Philippines' Auto tariffs out by 2010

Posted on 29 August 2007

The Cabinet-level committee on tariff and related matters has rejected the calls of the local automotive sector for government to extend the tariff protection of locally assembled vehicles, auto parts and components until 2010.


A highly placed source told reporters that the committee decided in its last meeting to pursue the publication of Executive Order 617 and ensure its implementation by putting an asterisk on all items on used completely built units.


The asterisk will indicate a further footnote, clarifying that used CBUs cannot be imported free of duty since they are prohibited items under EO 156, or the Motor Vehicle Development Program.


“The Cabinet TRM has already decided to just put in the asterisk,” said the source, adding the committee had opted not to grant the request of the local auto and auto parts industries to also exclude other tariff lines from EO 617.


EO 617, which was signed by President Gloria Macapagal Arroyo, brings down to zero the common effective preferential tariff rates in line with the country’s commitment to the Asean Free Trade Agreement.


The source said that the hearings on the executive order were conducted in 2004 while the directive was issued only this year, or a time lag of three years.


A number of tariff lines that used to be merely imported during the last three years were now being produced locally, the source said.


The auto and parts industries have identified several tariff lines they wanted scrapped from the list of products to be imported duty free starting this year. They said the product lines would compete with locally assembled vehicles and locally produced parts and components. But the source said the committee’s decision would only complicate matters.


When government takes out certain tariff lines from the 2007 inclusion list, it would no longer meet the 80-percent hurdle required under the tariff scheme. This would also mean that a corresponding number of tariff lines be taken out of the remaining 20 percent, whose tariffs will stay until 2010.


This would also mean another round of consultations not only with the auto and auto parts industries but also with the various industries whose products belong to the remaining 20 percent.


The local automotive and parts manufacturing industry earlier urged government to defer the publication, and consequent implementation of EO 617 until the provision eliminating tariffs on used and brand-new auto imports starting this year is corrected.


They said government had committed to maintain tariff cover on products that were locally produced until 2010.


Manila Standard Today, August 29, 2007

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