TM 416C Topic 5 - Safeguard Duty PDF

TM 416C TOPIC 5 – SAFEGUARD DUTY By: Arnold S. Librado, LCB  TOPIC OUTLINE TOPIC OUTLINE  Republic Act No. 8800  Safeguard Duty REPUBLIC ACT NO. 8800  REPUBLIC ACT NO. 8800 The ‘’Safeguards Measures Act’’ provides: General safeguard m...

TM 416C TOPIC 5 – SAFEGUARD DUTY By: Arnold S. Librado, LCB  TOPIC OUTLINE TOPIC OUTLINE  Republic Act No. 8800  Safeguard Duty REPUBLIC ACT NO. 8800  REPUBLIC ACT NO. 8800 The ‘’Safeguards Measures Act’’ provides: General safeguard measures to relieve domestic industries suffering from serious injury as a result of increased imports; Special safeguard measures on agricultural products marked ‘’SSG’’ in Schedule LXXV-Philippines when the import volume exceeds its trigger level or when the import price falls below a trigger price level.  REPUBLIC ACT NO. 8800  It was signed on July 19, 2000 and took effect on August 9, 2000.  Joint Administrative Order 03-2000 was issued to implementing rules and regulations of RA 8800 which took effect on October 11, 2000.  Tariff Commission Order 02-2000 was issued to prescribed internal rules and regulations governing the conduct of formal investigation under RA 8800.  The Safeguard Duty is prescribed under Sec. 712 of the Customs Modernization and Tariff Act (CMTA). GOVERNMENT AGENCIES INVOLVED IN ADMINISTERING THE GENERAL SAFEGUARD LEGISLATION 1. Department of Trade and Industry-Bureau of Import Services (DTI-BIS) or Department of Agriculture (DA) - Receives the properly documented application - Conducts preliminary investigation 2. Tariff Commission (TC) - Conducts formal investigation - Makes final determination for imposition of general safeguard duty 3. Bureau of Customs (BOC) - Takes charge in the imposition of the general safeguard duty GOVERNMENT AGENCIES INVOLVED IN ADMINISTERING THE SPECIAL SAFEGUARD LEGISLATION 1. Department of Agriculture (DA) - receives the application/petition for safeguard measure on sensitive tariffied agricultural products - Conducts verification whether:  Volume of imports exceeds a base trigger level  C.I.F. import price falls below a trigger price level and makes its finding within 5 working days frim the receipt of the petition - Issues a Department Order for the imposition of a special safeguard duty on subject product SAFEGUARD MEASURES  SAFEGUARD MEASURES Safeguard measures are trade remedy measures adopted by the government to provide affected domestic industries relief against imports. The purpose for the application of safeguard measures is to give the affected domestic industry time to prepare itself for and adjust to increased import competition resulting from the reduction of tariffs or the lifting of quantitative restrictions agreed upon in multilateral trade negotiations.  SAFEGUARD MEASURES A. General Safeguard Measures – imposed against imports if the products at issue are being imported in such increased quantities, either absolute or relative to domestic production, and under such conditions as to cause or threaten to cause serious injury to the domestic industry.  SAFEGUARD MEASURES A. Special Safeguard Measures – imposed against importations of agricultural products whose quantitative import restrictions were converted into ordinary customs duties and agricultural products designated with the symbol “SSG” in the GATT Schedule of Concessions.  SAFEGUARD MEASURES PRICE - $10.00 EXPORT PRICE - $10.00 PRICE - $15.00 Importation in increased quantities SAFEGUARD PROTEST  GENERAL SAFEGUARD PROTEST Who may file a general safeguard protest? 1. Domestic producers as a whole, of like or directly competitive products manufactured or produced in the Philippines; 2. The President, or the House or Senate Committee on Agriculture, or the House or Senate on Trade and Commerce; 3. The DTI or DA Secretary, motu proprio, provided there is evidence of increased imports of the product under consideration.  SPECIAL SAFEGUARD PROTEST Who may file a special safeguard protest? 1. Any person, whether natural or juridical may request a verification if a particular agricultural product can be imposed a special safeguard duty; 2. The DA Secretary may, motu proprio, initiate the imposition of a special safeguard measure following the satisfaction of conditions for imposing the measure.  SAFEGUARD INVESTIGATION  SAFEGUARD INVESTIGATION Stages of Safeguard Investigation: A. Prima Facie Determination B. Preliminary Determination C. Final Determination D. Issuance of Department Order  SAFEGUARD INVESTIGATION A. Prima Facie Determination The DTI-BIS or DA, upon acceptance of the properly documented petition, has 5 calendar days to decide whether a prima facie case exists to merit the initiation of a preliminary investigation.  SAFEGUARD INVESTIGATION B. Preliminary Determination The DTI-BIS or DA has 30 calendar days from receipt of the response to questionnaire to make its preliminary determination whether or not to impose a provisional safeguard measure.  SAFEGUARD INVESTIGATION C. Final Determination The Commission has 120 calendar days (or 60 days if the Secretary certifies the case as urgent) from receipt of the endorsement from the Secretary to conclude its formal investigation and submit its report of findings and recommendations to the Secretary.  SAFEGUARD INVESTIGATION D. Issuance of Department Order The Secretary has 15 calendar days from receipt of the Commission’s report to make a decision. If the decision is affirmative, a Department Order is issued to implement the imposition of the general safeguard measure. In case of negative of a negative final determination, the Secretary issues a DO for the termination of the case as well as a written instruction to the Commissioner of Customs, through the Secretary of Finance, authorizing the BOC the return of the cash bond previously collected.  LIMITATIONS IN GENERAL SAFEGUARD MEASURES The general safeguard measures should be limited to:  Extend of redressing or preventing serious injury to the domestic injury;  To facilitate the domestic industry’s adjustments from the adverse effects directly attributed to the increased imports.  LIMITATIONS IN GENERAL SAFEGUARD MEASURES The general safeguard measures should be limited to:  General safeguard measures shall not be applied to a product originating from a developing country, if that country’s share of total imports of the product is less than 3%, provided that the developing countries with less than 3% share collectively account for not more than 9% of the total imports.  LIMITATIONS IN SPECIAL SAFEGUARD MEASURES The special safeguard measures should be limited to:  To safeguard and enhance the interest of farmers and fisherfolk, the provisions of RA 8435 otherwise known as the Agriculture and Fishieries Modernization Act, will not be affected by special safeguard measures;  The special safeguard provisions of RA 8800 shall lapse with the duration of the reform process in agriculture as determined in the WTO.  GENERAL SAFEGUARD INVESTIGATION Four elements of general safeguard: A. Like Product B. Increased Imports C. Injury (Serious Injury) D. Causality  SPECIAL SAFEGUARD INVESTIGATION Elements of special safeguard: A. Volume of imports exceed a based trigger level; or B. Price of imports fall below a trigger price level. Injury to the domestic injury is not element in the imposition of a special safeguard measure. MEASURES  GENERAL SAFEGUARD MEASURES a. Provisional measure – Takes the form of a tariff increase either ad valorem or specific or both, to be paid through a cash bond set at a level sufficient to redress or prevent serious injury to the domestic industry. It shall not exceed 200 calendar days from the date of imposition.  GENERAL SAFEGUARD MEASURES b. Definitive measure – it may take any of the following forms:  Increase in, or imposition of, any duty on imported product;  Decrease in or the imposition of a tariff rate quota (MAV) on the product;  Modification or imposition of any quantitative restriction on the importation of the product into the Philippines;  One or more appropriate adjustment measures, including the provision of trade adjustment assistance;  Any combination of actions of the above.  GENERAL SAFEGUARD MEASURES b. Definitive measure – Maximum initial period for the application of a safeguard measure is four (4) years. The initial period may be extended up to a maximum of eight (8) years, or ten (10) years for developing countries. GENERAL SAFEGUARD MEASURES  SPECIAL SAFEGUARD MEASURES a. Definitive measure – it may take any of the following forms:  Under the volume test, additional duty should not exceed one-third of the applicable out-quota customs duty on the agricultural under consideration. SPECIAL SAFEGUARD MEASURES  SPECIAL SAFEGUARD MEASURES  Under the price test, the additional duty is computed as follows:  Zero, if price difference is, at most, 10% of trigger price;  Thirty percent of the amount by which the price difference exceeds 10% of the trigger price, if the said difference exceeds 10% but is at most 40% of the trigger price;  SPECIAL SAFEGUARD MEASURES  Under the price test, the additional duty is computed as follows:  Fifty percent of the amount by which the price difference exceeds 40% of the trigger price, plus the additional duty imposed under the 2nd paragraph, if the said difference exceeds 40% but is at most 60% of the trigger price;  SPECIAL SAFEGUARD MEASURES  Under the price test, the additional duty is computed as follows:  Seventy percent of the amount by which the price difference exceeds 60% of the trigger price, plus the additional duties imposed under the 2nd and 3rd paragraphs, if the said difference exceeds 60% but is at most 75% of the trigger price;  SPECIAL SAFEGUARD MEASURES  Under the price test, the additional duty is computed as follows:  Ninety percent of the amount by which the price difference exceeds 75% of the trigger price, plus the additional duties imposed under the 2nd ,3rd and 4th paragraphs, if the said difference exceeds 75% of the trigger price;  SPECIAL SAFEGUARD MEASURES a. Definitive measure – effective only until the end of the year in which measure is applied. SPECIAL SAFEGUARD MEASURES  SPECIAL SAFEGUARD MEASURES A. Price Difference B. Price Difference % C. Special Safeguard Duty SPECIAL SAFEGUARD MEASURES  SPECIAL SAFEGUARD MEASURES A shipment of 1,000 kilograms of garlic had export price of P6.55 per kilogram. However, the Tariff Commission found out that the said export price has fallen below the trigger price of P74.21 per kilogram.  SPECIAL SAFEGUARD MEASURES A. Price Difference PD = Trigger Price (TP) – Export Price PD = P74.21 – P6.55 PD = P67.66  SPECIAL SAFEGUARD MEASURES B. Price Difference % PD % = Trigger Price – Export Price x 100% Trigger Price PD % = P74.21 – P6.55 x 100% P74.21 PD % = 91.71% SPECIAL SAFEGUARD MEASURES  SPECIAL SAFEGUARD MEASURES A shipment of 1,000 kilograms of garlic had export price of P6.55 per kilogram. However, the Tariff Commission found out that the said export price has fallen below the trigger price of P74.21 per kilogram. SPECIAL SAFEGUARD MEASURES  SPECIAL SAFEGUARD MEASURES A shipment of 1,000 kilograms of garlic had export price of P6.55 per kilogram. However, the Tariff Commission found out that the said export price has fallen below the trigger price of P74.21 per kilogram.  SPECIAL SAFEGUARD MEASURES C. Special Safeguard Duty SSG Duty = Total Kilograms x SSG rate SSG Duty = 1,000 kilograms x P64.05 SSG Duty = P64,050.00  SPECIAL SAFEGUARD MEASURES A shipment of 500 kilograms of tomatoes had export price of P12.75 per kilogram. However, the Tariff Commission found out that the said export price has fallen below the trigger price of P98.55 per kilogram. Compute the special safeguard duty based on price test.