. /.RESTRICTEDWORLD TRADE
ORGANIZATIONG/C/W/289
30 August 2001
(01-4163)
Council for Trade in Goods Original:  English
PHILIPPINES – REQUEST FOR EXTENSION OF THE TRANSITION
PERIOD UNDER THE AGREEMENT ON TRADE-RELATED
INVESTMENT MEASURES
The following communication, dated 20 August 2001, has been received from the Permanent
Mission of the Philippines.
_______________
On behalf of the Philippines and pursuant to the 31 July 2001 decision of the Council for
Trade in Goods (G/L /464) (hereinafter referred to as the "Decision"), I have the honour to request the
further extension of the applicability of the TRIMs herein specified.
(i) Coverage
This request for extension covers local content and foreign exchange balancing requirements
under the Car Development Programme (CDP), Commercial Vehicle Development Programme
(CVDP), and the Motorcycle Development Programme (MDP).
Such requirements are indicated in the document entitled "Notification under Articles 5.1 and
5.5   of   the  Agreement  on  Trade-Related  In vestment  Measures"  (G/TRIMS/N/1/PHL/1,  dated
25 April 1995), and are likewise the subject-matter of the document entitled "Philippines – Request
for Extension of the Transition Period Under the Agreement on Trade-Related Investment Measures"
(G/L/325, dated 5 October 1999).
(ii) Period of extension requested
The period of extension requested  is one and one-half (1½) years from and after
31 December 2001, or up to 30 June 2003.
(iii) Phase-out plan
The Decision contemplates positive resolution of this request by the Council for Trade in
Goods no later than 5 October 2001.
On the basis of and predicated on such positive resolution, it is intended that local content
requirements shall thereafter be phased out in accordance with the following schedule:G/C/W/289
Page 2
Period Percentage of subsisting levels1
1 January – 30 June 2002 87.50%
1 July – 31 December 2002 75.00%
1 January – 30 June 2003 62.5%
From 1 July 2003 00.00%
No similar phase-out plan is contemplated for foreign exchange balancing requirements.
Likewise, on the basis of and predicated on such positive resolution, it is intended that foreignexchange balancing requirements shall thereafter be eliminated as of 1 July 2003.
(iv) Steps that the Philippines will take
The Philippines will, as appropriate, promulgate the necessary rules and regulations to
implement the phase-out and elimination of its remaining TRIMs as above-specified.
(v) Periodic reports
The Philippines commits to submit periodic repo rts to the Council for Trade in Goods on the
progress it makes in phasing out its remaining TRIMs in accordance herewith.
(vi) Particular difficulties
In its original request for extension (G/L/325, dated 5 October 1999), the Philippines stated
that the 1997 Asian financial crisis "wiped out six years of industry growth because of poor consumer
buying power and high costs of doing business"; that "as a result of such crisis, local industry
continues to be confronted with a severely contacted domestic market volume";  and that this, in turn,has resulted in, among others, low capacity utilisation, reduction of working hours, closures, and
worker lay-offs.
The same particular difficulties still prevail. In the meantime, there have been several
developments, internal and external, which could have further aggravated the situation.
The original request for extension of the Philippines was premised on the objective of merely
restoring the industry to its pre-1997 levels.  It was estimated then that it would take much more than
five (5) years from and after 1 January 2000 to achieve that objective.  That estimate remains
unaltered.  This notwithstanding, and due to certain constraints, the Philippines however confines its
present request to the periods above-specified.
The Philippines manifests its readiness to cons ult with the Council for Trade in Goods on this
request and on the implementation of the phase-out and the elimination of its remaining TRIMs.  At
the appropriate opportunity, the Philippines could elaborate further on its particular difficulties if so
requested.
The Philippines trusts that this request will be accorded due and positive consideration in the
context of Article 5.3 of the Agreement on Trade-Rela ted Investment Measures and relevant decisions
of the Council for Trade in G oods and of the General Council.
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1 For example, if the subsisting local content requirement level for a particular product is 40%, a
reduction of 87.50% would mean a reduction to 35%, 40% being equivalent to 100% of the subsisting level.