( ) Page: 1/5. TRADE POLICY REVIEW PHILIPPINES MINUTES OF THE MEETING Addendum. Chairperson: H.E. Mr Juan Carlos González (Colombia)

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1 26 June 2018 ( ) Page: 1/5 Trade Policy Review Body 26 and 28 March 2018 Original: English/anglais/inglés TRADE POLICY REVIEW PHILIPPINES MINUTES OF THE MEETING 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 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 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.

2 - 2 - EUROPEAN UNION... 3 MALAYSIA... 3 CHINA... 4

3 - 3 - EUROPEAN UNION SECRETARIAT REPORT (WT/TPR/S/368) 3 Trade Policies and Practices by Measure 3.1 Measures Directly Affecting Imports Other charges affecting imports Para 3.29 (Page 37) Excise taxes are levied on alcoholic beverages, tobacco products, automobiles, petroleum products, minerals, and goods defined as "non-essential", which essentially includes perfumes and jewellery (Table 3.5). Both specific and ad valorem taxes are applied; in addition, tobacco products are subject to an inspection fee. Since 2013, imported and domestically produced alcoholic beverages are subject to the same tax rates Table 3.5 (Page 37) Excise tax rates, 2017 What is the reason to levy this product over 23 times more than still or carbonated wine? The Philippines is presently reviewing the excise taxation on alcohol products. Para 4.52, p. 69 MALAYSIA Renewable energy (geothermal, hydro, wind, biomass, and solar) makes up the rest of the installed capacity of the country (accounting for about 34.3%). The DOE issued the National Renewable Energy Programme (NREP), with the aim of diversifying and expanding renewable energy. Under the NREP, the Philippines aims to double the 2010 installed capacity of renewable energy sources by 2030, which implies an increase from 5,438 MW in 2010 to 15,304 MW in Can the Philippines share on the government's policy towards long-term financing for green projects, for instance, through the issuance of sukuk? Under Republic Act (RA) No. 9513, otherwise known as the Renewable Energy Act of 2008, government financial institutions are directed to provide financial packages for duly recommended and endorsed renewable energy projects, in accordance with and to the extent allowed by domestic laws, rules and regulations. It may be noted that the Landbank of the Philippines has a Renewable Energy Lending Program that provides financing to renewable energy/energy efficient projects. The Philippines also has a Sustainable Energy Finance (SEF) Program being implemented by the International Finance Corporation (IFC). The SEF works with private banks (BPI, BDO and BanKO) to encourage lending to energy efficiency and renewable energy projects by supporting them through technical advisory services and risk sharing facility. Moreover, the Philippine government supports the policy towards long-term financing for green projects wherein local commercial banks serve as conduit in providing loans and grants to qualified investors or developers. An example is the Development Bank of the Philippines which has lending programs for green and clean projects. The Asian Development Bank established Renewable Energy Development Investment Fund and Financing Utilities for Sustainable Energy Development (FUSED). The Land Bank of the Philippines has similar financing mechanism which provide assistance to small and big RE developers through loans.

4 - 4 - Potential co-financiers like USAID, JICA, AusAID, GTZ, among others provide technical assistance such as conduct of feasibility studies and purchase of necessary equipment both software and hardware. ER-1-94 exemplifies government assistance to community hosting energy projects (e.g. P0.01 per KWh produced: 50 percent goes to electrification fund and 25 percent goes to livelihood and development fund and the remaining 25 percent is allotted to reforestation, watershed management and, health and environment enhancement fund. GOVERNMENT REPORT Banking Services Para 2.27, p. 9 To promote foreign participation in the banking and financial sectors, Republic Act (An Act Allowing the Full Entry of Foreign banks in the Philippines) was signed into law in July 2014,...The Law further opened up the banking sector to more offshore players. Since its establishment, the Philippines has approved the entry of foreign banks from Japan, the Republic of Korea, Chinese Taipei, and Singapore. Question(s): We commend that the Philippines has undertaken various liberalisation initiatives during the period under review. In line with the Philippines liberalisation efforts, are there plans to relax the requirements on Filipino understudies for every non-filipino employed in the financial sector? As per Amended Insurance Code, IC has no requirement on Filipino understudies for every non-filipino employed. We refer you to Department of Labor and Employment s (DOLE) Department Order (DO) No. 186 Series of 2017, Revised Rules for the Insurance of Employment Permits to Foreign National. CHINA Page 70, Para 4.59 The Government also provides a number of tax incentives for renewable energy producers. Please explain the contents of a number of tax incentives. What is the specific scope of renewable energy producers? Does this tax preference apply to all the foreign energy producers in the Philippines? Are there any differential policies? Tax incentives include Income Tax Holiday (ITH) for 7 years and reduced income tax rate of 10% thereafter. Duty free importation of machineries and equipment for the project and VAT-zero rating available within 10 years from issuance of Certificate of Registration to Renewable Energy (RE) Developer, Tax Credit on domestic capital equipment, exemption from universal charge for RE project in off grid area. For projects intended for commercial purpose, registration happens only after securing RE Service Contract.

5 - 5 - As notified by the Philippines, the incentives being referred to are in the form of tax concessions, which may be availed of by qualified renewable energy producers, whether foreign or domestic-owned enterprise. The Philippines has recently completed the comprehensive tariff review with the issuance of Executive Order No. 20, s In the said EO, the MFN rates for the equipment being referred to were maintained. Does the Philippines plan to cancel or correspondingly reduce the tariffs on equipment imported for construction in the energy industry? The Department of Energy is not in the position to respond on the plan of government whether to amend incentives for RE Development. The Legislative branch of the government has the authority to intervene on any existing law such as the RE Law by amending the law. In the Schedule of Specific Commitments on Services of the Philippines, it is mentioned that when an issuer whose principal business is investment, reinvestment or securities trading is engaged in trading business, it shall establish a commercial presence in the Philippines with the proportion of foreign investment being not more than 40% and all the board members must be Filipino. Which financial institutions may be engaged in the above business? Which type of issuers are mentioned in the above business? Insurance companies are not covered under the business who shall establish a commercial presence in the Philippines with the proportion of foreign investment being not more than 40% and all board members must be Filipino. This is so as Section 290 of the Amended Insurance Code does not distinguish whether the person who could exercise direct or indirect control (i.e., control is presumed to exist if any person directly or indirectly owns, controls or holds with the power to vote 40% or more of the voting securities) over an authorized insurance company is domestic or foreign.