THE government has to rethink its move to raise the tariff rates on vehicle imports, as this might breach the region’s deal on free flow of goods and services, a business leader has warned.
Vicente S. Socco, chairman of GT Capital Auto Dealership Holdings Inc. (GTCAD), said the plan to apply a safeguard measure on vehicles could be an infringement of the free-trade agreement between Southeast Asian economies. He argued that a safeguard is “very much contrary to the spirit of the Asean economic zone, which promotes the free movement of goods.”
The trade deal allows Association of Southeast Asian Nations (Asean) member-states to export automobiles, among many products, within and around the region at zero duty.
“I think the Asean free trade is premised on free flow of goods and services,” Socco said in an interview with reporters last week. “Any kind of barrier that might infringe on the Asean spirit, I think we have to be very mindful.”
He added the government has to understand that firms are opting to import units than making them here in order to bring to the market the most competitively priced vehicles.
“At the end of the day, what’s paramount is that we also understand that we’re trying to bring in the most competitively priced vehicles to the market. I think the government is also very much cognizant that the safeguard is very much contrary to the spirit of the Asean economic zone, which promotes the free movement of goods,” Socco argued.
However, Socco said it is the prerogative of the government to raise the tariff rates on vehicles, and gave GTCAD’s commitment to comply with whatever the decision will be.
“We have to operate as part of the community, that’s the most important thing, because we’re a signatory of the Asean economic community. Whatever the final decision, I think we have to be very respectful of that,” the GTCAD executive said.
“If the government believes there’s some need to impose safeguard duties [on vehicles] or use this as a retaliatory measure with Thailand, the government of course has that prerogative, and we will comply as the government decides,” he added.
GTCAD manages the Toyota dealerships under listed GT Capital in the Philippines. GT Capital Holdings Inc. has interests in the automotive industry, as it is the 51 percent owner of Toyota Motor Philippines Corp., the country’s leading vehicle assembler.
The Department of Trade and Industry (DTI) is seriously considering the imposition of safeguard measure on imported vehicles, targeting mostly those originating from Thailand and Indonesia, where the Philippines is largely sourcing its cars.
Trade union’s plaint
The move was triggered by the petition filed by trade union Philippine Metalworkers’ Alliance, which lamented the declining employment in automotive, particularly in manufacturing. According to the DTI, the PMA lodged the petition to apply a safeguard on automobile to stop the alleged import surge of the product.
Carmakers are reportedly choosing Thailand and Indonesia as their investment destinations in Southeast Asia, as they can just export units to the Philippines at zero duty under the region’s trade deal, leading to a drop in capital inflow and consequently, employment, here. Trade Undersecretary Ceferino S. Rodolfo said the country’s vehicle imports from 2014 to 2018 reached a total 1 million units. Of this, shipments from Thailand accounted for some 428,000 units, while those from Indonesia, 312,000.
Direct workers in the motor vehicle ma-nufacturing sector stood at 7,784 in 2014 before slipping to 6,842 in 2015 and dropping further to 6,614 in 2016, according to data from the Philippine Statistics Authority.