Background

In 2016, I filed an individual complaint under oath against certain cement companies and some of its managers for violation of the anti-competition law. With the exception of media coverage as well as informal dialogues, the closure of the case remains open. Now I read that the chairman of the CCP is the candidate for the post of secretary for socio-economic planning and simultaneously director general of NEDA. I can raise in his confirmation his possible non-compliance with the anti-red tape law.

In 2019, the Department of Commerce Industry issued DTI Administrative Order (DAO) No. 19-13, which imposed a final safeguard duty on cement imported from various countries for three years. The imposition of safeguard measures was meant to be a temporary relief for the domestic cement industry as it takes steps to become more competitive in the face of trade liberalisation.

With the existing safeguard duty ending in October, the Cement Manufacturers Association of the Philippines (CeMAP) has seen fit to seek extended protection for the cement industry. Additionally, in 2021, CeMAP also requested another protectionist measure for allegedly dumped cement from Vietnam.

So far, media coverage has focused on the positions of local cement and cement importers. There has been little or no discussion or reflection on the impact of all these protectionist measures on consumers. I am harassed by my experience in 2016 at the CCP as well as at the Tariff Commission in 2019.

The imposition of definitive safeguard measures, their possible extension and the imposition of anti-dumping duties are all detrimental to Filipino consumers.

Impact on consumers

As early as 2019, Laban Konsyumer said that imposing safeguard measures would only increase cement prices and ultimately hurt consumers. Even then, Laban Konsyumer showed evidence from no less than DTI’s own price monitoring reports that retail cement prices rose by 15 to 40 pesos per 40kg bag in the space of three months. .[1]. The increase was well above the provisional safeguard duty of 8.40 pula per bag which was imposed at the time. More recently, cement prices have increased to 20 pesos per bag in the first quarter of 2022. [MMCM1] Again, this is much higher than the current backup fee of P8 per bag. Provisional anti-dumping duties have also been imposed from December 2021 to April 2021, which is expected to add P2-25 to the import cost per bag.

CeMAP in a statement in 2019 said the effect of safeguard duties on prices, if any, will not be visible[2]This is clearly not the case as Laban Konsyumer has seen cement retail prices rise well above the duties imposed.

What is clear is that, thanks to all these tariff measures, prices have continued to rise and consumers are being denied the opportunity to seek out other cement choices at lower prices and higher quality.

The cement industry in the Philippines

To the extent that the government may have sought to protect an industry that is crucial to the economic development and recovery of the Philippines, it was misled, and continues to be misled, into believing that the industry cement suffers a lot because of imported cement. Under the guise of national interest and economic growth, the cement industry laments falling prices and profitability as an obstacle to its continued growth. The cement industry is not a nascent industry and has received many government incentives and support for many decades in an effort to help its development. Yet, time and time again, cement manufacturers have failed to demonstrate their ability to reach maturity and competitiveness. Investment in the industry and in the country seems to depend solely on the imposition of tariff measures such as safeguard duties and anti-dumping duties. It would seem that the industry has become accustomed to being pampered and made comfortable by the government, even if it means hurting consumers.

Protect consumer welfare

The imposition of tariff measures, both safeguard duties and anti-dumping duties, is detrimental to Filipino consumers and to the national interest. At a time of high inflation and financial instability, the rise of a crucial commodity like cement only makes the average consumer more vulnerable. It also jeopardizes the government’s ambitious infrastructure program in terms of rising costs and tighter supply.

Trade liberalization and increased market competition benefit consumers. In a free and competitive market, companies have more incentive to lower prices, improve products and services, increase productivity and be more responsive to the market. Competition pushes companies to be more efficient and innovative. It replaces inefficient businesses with efficient ones, thereby creating stronger industries. Moreover, these effects of healthy market competition contribute to the Philippines’ economic competitiveness and, therefore, to economic growth. In the end, the Filipinos will win.