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Ceramic tile traders seek clarification on DTI safeguard measure

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By Bernie Cahiles-Magkilat

Local ceramic traders are asking the Department of Trade and Industry to clarify its order imposing the P3 provisional safeguard measure per kilo on imported ceramic tiles and walls.

In a letter dated May 20, 2019 to Trade and Industry Secretary Ramon M. Lopez, the Philippine Ceramic Products Importers’ Association said the Department Administrative Order 19-06 issued on May 7, 2019 imposing the provisional safeguard duty on imported tiles and walls.

DAO 19-06 excluded porcelain tiles, among others, from the safeguard measure investigation since they are not produced locally. However, the same order provided for the imposition of the provisional safeguard measures amounting to P3 per kilo for ceramic floor and all tiles classified under AHTN 6907.2124, 6907.2193, and 6097.2194.

The aforementioned AHTN codes belong to the category of porcelain tiles or tiles with water absorption of less than 0.5 percent which are not produced locally.

Association Chairman Napoleon Co said majority of its imports are medium to high-end products only because the low-end ceramic floor tiles and walls are being produced by local manufacturer Mariwasa.

The cost of imported tiles ranges from $2 per square meter, medium price of $4-6 and the high-end at $15.

With the P3 per kilo provisional safeguard duty will increase the prices by 20-30 percent per kilo on the low-end and 15-20 percent on the high-end products, which are mostly imported from China.

Co said there is now a shift towards the use of bigger high-end ceramic floor and wall tile products than the small-sized and low-end tiles. Co also reiterated the same concern during the public hearing on the safeguard measure by the Tariff Commission held early this week.

In imposing the provisional tariff, DTI said that based on their preliminary investigation, there was a surge of imports that resulted in causal injury to the domestic manufacturers.
The volume of imports of ceramic floor and wall tiles increased from 2013 to 2016. In 2017, imports are lower by 13 percent over the 2016 level, but higher by 2,170 percent in 2014 or the pre-surge level.

In relative terms, DTI said that the share of imported to domestic production increased from 4 percent in 2013 to 641 percent in 2016. In 2017, the share of imports was recorded at 549 percent lower by 92 percent to 2016 level, but higher by 523 percent in 2014 or the pre-surge level. In 2018, the share of imports was recorded at 542 percent, lower by the 7 percent to 2016 level, but higher by 516 percent in 2014.

During the period of investigation, DTI said that despite the significant increases in market size, the market share of domestic manufacturers declined from 96 percent in 2013 to 15 percent in 2017 and 2018. The share of imported ceramic wall and floor tiles grew from 4 percent in 2013 to 87 percent in 2016.

DTI said the surge in imports has affected local manufacturers, which earnings before interest and tax exhibited a declining tend of 71 percent in 2014, a sharp decline of 203 percent in 2015 when the operations resulted in loss, an increase of 92 percent in 2016 which means that there was an improvement in operation compared to 2015, but the industry remained at loss. In 2017, the industry continued to exhibit losses with the highest decline of 1,067 percent and further decline of 157 percent in 2018.

As such, the DTI said the increased imports are the substantial cause of serious injury to the domestic industry based on the significant increase in the volume that caused serious injury to the industry from 2016-2017.

It added that the conditions of the competition show that the market share of locally produced ceramic floor and wall tiles was essentially displaced during the period of investigation as the share of imports in the domestic market significantly increased.

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