The Chamber of Automotive Manufacturers of the Philippines Inc. is asking the government to extend the country’s 30% "most-favored-nation" (MFN) tariff rate on completely built-up (CBU) vehicles up to 2010.

The CBU duty is set to be reduced by 5% next year in line with a Philippine commitment to the World Trade Organization.

The auto makers' group says the local industry, which has the smallest market among Southeast Asia’s top four assembler countries, requires up to six years to prepare for increased competition from vehicle makers in the U.S., Europe, Latin America, Japan and South Korea.

Philippine assemblers currently are adjusting to the onset of the Assn. of South East Asian Nations’ (ASEAN) Free Trade Area Agreement, under which CBU duties on vehicles made in the region carry a 5% duty.

Ford has ended Ranger pickup output in the Philippines.

So far, only Mitsubishi Motor Philippines Corp. and Ford Motor Co. Philippines Inc. have substituted some of their locally assembled units with CBUs from Thailand.

Mitsubishi has halted its Lancer line, while Ford has ceased its Ranger pickup to focus on the assembly of the Escape SUV and Lynx for export to Thailand.

The Philippines auto makers’ group says the extended tariff protection should help assemblers focus on improving their operations to answer the government's challenge for the industry to export CBU vehicles throughout the ASEAN region.

A protracted period of protection, auto makers say, will complement the export subsidy program of the Dept. of Trade and Industry, which will grant assemblers tax credits for each vehicle they export.

The government has indicated that it may delay the plan to reduce MFN duties-tariffs on products from non-ASEAN countries by next year in order to give local industries and farmers more time to beef up their operations. The general direction is to retain MFN duties through 2004.