Philippine Automotive Import Tariff Policy Violates WTO, National Industry Threatened

Illustration of automotive products (Photo: Ministry of Industry)

JAKARTA - The Director General of Foreign Trade, Didi Sumedi, said that the imposition of Temporary Safeguard Measures (BMTPS) for automotive products in the form of passenger cars and light commercial vehicles by the Philippines is contrary to international agreements.

The reason is, the arguments used by the Philippine authorities in the imposition of BMTPS are very weak and not in line with the agreement of the World Trade Organization (WTO).

This decision made Indonesia subject to BMTPS for passenger car / vehicle products in the form of cash bonds of around IDR 20 million per unit. However, this policy is exempted for imported passenger cars in the form of completely knocked-down, semi knocked-down, used vehicles, as well as vehicles for special purposes such as ambulances and electric vehicles.

"The Indonesian government has taken steps and will continue to formally submit objections and defenses to various forums for the imposition of BMTPS by the Philippines," he said in a press release Thursday, January 14, 2020.

Didi added that the Philippine authorities need to review the safeguard investigation which is currently still ongoing.

"It is hoped that this investigation will be stopped and the Philippines will not charge import duties for definitive safeguard measures," he said.

For information, the Philippines started a safeguard investigation on January 17, 2020 based on a request from the Philippine Metal Workers Alliance (PMA), a trade union whose members consist of a combination of workers in automotive companies in the Philippines. PMA claims to have suffered serious losses due to the surge in automotive imports in the 2014-2018 period.

Didi explained, based on BPS data, the export value of Indonesian passenger cars to the Philippines in 2017-2019 fluctuated.

"In 2017, passenger car exports were recorded at US $ 1.20 billion, in 2018 it decreased to US $ 1.12 billion, and in 2019 it increased slightly to US $ 1.13 billion. Through this data, it can be seen that there has been no significant increase in imports from Indonesia which is the basis for the safeguard investigation by the Philippines, "he said.