Implementation of a 10 percent tariff protection on all automotive imports and a subsidy of P10,000 per completely built up (CBU) production are being pushed to make the local automotive industry viable and competitive under a globally liberalized trading regime.

A highly-placed industry source said these proposals are the most controversial components of the Deloitte Consulting LLP study, which was commissioned by the Philippine Automotive Competitiveness Council Inc. (PACCI) composed of the five major automotive assemblers in the country.

The Deloitte study has also urged for the purging of the current list of participants in the Motor Vehicle Development Program (MVDP), which is administered by the Board of Investments.

According to the source, the proposals support the development of a competitive and viable domestic motor vehicle industry, which has been left behind by its neighboring countries, under a globally liberalized trading regime.

The source said that the 10 percent tariff should be imposed across all motor vehicle imports and was seen as very radical as this would go against the country’s commitments in the ASEAN-Common Effective Preferential Tariff (CEPT) for a zero tariff regional trading starting January 1, 2010.

This would also go against the Japan-Philippines Economic Partnership Agreement (JPEPA), which calls for the abolition of tariff barriers starting next year including automotive.

The multilateral World Trade Organization (WTO), which pushes for global trade liberalization, also frowns at moves reinstating tariff barriers.

On the P10,000 subsidy per CBU production, the source said this would help beef up the competitiveness of the local assemblers against cheap CBU imports.

Subsidizing CBU production would encourage automotive companies to invest in assembly operations in the country.

On the proposed clean-up of the participants in the MVDP, the source said this is supposed to get rid of the non-assemblers in the list because the program is supposed to be for assemblers not traders.