WORLD TRADE  
ORGANIZATION  RESTRICTED 
WT/TPR/G/261 
30 January 2012  
 
(12-0564) 
Trade Policy Review Body Original:  English 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by 
 
THE PHILIPPINES 
 
  
 
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by the Philippines is attached. 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Polic y Review Body on the Philippines. The Philippines WT/TPR/G/261 
 Page 3 
 
 
CONTENTS 
 
    P a g e  
I.  DEVELOPMENTS IN THE ECONOMY 5  
 (1)   OVERALL ECONOMIC PERFORMANCE  5  
 (2)   SECTORAL GROWTH  5  
 (3)   EXTERNAL TRADE  6  
II.  DOMESTIC REFORMS 7  
 (1)   STRUCTURAL REFORMS  7  
 (2)   FOREIGN INVESTMENT  13  
III.  TRADE POLICY DEVELOPMENTS 14  
 (1)   THE PHILIPPINES AND THE WTO 14  
 (2)   THE DDA  NEGOTIATIONS  14  
 (3)   BILATERAL AND REGIONAL TRADE RELATIONS  16  
IV.  FUTURE POLICY DIRECTIONS 17  
 
  The Philippines WT/TPR/G/261 
 Page 5 
 
 
I. DEVELOPMENTS IN THE ECONOMY 
(1) OVERALL ECONOMIC PERFORMANCE  
1. The global financial crisis of 2008 punctuated the period of review.1 
2. Despite the crisis, however, the Philippine econom y sizzled to its highest annual GDP growth 
in the post Marcos era of 7.3% in 2010.  GDP growth  rate increased from 5.0% in 2005 up to 7.1% in 
2007.  Thereafter, it declined to 3.7% in 2008 with  the advent of the global financial crisis, and 
recorded its lowest level at 1.1% in 2009.  Behavi ng similarly, GNP accelerated to a 7.2% growth in 
2010.  GNP increases ranged from 5.4% in 2005 up to 7.5% in 2007, declining to 6.4% in 2008, and also recording its lowest level at 4.0% in 2009. 
3. Among the factors that contributed to the positive performance by 2010 were the global 
economic recovery, the peaceful conduct of the national elections, and the renewed trust in 
government that implemented crucial reforms to improve tax collections, increase revenues, and 
prudently manage expenditures.  This contained the budget deficit and lowered interest rates.  
Meanwhile, record levels of overseas remittances coupled with increasing export earnings led to an 
improvement in the country's credit outlook, attracti ng foreign portfolio and direct investments, and 
boosting the peso's strength that kept domestic inflation low. 
Table 1 
Selected macroeconomic indicators 
 2005 2006 2007 2008 2009 2010 
Real GNP (growth rate in %) 5.4 5.4 7.5 6.4 4.0 7.2 
Real GDP (growth rate in %) 5.0 5.3 7.1 3.7 1.1 7.3 
Source: National Statistical  Coordination Board, and National Ec onomic and Development Authority. 
(2) SECTORAL GROWTH  
4. Services, industry, and agriculture growth  and GNP share performances were mixed. 
5. In 2010, industry once again took the driver seat in boosting the economy with its huge 12.1% 
growth from a decline of 0.9% in 2009.  Services pr ovided more than able support as it grew by 7.1% 
in 2010 from 2.8% from the previous year.  However, agriculture, hounded by El Niño, worsened to a negative 0.5% in 2010 from zero growth in 2009. 
6. Services meanwhile continued to garner the high est share of GNP at 43.0% in 2010, followed 
by industry with 29.1% and agriculture with 14.6% .  All sectors, however , maintained the same 
relative distribution in shares of GNP in 2005, a nd experiencing declines in GNP shares thereafter. 
7. During the fourth quarter of 2010, the biggest contributors to the growth of industry were 
manufacturing, mining and quarrying, electricity, gas,  and water;  in services were trade, private 
services and finance;  and in agriculture were Pala y, fishery, corn, poultry, and livestock.  In 2009, 
two devastating tropical storms (Ondoy and Pepeng) a dversely affected rice production in the Ilocos, 
Central Luzon and CALABARZON regions.  The sub-sectors that recorded the biggest growth were Palay, corn, and poultry while those that lagged behind were forestry, sugarcane, and coconut.  
                                                      
1 The Trade Policy Review Government Report covers the period 2005-2010. WT/TPR/G/261 Trade Policy Review 
Page 6 
  
Table 2 
Sectoral growth rates and share of GNP 
(%) 
 2005 2006 2007 2008 2009 2010 
Agriculture       
Growth rate 2.0 3.8 4.9 3.1 0.0 (0.5) 
Share* 17.5 17.2 16.8 16.3 15.7 14.6 
Industry       
Growth rate 3.8 4.5 6.8 4.9 (0.9) 12.1 
Share* 30.1 29.8 29.6 29.2 27.8 29.1 
Services       
Growth rate  7.0 6.5 8.1 3.1 2.8 7.1 
Share* 44.2 44.7 44.9 43.6 43.1 43.0 
Note: Details may not add up to totals due to rounding. 
Source:  National Statistical Coordi nation Board, National Economic and Devel opment Authority, and as indicated with 
 asterisk (*) Bangko Sentral ng Pilipinas. 
(3) EXTERNAL TRADE  
8. The Philippine Export Development Plan (PEDP) 2005-2007 identified three milestones to 
measure the success of the export sector:  i) increase exports to US$50 billion by 2006;  ii) job generation under the President's Ten-Point Agenda;  a nd iii) improved share of priority exports to total 
exports as a measure of diversification.   
9. For the period 2005-2010 exports of goods and servi ces exhibited a growth rate from 4.8% in 
2005 to a high of 25.6% in 2010.  Declines, however, were seen in 2008 at negative 2.0% and in 2009 
at negative 13.4% all due to th e global financial crisis.  
10. In 2006 exports reached US$46.5 billion recording a growth rate of 13.4%.  This was 
attributed mainly to the recovery of the electroni cs industry.  By the year 2010, total export receipts 
were placed at US$51.50 billion with total imports at US$54.93 billion, or a total external trade in 
goods amounting to US$106.43 billion. 
11. In 2010, the top five exports included electroni c products;  articles of apparel and clothing 
accessories;  coconut oil;  woodcrafts and furniture;  and ignition wiring sets and other wiring sets used in vehicles, aircrafts and ships.  Meanwhile , the top five imports included electronic products; 
mineral fuels, lubricants and related materials;   transport equipment;  industrial machinery and 
equipment;  and cereals and cereal preparations.  Given an expanding Philippine economy, imports 
indicated a continuing need for raw materials, in termediate, and capital goods supportive of the 
expanding Philippine economy.  The Philippines WT/TPR/G/261 
 Page 7 
 
 
Table 3 
Trade performance 
(Growth rate in % constant 1985 prices) 
 2005 2006 2007 2008 2009 2010 
Total exports of goods and services  4.8 13.4 5.5 (2.0) (13.4) 25.6 
Merchandise exports 4.2 11.3 4.1 (1.7) (16.8) 26.0 
(Non-factor services) 8.3 24.7 12.3 (3.0) 2.3 24.3 
Total imports of goods and services 2.4 1.8 (4.1) 0.8 (1.9) 20.7 
Merchandise imports 2.1 1.3 (5.6) 0.1 (1.8) 20.2 
(Non-factor services) 8.5 11.0 20.9 9.9 (3.6) 26.3 
Source : National Statistical Coordina tion Board and National Economic and Development Authority. 
II. DOMESTIC REFORMS 
(1) STRUCTURAL REFORMS  
Overall Growth Strategy 
12. Philippine economic development policies are spelled out in the country's Medium-Term 
Philippine Development Plan (MTPDP) of 200 4-2010.  The MTPDP had for its goals poverty 
alleviation and improved inco me, and wealth distribution.  In the plan, the Government sets to achieve 
growth targets through:  a) a sound fiscal policy an d manageable consolidated public sector deficit;  
b) enhancing the impact of public spending through p ublic-private partnerships in major infrastructure 
projects);  c) improving the investment climate to boost the country's competitiveness;  and 
d) accelerating the spill-over effects of growth to the poor.   
13. With the incipient global financial crisis in  2008, the Government implemented a fiscal 
stimulus programme to provide support to the economy.   Underpinning the fiscal programme were 
measures to boost the revenue-to-GDP ratio, primarily  from higher revenue collection efficiency.  A 
credible fiscal programme based on transparency and accountability was also continued to maintain 
investor and creditor confidence on the economy.  This was accompanied by a monetary policy that remained consistent with the economy's directi on towards a sustained non-inflationary growth 
committed to price stability, financial intermediation efficiency, and a more-developed capital market to improve domestic resource mobilization.   
14. To ensure the provision of appropriate infrast ructure in the country, the Government in 2006 
through Executive Order No. 561, set forth an in vestment-enhancing strategy by regrouping the 
geographic regions of the country into "S uper Regions", with the aim of spreading development in the 
countryside.  Through the Super Regions, the inv estment priority plan focused on areas where the 
Philippines could maximize the potential of its natu ral, geographical, and human resource advantages, 
thereby promoting economies of scale, as well as enhancing functional li nkages to boost economic, 
and market potentials.  Further, infrastructure requirements were to be financed mostly from 
build-operate-transfer (BOT)-type mode s without government guarantees.  
Monetary and Financial Sector 
15. The Bangko Sentral ng Pilipinas or BSP
2 looks at the financial system as performing an 
essential role in mobilizing national saving, and fina ncing investments that are necessary to sustain 
                                                      
2 The Central Bank of the Philippines. WT/TPR/G/261 Trade Policy Review 
Page 8 
  
economic growth.  In 2005, the BSP adjusted its policy rates upwards to respond to potential 
second-round effects of the supply shocks.  These cont ributed to the inflation slowdown in 2006, and 
the stability of prices in 2007.  These policy adjustment s also helped anchor inflation expectations.  
Meanwhile, monetary measures implemented in 2007,  were aimed at tempering the impact of the 
sustained strong foreign exchange inflows on domestic  liquidity and inflation.  A stronger peso in 
2007 helped cushion the effect of higher impor t prices on oil and food items on prices.  The 
significant increase in inflation in 2008 prompted three upward adjustments in the BSP policy rates, 
before events related to the global economic downt urn prompted a downward adjustment of 50 basis 
points, to 7.5% for the overnight lending or re purchase (RP) facility, and 5.5% for the overnight 
borrowing or reverse repurchase (RRP) facility.   
Microfinance 
16. The BSP also considers microfin ance as its flagship programme for poverty alleviation, and a 
big step toward financial inclusion.  The follo wing initiatives and programmes for microfinance were 
implemented:  a) policy and regul atory environment;  b) training and capacity building within BSP 
and the banking sector;  and c) promotion and advocacy.  The BSP's policy approach was to 
mainstream microfinance in the banking sector, and to provide banks with incentives for a wider scale 
and scope of operations, while main taining prudential standards.  
17. To provide greater access to financial servi ces for the marginalized sectors of the economy, 
particularly the farmers and fisher folks in the ru ral areas, the BSP actively pursued micro-financing, 
agent banking (e.g., " sari-sari " or variety stores under Electronic Money Circular or Circular No. 649 
dated 9 March 2009), e-banking platforms such as SMS-based mobile banking, branchless banking 
and the promotion of broad-based financial literacy and consumer protection.  As of 
end-December 2009, there were 212 banks engaged in microfinance with a loan portfolio of 
P6.6 billion and serving 882,692 micro-borrowers.  Parallel to this, it has improved the delivery 
channel for microfinance with the issuance of guidelines on loan collection and disbursement points 
(LCDP) of microfinance-oriented banks and mi crofinance/Barangay Micro-Business Enterprise 
(BMBE)-oriented branches of banks (Circu lar No. 669 dated 22 October 2009).   
18. Several circulars have also been issued to address technological and product innovations and 
to have an enabling policy and regulatory environmen t (i.e. Circular on the Approval and Provision of 
Housing Microfinance [Circular No. 678 dated 06 Janua ry 2010]), and Approval of micro-insurance 
products by rural, cooperative and thrift banks, and Circular allowing Micro-Agri Loans (Circular No. 
680 dated 3 February 2010). 
19. The moratorium on the establishment of banks was also lifted by allowing new banks to be 
established, which paved the way for pioneering microfinance banking institutions.  Incentives were 
provided to expand the scope and scale of micr ofinance operations.  Finally, the performance 
standards, and the reporting requirements to ensu re sound and sustainable operations were also 
established.  
Personal Equity and Retirement Account (PERA) Act of 2008 
20. Republic Act No. 9505 or the Personal Equity and Retirement Account (PERA) Act of 2008, 
was signed into law on 22 August 2008.  The law ai ms to encourage persona l savings and domestic 
capital formation through tax-exempt long-term investme nts.  As an incentive, an income tax credit 
equivalent to 5% of annual PER A contributions of up to a maximum of PHP 100,000.00/person and 
PHP 200,000.00/person for Overseas Filipino Workers is given.  In addition, their future investment 
incomes are exempted from tax if the account is main tained until they reach age 55 and is held for at The Philippines WT/TPR/G/261 
 Page 9 
 
 
least five years.  Voluntary contributions of private employers to employees' PERA may also be 
claimed as tax deductions from the employers' gross income.  PERA investments can be made only on 
specific products approved by regula tors that are non-speculative, readily marketable, and with a track 
record of regular income payments to investors.   These can be unit investment trust funds, mutual 
fund shares of stock, insurance pension, governme nt securities, annuity contract, pre-need pension 
plan, exchange-traded bonds, and shares of st ocks listed in the local stock exchange. 
Republic Act No. 9576 and Republic Act No. 9510 
21. The charter of the Philippine Deposit Insura nce Corporation (PDIC) was amended through 
Republic Act No. 9576 (28 July 2008), which pr ovides deposit insurance protection double the 
original insurance coverage (i.e., from PHP 250,000 .00 to PHP 500,000.00).  Republic Act No. 9510 
or the Credit Information System Act (1 September 2008), also provides for the establishment of a corporation, by which credit information from financial institutions such as banks, credit card 
companies, and government lending institutions will be  gathered, and consolidated in a centralized 
system. 
The Philippine Payments and Settlements System (PhilPass) 
22. The Real Time Gross Settlement (RTGS) System, also known as Philippine Payments and 
Settlements System (PhilPass), is a vital compone nt of the country's economic and financial 
infrastructure.  It serves as an avenue through which financial obligations/transactions, arising from 
economic activities between parties involved, are safely settled, and/or delivered on time.  The 
payments and settlements system's safe and effici ent functioning contributes to the promotion of 
financial stability, and the sustainability of economic growth. 
23. The RTGS System was implemented on 12 December 2002, to improve the delivery of 
large-value transactions and financial services in the country.  As of 2009, the number of PhilPass 
participating-members have expanded to 35 co mmercial banks, 37 thrift and savings banks, 
3 specialized banks, 12 NBQBs
3, 11 rural banks, third-party system providers (Megalink, Philippine 
Clearing House Corporation, Philippine Securities and Settlement Corporation, Philippine Dealing 
System Settlement Highway, and the Bureau of the Treasury), PDTC4 depository account and custody 
account, and BSP Departments and Offices (namely, Payments System Office, Provident Fund, and 
Treasury Department).  This is an expansi on from only 85 member-participants in 2004.   
24. On 2 December 2009, a Memorandum of Agreem ent was signed by the Bankers Association 
of the Philippines, Chamber of Thrift Banks, Asso ciation of Bank Remittance Officers Inc., and Rural 
Bank Association of the Philippines with the BSP with respect to the us e of PhilPass for the 
settlement of banks' Overseas Filip ino Workers (OFW) remittances. 
Power Sector  
25. The development of metering market rules was targeted by 2005 to allow implementation of 
the time-of-use (TOU) tariff.  The Energy Regulatory Commission (ERC) released an Order on 
27 June 2007 granting provisional approval on Ma nila Electric Company (MERALCO)'s application 
for time-of-use rates.  Furthermore, they provide d the Rules to Govern the Implementation of the 
TOU Retail Rates of Distribution Utilities (DUs) sour cing 100% of their power requirements from the 
National Power Corporation (NPC) in Octobe r 2007.  The NPC and MERALCO are presently 
                                                      
3 Non-bank financial institutions performing quasi-banking functions. 
4 Philippines Depository and Trust Corporation. WT/TPR/G/261 Trade Policy Review 
Page 10 
  
implementing the TOU rates to all of its bulk custom ers that include DUs and industries to reflect the 
true cost of power production. 
26. To further give impetus to the objective of providing competitive rates, two other 
programmes were implemented - the Enhanced One- Day Power Sales (e-ODPS) and the Customer's 
Choice Program (CCP).  The e-ODPS allows consum ers undertaking self-generation to avail of rates 
lower than those approved by the ERC, if not the cost of generating from their own facilities.  The 
CCP, meanwhile, provides MERALCO franchise customers the choice to avail of NPC's TOU rates.   
27. The full implementation of Lifeline Rates to ma rginalized consumers with minimal market 
distortions, was achieved in 2004 as targeted.  On 10 December 2008, the ERC promulgated its 
decision in ERC Case No. 2008-016 RC on the petition of the Bureau of Trade Regulation and 
Consumer Protection-Department of Trade and In dustry (BTRCP-DTI) for the approval of a new 
lifeline rate for marginalized end-users of MERA LCO, and other measures to achieve reduction of 
power rates.  In its decision, ERC granted MERA LCO's marginalized customers whose consumption 
levels fall below 21/KWH per month - a 100% discount or an increase from the previous 50%.    
28. The Power Sector Assets and Liabilities Manage ment (PSALM) Corporation with its mandate 
of undertaking the disposal of NPC's generation and transmission assets has successfully bid out 24 
operating or generating plants and 5 decommissioned plants.  Privatization le vel has reached 81.3%.  
It is now working on the remaining pre-conditions th at will lead to the implementation of open access, 
and retail competition which are the privatizati on of the remaining NPC generation assets, and 
completing the appointment of IPP5 Administrators from the current 44% to the 70% level as required 
by the Electric Power Industry Reform Act (EPIRA).  The remaining sub-transmission assets had to 
be divested also to qualified distribution u tilities.  Examples of these assets are the step-down 
transformers, sub-stations, and overhead lines whic h are the main grid's link to the distribution 
facilities. 
Energy Sector 
 
29. As the country faces the realities of growing energy demand, tight energy supply, limited 
foreign investments and critical power development issues, the Philippine Energy Plan (PEP) of the Department of Energy (DOE) highlights the plans and programmes of the energy sector to fuel support for the economic growth of the country for the period 2009-2030.  Specifically, the Plan will 
deal with the future of energy development which is  very vital to the country's prosperity.  The over-
arching theme of PEP 2009-2030 is ensuring the best energy choices for a better quality of life. 
30. The period 2004-2007 saw the increase in the u tilization of indigenous as well as renewable 
energy which raised the country's energy self-su fficiency level from 53.51% in 2004 to 55.69% in 
2007.  The country's total power generation in creased from 55,927 gigawatt hours (GWH) in 2004 to 
59,612 GWH in 2007.  Changes in the energy mix throughout 2004 to 2007 were primarily due to 
more use of indigenous and re newable energy, mainly from hydr opower, geothermal, and other 
renewable sources. 
31. The enactment of Republic Act No. 9367 or the Bio-fuels Law on 12 January 2007 was a 
landmark accomplishment for the local bio-fuels indu stry 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 fo r investments in the bio-fuels industry.   
                                                      
5 Independent power producer. The Philippines WT/TPR/G/261 
 Page 11 
 
 
32. Republic Act No. 9513 or the Renewable Energy Act of 2008 was signed into law on 
16 December 2008.  The law provides fiscal incentives to companies that would invest in renewable 
energy projects, and directs the DOE and the NP C to connect renewable energy sources to the 
national power grid.  Under the legislation, renewa ble energy developers will get a seven-year income 
tax holiday, and will only be levied a 10% corporate income tax, once their income tax holiday 
expires.  Power from renewable energy sources will likewise be exempted from value-added taxes, including an accelerated depreciation and tax exemption of carbon credits.  
Fiscal Policy 
33. Fiscal consolidation continues to be the Gove rnment's priority with fiscal policies and 
administrative measures focused on improving tax and revenue efforts, balanc ing the budget, reducing 
debt and at the same time, spending more on infrastructure and basic social services. 
34. To further improve revenue collection efficien cy, the Bureau of Internal Revenue (BIR) 
formulated new administrative measures to mini mize tax evasion.  The BIR included in its 
computerization and automation programme, the outsourcing of Information Technology (IT) Services, Mobile Payment, e-Lounge, and e-Complain t, on top of its existing administrative reforms 
and activities.  IT outsourcing aims to update the Integrated Tax System (ITS) Infrastructure and 
Application System of the Bureau.   
35. In addition, the Review of the Value Added Tax (RVAT) system as provided for by Republic 
Act No. 9337 expanded the tax base and increased the VAT rate from 10% to 12%.  The expansion in 
the base was implemented starting in November 2005.  
36. The National Government (NG) also strengthened its privatization efforts to augment its tax 
revenue collection and entice private sector investment  and participation in business.  In this light, the 
NG made an inventory of assets included in the priva tization programme and determined the status of 
these assets in 2008.  Major assets privatized in 2008 were Petron Corpora tion and MERALCO.   
37. Meanwhile, the e2m (electronic-to-mobile) Custom s Project seeks to streamline the Bureau of 
Customs' core processes (imports and exports) and improve trade facilitation between the Bureau and 
its stakeholders, including other government agen cies, through the development and integration of 
various systems allowing Internet-enabled and later SMS-enabled, thus less face-to-face, transactions, 
all towards the realization of the National and ASEAN Single Windows.  The e-Customs system or the electronic component of the integrated e2m- Customs automated processe s is an Internet-based 
technology that allows Customs officers and traders to handle most of the transactions - from Customs 
declarations to cargo manifests and transit documents  - via the Internet.  It makes use of advanced 
technology including electronic signatures to provide government officials, specifically Customs administrators with new tools that will enable them  to make dramatic improvements in security, trade 
efficiency, and fight against corruption. 
38. In 2010, the Philippines acceded to the Revised  Kyoto Convention (RKC) and the country is 
now in the process of reviewing and amending its Cu stoms laws, rules and regulations to make them 
RKC-compliant including its procedural rules.  WTO transaction value rules were implemented in 2001 and the rules of origin are WTO-compliant. 
Good Governance 
39. The Government has continuously st rived to improve transactions.  WT/TPR/G/261 Trade Policy Review 
Page 12 
  
40. The Philippine Government Electronic Procur ement System (PhilGEPS) aims to support a 
more efficient, convenient, and transpar ent procurement process and was launched on 
28 August 2006.  PhilGEPS is mandated by the Gove rnment Procurement Reform Act (Republic Act 
No. 9184 of 10 January 2003) to be the central elect ronic portal on all government procurement.  The 
use of PhilGEPS has likewise levelled the playing field in public procurement as even small and 
medium sized enterprises have a chance participa ting at and winning government contracts.  At 
present, the key features of PhilGEPS are the:  i) El ectronic Bulletin Board;  ii) Electronic Catalogue;  
iii) Supplier Registry; and  iv) Automatic Bid Matching;  and 5) Material Project Information.   
41. To promote a wider participation of private sector companies in government projects, 
amendments to the Build-Operate-Transfer (BOT) Law and its Implementing Rules and Regulations 
(IRR) were proposed.  Public consultations on these amendments were completed in May 2007.  Draft 
guidelines providing the overall framework for join t venture projects were also formulated and 
subsequently approved in April 2008 by the Nati onal Economic and Development Authority (NEDA) 
Board.  To ensure the fair participation of local  contractors and consultants in government projects, 
the IRR of Executive Order No. 278 (of 2 February 2004) was drafted and approved by the NEDA.   
42. Republic Act No. 9485, otherwise known as th e Anti-Red Tape Law was approved on 
2 June 2007.  The law seeks to improve efficiency  in the delivery of government service to the public 
by reducing red tape, preventing graft and corruption,  and providing penalties.  The Act is consistent 
with the policy of the State to promote transparency  regarding public transact ions in all government 
agencies that shall include a progr amme for the adoption of simplified procedures to reduce red tape 
and expedite transactions.   
43. The Philippine Business Registry Project, an  interagency project spearheaded by the 
Department of Trade and Industry (DTI), aims  to eliminate red tape by harmonizing business 
registration processes among primary agencies involved in business registration.  This will be through 
the development of a web-based registry connected with the databases of DTI, Bureau of Internal 
Revenue (BIR), Securities and Exchange Commi ssion (SEC), Cooperative Development Authority, 
Intellectual Property Office (IPO), Social Secur ity System (SSS), Philippine Health Insurance 
Corporation (Philhealth), Home Development Mutual Fund (Pag-IBIG Fund), e-ready Local 
Government Units (LGUs) and the national go vernment agencies that issue business-related 
certifications and licenses.   
Rural Development 
44. In 2010 a National Convergence Initiative (NCI),  a joint project of the Department of 
Agriculture (DA), Department of Agrarian Reform  (DAR), and the Department of Environment and 
Natural Resources (DENR) has been implemented in line with the goal of optimizing the 
Government's efforts in rural development th rough the synchronization of resources and the 
streamlining of policies, programmes, and projects of the concerned agencies.   
45. The NCI aims to develop and operationalize a common framework for sustainable rural 
development with the aim of providing continued su pport, faster and more effective services for the 
benefit of small farmers, fisher folks, agrarian reform beneficiaries, upla nders and indigenous people 
and other rural folks.   
46. The objectives of the NCI include, among others, the following:  i) up-scaling Local 
Convergence Initiative through Local Agribusiness Convergence Zones;  ii) enhanced National 
Convergence Initiative Development Framework featuri ng the "Ridge to Reef" Approach, which aims 
to revitalize the programme implementation of  the Convergence Initiative;  and iii) up-scaling The Philippines WT/TPR/G/261 
 Page 13 
 
 
Agribusiness through High Value Commercial Crops (HVCC) and Bio-fuels/Bio-mass Sector.  The 
NCI aims to have a major contribution in the attain ment of the country's international commitment in 
the Millennium Development Goals of reduci ng poverty by 50% betw een 1990 and 2015 and 
ensuring environmental sustainability. 
(2) FOREIGN INVESTMENT  
47. The Government has made it an official po licy to attract, promote and welcome productive 
investments from foreign individuals, partnerships, corporations and government s.  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).   
48. Subsequent to Executive Order No. 389 (Promulgating the 6th Regular FINL) issued on 
30 November 2004, Executive Order No. 584 (Promulgating the 7th Regular FINL) was issued on 
8 December 2006. Executive Order No. 584 provid ed for the same enumer ation of investment 
activities under both List A (Foreign Ownership is Limited by Mandate of the Constitution and Specific Laws) and List B (Foreign Ownership is Li mited for Reasons of Security, Defense, Risk to 
Health and Morals and Protection of Small-and Medium-Scale Ente rprises) as provided in Executive 
Order No. 389 since no new laws were enacted impo sing or removing foreign equity limitations in 
investment areas/activities during the period.   
49. Executive Order No. 858 (Promulgating the 8
th Regular FINL), which amended Executive 
Order No. 584, was issued on 5 February 2010.  List A now includes "guidance counselling" under 
the practice of profession where no foreign participation is allowed.  List B was revised to clarify that 
the forms of gambling where only up to 40% equity is allowed exclude those covered by investments 
agreements with the Philippine Amusement a nd Gaming Corporation operating within special 
economic zones administered by the Philippine Economic Zone Authority.   
50. The 2010 Philippine Investment Priorities Plan (IPP), the current annual IPP, is aimed at 
promoting more investments and creating more jobs  in agriculture, industry and services to optimize 
the opportunities arising from the global economic r ecovery and the implemen tation of international 
agreements entered into by the country while embracing an approach that is both green and 
economically viable to address the climate change challenge.  Guided by this framework, the 2010 
IPP provides support to private sector initiatives on greenhouse gas emissions reduction and disaster risk management by including new areas such as green projects and the disaster prevention, mitigation and recovery projects.   
51. Preparations for the 2011 IPP are underway.  The 2011 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 opportunities 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 strate gies to enhance the country's infrastructure system 
and competitiveness as an investment destination. 
52. A Minerals Action Plan was prepared to properl y implement the Mining Act.  The Plan is a 
time-bound comprehensive plan of actions that transl ates in concrete terms the commitment of the 
Government to attain sustainable development thr ough responsible mining.  It paved the way for the 
establishment of the Minerals Development Council in  2005 which is composed of government and 
private sector representatives.  Some of the initiatives undertaken by the Council to revive the mining 
industry include facilitation of mining companies to be listed in the Philippine Stock Exchange by WT/TPR/G/261 Trade Policy Review 
Page 14 
  
removing some stringent requirements, creation of a body to protect mines against any security risk, 
environmental protection programmes, among others. 
53. The Philippines also expects a robust minerals i ndustry in the near to medium term following 
the encouraging trend in the world metals market.  This positive outlook is spurred by hefty demand 
coming from the traditional major consuming countri es as well as the emerging markets like China 
and India.  As a result, there is a noticeable incr ease in exploration activities especially for the base 
metals.  To further boost momentum, the Governme nt has intensified its efforts to provide an 
equitable and stable policy environmen t for this billion-dollar industry. 
54. The revitalization programme of the Governme nt for the minerals industry has identified 
several projects that are estimated to generate si gnificant 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 mineral resource coupled with the Government's investment policy enhances the desirability of  the Philippines as an investment site.    
III. TRADE POLICY DEVELOPMENTS 
(1) T
HE PHILIPPINES AND THE WTO 
55. The Philippines continues to hold with impor tance its membership in the World Trade 
Organization and recognizes the value of the WT O's achievements in fostering a more open, 
transparent, predictable and competitive environment.   With its membership in 1995, the Philippines 
made substantial commitments on market access and at the same time continued to consolidate the 
liberalisation programme under the Tariff Reform Program, undertaken unilaterally since the 1980s. 
(2) THE DDA  NEGOTIATIONS  
56. The Philippines is an active participant in all negotiations and meetings  including the various 
committees and working parties.  It fully suppor ts the Doha Development Agenda (DDA), stressing 
consistently that the multilateral trading system can genuinely contribute to economic growth and 
development if the negotiations remain true to  its developmental spirit.  Developing countries 
constitute majority of WTO members and priority must be given to their needs and concerns.  
The Philippines is deeply concerned with and will c ontinue in the course of the negotiations to work 
towards correcting the imbalances on the distri bution of benefits accruing from the multilateral 
trading system.  
Agriculture  
57. The Philippines supports the importance of the inter-linkage of commitments in the three 
pillars (market access, export subsidies, and domestic  support) to attain overall balance of reform 
commitments.  The Philippines believes that the gene ral principles and disciplines, expressed in rules, 
should be laid down first, with the exceptions thr eshed out at a later stage.  Likewise, the counter 
demands for flexibilities of the developed country  members should be dealt with as exceptions. 
58. The Philippines is committed to preserve the remaining tariff policy space for agriculture, 
specifically for strategic sensitive sectors.  The Philip pines believes that the biggest subsidizers should 
commit to eliminate export subsidies with an end date  of not more than five years from the conclusion 
of the DDA.  It also supports the integration of  effective and operational S&D treatment in all 
elements and outcomes to provide developing countries special flexibilities to even the playing field. The Philippines WT/TPR/G/261 
 Page 15 
 
 
The Philippines is in the group of developing coun tries which are fighting for a useful Special 
Safeguards Mechanism (SSM) to correct import surges.   
Non-Agriculture Market Access (NAMA)  
59. The Philippines strongly believes that the NAMA negotiations should take into full account 
member countries which have low applied tariffs, and that have embarked on a unilateral tariff 
liberalization programme.  The nego tiations should result in reductions  in tariff peaks, high tariffs, 
and tariff escalation in other countries while at  the same time obtaining lower or no reduction 
commitments on bound tariffs, flexibility in treatme nt of unbound tariffs and longer time frames. 
60. The Philippines is committed to obtain practical application of less than full reciprocity (LFR) 
and S&D, including:  i) coefficient differen tiation between developing and developed member 
countries in the tariff reduction formula (i.e., develo ping countries should have a high coefficient that 
takes into account the already low applied tariffs in the Philippines and reductions therefore should 
not affect applied tariffs to the maximum extent  possible);  ii) mark ups for unbound tariff lines 
particularly those with low applied tariffs as cred it for unilateral tariff liberalization;  iii) flexibilities 
on unbound tariffs without  conditionalities (i.e., paragraph 8 flexibilities6 will define how many tariff 
lines need not be reduced and bound,  without being traded for any conditionality;  and iv) sectoral 
initiatives should be voluntary and developing countri es should not be forced to join the sectorals. 
Services  
61. The Philippines is committed to accord appropria te consideration of the needs of small and 
medium-size service suppliers and will continue to pu sh for the exercise of cer tain options by member 
countries (i.e. where commitments will be made, a pply horizontal limitations to all services, invoke 
general exceptions to justify existin g regulations or to enact new ones in pursuant of legitimate public 
policy concerns, and invoke restrictions to safe guard the Balance-of-Payments).  The Philippines 
supports the importance of maintaining the request-a nd-offer approach to en sure market access in 
sectors of interest to the Philippines and to preserve  the flexibility of the Philippines to determine 
sectors and modes to commit. 
Implementation Issues 
62. On the negotiation in the TRIPS Council for a proposed text on the Multilateral System of 
Notification and Registration of Geographical I ndications for wines and spirits, the Philippines 
supports the position that participation to the multila teral register should be on a voluntary basis, and 
that the implementation of the system should not  impose undue financial and administrative burdens 
and costs on developing and least developed countries.  In addition, the multilateral register should 
not prejudice other existing intellectual property ri ghts, such as trademarks  and service marks, and 
that whenever a conflict with a third party arises,  the same should be r esolved in accordance with 
national legislation. 
63. The Philippines also continues to support the commitment to address implementation 
concerns provided it does not result to a reversal in  whole of the commitments made and implemented 
under the Uruguay Round.  It also believes in st rengthening the S&D provisions, and that there should 
be no "carve out"  for selected developing countries only. 
                                                      
6 TN/MA/W/103/Rev.3, 6 December 2008. WT/TPR/G/261 Trade Policy Review 
Page 16 
  
Rules  
64. The Philippines continues the work in maintain ing the existing investigative procedures and 
discretion of authorities in pursuing trade remedies like anti-dumping and countervailing duties.  It 
also strives to work towards the development of further disciplines on subsidy practices, especially by 
developed countries.  The Philippines should endeavour  to develop predictable disciplines on fisheries 
subsidies to reverse over-capacity and over-fishing but artisanal or community fishing must be 
exempted.  On regional trading agreements (RTA s), the Philippines should also ensure that any 
resulting rules on RTAs should be able to accommoda te existing RTAs and provide the leeway to 
negotiate other bilateral and/or regional FTAs and EPAs particularly in respect of any agreed 
disciplines on transparency and related definitions on "substantially all trade".  
Trade Facilitation 
65. The Philippines continues to actively participate in the negotiations and in the drafting of the 
Trade Facilitation text.  The Philippines had completed the WTO Trade Facilitation Needs Assessment Exercise in February 2009.  It also  plans to seek technical and financial assistance 
programmes from its donor agencies and bilateral pa rtners to assist in the compliance of Trade 
Facilitation commitments. 
Dispute Settlement Understanding  
66. The Philippines supports the "outlawing" of the "carousel practice" during retaliation and join 
the other member countries, which oppose the propo sal on external transparency and modalities for 
amicus curiae  submissions.  The "carousel practice" invol ves a systematic change in the list of 
products targeted for retaliation, to identify  where it will hurt the trading partner most. 
(3) B
ILATERAL AND REGIONAL TRADE RELATIONS   
67. Apart from its engagement in the WTO, bilatera l and regional trade relations remain equally 
important, with a bulk of the Philippines' interna tional economic engagements taking place within the 
ASEAN.7 
68. Efforts to forge relations with the rest of th e world to increase market access and investment 
opportunities were carried out.  The country continue d to liberalize trade with the ASEAN, with the 
implementation of the ASEAN Trade in Goods Ag reement (ATIGA), wherein tariffs for 98.65% of 
Philippine tariff lines (100% of items in the Philippine Inclusion List) were brought down to zero. This significant milestone marks the realization of  the trade in goods component of the ASEAN Free 
Trade Area or AFTA.  The Philippines ratified the ATIGA on 11 August 2009.
8 
69. Significant progress has also been made in the ASEAN–China Trade in Goods Agreement 
(ACTIGA)9 and ASEAN–Korea Trade in Goods Agre ement (AKTIGA), having realized the 
elimination of tariffs for products classified under the Normal Track.  The ACTIGA has been ratified 
by the Philippines and entered into force on 19 July  2005.  Likewise, the Philippines ratified the 
AKTIGA on 17 July 2007 and started its implementation on 1 January 2008. 
                                                      
7 Association of South East Asian Nations. 
8 The ATIGA supersedes the CEPT Agreement as  the ATIGA consolidates all existing tariff 
commitments and agreements relating to trade in goods into a single Agreement.  Philippine implementation of 
ATIGA commitments is reflected in Executive Order No. 850, which was implemented on 1 January 2010. 
9 The Philippines has been granted flexibility for certai n tariff lines, wherein elimination of duties is set 
in 2012 instead of the scheduled 2010. The Philippines WT/TPR/G/261 
 Page 17 
 
 
70. Furthermore, the Philippines ratified the Ag reement establishing the ASEAN-Australia-New 
Zealand FTA on 21 October 2009, and implemen ted its trade in goods commitments on 
1 January 2010.  The ASEAN-Japan Comprehensiv e Economic Partnership Agreement on the other 
hand was ratified by the Philippines on 24 Dece mber 2008, and implemented on 1 July 2010.  
The Philippines, meanwhile, also ratified th e ASEAN-India Trade in Goods Agreement on 
27 April 2010, and started implementi ng its commitments in June 2011. 
71. The Government is also supportive of the AS EAN endeavour to further deepen economic 
integration in the region, and con tinues to be an active participant in discussions on the possibility of 
harmonizing the ASEAN Plus One FTAs into a possible ASEAN Plus FTA configuration.  
72. The Philippines also ratified the Philippines-Jap an Economic Partnershi p Agreement (PJEPA) 
on 8 October 2008.  PJEPA, which entered into forc e on 11 December 2008, is expected to further 
expand Philippine exports of goods and services to Japan. 
73. The Philippines is committed to constructive par ticipation to forge the planned partnerships 
with emphasis on maintaining policy flexibility but fu lly consistent with the existing rules under the 
multilateral trading system, particularly GATT Article XXIV, GATS Article V as well as the 
"Enabling Clause ". 
IV. FUTURE POLICY DIRECTIONS 
74. Achieving the country's development agenda of  reducing the incidence of poverty, sustaining 
economic growth, and encouraging private investment s require the effective and efficient delivery of 
public goods and services.  Thus, aside from achieving the macroeconomic goals, the MTPDP 
2004-2010, earlier cited, also aims to reform the institutional design, systems, capacities and integrity 
of government institutions to make them more ef ficient and effective provi ders of public goods and 
services.   
75. The goal of the MTPDP 2004-2010 is to st rengthen the institutional capacity of the 
Government for improved public service delivery, and develop a more effective, ethical and 
accountable bureaucracy.  Since 2004, these reforms have been initiated but they have yet to be fully 
completed or mainstreamed into the bureaucracy.  Some of the reforms needed longer time for 
consultations and implementation than expected, while  others were delayed by changes in government 
priority/strategy or department/agency leadership. 
76. Likewise, the Philippine Development Plan (P DP) 2011-2016 is the Government's roadmap in 
the formulation of policies and implementation of  development programmes.  The PDP 2011-2016, 
which has good governance and anti-corruption as its  theme, aims to effectively address poverty, 
create massive employment opportunities, and achieve its vision of inclusive growth.  It has emerged 
into a comprehensive set of strategies, policies a nd programmes, and activities within a framework of 
inclusive growth that will translate the administra tion's development agenda for the next six years. 
77. The Philippines is still beset with a number of problems and obstacles (e.g., lagging rate of 
investments, continuing fiscal restraints, heavy debt burdens, poor infrastructure, and stagnating levels 
of human capital).  To address such and paralle l with the MTPDP 2004-2010, PDP 2011-2016 has set 
for its objectives the increase in growth in output  and employment through higher investments, as 
well as the wise utilization of available resources, social cohesion, and good governance.  
 WT/TPR/G/261 Trade Policy Review 
Page 18 
  
78. In the pursuit of inclusive growth, the PD P 2011-2016 believes that the Philippines should 
take advantage of the existing economic and political  opportunities to achieve real change and break-
away from the cycle of mass poverty, social division, and political conflict which have been the hallmarks of the country's recent history. 
__________