Now the DTI has to decide

A few weeks ago, we got a copy of the staff report by the Tariff Commission (TC) regarding their investigation into the provisional safeguard bond imposed by the Department of Trade and Industry (DTI) on a variety of imported automobiles. The DTI was acting on the complaint made by the Philippine Metalworkers Alliance (PMA) that the sales performance of local vehicles is being harmed by vehicle imports. The result was a bond on imported passenger cars to the tune of PHP 70,000 bond and PHP 110,000 for LCVs. 

In that staff report, it was found that there was no unusual growth between imports and locally produced models. The report stated that the growth of imports “during the POI [period of investigation] cannot be considered recent, sudden, sharp and of such magnitude that can be deemed significant”.

The staff report, however, is still just that: a staff report. The actual final report is a different matter, and now it's out. Unsurprisingly, the final report reaffirms the position of the staff report. The gist of the summary report is this: the Tariff Commission is recommending that the provisional safeguard bond should be scrapped.

The TC's investigation showed that the volume of imported passenger cars and imported light commercial vehicles did not increase in both absolute terms and relative terms to models assembled here. That was the argument of the PMA over the whole matter: vehicle imports are outweighing locally assembled models.

That may sound strange, but here's the explanation: under the law, the Tariff Commission has to investigate on a like-for-like basis. That means they are only comparing vehicles that are directly competing versus locally made models, and have to be in the same vehicle class. For instance (hypothetically), they will not factor in an imported Honda Civic as part of the investigation because it does not compete against a Toyota Vios or a Mitsubishi Mirage, both of which are locally manufactured.

Still, it's not over yet. the Tariff Commission's summary report is still recommendatory in nature even though they have concluded their investigation. It is the DTI that has to act on it. Yes, the ball is in their court.

The next question is this: if the SG is removed, how will automakers and dealers refund the ones charged as deposits and/or compensate customers where the SG has been factored in?

Below is the full summary report from the Tariff Commission.

Tariff junks sc bond image

Tariff junks sc bond image