August 21, 2002
STEEL SCRAP
EXPORT BAN
(House Hearings Set)
The
Economy
House trade
committee forms body to resolve row on scrap steel exports
Jeffrey O. Valisno
The
House committee on trade and industry yesterday formed a Technical Working
Group (TWG) to come up with a "win-win solution" within 45 days on
whether or not to impose an export ban on scrap metal.
Committee
chairman Rep. Harry C. Angping told BusinessWorld last night that the group
will be composed of two members from scrap metal dealers, two from steel manufacturers,
and an equal number of administration and opposition solons, as well as
representatives from concerned government agencies.
"We have to protect both
industries. At one hand, we have the scrap metal dealers who bring in $210
million in the country through export earnings. On the other hand, we have the
local steel manufacturers that also need raw materials," Mr. Angping said.
During yesterday's committee hearing,
John Ng, president of the Philippine Steelmakers Association (PSA), said that
the government must ban exports of scrap metals to protect the industry, as
done by other countries.
"There is free trade all over the
world, but not in the international steel trade," Mr. Ng said." The
ban will save the remaining small companies. Because now, we are forced to
match the high prices of Taiwan,
Korea, and
other countries buying our scrap metal.
He said the US
recently imposed 30% tariffs on steel imports to protect its local industry.
Other countries followed suit.
"We (at the local steel industry)
is at the knife's edge. If we do not impose a ban, or at least a moratorium, we
will see more companies close shop because there is a shortage of supply,"
he said.
On the other hand, the Scrap Collector
and Recycler Association of the Philippines (SCRAP) through spokesperson Jess
Arranza said that there is no shortage of supply in scrap metal in the country,
adding local metal companies just want to create a cartel to dictate the
prices.
"Scrap dealers just want an
alternative source of money. We should not protect an industry for the sake of
others. Lets not put the fate of small scrap metal workers at the mercy of a
few buyers. Monopolistic buying should not be allowed," he said.
Last Month, Caloocan City Rep. Edgar R.
Erice urged the Department of Trade and Industry (DTI) to block the impending
export ban on junk steel products, saying such moves will cripple the local
steel industry.
In a privilege speech, the solon said
that Cathay Pacific Steel, Cathay Metal, SKK Steel, Stronghold Steel Industries,
and Elegant Steel are currently awaiting the decision of Trade Secretary Manuel
A. Roxas II on whether to impose junk steel restrictions in the export market.
In the petition filed last March 2002 at
the DTI's Board of Investments (BoI), the five companies claimed that there is
a shortage of scrap metals for local use, which prompted them to ask for the
export ban.
Mr. Erice however said: "That is a
thin and weak scapegoat. They are offering the flimsiest of reasons."
The solon said the petition of the five
local steel smelting companies to stop the export of scrap metals will severely
affect small-time scrap dealers who heavily rely on exports to keep their
businesses afloat.
He explained that small-time scrap
traders export junk metal to Asian countries like China
at P5.50 per kilo. While, the five steel companies buy scrap metal at only
P3.00 per kilo. If exporting junk steel will be banned, the small-time metal
traders will have no choice but to sell their scrap steel to the five local
players.
"The petitioners are playing a
numbers game, attacking the hapless small-time steel traders with the sole aim
of getting control of the business and earn more profits," the solon said.
"If the ban is imposed, the formation of cartel is not remote."
Mr. Erice said the five major companies
can dictate not only the price of scrap metal, but the volume and terms of
payment as well. The solon revealed that two of the major industry
players,namely Cathay Pacific Steel and Cathay Metal are owned by a single family,
thereby holding the lion's share of the local market. He added that the Ng
family is currently negotiating to buy one of the other three big-time
companies to effectively control the market. He even hinted that the family is
"very influential" in Malacanang.
"We are now
living in a world of free trade. Boundaries are being torn, and trade barriers
are being liberalized... Now, more than ever, the whole world is a potential
market. Let us not allow our country to take a step backwards towards
protectionism, which is actually a thing of the past. This I strongly feel, is
the way to build a strong republic - one that is free from the clutches of a
capitalist market controlled by an oligopoly," Mr. Erice said.
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