Organization

The World Trade

I.

Trade Organization?
1. What is the World
and international organization
formal
Trade Organization
(WTO) is the only trade between nations. Trade
The World
dealing with the rules of
member governments, to promote economic
composed of WTO Members have adopted
liberalization is the main
approach that of trade between participating
deals with the regulation
The WTO and a dispute settlement
growth and development. for negotiating trade agreements
a framework WTO agreements signed by
countries by providing adherence to the
participants' trade-related aspects of
mechanism aimed at enforcing in services and
covers trade
WTO also
WTO members. The
intellectual property rights.

the WTO created?

2 How was

the General Agreement

on Tarifs
with the signing of
The history of the WTO begins rules for the bulk of
world trade and presided
1947 which provided the trade. The initial
and Trade (GATT) in growth rates in international
saw some of the highest handle the trade side of
over periods that Organization (ITO) to
International Trade Institutions,
objective was to create two Bretton Woods
an
cooperation, to complement the with the
international economic
International Monetary
Fund (IMF). However,
and the took the
namely the World Bank (WB) the GATT served as an interim organization
and
failure of the creation of the ITO,
functions intended for the ITO.
originally
through eight(6)
The GATT developed rules
for the Multilateral Trading System (MTS)
focused on reducing
In the early years, the GATT trade rounds
rounds of trade negotiations. but also other trade bariers
trade rounds covered not only tariffs,
tariffs. The following GATT was the most comprehensive
rouna
the Uruguay Round (UR),
The eighth round, known as set of WTO Agreements.
led to the creation of the WTO and the current
that eventually

When did the WTO enter into force

and what is its present membership?
3. no
intense Uruguay Rou
The WTO was January 1995 after the long and
instituted on 01
of the founding members of the WTO, alongsu
of Negotiations. The Philippines is one
several AMSs, namely Brunei Darussalam, Indonesia,
Malaysia, Myanmar, Singapore,
Thailand. Currently, 164 countries have ratified
their accession to the WTO the neg0
with
acceded to the WTO on 14 July 2016 an eh e
Members being Liberia and Afghanistan who
countries negotiating accession
July 2016, respectively. As of 2018, there are 23 more
WTO.

What are the main objectives of the WTO?

4. ement

In the preamble of the Agreement Establishing the WTO, the parties to the AgreN
to attain through the multilateral trading system, nal
recognize the objectives they wish
to raise living standards
to ensure full employment;
a n d e f f e c t i v e

and
to ensure a large and steadily growing volume of real income
demand;

mirrion L Page 120

 avnand the production of and trade in goods and services while allowing for
ha 0oumal use of the world s resources in accordance with the objective of
sustainable development: and

to make positive efforts to ensure that developing countries, and especialy the
least developed among them, secure a share in the growth in international trade
commensuratewith..their economic development."

5. What are the functions of the WTO?

The main functions of the WTO as listed in Article ll of the Agreement Establishing the
WTOinclude
to facilitate the implementation, administration and operation, and further the
objectives of the WTO Agreements through its bodies and committees

to serve as a forum for trade negotiations:

to serve as a forum for Members to settle their disputes;
to review Members' trade policies;
to coordinate with relevant international organizations in global economic
policymaking, including the WB and the IMF; and
to provide technical assistance and capacity buiding for developing and least
developed countries.

6. What are the fundamental

principles of the WTO?
Non-discrimination Members shall not discriminate between their trading
partners (MFN principle); or between national and foreign like products,
services, or nationals (national treatment principle).
More open trade - involves efforts in reducing or eliminating obstacles to trade.

need to know trade

ransparency and predictability traders and Membersmeasures
-

will not be
ues around the world (transparency) and that trade
raisedintroduced arbitrarily (predictability)

for less developed Members developing

opecial and differential treatmentface particular challenges when dealing with
developing Members
na least are provided greater
flexibilty, given more
rade liberalization; therefore, they other special nghts.
ne to adjust to the rules, and granted

7.
What is the organizational structure of the WTO?

a. Conference
ighest Authority: The Ministerial
the Ministerial Conference (MC)
body of the WTo,review the ongoing work, provide
he highest decision-making
every two to
(2) years
Snal meet at least oncedirection set the agenda for further work
to that work, and
pofiical guidance and

Tariff Commission | Page 121

 as necessary. The MC is composed of the Trade Ministers of
all the Memh
(exceptfor some, e.g., the EU Trade Commissioner
and the US T
Representative for the European Union and the United States of
respectively). Americca
b. Second Level: The General Council

The General Council (GC) is composed of

they are usually Members' Ambassadors or representatives
Permanent
from all Members
in Geneva. The GC meets as Representatives based
MC, when the latter is not in appropriate to adopt decisions, on
behalf of the
session.
The GC has authority over the
Trade Negotiations Committee
in-charge of the negotiations mandated (TNC), which is
(DDA). The GC also meets by the Doha
Development Agenda
as
Dispute Settlement Body (DSB) establishes
panels of independent
-

experts to resolve the disputes, adopts the

implementation of those rulings rulings
oversees the of the panels, and

Trade Policy Review

Body (TPRB) administers trade policy
mandated by the Trade
Policy Review reviews as
Mechanism of the WTO
Third level: The Councils and
Subsidiary Bodies
Three more councils, each
General Council: handling a different area of trade, report to tne

The Council for Trade in

Goods (Goods Council) oversees all the
related to the WTO issues
-

Agreement on Trade in Goods.

It supervises the
of various committees
responsible for specific matters (e.g.. agnculutewolk
market access, customs
validations, rules of origin, sanitary and pny
sanitary measures).
Council for Trade in Services
related to the General (Services Council) oversees all
Agreement on Trade in Services (GATS) issu
Council for Trade-Related
Aspects of Intellectual Property TRIPS

Council) Oversees all issues related to the Rights(d

Trade-Related
Intellectual Property Rights
(TRIPS) ASpec
Agreement
Several other subsidiary bodies which focus on repon

directly to the GC.

Usually called Committees, horizontal issues alsng
Parlies, these are the following. Working Groups or
v
Committee on Trade and
Committee on Trade and Development (CTD)
Environment (CTE)
Committee on Regional Trade Agreements
(CRTA):
Committee on Balance-of-Payment Restrictions
(BOP Committe
Committee on Budget, Finance and Administration
Working Parties on Accession, (CBFA)
Working Group on Trade, Debt and Finance, and
Working Group on Trade and Technology Transfer

Tariff Commission | Page 122

 How are decisions made at the WTO?
8
The WTO continues GATT's tradition of making decisions not by voting but by
consensus. Where consensus Is not possible, the WTO Agreement allows for voting - a vote
being won with a majority of the votes cast, unless otherwise provided in said Agreement. At
meetings of the MC and the GC, each WTO Member shall have one vote.

Decisions in the WTO are taken through its various councils and committees, whose
memberships consist of all WTO Members. The highest decision-making body is the MC.

9. In what ways does the WTO operate?

As a set of multilaterally agreed rules governing the trade behavior of

governments providing the main rules of the road for trade

As a forum for trade negotiations in which the trade environment is liberalized

and made more predictable either through the opening of national markets or
the reinforcement and extension of the rules themselves

As an international court where governments can resolve disputes with other

WTO members

10. How does the WTO promote trade liberalization?

Trade liberalization is promoted through the conduct of Multilateral Trade Negotiations,

referred to as "Rounds", to remove or reduce barriers to world trade. Since the creation of the
GATT in 1948, eight (8) rounds of negotiations have been held, with the eariier Rounds
focusing on the reduction of tariff barriers that resulted in the lowering of industrial tariffs in
developed countries to about 7% on the average.

By the 1980s, negotiations were expanded to cover non-tariff barriers on goods (Tokyo
Round) and new areas such as trade in services, investments, and intellectual property (UR).

11 What is the Uruguay Round (UR)?

The UR was the eighth Round of Multilateral Trade Negotiations conducted within the
framework of the GATT, spanning from 1986 to 1994 and including 123 countries as
"contracting parties." It covered areas that were never integrated into the GATT before, such
as agriculture, textiles and clothing, services, trade-related intellectual property rights, and
trade-related investment measures. The UR transformed the GATT into the WTO which was
established in 1995.

The Final Act embodying the thirty (30) agreements and 22 ministerial decisions
resulting from the UR, and the Agreement to establish the World Trade Organization, was
signed on 15 April 1994 at Marrakesh, Morocco. The UR came into effect in 1995 and was
implemented up to 2000 In the case of developing country contracting parties
implementation was extended to 2004 under the administrative direction of the newly
created WTO.
 Round?
a r e a s of the
Uruguay
What are the three (3) key result
12.
Access-includes negotiations
in industrial xtiles and
tariffs, agriculture, textiles.
a.
a. Market
clothing, and services

trade measures againad

negotiating topics ranged from ainst
and countervailing measures), trar
Disciplines
and
measures), trade
-

b. Rules
trade (such as anti-dumping
surges and a deterioration of ito
unfair
measures to protect a country against import
safeguards), trade restrictions, Customs valuation
balance-of-payments (e.g., measures
investment
subsidies, intellectual property rights, and

Institutional Topics includes dispute settlement

-
and ways by which to improve
review
the conduct of the MTS, e.g., trade policy

13. What are the emergency measures sanctioned by the WTO?

13.

a. Trade Remedy Measures

Anti-Dumping
Countervailing
Safeguard Measures
b. Balance-of-Payments Measures:

The UR reaffirmed that a country can restrict

is threatened by increased
imports if its balance-of-paymen
imports. Restrictions can come in the form of proe
based measures (import
surcharges, import requirements) over the bouna
rates of a member country, subject to the Understanding on the Balanc
Payments Provisions of GATT 1994. Consultations are
from the adoption of a required four (4) mon
balance-of-payments measure.
Renegotiation of Tariff Concessions:
The WTO allows
renegotiation of bound tariffs subject to the
a that
a return to
higher tariffs be requiremel
say, apples plague the localcompensated for. For example, if imports
fruit industry; the bound Can
be renegotiated. In tariff on apples of
exchange for an increase in the bound tariff on s,3
trading partner affected by such increase
could &pbe
compensated reduction in the tariff on, say,
by a probably requestu
paper products.
 a w s have been issued to
implement the
14 WTO? Philippine commitments under the
5 1 Laws Issued to Implement Philippine Commitments
Under the WTO
Date Signed
Changed the basis ofDescription
Law

RA 8181 28 March 1996 dutiable value of imported articless

subject to an ad valorem rate of
consumption value to transaction valueduty from homne
Replaced quantitative import restrictions on
RA 8178 28 March 1996 agricultural
products, except rice, with tariffs, and created
Agricultural Competitiveness Enhancement Fund the
Set the tariff rates on
covered by quantitative agricultural products previously
EO 313 29 March 1996 restrictions, except rice, to
complement the lifting of quantitative restrictions under
RANo. 8178
EO 465
13 January 1998 Re-calibration of tariff rates for deserving industries and
Corrected remaining distortions in the tariff structure
Strengthened the mechanism for the imposition of
RA 8751 07 August 1999 countervailing duties, amending Section 302 of thee
TCCP
Provided the rules for the imposition of
RA 8752 12 August 1999 an anti-dumping
duty, amending Section 301 of the TCCP
RA 8800 19 July 2000 Provided safeguard measures against increased
imports
RA 9135 27 April 2001 Amended RA No. 8181
Modified the nomenclature and MFN duties on certain
EO 395 | 31 December 2004 IT products to implement Philippine tariff commitments
under the ITA
Reduced the MEN duties on certain agricultural
EO 190 05 November 2015prooucts to implement Philippine tariff commitments
under the WTO Decision on Waiver Relating to Special
Treatment for Rice
Modified the nomenclature and MFN duties on certain
EO 21 27 April 2017 IT products to implement Philippine tariff commitments
under its ITA Expansion Schedule
Extended the effectivity of the MFN duties on certain
EO 23 agricultural products and implemented other Philippine
27 April 2017
commitments under the WTO Decision on Waiver
Relating to Specialrestrictions
Treatmentfor Rice
Lifted quantitative on rice and provided for
ARA 11203
11203 14 February 2019
14 February
thetariff equivalent thereof
Modified the nomenclature and rates of import duties of
EO 82 13 June 2019 certain agricultural products under Section 1611 of RA
No. 10863
 Industrial Products
on
.Tariff Bindings

1. What is a taiff binding?

tarift.
by WTO Members not toincrease a
rale
Tariff binding" refers to a
commitment
maximum tariff
rate. The binding tariffs
of
the tariff ceiling or rate of duty is bo e
0eyond its bound rate, i.e.,
Once a
basis for trade.
WTO provides
pr a stable and predictable bound rate, without compensea
the tariff ceiling, or
Member may not raise it beyond
adversely affected Members.

in the Uruguay Round?

What the outcome of the taiff negotiations
2. was

across-the-board reduction
in tariffs of at least a third (339
The UR achieved an of 61%, the European t
cut its overall tariffs by a weighted average n
the 1986 levels. Japan America by 34%.
by 37%, and the United States of
construction and agricultural equipment, medicai
For certain sectors such
as
distilled spirits, paper, toys, pharmaceuticals and fumitI
equipment, steel, beer, over five (5) to ten (10) years.For semi
industrialized countries committed to eliminate tarififs
tarift cuts were anywhere from 509
conductors, computer parts and chip making equipment,
to 100%.

3. Did the Philippines cut its tariffs in the Uruguay Round?

The Philippines did not reduce its applied tariffs. Instead, a commitment to bind the
tariffs on some 2,800 industrial tariff lines at ceiling rates of ten (10) percentage points above
the 1995 applied rate was undertaken. This number represents around 50% of total tariff lines,
If the commitment to bind agricultural tariff lines were included, numbering some 744 lines
the scope of bindings would reach 63%.

In 2004, the tariffs on 66 tarifflines accounting for 0.01% of total tariff lines and refeming
to agricultural (42 lines) and textiles and clothing (24 lines) products, were reduced.

How were local industries affected by the taiff bindings committed under the UR?

Since the applied tariff rates fall way below the bound rates committed by the
Philippines under the UR, there was no change in the structure of tariff protection to domesto
industries.

Insofar as the tariff bindings/cuts undertaken by other WTO Members,

howev
especially for major trading partners of the Philippines, their lower tariff barriers mean ge
Commercial opportunities for Philippine businesses to
diversify and grow their Ex
encourage micro-, small-, and medium-scale enterprises to
market through participation in expand into the intenii
global supply networks, and ultimately, alloW nfreion
economy to reap the economic benefits of innovation foreg

trade. and efficiency from incred

 I. The Agreement on
Agriculture
What is the Agreement on Agriculture?

WTO Agreement on Agriculture (A0A) is an

he
HS Chapters 1 to 24 agreement covering agricultural
excluding fish and fish products
oroduc 99. 33, 35, 38, 41, 43, 50, 51, 52, and 53) negotiated duringplus certain products in
the UR. Parties
Chapte including the Philippines entered into binding commitments on to the
Agreei Dort, export competition, and an agreement on sanitary market access,
and phytosanitary issues.

of the AoA?
What are the objectives
2.
Establish a fair and market-oriented agricultural trading system and initiate a
reform process thrOugh thenegotiation of commitments on support and
protection and through the establishment of strengthened and more operationally
effective GATT rules and disciplines

Provide for substantial progressive reductions in agricultural support and

protection sustained over an agreed period of time, resulting in the correction

and prevention of any restrictions and distortions in world agricultural markets

market access, domestic

Achieve specific binding commitments in the areas of
and reach an agreement on sanitary and
support, export competition,
phytosanitary issues

commitment for agricultural products under the AoA?

What is the market access
3.
is tariffs only. Before the
access in agricultural products
The current rule for market licensing, import prohibition
were restricted by import
quotas, import
UR, agricultural imports all non-tariff border m e a s u r e s would have to
m e a s u r e s . Under the AoA,
and other non-tariff to their ad valorem
customs duties corresponding
converted into ordinary
be removed and
known as "tariffication".
equivalents. This is the process

products operate?
4. How does tariffication of agricultural
a mechanism called "tariff quotas."
The tariffication system operates
through
at
are set for agricultural products
Minimum Access Volumes (MAVs) the MAV are
Pre-negotiated Volumes to be imported outside of
tariffs."
low tariff rates, also called "in-quota which are set at more-or-less the equivalent
levied higher tariff rates, called "out-quota-tariffs, which were removed or "tariffied."
the quantitative restrictions
level of protection afforded by

of the tariff commitments under the AoA?

5 What was the implementation period
differential
like the Philippines entitled to special and
For developing countries were implemented over a ten (10)
treatment -
tariff concessions/commitments
1995 up to 2004. This meant that out-quota
tariffs, which were
year period from
were reduced by a minimum
of 10% for each tariff line and
really tariff ceilings,
24% for all tariff lines within ten (10) years.
by a simple average of

Tariff Commission | Page 127

 were
reduced by a minimum of.
tariff rates (6) ve
years fropermn
countries over six
rordeveloped cut of 36%
for all producis
product and by an average

1995 to 2000

Philippine tariff binding commitments une.

6. VWhat laws were issued to implement the
Agreement on Agriculture?

on 28 March 1996
implements the tariffication of aario.
RA 8178 signed
products
whose quantitative restrictions were
ere "tariffied
EO 313 specifies the products
-

03 May 1996.
be levied; it took effect
on
and the applicable tariffs to

7. Which agricultural products have MAVs?

The sensitive agricutural products on which MAVs were provided are listed in sek.
1-B Tariff Quotas of Schedule LXXV - Philippines. The initial and final bound rates of duty
are
also indicated in Schedule LXXV.

8. In case of commodity shortages or abnormal price increases of products with MAV

what action can be taken?

RA 8178 provides for a mechanism called "MAV Plus" which authorizes the President
to increase the MAV with the concurrence of Congress. In effect, the in-quota volumesaf
products which have been forecast to be in short supply, or whose domestic prices have risen
abnormally during a given year, will be increased to pre-set levels based on prevailing demand
and supply conditions.

9. Who administers the MAV?

The MAV Management Committee,

composed of the Secretary of Agriculture as
Chairman, and the Secretaries of Agrarian Reform, Finance, Science and Technology, Trade
and Industry and the Director-General of NEDA as
importations under the MAV scheme.
members, implements and administers al

10. What out-quota tariffs apply to non-sensitive agricultural products ?

Out-quota tariffs on non-sensitive products, which are bound
those for sensitive agricultural at higher levels tha
products, are set forth in Section 1-A Tariffs of Schedule LA
-

Philippines. The initial rates ranged from a minimum of 10% to

reduced over time to the level of the final bound a maximum of 100%, to D
rates also indicated in the
schedule.
11. What is the tariff
treatment of rice for the Philippines under the WTO?
As
special and differential treatment to
in the
traditional diet of a developing developing countries, the predominant soaple
MAV has to be country shall be exempt from
tariffication.
provided corresponding to 1% of the base Howeve
period domestic consumption

Tariff Commission | Page 128

 produe concerned
and increasing over time to up to 4% of domestic
y e a ro f i m p l e m e n t a t i o n . consumption in the final

As the
hasic staple grain or the
Pnilippines, rice was not "tariffied" under the UR.

In of the expiration of the ten-year rice quota under Annex

w 5 of the AoA
vephiliopine
2005,
the Philip Government requested the extension of the
on special treatment
on 30
June 2012. The WTO approved the request and the
rice until
June
June 012.
201. In line quantitative
with this, EO 627 was issued restriction on rice
ntained until on 15 June 2007 to
reduce the MFN rates on certain agriculture products (e.g., mechanically
debo
TO
ompensate other WTO member countries for the requested seven (7)-year extension of the
treatment on rice until 2012.
Special
With the expiration of the special treatment on rice in June 2012, the Philippines
sified the Council on Trade in Goods of its request for the continuance of the waiver on
otified
special treatment for rice until June 2017..The WTOGeneral Council approved the request
waiver on 24 July 2014.
for extension of the
In line with this, EO Nos. 190 and 191 were issued, both on 05 November 2015. EO
No. 190 provides a temporary modification of MFN rates on rice and non-rice products.
Aciustments on the rates of duty start on 01 January 2015 to 30 June 2017 with subsequent
adiustments on 01 July 2017. Under EO No.190, in-quota rates ofrice products (HS 10.06)
2017.
will decrease to 35% starting 01 January 2015 and revert back to 40% starting 01 July
Meanwhile, EO No. 191 modified the preferential tariff rates on certain agricultural
the tariff reductions under the
products under EO No. 851 (s. 2009), in effect accelerating
AANZFTA on certain agricultural products as concession for the requested extension of the
waiver.
EO No. 23 issued on 27 April 2017 extended the effectivity of the temporary
modification of the MFN tariffs on rice and non-rice products. Under EO No. 23, in-quota
rates of rice products will remain at 35% starting July
2017 and shall be applicable until 30
to rice tariffication
June 2020 or until such time that a law amending certain provisions relating
which the tariffs shall revert back to
in RA No. 8178 is enacted, whichever comes first, after
40%.
also known as "An Act
On 14 February 2019, the President signed RA No. 11203,
of rice, lifting for the purpose the
liberalizing the importation, exportation and trading Effective 05 March 2019, this
quantitative import restriction on rice, and for other purposes". RA No.
new law amends RA No. 8178, otherwise
known as the "Agricultural Tariffication Act."
of law, prescribing quantitative
11203 provides for the repeal of all other laws, and provisions such
agencies the power to impose
import and export restrictions, or granting government the liberalization of the importation,
or hindering
import restrictions on agricultural products,
of rice and the tariffication of quantitative import restrictions.
exportation and trading
farmers?
12. measures can be taken in case of import surges that injure Philippine
What

safeguards action in the form of an additional

5 of the AoA provides for special tariffs in cases (i) where
Aricle basis on top of the existing
on a temporary price falls below
tat may be imposedexceeds
y actual base trigger level, or (i) where the import
import volume a exceed 33% of the level
e level of additional duty to be levied shall not time
of
aoase tri9ger price. The product in question at the
customs duty applied on imports of the products and
ordinary agriculturalcover "tariffied"
inscriptions of the Philippines
u o n . The SSG Tariffs of Schedule LXXV -

Philippines.
r e listed in Section 1-A

Tariff
Commission | Page 129
 Agreement

Technology

Information

The E x p a n s i o n ?

1TA

ent enforced
A g r e e m e n t ?

Technology agreemen

is the Information informati

m u l t i l a t e r a l

1. Wh (ITA)
is a
barriers
to
rade
on 203
Agreement

Technology non-tariff

The Information eliminate

tariff and

the WTO whic aims to to include nnew

e
ich EXpansion)

technology (IT) products. expanded

(1TA
been
has
coverage
of ITA
he product
categories of IT products.
undertaken under

The
commitments

both the ITA

and ITA
mechanism.
While
basis.
tariff-cutting MFN no bindin.
The ITA is solely a WTO a r e on
an
barriers,
there are
ding
in the
non-tariff
Expansion review of
ITA and ITA
ITA the
Declarations provide for
EXpansion
commitments concerning these.

enter into force?

concluded?
When did it
the ITA
2. When was
Information Technology Products, which
in
Declaration on Trade beginning 01 July 19977
The Ministerial certain IT products
elimination/binding of
tariffs on
to the year 2005
tariff reductions up
provided for the extended staging of
and ending on 01 January
2000 (with
the Singapore
Ministerial Conference on 13
was concluded at
for developing countries),
December 1996.

It officially entered into force

on 01 July 1997.

its present membership?

3. Who were the original signatories ofthe ITA? What is
Fourteen (14) countries (counting the 5 member states of the European Union as one)
signed the ITA Declaration, namely: Australia, Canada, Chinese Taipei, European
Communities, Hong Kong, Iceland, Indonesia, Japan, Korea, Norway, Singapore, Switzerland,
Turkey, and United States of America.

The ITA membership has grown to 82 as of September 2017.

When was the ITA Expansion concluded? When did it enter into force?
The Ministerial Declaration on the
Expansion of Trade in Information Technology
Products, providing for the
and ending on 01 elimination/binding of tariffs on IT products beginning 01 July 2010
July 2019 (with flexibility for sensitive
concluded at the Nairobi Ministerial products until 01 July 2023), was
Conference in December 2015.
There were 53 WTO
Expansion. Members that
participated in the
negotiations for the IA
It
officially entered into force on 01
July 2016.

Tariff
Commission | Page 130
 What are the three (3) basic principles that an ITA and ITA Expansion participant mus
5. abide by?

All products listed in the Declarations must be covered.

All products listed in the Declarations must have their tariffs reduced to ai
nd
bound at zero.

All other duties and charges must be bound at zero.

6. What were the timeframes for the staging of concessions in the 11A ad
Expansion?

The Declarations
provide in principle for the
reductions based on the following timeframe: staging-in of concessions in equal
ra
Table 5.2 Timeframes for the
Staging of Concessions in the ITA and ITA
Expansion
Stage ITA ITA Expansion
1st By 01 July 1997
2nd By01 January 1998 By 01 July 2016
3rd By01January 1999 By 01 July 2017
4th Complete elimination of duties not By 01 July 2018
Complete elimination of duties not
later than 01 January 2000 later than 01 July 2019
7. Were the timeframes strictly
implemented?
No. A number of
developing countries
ITA) and 2019 (for the ITA Expansion)requested
for extensions
(for the beyond the years 2000
during the negotiations.
participants, said extensions were reflected in the concerned Approved by the other
of commitments. In no
case, however, were the developing countries' schedules
beyond year 2005 for the ITA and year 2023 for the extended staging periods allowed to go
ITA Expansion.
8 What is the product andscape of the ITA?

Computer hardware products

Semiconductor and integrated circuits

Computer software
Telecommunication equipment
Other IT products, e.g., semiconductor
manufacturing equipment
 What is the product
landscape of the 1TA Expansion?
9.
multi-component integrated circuits (MCOs)
New generation

Touch screens

Global Positioning Systems

(GPS) navigation equipment

equipment, such as magnetic resonance imaging proe

Medical
ultrasonic scanning apparatus and
education devices
Portable interactive electronic

Video game consoles

semiconductor manufacturing equipment and Darto

Other IT products, e.g.,

in the ITA and ITA Expansion?

10. What are the benefits from membership

hardware and softwara

Easier access to the latest technology in computer
well as certain telecommunications equipment
products as

accuracy of information exchange; increased network

Heightened speed and
utilization
Accelerated development of the information technology highway

Improved productivity
Lower cost of IT products covered by the ITA and ITA Expansion

Who oversees the implementation of the ITA and ITA Expansion?

11.
of Trade
Established in March 1997, the Committee of Participants on the Expansion
of the
in Information Technology Products (ITA Committee) oversees the implementation
for meetings and collective consultations among
provisions of the ITA. It serves as the forum
the participants concerning the following issues: () examination of classification divergences,
discussions
(i) consultations on non-tariff barriers; (n)invitation new participants; and (iv)
of
on implementation issues. All decisions of the ITA Committee are arrived at by consensUS.

12. How are problems arising from product coverage between and among participans
resolved?

Both Declarations provide that rticipants shall meet periodically to review the product
specified in the Attacnments n
coverage Ooecuve is to agree, by
consensus, whethe,
the light of technological developments
the
experience in applying the tarifif concessions, or
or
changes to the HS Nomenclature, Attachments should be modified to incorporate
additional products. Another objective of the periodic
barriers to trade in IT products. meetings is to consult o n non-tarif

Tariff Commission I Page 132

 I s
thePhilippines
ry/participant to the ITA and ITA Expansion?

did not participate in the ITA negotiations and was not oneof
13 Yes,but the Philippines
, the.
Instead, the Philippines
ppines acceded and formally signed the ITA on
the iginal signatories.

Senat
Senate concurred in the ratification of the Agreement on
Philippine
1997. The
03
0 1D
Aep April
cre m b e r 1 9 9 8 .

Philippines participated in the ITA Expansion negotiations. Its Schedule of

the issuance of
The
ons was approved by participants on 08 December 2015. Following
he Philippines notified the WTO on 19 June 2017 of the completion
Conces

April 2017, the

on 27
EO21
procedures.

domestic

ofits

under the ITA?

How did the
Philippines implement its commitments
14.
tariff phase-out schedule, as follows:
The Philippines adopted a

whether bound or unbound under

for products which are not locally produced,
the WTO, tariffs were eliminated in year 2000;

which are locally produced and considered non-sensitive, tariff

for products
elimination/binding were undertaken earlier than 2005; and

for products which are locally produced and considered sensitive, tariffs were

eliminated beginning year 2005.

How will the Philippines implement its commitments under the ITA Expansion?
15.
The Philippines requested to defer for one (1) year its implementation of the ITA
tariff phase-out schedule for
Expansion to complete its domestic procedures. It adopted a
productscovered by the ITA Expansion, as follows:

for products which are non-sensitive, whether bound or unbound, tariffs were
eliminated on 01 July 2017 or in year 2019;

for products which are sensitive and bound under the WTO, tarifs were reduced
starting 01 July 2017 and will be eliminated in year 2021 or 2023; and

for products which are sensitive and unbound under the WTO, tariffs would be
reduced starting 01 January 2019 or 01 January 2020 and eliminated in year
2021 or 2023.

16 What is the role of the Commission in Philippine participation in the ITA and ITA
Expansion?
Pursuant to Sections 1608 and 1609 of the CMTA (formerly Sections 401 and 402 of
the TCCP, as amended), the Commission conducts public hearings/consultations to afford
interested parties the opportunity to present thelr views and submit position papers on the
following, among others:
products agreed to be included in the negotiations with their corresponding
timeframes;

Tariff Commission | Page 133

 cannot be accepted;
inclusion
Sensiuve products whose
need longer timeframe
included but to
products which may be
sensitive and
eliminate/bind their tariffs;
participation.
disadvantages
Philippine
advantages and
and recommendations to NEDA for
Commission submits its reports offindings EO upon Tinal approval iby
The after which it prepares
the implementing
consideration by CTRM,
the NEDA Board.

issued granting tariff concessions under the ITA? TA

A
17. What Executive Orders were

Expansion?

a. Under the ITA

EOs 465 and 163 were issued on 13 January 1998 and 18 October 1990
respectively, to implement the Philippines' commitment to liberalize tariffs on
n
IT products starting 01 January 2000.

EO 395 was issued on 31 December 2004 binding the duty at zero on the
remaining tariff lines.

b. Under the ITA Expansion

EO 21 was issued on 27 April 2017 to implement the Philippines' commitment

to liberalize tariffs covered by the ITA Expansion starting 01 July 2017.

18. What is the progress of the work on non-tariff barriers?

The ITA Committee approved on 13 November
non-tariff measures on ITA products
13, 2000 a one-year work program on
consisting of three (3) phases:
a. Phase I the Committee
compiled in March 2001
barriers which had been identified an inventory of non-tariff
products
by as participants impediments to trade in IT

b. Phase lI participants examined the

-

aforementioned non-tariff barriers andeconomic and

the benefits developmental impact of the
participants from addressing the which would accrue to sad
barriers trade-distorting effects of these non-tarir
. In November 2001, the Committee
met to consider the outcomes of Phases and

Based on a
consultations conductedproposal from Australia, the work
by the ITA Committee. It program was adopted after
as
appropriate, draw on the expertise of
was also intens
agreed that the Committee
international bodies with due regulatory, industry, and relevant WTO and ie
non-tariff barriers cited theregard to the intergovernmental o
by IT
industry which nature of the WTO."
Among
adversely affect the expansion of trade" in I7

Tariff Commission
| Page 134
 and certification requirements by various countries and
oroducts are redundant testing
problems with import licenses.
Participants to the ITA Expansion agreed to intensify consultations concerning non
tariff barriers in the IT sector by supporting the development of an upgraded work program on
non-tariff barriers.
 Negotiations
V. The Doha Round of Multilateral Trade
1. What is the Doha Round?
as the Doha Development Agenda (DnA
The Doha Round, semi-officially known
WTO, launched on 9-13 Nov
trade negotiations at the
the latest round of multilateralDoha Round seeks to address
isSues of special intere
in Doha, Qatar. The
001 countries. Its aim is to achieve
a major reform of
developing and least developed of lower trade barriers and revised tre
international trading system through the introduction trade
rules.

2.
What are the areas of negotiation in the Doha Development Agenda?

The main areas of negotiation of the DDA are: (i) Agriculture; (i) Non-agricult rat
market access (NAMA); (ii) Services; (iv) Intellectual propety; (v) Trade and developmen.
(vi) Trade and environment; (vii) Trade facilitation; (vii) WTO rules, and (i%) Dispute Settlement
Understanding.

3. What are the areas for negotiation in Agriculture?

Negotiations on agriculture began in early 2000. At the November 2001 Doha

Ministerial Conference, the agriculture negotiations became part of the single undertaking, ie.
all linked negotiations were to end by 01 January 2005. Member governments committed to
comprehensive negotiations on:

Market access substantial reductions on trade barriers

Export subsidies - reductions with a view to phasing out; and

Domestic support substantial reductions for support that distort trade.

4 What were the Philippines' initial positions on Agriculture?

On Market Access
Two (2)-stage tariff reduction as follows:

Stage 1 (Harmonization): All tariff peaks harmonized at 150% for developing

countries and 50% for developed countries within three
(3) years
Stage 2 (Further Reduction): Choice of Swiss or Uruguay formula over SK
years based on final UR bound rates; further reductions for
to commence developing coun
only after developed countries complete a similar Stage
export competition and domestic support; and retention of SSG for
countries only including deveio
expansion of SSG access and coverage
 Export Competition:

Elimination of export subsidies over three (3) years for

six (6) years for
developing countries developed countries and
No roll-over to next year of unused
commitments; caps for each product category
Compliance with reduction commitments on other export subsidies with similar
trade-distorting effects; and
Flexibility for developing countries to apply specific types of export subsidies.

OnDomesticSupport
De minimis to be retained for developing countries only

Commitments shall be product specific

What are the areas for negotiation in Non-Agricultural Market Access?

to further liberalize trade on non-

At Doha, the Ministers agreed to initiate negotiations
on Market Access was created at the
agricultural goods. To this end, the Negotiating Group
in 2002.
first meeting of the Trade Negotiating Committee, early
as appropriate, eliminate tariffs, including
The NAMA negotiations aim to reduce or,
and tariff escalation, as well as non-
reduction or elimination of tariff peaks, high tariffs,
the interest to developing countries.
barriers particularly on products of export
tariff

in the negotiations
What techniques have been employed for tariff reduction purposes
6.
on NAMA?

tariff negotiations.
the development of techniques in
The history of the GATT has
seen
of
item-by-item/country-by-country modality
is the oldest, involving submission
1947
used in GATT negotiations from
The bilateral
lists followed by offer lists. This technique was and for those
request
1960-61 Dillon Round. It is still being used for bilateral negotiations
until the
accession as new WTO Members
countries in the process of

Other techniques/methods are thefollowing

levels, are
Linear reduction whereby all tariffs, regardless of their
method
industrial products in the
percentage; was applied for
reduced by an agreed
1960s during the Kennedy Round;
was
reduce high tariffs more than lower ones;
Harmonization formula seeks to
used the Tokyo Round in the 1970s;
during
tariffs in
the elimination (or harmonization) of
Sector formula aims to complete and
was applied during
the UR and 1997 ITA negotiations;
a given sector;
achieve more
combines the above three (3) techniques to
Cocktail approach -

was used during the UR.

this technique
meaningful tariff reductions;

Page 137
TariffCommission|
 Tob
Fomula?
in the
1973-79 okyo Round
What is the
Swiss
S w i t z e r l a n d

a single mathe
ematical
7. by It u s e s
was
proposed harmonization.

rates
from aa wide
from w set of initial
Formula tariff tariff
final
The
Swiss
to
achieve
maximum

tariff rates
tarif
are reached throunh
of
range of ma
method
The final
The final
negotiations
gotiations
as
a s a
a mearrow
produces
a
range
narrow

original
tariffs a r e .
that the
ormula matter
how high
tariffs, i.e., no n 20os
equal annual reductions. 13-18 December 2005, it wa
Kong on
Conference
held in Hong
Ministerial follows:
At the 6th be applied
as
Formula
agreed that a Swiss
a x to

t1a+ to
where:

t new bound rate

a coefficient
to = base rate

In the agreed formula, the value of the coefficient is the unknown variable. Two (2)
values for the coefficient have been proposed: (i) a lower one for developed Members which
would mean higher tarif cuts for them and (i) a higher value for developing Members which
would mean lower tariff reductions.

8. What are the effects of the Swiss Formula?

The Swiss Formula would result in harmonization

within schedules, but not necessarily
across schedules. If a single coefficient is used for all
schedules would be achieved, but this would Members, harmonization across
cuts for schedules with
also mean that there would be higher average
higher tariff rates, i.e., countries with
undertake substantially larger tariff higher tariffs will have to
reductions. If different coefficients are
across schedules would occur to a lesser used, harmonization
of cuts that would extent but there is
be required for schedules characterized greater flexibility in the magnitude
by higher tariffs.
9. How are bound and
unbound tariff lines factored
in the Swiss Formula?
Bound tariff lines:
The bound rates are used
intended to reduce the
as
Formula is base rates in the
rate and the the Swiss Formula. Use
currently "binding overhang", or the gap betweenof the
lower than the current applied tariff rate of bound
the Sw
applied rate would
indicate
tariff lines. A boun
new bound rate tna
Unbound tariff lines: attainment of real market
The base rate for
access
unbound
value of the lines would be their
appropriate
used to mark-up is being 2001 MFN
calculate the bound
values of the coefficient rates of negotiated The
tariffs plus a
mark-up The
and previously
currently applied tariffs the mark-up, the unbound tariff Swiss Formula would D
thus lines.
rates may Depending
new bound
leading to real market the
be O the
access. lower thnai
Tariff Commission |
Page 138
 The Philippines' unbound tariff lines (virtually all NAMA products) account for 41% of
Antal tariff lines based on the HS and 47% based on the AHTN.

What tariff reduction approaches have been proposed in the NAMA negotiations aside
10. from the
Swiss Formula?

The general modality that has been proposed is use of formula that is supplemented
b ys e c t o r a l /zero-for-zero approaches and with provision for special and differential treatment for
l / z e

developin
and least- t-developed Members:
Table 5.3 Proposed Tariff Reduction Approaches in the NAMA Negotiations

WTO Member Proposal

United States Two-step approach:
1) elimination of tariffs below 5% (nuisance tariffs)
2) use of Swiss formula using a coefficient of 8, so ending rates, even
with initial average duties of 120%, will be from zero to a maximum of
7.5%.

phasing can be discussed

special and differential treatment is customized
"no less than full reciprocity" would result to a cap of 8% on tariffs
- to be supplemented by sectoral zero-for-zero approaches
Japan Trade-weighted average tariff reduction
and 1) Japan -
no parameters were submitted
40% average tariff reduction with a minimum 20% reduction
Korea 2) Korea -

per bound tariff line

after the initial cut, tariff peaks will be addressed through further line-
by-line reduction of all tariff rates that are twice the national average
a formula (there will be a slightly higher rate of reduction
for tariffs
using
above 25% the national average)
-- to be supplemented bysectoral/zero-for-zero approach.
Compression formula, that will reduce high tariffs and tariff escalation
European
Union Phasing can be discussed
- Special and differential treatment and "less than full reciprocity" are not

fordiscussion needs
China Uniform formula but with different coefficients to address fully the
andinterests of Members,particularlytheleast developed oness
India Simple tariff cuts on bound tariffs, with the developing countries' taiff
only
reduction at 2/3 the level of tariff reduction to be undertaken t
developed countries, as special and differentialtreatment

11.
11 What were the Philippines' initial positions on NAMA?
maximum flexibilities, i.e., the
Keep tariff rates equal to year 2000 levels to obtain to only 6% in January
overall average nominal tariff in 2000 is 16% compared
2003
industrial exports of the
Support the elimination of high tariffs on agricultural and
Philippines

Tariff Commission | Page 139

 within the conte
where
warranted
ext
tariffs
flexibilities to maintain
maximum
Obtain treatment
of special and differential
tarifts
nuisance
eliminate
to
Oppose any move
With limited reven
countries nue
context of developing finance development
that in the revenues
that al
Strongly espouse government
generate
base, tariffs serve to
expenditures

the DDA negotiations?

12. What is the present status of
attach priority to the multilateral
Members continue to
Much remains to be done. diverted by bilateral and regional trada
is also being
trading system, but their attention that the WTO process is to0 slow, and it takes too lona
initiatives. There is also the perception to continue the work, however, i.e., make
to realize concrete results. Members need
to strengthen the multilateral trading system
compromises and adjust negotiating positions
and make it more responsive and relevant to businesses globally.

13. What is the Philippine position on the Doha Development Agenda?

The Philippines joins the rest of the Members in pushing for the conclusion of the DDA.
Despite setbacks in such areas as
agriculture, industrial goods, and services, Members
continue to exert great effort to
bridge their differences and build on past convergences.
 VI. The Trade Facilitation Agreement

What is the Trade Facilitation Agreement?

1.
The WTO Trade Facilitation Agreement
(TFA) is the first
o he concluded since the establishment of the WTO
multilateral trade agreement

The TFA contains provisions for expediting the movement,

release, and clearance of
ds including goods transit. It also sets out measures for effective cooperation between
in
efoms and other appropriate authorities on trade facilitation and customs
eciles, It further contains provisions for technical assistance and capacity building compliance
in this area.

When did the Trade Facilitation Agreement enter into force?

2
The TFA entered into force on 22 February 2017 after two-thirds of the
WTO
membership completed their domestic ratification processes.

3 What are the benefits of implementing the Trade Facilitation

Agreement?
Estimates show that the full implementation of the TFA could reduce trade
costs by an
average of 14% and boost global trade by up to $1 trillion per year, with the
the poorest countries. For the first time in WTO biggest gains in
history, the requirement to implement the
Agreement is directly linked to the capacity of the country to do so. A Trade Facilitation
Agreement Facility (TFAF) has been created by the WTO to help ensure that
least-developed countries can obtain the needed assistance to reap the full developing and
benefits of the
TFA.

4. Does the WTO provide technical assistance

and capacty building on trade facilitation?
Technical assistance for trade facilitation is
other intergovernmental organizations including the provided by the WTO, WTO members, and
Nations Conference on Trade and World Bank, the WCO and the United
announced the launch of the TFAF, which Development (UNCTAD). In July 2014, the WTO
will assist developing and
in implementing the TFA. The Facility became least-developed countries
Facilitation Protocol on 27 November 2014. operational with the adoption of the Trade
PART
SIX-TRADING ARRANGEMENTS:
Asia-Pacific Economic Cooperation
REGIO
IONA
.
A. Overview
B. Individual Action Plan
on Tariffs
C. Environmental Goods and Services
I. Association
of Southeast Asian
Nations
A. Overview
B. The ASEAN Charter
C. The ASEAN Community
1. ASEAN Economic Community
2. ASEAN Political-Security Community
3. ASEAN Sociocultural Community

The ASEAN Free Trade Area

A. Overview
B. The Common Effective Preferential Tariff Scheme
C. ASEAN Trade in Goods Agreement
D. Protocol to Provide Special Consideration for Rice and Sugar
IV. ASEAN and its Free Trade Area Partners
A. ASEAN-Australia-New Zealand Free Trade Area
B. ASEAN-China Free Trade Area
C. ASEAN-Hong Kong, China Free Trade Area
D. ASEAN-India Free Trade Area
E. ASEAN-Japan Comprehensive Economic Partnership
Agreement
F. ASEAN-Korea Free Trade Area
G. Regional Comprehensive Economic Partnership