Closing Statement of
Undersecretary Ceferino Rodolfo
Philippine Head of Delegation
Philippines 5th Trade Policy Review in the WTO
As delivered 28 March 2018
I am pleased to see you all again today, Ambassador Juan Carlos Gonzalez and all the delegations. On behalf of our Chief Trade Negotiator and Minister, Ramon M. Lopez, let me take this opportunity to reiterate the great importance we attach to the TPR mechanism. It has truly been a valuable experience and exercise for the Philippines. This, in no small measure, is due to the extra-ordinary dedication and competence of the WTO Secretariat and the very active engagement of all Philippine government agencies in the whole process; and in the insightful words of our discussant, Ambassador Stephen de Boer, who set the tone for our very productive discussions last Monday.
We thank members for two things. First, the generosity by which you have acknowledged the strong growth of the Philippine economy during the review period (2012-2017), the significant policy reforms undertaken—involving the amendment of decades-old laws and regulations, and the contributions of the Philippines as an active member of the WTO. We highlight that these achievements would have been without meaning, had these not been felt by ordinary Filipinos. But accompanying the highest GDP growth of the Philippines in over four (4) decades is a remarkable decline in unemployment and in poverty incidence. We shall however not rest until each and everyone benefits from growth.
Second, we are equally appreciative of your questions, requests for clarification, comments and suggestions. For instance, one Member said “Few economies in the world are faced with the everyday challenges of interconnecting 7,000 islands. The unusual geographic situation of the country means that its economic operators are widely dispersed. They have to make an extra effort to engage with their business partners.” This comment highlights that what we have taken as a given, as we—our people, our Micro, Small and Medium Enterprises (which accounts for 99% of all our businesses) day-in-and-day-out have to first worry about how the materials we need and the products we sell can get to the main islands—even before we are able to think of trading with the Rest of the World. This comment, from a landlocked country, on appreciating the challenges faced by an archipelago, highlights the value of the TPR as a mechanism for listening, sharing, discussing, and engaging in a dialogue—valuing each one’s perspectives. We all have something to contribute. For our 5th Trade Policy Review, the Secretariat Report, and members’ contributions allowed us to internally reflect on ways to further strengthen the link between trade openness and inclusive growth. In addition to the opportunity for our delegation to be here with you, it is our internal discussions in Manila—and our sleepless coordination meetings over the past two days, which have also proven to be extremely productive.
Members’ comments have been very focused, allowing us to group these and provide a general response per cluster. Majority of the questions referring to policy reforms go beyond WTO obligations and commitments—but are nevertheless consistent with the Philippines’ initiatives, as we have shared in our Opening Statement and as I will briefly recall shortly. The Administration of President Rodrigo Duterte has not only built on reform initiatives of previous Administrations; but has been accelerating and deepening reforms towards Inclusive Globalization.
Allow me now to comment on your questions and clarifications.
• FIRST, on allowing further foreign participation in economic activities – The Philippines is already an open economy, with foreign investments allowed in a broad range of activities. Sectors with restrictions by way of administrative regulations, or legislations, or thru the Constitution are transparently listed in a Foreign Investment Negative List.
In this particular area, we have embarked on a three-pronged reform approach:
o A: Limitations which are based on Administrative regulations are being addressed thru the issuance by the President of Memorandum Order No. 16 (in November 2017) directing government agencies to take immediate steps to lift or ease existing restrictions on foreign participation in the eight areas I mentioned last Monday.
But allow me to highlight today that there are two (2) key priority investment areas or activities where equity restriction is being reviewed relevant to the success of the government’s Infrastructure Program (or the Build, Build, Build Program): namely (1) the review on contracts for the construction and repair of locally-funded public works and (2) on public services, except activities and systems that are recognized as public utilities. By giving priority to these two areas, we look forward to creating a more liberal investment environment where our Build, Build, Build Program would be able to Deliver, Deliver, Deliver at the soonest possible time.
o B: In relation to Public Utilities, we note that most of members’ comments on foreign equity restrictions focused on the following sectors: transportation, communication, electricity, and water services. We reiterate that at the Legislative front, our Congress has placed utmost priority in amending Commonwealth Act No. 146 otherwise known as the Public Service Act (PSA)—a law which was enacted in 1936 (or more than 80 years ago) and which defined what sectors are considered as Public Utilities. This is a very important amendment as our Constitution reserved Public Utilities only for Filipinos (i.e. foreign equity not to exceed 40%).
Thru this Amendment, our Congress will be able to provide a clear definition of public utility to cover only three sectors: distribution of electricity; transmission of electricity and water pipeline distribution system or sewerage pipeline. This means that all other sectors in transportation (land, water and air), communication, electricity, and water services—will be opened to even 100% foreign ownership.
o And C, along parallel lines, a Constitutional Review Committee has been created with the urgent task of reviewing, among others, the economic provisions which at the present reserves remaining certain activities to Filipino citizens. The intention is to create a window for these activities to be liberalized thru legislation.
• SECOND cluster of your comments, the Philippines noted the encouragement of some members to join or to be an Observer in the plurilateral Government Procurement Agreement (GPA). Even as we are still currently studying and considering Observership, the Philippines is continuously building our capacity for understanding the GPA. Our officials have actively participated in regional and WTO-based workshops on the GPA; and, this April, we will host in Manila the first national workshop on government procurement through the assistance of the WTO Secretariat.
• THIRD, on intellectual property rights, through the member agencies of the National Committee on Intellectual Property Rights, the Philippines continues to adopt holistic and concerted efforts to strengthen IP protection and enforcement, while at the same time maintaining the delicate balance between the rights of IP holders and the public in general.
The Philippines will sustain the momentum of intellectual property rights enforcement reforms, and have made great strides as we continue to lead efforts to improve IPR enforcement in the ASEAN (We are Asean’s Country-Champion for IPR Enforcement; and we Chair the ASEAN Network of IPR Enforcement Experts). Now, to address on-line and digital piracy, the Philippines amended its intellectual property law in 2013 to provide for the liability of entities benefitting from copyright infringement, such as on-line intermediaries. A review of the IP Code is also currently being undertaken, including a proposal for a “notice and takedown” provision to provide expeditious remedies against on-line infringement.
And, to facilitate the expeditious resolution and adjudication of intellectual property rights cases, we have been regularly holding roundtable discussions with judges of the Special Commercial Courts and Justices of the Court of Appeals and the Supreme Court. In partnership with the United States Agency for International Development (USAID) and the American Bar Association-Rule of Law Initiative, the “Manual on Investigation and Prosecution of IP Cases” has been revised and updated, in order to streamline the investigation and prosecution of IP cases by law enforcement agencies, and ensure effective IPR enforcement.
• FOURTH, on tariffs, we would like to clarify that there were no major changes on tariff rates during the review period. From 2011 to 2017, the main MFN tariff policy instruments issued were Executive Order No. 61 series of 2011—which laid down the MFN tariff structure from 2011 to 2016; and Executive Order No. 20 series of 2017—which set the MFN tariff structure from 2017 to 2020. The Philippines would like to emphasize that the reported increase in average applied MFN tariff is mainly attributed to an increase in the number of our tariff lines, from 8,299 in 2011 to 9,599 in 2014 and to 10,813 in 2017, as a result of the transpositions of the Harmonized System (HS) and the ASEAN Harmonized Tariff Nomenclature (AHTN) from 2007 to 2012 to 2017. An example of this, is the increase in tariff lines of HS Chapter 87 from 331 lines in 2011 to 932 lines in 2017.
• FIFTH, the Philippines also notes the views on agriculture, particularly on compliance with notification obligations, on rice tariffication, on valuation, and on meat handling requirements. Let me comment on each:
O We recently submitted (and these were already published by the WTO) all our domestic support notifications; and all our agriculture notification obligations have been settled covering the period up to 2015. We will continue to ensure that our measures are consistent with obligations and all notifications are updated.
O On the tariffication of the rice quantitative restrictions through the amendment of the Agricultural Tariffication Act, I wish to highlight that it is a priority of the Philippines.
O On meat handling requirements, let me assure Members that the Philippines adopted technical regulations anchored on internationally accepted standards and verifiable scientific studies. It is therefore worth noting that the World Organization for Animal Health has recognized the Philippines as an FMD-free country not practicing vaccination and we are committed to protect our consumers and livestock sector, thus risk assessment measures are important.
O The Philippines also strictly observes the WTO Customs Valuation Agreement and does not apply reference prices. If there are test values that the Bureau of Customs publishes, these are used strictly as a risk management tool. Test value range shall be used as basis to cast doubt as to the truthfulness or accuracy of a given value declaration, which in turn may trigger a valuation query on the applicability of the method of valuation used by the importer. It should be made clear that the Bureau of Customs does not use the values in their database as substitute for the declared transaction values. The value information database is used merely for testing the validity of an importer’s value declaration. Should an importer disagree with the assessed value, there is a clear process for filing a protest against the valuation to the Bureau of Customs Commissioner as provided under the Customs Modernization and Tariff Act.
But having clarified this, let me further inform members that our relevant authorities are closely coordinating with stakeholders—particularly meat importers, to promote a better understanding of the process and ensure efficient flow of products.
Allow us to share that the Philippines will continue to improve the business environment, foster transparency and eliminate laws that place a heavy regulatory burden on businesses. To cut red tape, the “Project Repeal” was launched in March 2016 and, to date, three repeal days have been conducted where an aggregate of 4,837 policy issuances were reviewed with a view to repealing outdated rules and therefore reducing the time and cost of doing business.
Moreover, an enhanced automated National Single Window called the TradeNet system is being prepared for live operation by the middle of 2018. TradeNet will allow traders to lodge information and documents to fulfil all import, export and transit-related regulatory requirements.
But what is generating excitement as it will no doubt prove to be a game-changer, both Houses of Congress have passed the Expanded Anti-Red Tape Act and this is now with the Office of the President for consideration and signing. This bill covers all agencies—local and national—issuing permits and licenses; and mandates specific shortened processing periods for categories of permits and license. Failure to approve within the prescribed timelines will mean automatic approval; and, for the erring official, 6-month suspension without pay on first offense, and, on second offense, disqualification from public office, forfeiture of retirement benefits, fine of between Php500,000 (or about US$10,000) to Php2,000,000, and imprisonment of one (1) to six (6) years.
Allow me to summarize our responses at this point by highlighting that we are: (1) accelerating and deepening policy reforms started in past administrations towards greater liberalization, (2) enhancing the continuous effective implementation of obligations and enforcement of rules, and (3) ensuring an environment where it is easy to do business, devoid of any red-tape.
Once again, we would like to thank Members not only for recognizing the tremendous progress achieved by the Philippines since the last TPR; but also your constructive insights and optimism on the great opportunities that lie ahead.
We take great pride in the explicit recognition by members that Philippines is a responsible, responsive, and active WTO member, with significant contributions in keeping the WTO relevant and effective, not just in advocating for a development-oriented MSME-centered agenda but also by keeping our economy open and resisting protectionist and inward looking policies.
The Philippines is the first Member to adopt the alternative timeline for the TPR and we continually benefit immensely from this. It has been a very enriching experience for us to answer the 333 questions received even before our Delegation arrived here. On the additional questions received, we will be responding soon. I wish to thank everyone for your interest and participation today and last Monday; and especially for the warm welcome given to me and the Philippine Delegation, whose hard work (by each and every member government agency) made possible the positive presentation.
Allow me to also take this opportunity to thank our out-going TPRB Chairperson, Ambassador Juan Carlos Gonzalez, for his very capable chairmanship of our TPR, and for successfully heading this Committee in the past year. We owe a deep amount of gratitude to Colombia, especially as Ambassador Gonzalez’ compatriot, Ambassador Eduardo Muñoz Gómez, chaired the meeting during the Philippines’ Fourth TPR in 2012.
We are likewise grateful for the warm welcome extended by members to our Ambassador-designate, Ambassador Manuel Teehankee. In behalf of the Government of the Republic of the Philippines, we reiterate our commitment to continue to be actively engaged in ensuring that, thru the WTO, we realize a sustainably growing global economy where no one is left behind.
Thank you.♦