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PH notifies WTO on 3 probes on steel safeguards

By BERNIE CAHILES-MAGKILAT

The Philippines has notified the World Trade Organization that it has launched three safeguard investigations on aluminum zinc sheets, coils and strips (GL); prepainted galvanized iron and prepainted aluminum zinc (PPGI, PPGL); and galvanized iron sheets, coils and strips (GI) with the potential of imposing import tariffs after initial investigations showed that surges in importation, particularly from China, have caused serious injury to the domestic industry.

The notification was filed by the Philippines on June 19, 2020 before the WTO’s Committee on Safeguards. The notices of each of these investigations were published on 17 June 2020.

Under RA 8800 or the Safeguard Measures Law, the DTI Secretary has the power to impose the provisional measure will result in political and economic crisis, and the extent to which such imposition will cause shortage of a product under consideration in the domestic market. The period covered by the investigations (POI) on the three items are the years 2014 to 2018.

On GI sheets, DTI said that evidence showed increase in the volume of imported GI in 2015 (527%), 2016 (145%) but declined in 2017 (16%) and increased in 2018 (26%) preceded the serious injury to the industry. The industry suffered fluctuating domestic sales resulting to cut in EBIT into half from beginning POI (2014) to end of POI (2018).

The condition of competition showed that the market share of domestic product decreased during the POI from 69 percent in 2014 to 9 percent in 2018, as share of imports in the domestic market significantly increased.

The DTI said that evaluation of the application from domestic manufacturers, particularly Puyat Steel Corp., showed the existence of a prima facie case that will justify the initiation of a preliminary safeguard measures investigation on importation of GI sheets, coils and strips from various countries classified under AHTN Codes 7210.41.11, 7210.41.19, 7210.41.91, 7210.41.99, 7210.49.91, 7210.49.99 as well as GI Strips falling under AHTN Codes 7212.30.12, 7212.30.13, 7212.30.19 and 7212.30.99.

The People Republic of China (PROC) logged the largest supplier of GI and strips during the POI. In 2014, the volume of imports was recorded at 17,000MT which accounted for 93% share to total Philippine imports. In 2015, it significantly increased to 108,000MT of GI and further increased to approximately 270,000MT in 2016. It declined to 224,000MT in 2017, but still dominated the Philippine market at 94% market share. It moved up again to 277,000MT in 2018.

In 2019 (Jan to Nov), the share of Chinese exports set a record high at 347,000MT, representing 98% share to total Philippine imports. Other sources of imports include South Korea, Chinese Taipei, Japan, India, Hong Kong, Thailand Indonesia, Australia, Viet Nam, Malaysia, Singapore, Germany, Italy, United States, Sweden and South Africa.

On PPGI and PPGL, the DTI sided with the two local manufacturers Puyat Steel Corp. and Sonic Steel Industries Inc. for the initiation of a preliminary safeguard measures investigation stressing unabated imports have contributed significantly to the serious injury suffered by the local industry.

According to DTI, prima facie evidence will justify the initiation of preliminary safeguard measures investigation on importation of PPGI and PPGL from various countries classified under AHTN Codes 7210.70.11, 7210.70.19, 7210.70.90, 7210.70.91, 7210.70.99 including other coated products falling under AHTN Codes 7210.90.10, 7210.90.90 and painted strips falling under AHTN Codes 7212.40.11, 7212.40.12, 7212.40.19, 7212.40.91, 7212.40.92, 7212.40.99.

PROC and Vietnam are the top source countries for the Philippines PPGI/PPGL imports. PROC accounted for 97 to 99 percent share of total imports while Vietnam’s exports to the Philippines rose from 2,900MT in 2014 to nearly 6,000MT in 2018. Viet Nam’s import share increased from 1.91 percent in 2014 to 3.12 percent in 2018.

Significant increase in the volume of imported PPGI/PPGL increased by 46% in2016 but fell by 15 percent in 2017, however, it still higher by 16 percent over 2014 level. In 2018, imports increased by 7% which preceded the serious injury to the industry.

As such, DTI said the domestic industry suffered and is suffering significant impairment in its overall condition in terms of loss of market share, declining domestic sales, production, utilization rate, profitability, reduction in employment and increase inventory.

The condition of competition showed that the market share of domestic product decreased during the POI from 38% in 2015 to 29% in 2018, as share of imports in the domestic market significantly increased.
Affected local manufacture Sonic Steel Industries, Inc. is set to launch a new Plant envisioned to be under the auspices of its affiliate, Solid Steel International Coating Corporation (“SSICC”). SSICC is set to spearhead the introduction of new lines which shall tremendously improve production capacity as well as promote cost efficiency.

DTI investigation will cover AHTN Codes 7210.61.11, 7210.61.19, 7210.61.91, 7210.61.92, 7210.61.99, 7210.69.11, 7210.69.19, 7210.69.91, 7210.69.99 and GL strips falling under AHTN Codes 7212.50.19, 7212.50.23, 7212.50.24, 7212.50.29, 7212.50.93, 7212.50.9.

The largest increase in the volume of subject goods came from PROC which dominated the market from a mere 1 percent in 2014 to 96 percent in 2018. Other sources of imports include Japan, South Korea, Vietnam and Taipei.

Based on data submitted Significant increases in the volume of imported Aluminum Zinc (GL) in 2015 (3,090%), 2016 (300%), 2017 (7%) and in 2018 (20%) preceded the serious injury to the industry in 2018. The industry suffered declines in sales, production, utilization rate, profitability and employment. Inventory increased from 2014 to 2018. The condition of competition showed that the market share of domestic product decreased during the POI from 99% in 2014 to 25% in 2018, as share of imports in the domestic market displaced locally produced GL.

The domestic industry submitted its adjustment plan to undertake improvement to increase production capacity while also improving efficiency and cost of production. This will also use state-of-the-art technology that will improve environmental performance of the domestic industry’s operations.


Source: Manila Bulletin (https://business.mb.com.ph/2020/06/23/ph-notifies-wto-on-3-probes-on-steel-safeguards/)

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