Imported newsprint killing local industry
NEWSPRINT TRADING: Some 60 percent of the operation expenses of major Philippine newspapers are accounted for by newsprint, making the price of paper a critical factor in their viability and capability to continue publishing information.
Partly in consideration of the print media’s positive contribution to public information, the government has cut to zero rates the tariff on newsprint imported from sources in the region, mainly Japan, Korea and China.
The bad news is that some of the paper imported at preferential rates is being diverted to other commercial users, defeating the public information rationale of the zero rates. One media mogul allegedly trades zero-tariff newsprint, making some P60 million yearly.
How can the government save the struggling Philippine paper manufacturers against the flood of newsprint imports whose landed cost is lower than local production cost?
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BUBBLE TO BURST: Asked to comment, The Philippine STAR president Miguel G. Belmonte yesterday expressed concern that the print media industry would suffer when the bubble of cheap imported newsprint bursts.
Industry leader STAR group, btw, is the only publishing house that uses more than 2,000 metric tons of newsprint every month. The bulk is bought from Trust International Paper Corp. (TIPCO).
It is to protect local paper manufacturers, Belmonte said, that the STAR group continues to buy at least 85 percent of its newsprint supply from them, notably TIPCO. It uses only 300 MT of imported newsprint each month.
He said the collapse of the domestic paper industry would endanger the long-term availability of inexpensive newsprint and hamper the free flow of public information.
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FIRE SALE: Industry sources said that some 87 percent of the newsprint used here is imported from Korea, mainly from Jeonju, the biggest newsprint maker there. Its mill produces one million MT of newsprint a year out of South Korea’s total production of 1.5 million MT.
Only 700 MT of Jeonju’s one million MT production is absorbed by Korean users. The rest is exported, much of it to the Philippines.
Financially distressed Jeonju is selling at fire sale prices. But how long will the low prices hold before higher import rates kick in? By that time will any Philippine paper mill be still around?
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INDUSTRY DYING: Local mills are shutting down, an industry is dying before our eyes! Where will the thousands of small junkshops and bote-dyaryo boys sell their scrap paper? Are newsprint importers really after the welfare of the general public or their own?
Since the mid ‘90s, 14 paper mills have closed, displacing thousands of workers. Those that are still operating are barely surviving.
The General Agreement on Tariffs and Trade regulating trade among 153 countries aims for the substantial reduction of tariffs and other trade barriers and the elimination of preferences on a mutually advantageous basis.
But GATT includes measures to protect the member-country’s domestic industry against imports causing or threatening to cause injury to the industry.
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TIPCO PETITION: The threat prompted TIPCO, the biggest in the newsprint industry, to petition the Department of Trade and Industry in May 2012 for safeguard measures for newsprint under the Safeguard Measure Act.
Trade Secretary Gregory L. Domingo forwarded the petition to the Tariff Commission. After inspection, inquiries and review of the memos of the petitioner and the opposers, the commission agreed that underpriced imported newsprint has been hurting the industry.
The commission said that the safeguard duty is only temporary and will be progressively liberalized, that market access will improve over time and competition enhanced. It added that definitive safeguard will spur economic activity where the newsprint mills are located.
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DISINFORMATION: Resorting to disinformation, opposers have circulated news that tariff on newsprint will burden millions of schoolchildren, warning against a resulting price increase of such common paper products as pad paper and notebooks.
The truth is that majority of notebooks and pad papers are made from white printing paper and not newsprint.
The DTI had met with major manufacturers, suppliers, and school supply retailers and was assured that prices and supply remain reasonable, stable and sufficient for the next school year.
Domingo said: “The DTI disputes the news articles that prices of notebooks and pad paper will increase once higher import duties are imposed on newsprint in view of the application for safeguard measures against importation of newsprint.”
DTI Undersecretary Victorio Mario A. Dimagiba said: “Prices of notebooks and pad paper are not affected by the application for safeguard measure against importation of newsprint. Mr. Gerry Lim, president of Philippine School Pads and Notebooks Association Inc., said they are not using newsprint for notebooks and pad paper.”
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DTI ROLE: The opposers argue that TIPCO losses are not due to the surge in imports. They said that in spite of the relief given by the court in 2006, TIPCO failed to rehabilitate itself and continued to incur losses.
TIPCO submitted financial data showing that after the rehabilitation plan was approved by the court, it was well on the way to recovery. But the upturn was jeopardized with the surge of imports that flooded the market starting 2009.
The company said it was forced to bring down its price lower than production cost just to protect its market share.
While the Tariff Commission finds a direct causal link between the increased imports of newsprint and the serious injury on the newsprint industry, the DTI Secretary has the final say on the imposition of the proper safeguard measure on imported newsprint.
Will the DTI be pressured by the likes of publishers trading imported newsprint on the side? Who will act to save the jobs of hundreds of thousands of Filipinos depending on the local newsprint and collateral businesses?