VIETNAM at the World Trade Organization (WTO) is asking the Philippines for compensation after its export interests got hit by the safeguard measure Manila slapped on cement.
In a communication dated October 25, Vietnam requested the Philippines for consultations on its decision to apply safeguard measure on cement imports. In its communication filed before the WTO’s Committee on Safeguards, Vietnam said it has “substantial interest as an exporter in this case” and, therefore, has the right to invoke Article 12.3 of the Safeguards Agreement.
A WTO member proposing to apply or extend a safeguard measure is mandated under Article 12.3 of the Safeguards Agreement to provide adequate opportunity for prior consultations with those members that have substantial interest as exporter of the product concerned.
Further, Vietnam is demanding the Philippines “to address proposals on trade compensation,” citing Article 8.1 of the Safeguards Agreement. Under this provision, a WTO member proposing to apply or extend a safeguard is required to honor concessions to affected exporters as a way of compensation for the adverse impact of the measure on trade.
“However, in the process of these consultations, Vietnam reserves the right to raise additional issues, make further factual and legal arguments, and pursue any other remedies provided for under the Safeguards Agreement and the Understanding on Rules and Procedures Governing the Settlement of Disputes,” Vietnam raised in the communication.
“Moreover, Vietnam notes the requirement in Article 12.3 of the Agreement on Safeguards to ensure adequate opportunity for prior consultations before application of a measure. This request does not prejudge Vietnam’s position on whether the period between the announcement and application of the proposed measure provides sufficient amount of time for a meaningful exchange, as required under Article 12.3,” it added.
Hanoi said it is hoping for a prompt reply from Manila in order to set a mutually convenient date and venue for the consultations.
The Department of Trade and Industry (DTI) in August imposed a three-year safeguard measure on cement on findings of the Tariff Commission that imports pose an imminent threat of serious injury to the domestic industry. The tariff body argued there is a “significant rate of increase in cement importations starting 2016 until the first semester of 2019,” and that this trend will most likely carry over in the near future.
In justifying its recommendation, the Tariff Commission also said the Philippines is an important market to top suppliers Vietnam and China, indicating the high chance of increased shipments of cement from these countries in the near future, as well.
As such, the DTI slapped a definitive safeguard duty for three years on imported cement from various countries to provide local manufacturers the time to improve their competitiveness. The amount of the safeguard for the first year is P250 per metric ton, or P10 per 40 kilogram bag; for the second year P225 per MT, or P9 per bag; and for the third year P200 per MT, or P8 per bag. Over the next three years, local players are tasked to introduce adjustments to their operations that would raise their production output, reduce their business cost and, ultimately, make their cement competitive with imports.
Preliminary investigation from the DTI showed the market share of imported cement jumped to 15 percent in 2017, from just 0.02 percent in 2013. This import surge compelled the domestic industry to reduce prices of their cement products by nearly 10 percent, cutting their sales by 12 percent to P11.1 billion in 2017.
For one, cement imports from Vietnam accelerated at steep rates over the past years—by triple digits in 2015 and 2016, and by double digits in 2017 and 2018.
Based on records from the Philippine Statistics Authority (PSA), cement imports from Vietnam rose 170 percent to 1.59 million metric tons in 2015, from 592,299 MT in 2014. It went up again the following year, this time by 101 percent, to 3.22 MMT.
Cement shipped from Vietnam jumped 32.85 percent to 4.28 MMT in 2017, and by over half to a record high 6.56 MMT in 2018, PSA data showed.