THE Philippines has notified the World Trade Organization’s (WTO) Committee on Safeguards that it launched a safeguard investigation on the importation of liquefied petroleum gas (LPG) cylinders.
“Further to Article 12.1 (a) of the WTO Agreement on Safeguards, the Permanent Mission of the Philippines to the WTO hereby notifies the Committee on Safeguards of the initiation of a preliminary safeguard investigation on the importation of liquefied petroleum gas (LPG) cylinders from various countries,” the Philippine delegation said in a notification document forwarded to the WTO on April 4, 2023.
In the document, the Philippine delegation said the investigation was initiated based on the petition submitted by the LPG steel cylinder industry represented by Ferrotech Steel Corporation.
The petition noted the increased imports of LPG steel cylinders causing “serious injury” to the domestic industry in terms of declining market share, production, sales, capacity utilization, employment profitability, incurred losses and existence of price depression and price undercutting.
According to the Philippine delegation, the investigation was initiated to determine whether safeguard measures are warranted.
Per WTO’s definition, a safeguard investigation seeks to determine whether increased imports of a product are causing, or is threatening to cause, serious injury to a domestic industry.
During a safeguard investigation, WTO said importers, exporters and other interested parties may present evidence and views and respond to the presentations of other parties.
The international trade body said a WTO member may take a safeguard action such as restricting imports of a product temporarily “only if the increased imports of the product are found to be causing, or threatening to cause, serious injury.”
In a notice signed by Trade Secretary Alfredo E. Pascual on March 29, 2023 but released to the public on Tuesday, April 4 through the Department of Trade and Industry’s (DTI) website, the agency said it has officially received “properly” documented application from Ferrotech Steel Corp. for the initiation of a preliminary investigation on the application of safeguard measures on the importation of LPG steel cylinders.
With this, the Trade department, acting under Section 6 of Republic Act 8800 or the Safeguard Measures Act, said it has conducted an evaluation of the application. Upon evaluation, it said it found the existence of a prima facie case to justify the initiation of a preliminary safeguard measures investigation on the importation of the cylinders.
Ferrotech Steel Corp., the petitioner, manufactures LPG steel cylinders in the following sizes: 1kg, 2.7kg, 5kg, 7kg, 11kg, 22kg and 50kg, for industrial, commercial and household use, both for the domestic and Southeast Asian markets.
The LPG manufacturer’s head office and manufacturing plant are both located in Valenzuela City, DTI noted.
“We would like to request for 10 years duration of safeguard measures. This is in order for us to be competitive with imported LPG cylinders to remain viable and for the continuity of operation,” Ferrotech said in its application form.
Backed by data from the Bureau of Customs (BOC), the DTI showed the share of domestic sales to the Philippine market contracted during the period of investigation (POI) of imports of LPG steel cylinders, which entered the Philippine market from 2017 to 2021.
According to DTI’s findings, imports continued to displace the domestic market and cut into the industry’s sales and market share from 30 percent in 2018 to 10 percent in 2021.
“The loss of market share was taken by imports during the POI,” DTI said in its report, adding that this “dominance” persisted in 2020 and 2021 notwithstanding the Covid-19 pandemic.
The DTI noted the rate of import increased by 24 percent in 2019 and sharply increased by 45 percent in 2020. Meanwhile, imports reached 54 percent based on the 2021 level.
“During the POI, the industry suffered declines in sales, production, utilization rate, employment, profitability and even losses, and existence of price depression and price undercutting,” the DTI report noted.