MANILA, PHILIPPINES: Proposals to increase tariffs on imported used vehicles will not stop their entry because of the rampant practice of "undervaluation" at the Bureau of Customs, an industry source last week said.

The source, reacting to the President's pronouncements following a court decision declaring the two-year-old ban on imported used cars "unconstitutional," said that majority of these vehicles enter the ports with declared values of less than $500 (P27,500). The real transaction value could in fact be as high as $20,000 (P1.1 million).

"The solution is, while [we adopt] transaction value [as basis for collecting tariffs], we have to establish the real value of the imports," the source said, noting that this is allowed under World Trade Organization rules.

"If the value is suspect, we can make a determination of the real value," the source explained, for example, using the value of a like item.

Moreover, under the Tariff and Customs Code, Malaca§ang can only double the existing tariff, which may not have much impact, the source said.

Motor vehicles with 10 seats or more as well as passenger cars are subject to a 30% Most Favored Nation or MFN tariff, while trucks and buses are charged 15% to 20%.

An earlier plan is to extract used motor vehicles from existing tariff lines, which do not make a distinction between new and used vehicles.

Extraction is permitted under the Tariff Code but the new tariff line must proceed from the original rate, which the government can increase by 100% or double the existing rate, the source said.

"So if it's 30%, the tariff can only be adjusted to up to 60%," the source said.

There is, however, a debate on the Tariff Code provision in the case of a zero rate, which cannot be doubled, opening the possibility for a new tariff line to have a rate of 100%, the source added.

Another proposal, which is to impose a specific duty of P500,000 on top of the existing tariff, could be a better solution to the used car problem "but it depends on the situation."

Trade Sec. Juan B. Santos earlier said he preferred the strict implementation of antipollution laws and the existing ban on right-hand drive vehicles, citing the need to protect auto firms which have not achieved "an economically viable level" due to a depressed market.

In a statement over the weekend, the Chamber of Automotive Manufacturers of the Philippines (CAMPI) backed a call from Senator Manuel A. Roxas II for higher tariffs on imported used cars, saying this "supports an ever-increasing sentiment and proactive move to protect the local car manufacturing industry that continues to contribute significantly to the country's revenue collection."

The group argued that local used vehicles can support market requirements and that a developed motor vehicle industry would be a "global advantage leading to long-term sustainable progress."

Higher tariffs on used cars would not only raise revenues, it would also "promote local manufacturing of vehicles, parts and components, as well as safeguard employment of over 70,000 workers involved in the formal domestic auto industry."

"CAMPI believes that the importation of used vehicles discourages the viability of the local automotive manufacturing industry. This, in turn, negatively affects the auto parts manufacturing industry, and employment for thousands of Filipinos," the statement read.

The group also said vehicles converted from right-hand drive "are more hazardous to the environment and unsafe to operate."

Source:
Business World