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Tariff cuts on Chinese, Korean vehicles pushed

Malaya, Philippines

Tariff cuts on Chinese, Korean vehicles pushed

27 May 2011

Vehicle importers are urging the government to implement the scheduled tariff cuts under the Asean free trade agreements (FTAs) with China and Korea.

Fe Perez-Agudo, president of the Association of Vehicle Importers and Distributors (AVID), said the group has submitted a position to implement the scheduled reduction to 20 percent from 30 percent in 2012 under Asean-Korea FTA tariffs on light commercial vehicles (LCVs).

Agudo is president and chief executive of Hyundai Asia Resources Inc. (HARI), the exclusive distributor and importer of Hyundai vehicles.

The Truck Manufacturers Association (TMA) is pushing for a delay in the tariff cuts to give the industry time to adjust and for government to address smuggling and standards.

TMA is urging the maintenance of the current most-favored-nation rates on completely built-up (CBUs) vehicles at 15, 20 and 30 percent until the end of 2016 under the Asean-Korea free trade agreement (AKFTA) and 2018 under the Asean-China FTA (ACFTA).

HARI’s light commercial vehicles Tucson, Starex and Santa Fe are all expected to benefit from the tariff cuts, which mean lower prices for buyers.

But Agudo said a price reduction via a tariff cut would just offset higher prices to be imposed by Hyundai Motor by July.

According to Agudo, Tucson, its bestseller and currently the No.1 in the subcompact sport utility vehicle category, accounts for 65 percent of LCV sales. The share of Starex is 30 percent.

In its position paper submitted to the Tariff Commission, AVID asked that tariff reduction be accelerated under both AKFTA and ACFTA.

AVID executive director Enrique dela Cruz Jr. said the group fully supports and strongly pushes for the implementation on Jan. 1, 2012 of the tariff reduction in the sensitive list under AKFTA and ACFTA, specifically motor vehicles and motor vehicle parts and components.

Dela Cruz said the full implementation of AKFTA and ACFTA will level the uneven playing field brought about by the earlier elimination of tariffs under the Asean FTA and the tariff reduction for vehicle imports from Japan.

"The early tariff elimination for vehicles imported from Asean countries and the considerable tariff reduction for vehicles imported from Japan pursuant to the JPEPA (Japan-Philippines economic partnership agreement) have created, wittingly or unwittingly, winners and losers among the Philippine automotive industry players," Dela Cruz.

He said the current tariff and trade environment has thus become discriminatory and inconsistent with Philippine commitments under the World Trade Organization.

"Any delay or deferment in the implementation of tariff reduction of articles covered by the sensitive lists of AKFTA and ACFTA ... will damage the government’s standing as a reliable and trustworthy economic trade partner. Failure to honor the commitments made under the will be detrimental to the present valuable economic trade and political relationships between the Philippines and Korea and the Philippines and China," Dela Cruz said.

Agudo said AVID is sticking to its 5 percent growth target in sales.

She said members could be affected by the Japan quake and tsunami but the impact is not as severe as those whose products come directly from Japan.

AVID groups British United Automobiles Inc., CATS Motors Inc., Focus Ventures Inc., Foton Motor Philippines, HARI, Jaguar Cars Inc., PGA Cars Inc., Scandinavian Motors Corp. and The Covenant Car Co. Inc.

Its members’ brands include Audi, Chana, Chevrolet, Chrysler, Dodge, Faw, Foton, Hyundai, Jaguar, Jeep, Maserati, Mercedes Benz, Mini, Porsche and Volvo.