Tariff panel OK’s zero duty for steel coil imports

Steel coil imports may soon be allowed to enter the country duty-free to offset coming price hikes for galvanized iron (GI) sheets and other finished products, a Cabinet official said. "The Tariff and Related Matters (TRM) committee approved 0% tariff for [rolled coils] last April 28 to avoid supply shortage and price hikes," Trade Secretary Jesli A. Lapus said in a text message on Friday. The decision, which will have to go through the National Economic and Development Authority board, also comes as a local firm that has benefited from the current 7% tariff protection failed to meet operational criteria, a source said. Several galvanizers that crimp and coat the steel coils to make GI sheets were planning to hike prices by 5-10% this month due to rising iron ore costs worldwide. The price hikes were put off following the Trade department’s request that the firms wait for the possible slashing of tariffs. Mr. Lapus clarified, however, that tariffs would revert back to 7% "the moment Global Steel Philippines, Inc. is in commercial operation." The tariff had been imposed to protect Global Steel’s P13-billion bid to acquire and revive National Steel Corp. Prior to the hike, tariffs stood at 3%. The tariff protection, via Executive Order 375 issued in 2004, kicked in 2007 after Global Steel was deemed to be running at least 50% of its registered capacity. This privilege recently came under scrutiny, however, as production in its Iligan plant reportedly slowed and even halted at the height of the economic downturn. "They didn’t meet the old executive order and now consumers are penalized," the source who declined to be named said. Sought for comment, Global Steel spokesperson Sangram Mohanty countered the TRM’s decision to revoke its tariff protection, adding that the firm plans to operate above the required 50% this year. "We have been qualifying as per their requirements. The government just needs to consider the unprecedented recession which hit. All steel mills brought down their capacity," Mr. Mohanty said in a telephone interview on Saturday. "[But] our target is to operate over 50% to 60% of capacity [this year] provided that the market is dynamic," Mr. Mohanty said, noting that the firm is already buying slabs from India and Brazil for conversion at the mill. In the meantime, slashing tariffs would be a "piecemeal solution" that will not ensure stable GI sheet prices since global prices for iron ore are volatile, he said. "Government has to decide whether the country wants to be import-dependent or be self-reliant. They need to think of giving safeguard measures to the steel industry," Mr. Mohanty said. -- Jessica Anne D. Hermosa, BusinessWorld