By Bernie Cahiles-Magkilat

The Philippines has notified the World Trade Organization of its preliminary investigation to determine whether the increased imports of cement is causing or threatening to cause serious injury to the domestic cement industry as its initial review showed that import surges are causing adverse impact on the competitiveness of the local cement manufacturers.

In its post, WTO said that the Philippines’ Department of Trade and Industry has notified the body that it shall initiate motu propio, a preliminary investigation to determine whether increased imports of cement is causing or threatening to cause serious injury to the domestic industry.

The cement covered by the investigation is classified under AHTN Codes 2523.2990 and 2523.9000. The period covered by the investigation (POI) are the years 2013 – 2017.

In initiating the investigation, the DTI cited Safeguards Measures Act which allows the Secretary to initiate a motu propio probe if there is evidence that increased imports of the product are causing injury to the domestic industry. Under the law, positive results of the probe could mean imposition of provisional safeguard measures like punitive tariff on the imported product.

Based on their review, the DTI noted that the volume of cement imports has increased continuously from 2013 to 2017. In 2014, the volume of cement import went up by 70 percent, in 2015 by 4,391 percent, in 2016 by 549 percent and in 2017 by 72 percent.

In relative terms, the share of imports also increased during the review period from 0.02 in 2013 to 15 percent in 2017.

There are also pieces of evidence that the domestic industry suffered serious injury caused by increased imports during the POI.

The review showed that despite significant increases in market size, the market share of domestic manufacturers declined from a small share in the domestic market from 2013 to 2015, the share of imported cement grew to 8 percent and 13 percent in 2016 and 2017, respectively.

While the domestic industry’s sales revenues increased from 2013 to 2016, it went down by P11.1 billion in 2017, a decline of 12 percent over the previous year.

As earnings before interest and taxes increased from 2013 to 2016 by 6 percent,, 15 percent and 8 percent, respectively, the industry experienced a sharp decline in earnings of 49 percent in 2017.

In addition, the DTI said that the weighted average landed cost of imports is lower than the average selling price of the domestic product indicating a price undercutting of 14 percent. As a result, cement manufacturers have been forced to reduce prices by almost 10 percent to compete with lower-priced imported cement.

Sources of imported cement include China, Vietnam and Thailand.