Friday, October 22, 2021
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DTI scraps safeguard duty for auto imports

  • The Department of Trade and Industry has junked imposition of the safeguard duty on imported passenger cars and light commercial vehicles
  • All cash bonds previously collected on shipments of passenger cars and light commercial vehicles from February 1, 2021 must be immediately returned to importers
  • The decision follows recommendation of the Tariff Commission that no definitive general safeguard measure be imposed on imports of completely built-up passenger cars and CBU light commercial vehicles

The Department of Trade and Industry has officially scrapped imposition of the safeguard duty on imported passenger cars and light commercial vehicles following a similar recommendation by the Tariff Commission (TC).

Department Administrative Order No. 21-04 dated August 6 and signed by Trade Secretary Ramon Lopez ordered the immediate return to concerned importers of cash bonds previously collected on shipments of passenger cars and light commercial vehicles which entered or were withdrawn from warehouses in the Philippines for consumption from February 1, 2021.

READ: DTI bows to TC decision vs safeguard duty on auto imports

Customs Memorandum Order No. 06-2021 implemented provisional safeguard duties in the form of a cash bond amounting to P70,000 per unit for imported passenger cars and P110,000 per unit for imported light commercial vehicles.

DAO 21-04 follows recommendation of TC in its final report released last July 23 that no definitive general safeguard measure should be imposed on the importation of completely built-up passenger cars and CBU light commercial vehicles because such goods were not imported in increased quantities during the period of investigation covering 2014 to 2020.

As a result, TC said “the determination of serious injury or threat thereof, causation, and unforeseen developments has become moot and academic.”

Following a request from DTI, TC began a formal investigation last February on the merits of imposing definitive safeguard duty against imports of passenger cars and light commercial vehicles.

The Philippine Metalworkers Alliance, a national union of automotive, iron and steel, electronics, and electrical sectors, including affiliates composed of key players in the automotive industry, filed a petition in 2019 claiming serious injury to the domestic industry caused by increased auto imports.

DTI’s preliminary investigation found increased importation was a substantial cause of serious injury to the domestic motor vehicle manufacturing industry and that critical circumstances existed where delay in imposing the safeguard measure would cause the industry damage that would be difficult to repair.

Overall, DTI said, the domestic industry suffered declining market shares, sales and employment even as inventories accumulated. The industry also sustained increasing losses over the period that affected its cash flows and ability to invest and had been faced with excess and increasing production capacity in countries such as Thailand, Indonesia and China.

Under Republic Act No. 8800, or the Safeguard Measures Act, any person belonging to or representing a domestic industry may file with the DTI secretary a petition requesting action to remedy the serious injury to the domestic industry caused by increased imports of a like or directly substitutable product.

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