The Department of Trade and Industry is recommending a formal probe on whether there is a need to impose safeguard measures on imports of high-density polyethylene and linear low-density polyethylene pellets and granules
DTI found a link between increased imports of the products and serious injury to the domestic industry
JG Summit Petrochemical Corp, the sole domestic producer of HDPE and LLDPE, alleged increased imports of the commodities caused serious injury to the local industry
The Department of Trade and Industry (DTI) is asking the Tariff Commission (TC) to investigate whether safeguard measures on imports of high-density polyethylene (HDPE) and linear low-density polyethylene (LLDPE) pellets and granules are needed.
DTI in its preliminary investigation found “a causal link exists between increased imports of the products under consideration and serious injury to the domestic industry.”
Case records will be transmitted to the TC for the latter’s formal investigation, according to DTI Department Administrative Order (DAO) No. 21-05 dated September 17 signed by Trade Secretary Ramon Lopez.
A formal investigation by TC is wider in scope involving marathon public hearings which provide affected or interested parties the opportunity to be heard, present evidence, respond to presentations, and submit their views.
There will be no provisional safeguard measures while the case is being investigated as the petitioner, JG Summit Petrochemical Corp. (JGSPC) during the preliminary investigation “failed to show that critical circumstances exist” to warrant such imposition.
DTI conducted the preliminary investigation after JGSPC alleged the increased importation of HDPE and LLDPE was “a substantial cause of serious injury to the local industry.”
HDPE is used to produce plastic bottles, corrosion-resistant piping, geomembranes and plastic lumber, while LLDPE is used for plastic bags and sheets, plastic wrap, stretch wrap, pouches, toys, covers, lids, pipes, buckets and containers, covering of cables, geomembranes, and flexible tubing.
JGSPC accounts for all production of HDPE and LLDPE in the Philippines. It is the first and only integrated polyethylene and polypropylene resin manufacturer in the country.
DTI said that under Section 6 of Republic Act No. 8800 or the Safeguard Measures Act, it reviewed the evidence and determined a prima facie case exists to justify initiating a preliminary investigation into HDPE importation.
According to preliminary findings, Philippine imports of HDPE showed a significant increase in volume from 2015 to 2016, with imports increasing by 16,245 metric tons or 26% before volume slightly declining by about 1,840 MT or 2% in 2017.
Imports were up again by 10% in 2018 and 28% in 2019, and in 2020 (January to September) imports reached 69,360 MT, or 65% of the 2019 level.
Likewise, the share of imports relative to domestic production significantly increased during the investigation period, from 36% in 2015 to its peak at 67% in 2019, which “preceded serious injury to the domestic industry.”
The conditions of competition also showed market share of the domestic product decreased during the period of investigation, from 63% in 2015 to 54% in 2019, as the share of imports in the domestic market significantly increased.
The report said the domestic industry “suffered declines in sales, production, utilization rate, profitability and employment.”