THE Tariff Commission (TC) is set to conduct a public hearing this week as part of a formal investigation on the imposition of safeguard measures against the importation of raw materials in the manufacturing of plastic products.
The commission released its notice of formal investigation in September last year, announcing that the preliminary conference will then be held in December 2021.
According to the Commission, the originally scheduled public hearing was postponed to provide more time for interested parties to submit required information and to also allow the TC to complete its data verification.
With the TC announcing the new schedule, the public hearing will be an avenue to discuss the timelines, nature of investigation, appearance of counsel and parties, number of witnesses, notification, accessibility of documents and public and confidentiality of documents, according to the regulator.
In addition, the conference will tackle the submission of position papers and memoranda, conduct of inspection and verification of data, schedules of public hearings and other activities and other related concerns.
The probe came after JG Summit Petrochemical Corp. (JGSPC) filed an application to slap imported high-density polyethylene (HDPE) pellets and granules. With safeguard measures, claiming these pose a “serious injury” to the domestic sector.
HDPE is a type of polyethylene resin that is used in the manufacture of the following: grocery bags; pallets and crates for cold-storage applications; beverage caps for bottled liquid; bottles for personal care products and household and industrial chemicals; and, pipes for building and construction, among others.
The Department of Trade and Industry (DTI) noted receipt of the documents filed by the JGSPC on March 9, 2020. The trade department acquired additional data, including product description, raw materials used and export information.
The period of investigation (POI) covers 2015 to 2019.
“The domestic petrochemical industry’s overall performance during the POI is also evaluated to establish whether the increased imports are the substantial cause of the serious injury to the domestic industry,” a report by the DTI read.
The data used for the investigation came from the Bureau of Customs (BOC), single administrative document-import entry and internal revenue documents.
According to a report by the DTI, HDPE imports grew by 274 percent for the 5-year period, noting two “significant surges” in 2016 and 2019. Imported HDPE in January-April 2020 already reached 36 percent of the 2019 level. Most of the imported HDPE came from Thailand, Malaysia, Singapore and Saudi Arabia throughout 2015 to 2019.
“The conditions of competition showed that the market share of the domestic product decreased during the POI from 78 percent in 2015 to 53 percent in 2019, as the share of imports in the domestic market significantly increased,” the report noted.
While the industry saw its gross profits surge by 32 percent in 2016, the figure continued to decline after that. It even registered a 142-percent drop in 2019, resulting in a negative gross profit.
The domestic industry said that the “low prices of imported HDPE have affected the gross profit on the domestic sales of locally produced HDPE,” according to the DTI.
“In order to compete and defend its market share, the producer is forced to adopt a policy of import parity pricing and, as such, is forced to sell its products at a price below its cost to produce and sell plus a reasonable margin to recover the investment,” added the DTI report.