Philippine Government Considers Banning Scrap Metal Exports

The government of the Philippines can impose an export ban on scrap metal so long as it meets two requirements. These are: establish that a shortage in the raw material would drastically affect the downstream domestic processing industry, and that scrap metal is subject to government price controls.

In an interview, international law expert Ma. Lourdes Sereno told BusinessWorld (Manila, the Philippines) that the 1994 General Agreement on Tariffs and Trade allows export bans. The treaty provides for restrictions in the export of domestic materials to ensure sufficient quantities for the domestic market.

The ban would correspond to a period when the domestic price is held below the international market price as part of a government stabilization program.

Meanwhile, metal industry players are citing an earlier Department of Trade and Industry ban on rawhide exports as precedent for applying a similar restriction in the case of scrap metals.

The restriction lasted for six months, and was subject to review up until the "international trade on rawhides has normalized." In issuing the order, the DTI cited its policy of supporting small and medium enterprises (SMEs), which comprise the majority of firms in the two downstream sectors of footwear and leather goods.

The DTI based its order on Section 1(b) of Presidential Decree 721, which provides that the agency "shall be empowered and authorized to issue rules and regulations and adopt such measures to ensure price stability and supply availabilities of essential raw materials in the local market."

Metal industry players have sought a similar ban on the export of scrap metals after encountering difficulty in securing their raw material needs locally.

Based on data provided by the metal foundry industry, its raw material needs average 80,000 metric tons a month. In a memorandum sent to the DTI, scrap metal traders, however, pledged to allot 11,300 metric tons for the domestic market.  BusinessWorld (Philippines)