Assemblers seek deferral of JPEPA clause on truck, bus tariff reduction

Domestic truck assemblers have asked the government to delay for three years the tariff reduction on certain trucks and buses, as provided for under Manila’s commitment to the Japan-Philippines Economic Partnership Agreement (JPEPA).

In a letter to Tariff Commission Chairman Edgardo Abon, the Truck Manufacturers Association (TMA) said it “believes that tariff elimination by January 1, 2011 is premature and will have serious implications on the truck and bus manufacturing industry.”

“TMA requests that the existing duty rates under JPEPA [currently at 10 percent, 15 percent and 20 percent] be maintained until the end-date of January 1, 2013,” the group said in the position paper it submitted last week.

Executive Order 767, which enacted JPEPA, provides that the tariffs on Japan-made completely built-up (CBU) buses and trucks under AHTN Headings 87.02 and 87.04 should be slashed to zero by next year.

But TMA said that “significant structural and regulatory reform including capacity-building for regulatory personnel are still needed to prepare for open trade.”

The group cited bus import data between December 2008 and December 2009 showing that 41 percent of the 503 imports for the period were used buses, of which 156 units were undervalued by $404,358.

The data also showed that 187 of the brand new imported buses were undervalued by $3.338 million.

TMA said the pending issues with the Department of Environment and Natural Resources-Environmental Management Bureau regarding emission standards for both brand new and used buses “remain unsolved.”

“Likewise, conflicting regulations on used motor vehicles in general [have] yet to be reconciled/harmonized,” the group said.

TMA said the government should support the labor-intensive truck and bus manufacturing in the country.

The group also said that bus and truck assembly offers opportunities to local auto parts manufacturers, especially for fabricated parts and sub-assemblies.

“The deferment of tariff elimination will provide the government with policy space to adopt safety nets and to build its capacities, as well as [a] sheltering period for industrial adjustment in the truck/bus manufacturing sector,” TMA said.

TMA groups Columbian Motors Corp., Dreamco Automobile Company Inc., Ford Motor Co. Philippines Inc., MAN Automotive Concessionaires Corp., Mitsubishi Motors Philippines Corp., Pilipinas Hino Inc., Toyota Motor Philippines Corp. and Universal Motors Corp. –BEN ARNOLD O. DE VERA Reporter, Manila Times