WORLD TRADE ORGANIZATION  
ORGANISATION MONDIALE DU COMMERCE  
ORGANIZACIÓN MUNDIAL DEL COMERCIO  
WT/TPR/M/261/Add.1 
26 April 2012 
 
 (12-2230) 
Trade Policy Review Body 20 and 22 March 2012 Original:   English/ 
 anglais/  inglés 
 
TRADE POLICY REVIEW 
PHILIPPINES 
Record of the Meeting 
Addendum 
Chairperson:   H.E. Mr. Eduardo Muñoz Gómez (Colombia) 
 
 This document contains the advance wr itten questions, and replies provided by 
the Philippines.1 
__________________________________________________________________________________ 
Organe d'examen des politiques commerciales 
20 et 22 mars 2012 
 
EXAMEN DES POLITIQUES COMMERCIALES 
PHILIPPINES 
Compte-rendu de la réunion 
Addendum 
Président:   S.E. M. Eduardo Muñoz Gómez (Colombie) 
 
 Le présent document contient les questions écrites communiquées à l'avance et les réponses 
fournies par les Philippines.1 
__________________________________________________________________________________ 
Órgano de Examen de la s Políticas Comerciales 
20 y 22 de marzo de 2012 
 
EXAMEN DE LAS POLÍTICAS COMERCIALES 
FILIPINAS  
Acta de la reunión 
Addendum 
Presidente:   Excmo. Sr. E duardo Muñoz Gómez (Colombia) 
  En el presente documento figuran las pre guntas presentadas anticipadamente por escrito, 
junto con las respuestas facilitadas por las Filipinas.
1 
                                                      
1 In English only./En anglais seulement./En inglés solamente. WT/TPR/M/261/Add.1 
Page 2  
 
  REPLIES PROVIDED BY THE PHILIPPINES 
 
 
ARGENTINA  
 
Report by the Secretariat (WT/TPR/S/261) 
 
(2) M EASURES DIRECTLY AFFECTING EXPORTS  
(vi) Export support 
 (b) Duty and tax concessions 
 Paragraph 88 explains that under the Omnibus I nvestment Code (OIC),  which is currently 
administered by the Board of Investments (BOI ), tax incentives are available to producers of 
non-traditional exports for activ ities that support exporters. 
 
Question 1 
What are the sectors that benefit from these tax incentives? 
 
Answer   
Any sector may benefit from these tax incentives sin ce any project that will engage in the export of 
products and/or services may apply with the BOI for reg istration.  Provided, however, that in the 
export of products, subject product is not c onsidered as a tradition al export product.  
 (vii) Export performance requirements 
 According to paragraph 92, tax incentives provi ded by the BOI under the OIC to non-traditional 
exporters are contingent on e xport performance.  The export performance requirement is higher for 
foreign-owned enterprises (70 per cent of producti on) than for Philippine-owned companies (50 per 
cent).  According to the Export Development Act (E DA), enterprises generating at least 50 per cent of 
normal operating revenue from  exports are entitled to incentives under the EDA. 
 Question 2 
What export sectors are concerned by this provision? 
 
Answer 
All sectors of non-traditional export products. 
 
CHINESE TAIPEI 
 
Secretariat Report (WT/TPR/S/261) 
 
Summary 
 
Page viii (Para 9) 
 
Over the review period, new RTAs have entere d into force between ASEAN and a number of 
countries. In addition, a bilateral agreement betw een the Philippines and Japan entered into effect, 
bringing the total number preferential partners of the Philippines to15. 
 
Question 1 
Within the Philippines economic and trade system, have any implementation difficulties arisen from 
the gradual increase in the number of FTAs in its  trade regime?  How h as the Philippines reacted?  WT/TPR/M/261/Add.1 
 Page 3 
 
 
  Answer 
Implementation problems are mainly related to ver ification of certificates of origin, which importers 
submit to customs authorities to clai m preferential tariff treatment.  
 To resolve such issues expeditiously, the Philippines directly consults with the designated FTA focal 
points or in some cases, raise the issues in meetings of FTA working groups. 
 FTA focal points also make sure that informatio n necessary to verify authenticity of certificates of 
origin are circulated on time to avoid implementation problems.  
 
Question 2 
To what extent do Philippines importers and expor ters of goods and services apply for preferential 
treatment provided for in these FTAs?  
Answer 
In 2010, around 41% (equivalent to  $6.7 billion) of Philippine im ports from ASEAN countries were 
given preferential treatment under ATIGA.   Based on initial data, Philippines imports under various FTAs in 2010 are as follows:  ACFTA - $739 million 
AKFTA - $152 million 
AANZFTA - $15 million 
 
II. TRADE AND INVESTMENT REGIMES 
(3) FOREIGN
 INVESTMENT  REGIME  AND  BUSINESS  FRAMEWORK 
Page 21 (Para 25) 
 
The Philippines offers an array of investment incen tives, administered by the respective investment 
promotion agencies (IPAs) for listed activities within  the annual Investment Priority Plan (IPP). 
Foreign industry associations ha ve urged the Philippines Governme nt to rationalize these incentives 
and the government is also cognizant of the need to  re-evaluate them.  As at November 2011, a bill to 
integrate and consolidate the country's various i nvestment and incentive measures under one law and 
thereby provide consistent policies w as under consideration in the Senate. 
 
Question 3 
When is this bill expected to officially enter in to force? What measures proposed by the bill will 
facilitate foreign direct investments? 
 
Answer  
A bill on incentives rationalization has passed th e House of Representatives, and the Senate is 
currently deliberating on several bills.   
The bills contain several provisions, which are gea red towards simplification of administration of 
incentives and grant of an incentive package that is  deemed competitive with neighbouring countries.  
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) MEASURES DIRECTLY AFFECTING IMPORTS 
(vii) Government procurement  WT/TPR/M/261/Add.1 
Page 4  
 
  Page 48 (Paras 61 to 67) 
 
With the Government Procurement Reform Act (GPRA) of 2003, the Philippines Government 
simplified the procurement process, adopted th e objective and non-discriminative procurement 
standard, and established the Philippine Government  Electronic Procurement System (PhilGEPS). In 
practice, however, delays in procurement processing a nd payments, and different interpretations of the 
regulations by different government agencies cause  difficulties for foreigners participating in the 
Philippines' government procurement.  
Question 4 
Does the Philippines have any plans to improve the processing and payment aspects of government 
procurement in order to facilitate the participation of foreigners? 
 
Answer 
The Philippines will be implementing the government  integrated financial management information 
systems (GIFMIS), an IT-based for budget management and accounting that will cover the entire 
budget management cycle of the country.  It seeks to provide more transparency and enhance fiscal 
responsibility. This will enhance participation of both foreign and local entities in the area of public 
procurement. 
 
IV. TRADE POLICIES BY SECTOR 
(3) SERVICES  
Pages 74 and 75 (Para 37) 
 
As indicated in the report (Table IV.4), the Philippines has services co mmitments under the ASEAN 
Framework Agreement on Trade in Services (AFA S) as well as through its Economic Partnership 
Agreement with Japan (JPEPA), which cover both distribution ser vices, and social and health 
services. By contrast, the Philippines has not made  specific commitments in  these sectors in other 
FTAs with Australia/New Zealand, Ch ina or Korea under their ASEAN-FTAs. 
 
Question 5 
Are there any domestic measures or regulations th at dictate whether or not the Philippines makes 
specific commitments in distribution ser vices, and social and health services? 
 
Answer 
There are a number of considerations, which includ e national development objectives and priorities; 
level of development of the sector, regulatory environment, among others.   
Question 6 
Does the Philippines have any plans to unilaterall y liberalize distribution services, and social and 
health services?  Answer 
Republic Act 8762 already liberalizes the retail trade sector.  Its implementation is being reviewed, 
and we need to see the results of the review before making a decision.  There has also been some 
liberalization already in the other sectors, and their implementation is also under review.  
 
Question 7 
If so, could the Philippines please elaborate on th ese plans and their anticipated timeframes? 
 
Answer 
Republic Act 8762 already liberalizes the retail trade sector.   WT/TPR/M/261/Add.1 
 Page 5 
 
 
  Page 76 (Para 42) 
 
The report states that there have been no chang es to the New Central Bank Act over the review 
period, but amendments to it are pending in Congress  Question 8 
What direction do the amendments take?  Will fo reign bank branches or subsidiaries in the 
Philippines be affected by such amendments?  If so, how?  
Answer 
The proposed amendments on the BSP Charter pertain to the following:  
 
1. Enhancing the financial strength of the BSP through the completion of its capitalization;  
2. Including the promotion of the stability of th e financial payments systems among the objectives 
of the BSP; 
3. Strengthening the capability of the BSP to supervise the banking syst em through appropriate 
administrative sanctions and corrective actions;  and 
4. Enabling the BSP to be more effective and responsiv e central monetary authority by allowing it 
to issue its negotiable certificates of indebtedness,  providing it with tax exemption, allowing it to 
access data for its monetary policy, and strengtheni ng the legal protection to its personnel.  
 Foreign bank branches and subsidiaries are not incl uded in the proposed amendments to the BSP 
Charter as foreign investment in the Philippine ba nking sector is governed by another special law 
(Republic Act No. 7721 or Act Liberalizing the En try and Scope of Operations of Foreign Banks in 
the Philippines and for Other Purposes), as well as  the Thrift Banks Act (Republic Act No. 7906), 
Rural Banks Act (Republic Act No. 7353), Coopera tive Code (Republic Ac t No. 6848 as amended) 
and Charter of Al-Amanah Islamic Investment Bank  of the Philippines (Republic Act No. 6848).  
 
Page 78 (Para 49) 
 
The report mentions that in July 2011 the Bangko Sentral ng Pilipinas (BSP) started a two-phased 
lifting of prohibitions on bank branching in Metro Manila. 
 
Question 9 
How has the measure to lift prohibitions been impl emented and what progress has been made to date? 
 
Answer 
In June 2011, the BSP issued Circular 728 series of 2011 on the phased lifting of branching  
requirements in the 8 restricted areas of Metr o Manila.  Under the first phase of the 2-phased 
liberalization, second tier universal and commercial  banks and thrift banks that have less than 200 
branches in the restricted areas as of December 31, 2011 would be allowed to apply and establish 
branches in the said areas until June 30, 2014.   For the second phase wherein branchi ng in the restricted areas will be opened up except to rural and 
cooperative banks that are not allowed to establis h branches in Metro Manila, would commence on 
July 1, 2014. 
 
Government Report (WT/TPR/G/261)  
 
II. DOMESTIC REFORMS 
(2) FOREIGN INVESTMENT 
 WT/TPR/M/261/Add.1 
Page 6  
 
  Page 13 (Paras 47, 50 and 51) 
 
The official policy of the Philippines Government  is to attract, promote and welcome productive 
investment from foreign individuals, partnerships , corporations and governme nt.  As a general rule, 
there are no restrictions on the extent of foreign ownership of enterprises except those provided under 
the Foreign Investment Negative List (FINL).  Mo reover, the 2010 Philippine Investment Priorities 
Plan (IPP), is aimed, among other things, at prom oting more investments and creating more jobs. 
With the launch of the 2011 IPP, the Philippines is geared towards the promotion of public-private 
partnerships (PPP) as one of its key strategies to  enhance the country's infrastructure system and 
competitiveness as an investment destination. 
 
Question 10 
Would the Philippines please elaborate further on th e effectiveness of public-private partnerships 
since May, 2011, and its expectations for the future?  Answer 
It is too early to draw conclusions on the effectiveness of the PPP program.  
 
Question 11 
Under the Foreign Investment Negative List (FIN L), foreign equity is prohibited or limited to a 
certain percentage of the total.  Does the Philippi nes have any plans to remove the limitations on 
foreign investment to stimulate interest from foreign investors? 
 
Answer 
The Philippine Government, throug h all concerned agencies, con tinues to undertake review of 
existing laws with the end view of ensuring t hat the country remains as a competitive investment 
destination.  It may be noted that the FINL is reviewed every two (2) years to take into account any 
new legislations that w ould amend or repeal laws  affecting investments. 
 
III. TRADE POLICY DEVELOPMENTS 
(3) BILATERAL AND REGIONAL TRADE RELATIONS 
 
Page 17 (Para 71)  
The Government is also supportive of the ASEAN endeavour to further deepen economic integration 
in the region, and continues to be an active partic ipant in discussions on the possibility of harmonizing 
the ASEAN Plus One FTAs into a possible ASEAN Plus FTA configuration. 
 
Question 12 
What are the main points that the Philippines gove rnment is making in its efforts to enhance the 
possibility of harmonizing the ASEAN Plus One FTAs into a possible ASEAN  Plus FTA 
configuration?  Answer  
1. ASEAN continues to work internally and with FTA partners in deepening economic integration in 
East Asia through the possible establishment of an FTA arrangement covering ASEAN and her 
FTA partners.  At the 19th ASEAN Summit and Related Summits last November 2011, Leaders 
issued the ASEAN Framework for Regional  Comprehensive Economic Cooperation (ARCEP 
Framework).  
2. In pursuing the ARCEP, the Philippines has alwa ys affirmed the primacy of ASEAN centrality – 
ensuring that intra-ASEAN integration is at  the forefront, preferentiality of intra-ASEAN 
commitments are preserved with  respect to engaging with external countries and putting the 
ASEAN community into better order befo re more closely engaging the Partners.   WT/TPR/M/261/Add.1 
 Page 7 
 
 
  3. The Philippines also underscores that in forging a unified ASEAN position, the sensitivities and 
concerns of all Member States are covered, without losing sight of ASEAN's level of ambition.  
 Question 13 
What is the Government's standpoint on the Philippines joining the Trans-Pacific economic Partnership (TPP)? 
 
Answer 
The Philippines is watching with keen interest the progress of TPP negotiations.  As a member of the 
ASEAN+3 and the ASEAN+6, the TPP presents to the Philippines an attractive opportunity to pursue 
its market access and cooperation goals with ot her countries in the Asia-Pacific region. 
 HONG KONG, CHINA 
 
Secretariat Report (WT/TPR/S/261) 
 
III. TRADE policies and practices by measure  Page viii (Para. 10);  Pages 27-37 (Paras. 12-26, Tables III.1 and III.2)  Tariffs 
 
We are glad to know that Philippines has maintained all its tariff lines at ad valorem  rate and has 
reduced its MFN applied rate from 7% in 2004 to  5.8% in 2011 for non-agricultural products.  
However, the significant gap between its average ap plied rate (5.8%) and average bound rate (23.3%) 
in respect of non-agricultural products may impart unpredictability to the trade regime of the 
Philippines.  We also note that a review on the Ph ilippines' tariff structur e was recently concluded. 
 
Question 1 
Does the Philippines have plans to: 
(a) reduce the bound rates with a view to narrowing their gaps with the applied rates, so 
as to provide greater predictability in its tariff regime;  and 
(b) further reduce those applied tariff rates which exceed international tariff peaks for 
such products as chemical and photographi c supplies, and transport equipment? 
 
Answer  
The Philippines remains fully engaged in the Doha Round negotiations, where binding levels and 
binding coverage are part of the negotiations.  
IV. TRADE POLICIES BY SECTOR 
 
Page 76 (Para. 42) 
 
Banking Services 
 
Bangko Sentral ng Pilipinas (BSP) is responsible for regulating and supervising the banking sector.  
Its authority is derived from the New Central Ba nk Act (RA 7653, 1993).  Amendments to this Act 
are pending in Congress. 
 
Question 2 
Please share with us the scope and detail of the propo sed amendments to the Act, the latest legislative 
progress, and its implementation schedule.  WT/TPR/M/261/Add.1 
Page 8  
 
  Answer 
The proposed amendments on the BSP Charter pertain to the following:  
 
1. Enhancing the financial strength of the BSP through the completion of its capitalization;  
2. Including the promotion of the stability of the financial payments systems among the 
objectives of the BSP; 
3. Strengthening the capability of the BSP to  supervise the banking system through appropriate 
administrative sanctions and corrective actions;  and 
4. Enabling the BSP to be more effective and responsive central monetary authority by allowing 
it to issue its negotiable certificates of indebtedn ess, providing it with tax exemption, allowing 
it to access data for its monetary policy, and strengthening the legal protection to its personnel.  
 
Foreign bank branches and subsidiaries are not incl uded in the proposed amendments to the BSP 
Charter as foreign investment in the Philippine ba nking sector is governed by another special law 
(Republic Act No. 7721 or Act Liberalizing the En try and Scope of Operations of Foreign Banks in 
the Philippines and for Other Purposes), as well as  the Thrift Banks Act (Republic Act No. 7906), 
Rural Banks Act (Republic Act No. 7353), Coopera tive Code (Republic Ac t No. 6848 as amended) 
and Charter of Al-Amanah Islamic Investment Bank  of the Philippines (Republic Act No. 6848).  
 
All proposed legislative amendments ar e currently under consideration by Congress. 
 Page 78 (Para. 51) 
 We note that three forms of foreign entry in the banking sector are, in principle, allowed, yet in 
practice, only the option of "investment of up to 60% of the voting stock of an existing domestic bank" is available.    
Question 3 
Would the authorities consider reviewing the existing regulations with a view to liberalizing the foreign entry in the banking sector and making the fi nancial system more competitive, for instance, by 
lifting the moratorium on new banks?   
Answer 
In the case of setting up of new banks, the exist ing moratorium was partially lifted to allow the 
licensing of new thrift and rural banks that are micro finance oriented.  The lifting of moratorium on 
the opening of new commercial banks (including subsidiaries of foreign banks) regardless of 
ownership is currently being considered.  
 
Pages 83 - 84 (Para. 69) 
 
Telecommunications 
 
We noted that franchised public telecoms companie s must obtain a Certificate of Public Convenience 
and Necessity (CPCN) from the National Teleco mmunications Commission (NTC) in order to 
provide the relevant services.  To obtain a CPCN, the company must file in a petition with the NTC, 
supported by financial, legal and technical documents and the petition shall undergo a public hearing. 
 
Question 4 
How long does an application for a CPCN usually take?  Since the last trade policy review in 2005, 
how many new companies have been granted with the CPCN and how many of them have involved 
foreign participation?   WT/TPR/M/261/Add.1 
 Page 9 
 
 
  Answer 
The granting of CPCN is a quasi-judicial process.   The period depends on the number of oppositors 
to the application. 
 
Pages 87 – 88 (Para. 95) 
 
Maritime Transport Services 
 
All Philippine vessels must be repaired, altered, reconditioned, converted a nd dry docked at domestic 
shipyards or ship-repair facilities registered with  the Maritime Industry Authority (MARINA), unless 
there was a waiver from MARINA, such as when emergency repairs are required overseas, when 
repairs or works cannot be accommodated by Philipp ine shipyards or when the Philippines is not a 
port of call.  There were no foreign equity  limits in shipbuilding and ship repair.   
 
Question 5 
We would like to know whether foreign enterprises ar e allowed to engage in shipbuilding and ship 
repair services, and if yes, whether they enjoy national treatment in their operation.  
 
Answer 
Foreign enterprises are allowed to engage in ship  building and ship repair services pursuant to 
provisions of RA 9295. 
 
TURKEY 
 
Report by the Secretariat (WT/TPR/S/261)  
 
(IV) TRADE POLICIES BY SECTOR 
(ii) Financial Services  Paragraph 51, page78  
Regarding the banking sector, it is stated in the Secr etariat's Report that "foreign investment in the 
banking sector in the Philippines is governed by  the Act Liberalizing the Entry and Scope of 
Operations of Foreign Banks in the Philippines and for Other Purposes (R.A. 7721 of 1994), which 
sets out the conditions and legal structures permitted for the commercial presence of foreign banks.  
Under the law (Sections 3 and 8), 70% of the assets  of the entire banking system must be held by 
domestic banks.  In principle, three forms of forei gn entry are allowed:  (i) establishment of a branch 
with full banking authority;  (ii) investment of up to 60% of the voting stock of a new banking 
subsidiary;  and (iii) investment of up to 60% of the voting stock of an existing domestic bank.  In 
practice, the first and second options are not availabl e:  a limit was fixed on the number of banks that 
could set up branches with full banking authority, a nd this limit has been satisfied, and, as above-
mentioned, a moratorium on new banks remains in place."  Question 1 
Turkey would like to know whether there is a time frame to reduce the share of domestic banks in the 
assets of the entire banking system.  Does the Gove rnment of the Philippin es foresee any amendments 
in order to make foreign entry possible in the first and second options also in practice?   Answer 
There is no existing timeframe.  Amendments to th e banking law are currently being deliberated in 
Congress.  WT/TPR/M/261/Add.1 
Page 10  
 
  (iii) Telecommunications 
 Paragraph 68, page 83  
The Secretariat's Report points out that "telecoms services are regarded as a public utility and foreign 
equity in telecoms companies (both public (i.e. b asic) and value added) is limited constitutionally to 
40%.  Foreigners may not become executives or ma nagers of telecoms firms and the number of 
foreign directors must be proportionate to the firm's aggregate share of foreign capital." 
Question 2 
Does the Government of the Philippines envisage any ch anges in the relevant legislation to reduce the 
foreign equity limitation and to remove the restricti ons on foreigners to become managers of telecom 
firms for a greater competition in the sector?  
Answer 
Many of the limitations are constitutional in nature. 
 
(3) SERVICES (iv) Transport  Paragraph 95, page 87  
According to the Secretariat's Report "all Philippine vessels must be repaired, altered, reconditioned, 
converted and dry docked at domestic shipyards or ship-repair facilities registered with MARINA.  
Exemptions apply, subject to a waiver from MARI NA, such as when emergency repairs are required 
overseas, when repairs or works cannot be acco mmodated by Philippine shipyards or when the 
Philippines is not a port of call."  Question 3 
Turkey would like to know how of ten Philippine vessels require waiver from MARINA to receive 
mentioned services abroad.   
Answer 
As often as the provisions and conditions  of Section 2 of PD 1221 are met. 
 
Question 4 
Does the limitation requiring repairs, conversion or  drydocking of Philippine-owned or registered 
vessels to be done at MARINA-registered domesti c ship-repair yards cause any difficulties and 
unwanted results for the Philippine vessels that the Government of the Philippines has been informed 
about?   
Answer 
The Government through MARINA has not been inform ed of any difficulty or unwanted results in the 
implementation of the limitation set forth under PD 1221. 
 
Question 5 
Does the Government of Philippines have any plans for the relaxation of this limitation? 
 
Answer 
Based on the 2012 Plans and Programs of MARINA for the Shipbuilding & Ship Repair and Overseas 
Shipping Sectors of the Philippine maritime indus try, the implementation of PD 1221 shall be 
reviewed and assessed vis-à-vis its objectives. 
  WT/TPR/M/261/Add.1 
 Page 11 
 
 
  (v) Tourism 
 Paragraph 124, page 94-95  
The Secretariat Report notes that "notwithstandi ng the importance the Government attaches to 
growth, significant market access and barriers to fo reign investment remain in the tourism sector 
(Table IV.13)." and in the Table IV.13 for restaura nts it is stated that "minimum paid-up capital for 
100% foreign-owned restaurants is US$2.5 million;  ot herwise foreign ownership is limited to 40%."   
 
Question 6 
Could the Government of the Philippines provide in formation about the reasons behind such a high 
minimum paid-up capital for 100% foreign-owned rest aurants?  Turkey would like to know, if any, 
the prospects for the amendment in the relevant le gislation to reduce the required amount of the paid-
up capital for %100 foreign-owned restaurants?    Answer 
The capital requirement is provided under Republic  Act 8762 or the Retail Trade Liberalization Act, 
as amended, which is currently under review.  
 KINGDOM OF SAUDI ARABIA 
 
Secretariat Report (WT/TPR/S/261) 
 
IV. TRADE POLICIES BY SECTOR (3) SERVICES (ii) Financial Services 
(a) Banking Services 
 
Page 77 (Para. 46)  
 
There are three fully government-owned banking  institutions:  the Development Bank of the 
Philippines (DBP);  Land Bank of the Philippines (L BP);  and Al Amanah Islamic Development Bank 
of the Philippines.  The Al Amanah Islamic Ba nk offers capital or project financing programmes 
(public and private sectors).  
Question 1 
Could the Philippines indicate if other financia l institutions provide Shar i'ah-compliant products? 
 Answer 
The Al Amanah Islamic Development Bank of the Philippines is the only bank in the Philippines 
authorized to offer Islamic banking.  It provid es Islamic Banking products and services that adhere to 
the principles of Shari'ah.   
Question 2 Could the Philippines provide brief description of  the regulatory framework regarding Shari'ah-
compliant financial services? 
 
Answer 
Apart from the authority to perform regular banking services such as but not limited to the opening of 
current or checking accounts; opening of savings  accounts and acceptance of foreign currency, 
AIIBP is given the authority to provide financing with or without collateral by way of Al-Ijarah 
(leasing), Al-Baiul Takjiri (sale and leaseba ck) or Al-Murabahah (cost-plus profit sales 
arrangement).  It is also allowed to undertake va rious investments in all transactions allowed by the WT/TPR/M/261/Add.1 
Page 12  
 
  Islamic Shari'a in such a way that shall not p ermit the haram (forbidden), nor forbid the halal 
(permissible). 
 
IV. TRADE POLICIES BY SECTOR 
(3) SERVICES 
(ii) Financial Services (a) Banking Services 
 
Page 78 (Para. 51)  
 Foreign investment in the banking sector in the Philippines is governed by the ACT Liberalizing the 
Entry and Scope of Operations of Foreign Banks in the Philippines and for Other Purposes (R.A. 7721 
of 1994), which sets out the conditions and legal stru ctures permitted for the commercial presence of 
foreign banks.  Under the law (Sec tion 3 and 8), 70% of the assets of the entire banking system must 
be held by domestic banks. 
 
Question 3 
Could the Philippines indicate the link between this condition and the foreign investment in banking 
limitation of up to 60% of the voting stock of a new banking subsidiary; and investment of up to 60% of the voting stock of an existing domestic ba nk? Does such condition set  limitations on foreign 
investments in banking and foreign branches.  Answer 
On the link between (1) the condition that 70 per cent of the resources of the assets of the entire 
banking system is held by domestic banks, and (2) 60 per cent limitation of foreign ownership in an 
existing domestic bank or new bank subsidiary, the 70 per cent limit in the banking system's resources 
pertains to the minimum share of domestic banks with  majority voting shares owned by Filipinos.  Put 
together, banks that are majority owned by forei gn individuals and/or entities can only have at most, 
30 per cent of the banking system's assets.  I ndividually, however, foreign banks can invest up to a 
maximum of 60 per cent in universal, commercial , thrift banks, and rural banks.  Likewise, 
individuals and non-bank entities can invest up to 60 per cent in thrift banks.  However, where 
universal and commercial banks are concerned, only a ma ximum of 40 per cent may be invested by 
individuals or non-bank entities in their voting stock. 
 IV. TRADE POLICIES BY SECTOR (3) SERVICES (ii) Financial Services 
(a) Banking Services 
 
Page 78 (Para. 51)  
 
In principle, three forms of forei gn entry are allowed:  (i) establishm ent of a branch with full banking 
authority; (ii) investment of up to 60% of the voting stock of a new banki ng subsidiary;  and (iii) 
investment of up to 60% of the voting stock of an existing domestic bank. 
 
Question 4 
Could the Philippines indicate whether it would rela x the foreign participation limitation in banking 
sector of more than 60%? 
 
Answer 
Relaxation of existing constraints in foreign invest ments in banking will entail amendments to existing 
legislation.  WT/TPR/M/261/Add.1 
 Page 13 
 
 
  Secretariat Report (WT/TPR/S/261) 
 
IV. TRADE POLICIES BY SECTOR (3) SERVICES (ii) Financial Services  
(b) Insurance Services 
 
Page 80 (Para. 55) 
 
Through the Government Services Insurance system (GSIS), the Government of the Philippines owns 
24.25% of the National Reinsurance Corporation, which provides life and non-life insurance services 
for domestic and regional clients.  Reinsuran ce companies doing business in the Philippines are 
required to cede to the Corporati on at least 10% of the outward re insurance placements.  Under the 
Property Insurance Law (R.A. 656), has responsibility for administering the General Investment Fund, 
which provides insurance coverage for government a ssets and properties.  According to an external 
source, a 1994 order requires sponsors of build-opera te-transfer projects and privatized government 
corporations to secure their insura nce and bonding from GSIS at least to the extent of the Government 
interests:  this is considered by private insu rance firms to be a significant market-access barrier. 
 
Question 5 
Could the Philippines indicates whether the Genera l Investment Fund requirements have hampered 
increasing participation of the private insurance firms? 
 
Answer 
Republic Act 656 empowers the GSIS to issue insurance covers for all properties, contracts, rights of 
action and other insurance risks of the government  including those in which the government has an 
insurance interest.  There is, however, no official national government assessment that the increasing 
participation of the private in surance firms is hampered. 
 JAPAN 
 Secretariat Report (WT/TPR/S/261) 
 II. TRADE AND INVESTMENT REGIMES (3) FOREIGN INVESTMENT REGIME AND BUSINESS FRAMEWORK 
 
Page 20, Paragraph 20 and Page 111, Table AII 
 
Question 1 
Domestic law including the Constitution has restrict ed the entry of foreign capital in accordance with 
different industrial sectors and the acquisition of pr operty by foreigners in the Philippine market.  
Does the Philippines intend to review those restrictions or amend the constitution?  
 Answer 
The Philippine Government, throug h all concerned agencies, con tinues to undertake review of 
existing laws with the end view of ensuring t hat the country remains as a competitive investment 
destination.  
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) MEASURES  DIRECTLY  AFFECTING  IMPORTS 
(iii) Tariffs, other duties, and taxes  WT/TPR/M/261/Add.1 
Page 14  
 
  Page 34, Paragraph 24 
 
Question 2 
The process for VAT (Value Added Tax) refund seems  to be very time-consuming, and worse, in 
some cases, it is not refunded at all.  On this matter, the Philippines announced that the budget in 2012 
will include about PHP 6.7 billion as appropriation cover for cash ref unds of VAT.  In addition, the 
government will shift to a cash-only refund system  for VAT, abolishing the Tax Credit Certificates 
(TCCs) one.  Japan would like to know the progress on this matter.   
Answer 
The policy shift to provide for a cash refund system for VAT commences this year.  
 
(vii) Government procurement 
 Page 48, Paragraph 67 
 
Question 3 
As for construction business in the Philippines, a company needs to receive the license, and the 
Philippine Contractors Accreditation Board grants  such licenses on the condition that foreign 
companies have at least 60% Filipino ownership or interest.  Moreover, under the current regulation, 
foreign construction companies in government procurem ent projects are required to have at least 75% 
Filipino ownership or interest a nd operate through a local subsidiary . Japan would like the Philippines 
to provide an explanation on the background and th e reasons for these regulations.  What kind of 
measures is the Philippines taking in order to make the Filipino market more open and transparent?  
 Does the Philippines have any plans to eliminat e or ease this foreign equity limitation?  
 
Answer 
The Constitution enshrines Filipino preference.  However, foreign participation is allowed subject to 
equity limitations to encourage foreign firms to  increase domestic participation and help enhance 
local employment and skills in the industry through transfer of technology.  
The area of public procurement has been more ope n and transparent with the passage of the GPRA in 
2003 and the use of information communication technology.  
 
Page 46, Paragraph 61 and Page 48, Paragraph 68 
 
Question 4 The Philippines is currently neither a signatory nor an observer to the Government Procurement 
Agreement of the WTO.  What kind of measures ha s the Philippines taken since the last TPR with 
regard to liberalization of the Filipino governme nt procurement market?  Does the Philippines have 
any plan to become a member of the WTO GPA in the near future? 
 Answer 
Since the last TPR, the procurement tools were a ligned with international best practices.  The 
Philippines is currently studying the possibility of becoming a GPA observer. 
 
IV. TRADE POLICIES BY SECTOR 
(3) SERVICES 
(i) Services commitments under the GATS and FTAs   WT/TPR/M/261/Add.1 
 Page 15 
 
 
  Page74, Paragraph 37 
 
Question 5 
The Philippines has not made any commitments on co nstruction services in the GATS.  What are the 
reasons for not having any commitments in full construction sectors?  What kind of measures is the 
Philippines taking to make the Filipino market more  open and transparent in terms of construction 
services?  Does the Philippines have any intention to make commitments in the near future?  
 
Answer 
This is under discussion in the DDA services negotiations. 
 
(ii) Financial Services 
(a) Banking Services 
 
Page 78, Paragraph 51 
 
Question6 
Japan understands that the foreign ownership of an overseas bank in a new banking subsidiary or an 
existing bank could not exceed 60 percent under dom estic law (the Act Liberalizing the Entry and 
Scope of Operations of Foreign Banks).  Japan would like to know the possibility of easing foreign 
equity limitation.  
 
Answer 
Relaxation of existing constraints entails amendment of existing legislation.  Efforts are being 
undertaken in Congress to allow foreign investment in the banking sector, specifically the entry of 
foreign individuals and non-bank entities in rural banks.  
 
Insurance  Page 79, Paragraph 55  Question 7 
Japan understands that at least 10% of reinsura nce placements must be ceded to the National 
Reinsurance Corporation in the Ph ilippines.  Japan considers that this regulation is not only an 
operational burden on insurers but also preventin g the Filipino market from achieving optimal risk 
dispersion.  
Japan would like to know the backgroun d and intention of this regulation.  
 
Answer 
The Philippines signed an agreement on Septemb er 30, 1977 establishing the Asian Reinsurance 
Corporation (ARC).  Presidential Decree 1270 dated  December 22, 1977 authorized the organization 
of the NRCP and designated said corporation to sub scribe to the capital stock of the ARC.  The 10% 
reinsurance placement cessions by the NRCP is in support of the ARC. 
 (iii) Telecommunications  Page83, Paragraph 68 
 
Question 8 
According to the Philippines' Constitution, foreign equity in a public utility including the telecom 
sector (both basic and value added services) is limite d to 40%.  Japan considers that all value added 
services are not necessarily regarded as a public u tility and that there could be some non-public value WT/TPR/M/261/Add.1 
Page 16  
 
  added services.  Japan would like to know the Philippines' view on this point.  
 
Answer 
The rules provided under NTC Office Order No. 28-03- 2009, states that the citizenship requirement of 
at least 60% Filipino shall not be necessary for pur poses of registration of a mobile content service 
provider on condition that the mobile content servi ce provider can prove that it is extending its 
services only to a particular telecommunications company or Telco duly covered by a private 
contract, which Telco owns and operates the transmi ssion, switching and distribution facilities.   
 The citizenship requirement of at least 60% Filip ino shall apply only to mobile content service 
providers that offer the services directly to the genera l public or to whoever may wish to avail of the 
same.    Under this scenario, the content provider may be considered as a non-public VAS provider.  A VAS 
provider without its own network shall not be  required to secure a franchise from Congress. 
 
(iv) Transport 
(b) Air Transport 
 
Page92, Paragraph 115  
Question 9 According to the Secretariat's report, the reform of the Common Carriers Tax and Gross Billings Tax, 
which are imposed by 3% and 2.5%, respectively, on the aviation industry, are being considered in the 
Congress of the Philippines.  In this regard, Japan  would like to know the details of this reform, 
including the treatment of international shipping carriers.  Japan considers that these tax systems 
which only apply to foreign international ship carrier s might be inconsistent with the principle of the 
national treatment of GATS.  Japan would like to  know the view of the Philippines on its GATS 
commitment.   
Answer 
Reply to follow. 
 
(v) Tourism 
 Page94, Paragraph 122  
Question 10 The Secretariat notes that "there are also various restrictions on employment of foreigners and/or 
residency and citizenship requirements".  Could the Philippines provide further details on these 
various restrictions?  Also, we would like to know a pl an to review these restrictions, if any.  Also, 
Japan would like to know the reason for varying empl oyment restrictions in accordance with the size 
of "specialty restaurants".  Answer 
Reply to follow. 
 
(vi) Professional Services 
 
Page97, Paragraph 133  Question 11 
Framework arrangements to facilita te MRAs between countries have been concluded under the AFAS  WT/TPR/M/261/Add.1 
 Page 17 
 
 
  on engineering (2005);  nursing (2006);  architect ural services (2007);  surveying (2007);  medical 
practitioners (2009);  dental pr actitioners (2009); and accountancy services (2009).  What specific 
sectors or occupations is the Philippines interested  in for recognition?  Please provide background 
information on the reasons the Philippines is interested in it.  
Answer 
Nurses, Engineers, Doctors, Accountants, Architects 
 
Government Report (WT/TPR/G/261) 
 
III. TRADE POLICY DEVELOPMENTS 
(3) BILATERAL AND REGIONAL TRADE RELATIONS 
 Page17, Paragraph 70  Question 12 
Please provide information on the bilateral frame work of sending 100 Filipino nurses, 20 Filipino 
Farm Managers, and 20 Filipino E ngineering Professionals to New Zealand at any one time for the 
period of up to three years according to the Side Instruments, "New Zealand-Philippines Agreement 
on Temporary Entry" on 27 February 2009 relating the commitment in th e ASEAN-Australia-New 
Zealand FTA? In what way has the framework been implemented after the entry into force of the 
FTA? 
In addition, did the Philippines and New Z ealand mutually recognize those professional 
qualifications? 
 
Answer  
Detailed information is available at:  www. immigration.govt.nz/migrant/stream/work/ 
worktemporarily/requirements/philippinesspecial.htm. 
 Secretariat Report (WT/TPR/S/261) 
 IV. TRADE
 POLICIES  BY SECTOR 
Insurance 
 
Page 79, Paragraph 55  Question 13 
Japan understands that at least 10% of reinsura nce placements must be ceded to the National 
Reinsurance Corporation in the Ph ilippines.  Japan considers that this regulation is not only an 
operational burden on insurers but also preventin g the Filipino market from achieving optimal risk 
dispersion.  Japan to know the background and intention of this regulation.  Answer 
The Philippines signed an agreement on Septemb er 30, 1977 establishing the Asian Reinsurance 
Corporation (ARC).  Presidential Decree 1270 dated  December 22, 1977 authorized the organization 
of the NRCP and designated said corporation to sub scribe to the capital stock of the ARC.  The 10% 
reinsurance placement cessions by the NRCP is in support of the ARC. 
 
(iv) Transport 
(b) Air Transport WT/TPR/M/261/Add.1 
Page 18  
 
  Page 92, Paragraph 115 
 Question 14 
According to the Secretariat's report, the reform of the Common Carriers Tax and Gross Billings Tax, 
which are imposed by 3% and 2.5%, respectively, on the aviation industry, are being considered in the 
Congress of the Philippines.  In this regard, Japan  would like to know the details of this reform, 
including the treatment of international shipping carriers.  Japan considers that these tax systems 
which only apply to foreign international ship carrier s might be inconsistent with the principle of the 
national treatment of GATS.  Japan would like to  know the view of the Philippines on its GATS 
commitment.  
 
Answer 
The matter is currently being deliberated in Congress. 
 
(v) Tourism 
 Page 94, Paragraph 122  
Question 15 The Secretariat notes that "there are also various restrictions on employment of foreigners and/or 
residency and citizenship requirements".  Could the Philippines provide further details on these 
various restrictions?  Also, we would like to know a pl an to review these restrictions, if any.  Also, 
Japan would like to know the reason for varying empl oyment restrictions in accordance with the size 
of "specialty restaurants".  Answer 
Under the Labour Code of the Philippines the empl oyment of foreigners is subject to the "labor 
market/economic needs test" which currently is be ing reviewed.  Any employment restriction is not 
dependent on the size of the specialty restaurant but whether or not the restaurant is owned and 
operated by the hotel.  
 EUROPEAN UNION 
 II. TRADE AND INVESTMENT REGIMES 
(2) T
RADE AGREEMENTS AND ARRANGEMENTS  
(ii) Regional and bilateral free trade agreements   WTO Secretariat's report 
 Pages 16-19 
 
Question 1 
Would the Philippines elaborate on the extent to whic h, and how, trade related environmental, social 
and labour issues are addressed within each of ASEAN preferential agreements referred to in the 
Secretariat and the Government reports, as we ll as the Philippines-Japan Economic Partnership 
Agreement? 
Answer 
These matters are not covered in the ASEAN FTAs.  In PJEPA, there are provisions that require 
Parties not to waive or otherwise derogate from environmental measures as an encouragement for 
establishment, acquisition or expansion or in a manner that weakens or reduces adherence to the 
internationally recognized labor laws.  WT/TPR/M/261/Add.1 
 Page 19 
 
 
  WTO Secretariat's report 
Pages 20-21, para-s 20 and 23 
Question 2 
With respect to foreign equity restrictions in public utilities, could the Philippines clarify how the 
extent of foreign ownership – 60% –40% – rule is applied, i.e. whether this is based on the "control 
test" or the "grandfather rule" and also provi de the motivation for the chosen approach? 
Answer 
The general rule is the "control test"; however, in  cases where the Filipino entity is in doubt, the 
"grandfather rule" may be used.  The motivati on for the chosen approach is a mandate of the 
Constitution. 
 
(iv) Import prohibitions, restrictions, licensing, and quotas  WTO Secretariat's report 
 
Pages 38 – 39, Table III.6 
 
In the Secretariat's report it is stated that certain  measures are applicable to goods "originating" from 
the countries mentioned.   
Question 3 
Could the Philippines explain how this origin is determined? 
Answer 
The origin is based on the export documents. 
WTO Secretariat's report 
Page 57, para. 107  
It is pointed out in the Secretariat's report that  most of agricultural products are covered by price 
control.   
Question 4 
Would the Philippines please indicate the level of the ceilings for each category of the product? 
Answer 
The Secretariat Report does not mention price contro l over agricultural products.  The Department of 
Agriculture only monitors prices of agricultural products.  
IV. TRADE POLICIES BY SECTOR 
(1) AGRICULTURE AND FISHERIES (i) Agriculture 
WTO Secretariat's report 
Page 66, para. 4 It is mentioned in different parts of the Secret ariat's report that Philippines are providing incentives 
for organic agricultural production (prefere ntial loans, VAT free products, etc.).  
 WT/TPR/M/261/Add.1 
Page 20  
 
  Question 5 
The EU understands that the purpose of this po licy is to increase the quality of the products, 
compensate farmers for increased production costs and grant them a better financial return.  Does the 
Philippines envisage extending this approach to geographical indications? 
 
Answer 
This is not at present being considered by the Depar tment of Agriculture.  However, as part of the 
continuing efforts of the IPO to improve the IP System, the Philippines is assessing the benefits of a 
sui generis system for the protection of GIs.   
 
INDIA 
 Government Report (WT/TPR/G/261) 
 
Page 10 (Para 31) 
 
Philippines enacted new Bio-fuels Laws in Janua ry 2007.  It is described as a "landmark" 
accomplishment for the local bio-fuels industry as it required the blending of bio-diesel and bio-ethanol in diesel and gasoline, respectively, in  all fuelling stations nationwide, as well as 
institutionalized incentives, and other benefits  for investments in the bio-fuels industry.   
 
Question 1 
Could Philippines provide details of  the institutionalized incentives a nd other benefits it provides for 
investments in the bio-fuels industry under its Bio-fuels Law? 
 
Answer 
The Biofuels Act provides for zero (0) specific tax on  local or imported biofuels component, and the 
sale of raw material used in the production of bi ofuels such as but not limited to coconut, jatropha, 
cassava, corn and sweet sorghum a re exempt from value added tax. 
 
Secretariat Report (WT/TPR/S/261) 
 
Page 50 (Para 80) 
 
Philippines imposed export restriction on rice, corn, a nd sugar.  In order to ensure food security and 
price stability, these commodities may be exported onl y if there is a surplus, according to the 
authorities.  Fish exports are also regulated on grounds of domestic food security.  
 
Question 2 
In view of recent discussion in WTO to discipline expor t restriction, Philippines is requested to give 
views on export restriction.    Answer 
Philippine views are still evolving.  But for reasons  of domestic food security, the Philippines imposes 
export restrictions on certain agricultural crops who se supply from local production is not sufficient 
to meet domestic demand, primary of which is rice. 
  WT/TPR/M/261/Add.1 
 Page 21 
 
 
  Page 50 (Para 77) 
 
Only plantation (non-native) logs are subject to an export tax (20% of f.o.b.).  The authorities indicate 
that the export tax on non-native logs is imposed to ensure an adequate, stable, and sustainable supply 
of domestic timber.  However, export taxes ar e distorting and implicitly subsidize downstream 
processors by providing logs at below world pric es, thereby encouraging domestic value added, 
which may be an inefficient use of res ources if this is reliant on the subsidy.   
 
Question 3 
Could Philippines provide details of  the export taxes imposed by it on  export of non-native logs and 
the annual revenue generated from such an export tax? 
 
Answer 
The imposition of 20 percent export duty on logs is  provided under Section 514 of the Customs & 
Tariff Code of the Philippines.  This is the onl y product subject to export duty pursuant to E.O. 
26 issued July 01, 1986 which eliminates all expor t duties on all export products except logs.  The 
export duty covers all kinds of logs.   Recent data show no collections from export taxe s.  Statistics from Forest Management Bureau 
website indicate that in 2009 (latest data availa ble) export of roundwood logs were less than one 
thousand cubic meter.  
Page 54- 55 (Para 96-100 and 101) 
 
The Philippines has a long history of providing incentives (mainly tax) to selected activities.  
Incentives are regulated by the Omnibus Investment Code (OIC) of 1987 (as amended) with implementing rules and regulations.  In general, und er the OIC, only enterprises that are registered 
with the BOI, and produce non-traditional exports or ar e engaged in a sector listed in the Investment 
Priorities Plan (IPP) are entitled to tax exemptions a nd to some non-tax incentives.  However, even if 
the activity is not listed in the IPP, an enterprise ma y be eligible to receive incentives if it exports at 
least 70% of production (foreign-owned enterprises), or  50% (Filipino-owned enterprises, i.e. at least 
60% domestic equity).  
 
Question 4 
Could Philippines provide details of the incentiv es provided by it under the Omnibus Investment 
Code and list the sectors which receive the same? 
 
Question 5 
Could Philippines also provide the details of the non-tax incentives provided by it and the sectors 
which benefit from the same?  
Answer 
The fiscal Incentives available und er OIC are income tax holiday, exemption from taxes and duties on 
imported spare parts, exemption from wharfage dues and export tax, duty, impost and fees, tax 
exemption on breeding stocks and genetic material s, tax credits, and additional deduction from 
taxable income on additional labor expense  The non-fiscal Incentives, on the other hand, include employment of foreign nationals, simplification 
of customs procedures, importation of consigned e quipment, and the privilege to operate a bonded 
manufacturing/ trading warehouse subject to customs rules and regulations.  WT/TPR/M/261/Add.1 
Page 22  
 
  Sectors that benefit from the above fiscal and non- fiscal incentives are those listed in the annual 
Investment Priorities Plan (IPP) of the Government. 
 
Page 61 (Para 121)  
The Philippines protects Trademarks on registration with the IPO Bureau of Trademarks.  
Question 6 
Does the Philippines protect well-known trademarks without registration?  If yes, is it part of the 
statute or through jurisprudence?  
Answer 
Section 123.1 (e and f) of the Intellectual Propert y Code of the Philippines protects well-known marks 
in that no other entity or person other than the owner of a well-known mark can register the same. 
 
Page 63 (Para 127) 
 
The Philippines has enforced its IP laws through confiscation of pirated and counterfeit goods. 
 
Question 7 
Does the Philippines define pirated and counterfeit goods in terms of the Footnote 14 of the TRIPS 
Agreement or does it use any other definition of such infringing goods?  If the latter, could the 
Philippines kindly apprise us of the definition being used?  
 
Answer 
No, the Philippines did not adopt the verbatim defin ition provided in Footnote 14 of the TRIPS 
Agreement.  Instead the IP Code defines act of infr ingement in the various sections of the Code.  
 However, there are spec ial laws which define "piracy" and "c ounterfeit goods such as in "Republic 
Act No. 8792 or the Electronic Commerce Act wh ich enumerates punishable acts that constitutes 
"piracy" under Section 33(b).   
And Republic Act 8203 otherwise known as Special  Law on Counterfeit Drugs which  provides for 
definition of counterfeit drugs in section (b).  Please refer to section (b) of this Act.  
 
Page 15 (Para 8)   
Since 2005, the Philippines has not notified any TBT-re levant bilateral or plur ilateral agreements or 
any preferential or non-preferential rules of origin.  The authorities indicated that there have not been 
"any new, or any changes to existing laws, re gulations or administrative guidelines, which 
significantly affect trade in services", which the Phili ppines is obliged to notify under Article III:3 of 
the GATS.  
Question 8 
Does the Philippines have any plans to come forwar d with information and notify its rules of origin 
and TBT-relevant provisions in b ilateral or plurilateral agreemen ts especially in light of the 
transparency mechanism for RTAs (WT/L/671)?  If so, could the Philippines please elaborate on these 
plans and the anticipated timeframes? 
  WT/TPR/M/261/Add.1 
 Page 23 
 
 
  Answer 
In light of the transparency mechanism for RTAs in WT/L/671, the Philippines will comply. But in the 
context of ASEAN FTAs, it should be noted that not ification is done collectively after appropriate 
consultations. 
 
Question 9 
On trade in services, the Philippines has indicated th at there have not been "any new, or any changes 
to existing laws, regulations or administrative guideli nes, which significantly affect trade in services".  
Are there any plans to move on this front unilaterally  or in the bilateral, regional or the multilateral 
context? 
 
Answer 
This is a decision to be taken by the Philippines in the context of the DDA negotiations or in the 
bilateral or regional negotiations. 
 
Page 37 and 45 (Para 28 and 53)  
 
Fish products may be imported only when th e importation has been certified as necessary by the 
Department of Agriculture to attain food security.  
 
Question 10 
While we appreciate and are sensitive to food s ecurity concerns, could the Philippines kindly 
elaborate on this measure that appears to restrict or prohibit the importation of all fish products.  
 
Question 11 
Has the Department of Agriculture issued any certificates that allow importation of fish products since 
this requirement has entered into  force?  If so, who may apply for the certification, for what 
quantity/value and types of fish products?  Wh at is the basis and procedures for issuing the 
certificates? 
 Answer 
The Secretary of Agriculture has issued only one Certificate of Necessity (CN), so far, for the 
importation of tuna, which is not  for export grade landed by fore ign fishing vessels in Davao City 
Port.  This was effective 17 November 2003 and is of indefinite duration.  Quantity imported is set at 
a maximum of 3.5 metric tons per month.  Im portation is undertaken by accredited importers. 
 
Page 46-48 (Para 61-68) 
 
The Philippines is neither a member nor an observe r of the Government Procurement Agreement of 
the WTO. Yet it seeks to conduct its Government pr ocurements with transparency and efficiency.   
 
Question 12 
Could the Philippines please provide information of the quantum of procurement by the Federal and Provincial Governments and what proportion of this procurement is from foreign sources? 
 
Answer 
There is no data available at this time. 
 WT/TPR/M/261/Add.1 
Page 24  
 
  Page 40 (Para 36) 
 
The rice quota was to be phased out by 2005, but th e Philippines was granted a seven-year extension 
(until 30 June 2012) in the WTO.  
 
Question 13 
Could the Philippines please elaborate its plans and the anticipated timeframes for phasing out the rice 
quota? 
 
Answer 
The Philippines is currently negotiating the c ontinuation of the special treatment on rice. 
 
Page 44 (Para 49)  
 
PNSs are voluntary, unless declared mandatory through Department Administrative Orders (DAO).  
At end-October 2011, there were 85 mandatory PNSs  (i.e. technical regulations).2  Importers of 
products covered by mandatory PNSs are issued an Import Commodity Clearance (ICC) once the BPS 
has determined that imports meet the relevant Ph ilippine national standard.  Nevertheless, imports, 
including those certified abroad as meeting internati onal standards, may be subject to sample testing 
by BPS; non-compliant imports are denied entry.  BPS also conducts random checks at retail outlets 
to ensure that imports consistently meet Philippine standards. 
 
Question 14 
The Philippines is requested to provide an answer  as to how it proposes to undertake conducts random 
checks at retail outlets to ensure that imports consis tently meet Philippine standards.  Are there border 
measures to address the TBT measures over and above  the random checks at retail outlets? India 
would like to know the details of these various measures undertaken both at the border and inside 
Philippines. 
 
Answer 
Market Surveillance 
 The Department of Trade and Industry thr ough the Bureau of Product Standards (BPS) 
issued DAO 02:  2007 entitled "Defining the responsibilities and liabilities of manufacturers, 
importers, traders, wholesalers, distributors, retailers and/or their agents, with regard to 
products covered by mandatory certification and p rescribes penalties for violation thereof" 
and Its Guidelines. 
 On the basis of these guidelines, the DTI Regional and Provincial Offices, as the 
implementing arm of the Department, conduc t regular market monitoring to ensure 
compliance.  
 
Related information can be accessed at th e BPS Standards and Conformance Portal. 
 
Page 44 (Para 52)  
The Department of Agriculture ( DA) remains the national enquiry point to the WTO.  The Philippines 
has made some 200 notifications to the WTO Co mmittee on Sanitary and Phytosanitary Measures, 
                                                      
2 Mandatory standards apply, inter alia,  to:  automotive and motorcycle batteries,  electrical wires and 
cables, fire extinguishers, household appliances, lighting fixtures, matches, mechanical equipment, Portland 
cement, pneumatic tyres, and sanitary ware.  These product s are subject to local inspec tion to assess compliance.   WT/TPR/M/261/Add.1 
 Page 25 
 
 
  covering an array of measures, including impositi on of temporary import restrictions, on grounds of 
food safety, animal health, and plant protection, and their termination.  The Philippines is member of 
the Codex Alimentarius Commission, the Intern ational Plant Convention (IPPC), and the World 
Organization for Animal Health (OIE). 
 
Question 15 
The Philippines is requested to explain the reasons for the gross underreporting of the SPS 
notifications made to WTO Committee.  It can be  observed that Philippines notified a total of 314 
notifications: of which 146 were Emergency measu res;  addition/corrigendum/revisions were 79 and 
only 89 regular notifications.  
Table 1 
SPS Notifications of Philippines since becoming WTO member 
Year Emergency Measures Addition Regular Total 
1997 1  5 6 
1998 13  23 36 
1999 1  3 4 
2000 4  5 9 
2001 3 1 7 11 
2002 8 5 2 15 
2003 3 5 1 9 
2004 22 7 3 32 
2005 10 2 7 19 
2006 18 14 1 33 
2007 12 7 8 27 
2008 16 13 1 30 
2009 10 7 12 29 
2010 12 14 4 30 
2011 13 4 7 24 
Total 146 79 89 314 
Source:  Centre for WTO Studies Web Portal, http://wtocentre.iift.ac.in/. 
Question 16 
Also India would like to know as to why there is  very high use of Emergency Measures when 
compared to Regular notifications?  Can Philippines explain the reasons behind it?  
 
Answer 
The Philippines' submission of SPS notifications is based on the transparency provision of the SPS 
Agreement. In G/SPS/GEN/804/Rev.4 dated 13 October 2011, the Philippines was cited as one of the 
top 20 Members, which have submitted the most number of regular notifications since 1995. 
 There have been more emergen cy notifications than regular notificati ons since most of the measures 
instituted by the Philippines are urgent in na ture requiring immediate action and thus are notified 
using the emergency format.  
NEW ZEALAND 
 
Agriculture  
Section III 
 
Paragraph 52 of Secretariat report WTO/TPR/S/261  notes that "the Department of Agriculture 
(DA) remains the national enquiry point to th e WTO.  The Philippines has made some 200 
notifications to the WTO Committee on Sanitary an d Phytosanitary Measures, covering an array of 
measures…." 
 WT/TPR/M/261/Add.1 
Page 26  
 
  Question 1 
We welcome the SPS notifications received from the Philippines.  Would the Philippines be able to 
provide information on the criteria that it uses for determining whether a measure will be notified to 
WTO members, and also, why Administrative Order 22 (new rules and regulations for the handling of frozen and chilled meat and meat products in the Ph ilippines) has not yet been notified?  Does the 
Philippines intend to notify the current final draf t of the new proposed rules and regulations on 
hygienic handling in meat markets of newly sl aughtered meat and on chilled, frozen and thawed 
meat? 
 
Answer  
The Philippines notifies SPS measures based on th e transparency provision of the SPS Agreement. 
AO 22 is a post-border measure that does not modify nor impose additional restrictions or 
requirement to meat importation, thus there is no need to notify to WTO. 
 
Section IV 
 Paragraph 53 of the Secretariat report WTO/TPR/S/261  notes that "imports of agricultural 
products, live animals, plants, fish, their products  and by-products must be accompanied by a sanitary, 
phytosanitary or health certificate from the country of origin, and are subject to inspection upon arrival.
3]  An additional import permit is required for m eat and meat products, fish and fish products, 
and for all agricultural products.  The Bureau of An imal Industry (BAI), the Bureau of Fisheries and 
Aquatic Resources (BFAR), and the Bureau of Plan t Industry (BPI), all under the DA, issue these 
permits, generally taking into account only SPS re gulations.  However, in some cases domestic supply 
is also considered.  For example, fish products may be imported only when certified by the DA as 
necessary to attain food security…."   Question 2 
We would welcome information from the Philippi nes on the considerations underpinning the 
application of Administrative Order 22 to imported meat products. Does the Philippines see a risk that this regulation could place a higher food safety requ irement on the sale of frozen or chilled (imported) 
meat than on the sale of "warm" or "freshly slaught ered" (locally produced) meat, and if so, what is 
the basis for this additional requirement?  Answer 
AO 22 is a food safety measure based, among others,  on Codex Code of Practice for the Hygienic 
Handling of Meats (CAC/RCP 58-2005) with the ob jective to effectively protect the public against 
food-borne illnesses.  
 
AUSTRALIA 
 Report by the Secretariat (WT/TPR/261) 
 
I. ECONOMIC ENVIRONMENT 
(2) RECENT ECONOMIC PERFORMANCE 
 Page 3, Paragraph 7  
Australia notes the large external financing requirement of the National Food Authority a 
government-owned and -controlled corpora tion, and the resulting fiscal deficit. 
 
                                                      
3 Administrative Order No.18 of 2000.  WT/TPR/M/261/Add.1 
 Page 27 
 
 
  Question 1 
Can the Philippines please advise what if any reform  of the National Food Authority is envisaged? 
 
Answer 
In 2008, NFA implemented a Rationalization Prog ram (RP) pursuant to Executive Order No. 366 
issued by the President on 4 October 2004 aime d at rationalizing the operations of the Agency. 
Among the significant reforms implemented under EO  366 are in the areas of operations (e.g. 
discontinuation of special programs requiring extensive funding, streamlining procurement and 
distribution strategies) and financial manage ment (restructuring of various loans). 
 
Some of these reforms are a result of the Australian-funded comprehensive study of the NFA under 
the Partnership for Economic Go vernance and Reform (2005-2009). 
 II. TRADE AND INVESTMENT REGIMES  (2) TRADE AGREEMENTS AND ARRANGEMENTS  
(i) Participation in the WTO 
 Page 15, Paragraph 8 
 
Australia appreciates the strong record the Philippin es has maintained on notifications to the WTO in 
other areas, however Australia notes the Philippin es is behind in notifications with respect to 
agriculture.  
 
Question 2 
Can the Philippines please advise when it expects to provide its overdue notifications for agriculture? 
 Answer 
The Philippines is working on the submission of its notifications. 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
(3) MEASURES AFFECTING PRODUCTION AND TRADE (ii) Competition Policy and Price Controls 
 
Page 56, Paragraphs 105-106  Question 3 
Paragraph 105 indicates that the Philippines has onl y relatively recently established a mechanism to 
enforce competition laws, with the Competition Auth ority being established under the Department of 
Justice on 9 June 2011.  Since being given the r esponsibility of enforcing the Philippines' laws 
relating to competition, has the Competition Au thority been active in pursuing cases of anti-
competitive conduct? 
 
Answer 
The Office for Competition, under the Department of Justice, was formally constituted only in 
October 2011.  As such, necessary consultations with  sector regulators for complementation of efforts 
as well as developing rules governing complaints hand ling and/or referral are still being undertaken.  
In the meantime, the OfC has received a number of  complaints and they are undergoing evaluation. 
 
Question 4 
It is stated at Paragraph 106 that the Philippi nes Development Plan 2011 - 2016 recognizes the need to 
enact a general competition law.  What work has been completed toward this to date?  
 WT/TPR/M/261/Add.1 
Page 28  
 
  Answer 
A proposed comprehensive competition law is in  various stages of th e legislative process. 
 
Question 5 
Table III.8, paragraph 106, shows that penalties u nder the Revised Penal Code (Article 186) for 
monopolies and restrictive trade practices includ es imprisonment and fines ranging from PHP 200 - 
PHP 6000.  These fines are in the range of $5 - $1 50USD.  Paragraph 104 indicates that there are 
several bills dealing with competition which are being deliberated in the Philippines Congress at present.  Given the relatively low financial pena lties that exist in the Revised Penal Code, is 
consideration being given to increased pe nalties/other remedies under the new laws? 
 
Answer 
Yes.  In the proposed legislation, violations of competition laws will be  meted both fines and/or 
penalties imposed by the court and/or the compe tition authority.  The fines and penalties have been 
proposed to be increased to P10 million to P50 million, if natural person, and P250 million to 
P750 million, if juridical person.   
Page 59, Paragraph 113 
 
Question 6 
Australia notes that the IPO is th e main institution responsible for administering and implementing the 
IP Code but it doesn't have a mandate for copyright (footnote 136). Is there a separate organisation 
that administers the copyright law? 
 
Answer 
Under Republic Act 8293 otherwise known as the Intellectual Property Code, the Intellectual 
Property Office of the Philippines (IPOPHL)is mandat ed  to effectively administer the intellectual 
property system, including copyright and related rights.   However, under Section 191 of the IP Code, copyri ght registration is undertaken by the National 
Library and Supreme Court.  The National Libra ry based on a Memorandum of Agreement with IPO 
has deputized the IPO to undert ake copyright registration.  
 
IPOPHL is now working with the Philippine Congress for the passage of a bill to seek the amendment 
of the IP Code which shall include, among others, the creation of a Copyright Bureau. 
 
Question 7 
How are royalties or equitable remuneration for use of copyrighted materials paid? Are there 
collecting societies in the Philippines?   
Answer 
There is no provision in the IP Code that fixes roya lties or remuneration for copyrighted materials.  
Royalties or revenue sharing arrangements are subj ect to contractual stipulations between the 
parties.  
 The accredited existing Collecting Management Or ganizations (CMOs) in the Philippines are:  
1. Filipino Society of Composers, Authors and Publishers (FILSCAP), for music composers; 
2. Filipinas Copyright Licensing Society (FIL COLS),  for book authors and publishers; 
3. Filipino Visual Arts and Design Rights Organi zation (FILVADRO), painters, sculptors and 
other visual artists; 
4. Music and Video Performance, Inc. (MVP), for phonogram producers; and  Performance 
Rights Society of the Philippines, for performers. 
  WT/TPR/M/261/Add.1 
 Page 29 
 
 
  Page 63, Paragraph 127: 
 
Question 8 
We note that the confiscation of pirated and counterfeit goods amounted to PHP 3.8 billion during 
1 January to 21 September 2011.  How is it compared to previous years?  To what extent was any 
increase or decrease a result of stronger enforc ement activities or an increase in the infringing 
activities respectively?  
 
Answer 
The total value of confiscated good for the year 2011 amounted  to P8,384,994,228.00   
which represents a 58.33% increase  in the value of the confi scated products compared to 
the 2010 seizure of P5,295,596 ,875.50 (P5.295B).  The dat a below shows the increase in 
the confiscation  over the past years: 
2008 Php3,519,739,148.03 2009 Php5,680,408,036.00 
2010 Php5,295,596,875.50 
2011 Php 8,384,994,228.00 
 
The increase in the value of confiscated goods and counterfeit is a result of stronger enforcement 
since the members of the National Committee on In tellectual Property Rights are given specific 
enforcement targets. 
 
IV. TRADE POLICIES BY SECTOR  
(1) AGRICULTURE AND FISHERIES (i) Agriculture  
Page 65, Paragraph 2  
Australia notes the policy objective of increa sing farm productivity, and that under the 
Comprehensive Agrarian Reform Program the number of small farms has increased.   
Question 9 
Can the Philippines please explain the policy cohe rence between increasing productivity with an 
increasing number of small farms?   
Answer 
Productivity can still be achieved despite the sma ll landholdings since farm management would be 
more manageable relative to the resources available to the Filipino farmer.  Further, given the impact 
of climate change, it might be more practical and  strategic to have small farm holdings.   
 There are studies that indicate that many crops gr own on plantations such as coconuts and sugarcane 
are economically viable even when grown on small fa rms.  Moreover, there are studies that indicate 
that farmers when given rightful land  ownership become more productive. 
 
Pages 68-71, Paragraphs 17-23 
 
Australia notes the Philippine Government policy is to be self-sufficient in the production of rice, 
sugar, and corn. Australia sees trade reform as e nhancing food security in this context and welcomes 
the contribution of the ASEAN-Australia-New Zeal and Free Trade agreement in supporting enhanced 
regional food security needs.    WT/TPR/M/261/Add.1 
Page 30  
 
  Question 10 
Can the Philippines please further advise how they are measuring their achievement of self-
sufficiency?  
 
Answer 
Self-sufficiency is measured by compari ng domestic production vis-à-vis imports. 
 
Australia notes the following import levels of rice into the Philippines: 2010 - 2.2 million tonnes; 
2009 - 1.6 million tonnes; 2008 - 2.3 million tonnes; 2007 - 1.8 million tonnes; 2006 - 1.6 million tonnes; and 2005 - 1.6 million tonnes.   Question 11 
Can the Philippines please provide thei r projections for the future level of imports, and what is the 
likelihood of substantial change?  
 
Answer 
Imports for 2012 may range from 0.59 million me tric ton to 1.46 million metric ton. 
 
Question 12 
What is the relationship between the Philippin es minimum market access requirement of 350,000 
tonnes of rice to the actual level of imports? 
 
Answer 
The minimum access requirement of 350,000 metric tons is below the actual import levels. 
 
Question 13 
What portion of the Philippines rice imports are subj ect to preferential tariff rates including under any 
free trade agreements?  
Answer 
A majority of rice imports are sourced from ASEAN. 
 
(3) S ERVICES  
Page 78, Paragraph 49 
 
As noted in the Philippines' previous Review, th e BSP prevented the opening of new bank offices and 
branches from September 1999, and the entry of new banks from 13 June 2000, to slow down the 
expansion of the banking system and to consolid ate the industry.  The moratorium on new banks 
remains in place.  However, in an effort to ma ke the financial system more competitive, in 2005 
restrictions on new bank offices and branches were lifted for all areas of the country with the 
exception of Metro Manila.  In July 2011, the B SP started a two-phased lifting of prohibitions on bank 
branching in Metro Manila. 
 
Question 14 Australia notes that the moratorium on new banks re mains in place, although there have been efforts 
to lift restrictions.  Could the Philippines please advise  whether there has been consideration to lift the 
moratorium or to allow new banks in Metro Manila?  Answer 
In June 2011, the BSP issued Circular 728 series of 2011 on the phased lifting of branching 
requirements in the 8 restricted areas of Metr o Manila.  Under the first phase of the 2-phased 
liberalization, second tier universal and commercial banks and thrift banks that have less than  WT/TPR/M/261/Add.1 
 Page 31 
 
 
  200 branches in the restricted areas as of 31 Decem ber 2011 would be allowed to apply and establish 
branches in the said areas until June 30, 2014.   For the second phase wherein branchi ng in the restricted areas will be opened up except to rural and 
cooperative banks that are not allowed to establis h branches in Metro Manila, would commence on 
1 July 2014. 
 As a result of this two phased lifting, a total of  15 new branches were reco rded in Metro Manila 
between end of June 2011 and end of September 2011. 
 
Report by the Philippines (WT/TPR/G/261) 
 II. DOMESTIC REFORMS 
Page 7, Paragraph 12 
 
Question 15 What were the major achievements for copyright protection or enhancement under the Medium-term 
Philippines Development Plan (MTPDP) of 2004-2010?  
Answer 
The major achievements for copyright pr otection or enhancement are as follows: 
1. Enactment of the Optical Media Act (2004) and the Anti-Cam-cording Act (2010) which were 
immediately applied and Invoked by IP owners in filing court actions. 
2. Establishment of collective management organi zations (CMOs) such as the FILCOLS, 
FILVADRO, and MVP. 
3. Continuing seizure in increasing volumes of infr inging products in the form of DVDs, CDs, 
books, merchandise and equipment used in illegal copying. 
4. Assisted universities to formulate IP policies and establish IP office within the universities to 
raise the institutional capacity of High er Education Institutions in IP matters. 
5. IPOPHL's intensive information dissemination activities with the different copyright sectors: 
writers/authors, music industry, visual artists, film makers, performers. 
 
Foreign Investment  Page 13, Paragraph 51 
 
Preparations for the 2011 IPP are underway.  The 20 11 IPP will have a shorter and more focused list 
of priority investment areas that are considered  "enablers" or "triggers" for job creation thereby 
empowering the people and providing them opportun ities for progress to achieve equitable economic 
development.  In addition, the Philippines is likewise geared towards the full promotion of public-
private partnerships as one of its key strategies to enhance the country's infrastructure system and 
competitiveness as an investment destination.  Question 16 
Can the Philippines please advise what the "full prom otion of public-private sector partnerships" will 
include and whether any reforms in this area will incl ude liberalisation of part nerships between public 
and foreign private companies?  Answer 
Full promotion of the PPP refers to  inclusion in the IPP and in the various investment promotion 
activities of the Government, e.g., inbound a nd outbound missions and promotion collaterals. 
 WT/TPR/M/261/Add.1 
Page 32  
 
  Page 14, Paragraph 54 
 
The revitalization programme of the Government for the minerals industry has identified several 
projects that are estimated to generate significan t investments until 2016.  The major driving forces 
are projects under the feasibility/financing and advanced exploration stages.  Investments for these 
projects are expected to peak in 2014 at US$3.14 billion.  Among the strategic projects involved are 
those on nickel, copper, and gold.  The rich mi neral resource coupled with the Government's 
investment policy enhances the desirability of  the Philippines as an investment site. 
 
Question 17 
Australia notes the focus on expansion and revitalisati on of the mining industry to take advantage of 
the current global price for resources.  Can the Ph ilippines please advise whether there is an intention 
in the "revitalization programme" to further liberalize the mining-related services sector?  
Answer 
This matter is under study and consideration by aut horities, especially in the context of the DDA 
services negotiations. 
 
(IV) FUTURE POLICY DIRECTIONS  
Page 17, Paragraph 76 
 
Question 18 Does the Philippines Development Plan (PDP) of 2011-2016 or its supporting strategies, policies or 
programmes include initiatives fo r enhancement of IP rights?  What are the major initiatives? 
 
Answer 
Yes, the PDP 2011-2016 makes mention of initiatives and strategies geared toward the realization of 
Indigenous Peoples' (IP) rights, particularly with  regard to their Ancestral Domains/Lands, Self-
Governance, and Empowerment.  The Chapter on plans for Social Development contai ns a section on Ancestral Domains/Lands, with 
specifics that deal at length with particular IP  issues (i.e. Information and Communication drives, 
land titling, IP access to justice and indigenous justice systems and REDD, among others).  
 Targets have also been set for th e issuance of Certificate of Ancestr al Land Titles and Certificate of 
Ancestral Land Titles (CADTs/CALTs) and formulation of Ancestral Domain Sustainable Development and Protection Plans (ADSDPPs). 
 
THAILAND 
 Secretariat Report 
 II. TRADE AND INVESTMENT REGIMES 
Page 20 (paragraph 21) 
 
"Since the last Review of the Philippines, the FI NL has been amended so that the practice of 
"guidance counseling" is now limited to Filipino citiz ens.  Investments in gambling are now permitted 
but only if they are covered by investment agre ements with the Philippines Amusement and Gaming 
Corporation (PAGCOR) operating within special ec onomic zones administered by the Philippines 
Economic Zone Authority." 
  WT/TPR/M/261/Add.1 
 Page 33 
 
 
  Question 1 
What are the reasons behind the limitation of the practice of "guidance counseling" to Filipino citizens 
under the amendment of the FINL?  
Answer 
The amendment was pursuant to the Guidance and Counselling Act of 2004. 
 
Question 2 
Does the Philippines provide any incentives for investments in gambling?  If so, what are those 
incentives?  Answer 
Under the Investments Priorities Plan (IPP), gambling is not among those preferred activities which are entitled to incentives.  Economic zones, i.e.  PEZA, also do not grant incentives to gambling 
operations 
 
Question 3 
Does the Philippines impose any rules or regulations on the remittance of profits from investments in 
gambling? 
 
Answer 
The remittance/repatriation of profits from invest ments in gambling is subject to the rules and 
regulations on foreign exchange (see:  http://www. bsp.gov.ph/regulations/regulations.asp?type =1 
&id=2334).   III. TRADE POLICIES AND PRACTICES BY SECTOR 
Page 26 (paragraphs 7-9) 
 
"A Valuation and Classification Review Committee (V CRC) is organized in every district port to 
solve valuation and classification disputes.  The de cision of the VCRC is appealable to the Central 
Valuation Classification Review and Ruling Committee (CVCRRC) within 15 days of receipt of the decision.  The CVCRRC's decision is subject only to  one motion for reconsider ation, which should be 
filed within five working days of its receipt.  If no motion is filed in time or if denied, the CVCRRC 
resolution becomes final.  The aggrieved importer ma y pay under "formal protest".  In the Port of 
Manila, an annual average of 100 valuation/classifi cation disputes have b een referred to the VCRC 
since 2005.  
The Philippines discontinued pre-shipment inspec tion on 31 March 2000.  Nonetheless, in case of 
bulk and break-bulk cargoes a load port survey/dischar ge port survey is required under the Bulk and 
Break-Bulk Enhancement Programme  implemented as from June 2010. 
 The Philippines is a member of the World Customs Organization (WCO).  It acceded to the WCO's 
Revised Kyoto Convention in June 2010 but with cer tain reservations, including full adoption of post-
entry auditing.  It has been suggested that th e Tariff and Customs Code of the Philippines (TCCP) 
needs to be revised to achieve full compliance with the Convention's provisions;  this is being 
deliberated in Congress." 
 
Question 4 
Are the Valuation and Classification Review Committee (VCRC) and the Central Valuation 
Classification Review and Ruling Committee (CV CRRC) administrative organs or independent 
entities?  How much time does the CVCRRC have in  order to make its decision with regard to 
appeals?  The report states that, "the CVCRRC's decision is subject only to one motion for WT/TPR/M/261/Add.1 
Page 34  
 
  reconsideration";  is the decision reconsidered by the same committee members or other different 
officers?  Does this mean that there is no more  higher body to review the CVCRRC's decision? 
 
Answer 
The VCRC is headed by the District Collector of Customs at each port, while the CVCRRC is headed 
by the Commissioner of Customs, both with different set of members.  
 The time necessary for the CVCRRC to render decisions with regard to appeals vary, depending upon 
the circumstances surrounding the case.  The motion for reconsideration at the CVCRRC le vel is subject to reconsideration of the same 
Committee members. 
 The decision of the CVCRRC may be appealed to the Court of Tax Appeals and then to the Supreme 
Court. 
 
Question 5 
Could the Philippines please indicate the provisions in  its Tariff and Custom s Code, and relevant 
regulations and/or rules, which indicate the proced ure of (1) valuation and classification disputes by 
the exporters, and (2) post-entry auditing?  
Answer 
Please refer to Sections 1313 and 3515 of the Tariff and Customs Code of the Philippines. 
 Question 6 
Would it be possible for the Philippines to provide la ws or regulations of the Philippines pertaining to 
an appeal of guarantee during the customs valuation process?  Answer 
Please clarify the term "appeal of guarantee".   Page 32 (paragraph 20)  
"Tariff quotas, ranging from 30-50% (in-quota rates) and 35-65% (out-of-quota rates), have remained 
relative stable during the period under review (Table  AIII.2).  Cane and suga r beet lines have the 
highest rates, both in-quota (50%) and out-of-quota (65%), followed by rice.  However several are inoperative following the lowering of the out-of-quota ra te to equal the in-quota rate.  The system for 
administering tariff quotas still seem complex (sect ion (v) below), and this may deter imports.  A 
substantial number of tariff quotas are regularly un filled; more recently there have been no tariff-
quota imports of sugar and potatoes, which utilizatio n for coffee and corn (maize) has been less than 
three quarters." (emphasis added) 
 
Question 7 
According to the report, the Philippines tends to lowe r the out-of-quota rate to equal the in-quota rate.  
Does the Philippines have any plan to remove tariff quotas on any products? 
 
Answer 
There are no plans to remove tariff quotas at this time. 
 
Page 41 (paragraph 42)  
"Domestic producers of "like or directly compe titive products" or producers whose collective output 
constitutes a major proportion of total production ma y file petitions for the imposition of a general 
safeguard. The DTI/DOA must determine whether a pr ima facie case exists to initiate a preliminary  WT/TPR/M/261/Add.1 
 Page 35 
 
 
  general safeguard investigation. The TC conducts  formal safeguard inv estigations and address 
requests for the extension and re-application of safeguard measures, their reduction, modification 
and/or termination. Under the Safeguards Measures Act, interested parties are allowed a five-day 
comment period." 
 
Question 8 Could the Philippines please clarify at what stage of the safeguards proceeding does the five-day 
comment period apply?  Is the extension request ed normally granted?  Moreover, in case of the 
extension, what is the average period of time given by the Philippines' authorities? 
 
Answer 
The five-day comment period applies to the period within which the respondent has to submit his 
comment on the petition from the receipt of the noti ce of initiation (Rule 6.5b of RA 8800).  If the 
request for extension is meritorious then the same is granted.  The average period of extension usually 
granted is 15 days. 
 
Pages 43-44 (paragraph 48)  
"PNSs are based on international standards whenever appropriate.  However, not all are aligned with 
international standards, due mainly to "long st anding business practices", climatic conditions, no 
specific international standards, and the need for hi gher requirements than international standards.  At 
end-October 2011, there were 7,547 PNSs;  the sh are aligned with international standards had 
increased to 78.5%, from 75.7% in October 2004."  
 
Question 9 
Could the Philippines notify the list of products  which are required a higher standard than 
international standards and the reasons underlying them? 
 
Answer 
As a signatory to the WTO TBT Agreement, the Philippines through the Bureau of Product Standards 
notifies technical regulations and conf ormity assessment procedures prio r to its applications as well 
as standards for adoption with deviation with the relevant international standards. 
 
Due to the large number of PNS adopted/developed by the Philippines, Thailand is invited to specify 
its product interests.  Meanwhile, information is  available at www.bps.dti. gov.ph.  In addition, 
standards that are harmonized with ISO/IEC are appr opriately designated (i.e. PNS/ISO, PNS/IEC). 
 
Page 45 (paragraph 53)  
"Imports of agricultural products, live animals, plan ts, fish, their products and by-products must be 
accompanied by a sanitary, phytosanitary or health certificate from the country of origin, and are 
subject to inspection upon arrival. An additional im port permit is required for meat and meat products, 
fish and fish products, and for all agricultural pro ducts.  The Bureau of Animal Industry (BAI), the 
Bureau of Fisheries and Aquatic Resources (BFAR), and the Bureau of Plant Industry (BPI), all under 
the DA, issue these permits, generally taking into account only SPS regulations.  However, in some 
cases domestic supply is also considered.  For ex ample, fish products may be imported only when 
certified by the DA as necessary to attain food security .  Packaged food imports may be confiscated 
unless registered with the Food and Drug Administration (FDA)."  
 
Question 10 
An import permit is required for meat and meat  products, fish and fish  products, and for all 
agricultural products by the authorities concerned of the Philippines and in some cases based on WT/TPR/M/261/Add.1 
Page 36  
 
  domestic supply.  Is issuance of such import perm it by the Philippines consistent with the WTO 
obligations?  
Answer 
The regulatory agencies of the Department of Agri culture issue SPS Import Clearances which are the 
basis of the importers' compliance with food safety  and plant and animal health standards as required 
by the Philippines.  This is c onsistent with the SPS Agreement.  
Page 48 (paragraph 67) 
 
"Nevertheless, foreigners' participation in the proc urement of goods remains restricted, and seems to 
depend upon the source of the funds for the project  and the domestic availability of the procured 
goods and services.  The Constitution provides for a strong preference to procure domestically.  It requires the State to give preference to qualified F ilipinos (section 10), and to promote the preferential 
use of Filipino labour, domestic ma terials, and locally produced goods, as well as to adopt measures 
that help make them competitive (section 12).  Fo r example, the Government continues to procure 
official uniforms containing Philippine tropical fabrics as well as footwear and leather goods 
manufactured in the Philippines as a means to support local industries (Chapter IV(2)).  For foreign-
assisted projects, overseas firms may bid, but there is a 15% price preference for domestic suppliers. For other procurement projects, such as those funded domestically, only firms with at least 60% or 75% Filipino ownership or inter est, depending on the type of procurement, may participate.  
However, if the goods are not available locally, or wh ere there is a need to prevent unfair competition, 
foreign suppliers may be invited to participate.  In addition, in the interest of efficiency and timely 
delivery of goods, the procuring entity may give preference to the purchase of domestically produced 
and manufactured goods, supplies, and materials that satisfy the specified or desire quality." 
 
Question 11 
Foreigners' participation in the pr ocurement of goods remains restricted  and there seems to be a strong 
preference to procure domestically under the Gove rnment Procurement Reform Act (GPRA).  Does 
this practice coincide with the international practices?  
Answer 
The GPRA was adopted generally to elevate public procurement standards to international standards. 
Several countries spell out in their procurement laws preference to domestic companies.  The 
Philippines is not the only country that provides p reference to locals since this becomes an approach 
to empower small and medium enterpris es, hence practiced worldwide.  
 
Page 48 (paragraph 68) 
 
"The Philippines is neither a signatory nor an observer to the WTO Plurilateral Agreement on 
Government Procurement."  
Question 12 
Does the Philippines plan to be a signato ry or an observer to the WTO GPA?  
 
Answer 
The matter is currently under consideration by authorities. 
 Pages 51-52 (paragraph 87) 
 "The Motor Vehicle Development Programme (MVPD), under Executive Order No. 156 of 2002, 
provided, inter alia , for the removal by 30 June 2003 of  export-balancing and local-content 
requirements.  In June 2010, under Executiv e Order No. 877-A, the MVPD was revised, inter alia , to  WT/TPR/M/261/Add.1 
 Page 37 
 
 
  promote domestic automobile production, spur expo rts, and make the Philippines a regional hub for 
auto parts and components.  Some of the key f eatures of the new MVPD are:  (i) favours local 
completely knocked-down (CKD) auto parts and com ponents against imports;  (ii) tightens the rules 
on imports of used engines, which in the past were  freely importable;  (iii) continues the prohibition 
on imports of used motor vehicles;  (iv) takes adva ntage of regional trade agreements;  (v) creates the 
Motor Vehicle Industry Council;  and (vi) estab lishes an industry fund to promote R&D and 
upgrading of equipment and facilities.  The new MV PD will enter into force after adoption of the 
implementing rules and regulations." 
 
Question 13 
As it is indicated that the new Motor Vehicle Development Programme (M VPD) favours local CKD 
auto parts and component against imports under Executive Order No. 877-A, could the Philippines 
explain how the measure complies with the WTO obligations?   
Answer 
EO 877-A has not been implemented. 
 
Page 55 (paragraph 99) 
 
"Over the last decade, the Government has been attempting to reform the tax incentives system by 
rationalizing and harmonizing over 100 investment in centive laws under one law.  This would list the 
priority areas and the incentives to be granted to investors registered with the various investment 
promotion agencies.  According to the authorities, the proposed incentive system would be:  (a) highly 
focused to ensure that only those economic ac tivities in which the country has a comparative 
advantage are promoted;  (b) efficient enough to promote both optimal allocation of resources and neutrality in terms of use of the limited resources;  (c) time-bound to ensure viability of the investing 
firm;  and (d) simple enough to administer and monitor to address revenue leakages." 
 
Question 14 
How far has the reform of tax incentives system been progressing? 
 
Answer 
A bill on incentives rationalization has passed th e House of Representatives, and the Senate is 
currently deliberating on several bills.   Question 15 
After the said reform is completed, which agency will be the focal point for the application and approval of tax incentives for investors? 
 
Answer 
The focal agency is proposed to be the Board of Investments.  
 
IV. TRADE POLICIES BY SECTOR 
 
Page 69 (paragraphs 18-20) 
 
"The Philippines is one of a few countries that have benefitted from the Uruguay Round Agreement 
on Agriculture (AOA) special treatment clause (Annex 5), which has allowed it to maintain an import 
quota on rice, under certain conditions.  In 2006, the Philippines negotiated the continuation of this 
regime until 30 June 2012.  The Philippines must import a minimum of 350,000 tonnes of rice at an 
in-quota tariff rate of 40%.  It is required to allo cate country-specific quotas each year to:  Australia 
(15,000 tonnes);  China (25,000 tonnes);  India (25,000 tonnes), and Thailand (98,000 tonnes).  Imports of rice above the 350,000 tonnes threshold are subject to the MFN duty rate of 50%.  Over the WT/TPR/M/261/Add.1 
Page 38  
 
  review period, the Philippines' imports of ri ce have well exceeded the 350,000 tonnes minimum 
access commitments.  In 2010 imports were (2.2 m illion tonnes);  2009 (1.6 million tonnes);  2008 
(2.3 million tonnes);  2007 (1.8 million tonnes);  2006 (1.6 million tonnes);  and 2005 (1.6 million tonnes).  
The NFA has control over imports of rice:  it has the authority to import rice itself or to allocate 
import quotas to licensed importers (i.e. Filipino fa rmers, cooperatives, or private grains businesses). 
The review period has seen much greater private participation in rice importing, in line with the 
government policy:  all country-specific quota allocations are now imported by the private sector. All out-of-quota rice is imported by the NFA directly.  It is hoped that greater private sector participation 
will help the NFA to address some of its very subs tantial debts, which amounted to PHP 177 billion in 
2010.  The authorities noted that when the NFA import s directly, it has to resort to foreign borrowing 
and hence incurs significant interest rate repayments.   In 2010, the DOA launched a 2011-2016 Rice Self Su fficiency Roadmap (RSSR) which has evolved 
into the Food Staples Self-Suffi ciency Roadmap.  This progra mme has three components:  (i) 
increasing and sustaining the gains of production through the use of production interventions and 
establishment of enabling mechanisms;  (ii) management  of consumption;  and, (iii) diversification of 
staples."  
Question 16 
The Philippines aims to become sel f-sufficient in rice, or no rice import, by 2013 while intends to 
continue the special treatment on rice under the mi nimum market access rules of the Agreement on 
Agriculture, which requires minimum rice import quota.  Thailand would like to seek clarification regarding the coexistence between these two policies.  Answer 
The Philippines aims to be self-sufficient in rice a fter 2013.  However, it should be clarified that rice 
self-sufficiency does not automatically mean that th ere would be no more rice imports from thereon. 
The continuation of the special treatment is bein g negotiated to ensure rice food security given the 
increased unreliability and volatility of the world rice supply.  There is a need  to ensure farmers' 
incomes to re-invest in rice and ultimat ely greater food security for the people. 
 
Pages 70 (paragraph 22) 
 
"As reported in the Philippines' previous TPR, th e Sugar Regulatory Administration (SRA), an 
"attached agency" of the Department of Agricu lture, manages sugar production and supply, through 
the "quedan system".  In addition to NFA's occa sional role in importing sugar, SRA-registered 
international sugar traders may im port and export sugar.  The authorities noted that traders must 
receive clearance from the SRA to release the impo rted sugar from Customs.  The SRA will either 
classify the sugar as "domestic" or "reserve".  If cl assified as "domestic" it may be sold domestically.  
Reserve sugar must be stored and may only be re leased onto the domestic market once authorization 
has been obtained from the SRA for it to be recl assified from "reserve" to "domestic".  The SRA 
authorizes traders to export once it has ensured that domestic demand has been satisfied." 
 
Question 17 
What are the qualification requirements to become a registered sugar trader with the SRA, and how 
many traders have been registered thus far?  
 
Answer 
Any individual or business entity duly created under Philippine laws may qualify as an international 
sugar trader subject to the submission of the follo wing to the SRA:  1) mayor's business permit, 2) 
SEC Registration, 3) Current year general informa tion sheet, 4) Articles of Incorporation and By- WT/TPR/M/261/Add.1 
 Page 39 
 
 
  Laws, 5) TIN, 6) Photo of designated representati ve, 7) Notarized application form, and 8) Track 
Record of domestic and international transactions.  As of March 2012, a total of 26 international 
sugar traders have been registered. 
 
Question 18 
According to paragraph 22, "traders must receive  clearance form SRA to release the imported sugar 
from Customs."  Please clarify the clearance procedure. 
 
Answer 
The following procedures are followed in securing cl earance to release imported sugar from customs: 
1) the importer (international sugar trader) submits application for clearance to release imported sugar 
as well as the documentary requirements to the SRA pr ior to the arrival of the shipment, and 2) the 
SRA indicates in the clearance the market classificat ion of the sugar based on existing sugar supply 
situation and intended use of the imported sugar. 
 
INDONESIA 
 
I. M EASURES DIRECTLY AFFECTING IMPORTS  
 Import prohibitions, restrictions, licensing, and quotas  
 
According to the Report of Secretariat, Imports of fi sh products are highly regulated; if allowed, each 
shipment requires a permit or license issued by th e the Bureau of Fisheries and Aquatic Resources 
(BFAR).  Fish imports are subject to a physi cal examination and microbiological analysis upon 
arrival.  If deemed safe, a Fishery Sanitary and Ph ytosanitary Certificate is issued to release imports. 
(Document :  WT/TPR/S/261, para 56 page 45)  
Question 1 
In regards to Policy of Imports of fish products , how long does it takes for physical examination and 
microbiological analysis process of Imported fish products?  
Answer 
When the imported fishery product is presented for physical examinatio n/inspection, for containerized 
shipments, it takes less than one (1) hour to conduct the inspection.  While inspection is mandatory, 
drawing of samples for laboratory examination (microbiological analysis, etc.) is done randomly, that 
is, not all shipments are drawn samples for laborat ory examination.  The shipment is released to 
consignee after drawing of the samples and the la boratory result is not required as condition for 
release of shipment.  This process applies to ship ments accompanied by SPS Certificates from the 
country of origin. 
 
II. TRADE POLICIES AND PRACTICES BY MEASURE 
(v) Contingency Trade Remedies 
 
According to the Report of Secretariat at Part V on Contingency Trade Remedies, its mentioned that 
The Philippines mentioned that there are no major ch anges have been made to the legislative and 
institutional framework for anti-dumping, countervaili ng measure since the Philippines' last TPR and 
also for safeguards during the period under review.  (Document:  WT/TPR/S/261, Part (v) Para 37 - 
40 page 40 - 43)  
Question 2 
Could the Philippines release a clear decision or stat ement to the interested parties once the trade 
remedies' duty's ended or has been terminated?  WT/TPR/M/261/Add.1 
Page 40  
 
  In practice, other WTO Members like India and Eur opean Commission has made  such statement e.g. 
in a form of press release.  This statement shall gi ve clarification to the exporting Members to do trade 
with the Philippines.  
Answer 
The Philippine Government issues corresponding Depar tment Orders, furnishes copy of the Orders to 
all interested parties and publishes notices in tw o (2) newspapers of general circulation upon 
termination of the measure.  The Tariff Commission and Bureau of Import Services a re currently looking towards posting in their 
websites definitive decisions to terminate the trade remedies. 
WTO Agreements such as Anti-Dumping Agreem ent, Agreement on Subsidy and Countervailing 
Measures and Agreement on Safeguard has clea rly provided a chance for the parties under 
investigation to defense their interest  before the Investigating Authority. 
 Question 3 
Could the Philippines in its trade remedies procedure make a regulation that allowed a sufficient time 
for the investigated parties in delivering their defe nse to the on-going trade remedies' investigation?   
 
Answer 
Yes, the Philippine trade remedy procedures allow su fficient time for all interested parties to submit 
their response/comment and other evidence and information to dispute all allegations (Rule 6.5 of 
RA8800, Sec. 301.(e) of RA 8752 and Sec. 302.(d) of RA 8751). 
 
Question 3 
Does the Philippines already has the regulation to  offer, a compensation to the countries under 
imposition of safeguards measure as mentione d under Article 8 WTO Agreement on Safeguard? 
 
Answer 
The Philippine Government adheres to Article 8 of WTO Agreement on Safeguard Measure.  Any 
means of trade compensation is  done through consultations. 
 
Other Measures  
We note from the WTO Secretariat's report that the President may impose an additional ad valorem 
duty not exceeding 100% on goods par tly or wholly originating in or transported in a vessel of any 
country that discriminates against Philippine exports.   If discrimination persists or increases after the 
duty is imposed, the President may prohibit the importa tion of goods originating in or transported in 
vessels of that country, if in the national interest.  This measure has not been used during the period 
under review.  (Document:  WT/ TPR/S/261, para 46 page 42) 
 
Question 4 
Could Philippines please explain that in order to prev ent illegal retaliation (which is not in line with 
WTO Agreements), whether such policy has been notified to WTO before imposing it? 
 
Answer 
The measure has not been used. 
  WT/TPR/M/261/Add.1 
 Page 41 
 
 
  (vi) Standards and Other Technical Requirements 
We note from the WTO Secretariat's report that According to the Report of Secretariat at Part V on 
Contingency Trade Remedies, it's mentioned that the Philippines has made 200 notifications to the 
WTO. (Document: WT/TPR/S/261, Para 52 page 44)  Question 5 
Could The Philippines provide its complete import regul ations, to be notified to the other Members so 
the information could be accessible by interested parties in a timely fashion?  
Answer 
The Philippines' SPS regulations ha ve been duly notified.  The full text of these regulations can be 
provided upon request at the SPS Enquiry Point. 
 
Labeling and marking requirements 
The Philippines continues to prescribe minimum la beling requirements for all imported and locally 
manufactured products as specified in the Consumer  Act.  If an imported good is covered by 
mandatory certification of the BPS and certified to  have passed the standard prescribed by the BPS, 
the label must contain the Import Commodity Clearance (ICC) Mark or PS Quality/Safety Mark if the manufacturer of the product is a PS license holder.  Domestically produced goods, regulated by BPS, 
must have the PS Quality/Safety Mark.  Articles that  cannot be marked prior to shipment, such as 
crude substances, and products im ported for private use and not for resale in their imported form, are 
exempt from marking requirements.  In 2008, the DTI issued mandatory parallel translation in English 
or Filipino language on the product labe l or packaging.  (Para 60 page 46) 
Para 60 stated:  "Articles that cannot be marked prior to shipment, such as crude substances, and 
products imported for private use and not for resale in their imported form, are exempt from marking requirements".  
 
Question 6 
Could the Philippine give the compelling reason of  the exemption of marking requirement for the 
following products:  crude substa nces, products imported for private use and not for resale.  
 
Answer 
Labeling requirements of the Consumer Act of the Philippines and other related Philippine National 
Standards (PNSs) apply to imported pr oducts that are for distribution in the Philippine market, if said 
importations were declared for private use and not  for resale in their im ported form then the 
exemption applies. 
 
Granted that these declared products are found be ing distributed in the Philippine market, then the 
labeling requirements of the Consumer Act of the Phi lippines and related PNSs shall be enforced and 
necessary sanctions shall be applied. 
 
Export Support 
 According to the Report by Secretariat, Philippin es had been providing incentives (mainly tax) to 
selected activities.  Tax incentives provided by th e Board of Investments (BOI) under the Omnibus 
Investment Code (OIC).  Tax incentives are availabl e to producers of non-traditional exports and for 
activities that support exporters.  (Docum ent:  WT/TPR/S/261, para 88 page 52) 
 WT/TPR/M/261/Add.1 
Page 42  
 
  Question 7 
In regards to Philippines' policy which providing  tax incentives to the selected activities.  Could 
Philippines further explain about this tax in centives scheme and how to ensure that the 
implementation of such tax incentives scheme would not violate the WTO Agreements.  Answer 
The Philippines provides incentives to  industries which contribute to the development goals of the 
country.  Given the limited size of the Philippine  market, the government for decades has been 
encouraging domestic companies to increasingly participate in international trade.  It is our view that 
this will not only improve their economies of scale , thereby improving their competitiveness but also 
generate the much-needed foreign exchange for th e government.  Incentives are no more than those 
provided by other economies to similar activities 
 
Sanitary and phytosanitary measures 
 In the note of Secretariat, Imports of agricultura l products, live animals, plants, fish, their products 
and by-products must be accompanied by a sanitary , phytosanitary or health certificate from the 
country of origin, and are subject to inspection upon  arrival.  An additional import permit is required 
for meat and meat products, fish a nd fish products, and for all agricu ltural products.  The Bureau of 
Animal Industry (BAI), the Bureau of Fisheries and Aquatic Resources (BFAR), and the Bureau of 
Plant Industry (BPI), all under the DA, issue thes e permits, generally taking into account only SPS 
regulations.  However, in some cases domestic supply is also considered.  For example, fish products 
may be imported only when certified by the DA as necessary to attain food security.  (Document : 
WT/TPR/S/261, para 53 page 45) 
Question 8 
Regarding to the Philippines import policy on agricu ltural products which use food security (domestic 
supply) as consideration to issue import permit, I ndonesia would like to seek for further explanation 
regarding this policy.  As in the case of Sanitary  and Phytosanitary Agreement (SPS), food security 
reason cannot be used as consideration for importa tion policy.  Fairly, SPS Agreement emphasis on 
scientific justification in importation policy.  
Answer 
The regulatory agencies of the Department of Agri culture issue SPS Import Clearances which are the 
basis of the importers' compliance with food safety  and plant and animal health standards as required 
by the Philippine.  This is cons istent with the SPS Agreement. 
 
Since on April 2011 Indonesia has sent import protocol  of Strawberry and give technical information 
needed by Philippines for import permit of Strawb erry but until now Philippines has not issued the 
import permit.  (Document :  WT /TPR/S/261, para 53 page 45)  
 
Question 9 
Regarding to this situation Indonesia kindly ask s Philippines to explain the mechanism of import 
licensing for Strawberry and furthermore, what is the time frame under this policy to get an import 
license. 
 
Answer 
DA has responded to Indonesia's request for ma rket access for strawb erry and has provided the 
technical information required for the conduct of th e Pest Risk Analysis (PRA) on April 2011.  The 
first step for market access is the conduct of PRA for strawberry by the Bureau of Plant (BPI)-Plant 
Quarantine Service (PQS).  At present, the BPI-P QS is still in the lit erature search and pest 
categorization phase of the PRA process.   WT/TPR/M/261/Add.1 
 Page 43 
 
 
  However, there are a number of PRAs that a re being conducted by the PRA Team which were 
submitted earlier than that of Indonesia.  The PRA Te am of the BPI-PQS follows a "first come first 
serve" policy for the conduct of PRA.  III. TRADE POLICIES BY SECTOR 
 
Transport 
 
The Civil Aeronautics Board (CAB), an attached agency of the Department of Transportation and 
Communications (DOTC), is responsible for li censing domestic and international airlines and 
regulating competition within the sector.  (Para 107, page 90) 
 
Question 10 
What if there is one domestic airlines opposing a foreign airlines application in the public hearing? 
Would the application be rejected? 
 
Answer 
Not necessarily.  All applications for Foreign Air Ca rrier's Permit  (FACP) or Certificates of Public 
Convenience and Necessity (CPCN), whether opposed or unopposed, are evaluated on the merits 
giving weight to reciprocity, financial capacity, safe ty record, ability to generate employment, bring 
in capital and/or raise tourism-rel ated activities in the Philippines. 
 
Question 11 
Could the Philippines further explain regarding its re gulation for the new entrant- airlines which is in 
the application process for operating to and or from Philippines?  
 Answer 
New entrant airlines can resort to the REGULAR application for an FACP/CPCN or for foreign airlines can apply by way of E.O.28/29 (a policy declaring the further liberalization of Philippine 
aviation to gateways outside Manila).  
The Philippines imposes a 3% common Carriers Tax (CCT ) and a 2.5% gross billings tax on carriers.  
Tax reforms are being considered in Congress to  reduce disincentives for long-haul carriers and 
thereby encourage tourism. (para 115, page 92)  
Question 12 
Does this tax also applied to foreign airliners?  If yes, Is there possibility to harmonize this tax 
regulation with Philippines partner's country  in order to be applied reciprocally? 
 
Answer 
Yes, this is applied to foreign airlines. 
 
Professional services 
 
To practice as a lawyer in the Philippines, the Supreme Court Philippine Bar Examination must be passed.  In order to be a candidate for the bar examination, the academic requirements are:  a 
professional degree in law from a recognized law sc hool in the Philippines or from a foreign law 
school that has been accredited by the Philippine Government (introduced in 2010), and a bachelor's 
degree (with academic credits in required subjects)  from a recognized college or university in the 
Philippines or abroad.  Lawyers must be Filipino c itizens and residents.  (Document:  WT/TPR/S/261, 
para 130 page 96)  WT/TPR/M/261/Add.1 
Page 44  
 
  Question 13 
Could Philippines provide further explanation why fo reign lawyers are not allowed to practice in the 
legal service market in Philippines? 
 
Answer 
The practice of law in the Philippines is regulat ed by the Supreme Court of the Philippines.  
 CHILE 
 
Secretariat Report (WT/TPR/S/261) 
 
TRADE POLICIES AND PRACTICES BY MEASURE (1) M
EASURES DIRECTLY AFFECTING IMPORTS  
(iii) Tariffs, other duties, and taxes 
(b) Bound tariffs  
Page 31 (Para. 17) 
 
According to paragraph 17 of the Report by the Secr etariat, the binding coverage is approximately 65 
per cent. 
 
Question 1 Is the Philippines considering increasing the number of  bound tariff lines, particularly in the product 
groups in which there are no bound items?  
Answer 
The Philippines remains fully engaged in the Do ha Round negotiations where binding levels and 
binding coverage are part of the negotiations.   
 
Government Report (WT/TPR/G/261) 
 II. DOMESTIC REFORMS 
(1) S
TRUCTURAL REFORMS  
Energy Sector 
 Page 10 (Para. 31)  
It is stated that in addition to Act No. 9367 on Biofuels, there are a number of incentives and benefits 
for investment in the biofuels industry.  
Question 2 
Could the Philippines please provide further informa tion on the incentives and benefits granted to the 
biofuels industry? 
 
Answer 
In addition to the incentives under the Biofuels Act,  benefits are also granted under Republic Act 9513 
otherwise known as the Renewable Energy Law. 
  WT/TPR/M/261/Add.1 
 Page 45 
 
 
  Additional Questions from Chile 
 
Secretariat Report (WT/TPR/S/261) 
 
Technical barriers to trade 
 
(vi) Standards and other technical requirements 
(a) Standards, technical requirements, and certification 
The Bureau of Product Standards (BPS), a governme ntal body under the DTI, is responsible for 
developing and implementing Philippine National Standards (PNSs), and is the WTO-TBT national 
inquiry point.4  BPS has been actively involved in establis hing mutual recognition agreements within 
APEC and ASEAN, and at the bilateral level.  As  a member of the International Organization for 
Standardization (ISO) and the International Electrotechnical Commission (IEC), BPS participates in the development of international standards.  Question 3 
In the Philippines, does the same organization (the  Bureau of Product Standards) develop technical 
regulations or is this, rather, the responsibility of each ministry and regulatory agency?  In the case of 
the latter, is there any internal coordination on the matter?  
Answer 
The Bureau of Product Standards is the prin cipal agency responsible for the development, 
implementation and coordination of  standardization activities in the Philippines.  However, some 
laws also provide other government agencies the mandate or authority to develop technical 
regulations in specific areas of competence. 
 
Trade defence Anti-dumping and countervailing measures 
 
According to paragraph 38 of Chapter III "Trade Policies and Practices by Measure", (1) "Measures 
Directly Affecting Imports", (v) "Contingency tr ade remedies", (a) "Anti-dumping and countervailing 
measures", the anti-dumping/countervailing legislati on is administered by the Department of Trade 
and Industry (DTI) for non-agricultural products, and the Department of Agriculture (DOA) for 
agricultural goods. 
 
Question 4 
Are the prerequisites for determining whether to apply provisional anti-dumping and countervailing 
measures different for agricultural products and non-agricultural products? 
 
Answer 
No - the requisites under the law for both provis ional anti-dumping and countervailing measures are 
the same, whether the subject article is agricultural or non-agricultural. 
 According to paragraph 39 of Chapter III " Trade Policies and Practices by Measure ", (1) " Measures 
Directly Affecting Imports ", (v) " Contingency trade remedies ", (a) " Anti-dumping and countervailing 
measures ", anti-dumping/countervailing duties are effec tive for five years and may be extended. 
 
Question 5 
What is the maximum number of times that an ti-dumping and countervailing duties may be extended? 
 
                                                      
4 At end October 2011, the Philippines had made more than 150 notifications to the WTO Committee 
on Technical Barriers to Trade. WT/TPR/M/261/Add.1 
Page 46  
 
  Answer 
With reference to the maximum duration of the imposition of anti-dumping  and countervailing duties, 
the Philippine Government adheres to and applies the standards of the WTO Agreements of ADA 
(Article 11) and ASCM (Article 21). 
 
Safeguards  
Paragraphs 43 and 44 of Chapter III " Trade Policies and Practices by Measure ", (1) " Measures 
Directly Affecting Imports ", (v) " Contingency trade remedies ", (b) " Safeguard measures ", state that, 
for agricultural products, the authorities may appl y a quantitative restriction where increasing the 
tariff is considered insufficient to  redress or prevent serious injury. 
 
Question 6 
Does this paragraph refer to the special agricu ltural safeguard (Article 5 of the Agreement on 
Agriculture)? 
 
Answer 
No. But this option has not been used as no general safeguard was imposed on agricultural goods 
during the years under review. 
 
Question 7 
Does it mean that in the first inst ance the tariff is increased and th en, if this proves insufficient, a 
quantitative restriction is applied?  
Answer 
Yes but this option has not been used as no ge neral safeguard was imposed on agricultural goods 
during the years under review.  
Competition policy 
 
According to paragraph 106 of Chapter III " Trade Policies and Practices by Measure ", (3) " Measures 
Affecting Production and Trade ", (ii) " Competition policy and price controls ", the Philippine 
Development Plan 2011-2016 recognizes the need to enact a competition law. 
 
Question 8 
When does the Philippines plan to enact and implement such a law? 
 Answer 
A proposed comprehensive competition law is in  various stages of th e legislative process. 
 
Question 9 
According to the Secretariat Report, there is potentia l for conflict with other legislation.  What could 
be done to prevent such conflict? 
 
Answer 
Every effort is being made in the crafting of the le gislation to ensure that potential conflict will be 
avoided.  
 
Intellectual property  
In document WT/TPR/S/261 we cannot find any refe rence to geographical indications or their 
protection in the Philippines.   WT/TPR/M/261/Add.1 
 Page 47 
 
 
  Question 10 
Could you provide this information, as well as information regarding the relationship between 
geographical indications and trademarks?  
Answer 
The Philippines protects GIs under the trademark system.  These can be protected as collective marks.  
The Philippines is in the process of reviewing its regulations to include the registration of 
certification marks.  As part of the continuing effort s to improve its IP System, the Philippines is 
assessing the benefits of a sui generis system for the protection of GIs. 
 Regarding what is expressed in paragraph 126 in relation to enforcement and the reference to the 
National Committee on Intellectual Property Rights (NCI PR), specifically in regards to the Philippine 
National Police (PNP) and the Bureau of Customs (BOC):  
Question 11 
We would like to inquire if there is a specialized branch within the PNP or BOC dedicated solely to 
the enforcement of intellectual property rights.  
Answer 
All member-agencies of the National Committee on Intellectual Property Rights (NCIPR) have 
specialized units for intellectual  property rights (IPR) enforcement.  Executive Order No 736 of 2008 
established the NCIPR and mandated the creation of Intellectual Property Rights Unit (IPR Unit).  
 The Philippine National Police (PNP) has a divi sion under the CIDG (Cri minal Investigation and 
Detection Group) called the AFCCD (Anti-Fraud and Commercial Crimes Division), which handles 
all commercial crimes, including but not limited to IP violations.  They are the enforcement arm 
which conduct raids and effect seizures. 
 The Bureau of Customs (BOC) has a unit called the IPU (Intellectual Property Unit) which has 
jurisdiction over IP violations, and they are responsib le for border control me asures such as seizure 
and detention of incoming goods. 
 Finally, on the same issue of enforcement, para graph 128 establishes criminal and civil penalties and 
damages.  
Question 12 
In this sense, could the Philippines inform us of  how these penalties equate to similar crimes or 
infractions to other types of property? 
 
Answer 
The penalties are comparable to those imposed on si milar crimes or infractions to other types of 
property.  MEXICO 
 
Question 1 
Given that low investment is one of the key con cerns identified in the Philippine Development Plan 
2011-2016 (Chapter 1, paragraph 5), and that, as stat ed in paragraph 16, the Philippines is performing 
"below potential", are any steps being taken to  open up sectors such as agriculture, services and 
fisheries to foreign participation?  WT/TPR/M/261/Add.1 
Page 48  
 
  Answer 
On agriculture and fisheries, there are no initiatives to ease the restrictions. The Philippines is 
actively engaged in the DDA services negotiations. 
 
Question 2 
According to paragraph 7, fiscal deficits and public debt pose one of the greatest risks to 
macro-stability in the Philippines.  What policies ar e being implemented to r ectify this situation? 
 
Answer 
Tax administration improvements, improved go vernance in procurement and project planning and 
implementation are major measures used to contain th e fiscal deficit.  Strate gic liability management 
has improved the profile of public debt.  Focus on fiscal consolidation has brought down the ratio of 
public debt to GDP. 
 
Question3 
While we welcome the fact that the Philippines does not apply export taxes to virtually any of the 
products in its tariff, we would like  to know why non-native logs are subject to an export tax of 20 per 
cent.  
Answer 
The 20% export tax on exported logs aims to augmen t the local log supply to address the needs of 
domestic wood processors.  Moreover, this is in lin e with the afforestation and reforestation activities 
throughout the country. 
 
Question 4 
According to paragraph 67, participation by fo reigners in the government procurement regime 
remains restricted.  Are there any plans to open up this sector to foreign businesses? 
 
Answer 
Under the GPRA, foreigners may participate in public procurement subject to conditions stated in the 
law.  Whether to open this sector  further to foreign business is a question of policy which is to be 
addressed by the legislative branch of government. 
 
Also, Section 10 of the GPRA espouses competitive bi dding as the primary mode of procurement by 
the government.  In support of the principle of co mpetition, alternative forms of procurement may be 
resorted to in highly exceptional cases. 
 
Question 5 
While we recognize that there are several laws re lating to competition policy and that the introduction 
of a general competition law would conflict with other legislation (paragraphs 104 and 106), we 
would like to know what measures have been taken to increase competition in the Philippine economy.  Answer 
The Office for Competition, und er the Department of Justice, was formally constituted in 
October 2011.  A Comprehensive Competition Law is currently being deliberated in Congress. 
 
Question 6 
Chapter IV, paragraph 4 states that all banking ins titutions (government and private) are now required 
to set aside 25 per cent of their funds for agricultu re and fisheries credit.  Did the Philippines assess 
the potential for distortion in other sectors, su ch as manufacturing and services, and in consumer 
credit?   WT/TPR/M/261/Add.1 
 Page 49 
 
 
  Answer 
This requirement is based on a Republic Act wh ich underwent extensive legislative deliberations. 
 
Question 7 
Paragraph 71 states that no entity can have a franc hise in both telecommunications and broadcasting.  
Which factors were taken into considera tion when this restriction was imposed? 
 
Answer 
The restriction is provided under Republic Act 7925 (P ublic Telecom Policy Act of 1995) as well as 
Executive Order 436 (Policy guidelines to govern the operations of cable TV or CATV in the 
Philippines).  The Philippine Constitution also reserves broadcast services to Filipino citizens (i.e., 
100% Filipino).  Telecommunications is essential to  the economic development, integrity, and security 
of the Philippines, and as such shall be d eveloped and administered to safeguard, enrich, and 
strengthen the economic, cultural, social, and political fabric of the Philippines.   
 
Additional Questions by Mexico - Set II 
 
Intellectual property 
 
Question 8 
What is the term of protection of copy right and related rights in the Philippines? 
 
Answer 
For literary and artistic works in general, term of pr otection is life of the author plus fifty (50) years 
after his death.  In case of works of joint authorship, life of the last surviving author plus 50 years 
after his death.  For anonymous or pseudonymous works, 50 years from the date on which the work 
was first lawfully published;  if not published, 50 years from the making of the work.  For works of 
applied art, twenty-five (25) years from the date of making.  For photographic works and audiovisual 
works, 50 years from publication or making. 
 
Question 9 
Does the Intellectual Property Code provide for restri ctions and exceptions in favour of persons with 
disabilities?  If so, what are the ma in restrictions and exceptions? 
 
Answer 
No.  However, an exception for visually-impaired/bli nd persons is contained in bills that would 
amend the IP Code, particularly the copyright law. 
 
Question 10 
Does the Intellectual Property Code or any other legi slation contain any provisions on legal protection 
and legal remedies against the circumvention of technological protection measures and against the 
removal or alteration of electronic rights management information?  Answer 
Sec. 33 of the Electronic Commerce Act of 2000 (R.A. No. 8792) provides penalties for "hacking"and "piracy", which are defined therein.  Question 11 
Does the Intellectual Property Code contain provisions  on the liability of Internet service providers? 
 
Answer 
No.  Likewise, this provision (on secondary liability,  though not specifically naming ISPs), is also 
contained in the said pending bills. WT/TPR/M/261/Add.1 
Page 50  
 
  Question 12 
How many collective management societies or bodies are there in the Philippines and which branches 
of copyright or related rights do they cover?  
Answer 
There are five (5) existing CMOs in the Philippines.   They are:  Filipino Society of Composers, 
Authors and Publishers (FILSCAP), for music com posers;  Filipinas Copyright Licensing Society 
(FILCOLS), for book authors and publishers;  Filipino Visual Arts and Design Rights Organization (FILVADRO), painters, sculptors and other visual artists;  Music and Video Performance, Inc. (MVP), for phonogram producers;  Performance Rights Society of the Philippines, for performers. 
 
Question 13 
Who is responsible for establishing roya lty payment rates in the Philippines? 
 
Answer 
There is no provision of law fixing royalty rates as these are subject to contractual stipulations.  
However, there are rates and practi ces observed by certain industries. 
 
Question 14 
What is the maximum penalty applied by the Government of the Philippines for copyright 
infringements? 
 
Answer 
Six (6) years and one (1) day to nine (9) years plus a fine ranging from five hundred thousand pesos 
(P 500,000) to one million five hundred  thousand pesos (P 1,500,000). 
 
Question 15 
Does the Government of the Philippines plan to accede, at some point, to the Convention for the 
Protection of Producers of Phonograms Against Unau thorized Duplication of Their Phonograms and 
the Convention Relating to the Distribution of Programme-Carrying Signals Transmitted by Satellite? 
 
Answer 
There are no plans as of to date. 
 
Government procurement 
 
Question 16 
Could you please clarify whether the Government Procurement Reform Act (GPRA) mentioned in 
paragraph 61 of the Report by the Secretariat al so covers procurement by sub-federal entities? 
 
Answer 
Yes.  
 
Question 17 What entities or ministries make up the Governme nt Procurement Policy Board and the Procurement 
Transparency Board mentioned in paragra ph 62 of the Report by the Secretariat? 
 
Answer 
The GPPB is composed of the Secretaries of DB M, NEDA, DPWH, DOF, DTI, DOH, DND, DepED, 
DILG, DOST, DOTC, DOE and a representative from th e private sector appointed by the President 
upon recommendation of the GPPB.   WT/TPR/M/261/Add.1 
 Page 51 
 
 
  The PTB is composed of the GPPB, the Preside ntial Anti Graft Commission, NEDA, DOJ, DBM, 
DILG, and 5 NGOs/CSOs duly designated by the netwo rk of CSOs involved in training procurement 
observers and/or procurement reforms.  Question 18 
What are the purposes of the Procurement Service-Department of Budget and 
Management (PS-DBM) mentioned in paragr aph 62 of the Report by the Secretariat? 
 
Answer 
It is the focal point for the pr ocurement of common-use supplies by  all government agencies so that 
such procurement is done in the most economical and efficient manner, by purchasing directly from 
reliable sources in economic lot sizes, by observi ng optimum specifications and by making prompt 
payment.  Question 19 
Could you please provide further information on the administrative anti-corruption provisions - 
including the penalty procedures - mentioned in paragraph 62 of the Secretariat Report? 
 
Answer 
The administrative anti-corruption provisions foun d in the GPRA and its IRR carry the penalty of 
suspension of the erring bidder by the head of the pr ocuring entity, subject to the authority delegated 
to the BAC.   
Question 20 
In connection with the information provided in pa ragraph 62, have the administrative anti-corruption 
provisions already been applied in the Philippine government procurement system, and if so, what 
progress has their implementation achieved? 
 
Answer 
Yes, the provisions have been applied and have mitigated corrupt practices in the area of 
procurement. 
 
Question 21 
With respect to the Philippine procurement system  referred to in paragra ph 62 of the Secretariat 
Report, Mexico would like to know the procedure used to procure goods or merchandise (consolidated procurement;  procurement by en tities/agencies;  procurement through framework 
agreements, or some other type of proces s) and the benefits derived from its use. 
 
Answer 
The procedure depends on the me thod adopted by the procuring en tity.  Generally, they must adopt 
competitive bidding and only in exceptional circums tances are alternative methods (example given: 
limited source bidding, repeat order, negotiated procu rement) allowed.  Competitive bidding consists 
of advertisement, pre-bid conference, eligibility scree ning, receipt and opening of bids, evaluation of 
bids, post-qualification and contract award. 
 The use of competitive bidding as a general rule ensures that proponents offer the most beneficial 
terms to the government.  
 
Question 22 
Could you please provide further detail on the inform ation available from the Philippine Government 
Electronic Procurement System bulletin board?  WT/TPR/M/261/Add.1 
Page 52  
 
  Answer 
It contains the following information: procu rement opportunities (invitation to bid for goods and 
infrastructure projects or the request for expressi on of interest for consulting services), results of 
bidding, notices, awards and reasons for award and other procurement/related information. 
PhilGEPS website:  www.philgeps.net. 
 
Question 23 
Who attends the pre-procurement conferences menti oned in paragraph 63 of the Secretariat Report? 
 
Answer 
The bids and awards committee (BAC), BAC Se cretariat/Procuring Unit, representatives of the 
project management unit or end-user units, members of the technical working group and consultants, 
and other officials concerned. 
 
Question 24 
Regarding paragraph 65 of the Secretariat Report,  when is competitive bidding used and when are 
alternative procurement methods used?  
Answer  
Under the GPRA, the default mode is competitive bi dding. Resort to alternative method is conditioned 
upon the following:  A. whenever the grounds ju stifying the alternative method are present (as 
provided for in the GPRA and its IRR);  B. to promote economy and efficiency; C. the determination 
on whether such grounds exist rests primar ily with the procuring entity and its BAC. 
 
Question 25 
Regarding the eligibility criteria for the participati on of foreigners in govern ment procurement listed 
in paragraph 66 of the Secretariat Report, are they  cumulative?  In other words must they occur 
simultaneously?  
Answer 
The GPRA provides that foreigners may participate in public bidding under any of the stated 
circumstances subject to eligibility  requirements and equity limitations. 
 
Question 26 
Do foreigners have the possibility of particip ating in government procurement of services? 
 
Answer 
Foreigners are allowed to participate in the procurem ent of services in the event Filipino consultants 
do not have sufficient expertise and capability to re nder the services required under the project as 
determined by the head of the procuring entity, subj ect to the following qualifications:  A. must be 
registered with the Securities and Exchange Commissi on and/or any agency registered by the laws of 
the Philippines;  and B. when the types and fie lds of consulting services in which the foreign 
consultant wishes to engage involve the practice of regulated professions, the foreign consultant must 
be authorized by the authorized by the appropriate  Philippine professional regulatory body to engage 
in the practice of those professions and allied professions.  Question 27 
Regarding the information in paragraph 67 of the Report by the Secretariat, are there any State 
enterprises or sensitive sector s for which the Government of the Philippines has established 
preferential government procurement provisions?   WT/TPR/M/261/Add.1 
 Page 53 
 
 
  Answer 
There are no state enterprises or sensitive sectors that  enjoy a fixed preference. Preference is subject 
to the Philippine Constitution and existing legislation.  Additional Questions by Mexico- Set III 
 WTO Secretariat Report 
 
II. TRADE AND INVESTMENT REGIMES 
(3) F OREIGN INVESTMENT REGIME AND BUSINESS FRAMEWORK  
 
Question 28 
In paragraph 18 it is mentioned that in spite of  the Government's concern about the Philippines 
suboptimal record of attracting investment, compared with other ASEAN countries, and its determination to change this situation, there re main extensive constitutional and statutory limitations 
on foreign investment.  Mexico would like to know if  the Philippines has any pl ans to increase foreign 
investment participation.  
Answer 
The Philippine Government, throug h all concerned agencies, continues to initiate reforms and 
programs with the end view of ensuring that the country remains as a competitive investment 
destination. 
 Question 29 
In paragraph 23 it is indicated that for activities not  included in the Foreign Investment Negative List 
(FINL), full foreign ownership is permitted, includi ng foreign investment in export enterprises (those 
which export 60 per cent or more of their output).  We would like to know if the foreign investors 
receive the same treatment than nationals and th e existing provisions of investment protection for 
foreign investors, especially for those from count ries that the Philippines does not have Bilateral 
Investment Treaties.  
Answer 
All investors and enterprises are entitled to the basic  rights and guarantees provided in the Philippine 
Constitution such as right to repat riation of investments, right to remittance of earnings, right to 
foreign loans and contracts, right to freedom fr om expropriation, and right to non-requisition of 
investment. 
 
Question 30 
In paragraph 27 it is said that the bilateral investme nt agreements of the Philippines contain provisions 
on investor-State dispute settlement.  The investor  has the option to submit the dispute through the 
Philippines national court system or to an internati onal arbitration body.  We would wish to know if 
those agreements include provisions to grant national treatment to the foreign investors. 
 Answer 
The Philippine bilateral investment treaties include provisions on national treatment. 
 
Question 31 
In paragraph 30 it is mentioned that initiatives over  the review period to improve the climate for 
business and investment in the Philippines include a programme of public-priva te partnerships (PPP) 
launched by the new Government in 2010 to encour age private investments, inter alia, in major 
infrastructure initiatives.  Mexico would like to know if those initiatives have had impact in the 
attraction of foreign investment.  WT/TPR/M/261/Add.1 
Page 54  
 
  Answer 
The current administration has made PPP a flagshi p program of the government to facilitate 
infrastructure and development projects in the country.  It is still too early to assess the effectiveness 
of the PPP program.  
III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) M
EASURES DIRECTLY AFFECTING IMPORTS  
(g) Other duties, fees, and taxes 
 According to paragraph 26 , excise taxes are levied on alcohol  products, automobiles, jewellery, 
minerals, perfumes, cigarettes, and petroleum (Table AIII.3).  Despite efforts to reform the excise tax 
regime, few changes have been achieved since 1999.   In late 2011, excise tax rates on tobacco and 
alcohol products were increased.  Imported distilled spirits are subject to higher excise taxes than 
those produced domestically.  In March 2010, the United States requested the establishment of a 
WTO panel on "Philippines-Taxes on Distilled Spirits" (Chapter II(2)(i)). 
 
Question 32 
What is the purpose of levying a special tax on these products? 
 
Answer 
These taxes are being imposed on "essential, luxu ry and socially-proscribed goods and services".   
 
(2) M EASURES DIRECTLY AFFECTING EXPORTS  
(b) Duty and tax concessions 
 According to paragraph 87 , the Motor Vehicle Development Programme (MVPD), under Executive 
Order No. 156 of 2002, provided, inter alia , for the removal by 30 June 2003 of export-balancing and 
local-content requirements.  In June 2010, under Executive Order No. 877-A, the MVDP was revised, 
inter alia , to promote domestic automobile production,  spur exports, and make the Philippines a 
regional hub for auto parts and components.  Some of the key features of the new MVPD are:  (i) 
favours local completely knocked-down (CKD) auto parts and components against imports;  (ii) 
tightens the rules on imports of used engines, which in  the past were freely importable;  (iii) continues 
the prohibition on imports of used motor vehicles;  (iv) takes advantage of regional trade agreements;  
(v) creates the Motor Vehicle Industry Council;  a nd (vi) establishes an industry fund to promote 
R&D and upgrading of equipment and facilities.  Th e new MVPD will enter into force after adoption 
of the implementing rules and regulations.  Question 33 
Question from MEXICO.  Mexico would like to know how points (i), (ii) and (iii) of the MVDP - 
which was revised in 2010 to promote domestic au tomobile production, spur  exports, and make the 
Philippines a regional hub for auto parts and components - work, as they clearly favour domestic production while imposing hars her import restrictions. 
 Answer 
EO 877-A has not been implemented.  
 
(3) M EASURES AFFECTING PRODUCTION AND TRADE  
(i) Incentives 
 According to paragraph 96 , the Philippines has a long history of providing incentives (mainly tax) to 
selected activities.  The main stra tegy has been to channel inv estments into sectors considered 
desirable for meeting key objectives, such as gene rating exports and employment.  Thus, the incentive  WT/TPR/M/261/Add.1 
 Page 55 
 
 
  system attempts to direct investments into elig ible priority areas, a form of selective government 
intervention.  
Question 34 
What are the incentives, and which sectors is th e Government supporting to generate exports? 
 Answer 
The Philippines provides fiscal and non-fiscal incen tives to industries which contribute to the 
development goals of the country.  
 
Technical Barriers to Trade 
 
Question 35 
To what extent have technical standards for consumer product safety been developed? 
 
Answer 
The Philippines has developed technical standards for consumer safety which are mostly for electrical 
and electronic products. 
 
Question 36 
If technical standards for consumer product safety have been developed, are they aligned to 
international standards?  If not, what are the main  reasons?  Do Philippine standards have higher or 
stricter requirements than international standards? 
 
Answer 
Yes.  The Philippine National Standards are a ligned with the International Electro-technical 
Commission (IEC).  
Question 37 
The Trade Policy Review mentions that Philippine  National Standards (PNSs) are voluntary, unless 
declared mandatory through Department Administrati ve Orders (DAO).  If this is so, are technical 
standards for consumer product safety mandatory or voluntary? 
 
Answer 
There are safety standards that are covered by the mandatory certification. 
 
Question 38 
What specific measures have the relevant authorities taken to prevent the impor tation of products that 
may pose a risk to consumer safety and/or health?  
Answer 
The Bureau of Product Standards is implementing certification schem es (use of Import Commodity 
Clearances or ICCs) for products under mandatory certification which the Philippine importers are 
required to comply with.    
Question 39 
The aforementioned document says that the Phili ppines's Bureau of Product Standards (BPS) 
implements a maintenance scheme for its safety  marks by regularly monitoring and conducting 
surveillance audits of products.  What criterion is used to determine which pr oducts will be audited?  
Are audits based on any statistical data  and/or complaints from consumers? 
 WT/TPR/M/261/Add.1 
Page 56  
 
  Answer 
All Philippine Standards Quality Mark license hold ers are audited regularly by the BPS.  In case of 
consumer complaints, the BPS could conduct an aud it if necessary.  These audits are based on the 
criteria of the relevant Philippine National Standards.   
 
Question 40 
How do authorities ensure that product labels comply with the Consumer Act?  In other words, does 
any authority conduct inspections of pr oduct labelling and business information? 
 
Answer 
DTI conducts market monitoring and enforcement acti vities either on its own or based on consumer 
complaints.  Question 41 
According to the Organization for Economic C ooperation and Development (OECD), public policies 
on consumers and competition are interrelated, highly  interdependent and have the same objective, 
which is to improve market functioning, thus improving economic performance, while they promote 
consumer well-being.  What impact  has the consumer policy in the Philippines had in the absence of a 
specific law on competition?  
Answer 
To date no study has been done on the impact of th e consumer policy of the Philippines in the absence 
of a specific law on competition.  IV. TRADE POLICIES BY SECTOR (3) S
ERVICES  
(ii) Financial Services  
Question 42 
In paragraph 52 it is said that except for cooperatives,  whose ownership is limited to Filipino citizens, 
there are no restrictions on the type of bank that foreigners may invest in and foreign banks are 
permitted to perform the same functions, enjoy the same privileges, and are subject to the same 
limitations as imposed on domestic banks of the same category.  We would like to know what 
requirements foreign banks need to operate in the Philippines.  
Answer 
Foreign banks interested to gain market access in th e Philippines may enter through the investment of 
up to 60% of the voting stock of an existing domestic bank.  In approving the entry of foreign banks, 
the BSP considers a number of factors such as geographic representation and complementation, 
bank's demonstrated c apacity, global reputation and stability, and the bank's willingness to fully 
share their technology.  Please refer to http: //www.bsp.gov.ph/regulations / guidelines.asp on the 
Guidelines on the Establishment of Banks. 
 
(3) S ERVICES  
(iii) Telecommunications 
 
Question 43 
In paragraph 68 it is mentioned that Telecoms services are regarded as a public utility and foreign equity in telecoms companies (both public (i.e. b asic) and value added) is limited constitutionally to 
40 per cent.  Foreigners may not become executives or  managers of telecoms firms and the number of 
foreign directors must be proportionate to the fi rm's aggregate share of foreign capital.  The 
authorities indicated that, according to a Department of  Justice opinion, if the service is not provided  WT/TPR/M/261/Add.1 
 Page 57 
 
 
  directly to consumers or the public, then the 40 pe r cent limit does not apply.  Could the Philippines 
tell us, in this case, what would be the limit to foreign equity in telecoms companies. 
 
Answer 
Telecom companies are considered  public utilities and thus covered by the 40% foreign equity 
restriction.  For clarity the DOJ opinion cited in the report states that a value added service (VAS) 
provider will only become a public utility if it holds itself out to whoever may wish to avail of its 
services.  On the other hand, a VAS provider cannot be  regarded as a public utility if it extends its 
services to a particular telecoms comp any covered by a private contract. 
 
(3) S ERVICES  
(v) Tourism 
 
Question 44 
In paragraphs 123 and 124 it is indicated that the t ourism sector is considered to be central to the 
Philippines social and economic development.  In th e Goals and Growth Strategies of the Department 
of Tourism 2010-2016, the Government's objective is to double tourist arrivals by 2016, and create a 
substantial number of jobs.  No twithstanding the importance the Government attaches to growth, 
significant market access and barriers to foreign inv estment remain in the tourism sector.  Mexico 
would like to know if the Goals and Growth Strate gies of the Department of Tourism foresee to 
reduce the barriers to foreign investment. 
 
Answer 
The National Tourism Development Plan 2011-2016 iden tified as one of the strategic directions the 
need to improve market access, connectivity, and destination infrastructure to promote the 
competitiveness of the tourism sector.  The Depar tment of Tourism is closely working with Congress 
and the relevant government agencies on reforms in the tourism sector.   
 
Question 45 
The Government provides a number of incentives fo r investments in tourist facilities, including the 
allocation of public land on 49-year leases, the prov ision of water and electricity at low rates, tax 
exemptions on imported goods, as well as exemp tions from VAT and other taxes on purchases of 
local products.  Many tourism projects are being co ntemplated as public-priva te-sector partnerships, 
constructed on a build-operate-trans fer or similar basis.  We would like to know if the aforementioned 
incentives for investment in tourist facilities ar e offered to companies with foreign capital. 
 
Answer 
Incentives are available to qualified investors in tour ism-enterprise zones pursuant to Republic Act 
No. 9593 or the Tourism Act as well as those out side the tourism zones under the Investments 
Priorities Plan.  (3) S
ERVICES  
(vi) Professional Services 
 
Question 46 
In paragraph 130 it is said that the Philippi nes Professional Regulation Commission (PRC) has 
responsibility for regulating and licensing 46 prof essions, which it does through its sector-specific 
Professional Regulatory Boards (PRBs) and the respective profession-specific laws.  We would like to 
know the possibilities that a foreigner has to provi de its services in arch itecture and engineering 
professions.  WT/TPR/M/261/Add.1 
Page 58  
 
  Answer 
The Constitution restricts the practice of professions to  Filipino citizens save in  cases prescribed by 
law.  However, the Professional Regulatory Co mmission Modernization Act provides that the 
Commission  may upon recommendation of the Professional Board concerned authorize the issuance of a Certificate of Registration/License or a Speci al Temporary Permit for individuals who desire to 
practice their professions in the country under re ciprocity and other international agreements: 
consultants in foreign-funded, joint-venture, or  foreign assisted project for the Government, 
employees of Philippine or foreign private firms or institutions pursuant to law, or health 
professionals engaged in humanitarian missions fo r a limited period of time.  Engineers and 
architects may be allowed to provide services under the respective professional regulatory laws. 
 
Question 47 
In paragraph 131 it is mentioned that under the C onstitution (Article XII (Section 14)), and as outlined 
in the Eighth Regular Foreign In vestment Negative List, the practice of all professions in the 
Philippines is limited to Filipino citizens, except in cases prescribed by law.  However, Article 40 of 
the Labour Code provides that non-resident aliens  may be admitted to the Philippines to supply a 
service after it has been determined that a competen t and willing Filipino is not available at the time 
of application.  We would wish to know which are the most frequent professions in this case.  
Answer 
The most frequent would be health professional s for humanitarian missions,  engineers and architects 
for construction and other infrastructure projects.  
 IV. TRADE
 POLICIES  BY SECTOR 
(3) S ERVICES  
 
Construction  
Question 48 
In the Turkish construction sector, no licence is requ ired to operate a construction company, except 
for construction licences granted by the Minist ry of Environment and Urbanism for on-going 
construction projects subject to Law No. 2886.  Please describe the foreign investment regime for 
companies in this sector. 
 
Answer 
As provided in the current FINL, foreign equity  is allowed up to 25% for contracts for the 
construction and repair of locally -funded public works except for in frastructure/development projects 
covered in Republic Act No. 7718 where 40% equity is allowed, and projects which are foreign 
funded or assisted and required to undergo inter national competitive bidding (Section 2a of R.A. 
7718). 
 
In addition, 25% foreign equity is allowed for c ontracts for the construction of defense-related 
structures (Section 1 of C.A. 541). 
 
Additional Questions from Mexico - Set IV 
 Sanitary and Phytosanitary Measures 
 Paragraph 53 - Imports of agricultural products, liv e animals, plants, fish, their products and 
by-products must be accompanied by a sanitary, phyt osanitary or health certificate from the country 
of origin, and are subject to inspection upon arrival.   WT/TPR/M/261/Add.1 
 Page 59 
 
 
  Question 49 
What are the inspection procedures and what are the acceptance or rejection criteria? 
 
Answer 
The respective import procedures including inspecti on and criteria for acceptance or rejection are 
contained in various regulations  which can be provided upon request from the Philippines SPS 
Enquiry Point.  
 
Paragraph 53 - An additional impor t permit is required for meat a nd meat products, fish and fish 
products, and for all agricultural products.  The Bu reau of Animal Industry (BAI), the Bureau of 
Fisheries and Aquatic Resources (BFAR), and the Bu reau of Plant Industry (BPI), all under the DA, 
issue these permits, generally taking into account onl y SPS regulations.  However, in some cases 
domestic supply is also considered.  For example,  fish products may be imported only when certified 
by the DA as necessary to attain food security.  Packaged food imports may be confiscated unless 
registered with the Food and Drug Administration (FDA). 
 
Question 50 
So the sanitary or phytosanitary certificate from the country of origin would not be valid for the 
mentioned products?  What sanitary and phytosanitary  standards are taken into account?  What is the 
influence of domestic supply?  What is the FDA's involvement in the case of packaged food? 
 
Answer 
The Philippines has no additional documentary requirem ent from the country of origin other than a 
SPS or Health Certificate.  The FDA regulates the safety and quality of packaged/processed food. 
 Paragraph 56 - Imports of fish pr oducts are highly regulated;  if a llowed, each shipment requires a 
permit or license issued by the BFAR.  Fish im ports are subject to a physical examination and 
microbiological analysis upon arrival.  If deemed safe, a Fishery Sanitary and Phytosanitary Certificate is issued to release imports.
5  Imports of live exotic species and live shrimp and prawn are 
restricted on the basis of an import risk analysis.6  In 2007, the import restriction on pacific white 
shrimp was lifted from certified br eeding facilities;  and, in 2009, th e import restriction on broodstock 
and post-larvae of specific pathogen free/specific pa thogen resistant black tiger shrimp was also 
removed.7 
 
Question 51 
What requirements and criteria do fish products have to meet in order to be deemed safe? 
 
Answer 
The requirements and criteria for food safety of fish are contained in various regulations which can 
be provided upon request from the Philippines SPS Enquiry Point. 
 
Paragraph 57 - Plants and plant products to be used  as food, feed or processing may be imported only 
after approval by the BPI;  requirements vary by product.  Some products require only an SPS 
certificate while others are also subject to  inspection and verification upon arrival. 
 
Question 52 
Once again, what happens to the documents from the country of origin?  
                                                      
5 Fisheries Administrative Order No. 195 of 1999. 
6 Fisheries Administrative Order No. 207 of 2001, and Order No. 221 of 2003. 
7 Fisheries Administrative Order No. 230 of 2009. WT/TPR/M/261/Add.1 
Page 60  
 
  Answer 
The documents from the country of origin accomp any the shipment and are required at the port of 
entry for the release of the consignment. 
 
Paragraph 59 - Prohibited/restricted  fruits, vegetables, plants, and pl ant products are listed in Tables 
AIII.4 and AIII.5. 
 For Mexico, the listed products include "fresh fr uit, limes, guava, mangos, oranges, peaches and 
plums" owing to the Mexican Fruit Fly (Anastrepha ludens).  There is no reference to safety issues. 
 
PERU 
 
Question 1 
Do the charges for registration and renewing registra tion with the Bureau of Customs not constitute a 
practice that raises costs and affects trade facilitatio n?  In any event, what  additional benefits does 
such registration bring? 
 
Answer 
The Tariff and Customs Code of the Philippines authorized BOC to collect reasonable fees and 
charges commensurate to the cost of service rende red.  Registration is mandatory for the importers 
and exporters to gain access to the electronic processes of BOC. 
In addition, it is one of the risk management tools bei ng used by the BOC in order to ensure that only 
legitimate importers conduct business. 
 
Question 2 
In addition to registering trademark rights in the IP O, these rights are also registered with the Bureau 
of Customs as a requirement for applying measures at  the border.  Is information shared with the IPO 
electronically to replace such registration?  
Answer 
The BOC has a separate record of IP holders and is  different from the registration at the IPO. 
However, the IP Holder, as a requirement, should first  be registered at the IPO before its recordation 
may be accepted at the BOC.  In that case, the info rmation at the IPO is being consulted by the BOC, 
but does not replace the registration thereat.  The recordation at the BOC serves as a continuing 
complaint in behalf of the IP owners, in order for the BOC to cause the apprehension/seizure of fake 
articles infringing pertaining to the regist ered IP owner's intellectual property right. 
 
Question 3 
Does the Philippines Bureau of Customs use the reasonable doubt mechanism - provided by Decision 
6.1 of the Customs Valuation Committee - in the co urse of customs clearance or during subsequent 
control?  To what percentage of its imports subject to the reasonable doubt procedure does the 
transaction value method not apply and the other valuation methods provided in the WTO Customs 
Valuation Agreement are applied instead? 
 
Answer 
Yes, the BOC uses the reasonable doubt mechanism. 
There is no data as to the percentage of imports  being subjected to reasonable doubt mechanism. 
 
Question 4 
Does the Philippines apply the advance ruling mechanis m?  If the answer is in the affirmative, for 
how long has the mechanism been applied and what cu stoms matters are likely to  be the subject of an 
advance ruling in the Philippines?   WT/TPR/M/261/Add.1 
 Page 61 
 
 
  Answer 
The Philippines has advance rulings on tariff classific ation.  The BOC is now preparing a regulation 
to implement advance rulings on Rules of Origin an d Valuation in order to be compliant with RKC 
and ASEAN FTA agreements.  
In addition, advance ruling as to value is provided under Section 1313 of the TCCP. 
 
COLOMBIA 
 
Report by the Secretariat 
 According to Section I Economic Environment, (3 ) Trade Performance and Investment, paragraph 14, 
in 2010 the Philippines exported services classified under "other business services" (e.g. professional and technical services, and other miscellaneous business) followed by travel, computer and 
information, and transportation. 
 
Question 1 
Please elaborate on the classification of "business services" and the impact of the exports of those 
services on the national economy.  
Answer 
The classification used fo r "other business services" is consiste nt with the BOP and international 
investment position manual (BPM6) of the IMF. Bulk of the exports in this category is comprised of 
outsourcing services wherein the Philippines has est ablished itself as one of the service providers. 
From 2006-2010, the sector contributed an average  of 4-5% in annual GDP, and was the largest 
private sector new-job creator at 300,000 direct  and up to 700,000 – 1, 000,000 indirect jobs.  
 According to (ii) foreign direct investment, pa ragraph 16, the Philippines is ranked as performing 
"below potential" in attracting inward FDI (i.e . has high FDI potential but low FDI performance). 
 
Question 2 
How has the Philippines' potential to attract foreign direct investment  been calculated?  Why does the 
Philippines perform below potential in this respect? 
 
Answer 
The Philippines competes with other foreign investme nt destination leveraging on its competitiveness 
in areas such as in human resource, natural res ources, strategic location, etc.  Given these 
advantages, the country continues to attract significant levels of investments. 
 III. TRADE POLICIES AND PRACTICES BY MEASURE (1) M
EASURES DIRECTLY AFFECTING IMPORTS  
(iv) Import prohibitions, restrictions, licensing, and quotas 
 Paragraph 31 on page 38 of the S ecretariat Report states that "[t]he Philippines' licencing system 
remains complex, and fees vary by product and are collected by the agency granting the licence.  
There are non-automatic, automatic, and special licencing systems.  Under the non-automatic 
licensing system, only persons, firms, and instituti ons registered as bona fide importers, domestic 
users, breeders, producers, traders, etc. are eligib le to apply for licences;  only the Government or its 
entities/agencies may import certain products (e .g. rice, which is largely State-traded 
(Chapter IV(1)(i)))."  
Question 3 
What are the criteria used to define "bona fide importers"? WT/TPR/M/261/Add.1 
Page 62  
 
  Question 4 
Do these criteria differ according to whether the us er is a producer, a trader or a government entity?  
If so, what are the differences in the eligibility criteria for licences? 
 
Answer (Question Nos. 3 And 4) 
The criteria will depend on the product and the rules of the concerned government agencies. 
 (vi) Standards and other technical requirements  Sanitary and phytosanitary measures 
 
According to paragraph 53 on page 45 of the Secr etariat Report "[i]mports of agricultural products, 
live animals, plants, fish, their products and by -products must be accompanied by a sanitary, 
phytosanitary or health certificate from the country of origin, and are subject to inspection upon arrival.  An additional import pe rmit is required for meat and meat  products, fish and fish products, 
and for all agricultural products.  The Bureau of An imal Industry (BAI), the Bureau of Fisheries and 
Aquatic Resources (BFAR), and the Bureau of Plan t Industry (BPI), all under the DA, issue these 
permits, generally taking into account only SPS re gulations.  However, in some cases domestic supply 
is also considered.  For example, fish products may be imported only when certified by the DA as 
necessary to attain food security.  Packaged food im ports may be confiscated unless registered with 
the Food and Drug Administration (FDA)."  Question 5 
Could the Philippines provide examples of agricultura l products which, in addition to being subjected 
to sanitary and phytosanitary requirements, have see n their imports restricted for reasons of domestic 
supply?  Have there been any other r easons for prohibiting their importation? 
 
Answer 
For reasons of supply and use, the Philippines imposes import restrictions on rice.  
 
(2) M EASURES DIRECTLY AFFECTING EXPORTS  
 Paragraph 20 on page 32 of the Secretariat Repor t states that "[t]ariff quotas, ranging from 30-50 per 
cent (in-quota rates) and 35-65 per cent (out-of-quota rates), have remained relatively stable during 
the period under review (Table AIII.2).  Cane and sugar beet lines have the highest rates, both 
in-quota (50 per cent) and out-of-quota (65 per cent), followed by rice.  However, several are 
inoperative following the lowering of the out-of-quota ra te to equal the in-quota rate.  The system for 
administering tariff quotas still seems complex (secti on (v) below), and this may deter imports.  A 
substantial number of tariff quotas are regularly unfilled;  more recently there have been no 
tariff-quota imports of sugar and potatoes, while uti lization for coffee and corn (maize) has been less 
than three quarters."  
Question 6 
We would be grateful if the Government of th e Philippines could provide detailed information in 
addition to what it has reported in the notifications on the system for administering tariff quotas allocated for agricultural products during the period under review.  
Answer 
The manner by which the tariff quotas are allocate d as described in WTO document G/AG/N/PHL/13 
has not been amended. 
  WT/TPR/M/261/Add.1 
 Page 63 
 
 
  (iii) Minimum export prices 
 
Paragraph 78 on page 50 of the Secretariat Report st ates that "[m]inimum export prices continue to 
apply for rice and corn;  according to the authori ties, they are generally based on world prices.  
Minimum export prices could have similar economic effects to export taxes." 
 
Question 7 
What methodology is used to set these prices? 
 
Answer 
The Philippines is not exporting rice and corn in commercial quantities and therefore does not impose 
minimum export prices for these products. 
 
IV. TRADE POLICIES BY SECTOR 
 Paragraph 3 on page 65 of the Secretariat Report states that the Philippines Development 
Plan 2011-2016 proposes goals and strategies to address, inter alia , the significant financial losses 
resulting from government intervention in the rice sector.  
Question 8 
Could the Philippines please provide us with some information on the programmes implemented for the rice sector? 
 
Answer 
The Food Staples Self-Sufficiency Program (FSSP) 2 011-2016 aims to achieve self-sufficiency in food 
staples towards ensuring food security.  This will be achieved by:  (1) Raising productivity and 
competitiveness by, among others, accelerating th e expansion of irrigation services, ensuring 
adoption of suitable high-quality seeds, fertilizer and other integrated crop management systems, 
sustaining research and development, promoting m echanization, and enhancing delivery of extension 
services;  (2) Improving access to credit and cr op insurance;  and (3) Managing food staples 
consumption (e.g. waste reduction, alternative staples).  
Paragraph 4 on page 66 states that the Agri-Agr a Reform Credit Act (2009) requires all banking 
institutions to set aside 10 per cent of their loan s for beneficiaries undertaking certain activities. 
 
Question 9 
What are the criteria used to define the activities th at receive 10 per cent of the loans for agriculture?  
What products have benefited from these loans and under what conditions? 
 
Answer 
The 10% credit quota for agrarian reform should benefit agrarian reform beneficiaries (ARBs) – 
farmers granted agricultural lands by the government  – through loans for agricultural and agrarian 
reform purposes.  Please refer to RA 10000 or the Agri-Agra Reform Credit Act and its Implementing 
Rules and Regulations. 
 Question 10 
We would appreciate further details on these modes of financing, including interest rates, guarantees 
and other financial conditions. 
 
Answer 
The Agro-Industry Modernization Credit and Fin ancing Program (AMCFP) offers the following 
modes of financing:  WT/TPR/M/261/Add.1 
Page 64  
 
  (1) Wholesaler-Retailer Mode of Credit Delivery.  The AMCFP design and implementing 
guidelines adopted the "wholesaler retailer" mode of credit delivery wherein government 
financing institutions (GFIs) serve as wholesal er of government credit funds, providing loans 
to private rural financial institutions such  as rural banks, cooperative banks, viable 
cooperatives and NGOs.  In turn these rural financ ial institutions act as retailers and lend to 
end-borrowers composed of small farmers and fis herfolk.  Wholesalers assume 100% of the 
risk and are therefore responsible for eval uating and accrediting eligible financing 
institutions as retailers.  They are allowed to use their existing accreditation and eligibility 
criteria in screening and evaluating potential retailers.  On the other hand, retailers are 
tasked to screen potential farmer and fisherfolk bo rrowers according to their set of criteria 
and take full responsibility over the financial tr ansactions and decisions in channeling the 
AMCFP funds to the intended clientele/borrow ers.  Interest rates are market-based, meaning 
wholesalers and retailers are allowed to charge interest that will cover their lending costs 
plus a reasonable spread.  There are currently two (2) AMCFP facilities being implemented 
using the wholesaler-retailer mode of credit delivery, namely:  (i) the Agri-Fishery 
Microfinance Program (AMP) in partnership with the People's Credit and Finance 
Corporation (PCFC), and (ii) the Cooperatives Agricultural Lending Program (CALP) with the Development Bank of the Philippines;  and  
(2) Depository Mode of Credit Delivery.  To comple ment the wholesaler-retailer scheme of the 
AMCFP, ACPC developed the Cooperative B anks Agricultural Lending Program (CBAP) 
which was launched in September 2011.  This  new program employs a depository mode of 
credit delivery wherein special time deposits (STDs) are placed directly in partner 
cooperative banks, eliminating the need for a wholesaler, resulting in lower pass-on rates to 
small farmers and fisherfolk.  CBAP aims to provide stable, low-cost funding support to 
cooperative banks that have demonstrated capac ity to continually provide appropriate and 
incremental agricultural loans to small farmers and fisherfolk.  This support shall be in the 
form of STDs, which will have a one-year matu rity with a maximum interest of 3% per 
annum.  Meanwhile, eligible borrowers shall be  charged pass-on rates of not more than 15% 
per annum, for either agricultural production or mi crofinance loans.  With an initial funding 
of P400 million sourced from the AMCFP,  CBAP is implemented in areas where 
participating cooperative banks operate.  Prio rity commodities financed under the program 
are rice, corn, high value commercial crops, fis hery and other commodities prioritized by the 
DA. 
 
Paragraph 5 on page 66 states that  "[t]he National Food Authority (NFA) buys rice and corn from 
domestic producers.  It has the exclusive author ity to import and export rice, although the private 
sector is increasingly involved (see below).  When th ere is a shortfall in the market, the NFA may be 
instructed by the President (through the issuance of an executive order) to import sugar and corn to 
stabilize prices.  It also issues export permits for co rn when domestic consumption has been fulfilled.  
The Government, as part of efforts to trim the na tional budgetary deficit, has been looking at how to 
restructure, streamline or privatize certain activiti es of the NFA.  As at November 2011, three bills 
were being considered in Congress, relating to changing is its powers, functions, and status." 
 
Question 11 
Could the Government of the Philippines please pr ovide further information on the scope of the 
restructuring of the NFA? 
 
Answer 
In 2008, NFA implemented a Ratio nalization Program pursuant to Executive Order No. 366 aimed at 
rationalizing the operations of the Agency.  Am ong the significant operations reforms implemented 
under EO 366 and the NFA leadership are:    WT/TPR/M/261/Add.1 
 Page 65 
 
 
  (1) Various special programs requiring extensive f unding were discontinued such as the Rolling 
Stores, participation in the Food for Sch ool Program of DSWD and some others; 
(2) Procurement and distribution strategies were stre amlined such that the Agency acts only as 
Buyer (palay) of and Seller (rice) of last resort .  This means that the Agency, as much as 
possible, will not directly compete with private grains traders but will let market forces work. 
Moreover, selling price for NFA rice were also adjusted to near-market levels to reduce 
losses;  and 
(3) The private sector (including the farmers) were given expanded participation in rice 
importation activities under the Public Priv ate Partnership (PPP) program of the 
administration.  Under such scheme, scarce gov ernment funds will not anymore be used to pay 
for the country's rice imports as it will now be the private sector who finances the activity.  In 
exchange, they will have to pay the government a se rvice fee (SF).  Worth mentioning is that 
last year, more than a billion Pesos went to government coffers from SF payments. 
 
Question 12 
We would also appreciate information on the pri ce support programme for rice producers and on the 
methodology used to determine the quantiti es and values involved over the past year. 
 
Answer 
The farm price stabilization support program for producers involves procurement only from small 
farmers and their cooperatives and transparency measures such as posting in the NFA website, in 
compliance with the Magna Carta for Small Farm ers.  Palay (paddy) procurement is done at 
government support prices. 
 
Question 13 
How are the maximum allocation fo r a particular rice importer and the percentage of the quota set 
aside for farmers' orga nizations determined? 
 
Answer 
The minimum/maximum allocation per importer is de termined through consultations with concerned 
parties including farmers' cooperatives/organizations. 
 Paragraph 22 on page 70 of the Se cretariat Report states that "[a]s reported in the Philippines' 
previous TPR, the Sugar Regulatory Administration (SRA), an "attached agency" of the Department of Agriculture, manages sugar production and supply,  through the "quedan syste"'.  In addition to 
NFA's occasional role in importing sugar, SRA-regist ered international sugar traders may import and 
export sugar." 
 
Question 14 
How do these traders operate?  Are they private, mi xed or State companies?  What requirements are 
they subjected to? 
 
Answer 
Any individual or business entity duly created under Philippine laws may qualify as an international 
sugar trader subject to submission of the following  to SRA:  (1) mayor's business permit;  (2) SEC 
registration;  (3) current year general information sheet;  (4) Articles of Incorporation and By-Laws; 
(5) TIN; 96) photo of designated representative;  (7) notarized application form;  and (8) track record 
of domestic and inter national transactions. 
 WT/TPR/M/261/Add.1 
Page 66  
 
  PAKISTAN 
 
Question 1 
The trade in goods and services section, page 4 of the secretariat's report indicates the positive impact 
of remittance inflow in offsetting the trade defi cit, the remittances increased from $10.7 billion in 
2005 to $18.86 billion in 2010,which indicates the be nefit of mode IV liberalization.  Would the 
Government of Philippines like to share their experi ence of liberalization in the financial sector and 
telecommunication, especially with reference to its  impact on the GDP and BoP (balance of payment). 
 
Answer 
The liberalization of the financial sector, in particul ar the liberalization of foreign bank entry, has 
contributed to the delivery of improved banking services, provision of additional credit, promotion 
and facilitation of trade and investments in the count ry, and provision of additional employment 
opportunities.  
Question 2 Part IV of the secretariat's report, page 65 indicat es about the Philippines policy to be self-sufficient in 
the production of rice, sugar and corn.  Would the government of Philippines like to share the impact 
of this policy on the sustainability of the agriculture sector?  
Answer 
The Food Staples Self-Sufficiency Program (FSSP) 2011- 2016, aside from ensuring available rice for 
domestic consumption is likewise the Department's strategy for our farmers to become more productive and competitive in the near future in th e global market.  However, it should be clarified 
that to be self-sufficient with these products does not automatically mean that there would be no more 
imports from thereon.  
 
Question 3 
Paragraph 3 of the report in the Agriculture secti on at page 65 indicates some of the challenges and 
difficulties faced by the agriculture  sector, weak agriculture extension services as a result of their 
devolution to local government units, significant financial losses resulting from government intervention in the rice sector and lack of inv estment in R&D in the commodities in which the 
Philippines has a comparative advantage.  Would the Govt. of Philippines like to share their plans for 
resource allocation to these issues?   
Answer 
The Philippine Development Plan 2011-2016 provides the blueprint for the development of the 
agriculture and fisheries sector.  According to the plan, within six years and through prudent use of 
resources, the agriculture and fisheries  sector shall have attained the following:  (a) improved food 
security and increased rural incomes;   (b) increased sector resilience to climate change risks;  and 
(c) enhanced policy environment and governance.   The plan includes interventions on product 
diversification, strengthening RD&E, and increasing investments and employment across the value chain.  
  WT/TPR/M/261/Add.1 
 Page 67 
 
 
  REPUBLIC OF KOREA 
 
Questions Regarding the Secretariat Report 
 
II. TRADE AND INVESTMENT REGIMES 
Pages 19-24 (Paras 18-35) 
 
Despite the Philippines' efforts, it is pointed out that there remains considerable room for 
improvement in the Philippine business environment.  For example, foreign investment in key sectors 
including agriculture and services are still restricted .  There has been little change in this situation 
since the Philippines' previous TPR in 2005. 
 
Question 1 
What are the main reasons for the stagnancy in the Philippines' efforts to improve its business 
environment?  Does the Philippine government have any plan to overcome this stagnancy? 
 
Answer 
The Philippine Government, throug h all concerned agencies, continues to initiate reforms and 
programs with the end view of ensuring that the country remains as a competitive investment 
destination.  The Government through th e National Competitiveness Council (NCC) pursues 
measures to improve the business envir onment to attract more investments. 
 
Page 21 (Para 25) 
 
The Philippines has been making efforts to rationali ze its incentive system in order to boost foreign 
investment to the Philippines.  A comprehensive bill to integrate and consolidate the country's various 
investment and incentive measures has been p assed by the House of Representatives and was under 
consideration in the Senate as at November 2011.  
Question 2 
What is the main content of the bill?   What is the anticipated effect of the bill on foreign investment to 
the Philippines? 
 
Answer 
The main features of H.B. No. 4935 include th e strengthening of BOI's functions to improve 
investment promotion and facilitation, which include:  (1) Policy-making body of all investments promotion agencies (IPAs);  (2) Industry development;   (3) Facilitation and aftercare services;  (4) 
International and domestic investme nts promotion;  and (5) Regulat ory functions outside ecozones 
and freeports (i.e., registration, incentive administr ation and supervision of registered enterprises, 
both domestic and exports) 
 
The following are proposed in the bill:  (1) Ta x-related incentives;  (2 ) Differentiated incentives 
depending on location (based on  the class of mu nicipalities);  and (3) Ot her incentives such as 
accelerated depreciation, double deduction for training expense, double deduction of research and 
development, and net loss carry-over.  The Bill is geared towards simplification of ad ministration of incentives and grant of an incentive 
package that is deemed compe titive with neighboring countries. 
 WT/TPR/M/261/Add.1 
Page 68  
 
  III. TRADE POLICIES AND PRACTICES BY MEASURE 
Pages 47 (Para 62) 
 
Corruption, inefficiency and disorganization still exist in the Philippine government procurement 
market in spite of the Philippine governme nt's on-going efforts to fight these problems. 
 
Question 3 
Could the Philippine government provide its opin ion on the view that enhancing foreigners' 
participation in the Philippine gove rnment procurement market, whic h currently remains restricted, 
can help tackle these problems? 
 
Answer 
We see foreign participation, subject to equity lim itations, as a means to encourage foreign firms to 
increase domestic participation and help enhance local employment  and skills in the industry, 
through transfer of technology.  The area of public  procurement has been more open and transparent 
with the passage of the GPRA in 2003, and the use of information communication technology.  
IV. TRADE POLICIES BY SECTOR 
Page 82 (Para 66) 
 
With respect to the telecommunications sector, many ICT-related bills are known to be pending in the 
Congress of the Philippines. 
 
Question 4 
Why have none of these ICT-relate d bills (the Convergence Bill, DICT bill, and NTC Reorganization 
Bill) not yet been enacted despite the considerable time that has gone by since the last TPR in 2005? 
What are the main contents of th ese bills?  How does the Philippine  government evaluate the possible 
changes that the bills can bring ab out in the telecommunications sector? 
 
Answer 
The ICT-related bills are still under Congressional  deliberations.  These bills are intended to 
introduce improvements in the competitive environment and efficie ncy in the telecommunications 
sector. 
 Page 83 (Para 68) 
 
According to the Philippines' offer in the DDA services negotiations, considerable market access 
limitations continue to exist for value-added telecommunications, such as restricting foreign 
investment to 40% and forbidding th e resale of private leased lines.  
 
Question 5 
Given the fact that nearly all WTO member countri es have allowed full market access in the area of 
value-added telecom services, can we expect th e Philippines to do the same through the DDA services 
negotiations? 
 
Answer 
The Philippines will remain actively e ngaged in the DDA services negotiations. 
  WT/TPR/M/261/Add.1 
 Page 69 
 
 
  Page 84 (Para 70) 
 
According to the Philippine's telecommunication license regulations, value-added telecommunication 
service providers need only to register with the NTC.  However, in its offer in the DDA services 
negotiations, a franchise from the Congress and a CPCN from the NTC are required for voice mail, 
on-line information and data base retrieval, electro nic data exchange, and videotex services.  The 
above-mentioned services are value-added tel ecommunication services and, according to the 
Secretariat report, they are not required to obtain a franchise under the current regulations of the Philippines.  Question 6 
Are there any plans to correctly reflect the Philippi nes' domestic regulations in its offer in the DDA 
services negotiations?  
Answer 
This will depend on the outcome of the DDA negotiations.   
UNITED STATES 
 WT/TPR/S/261 
 
Summary 
 
Question 1 
Page X, paragraph 27:  According to the Secr etariat, "The Constitution limits the practice of 
professional services to Filipinos, except in cases prescr ibed by law, and there is flexibility under the 
Labour Code and under the PRC Modernization Act to enable foreign professionals to practice in the 
Philippines." Could the GOP explain what "flexibility" it has under the Labour Code and the PRC 
Modernization Act to allow foreign prof essionals to practice in the Philippines? 
 
Answer 
Under Article 40 of the Labour Code, employment p ermits may be issued to a non-resident alien or to 
the applicant employer after a determination of th e non-availability of a person in the Philippines 
who is competent, able, and willin g at the time of application to perform the services for which the 
alien is desired.  
 
The Constitution restricts the practice of professions to  Filipino citizens save in  cases prescribed by 
law.  However, the Professional Regulatory Co mmission Modernization Act provides that the 
Commission  may upon recommendation of the Professional Board concerned authorize the issuance 
of a Certificate of Registration/License or a Speci al Temporary Permit for individuals who desire to 
practice their professions in the country under re ciprocity and other international agreements: 
consultants in foreign-funded, joint-venture, or fo reign assisted project for the government, employees 
of Philippine or foreign private firms or instituti ons pursuant to law, or health professionals engaged 
in humanitarian missions for a limited period of time.  
 
I. ECONOMIC ENVIRONMENT (2) R
ECENT ECONOMIC PERFORMANCE  
Question 2 
Page 1, paragraph 4 and page 11,  paragraph 19:  The Secretariat Report cites concerns about "long-
standing institutional and governance weaknesses" and states that addressing such "vulnerabilities" is 
a priority of the Government of the Philippines.  Has the Government of the Philippines identified 
specific priority areas for action and what step s has the Government taken to address them? 
 WT/TPR/M/261/Add.1 
Page 70  
 
  Answer 
The Government as part of its Philippine Devel opment Plan (2011-2016) will actively engage private 
business, civil society, and media for governance m onitoring and feedback.  Civil society and media 
will act as government partners to be more responsive.   Client satisfaction surveys shall be made use 
of at all levels of government. 
 
II. TRADE AND INVESTMENT REGIMES 
(2) T RADE AGREEMENTS AND ARRANGEMENTS  
(i) Participation in the WTO 
 
Question 3 
Page 15, paragraph 8:  The Secretariat Report notes:   "The Philippines has maintained a strong record 
on notifications to the WTO.  However, notifications  are lagging with respect to agriculture (special 
safeguard, domestic support, expor t subsidies and tariff quotas (see Chapter IV)), subsidies and 
countervailing measures, and state-trading activities.   Since 2005, the Philippines has not notified any 
TBT-relevant bilateral or plurila teral agreements or any preferential or non-preferential rules of 
origin."  Please explain what the Philippines is  doing to bring its notifications up-to-date? 
 
Answer 
All RTAs of  the Philippines have been  notified u nder the transparency mechanism of the WTO either 
to the CTD or CRTA. 
 
(3) Foreign Investment Regime And Business Framework 
 
Question 4 
Page 20, paragraph 20:  Is legisl ation which would allow up to 40 pe rcent foreign ownership of cable 
systems that do not produce their own cont ent or programs still under consideration? 
 
Answer 
The question does not refer to the contents of paragraph 20, page 20.  
 
Question 5 
Page 21, paragraph 24:  According to the Secret ariat: "During its previous  Review, the Philippines 
was urged by some Members to relax these foreign inv estment barriers.  In particular it was suggested 
that the Philippines might consider reducing the paid-up capital requirement for 100% foreign-owned 
retail trade enterprises from US$2.5 million to US $200,000; and, removing the 40% foreign equity 
limitation for private land ownership."  Is the Philip pine Government considering any changes to the 
Retail Trade Liberalization Act?  If so, what changes are under consideration? 
 
Answer 
The Retail Trade Liberalization Act is currently under review.  
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) M EASURES DIRECTLY AFFECTING IMPORTS  
(i) Customs registration, documentation, procedures, and valuation 
 
Question 6 
Page 25, paragraph 2:  According to the Secretaria t: "Importers (or customs brokers) are required to 
lodge an import entry electronically through th e E2M system.   However, they must submit 
hardcopies of import documents and attachments to the Entry Processing Unit for verification."  
Could the representative of the Philippines please e xplain the purpose of the verification of the 
hardcopies of import documents and attachments?  Also, please confirm that review of the documents  WT/TPR/M/261/Add.1 
 Page 71 
 
 
  and attachments lodged electronically is initiate d when the documents are received through the 
electronic system and that the review is not  postponed until after hardcopies are submitted. 
 
Answer 
Under the E2M system, only the im port entry declaration and th e export entry declaration are 
electronically lodged. Hard copies of the Bill of Lading, commercial invoice, and if required, 
commodity clearance must be presented for purposes of validation and customs control.  
 
Question 7 
Page 26, paragraph 7:  Is there any private sector involvement in the valuation process, particularly in 
the activities of the Import Specialist Team, which has the power to review all green lane entries for 
possible valuation-related offenses?  Can the Phili ppines confirm that it provides importers with the 
right to appeal customs valuation decisions at the judicial level?  
Answer 
The BOC has MOUs with various trade and indust ry associations where they have assigned import 
commodity experts from the privat e sector to various ports to provide advice and inputs on valuation 
of import commodities. The importers have a right to appeal customs valuation at the judicial level 
thru the Court of Tax Appeals and eventually the Supreme Court. 
 
(iii) Tariffs, other duties, and taxes 
(c) Tariff quotas 
 
Question 8 
Page 32, paragraph 20 and page 40, paragraph 34:  In para graph 20, the Secretariat Report states that 
several tariff quotas "are inoperative following the lowering of the out-of-quota rate to equal the in-
quota rate."  What is meant by "inoperative?"  For products, such as poultry, where in-quota and out-
of-quota tariff rates are now the same, does the Philippines still require importers to follow the 
process for obtaining licenses as described in paragraph 34?  
Answer 
Inoperative means no license is issued for the product since no applications are received.  
 
Yes, the Philippines still requires importers to fo llow the process for obtaining licenses even if in-
quota and out-quota have the same tariff rates.  
 
Question 9 
Page 32, paragraph 20:  The Secretariat Report st ates that "a substantial number of tariff quotas are 
regularly unfilled; more recently there have been no tariff-quota imports of sugar and potatoes, while 
utilization for coffee and corn (maize) has been less  than three quarters."  Please explain why tariff 
quotas are regularly unfilled or under-filled.   
Answer 
There is low demand for licenses. 
 (vi) Standards and other technical requirements 
(b) Sanitary and phytosanitary measures 
 Question 10 
Pages 44-45, paragraph 52:  The Philippine govern ment implemented Administrative Order 22 in 
December 2010, but has not notified the WTO.  Th e measure imposes strict handling and cold chain 
requirements on the sale of frozen and thawing meats (t he vast majority of which is imported), while 
exempting meat from freshly slaughtered animal s (the vast majority of which is produced WT/TPR/M/261/Add.1 
Page 72  
 
  domestically).  The scientific justification for this  exemption has been questioned by several trade 
partners, including the United States, and the Philippi nes has yet to provide a formal risk assessment 
or scientific study demonstrating that frozen and th awing meats present a higher food safety risk than 
meats that are never refrigerated.  Please provide information on when the Philippines will notify the 
WTO regarding Administrative Order 22. 
 
Answer 
There is no need for notification since these ar e post-border measures and do not impose additional 
restriction/ requirement for the importati on of meat and meat products.   
 
Question 11 
Page 45, paragraph 53:  According to the Secretar iat Report, imports of agricultural products, live 
animals, plants, fish, their products and by-products  must be accompanied by a sanitary, phytosanitary 
or health certificate from the country of origin, and are subject to inspection upon arrival.  We 
understand that in December 2011 the Philippine government impl emented a 100 per cent testing 
requirement for all imported meats without formal no tification to trade partners and without citing a 
food safety hazard from trade partners or providing a scientific study justifying the need for 100 per cent testing.  What percentage of Philippine meat  production is required to be tested by Philippine 
regulations?  Also, when will the Philippines notify the WTO of its new 100 per cent testing requirement?  Answer 
Domestically produced meat is subjected to the same level of enforcement as imported meat for  
laboratory test regimen for hygiene and sanitation.  Establishments are also required to adopt GMP 
and HACCP. If the random sampling of the meat shows an alarming contamination of E. Coli or Salmonella, the rigid sampling will be instituted similar to that required under Memorandum 835. 
 
Question 12 
Page 45, paragraph 54:  The Secretariat Report stat es: "All meat and meat products require a Foreign 
Meat Inspection Certificate signed by an authorized veterinarian.  Such imports are also subject to 
inspection and require a Veterinary Quarantine Cl earance [(VQC)] issued by the BAI prior to 
shipment.  Imports of meat must originate in a foreign meat establishment recognized as an exporting 
entity by the Veterinary Administration and accredit ed in the Philippines."  In November 2011, the 
Philippines suspended issuance of VQCs for pork a nd poultry products for over three weeks, which 
resulted in little or no products entering the country  in December (peak season for meat consumption 
in the Philippines).  The Philippines provided no justification for this suspension.  Could the 
Philippines please explain on what grounds the issu ance of VQCs was suspended?  What is the 
Philippines doing to ensure that it issues VQCs in a manner that takes into account the Philippines' 
international obligations?  Furthe rmore, if a country has already received recognition of equivalency 
from the Philippines, why do importers of meat and poultry products from such a country still need to obtain VQCs prior to shipment?  
Answer 
There was no suspension in the issuance of VQCs. The Philippines only experienced delay in 
December 2011 when the volume of applications  doubled. Processing of VQCs however normalized 
after the Christmas season. 
 
(vii) Government procurement 
 
Question 13 
Page 48, paragraph 68:  The Secretariat notes that the Philippines is neither a signatory of the WTO 
Agreement on Government Procurement (GPA ) nor an observer to the WTO Committee on 
Government Procurement.  Does the Philippines pl an to become an observer to the WTO Committee  WT/TPR/M/261/Add.1 
 Page 73 
 
 
  on Government Procurement now that the GPA has been revised?  If so, when?  Does the Philippines 
have plans to commence accession to the GPA in light of the fact that the GP A has been revised and 
should assist in the accession process?  If not, why not?  If so, when does the government plan to 
undertake accession?  Answer 
The matter is still currently under c onsideration by the authorities. 
 (2) M
EASURES DIRECTLY AFFECTING EXPORTS  
Question 14 
Pages 51 - 56, Paragraphs 89 - 103:   This secti on of the report provides information on numerous 
subsidy programs which appear to meet the criteri a for notification as provi ded for under Article 25 of 
the Subsidies Agreement.  The Philippines has not  submitted a subsidy notification in many years 
(e.g., the last notification submitted covered 1996) .  When will the Philippines submit the required 
subsidy notifications pursuant to its oblig ations under the Subsidies Agreement? 
 
Moreover, we note that it appears that the Philippi nes has graduated from Annex VII of the Subsidies 
Agreement (see G/SCM/110/Add.8).  How does the Philippines intend to change the following 
programs, inter alia, which appear to be subsidies contingent upon export performance, in light of its 
graduation from Annex VII:     
• Tax credits under the Export development Act 
• Incentives under the Philippine Economic Zone Authority (PEZA) • Tax incentives under the Omnibus Investment Code (OIC) • Financing under the Trade and Investment Development Corporation of the Philippines 
 (TIDCORP) 
• Tax exemptions and non-tax incentives provided to  enterprises registered with the BOI that 
produce non-traditional exports or are engaged in a sect or listed in the Investment Priorities Plan (IPP) 
 
Answer 
The Philippines is working on the submission of its no tifications. A bill on incentives rationalization is 
currently under deliberation in Cong ress. Once the law is passed, we will notify, as appropriate.  
 
(3) M EASURES AFFECTING PRODUCTION AND TRADE  
(i) Incentives 
 
Question 15 
Page 55, paragraph 102:  The Secretariat Repor t states that under the Barangay Micro Business 
Enterprise Act small and medium sized enterprises (SMEs) are subject to "exemption from the coverage of the Minimum Wage Law."   Please iden tify the extent of this exemption, as well as 
identify any other labor laws and regul ations from which SMEs are exempt. 
 
Answer 
Pursuant to Section 8 of the Barangay Micro Bu siness Enterprise (BMBE) Act, BMBEs shall be 
exempt from the coverage of the Minimum Wage Law; Provided, that all employees covered under 
this Act shall be entitled to the same benefits given to any regular employees such as social security 
and healthcare benefits.   
In order to ensure uniformity in the interpretation and implementation of Section 8 of the Act, the 
Department of Labor and Employment issued De partment Order No. 45-03 Series of 2003 for the 
proper guidance and information of all concerned.   
 WT/TPR/M/261/Add.1 
Page 74  
 
  (iv) Intellectual Property Rights 
 
Question 16 
Page 58, paragraph 112:  In view  of the importance of anti-counterfeit activities related to medicines, 
please describe steps that the Philippine Government  is taking to address concerns related to a 
provision of the Cheaper Medicines Act that allows  non-prescription products to be sold in small 
quantities, "not in their original containers" in retail outlets.  
Answer 
Sec. 25 of RA 5921 as amended by RA 9502 states that  non-prescription or OTC products may be sold 
in their original packages, bottles,  containers or in small quantities not  in their original containers to 
the public through supermarkets, convenie nce stores and other retail establishment. 
 
However, Chapter X, Rule 51 of IRR of RA 9502 provided that only solid dosage forms with 
individual original and primary packaging, as approved by the FD A, (like blister packs, foil packs) 
may be sold in smaller quantities. No other repacka ging is allowed. Any new packaging shall require 
FDA approval. Further, selling in smaller quantiti es should be done at the time of actual retail 
transaction with the customer.  Also, Sec. 31 of RA 5921 which provision was not amended by RA 9502 prohibits the non-labelling of 
dispensed medicines and provides for a penalty therefor. 
 
Question 17 
Pages 59-60, Paragraph 116:  The Secretariat indi cates that "[d]rugs and medicines excluded from 
patent protection include the mere discovery of a new form or new property of a known substance, 
which does not result in the enhancement of the know n efficacy of that substance . . ." Does "mere 
discovery" imply lacking an inventive step?  If the discovery of the new form involves an inventive 
step, will that new form be patentable?  What do es "enhancement of the known efficacy" entail?  If 
the new form shows a substantial improvement in shel f-life, or substantial reduction in side effects, 
will that new form be patentable?  
 
Answer  
Mere Discovery - Yes, "mere discovery" implies the lacking of inventive step but not only that.   
 A provision on "discovery" already exists in the orig inal text of the IP Code under Section 22.1 (Non-
Patentable Subject Matter) since 1998 but the "m ere discovery" provision was introduced in the  
amendment of the IP Code in the Cheaper Medici nes Act under Section 22 .1 (Non-Patentable Subject 
Matter) and Section 26.2 (Inventive Step).   Generally, the assessment against pa tent eligibility standard (Non-Patentable Subject Matter) comes 
before the assessment of patentability criterion of in ventive step.  Patent applications must pass the 
patent eligibility standard first before assessment on other patentability requirement such as novelty, 
inventive step and industrial applicability. 
 The Guidelines for Examination of Pharmaceutical  Products, which provid es the administrative 
interpretation of the "mere discovery" provisi on, applies the "Doctrine of Inherency" in the 
assessment of patent eligibility standard and the paten tability criterion of inventive step. The doctrine 
of inherency is adopted to further articulate on th e meaning, and operationalize the effect of "mere 
discovery" during the query on non-patentable subject matter as well as the patent criterion of inventive step.  The "Doctrine of Inherency" is derived from the US jurisprudence. 
 Discovery of New Form -  WT/TPR/M/261/Add.1 
 Page 75 
 
 
  Discoveries are not patentable under the IP Code but technical solutions that are novel, inventive and 
with industrial applicability are.  Thus, if new fo rms comply with said requirements, including the 
inherency test, it is patentable.  Enhancement of Efficacy - 
Enhancement of efficacy may refer to the im proved and unexpected properties of known 
pharmaceutical substances such as bioavailability, lo wer nuerotoxicity, higher potency, which are not 
found in the original pharmaceutical substance.  Where enhancement of the known efficacy arises, it 
implies an assessment of patent eligibility standar d and the patentability criterion of inventive step, 
within the purview of the Cheaper Medicines Act. 
 
Yes, if the new form complies w ith the patent eligibility standard and the patentability criterion of 
inventive step.  Question 18 
Page 60, Paragraph 118:  The Secretariat indicat es that "[c]ompulsory licensing may be granted 
without the patent owner's agreement on specific grounds, including:  national emergency; public 
interest, in particular, national security, nutrition, or health; . . ." Is the authorization of a compulsory 
license or the amount of compensation to the patent ow ner (other than by a judicial decision), subject 
to judicial review or other independent review by a distinct higher authority? 
 Answer 
Yes, the decision of the Director General on the grant of a compulsory license is appealable to the 
Court of Appeals.  Question 19 
Page 60, paragraph 119:  Please provi de an update on the status of all IPR-related legislation, either 
under consideration in Congress or in the Intellect ual Property Office (IPO), including legislation to 
strengthen the copyright law, to provide new enfo rcement authority to the IPO, to implement the 
WIPO Treaties, and to address cybercrime and cable piracy.  
Answer 
The bills to implement the WIPO In ternet Treaties, amending the law on copyright as well as the bills 
granting enforcement authority to IPO have been co nsolidated.  House Bill 3184 was approved last 
May 25, 2011. Its counterpart in the Senate, Senate Bill 2842 is scheduled for plenary deliberation.  The Cybercrime bills have been consolidated a nd approved at the Committee level for the both 
Houses.  House Bill 5808 is scheduled for plenary deliberation in the House of Representatives.  
Senate Bill 2796 is scheduled for plenary deliberation.  
 For the Anti-cable Piracy Bill, the House of Rep resentatives approved the consolidated bill on Second 
Reading on January 30, 2012.  Senate Bill Nos. 122 7, 2100 and 2345 are the Senate's version of the 
Anti-Cable TV and Cable Internet Pilferage Act,  all the three bills have been referred to the 
Committee on Public Information and Mass Media and the Committee on Justice and Human Rights. 
All these measures are currently pe nding at the Committee level. 
 
Question 20 
Page 63, paragraph 126:  What steps has the govern ment taken to address internet and cable signal 
piracy? 
 
Answer 
There are related proposed legislative measures  currently being deliberated in Congress.  
Meanwhile, the Local Government Units or LGUs ( particularly the city or municipal governments) 
have issued rules against cable signal theft/piracy.  WT/TPR/M/261/Add.1 
Page 76  
 
  Question 21 
Page 63, paragraph 126:  The Anti-camcording Ac t prohibits and penalizes the unauthorized use, 
possession and/or control of A/V devices for unauthorized camcording.  Does the government have any statistics or reports on the enforcement of this  provision, e.g., arrests and convictions or other 
information that might show how effective this  provision has been in addressing the problem of 
unauthorized camcording? 
 
Answer 
Two (2) arrests were made for violation of the An ti-camcording Act, which are pending preliminary 
investigation with the Department of Justi ce (NPS Docket No. XVI-INV-00222 and NPS Docket No. 
VII-14-11Q-11F-00056).  
 Moreover, informative tr ailers were launched in the first w eek of December 2011. These trailers 
explain to movie patrons the acts covered by the sa id law, as well as the penalties provided therefore. 
 
IV. TRADE POLICIES BY SECTOR (1) A
GRICULTURE AND FISHERIES  
(i) Agriculture 
 
Question 22 
Page 68, paragraph 14:  The Secretariat Report stat es that the Philippines has not notified either the 
volume of imports under tariff-quota commitments or  domestic support during the review period.  
Could the Philippines please explain what it is doing to bring these notifications up-to-date? 
 
Answer 
The notifications are currently being prepared and will be submitted as soon as they are finalized. 
 
Question 23 
Page 69, paragraph 20:  The Secretariat Report st ates:  "In 2010, the DOA launched a 2011-2016 Rice 
Self Sufficiency Roadmap (RSSR) which has evol ved into the Food Staples Self-Sufficiency 
Roadmap.  This programme has three components:  (i) increasing and sustaining the gains of production through the use of production interventions  and establishment of enabling mechanisms;  
(ii) management of consumption;  and, (iii) dive rsification of staples."  Can the Philippines please 
provide more details on how this pr ogram is implemented?  Are prod ucts other than rice considered 
under this program? 
 
Answer 
The Food Staples Self-Sufficiency Program (FSSP) 2 011-2016 aims to achieve self-sufficiency in food 
staples towards ensuring food security.  This will be achieved by:  (1) Raising productivity and 
competitiveness by, among others, accelerating th e expansion of irrigation services, ensuring 
adoption of suitable high-quality seeds, fertilizer and other integrated crop management systems, 
sustaining research and development, promoting m echanization, and enhancing delivery of extension 
services;  (2) Improving access to credit and cr op insurance;  and (3) Managing food staples 
consumption (e.g. waste reduction, alternative staples). 
 The programme encourages diversification of staples consumption by intensify ing production of while 
corn, root crops (sweet potato, cassava), and cooking banana. 
 
(3) S
ERVICES  
(iii) Telecommunications 
  WT/TPR/M/261/Add.1 
 Page 77 
 
 
  Question 24 
Page 82, paragraph 66:  What is the status of the Convergence Bill, the DICT bill, and the National 
Telecommunications Commission (NTC) Reorganization Bill?  
Answer 
These are pending in Congress. 
 Question 25 
Page 83, paragraph 68:  According to the Secretar iat report, telecoms services are regarded as a public 
utility and foreign equity in telecoms companies (bot h public (i.e. basic) and value added) is limited 
constitutionally to 40%.  Foreigners may not beco me executives or managers of telecoms firms and 
the number of foreign directors must be proportionate to the firm's aggregate share of foreign capital. 
 - What are the prospects of classifying teleco mmunications as being outside the scope of a 
 "public utility," and thus eligible for 100 pe rcent foreign investment?  Would the Executive 
 Branch support such an approach? 
 
Answer 
It is not being considered at present.   
 
- It is our understanding that the Philippine G overnment decided that the electricity sector 
 should no longer be considered a "public utilit y" subject to the 40 percent foreign ownership 
 limitation.  In making that decision, what factors were taken into account?  Did the  Government of Philippines consider that removing restrictions on foreign capital and 
 technology could result in e nhanced consumer welfare? 
 Answer 
Please clarify the context of the question since it is not referred to in paragr aph 68, page 83 of the 
Secretariat Report.  (v) Tourism 
 
Question 26 
Page 94, paragraph 123:  Given the importance that the Philippines attaches to the tourism sector, and 
since the current lack of tourist facilities, such as restaurants and hotels, hurts tourism development, 
why does the Philippine Government impose a 15 per cent tariff on restaurant equipment?  Answer 
The DTI is currently working on the extension of the duty free importation scheme.   
 SINGAPORE 
 Tariffs  
Customs Procedures 
 
WT/TPR/G/261, page 11, para 37  
 
Question 1 
We welcome the efforts made by the Philippine gover nment to enhance trade facilitation.   We view 
the e2m Customs project as progressive measures to streamline customs processes and enhance 
transparency.  We would be grateful if the Philippines Customs department could update on the 
implementation progress of such measures.  WT/TPR/M/261/Add.1 
Page 78  
 
  Answer 
The E2M system is an internet based technology th at allows Customs and traders to handle most of 
their transaction thru the internet.  The BOC is  now implementing the system wherein clearances of 
goods both import and export are electronically pro cessed.  Major features of the E2M include the 
following:  import and assessment system compo sed of electronic manifest system;  internet 
lodgement of import entry;  electronic assessme nt system;  risk management system, licensing and 
clearance system, electronic payment system and on- line release system.  For exports, the automated 
export documentation system allows electronic lodge ment of export declaration for authorized 
loading of shipment to the vessel.  
The E2M System covers the improvement of the fo llowing BOC Processes:  (1) Online submission of 
declarations;  (2) Automatic advice on declaration status;  (3) Engagement of Value Added Service 
Providers (VASPs);  (4) Online submission of man ifests by airlines and shipping lines, including 
consolidators;  (5) Automated process for other types of import transactions such as informal 
(including passenger baggage system), warehousing and transshipment entr ies;  (6) Payments to be 
made after assessment;  (7) Pa yments will be coursed through b anks;  (8) Automated process for 
liquidation of raw materials;  (9) Centralized management of bond transactio ns;  (10) Automated 
legal case tracking and management;  (11) Hold and alert management system;  (12) Customer 
service hotline for external stakeholders;  (13) Li nks with relevant government;  and (14) Online 
resource access through BOC Website on issuances, pr ocesses, policies, guidelines and other related 
information. 
 
Investment  
Foreign Investment Regime and Business Framework  
 
WT/TPR/S/261, pages 23 and 48, paras 34 and 66  
 
Question 2 
We read with interest that the Philippine govern ment is determined to improve processes for trade 
facilitation.  We note in the Secretariat Report th at the Philippines' procurement regime (Resolution 
No. 03/2011) requires foreign companies to obtain a letter of reciprocal rights issued from the home 
country authorities to participate in the government  tender process.  We would like to highlight 
similar requirements to participat e in several industries in the Ph ilippines such as the retail trade 
(Republic Act 8762).  We hope that  the Philippines can consider easing these restrictions, so as to 
create a more investor-friendly environment.  
Answer 
Comment is noted. 
 CANADA 
 
Report by the Secretariat (WT/TPR/S/261) 
 
II. TRADE AND INVESTMENT REGIMES (2) T
RADE AGREEMENT AND ARRANGEMENTS  
(i) Participation in the WTO 
 
Paragraph 8, page 15 
 
National Meat Inspection Service (NMIS) Memo randum 835 mandates the strict enforcement of 
NMIS Memorandum-Circular 09-2008-05 (MC. 09- 2008-05).  MC. 09-2008-05 stipulates a zero 
tolerance for salmonella in fresh, chilled and fro zen meat and offals both locally produced and 
imported.  WT/TPR/M/261/Add.1 
 Page 79 
 
 
  Frequent stringent inspection of imported meats has been reported by Canadian  exporters and by their 
Philippine importers.    
Question 1 
Can the Philippines confirm that domestically-produced  meats are subject to testing at the same level 
of enforcement, including frequency of testing, as  imported meats?  In particular, can this be 
confirmed in the case of salmonella testing?   
Question 2 
If not, can the Philippines confirm what alternative c ontrol measure(s) is/are in place and enforced in 
order to ensure domestic compliance with MC. 09-2008-05? 
 
Answer  
(Question Nos. 1 and 2):  Domestically produced meat  is subjected to the sa me level of enforcement 
as imported meat for laboratory test regimen for hygiene and sanitation.  Establishments are also 
required to adopt GMP and HACCP.  If the random sampling of the meat shows an alarming 
contamination of E. Coli or Salmonella, the rigid sa mpling will be instituted similar to that required 
under Memorandum 835.  The implementation of Memorandum 835 on imported me at was triggered by the results of random 
sampling of mechanically-deboned meat (MDM) im portation from 1 September to 31 October 2011 
which showed that 53% of those sampled for 28/53 are positive for Salmonella.  
III. TRADE POLICIES AND PRACTICES BY MEASURE 
(2) M
EASURES DIRECTLY AFFECTING IMPORTS  
(vi) Import prohibitions, controls, and licensing 
 
Paragraph 34, page 40 
 
According to the WTO Secretariat report: "For prod ucts subject to quotas, there are licences for non-
agricultural and agricultural products.  For non-ag ricultural products, quotas are granted on the basis 
of an importer's past performance in relation to hist orical growth in sale.  For agricultural products, 
there are regular and special licences.  Regular licen ces are issued annually for tariff quotas at the start 
of the quota year."  
Question 3 
Could the Philippines elaborate on how and to whom quotas are allocated for the various agricultural products subject to tariff quotas? 
 
Answer 
The rules and regulations for the allocation of agricu ltural products that are subject to tariff quotas 
are contained in Department of Agriculture Admini strative Order (DA-AO) No. 9, series of 1996, 
which was amended by AO Nos. 8 (1997), 1 (19 98), and 52 (2000).  The manner by which the quotas 
are allocated to qualified applicants is d escribed in WTO document G/AG/N/PHL/13 dated 
9 April 1998 which remain unchanged. 
 
III. TRADE POLICIES AND PRACTICES BY MEASURES 
(1) M EASURES DIRECTLY AFFECTING IMPORTS  
(vi) Standards and other technical requirements  WT/TPR/M/261/Add.1 
Page 80  
 
  Paragraph 52, page 44 
 
Following a series of consultations, the Department  of Agriculture (DA), through the National Meat 
Inspection Services (NMIS), published final draf ts for two new Administrative Orders (AOs) 
governing the handling of chilled/frozen/thawed  meat and newly slaughtered meat.   
 
Question 4 
Can the Philippines advise if these new AOs are intended to replace AO-22?   
 
Answer 
One of the new AOs is intended to replace AO 22 while the other one will be for newly slaughtered 
meat.  
 
Question 5 
Will these new AOs be notified to the WTO?  
Answer 
There is no need for notification since these ar e post-border measures and do not impose additional 
restriction/ requirement for the importati on of meat and meat products.   
Question 6 
With regards to meat handling rules and regulations  stipulated in AO-22 and its draft replacements, 
upon which international standards/guidelines/ r ecommendations has the Philippines based this 
measure?  
Answer 
The rules and regulations are based on the Codex Code of Practice for Meat Hygiene (CAC/RCP 58-
2005), among others, while the specific product te mperatures are based on the US Food Code of 
2009.  Question 7 
Can the Philippines advise if its rules and regula tions governing the handling of newly slaughtered 
meat are based on international standards/guidelines/ recommendations?  Answer 
There is no international standard for the ambien t temperature holding of newly slaughtered meat. 
The Philippine regulation does not deviate from Codex as Section 2 of CAC/RCP 58-2005 states that "traditional practice may result in departures from  some of the meat hygiene recommendations 
presented in this code when meat is produced for local trade".   
 
While Canada supports the Philippines efforts to enhance food safety, the absence of comparable 
handling requirements between warm/freshly sl aughtered meat and frozen/chilled/thawed meat 
suggests that the Philippines is willing to accept a hi gher level of risk for warm/freshly slaughtered 
meat.  
 
Question 8 
Is the Philippines able to provide scientific ju stification for the absence of comparable similar 
handling requirements, particularly cold  chain requirements, for warm meat? 
 Answer 
Newly slaughtered meat, and frozen and thawed meat  are two different products that present different 
food safety risks; thus, subject to different handling requirements. 
  WT/TPR/M/261/Add.1 
 Page 81 
 
 
  III. TRADE POLICIES AND PRACTICES BY MEASURES 
(1) M EASURES DIRECTLY AFFECTING IMPORTS  
(vi) Standards and other technical requirements 
 
Paragraph 54, page 45 
 
According to this section all imports of meat requi re a Veterinary Quarantine Clearance (VQC) issued 
by the Bureau of Animal Industry (BAI) prior to shipment.  The DA's Administrative Order 26, Series 
of 2005, entitled "Revised rules, regulations, a nd standards governing the importation of meat and 
meat products into the Philippines", states that BAI shall approve/disappr ove application for VQC 
within five working days from the receipt  of complete application documents.   
 
Question 9 
Can the Philippines advise if there are conditions un der which persistent delays in the issuance of 
VQCs in excess of five working days can be justified? 
 
Question 10 
If there are no such conditions, what enforcement mechanisms exist to ensure that VQCs are 
processed expeditiously as per AO-26 to prevent trade disruptions?  
Answer (Question Nos. 9 And 10) 
The Philippines only experienced de lay in December 2011 when the vo lume of applications doubled. 
Processing of VQCs however normalized after the Christmas season. 
 
IV. TRADE POLICIES BY SECTOR 
(1) A GRICULTURE AND FISHERIES  
(i) Agriculture  
Paragraph 5 
 
The Secretariat Report indicates th at as of November 2011, three b ills were being considered in 
Congress relating to changing the powers, functions, and status of the National Food Authority.  
 
Question 11 
Could the Philippines please provide an update on this process? 
 
Answer 
The bills are currently bei ng deliberated in Congress.  
 IV. TRADE POLICIES BY SECTOR (1) A
GRICULTURE AND FISHERIES  
(i) Agriculture 
 
Paragraph 14 
 
The Secretariat report notes that the Philippines has no t provided notifications of either the volume of 
imports under tariff-quota commitments or dom estic support during the review period.  
 Question 12 
Could the Philippines elaborate on when it will submit this information to the Committee on 
Agriculture?  WT/TPR/M/261/Add.1 
Page 82  
 
  Answer 
The Philippines shall submit its notificati ons as soon as they are finalized. 
 IV. TRADE POLICIES BY SECTOR (1) A
GRICULTURE AND FISHERIES  
(i) Agriculture 
 
(a) selected sectors 
 
Paragraph 20 
 
The Philippines is now implementing its Food Stap les Self-Sufficiency Roadmap over the years 2011-
16;  the roadmap concerns mainly rice (palay).   Along with "production interventions" such as 
enhanced irrigation, extension, and research, and subs idization of certain inputs, the program also uses 
"enabling mechanisms" to stimulate production res ponses of farmers by, inter alia, increasing the 
portion of total production of palay that is proc ured by the National Food Authority (NFA), and 
providing price support to farmers.   
Question 13 
Could the Philippines elaborate on (1) how the activities of the NFA under the roadmap might be 
affected by the possible streamlining of NFA menti oned in paragraph 5, and (2) the steps taken to 
procure more of the palay harvest and to adjust the procurement prices? 
 
Answer 
Under the roadmap, no NFA operational activities w ill be affected by the proposed bills on NFA 
reorganization. 
 
On procurement, the NFA has targeted increase d local procurement even without the proposed 
increase in government procurement price 
 
Additional Questions from Canada 
 
Report by the Secretariat (WT/TPR/S/261) 
 
IV. TRADE POLICIES BY SECTOR 
(3) S ERVICES  
(iv) Transport 
 
Paragraphs 89 and 91, page 87 
 
Paragraph 87 states that "...authorities noted that  Philippines-registered ships generally operate 
internationally, and do not tend to transport Ph ilippine cargo" and then states in paragraph 91 
"...authorities indicated that these ships (foreign v essels under special permit) are mostly involved in 
oil exploration projects contracted by the Government, which require specialized ships not normally 
available from the domestic fleet."    
Question 14 
Can the Philippines clarify which vessels move cargo in the Philippines if they are generally not 
nationally registered and not under a special permit?  
 
Answer 
The vessels that could move cargo in the Philippines a re: 1) Philippine-registered ships engaged in 
the domestic trade, 2) Philippine-registered ships engaged in international trade issued a special  WT/TPR/M/261/Add.1 
 Page 83 
 
 
  permit to operate in the domestic trade (under MARINA Memorandum Circular (MC) No. 105 dated 
06 April 1995), and 3) foreign flag/registered  ships i ssued a special permit to be temporarily utilized 
within the Philippine national territory (under MC No. 2011-04 dated 17 November 2011). 
 
IV. TRADE POLICIES BY SECTOR 
(3) S ERVICES  
(iv) Transport – Maritime Transport 
 
Paragraph 91, page 87. 
 
Question 15 
What are the criteria used to determine if a servi ce (by a foreign vessel) is in the public interest? 
 
Answer 
"National and public interest", as defined under MC 2011-04, means the welfare of the public and 
which warrants recognition, prom otion, and protection by the government and its agencies. 
 IV. TRADE POLICIES BY SECTOR (3) S
ERVICES  
(iv) Transport – Maritime Transport 
 
Paragraphs 90-91, page 87. 
 
Question 16 
How many special permits are issued by MARINA fo r the use of foreign vessels and is there a limit 
on the number issued each year?   
 
Answer 
The number of Special Permits issued to forei gn vessels will depend on the applications filed/received 
by MARINA, subject to evaluation and determinati on of compliance with the conditions/requirements 
under MC 2011-04.  There is no limit as to the number of Special Permits issued by MARINA each 
year. 
 
Question 17 
What is the limit of time for these permits? 
 
Answer 
Section V.3 of MC 2011-04 provides that the Special Permit for the carriage of passenger or cargo to 
be issued shall be for a maximum validity period of  six (6) months per issuance but not to exceed one 
(1) year.  The Special Permit to be issued for othe r types of foreign-registered ships shall be for a 
maximum validity period of six (6) months per issuance but not to exceed two (2) years.  
Question 18 
Are foreign vessels operating under a special permit required to have Filipino nationals on board? 
 
Answer 
Foreign vessels operating under a Special Permit purs uant to MC 2011-04 are not required to have 
Filipino nationals on board. 
 
IV. TRADE POLICIES BY SECTOR (3) S
ERVICES  
(iv) Transport 
 WT/TPR/M/261/Add.1 
Page 84  
 
  Paragraph 103, page 89. 
 
Question 19 
What type of revenue tax regime  exists (e.g. is it a tonnage or a corporate tax regime)?   
 Answer 
Please clarify the question because the corporate ta x regime is not referred to in the paragraph cited 
that covers VAT exemptions. 
 
IV. TRADE POLICIES BY SECTOR 
(3) S ERVICES  
(iv) Transport – Air Transport  General  
Question 20 Could the Government of the Philippines please provi de an update regarding its review of third-
country code-share provisions for inclusi on in bilateral air transport agreements? 
 
Answer 
As our aviation landscape continues to evolve, the Philippines is  undertaking a continuing review of 
our air policy including third country code-sharing.  
  
FOLLOW-UP QUESTIONS 
 
 
CANADA 
 Amendment to NMIS Memo 835  
The Government of the Philippines has indicated  over the course of its 2012 TPR that inspection 
standards are the same for domestic and impor ted meat.  With regard to the 20 March 2012 
amendment to NMIS Memo 835  stipulating rigid testing of all sh ipments of imported pork offal and 
deboned meat  - as well as all meat from newly accredited countries - for salmonella, Canada would 
like to know:  
 
Question 1 What procedures are in place for testing of domes tically produced meat and what are the results? 
 
Question 2  
Can the Philippines also share the relevant administrative orders for testing of similar domestic 
products?  
 Answer (questions 1 and 2) 
From 2005 to late 2011 , there was only one sampling plan and protocol applied to domestically 
produced and imported meat.  It was contained in Administrative Order No. 26 (AO 26), series of 2005, and formulated in accordance with the Codex General Guidelines on Sampling (CAC/GL 50-
2004).  In November 2011, AO26 was strengthened due  to the alarming laboratory results where 53% 
of the imported consignments for the peri od September to October 2011 tested positive for 
Salmonella.  As a result, all succeeding consignm ents were subjected to 100% testing.   
  WT/TPR/M/261/Add.1 
 Page 85 
 
 
  On 26 March 2012, however, the 100% testing regim en was revoked and rep laced by Memorandum 
Order No. 3-2012-60, a sampling plan recommended by the International Commission on Microbiological Specification in Foods (ICMSF). Sam pling by "two-class attributes plans" would be 
used for ready to eat or cooked meat products, wh ile sampling by "three-class attributes plans" will 
be used for raw meat (newly slaughtered/fresh or fro zen).  This protocol applies to both domestically-
produced and imported meat.  
 EU 
 Follow-up to question 8  
 
WTO Secretariat's report, pages 20-21, para-s 20 and 23 
 
Could the Philippines indicate specifically for each  of the following areas which constitutional 
provision prevents the relaxation of the equity requi rements in:  domestic-market oriented firms (vs 
exporters), government procurement, contracts for locally funded public works, firms that provide 
professional services, rice and corn production, d eep sea fishing, retail trade, private radio 
communications networks, banking, adjustment  companies, condominium ownership and land 
ownership or land lease, gambling and manpower recruitment?  
Answer 
The following shows the Constitutional and statutory bases of the restrictions: 
 
 Domestic market enterprises with paid-in equity capital of less th an the equivalent of US$200,000 
(Article XII Section 10 of the Constitution;  Republic Act 7042 as  amended by RA 8179). 
 
 Retail trade enterprises with paid-up capital of less than US$2,500,000 (Ar ticle XII Section 10 of 
the Constitution;  Section 5 of Republic Act 8762)8. 
 
 Adjustment Companies (Article XII Section 10 of the Constitution;  Section 323 of Presidential 
Decree 612 as amended by PD 1814). 
 
 Ownership of condominium units where the comm on areas in the condominium project are co-
owned by the owners of the separate units or owne d by a corporation (Article XII Section 10 of 
the Constitution;  Section 5 of Republic Act 4726). 
 
 Ownership of private lands (Article XII Section 7 of the Constitution;  Chapter 5, Section 22 of 
Commonwealth Act 141;  Section 4 of RA 9182). 
 
 All forms of gambling (Article XII Section 10 of  the Constitution;  Repub lic Act 7042 as amended 
by RA 8179), except those covered by investment agreements with PAGCOR (RA 9487) operating 
within special economic zones administered by  the Philippine Economic  Zone Authority (RA 
7916).  
 
 In banking, Section 10 of Article XII on Natio nal Economy and Patrimony of the Philippine 
Constitution. 
 
                                                      
8 Full foreign participation is allowed for retail trade enterprises:  (a) with paid-up capital of 
US$2,500,000 or more provided that investments for establishing a store is not less than US$830,000;  or (b) specializing in high end or luxury products, provided that the paid-up capital per store is not less than 
US$250,000 (Section 5 of Republic Act 8762). WT/TPR/M/261/Add.1 
Page 86  
 
   There is no Constitutional limitation on the ownership  of private communications network.  The 
limitation is in Act No. 3846, as amended (Radi o Control Law) which was enacted in 1931 and 
was last amended in 1950.  Sec. 8 of Act38 46 provides that no license shall be granted or 
transferred to a person who is not a Filipino citizen.  
 
EU's initial question 8 
The Foreign Investment Negative List (FINL) cont ains economic activities in which foreign equity 
either is prohibited or limited to a certain per centage. For activities not included in the FINL full 
foreign ownership is permitted.  Does the Philippin es intend to reduce the existing restrictions to 
foreign investments regarding economic activities incl uded in the list and also for those activities that 
are not included in the list, specifically in the following areas: domestic-mar ket oriented firms (vs 
exporters), government procurement, contracts for locally funded public works, firms that provide 
professional services, rice and corn production, d eep sea fishing, retail trade, private radio 
communications networks, banking, adjustment  companies, condominium ownership and land 
ownership or land lease, gambling and manpower recruitment?  Are there any constitutional 
impediments to relax the requirements? 
 
Reply by the Philippines 
The Philippine Government, through  all concerned agencies, continues to undertake review of 
existing laws with the end view of ensuring that  the country remains as a competitive investment 
destination. It may be noted that the FINL is re viewed every two (2) years to take into account any 
new legislations that would amend or repeal laws affecting investments. 
 
Yes, there are constitutional impediments to rela xing the equity requirements in certain activities 
indicated in the FINL.  
Follow-up to question 10   
 
WTO Secretariat's report, page 20, para 20 
 
Could the Philippines clarify if the foreign owners hip provisions in RA 4726 apply both to vertical as 
well as horizontal condominiums?  
 Answer 
Section 29 of R.A. No. 4726 does not qu alify the condominiums subject of  the law.  However, the law 
implicitly applies only to vertical buildings. 
 
EU's initial question 10 
Land ownership restrictions and RA 4726 – Condominum Act of 1966 – allows up to 100% 
ownership of a condominium unit under certain cond itions.Could the Philippines confirm if foreign 
ownership of land in horizontal c ondominiums, industrial estates, tour ism estates, retirement villages, 
and similar real estate arrangements is allowed?  
                                                      
9 Section 2 of RA 4726, otherwise known as “The Condominium Act,” states that “A condominium is 
an interest in real property consisting of a separate inte rest in a unit in a residential, industrial or commercial 
building and an undivided interest in common directly or indirectly, in the land which it is located and in other 
common areas of the building. A condominium may include, in  addition, a separate interest in other portions of 
such real property.  Title to the common areas, including the land, or the appurtenant interests in such areas, may 
be held by a corporation specially formed for the purpose (hereinafter known as the condominium corporation) 
in which the holders of separate interests shall automati cally be members or share-holders, to the exclusion of 
others, in proportion to the appurtenant interest of their respective units in the common areas.  The interests in condominium may be ownership or any other interest in real property recognized by the law of property in the 
Civil Code and other pertinent laws.”  WT/TPR/M/261/Add.1 
 Page 87 
 
 
  Reply by the Philippines 
Under the Constitution, land ownershi p is limited to Filipino citizens or corporations with at least 
sixty per cent of the capital stock belonging to Filip ino citizens.  However, under the Investor's Lease 
Act (R.A. No. 7652), foreign investors can l ease land up to a maximum term of 75 years. 
 
Follow-up to question 27  
 
WTO Secretariat's report, page 44, para. 52  
Question has been partially replied:  Given that th ere is an impact on trade as a consequence of the 
new measures, could the Philippines clarify if it intends to notify to the WTO SPS Committee the 
current Administrative order on rules and regulations  on hygienic handling in meat markets of newly 
slaughtered meat and on chilled frozen and thawed meat (as can be found on the DA-NMIS website)? 
 In addition, the EU has been informed that the AO 22 has been recently replaced with AO 5 "Rules 
and regulations on hygienic handling of newly slau ghtered meat in meat markets", which imposes 
new requirements on the handling of freshly slaugh tered meat and with AO 6 "Rules and regulations 
on hygienic handling of chilled, frozen and thawed m eat in meat markets", which covers the hygienic 
handling of chilled, frozen and thawed meat.  The EU understands that as a result of these changes, 
AO5 and AO6 may result in a discriminatory treatment of imported frozen meat and locally produced meat which can be sold "unchilled". Could the Philip pines provide further information about this issue 
and in particular that such a differentiated treatme nt of the rules and in practice does not exist?  
 
Answer 
The Philippines maintains that there is no need to notify Administrative Order (AO) No. 5, series of 
2012 (Rules and Regulations on the Hygienic Handling of Newly Slaughtered Meat in Meat Markets) 
and AO No. 6, series of 2012 (Rules and Regulations on the Hygienic Handling of Chilled, Frozen 
and Thawed Meat in Meat Markets) since these  regulations are post border measures and do not  
impose additional requirements for the importation of meat and meat products.  The subject AOs are 
distinctly and solely directed to the hand ling of meat products in the wet markets. 
AO 6 does not discriminate against imported meat since it applies to all chilled, frozen and thawed meat, whether locally produced or imported.  Fu rthermore, AO5 and AO 6 should not be compared 
since frozen, chilled meat and freshly slaughtered me at are two very different products, belonging to 
different HS codes, and therefore require ext remely divergent  risk management regimen. 
 EU's initial question 27 
Could the Philippines provide its reasoning for not  having notified Administrative order 22 (New 
rules and regulations for the handling of frozen and chilled meat and meat products in the Philippines) 
of 2011?  Could the Philippines clarify if it inte nds to notify the current final draft Administrative 
order on rules and regulations on hygienic handling in meat markets of newly slaughtered meat and 
on chilled frozen and thawed meat as can be found on the DA-NMIS website? 
 
Reply by the Philippines 
AO 22 is a post border measure that did not modify or impose additional restrictions or requirements 
to meat importation but rather seeks to strengthe n the Government's regulatory capability to ensure 
meat safety.  
Follow-up to question 54  
 
WTO Secretariat's report, page 84, para. 71  
According to the Foreign Investment Negative List, the 20% foreign equity limit is based on Act 3846 
of 1931 – a colonial era law that pre-dates the Consti tution.  Moreover, Section 11, Article XII of the WT/TPR/M/261/Add.1 
Page 88  
 
  Philippine Constitution does not seem to be an appropr iate reference as it pertains to public utilities, 
where foreign equity is limited to 40%.  Could th e Philippines clarify if private radio communications 
networks are considered public u tilities, and on what legal basis?  If so, please explain also why there 
is a discrepancy between the limits imposed by Act 3846 and the Constitution? 
 Answer 
Private radio communications networks are not public  utilities.  Whether or not Sec. 8 of Act 3846 
has been amended by the 1987 Cons titution is a legal issue, which can be resolved by the regular 
courts. 
 
EU's initial question 54 
According to the Secretariat's report "Cross-owners hip restrictions apply, and no entity can have a 
franchise in both telecommunications and broadcasti ng (radio or television), either through airwaves 
or by cable.  Foreign equity in a private ra dio communications network is limited to 20%.  
Broadcasting and TV are constitutionally reserved for Filipino nationals.".  Could the Philippines 
clarify if there are any Constitutional impediments to  enacting legislation to relax restrictions on 
foreign equity in private radio communications networks?  
Reply by the Philippines 
Section 11, Article XII of the Philippine Constitution. 
 Follow-up to question 59  
 WTO Secretariat's report, page 97, para. 131 
 
Could the Philippines cite the specific provision in RA8981 (or other laws) that limit to Filipinos the 
ownership of firms that provide such professional services? 
 
Answer 
The following provisions in the Philippine Constitution and Republic Act No. 8981 limit the 
ownership of firms that provide su ch professional services to Filipinos:  
1. Sec. 14, Art. XII of the 1987 Philippine Constitution 
2. Section 7 (j) of the Republic Act No. 8981 (PRC Modernization Act of 2000) 
 
In the cited provisions, reference to practice of pr ofession is always with natural persons and never 
with juridical persons.  
 EU's initial question 59 
The Secretariat's report states "Under the Constitution (Article XII (Section 14), and as outlined in the 
Eighth Regular Foreign Investment Negative List, th e practice of all professions in the Philippines is 
limited to Filipino citizens, excep t in cases prescribed by law.  However, Article 40 of the Labour 
Code provides that non-resident aliens may be admi tted to the Philippines to supply a service after it 
has been determined that a competent and willing Filipi no is not available at the time of application.  
Moreover, the Philippines Professional Regulation Commission Modernization Act (2000) allows the 
PRC, upon the recommendation of the professional regulatory body concerned, to approve the licensing and registration of foreign professionals, w ith or without examination, when substantially 
the same requirements for licensing and registration for the profession exist in the respective country, 
and on the basis of reciprocal treatment.  Licences or special temporary permits may be granted to: 
foreign professionals under reciprocity and other in ternational agreements; consultants engaged in 
foreign-assisted government projects;  and employees of foreign private firms or institutions pursuant to law
, or health professionals engaged in time-limit ed humanitarian missions."  Could the Philippines 
clarify the motivation for including the practice of  professions in the Foreign Investment Negative 
List, which is intended to catal ogue limitations on foreign equity in non-banking business sectors?  WT/TPR/M/261/Add.1 
 Page 89 
 
 
  Related to this, is it possible to distinguish be tween, and clarify public policy with respect to, 
ownership of firms that provide professional services versus the practice of professions by individuals?  
 
Reply by the Philippines 
There is a difference between doing business and th e practice of the profession in the Philippines. 
The different Professional Regulatory Laws (PRL s) and the Professional Regulation Commission 
(PRC) Modernization Act of 2000 (R.A. 8981) allow the practice of profession of foreign nationals as 
natural persons and not as juridical persons.  Under the abovementioned laws the ownership of firms that provide such  professional services shall 
be owned by Filipinos while the practice of profe ssions by individuals may be allowed to foreign 
nationals certain conditions.  
 
JAPAN  
 Report by the Secretariat (WT/TPR/S/261) 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) MEASURES  DIRECTLY  AFFECTING  IMPORTS 
(iii) Tariffs, other duties, and taxes 
 
Follow-up question regarding a reply to Question2 by Japan 
 Page 34, Paragraph 24  
Japan welcomes the shift to a cash refund system inst ead of Tax Credit Certificates (TCCs).  There is 
a concern, however, about the liquidity of alrea dy issued TCCs.  Please provide a detailed plan to 
monetize the TCCs.  
Answer 
The VAT-TCC Monetization Program will be spread o ver a five year period starting 2012 up to 2016. 
 
The General Appropriations Act of 2012 has allocated for the funding of the first tranche of the 
monetization of outstanding TCCs issued by the BI R, BOC and DOF-OSS in FY 2003.  This in line 
with the Multi-Year Obligation Allotment issued  by Department of Budget and Management, which 
will provide for the annual budgeta ry commitment for the programme. 
 
a. P 679.63  Million for BOC, to cover the monetization of duty drawbacks of TCC as of 
December 2011. 
b. P 29.30  Million for BIR, to cover the first tranche of payments for outstanding VAT 
TCCs issued on 2003 and previous years. 
 
The DOF shall direct the verification by the BIR and  the BOC of the outstanding VAT-TCCs.  All TCC 
holders who intend to enroll in the program shall submit their original TCCs for verification and 
establishment of its authenticity.  The BIR and the BOC may require other supporting documents as may be necessary for the verification of the TCCs. 
 
The BIR or the BOC shall issue to the owner of the verified TCC a Notice of Payment Schedule (NPS) 
confirming the details of his/her entitlement to  monetization, the refundable amount, the date of 
monetization and such other necessa ry information.  Only the duly i ssued NPS shall be accepted by 
the refunding agency or the government participa ting banks (Land Bank of the Philippines and 
Development Bank of the Philippines) fo r the monetization of covered TCCs.  WT/TPR/M/261/Add.1 
Page 90  
 
  An enrolment process will be set up at the BIR and  BOC for the VAT TCC holders who opt to collect 
in advance though government participating banks (LBP and DBP) at a discounted value of their 
TCCs.  Holders who will not enroll in the programme  will get the cash value of their outstanding TCC 
upon maturity date.  
 
Report by the Secretariat (WT/TPR/S/261) 
 
IV. TRADE POLICIES AND PRACTICES BY MEASURE 
(3) SERVICES 
(v) Tourism 
 
Follow-up question regarding a reply to Question 10 by Japan 
 Page 94, Paragraph 122  
The Philippines replied that "any employment restriction is not dependent on the size of the specialty 
restaurant but whether or not the restaura nt is owned and operated by the hotel". 
 
However, according to the Philippines' schedule on  GATS with respect to specialty restaurant in 
mode 4 of MA, the description is as follows;  
i) only specialty restaurants duly accredited with  the Department of Tourism as well as those 
 forming part of the integrated operation of accr edited hotels/resorts may be allowed to engage 
 the services of aliens; 
ii) a specialty restaurant with a minimum of 75-seat capacity shall be allowed to employ one (1)  alien Specialty Chef or Sous Chef.  In the initial stage of operation of a specialty restaurant  and for a maximum period of two (2) years, thr ee (3) more alien specialty chefs or sous chefs 
 may be employed;  and 
iii) a specialty restaurant with a seating capacity of 500 or more may be allowed to employ three 
 (3) additional aliens in any of  the following positions: specialty chef, sous chef, food service 
 manager or a combination of the above.  
Japan would like the Philippines to explain whet her these alien employment restrictions on the 
Schedule do not exist in the current regulation. 
 Answer 
The restrictions in the Employment of Foreign Nati onals in said Specialty Restaurants as indicated 
still exists in the current regulations.  
 
UNITED STATES 
 WT/TPR/S/261 
 II. TRADE AND INVESTMENT REGIMES (2) T
RADE AGREEMENTS AND ARRANGEMENTS  
(i) Participation in the WTO 
  WT/TPR/M/261/Add.1 
 Page 91 
 
 
  Question 3 
 Page 15, paragraph 8  
The Secretariat Report notes:  "The Philippines has ma intained a strong record on notifications to the 
WTO.  However, notifications are lagging with r espect to agriculture (special safeguard, domestic 
support, export subsidies and tariff quotas (see Chap ter IV)), subsidies and countervailing measures, 
and state-trading activities.  Since 2005, the Philippin es has not notified any TBT-relevant bilateral or 
plurilateral agreements or any preferential or non- preferential rules of origin."  Please explain what 
the Philippines is doing to bring its notifications up-to-date?  
 
Answer 
All RTAs of the Philippines have been notified under the transparency mechanism  of the WTO either 
to the CTD or CRTA. 
 
Follow-up Question  
We appreciate the Philippines' efforts to submit its notifications on RTAs.  Please explain what steps 
the Philippines is taking to submit other notificati ons referenced in paragraph 8 (page 15) of the 
Secretariat report, including with respect to the Committee on Agriculture (special safeguard, 
domestic support, export subsidies, and tariff quot as), subsidies and countervailing measures, state-
trading activities, TBT, and rules of origin. 
 
Answer 
The appropriate notifications are currently being p repared and will be submitted as soon as they are 
finalized.  
(3) F
OREIGN INVESTMENT REGIME AND BUSINESS FRAMEWORK  
 
Question 4 
 Page 20, paragraph 20 
Is legislation which would allow up to 40 per cent foreign ownership of cable systems that do not 
produce their own content or programs still under consideration? 
 
Answer 
The question does not refer to the contents of paragraph 20, page 20.  
 
Follow-up Question 
Paragraph 20 of the Secretariat report indicates  that the Philippines' Foreign Investment Act 
enumerates economic activities in which foreign equity is either prohibited or limited to a certain 
percentage.  We therefore seek additional informat ion regarding the Philippines foreign investment 
restrictions, resulting from the application of the Foreign Investment Act or other legislation. 
Specifically, what is the current status of legisla tion that would allow 40 per cent foreign ownership of 
cable systems that do not produce their own content or programmes? 
 
Answer 
At present cable TVs are considered broadcast and s ubject to 100% Filipino ownership requirement. 
A law is necessary to classify cable TVs as public telecommunications systems so that the 60-40 
Filipino-Foreign ownership will apply.  
III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) M
EASURES DIRECTLY AFFECTING IMPORTS  
(vi) Standards and other technical requirements WT/TPR/M/261/Add.1 
Page 92  
 
  (b) Sanitary and phytosanitary measures 
 
Question 11 
 Page 45, paragraph 53 
 According to the Secretariat Report, imports of agri cultural products, live animals, plants, fish, their 
products and by-products must be accompanied by a sanitary, phytosanitary or health certificate from 
the country of origin, and are subject to in spection upon arrival.  We understand that in 
December 2011 the Philippine government implemen ted a 100 per cent testing requirement for all 
imported meats without formal notification to trad e partners and without citing a food safety hazard 
from trade partners or providing a scientific study ju stifying the need for 100 per cent testing.  What 
percentage of Philippine meat pr oduction is required to be tested by Philippine regulations?  Also, 
when will the Philippines notify the WTO of its new 100 per cent testing requirement?  
 
Answer 
Domestically produced meat is subjected to the same level of enforcement as imported meat for 
laboratory test regimen for hygiene and sanitation.  Establishments are also required to adopt GMP 
and HACCP.  If the random sampling of the meat shows an alarming contamination of E. Coli or Salmonella, the rigid sampling will be instituted similar to that required under Memorandum 835. 
 
Follow-up Question 
Please explain why the Philippines tests for salmonell a on raw meat products at the port of entry and 
condemns any shipment testing positive for salmonell a.  A zero tolerance standard for salmonella is 
unwarranted because it is generally accepted by fo od safety experts and scientists that pathogens 
cannot be entirely eliminated from raw meat, and th at proper storage, handling, and cooking of raw 
meat reduce significantly the risk of a number of food ‐borne diseases caused by these microbes.  In 
light of this, please explain whether the Philippines tests domestic raw meat products for salmonella 
and if so, whether the testing is conducted at the same rate.  Please provide all Philippine government 
testing results for salmonella, with respect to bot h domestic and foreign raw meat.  Moreover, please 
explain why certain meat products, like pork offal a nd mechanically deboned meats, are now subject 
to increased testing while other meat produc ts are only subject to random sampling. 
 Answer 
Domestically produced meat products in the Phili ppines are subjected to the same treatment as 
imported products.  Fr om 2005 to late 2011, there was only one sampling plan and protocol applied 
to domestically produced and imported meat.  It was contained in Administrative Order No. 26 (AO 
26), series of 2005, and formulated in accordan ce with the Codex Genera l Guidelines on Sampling  
(CAC/GL 50-2004).  However, in November 2011, AO26 was strengthened due to the alarming 
laboratory results where 53% of the imported cons ignments for the period September to October 
2011 tested positive for Salmonella.  As a result, a ll succeeding consignments were subjected to 100% 
testing.  
 
On 26 March 2012, the 100% testing regimen wa s revoked and replaced by Memorandum Order No. 
3-2012-60, a sampling plan recommended by the International Commission on Microbiological 
Specification in Foods (ICMSF). Sampling by "two-cla ss attributes plans" would be used for ready to 
eat or cooked meat products, while sampling by "three-class attributes plans" will be used for raw 
meat (newly slaughtered/fresh or frozen).  This pr otocol applies to both domestically-produced and 
imported meat.  
  WT/TPR/M/261/Add.1 
 Page 93 
 
 
  (2) M EASURES DIRECTLY AFFECTING EXPORTS  
 
Question 14 
 Pages 51 - 56, Paragraphs 89 - 103 
 This section of the report provides information on nu merous subsidy programs which appear to meet 
the criteria for notification as provided for under Article 25 of the Subsidies Agreement.  The 
Philippines has not submitted a subsidy notification in  many years (e.g., the last notification submitted 
covered 1996).  When will the Philippines submit th e required subsidy notifications pursuant to its 
obligations under the Subsidies Agreement? 
 Moreover, we note that it appears that the Philippi nes has graduated from Annex VII of the Subsidies 
Agreement (see G/SCM/110/Add.8).  How does the Philippines intend to change the following 
programs, inter alia, which appear to be subsidies contingent upon export performance, in light of its 
graduation from Annex VII:  
 
• Tax credits under the Export development Act • Incentives under the Philippine Economic Zone Authority (PEZA) 
• Tax incentives under the Omnibus Investment Code (OIC) 
• Financing under the Trade and Investment Development Corporation of the Philippines 
(TIDCORP) 
• Tax exemptions and non-tax incentives provided to enterprises registered with the BOI that 
produce non-traditional exports or are engaged in a sector listed in the Investment Priorities 
Plan (IPP) 
 Answer  
The Philippines is working on the submission of its notifications.  A bill on incentives rationalization 
is currently under deliberation in Congress.  Once th e law is passed, we will notify, as appropriate.  
 
Follow-up Question 
The Philippines stated that a b ill on incentives rationalization is currently under deliberation in 
Congress.  When does the Philippines expect the bill to pass in Congress?  Please also explain 
whether any of the incentives contained in the b ill under deliberation in Congress are contingent upon 
exportation?  In light of its obligations under the Subsidies Agre ement, when does the Philippines expect to submit 
its notifications for all notifiable subsidies currently in effect?  
 
Answer 
A bill on incentives rationalization has been passed in the House of Representatives.  Currently 
however, there are several bills file d in the Senate that would s till have to be consolidated and  
deliberated on upon receipt of position papers from all st akeholders.  Thus, it is difficult to say when 
the bill may be expected to pass Congress.  
There are several bills that still have to be consolid ated and thus, there is still no single bill under 
consideration.   
The appropriate notifications are currently being prepared and will be submitted as soon as finalized. 
 
IV. TRADE POLICIES BY SECTOR (3) S
ERVICES  
(iii) Telecommunications WT/TPR/M/261/Add.1 
Page 94  
 
  Question 25 
 Page 83, paragraph 68  
According to the Secretariat repor t, telecoms services are regarded as a public utility and foreign 
equity in telecoms companies (both public (i.e. b asic) and value added) is limited constitutionally to 
40%.  Foreigners may not become executives or ma nagers of telecoms firms and the number of 
foreign directors must be proportionate to the firm's aggregate share of foreign capital.  - What are the prospects of classifying teleco mmunications as being outside the scope of a 
"public utility," and thus eligible for 100 per cent foreign investment?  Would the Executive Branch 
support such an approach?  
Answer 
It is not being considered at present.  
 
- It is our understanding that the Philippine gove rnment decided that the electricity sector 
should no longer be considered a "public utility" subject to the 40 per cent foreign ownership 
limitation.  In making that decision, what factor s were taken into account?  Did the Government of 
Philippines consider that removing restrictions on foreign capital and technology could result in 
enhanced consumer welfare? 
 
Answer 
Please clarify the context of the question since it is not referred to in paragr aph 68, page 83 of the 
Secretariat Report. 
 
Follow-up Question 
Paragraph 68 of the Secretariat report notes foreign equity in public utilities is constitutionally limited 
to 40%.  The report also indicates earlier (page 20, paragraph 20) that the Philippines' Foreign 
Investment Act enumerates economic activities in which foreign equity is either prohibited or limited 
to a certain percentage, including public utilities.  We therefore seek additional information regarding 
the Philippines' foreign investment restriction fo r certain public utilities, including electricity.   
 
Can the Philippines please confirm that it has determ ined that the electricity sector should no longer 
subject to a 40 per cent foreign ownership limitation?   In arriving at such a determination, what 
factors did the Philippines consider in making its determination that the electricity sector should not be considered a "public utility?" 
 
Answer 
Section 6, paragraph 3 of Republic Act 9136 states that "xxx power generation shall not be 
considered a public utility operation.  For this pur pose, any person or entity  engaged or which shall 
engage in power generation and suppl y of electricity shall not be required to secure a national 
franchise."  Being classified as a non-public util ity business, electricity generation is no longer 
subject to the 60%-40% foreign ownership limitation.  This decision was made in order to make the 
power generation sector more efficient, and to attract foreign capital and technology.  
 However, the transmission and distribution sectors continue to be guided by the 60%-40% foreign 
ownership limitation being pub lic utility operation requiring fr anchise granted by Congress as 
provided for under Article XII, Section 11 of the 1987 Philippine Constitution. 
__________