Plastic makers urge TC to revise position on imposition of safeguard duties on HDPE

The Philippine Plastics Industry Association Inc. (PPIA) is urging the Tariff Commission (TC) to reconsider its  position on imposing safeguard duties on high-density polyethylene (HDPE) resin.

“We implore the Tariff Commission to reconsider their position and the DTI [Department of Trade and Industry] to not impose safeguard duties on HDPE resin,” said PPIA in a news statement issued on Monday.

In a report released on June 29, the TC recommended the application of the appropriate safeguard measure on importations of HDPE pellets and granules “to prevent the imminent occurrence of serious injury to the Philippine HDPE industry.”

The TC noted in the said report, “There is a direct causal relationship between increased imports of HDPE and the imminent threat of serious injury and significant overall impairment to the position of the domestic HDPE industry in the near future.”

JG Summit Olefins Corporation (JGSOC) is the country’s sole producer of HDPE pellets and granules. The leading petrochemical firm in the country claimed in its filing of the safeguard measures petition that the volume of HDPE and LLDPE—the key raw materials used in many consumer products—being imported into the country in recent years were in quantities that are substantial to cause serious injury to the local petrochemical industry.

TC’s investigation began in September 2021 upon the request of DTI, which reviewed documented applications from JGSOC, as well as imported data covering the petitioned products.

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Meanwhile, PPIA, the representative of the local downstream plastic industry, decried TC’s decision, saying, “To extend protection to benefit a sole producer, at the expense of the downstream manufacturing industry dominated by micro, small and medium enterprises [MSMEs] and employing hundreds and thousands of Filipinos, increase the cost of packaging materials and plastic products and add to the increasing inflation amidst the current crisis faced by our country.”

PPIA pointed out that such a move will also result in “tariff distortion” where cheaper imported finished products will continue to proliferate the market.

The representative of the local downstream plastic industry also emphasized that the findings in the TC’s investigation report are not consistent with the facts presented during the hearings and submitted in the form of position papers.

Moreover, PPIA said, the increased imports during the period of investigation is attributed to the lack of domestic supply and operational shutdowns resulting from the expansion of JGSOC, and the increased demand for products that they do not produce.

According to a report released by the TC on Wednesday, from October 2019 to March 2020, JGSOC shut down its operations to give way to a complex-wide expansion. As a result, its production contracted by 18 percent in 2019.

“This substantially smaller domestic supply made available in the market led to an expansion of imports by 28 percent,” read the TC report.

For their part, the PPIA said that it is wrong to ascertain that the locally produced HDPE using its Unimodal technology will produce “like products” compared to bimodal production systems that make the material stronger.

PPIA added, for instance, “the construction industry experienced a significant growth during the period of investigation and while JG claims to have equivalent grades for PE100, their products have not qualified to meet the mandatory quality and performance tests, pursuant to the Philippine National Standards and Water Utility Companies who use them.”

PPI stressed that to grant safeguards for a period of three years to benefit a single entity for the “imminent occurrence of serious injury despite clear evidence of posting a healthy net income during the investigation period and embarking on expansion programs is not fair to the downstream industry who are expected to suffer from any decision favoring the request.”  -30-

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