logo logo

Auto workers slam DTI on JPEPA auto tariff talks delay

Manila Bulletin |November 29, 2009

Auto workers slam DTI on JPEPA auto tariff talks delay


The group of 75,000 strong automotive industry workers has slammed the Department of Trade and Industry for lack of earnest efforts to negotiate for a delay in the tariff elimination of imported vehicles under the signed Japan Philippine Economic Partnership Agreement (JPEPA).

This was aired at Sunday’s press briefing by the multisectoral Fair Trade Alliance (FairTrade) for its advocacy on the passage of the pending bills seeking for the creation of a Philippine Trade Representative Office (PTRO).

Angel Dimalanta, president of the Automotive Industry Workers Alliance (AIWA), said the lack of earnest efforts from the DTI to push the workers’ interest in the JPEPA has forced them to support PTRO so that a strong, balanced and comprehensive developmental industry strategy can be adopted in all of the country’s trade agreement negotiations.

Dimalanta aired the apprehension of the industry that once tariffs on sports utility vehicles or the big cars with engine displacements of 3 liters and above are brought down to zero starting next year, the market might shift preference for the cheaper and bigger cars from the locally assembled small cars.

“People might shift preference for bigger cars instead of the completely knocked down (CKDs) such as Innova and Vios since the imported bigger vehicles would turn out to be cheaper given the zero tariffs. This is a big threat to us, industry workers,” Dimalanta said.

For instance, Hi-Ace now retails for P1.1 million, if the duties fall to zero percent, this would be at least 20 percent cheaper, Innova, which is locally assembled, would be more expensive Innova that is assembled in Indonesia is $2,000 cheaper than Innova assembled in the Philippines.

Vios from Thailand is $1,000 cheaper than Vios made locally.

“Cheaper big vehicle imports could displace CKDs, which would then affect jobs of at least 700 workers for Toyota that are directly involved in the line manufacturing,” Dimalanta said.

Dimalanta, who is also president of the labor union for supervisors of Toyota Motor Corp. Philippines, said the Japanese-owned company cannot commit to hold on to the workers amid the danger of shifting to importation.

TMPC only resumed normal operations early November this year after implementing a four-day work week for about three to four months because of the global financial crisis.

The TMPC workers union, however, managed to negotiate that workers were still able to work for maintenance on non-production days to avoid salary deductions.

In October this year, however, the DTI said it has already informed Japan to negotiate the tariff elimination provision on the automotive sectors under the JPEPA with the intention of delaying tariff elimination until 2013 on locally produced automotive parts and components and tariffs on completely built up (CBU) sports utility vehicles (SUVs) or vehicles with engine displacement of 3 liters c.c. and above.

Under the treaty, customs duty on CBU packs with cylinder capacity greater than 3000 above must also be free or reduced to zero starting January 1, 2010 from the 30 percent duty from the date the JPEPA treaty was enforced.

But should the Philippines decide to delay tariff cuts, it has to inform Japan and initiate a negotiation in 2009 otherwise tariffs shall go down to zero by 2010.

The same provision in the economic treaty applies on car parts by 2010. However, an annex to the agreement specifically states that the schedule for lifting tariffs on those auto parts listed under Executive Order 262 can be delayed until January 1, 2013 as long as negotiations are initiated in 2009.

EO 262, signed in December 2003, had slapped tariffs ranging from 10%-30% on roughly 50 types of car parts.

“We have already informed Japan we want to negotiate,” Hernandez said noting that the local industry has already made its position to delay the tariff elimination up to 2013.

 source: Manila Bulletin