Orders lifting wheat, cement tariffs await Palace OK

Wheat and cement are set to again enter the country duty-free, as draft executive orders (EO) allowing this are now just waiting for Malacañang approval, a Cabinet member yesterday said. If the orders are signed, tariffs on the imported commodities will be eliminated for another six months. A group representing flour millers welcomed this development, saying it will ensure the stability of flour prices. Officials of the Cement Manufacturers Association of the Philippines (CeMAP), which had opposed government plans to drop tariffs on competing imports, could not be reached for comment. "[The draft] was approved by the National Economic and Development Authority (NEDA) Board last week. I have just forwarded the draft EO to Malacañang for signature yesterday [Tuesday]," NEDA Acting Director-General Augusto B. Santos said in a telephone interview. The Committee on Tariff and Related Matters, which handled this issue, is one of NEDA’s five interagency committees. Mr. Santos clarified that the order for wheat will cover only those for human consumption and not those used for animal feed; hence, should not compete with local yellow corn. "The rationale is to keep prices low and spur economic activity. The state revenue loss [that would have otherwise been derived from tariff collections] is not that big anyway," Mr. Santos said, without citing amounts. The new orders, in effect, will revive EOs 818 and 819 which had similarly dropped tariffs on wheat and cement for six months until last Jan. 12. Tariffs on the two products had reverted to previous levels when the earlier orders lapsed. A 3% levy is slapped on both products if they are imported from Southeast Asia and 5% for those sourced elsewhere. "We are looking forward to the issuance of the new EO extending 0% duty on milling wheat. It is because of this promised EO that millers have held on to our present prices," Ricardo M. Pinca, Philippine Association of Flour Millers executive director, said in a separate phone interview yesterday. Millers, Mr. Pinca said, have been absorbing the reimposed 3%-5% tariff on wheat, amounting to P20 per 25-kilo bag, while waiting for a new order to be issued. Consequently, prices of hard flour continue to stand at P770-P790 per bag, he said. The 0% tariff in the past had generally not triggered wide-spread importation of cement, since expensive shipping and brand loyalty among consumers were thought to render foreign-made cement uncompetitive against locally made counterparts. Cement prices, therefore, have not budged and even rose in late 2009 to early January. CeMAP, however, argued that orders eliminating cement tariffs would make the country vulnerable to dumping of substandard cement. - BusinessWorld