The technical level of the Committee on Tariff and Related Matters (CTRM) is inclined to revert back to zero the import tariff on steel from 7 percent because of the unstable production of the country’s biggest steel producer, Global Steel Philippines Inc. (GSPI).

Trade and Industry Undersecretary Thomas G. Aquino said that GSPI has slowed down production and this has materially and substantially affected its capacity to supply its customers (downstream steel producers).

According to Aquino, GSPI’s customers are not happy with the situation.

Aquino noted that GSPI was granted a 7 percent tariff protection for its imports of raw materials, hot rolled coils (HRC) and cold rolled coils (CRC), to assist the company on its initial years of operation by putting imports at bay.

But GSPI was also affected by the global financial crisis and the recent labor union strike, power, taxes, among other issues, affecting its production capability.

The 7 percent tariff protection has also created a tariff distortion because other finished steel products, including roofing materials are allowed duty-free entry.

Filipino Galvanizers Institute president Salvio Perez, in a position paper submitted to the Tariff Commission, said the continued imposition of the tariff protection on HRC and CRC created a distorted tariff structure where local manufacturers are slapped a 7 percent duty on raw material imports while competing foreign manufacturers are given free entry to the Philippine market.

“Local galvanizers are already experiencing the impact of the distorted tariff structure for raw materials and finished goods in the form a surge in the importation of finished roofing sheets,” he said.

“Without the needed favorable action on our petition, which have long been pending with the Technical Committee of the Cabinet Tariff Reform and Related Matters (TRM) office, Perez said they have no option but to shutdown and stop operations since continuing operations under this tariff environment will lead to financial losses,” Perez said.

There are 10 steel galvanizing companies in the country directly employing nearly 5,000 laborers and indirectly employing more than 10,000 individuals. This sector contributes some P6B to government coffers annually in the form of import duties, taxes, permits, licenses and other fees.