WT/TPR/M/368/Add.1 29 May 2018 (18-3249) Page

152 Pages·2017·2.01 MB·English

WT/TPR/M/368/Add.1

29 May 2018
(18-3249) Page: 1/152
Trade Policy Review Body Original: English/anglais/inglés
26 and 28 March 2018 Spanish/espagnol/español

TRADE POLICY REVIEW
PHILIPPINES
MINUTES OF THE MEETING
Addendum
Chairperson: H.E. Mr Juan Carlos González (Colombia)
This document contains the advance written questions by WTO Members and replies
provided by the Philippines.1

Organe d'examen des politiques commerciales
26 et 28 mars 2018
EXAMEN DES POLITIQUES COMMERCIALES
PHILIPPINES
COMPTE RENDU DE LA RÉUNION
Addendum
Président: S.E. M. Juan Carlos González (Colombie)
Le présent document contient les questions écrites communiquées à l'avance par les
Membres de l'OMC et les réponses fournies par les Philippines.1

Órgano de Examen de las Políticas Comerciales
26 y 28 de marzo de 2018
EXAMEN DE LAS POLÍTICAS COMERCIALES
FILIPINAS
ACTA DE LA REUNIÓN
Addendum
Presidente: Excmo. Sr. Juan Carlos González (Colombia)
En el presente documento figuran las preguntas presentadas anticipadamente por escrito
de los Miembros de la OMC, así como las respuestas facilitadas por las Filipinas.1

1 In English and Spanish only./En anglais et espagnol seulement./En inglés y español solamente.
WT/TPR/M/368/Add.1

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CANADA ............................................................................................................................ 3
JAPAN ............................................................................................................................... 6
ARGENTINA .......................................................................................................................12
AUSTRALIA .......................................................................................................................15
BRAZIL .............................................................................................................................20
CHINA ..............................................................................................................................24
DOMINICAN REPUBLIC .......................................................................................................34
EL SALVADOR ....................................................................................................................38
EUROPEAN UNION .............................................................................................................39
NORWAY ...........................................................................................................................59
SINGAPORE .......................................................................................................................63
THAILAND .........................................................................................................................63
UKRAINE...........................................................................................................................73
UNITED STATES .................................................................................................................86
CHILE ............................................................................................................................. 105
NEW ZEALAND................................................................................................................. 115
INDONESIA ..................................................................................................................... 119
MALAYSIA ....................................................................................................................... 122
SEPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU, KINMEN AND MATSU ........................ 131
REPUBLIC OF KOREA ........................................................................................................ 135
TURKEY .......................................................................................................................... 136
BRAZIL, FOLLOW-UP QUESTIONS ...................................................................................... 140
CHINA, FOLLOW-UP QUESTIONS ....................................................................................... 140
EUROPEAN UNION, FOLLOW-UP QUESTIONS ....................................................................... 147
MALAYSIA, FOLLOW-UP QUESTIONS .................................................................................. 151
WT/TPR/M/368/Add.1

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CANADA

PART I: QUESTIONS REGARDING THE SECRETARIAT REPORT

3 TRADE POLICIES BY MEASURE: STANDARDS AND OTHER TECHNICAL REQUIREMENTS
Page 46 (para 3.62)

The Secretariat report notes that for the minority of Philippine National Standards (PNSs) not
aligned with international standards, it is due mainly to long standing business practices, climatic
conditions, the absence of specific international standards, and the need for higher requirements
than international standards.

In those cases where PNSs are not aligned with international standards due to the need for higher
requirements than those of international standards, could the Philippines provide examples of
products that would fall into this category? Please explain what is meant by “higher
requirements”?

Response:

Examples of products where PNSs are not aligned to International Standards are steel
bars, galvanized iron sheets and other construction materials, among others.
‘Higher requirements’ refers to requirements specific to domestic conditions, consistent
with Paragraph F, Annex 3 of the TBT Agreement.

Page 46 (para 3.65)

The Secretariat report notes that the Philippines Accreditation Bureau (PAB), which is responsible
for the accreditation of inspection, testing and calibration laboratories and assesses the
conformance of laboratories' quality management systems with international guidelines, has
accredited 243 conformity assessment bodies.

Of the 243 conformity assessment bodies accredited by the PAB, how many are located outside
the Philippines?

Response:

Three (3) foreign Conformity Assessment Bodies (CABs) are accredited by PAB as
follows:

 Certification Body: Brixton Assessment Services, Abu Dhabi, UAE for Quality
Management System, Environmental Management System and Food Safety
Management System;
 Testing Laboratory: Intertek Testing Services Guam for Chemical Testing; and
 Testing Laboratory: SGS Guam Inc. Laboratory for Chemical Testing.

4 TRADE POLICIES BY SECTOR: AGRICULTURE

Page 64 (Para 4.15 and 4.17)

The Secretariat report notes that the General Council granted the Philippines an extension of
special treatment for rice until June 30, 2017 and that as of October 2017, the Philippines rice
regime is governed by the status quo.

Could the Philippines provide an update on its domestic process to tariffy rice?

Response:

At the Lower House of Congress, the bill is under deliberation by the Committee on
Appropriations before being submitted to the Plenary for approval. At the Upper House
of Congress, a version of the bill is being deliberated by the Senate Committee on
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Agriculture and Food. Both Houses will transmit the bill to the Bicameral Conference
Committee for a final bill to be approved.
The approved version of the bill will then be transmitted to the Office of the President
for approval. Note that both the Legislative and Executive branches of Government have
given priority to this proposed legislation.

Page 65 (Para 4.24)

The state report mentions that “the NFA's operations include the buying/procurement of paddy on
a nationwide scale at a fixed government support price. According to the authorities, the NFA only
procures in the domestic market when the prevailing farm gate price of paddy significantly drops
to a level that would deprive the farmers of earning a modest income for their produce.”

Could Philippines indicate how often the NFA evaluates the farm gate price of paddy to establish
new rice and corn procurement?

Are these evaluations made as needed or are they done on a regular basis?

Response:

The NFA monitors the farm gate price of paddy frequently to assess the behavior of
prices and to be able to reliably source the areas where the Agency can procure paddy.
Determination of any change in the government’s buying price is done on need basis
depending on several factors such as cost of paddy production; inflation rate, prevailing
situation and outlook on the domestic/global rice market; income of rice/corn farmers
relative to farmers of other crops and the government's capability to implement the
program.

The Philippines will provide clarification on the Secretariat Report on the statement, to
wit:

”NFA only procures in the domestic market when the prevailing farm gate price
of paddy significantly drop to a level that would deprive the farmers of earning a
modest income for their produce.”

Part of NFA’s mandated price stabilization function is the provision to farmers of a ready
market for their produce by procuring their paddy harvest especially when prevailing
farmgate prices of paddy significantly drop to allow fair returns on farmers’ investment.
The paddy procurement intervention/activity of NFA is being conducted year-round to
build-up rice buffer stocks for food security purposes

4 TRADE POLICIES BY SECTOR: TRANSPORT

Page 78 (Para 4.111)

The Secretariat Report notes that foreign equity in a domestically licensed airline may not exceed
40%.

Does the same foreign equity limitation (i.e., 40%) also apply to foreign equity in airlines licensed
to fly internationally?

If not, what foreign equity limitation applies to airlines licensed to fly internationally?

Response:

An airline is considered a public utility pursuant to Section 9 of Act No. 2694. Act No.
2694 defines “public utility” to hereby include every individual, co-partnership,
association, corporation or joint stock company, whether domestic or foreign, appointed
by any court or department of the Government that owns or controls any common
carrier engaged in the transportation of passengers and cargo for public use.
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Since the 1987 Constitution mandates that the operation of a public utility be granted to
citizens of the Philippines or to corporations organized under the laws of the Philippines
whose capital is owned by at least sixty percent (60%) of such citizens, the foreign
equity limitation of airlines still applies, regardless if airlines are licensed to fly
internationally.
This rule applies even if the carrier is given a license to operate international flights.
However, this is limited to domestic airline companies. Foreign airline companies are not
covered.

Page 80 (Para 4.121)

The Secretariat Report notes that foreign vessels, under a special permit granted by MARINA, may
provide cabotage services when no domestic vessel is available or suitable to provide the service
required, and the public interest warrants it. The Report also notes that as of September 2017,
MARINE granted 242 special permits to foreign vessels.

Could the Philippines please provide additional information on how the term “when the public
interest warrants it” is, or has been interpreted in the past?

Could the Philippines please provide a breakdown, by activity, of the number of special permits
granted to foreign vessels?

Response:

The term “when the public interest warrants it” may be interpreted to mean that the
issuance by the MARINA of a Special Permit to foreign-registered highly specialized ship
will not prejudice efficient trade and commerce in the delivery of critical
services/commodities, infrastructure and development projects, in case the required
shipping services are not readily available and suitable from the domestic fleet.

Another example refers to the significance of projects for the development of the
Liquefied Natural Gas (LNG) Industry and Petroleum Operations which require highly
specialized ships not normally available from the domestic fleet.

In addition, it covers companies/entities that intend to secure Special Permit to operate
foreign-registered highly specialized ships within Philippine territorial waters includes,
but not limited to, the operation of certain ships used in Petroleum Exploration and
Operation.

Please refer to the following link for more detailed information:
http://www.marina.gov.ph/policies/MCs/MC%202017-02.pdf

Page 80 (Para 4.123)

The Secretariat Report notes that international relays are now possible in the Philippines.

Could the Philippines please provide additional data on the effect that this liberalization has had?
For example, have efficiency gains been realized by allowing domestic point-to-point movement of
goods bound for international destinations?

Response:

On the effect of international relays, the Philippines does not have studies available.
However, many stakeholders have welcomed the law for its expected effects in reducing
shipping costs and efficiencies. It can also be noted that in the 2017 World Bank Ease
of Doing Business indicator for the Philippines on “Trading Across Borders”, the “cost to
export” went down from USD 585 (2014) to USD 456 (2017) and the “cost to import”
went down from USD 660 (2014) to USD 580 (2017).
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JAPAN
2 Domestic Policies and Initiatives to Sustain Long-term Growth and Improve the Business
Environment for Inclusive Growth

2.4 Services

2.4.4 Logistics

(Question 1 Paragraphs 2.31, Page 10)

According to the report by the Government, the Philippines seeks to improve distribution and
transport services. Does the Philippines have any policy plan to promote these sectors, such as
mitigating the restriction on foreign investment to promote these sectors?

Response:

The Philippines continues to review its domestic laws, rules and regulations in order to
make distribution and transport services more responsive to the needs of the country.

Aside from the amendment of the Cabotage Law, which lifted the cabotage restrictions
imposed on foreign operators, the Philippines is also currently reviewing Commonwealth
Act No. 146 otherwise known as the Public Service Act (PSA). The said review is for the
purpose of clarifying the definition of public utilities in order to open up certain
industries to more competition and attract investments on the same.

On 15 February 2018, the Senate Committee on Public Services jointly with Finance and
Economic Affairs conducted a public hearing to consider five (5) Senate Bills and the
approved House version relevant to the amendment of Commonwealth Act No. 146 or
the Public Service Act. The Senate version is still pending before the Committee on
Public Services. The draft bills provide a clear definition of public utility to cover three
sectors: distribution of electricity; transmission of electricity and water pipeline
distribution system or sewerage pipeline.

The National Transport Policy (NTP) which was adopted by the NEDA Board on 12
September 2017 is a priority strategy reflected in the Philippine Development Plan. It
will serve as the guiding policy for transportation development, management,
operations, and use, covering all elements of the transport system and its sub-sectors.
It is intended to facilitate the realization of the Transport Vision of a safe, secure,
reliable, efficient, integrated, intermodal, affordable, cost-effective, environmentally
sustainable, and people-oriented national transport system that ensures improved
quality of life of the people. The Philippine Transport Systems Master Plan (PTSMP) is
currently being prepared and targeted for completion by the end of the year.

3 Industry and Trade Policy Developments

3.2 Participation in the Doha Development Agenda (DDA) Negotiations

3.22 Services

(Question 2 Paragraphs 3.14, Page 13)

Does the Constitution of the Philippines limit its government from liberalizing services or supply of
services? If so, does the Philippines have any plan to amend the Constitution in terms of
liberalization of trade in services and investment?

Response:

The Constitution is the supreme law of the Philippines. As such, laws, rules and
regulations should be consistent with the 1987 Constitution including commitments in
international agreements such as the GATS. It may be noted however, that several
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steps have already been undertaken by the Philippines to review the 1987 Constitution
with a view to revise or amend it.

The amendment of the restrictive economic provisions of the Constitution is stipulated in
the Philippine Development Plan, but the timing is not yet ascertained. In the meantime,
bills have been filed in both Houses of Congress that would amend certain laws such as
the bill amending the Public Service Act, i.e. defining “public utility”, and the bill seeking
to promote open access in data transmission.
In December 2017, Executive Order 10 was signed creating a consultative committee
that will conduct consultations and review the provisions of the Constitution relevant to
the structure and power of the government, local governance and economic policies.

In January 2018, the Philippine Congress adopted a resolution constituting the Congress
of the Philippines as a Constituent Assembly that will review the 1987 Constitution for
the purpose of proposing amendments to or revision of the same. Subsequently, the
Senate Committee on Constitutional Amendments and Revision of Codes have conducted
hearings on Charter Change Proposal.

3 TRADE POLICIES AND PRACTICES BY MEASURE

3.1 Measures Directly Affecting Imports

3.1.5 Import prohibitions, restrictions, and licensing

(Questions 3, Page 38-41)

1. The Government of the Philippines fined Sanofi for selling Dengvaxia (dengue shot), as it might
cause serious side-effects. We would like to know what penalties could be imposed on a company
that manufactures and/or exports pharmaceutical products with unforeseen side-effects.

2. Could you explain the legal framework and procedure to appeal against a decision which
imposes penalties on pharmaceutical companies for supplying pharmaceutical products with
unforeseen side-effects?

Response:

The Philippines, through the Food and Drug Administration (FDA), did not fine Sanofi
Pasteur, Inc for selling Dengvaxia “as it might cause serious side-effects”. Sanofi was
fined for violating Section V of the FDA Circular 2013-004, in relation to Section VII of
the same circular, and Section 4 (B)(2)(3), Article I Book II of the Implementing Rules
and Regulation of Republic Act No. 9711, otherwise known as the FDA Act of 2009.

Records and evidence showed that Sanofi failed to comply with its post-marketing
authorization issuance commitments, such as submission of Pharmacovigilance Plan
prior to the distribution of Dengvaxia and regular submission of safety data and updates
as contained in the Pharmacovigilance Plan. For the said violation, the Certificates of
Product Registration (CPR) of Dengue and Dengue multi-dose were suspended for a
period of one year and an administrative fine of PhP 100,000.00 was imposed, with a
stern warning that future violations of FDA laws, rules and regulations shall warrant
stiffer sanctions, including but not limited to cancellation of the CPRs and/or License to
Operate, and the closure of the establishment.

Under the Republic Act No. 9711, otherwise known as the FDA Act of 2009, erring
establishments may be penalized under Section 5, “Imposition of Administrative
Penalties”. Other details on the administrative penalties and appeal can be accessed
from this link:
http://www.officialgazette.gov.ph/2009/08/18/republic-act-no-9711/.

3.3 Measures Affecting Production and Trade

3.3.8 Intellectual Property
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(Question 4 Paragraphs 3.131, Page 57)

We would like to know if, in the Philippines, any third-party can register an unregistered trademark
which is identical or similar to a trademark that is well-known in a foreign country.

If such trademark is filed or registered by any third-party in the Philippines, is it possible for the
trademark owner of well-known mark in a foreign country entitled to invalidate or cancel such
application or registration? If possible, we would like to know specific articles in the trademark act
to be applied in such case.

Response:

A third-party may file an application for registration of a trademark that has been
declared as a well-known mark in a foreign country; however, such application shall be
subject to opposition proceedings where an opposer may present evidence that the
third-party applicant is not the true owner of the trademark and is therefore not entitled
to its registration in the Philippines.
Under Section 123.1 of the IP Code, a mark which is identical with, or confusingly
similar to, or constitutes a translation of a mark which is considered by the competent
authority of the Philippines to be well-known internationally and in the Philippines,
whether or not it is registered in the Philippines, and which is used for identical goods or
services, cannot be registered by a third party. In determining whether a mark is well-
known, account shall be taken of the knowledge of the relevant sector of the public,
rather than of the public at large, including knowledge in the Philippines which has been
obtained as a result of the promotion of the mark. The Rules and Regulations further
provides that the “competent authority” for purposes of determining whether a mark is
well-known shall be the Court, the Director General of the IPOPHL, the Director of the
Bureau of Legal Affairs of the IPOPHL, or any administrative agency or office vested
with quasi-judicial or judicial jurisdiction to hear and adjudicate any action to enforce
the rights to a mark. Therefore, if in the appropriate proceedings the subject trademark
is likewise declared as a well-known mark not only internationally or in a foreign
country but also in the Philippines, such well-known mark cannot be registered by a
third party for identical goods or services.

During the proceedings on determining whether the trademark application filed by the
third party should be granted, evidence may also be submitted as to whether the
application was filed in bad faith. The Supreme Court of the Philippines has held that the
registrant of a mark was in bad faith in having it registered in its name since another
entity is the true and lawful owner thereof. In another case, the Court decided, among
other points, that the registrant of the mark had acted in bad faith because it was aware
of the prior existence of the earlier mark and proceeded to obtain registration in its
name despite of such knowledge.

In the event that the trademark is registered in the name of the third-party, the
trademark owner of the well-known mark in a foreign country may also subsequently
cause the cancellation of such registration through an administrative proceeding. Under
Section 151.1 (b) of the IP Code, a petition to cancel a registration of a mark may be
filed at any time with the Bureau of Legal Affairs of IPOPHL by any person who believes
that he is or will be damaged by the registration of a mark, if the registration was
obtained fraudulently or contrary to the provisions of the IP Code.

(Question 5 Paragraphs 3.133, Page 57)

We would like to know whether the Philippines is planning to become a member of the Hague
Agreement Concerning the International Registration of Industrial Designs. If the Philippines has
plan to become a member, we would like to know the schedule of accession.

Response:

The Philippines confirms its plan to accede to the Hague Agreement Concerning the
International Registration of Industrial Designs. It is currently in the process of
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finalizing a national work plan for accession. Initial consultations with the relevant
stakeholders have also been conducted as part of pre-accession preparations.

(Question 6 Paragraphs 3.133, Page 57)

We would like to know whether partial design can be registered and protected as industrial design
in the Philippines.

Response:

The Philippines can confirm that a partial design can be registered and protected as an
industrial design in the Philippines. Partial designs are covered by the definition of an
Industrial Design under the IP Code, as amended, to wit: “An Industrial Design is any
composition of lines or colors or any three-dimensional form, whether or not associated
with lines or colors: Provided, That such composition or form gives a special appearance
to and can serve as pattern for an industrial product or handicraft”. An application for
registration of an industrial design must contain a representation of the design, which
may be in the form of drawings, which fully discloses those features for which
protection is claimed.

Partial designs sought to be protected must include in the drawings the unclaimed
"environment/outward form". The representation of the design should adopt solid lines
to depict the portion of the design sought to be protected, while dashed, dotted, or
broken lines should show the unclaimed environmental structure in the drawing
disclosure.

(Question 7 Paragraphs 3.133, Page 57)

We would like to know whether exploitation of a design which is similar to a registered industrial
design is deemed as the exploitation of such registered industrial design in the Philippines.
Response:

The Philippines confirms that exploitation of a design which is similar to a registered
industrial design is deemed as exploitation of such registered design in the Philippines.
Pursuant to Section 71(a) of the IP Code, as amended, a registered industrial design
confers to its owner the right to exclude others from making, using, offering for sale,
selling or importing a similar registered industrial design.

(Question 8 Paragraphs 3.134, Page 57)

We would like to know whether the Philippines is planning to become a member of UPOV1991. If
the Philippines has plan to become a member, we would like to know the schedule of accession.

Response:

At present, the Philippines is not inclined to become a member of UPOV 1991.
Nevertheless, plant varieties that are new, distinct, uniform, and stable are protected
under a sui generis system pursuant to Republic Act No. 9168 or the Plant Variety
Protection Act of the Philippines.

4 TRADE POLICIES BY SECTOR

4.1 Agriculture

4.1.5 Rice

(Questions 9 Paragraphs 4.16, Page 62-63)

1. Regarding WT/L/932, Japan understands that the Philippines’ MFN in-quota tariff rate of the
minimum access volume (MAV) of rice is 35% in 2017. We would like to know whether this rate
remains unchanged in and after 2018.
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Response:

Executive Order No. 23 dated 22 May 2017 extends the concessions granted by the
Philippines to interested trading partners for another three years (2018-2020) or until
the enactment of a law removing the QR provisions of Republic Act (RA) 8178,
whichever comes first. In the meantime, the MFN tariff rates remain at 35% for the in-
quota rate and 50% for the out-quota rate.

2. We would like to know whether it is possible for private business operations to import rice
through the MAV's allocations for "other" countries (50,000t) instead of country specific allocations
(755,200t). If it is possible, we would appreciate it if you could indicate the eligibilities and
procedures to apply for the MAV, and whether there are limits on the volume of import per
application or per year.

Response:

Local eligible importers wishing to import rice from other countries which are not part of
the Country Specific Quota could do so under the Omnibus Origin (total allocation of
50,000 MT) of the MAV Rice Importation for the Private Sector.

Any person and/or entity who is engaged in or is intending to engage in the importation
of rice can apply for an Import License with NFA. The following documents required are
as follows:

For New Applicants/Individual (Sole Proprietorship):

 Passport picture of the applicant.
For Corporation/Partnership/Association/Cooperative:

 Secretary’s Certificate of a Board Resolution authorizing the representative to
sign for and in behalf of the corporate/entity
 Passport-size picture of the representative
 Article of Incorporation and By-Laws and All Amendments thereto
 Certificate of Registration with the Securities and Exchange Commission, in case
of corporation, partnership or associations and Certificate of Registration with
the Cooperative Development Authority in case of cooperative
For both categories, an interested importer who would like to apply for the MAV Rice
Importation Program for the Private Sector needs to submit a Letter of Intent together
with the required documentary requirements consisting of the three (3) parts: (1)
Technical Documents; (2) Legal Documents; and (3) Financial Documents.

Prospective applicant-importer may check the electronic copy of the General Guidelines
in the Importation of 805,200 MT White Rice Under MAV Country Specific Quota and
MAV-Omnibus Origins (MAV-OMB) for CY 2017 by the Private Sector that is published at
the NFA website through www.nfa.gov.ph for the detailed information on the process and
procedures.

For CY 2017, eligible importers were allocated a maximum volume of 20,000 MT
depending on their financial and technical capacity.

3. Could you illustrate policy direction on tariffication of the Philippines, as well as the current
status and future prospect of amendments of the Agricultural Tariffication Act?

Response:

The Office of the President issued on 22 May 2017 the Executive Order No. 23 extending
the concessions granted by the Philippines to interested trading partners. The extension