Galvanizers buck impending tariff hike

BY BERNARDETTE S. STO. DOMINGO, BusinessWorld Reporter The Filipino Galvanizers Institute (FGI) has asked the policy-making Tariff and Related Matters (TRM) committee to rethink its decision to declare Global Steel Philippines, Inc. in commercial operations, a move that is expected to raise tariff rates on some imported steel products to as much as 7% from 3%. In a June 27 letter to Trade Undersecretary and Chairman of the TRM technical committee Thomas G. Aquino, the group said the committee’s decision would result in higher tariffs on hot-rolled coils and cold-rolled coils (CRC) once approved by the cabinet-level TRM. "The galvanizing industry is the biggest user of CRC and considering the serious impact of this impending tariff increase, we believe that your decision to declare Global Steel commercially operational must be based on a sound judgment supported by adequate and concrete justification," it said. The TRM committee earlier said Global Steel was now in commercial operations and entitled to tariff protection, as mandated by Executive Order 375. The EO modified the rates on import duties of certain iron and steel products and stated that companies engaged in commercial operations must be given tariff protection. Steel companies are considered to be operating commercially if production reaches at least half of its annual registered capacity with the Board of Investments and if output is at least 50% of the average yearly importation of hot-rolled coils and CRCs for the last five years. FGI told Mr. Aquino that Global Steel’s CRC had not met galvanizers’ quality requirements and added processing it had resulted in low yield and productivity. It also said Global Steel’s 50-year-old Iligan steel plant has not been upgraded, and stressed that tariff protection would lead to higher prices of construction materials. "Granting Global Steel the undeserved tariff protection under EO 375 will put in peril the continuous viability of downstream companies and endanger the livelihood of tens of thousands of direct and indirect workers." The group also asked the committee to conduct a public hearing before a final recommendation is made to the Cabinet-level TRM. In an interview Sunday, Mr. Aquino said the committee would not respond to FGI’s letter, adding the decision to declare Global Steel in commercial operations and the 7% increase in tariff rates had legal basis. "There’s a law that says the duty would be raised to 7%. On the quality, if they don’t want to buy from Global Steel, they don’t have to," he said. An EO 375 footnote states tariffs are to be increased to 7% once Global Steel is in commercial operation as determined by the TRM committee. The Cabinet-level TRM—composed of the heads of agencies, including the Trade and Finance departments as well as the National Economic and Development Authority and the Tariff Commission —has yet to decide on the recommendation.