United States FTA Could Disrupt Market for Imported Completely Built Up Automobiles: DTI

According to the Department of Trade and Industry, a Free Trade Agreement with the United States could potentially disrupt the market in terms of automotive imports, by making automobiles more attractive to ship into the United States, in comparison to other competing products from Asian countries.

Ceferino S. Rodolfo, the Trade Undersecretary addressed the United States Free Trade Agreement workshop, at the Manila Polo Club, saying that the view of the department is to shift sources in the United States for the segment of completely built up units in the market. He said: “When it comes to an FTA with the US, what we are foreseeing is a diversion of current import sources to the US.”

He also said that the transition to the United States would also be supported by a current investigation into potential duties to safeguard existing auto imports: “If the investigation progresses and if for instance there is a positive determination on the part of the BIS (Bureau of Import Services) and the DTI Secretary, there could be provisional safeguard duty on auto.”

Philippines Waiting to Initiate Negotiations with the U.S.

According to Mr. Rodolfo, the move to combine a free trade agreement, which reduces rates of tariffs for the United States, while protecting duties on competing imports could result in a potential situation that will level the playing field, and will also  give imports of completely built up units a preferential rate coming in from the United States.

He identified the Philippines as the region with the fastest growth in the automotive industry, the largest importer of SUVs, in the Southeast Asia region. Currently, the Philippines is pushing to initiate negotiations with the United States, even as the U.S. is engaged in deals with Mexico and Canada.

The rules of the World Trade Organization allow the setup of safeguard duties, in cases where imports have been found to damage domestic industries. The DTI may potentially enter an investigation to possible measures to protect domestic jobs, focusing on the link between growing imports and falling employment in the local automotive industry.