Interagency committee to address oil tariff distortion

The interagency Committee on Tariff and Related Matters will take up this week oil refiners’ plea for the government to cure a tariff distortion that favors importers of finished petroleum products, an official said on Friday. Government action on the matter, which will likely mean lowering tariffs on crude oil imported from the Middle East, will factor in the impact of the so-called distortion on investments and employment, the official said. "Tariffs on energy products — [crude] and refined petroleum — are on the agenda," Trade Senior Undersecretary Thomas G. Aquino told reporters. "The bulk of [crude oil] comes from the Middle East [and is subject] to most favored nation tariffs. But refined petroleum from Southeast Asia is at 0 percent," he added. Oil refiners have similarly pointed this out earlier in a petition to the commission. They pay a 3-percent tariff on crude oil, while importers who obtain the finished produce elsewhere in Southeast Asia enjoy duty-free privileges. Petron Corp., in particular, invoked a provision in the Oil Deregulation law, which requires the government to impose unitary tariffs on crude oil and finished fuel products. It warned that oil refiners might close down their refineries and instead import, leading to job losses. Aquino acknowledged this, saying the Labor department had been called in to provide insight on the distortion’s impact on employment. He also said government action was needed to keep the investment climate in the oil industry attractive. Foregone state revenues from eliminating crude oil tariffs will be considered as well, Tariff Commission officials earlier said. — Jessica Anne D. Hermosa, BusinessWorld