Workers in the motor vehicle industry have opposed the inclusion of 2020 data on imported vehicles in the Tariff Commission’s investigation whether the imposition of safeguard measure against imported completely built up passenger cars and light commercial vehicles be made permanent or discontinued.
In its comment to the TC Staff Report, the Philippine Metalworkers Alliance (PMA) said that using the 2020 data does not reflect the real situation as all importation naturally dropped during the pandemic year.
“The imports from year 2020 must be removed from the analysis as sales in that year are abnormally very low due to the Covid-19 pandemic. The year 2020 should be excluded in the analysis because of the extraordinary economic situation brought by the COVID pandemic and thus, imports during the period cannot be compared to previous periods. The year 2020 was characterized by the deepest recession in the Philippines since the 2nd world war,” the PMA commented on the TC Staff report as the agency conducts an analysis to determine whether or not there is merit to impose a permanent safeguard duty on imported cars and light commercial vehicles.
At present, the DTI imposes P70,000 safeguard duty per unit of imported completely built up passenger cars and P110,000 per unit of imported light commercial vehicles.
PMA President Ruel Punzalan cited figures from 2014 to 2017 where importation of CBU passenger cars by traders have been increasing in an average annual growth rate of 75 percent while domestic production of CBU passenger cars increase at an average annual growth rate of 16 percent.
However, this trend reversed beginning 2018 until 2020 with importations decreasing at an average rate of negative 35 percent while domestic production in the same period also decreased at an average rate of negative 19 percent.
Share of imports to production only peaked in 2017 (with 52%) when traders increased their importation of CBU passenger cars in anticipation of the implementation of the TRAIN Law in 2018 that imposes higher excise tax on motor vehicles. Share of imports to production also went downhill beginning 2018 from 52 percent to 45 percent in 2020.
“Clearly, removing 2020 data will make the analysis more credible,” Punzalan said. In any event, he said, the fact that from 2014-2017 the importation of CBU passenger cars have been increasing at an average annual growth rate of 75 percent while domestic production of CBU passenger cars increase at an average annual growth rate of only 16 percent would show that the surge in import that would merit the imposition of safeguard measures.
Based on the TC Staff Report, total importation of CBU motor vehicles was cut by half in 2020 to 108,770 units from 222,764 in 2019 and 233,346 units in 2018. The highest CBU importation was in 2017 at 306,819 units from 199,214 units in 2016 and 126,640 units in 2015.
“Naturally, demand for goods and services, especially luxury goods like automobiles, is expected to fall during such crises,” said PMA.
As early as first quarter 2020, PMA said the results of Bangko Sental ng Pilipinas’ consumer expectations survey revealed that consumers are likely to reduce demand for ‘big ticket’ consumer items like automobiles as indicated by lower percentage of households that think 2020 is a favorable time to buy motor vehicles. Both imports and locally produced automobiles are affected by the decline in demand. Trade in general fell, and not just in automotive sector. It is but natural for imports to fall during the economic crisis. In fact, global trade was estimated to have fallen by 9.2 percent (WTO, 2020).
PMA also opposed the use of metric tons would not reflect the actual volume of imports and sales in determining the import surge. Instead, PMA urged the use of number of units imported.
The workers’ union further said it is not wrong for a government-led adjustment plans especially when these actually translate into the betterment of the local auto industry.
“ Such initiatives on the part of the government are apparently taken in order to promote the interests of the both the corporations we work for and us workers and our families. If anything, this highlights the fact that we are indeed proper parties of interest in this safeguards measure case,” said PMA.
The workers union even cited Sec 6 --Initiation of Action Involving General Safeguard Measure -- of the Safeguard Measures Act that provides PMA, the union, with the legal personality in the case it filed for the imposition of safeguard duty on imported vehicles.
Section 6 of the law provides that “Any person, whether natural or juridical, belonging to or representing a domestic industry may file with the Secretary a verified petition requesting that action be taken to remedy the serious injury or prevent the threat thereof to the domestic industry caused by increased imports of the product under consideration.” It could be recalled that motor vehicle companies have questioned the legal personality of PMA in the case.
As far as PMA is concerned the imposition of safeguard measure on imported vehicles is justified because they were able to submit three essential evidence: increase in import of like or directly competitive products; existence of serious injury or threat thereof to the domestic industry; and causal link between the increased imports of the product under consideration and the serious injury or threat thereof.
“The Philippines has been left way behind in terms of industrialization because it has for decade tried to rely solely on agriculture and services. It is apparent that our country does not have a dynamic industrial or manufacturing sector,” said PMA.