The Department of Trade and Industry (DTI) is imposing a provisional safeguard measure on the importation of ceramic floor and wall tiles.
The safeguard measure, in the form of a cash bond amounting to P3 per kilogram (kg), will be imposed on imported ceramic floor and wall tiles classified under AHTN (Association of Southeast Asian Nations Harmonized Tariff Nomenclature) Codes 6907.2123, 6907.2124, 6907.2193, 6907.2194, 6907.2213, 6907.2214, 6907.2293, 6907.2294, 6907.2313, 6907.2314, 6907.2393, 6907.2394 and 6907.4092, according to DTI Department Order (DO) 19-06 signed by Trade Secretary Ramon Lopez and dated May 6.
The measure is effective for a period of 200 days from the date of issuance by the Bureau of Customs (BOC) of the relevant customs memorandum order (CMO), or 15 days after the publication of DO 19-06 in two newspapers of general circulation, whichever comes earlier. As of this writing, BOC has yet to issue a CMO.
The safeguard measure is being imposed following a preliminary investigation initiated by DTI to determine whether increased imports of ceramic floor and wall tiles under several AHTN Codes were causing or threatening to cause serious injury to the domestic industry. The investigation period covered the years 2013 to 2017, with updated data for 2018.
The preliminary investigation found that “increased imports of ceramic floor and wall tiles have caused serious injury to the domestic industry”, DO 19-06 noted.
The same investigation showed that the volume of imports of ceramic floor and wall tiles in absolute terms, increased from 2013 to 2016. In 2017, imports were lower by 13% from the 2016 level, but higher by 2,170% than in 2014 or the pre-surge level.
In relative terms, the share of imports to domestic production increased from 4% in 2013 to 641% in 2016. In 2017, the share of imports was recorded at 549%, lower by 92% than the 2016 level, but higher by 523% than 2014 or the pre-surge level. In 2018, share of imports was at 542%, lower by 7% compared to the 2016 level but higher by 516% than in 2014.
Despite significant increases in market size, the market share of domestic manufacturers declined from 96% in 2013 to 15% in 2017 and 2018, DTI said.
Earnings before interest and taxes exhibited a declining trend of 71% in 2014, a sharp drop of 203% in 2015 when operations resulted in loss, an increase of 92% in 2016 which meant operation improved compared to 2015 although the industry remained at loss. In 2017, the industry’s operation continued to exhibit losses with the highest decline of 1,067% and a further decline of 157% in 2018.
DO 19-06 noted that the imposition of the temporary safeguard measure is in keeping with Section 8 of Republic Act (RA) No. 8800, or the Safeguard Measures Act, which provides that “in critical circumstances where a delay would cause damage which would be difficult to repair, and pursuant to a preliminary determination that increased imports are the substantial cause of serious injury to the domestic industry.”
Imports originating from developing countries, as listed in Annex A of DO 19-06, covered by Rule 8.8 of the implementing rules and regulation of RA 8800, are not subject to the provisional safeguard measure.
Also excluded are unglazed, porcelain, mosaic and marble tiles since they are not produced locally as well as glazed ceramic tiles imported from the European Union as they do not compete with locally produced tiles.
Importers of ceramic floor and wall tiles originating from a country exempt from the provisional safeguard duty will have to submit a certificate of origin issued by the authorized agency/office in the source country of manufacture, authenticated by the Philippine embassy/consulate general.
Case records on the preliminary investigation will be transmitted to the Tariff Commission for a formal investigation to determine whether or not a definitive safeguard measure needs to be imposed.
