Indian-owned Global Steel Philippines Inc. (GSPI), the country’s supposedly biggest midstream steel producer, should shape up to enjoy government protection, Trade and Industry Secretary Jesli A. Lapus said.

Lapus made this statement after the government has decided to lift the 7 percent tariff on HRC/CRC products, which was imposed to protect the formerly National Steel Corp.

“We cannot protect a company that is not operating commercially,” Lapus told reporters.

The National Economic and Development Authority (NEDA) Board has already approved a zero tariff on HRC/CRC, the raw materials for the production of downstream steel products such as galvanized iron sheets, but this would revert back to 7 percent once GSPI goes into full commercial operation.

The prepared Executive Order is now ready for signing by Malacañang.

The lifting of the steel tariff was meant to cushion the impact of increasing steel prices in the international market to local steel products.

Lapus said that local steel firms are just holding off the estimated 3 to 5 percent price increase because of the government commitment to lift the import tariff on their raw materials, which have now reached $800 per metric tons from $600 tons.

“GSPI has lots of problems,” Lapus noted. The Iligan-based steel company has not been producing on a regular basis. Early this year, it was besieged with labor strike forcing the Department of Labor on salary issues.

For GSPI to be declared in commercial operation it should have attained 50 percent of the its BOI-registered capacity for CRC/HRC or 50 percent of average Philippine importation volume of hot mill or cold mill products for five years immediately prior to the start of commercial operations.

The waived duties are expected to translate to government revenue loss of P800 million, but this would also cushion the impact of high world prices on domestic roofing materials while allowing GSPI time to stabilize its erratic production and the local GI sheet producers to improve their competitiveness.

The tariff reduction would also resolve the tariff distortion between raw materials already at 7 percent and finished roofing materials at 0 percent in ASEAN as well as in the ASEAN-China and ASEAN-Korea free trade agreements. Most of the finished roofing materials are imported from China.