Court voids import sanctions – Taiheiyo victory

Court voids import sanctions – Taiheiyo victory
Published: 15 July 2004

Protective tariffs imposed by the Philippine Department of Trade and Industry (DTI) on imported grey cement were voided by the Supreme Court (SC) on the grounds that these safeguard duties have not actually hurt the local cement industry, it was learned Tuesday. Trade secretary and now Sen. Manuel Roxas II imposed safeguard duties on the product 2001 after the cement industry, represented by the Philippine Cement Manufacturers Corp. (Philcemcor), complained that rising imports of these products by Japanese-owned Southern Cross Cement Corp had resulted in declining production and market share for domestic players, and depressed prices.

 But in a July 8 decision penned by Associate Justice Dante Tinga that spanned 60 pages, the High Court’s Second Division ruled that Roxas had exceeded his bounds in imposing these safeguard measures against Southern Cross by ignoring the findings of both the Tariff Commission (TC) and the Department of Justice. Both agencies concluded that Southern Cross’ imports of cement posed no threat of serious injury to the local cement industry and advised Roxas against imposing the safeguard duties. But the former DTI chief went ahead with the tariff hike, even as Southern Cross’ appeal over the appellate court’s ruling was under deliberation. The Court of Appeals nonetheless granted Philcemcor’s request, arming Roxas with the authority to impose safeguard measures against imported cement.

 The Supreme Court ruled that the trade secretary cannot overturn the factual finding of the TC and that it is the Court of Tax Appeals -- not the C.A. -- which has jurisdiction over the issue. “The most fundamental restriction on the DTI Secretary’s power in that respect is …that there should first be a positive final determination of the Tariff Commission,” the SC said. The High Court even rapped Roxas for issuing the assailed decision even before the CA ruling -- which the DTI used as justification for the duties -- became final. “Had it been a judge who attempted to enforce a decision that is not yet final and executory, he or she would have readily been subjected to sanctions by this court,” the SC said.

 Local cement producers had yet to receive a copy of the Supreme Court decision at press time, though they said in a statement that they would file a motion for reconsideration with the High Court to reinstate the safeguard duties. In a statement Cement Manufacturers Association of the Philippines (Cemap) counsel Edcel Lagman described the decision as “adverse” to both the government and local players and argued that it would undermine special safety nets assured by the World Trade Organization (WTO) to workers and industries in its member-states.

Philcemcor, which counts 18 members in the local cement industry objected to Southern Cross Cement’s imports on the grounds that it was hurting local producers’ business. But in drawing up its decision, the Supreme Court concluded that the controversy over safeguard tariffs was actually part of a global trade war among the leaders in the global cement industry. The high court took into consideration that at least 12 of the association’s member companies were actually controlled the three largest cement manufacturers in the world — Lafarge, Cemex and Holcim Ltd. of Switzerland. The target of Philcemcor’s trade suit against Southern Cross Cement, was actually leveled against its principal stockholders, Teiheiyo Cement Corp. and Tokuyama Corp.  Southern Cross has complained that the safeguard measures forced it to cease its business in the Philippines last November.

On November 7, 2001, the DTI imposed a provisional safeguard duty of P20.60 per 40 kilogram bag on all cement imports for 200 days after it supported a petition filed by local cement makers. But a few months later, on March 13, 2002, the TC concluded that the imports posed no threat to the local industry, which was seconded by the DOJ. As a result of these findings, the DTI on April 12 of that same year scrapped the sanctions Philcemcor had sought. Philcemcor elevated the case to the CA which ruled in its favour. The P20.60 duty was made permanent on June 25 for a period of three years, but the amount was reduced to P15.60 per bag last March after local cement producers failed to lower their prices against the DTI’s orders.

But before these definitive duties were passed by Roxas, Southern Cross had filed a motion for reconsideration with the CA, which, in a June 5 refused to annul the TC’s findings and remanded the case to DTI, arguing that the Trade secretary was not bound by any of the commission’s findings. The Japanese firm then elevated the matter to the High Court later that month on June 23. but even as the high court started deliberating the case, Roxas nonetheless pushed through with the definitive tariffs on June 25 with the intention of having these safeguard duties in place for three years.  Fighting back, Southern Cross filed another petition before the SC, asking for a temporary restraining order and writ of preliminary injunction to block the DTI order, which was finally granted by the Supreme Court (original report ABS-CBN).

The organization of cement workers’ unions has  since criticised the Supreme Court for nullifying protective tariffs imposed on imported cement, saying the safeguard measures saved their jobs and "paved the way for industrial peace." Samuel Eslava, secretary-general of the Philippine Cement Workers Council, said his group was "surprised" at the court’s decision.