Cabinet endorses tariff cut for imported cement

MANILA, Philippines - THE Cabinet and the Tariff and Related Matters Committee have endorsed reduction to zero of the tariff rate on imported cement for signing by President Gloria M. Arroyo, the Trade chief said Tuesday. The recommendation now awaits Ms. Arroyo’s approval, Trade Secretary Peter B. Favila said in a phone interview Tuesday. "There was a Cabinet decision on the lifting of the tariff. It is now with OP [Office of the President]," he said. A 5% tariff is currently applied to Portland cement from countries with most favored nation status, while a 3% rate is slapped on cement imports from the Association of Southeast Asian Nations (Asean). Senior Trade Undersecretary Thomas G. Aquino had earlier said that tariffs will be eliminated for a six-month trial period, once approved. Such a move will allow for more competition in the market amid the recent price hikes by local cement manufacturers in September, Mr. Favila said in previous reports. Holcim Philippines Inc. and Lafarge Philippines raised prices by P10-P12 per 40-kilogram bag last September. Cement sold in Metro Manila cost P205 per bag in the first week of November, data from the Trade department show. "This was the only intervention available to us," Mr. Favila said. Asked to comment on the cement industry’s claims that its side has not been thoroughly heard, Mr. Favila countered: "I even went as far as to issuing a subpoena [for them to submit documents to justify their price increases]. Enough is enough. They have to behave." Cement Manufacturers Association of the Philippines (CeMAP) President Ernesto M. Ordoñez, for his part, said that they will continue to appeal to Mr. Favila and Ms. Arroyo to defer the tariff cuts. "We have information that may have not been communicated yet," Mr. Ordoñez said in a separate telephone interview Tuesday. Mr. Ordoñez added that CeMAP had sent a letter to the Trade department last Monday, but declined to provide details, citing confidentiality issues. He warned that eliminating tariffs will encourage other countries to dump cement here. "Especially with the global crisis, they’re all desperate to export," Mr. Ordoñez said. High prices are partly due to retailers, he explained, noting a case in Camiguin wherein cement priced at P195 was sold by a retailer for P225. "We lost P12 billion [because of dumping in 2001]. Are we going through this again?" Mr. Ordoñez asked. Cement factory workers have also opposed the planned tariff cuts, fearing that the expected reduced profitability of cement firms will lead to massive layoffs. "May the President consider that, as she signs her new executive order [cutting the cement tariff rate], danger is posed on our jobs and on our capacity to feed our families," Philippine Cement Workers’ Council Secretary-General Samuel Eslava said in a statement late last week. — Jessica Anne D. Hermosa, BusinessWorld