Rice Tarrification Study Draft

San Sebastian College – Recoletos 1
CHAPTER 1
THE PROBLEM RATIONALE
1.1. Introduction
The Philippines is the world’s third largest importer of rice. 1 This is attributed to
the issue of maintaining a sustainable supply of rice to the rapidly growing population.
The insufficient local production is charged against the country’s topography and
ineffective irrigation.
Nonetheless, having the status such as a big importer of rice affects the shifts in
international rice market, and is affected, in turn, by her need to maintain international
trade relations. The basic legal obligations concerning global rice trade relations and
trade liberalization is presently covered by the World Trade Organization Agreements on
Agriculture (Agriculture Agreement).2 The Philippines is bound by The Agriculture
Agreement by virtue of its membership with the World Trade Organization (WTO) since
January 1, 1995.
1
James Burdon, “The 10 Largest Rice Importers in the World, Economics” (April 25, 2017),
https://www.worldatlas.com/articles/the-largest-rice-importers-in-the-world.html, [Accessed: October 28,
2018].
2
Victor Mosoti and AmbraGobena.”International trade rules and the agriculture sector, Selected
implementation issues”. FAO LEGISLATIVE STUDY 98, ISSN 1014-6679, pp. 11-16.
With the enforcement of the Agriculture Agreement on the same date, all
quotas, including quantitative restrictions, and import bans on agricultural products are
prohibited. Effectively, all agricultural products traded internationally should have no
other restriction besides tariff limits.
However, under Annex 5 of the Agriculture Agreement, the Philippines, together
with a few other countries,3 was afforded a “Special Treatment”. Pursuant to this
provision, the Philippines is given a 10-year period (1995 – 2005) of exemption from
lifting its limit on the volume of rice importation. This limit is called quantitative
restriction (QR).
Thus, in 1996, the Philippines established a tariffication system through Republic
Act (RA) 8178, otherwise known as the Agricultural Tariffication Act. Through this law,
the country’s agricultural market was opened to WTO member countries. RA 8178
converted all quantitative restrictions (QR) on agricultural products into tariffs, except
rice.
3
Other countries that invoked deferred tariffication under the “Special Treatment” provisions of Annex
5 are : Japan, the Rep. of Korea, China and Taiwan. C. Calpe, “Status of the world rice market in 2002”
-, Part II - Rice in World Trade. http://www.fao.org/docrep/006/Y4751E/y4751e03.htm.[Accessed:
December 8, 2018]; Future Directions, Proceedings of the Policy Seminar on Philippine Trade Policies
and Rice Security. Published by the DA-Philippine Rice Research Institute Maligaya, Science City of
Munoz, Nueva Ecija, Copyright © 2015.
Before the expiration of the “special treatment” on June 30, 2005, the Philippines
negotiated to have it extended for seven years or up to 30 June 2012. Still, before June
2012, another extension was successfully negotiated by the Philippines. In 2012, again, a
waiver allowed the country to postpone the tariffication of the rice QR from 1 July 2012
to 1 July 2017.
On April 27, 2017, President Rodrigo Roa Duterte issued Executive Order No. 23 4
in order to extend the effectivity of World Trade Organization “Decision on Waiver
Relating to Special Treatment of Rice for the Philippines” [Annex 6].
Faced with the pressure from the WTO and the thrust from the President of the
Philippines, Congress sought to amend the Agricultural Tariffication Act or RA 8178.
Thus, on August 14, 20185 the House of Representatives approved on third reading
House Bill No. 7735 or the “Revised Agricultural Tariffication Act” 6.
4
Executive Order No. 23 entitled “EXTENDING THE EFFECTIVITY OF THE MOST-FAVOURED-NATION RATES
OF DUTY ON CERTAIN AGRICULTURAL PRODUCTS UNDER REPUBLIC ACT NO. 10863, OTHERWISE
KNOWN AS THE CUSTOMS MODERNIZATION AND TARIFF ACT, AND THE OTHER PHILIPPINE
COMMITMENTS UNDER THE WORLD TRADE ORGANIZATION DECISION ON WAIVER RELATING TO
SPECIAL TREATMENT FOR RICE OF THE PHILIPPINES” [see Annex 4, this thesis].
5
Journal Service, Plenary Affairs Bureau. Journal of the House of Representatives. Seventeenth Congress
Third Regular Session 2018 – 2019, Journal No. 10 Tuesday, August 14, 2018.
http://www.congress.gov.ph/legisdocs/journals_17/J10-3RS-20180814.pdf [Accessed: October 29, 2018].
6
House Bill No. 7735 entitled “An Act Replacing the Quantitative Import Restrictions on Rice with Tariffs
and Creating the Rice Competitiveness Enhancement Fund”, sponsored by Representatives jose T.
Panganiban, Jr., Gloria Macapagal-Arroyo, et al.
On November 14, 20187, the Senate, in turn, with a vote of 14-0-0, approved
Senate Bill No. 1998 [Annex 7] or An Act Replacing the Quantitative Import Restrictions
on Rice with Tariffs, Lifting the Quantitative Export Restrictions on Rice, and Creating the
Rice Competitiveness Enhancement Fund.
1.2. Statement of the Problem
As can be deduced from the foregoing, it may seem that the Philippines has no
other option except that of rice tariffication, together with the rest of all the WTO
member countries8.
This tendency notwithstanding, would it be legal for the Philippines to further
extend the special treatment of rice?
How then should tariffication be understood in the light of the WTO
Agreements?
Why is the Philippines bound to tariffy rice?
7
Senate of the Philippines, 17thCongess. Press Release, November 14,
2018http://www.senate.gov.ph/press_release/2018/1114_prib2.asp (Accessed: December 5, 2018].
8
Japan ceased to apply the special treatment on their rice importation in 1999; Chinese Taipei in 1996;
Taiwan in 2003; and Korea in 2015.
1.3. Scope and Limitations
Above are the problems that are to be addressed in this paper, giving focus on
the legal analysis of the provisions on the special treatment of rice under the World
Trade Organization Agreements on Agriculture. Its impact on the international
agricultural trade relations will be discussed insofar as it surrounds the issue on this
special treatment. In addition, a minimal discussion of the other countries’ availment of
the special treatment will be given but only as far as maybe relevant.
1.4. Definition of Terms:
In international trade, tariffs are taxes imposed by sovereign states on both
imported and exported goods and service. This is for purposes of revenue and
protection of domestic products.

There are also nontariff barriers or protections. These are measures that restrict
imports or exports of goods or services through mechanisms other than the simple
imposition of tariffs. One of them are quantitative restrictions.
Quantitative restrictions (QR) include measures such as quotas, bans and
licensing requirements imposed to limit the volume of a particular commodity entering
into the country during a specified period of time.
Multilateral negotiations are those negotiations involving all the WTO
Contracting Parties. The current negotiation round is the Doha Round which started in
November 2001.9
Plurilateral trade agreements involve several countries with a common
interest but do not involve all WTO countries. Not all the plurilateral agreements are
negotiated within the WTO framework. When started within the WTO context,
plurilateral agreements may come from the failure to find agreement among all the WTO
Contracting Parties and therefore a smaller group of countries decide to conclude The
Agriculture Agreement between themselves.10

9
Legislative Train Schedule, A Balanced And Progressive Trade Policy To Harness Globalisation.
http://www.europarl.europa.eu/legislative-train/theme-a-balanced-and-progressive-trade-policy-to-
harness-globalisation/package-multilateral-and-plurilateral-trade-agreements [Accessed: November 6,
2018].
10
Legislative Train Schedule, A Balanced And Progressive Trade Policy To Harness
Globalisation.http://www.europarl.europa.eu/legislative-train/theme-a-balanced-and-progressive-trade-
policy-to-harness-globalisation/package-multilateral-and-plurilateral-trade-agreements [Accessed:
November 6, 2018].
A country's balance of payments is the difference, over a period of time,
between the payments it makes to other countries for imports and the payments
it receives from other countries for exports. 11; a balance estimated for a given time
period showing an excess or deficit in total payments of all kinds between one country
and another country or other countries, including exports and imports, grants, debt
payments, etc.12
CHAPTER 2
THE RESEARCH LITERATURE
In order to understand international trade agreements and relations under the
World Trade Organization, a brief history of its establishment is being presented, in
Collins. Definition of 'balance of payments'.

11
https://www.collinsdictionary.com/dictionary/english/balance-of-payments [Accessed:
December 12, 2018].
12
Collins. Definition of 'balance of payments'. “balance of (international) payments in American”
https://www.collinsdictionary.com/dictionary/english/balance-of-payments
[Accessed: December 12, 2018].
chronological order. The period will be reckoned from the trade liberalization
negotiations after the Second World War.
2.1 The General Agreement on Tariffs and Trade of 1947 (GATT 1947)
In 1945, with the Second World War only recently ended, countries gathered
together to reduce and bind customs tariffs. They were determined to strengthen trade
liberalization, and to begin to correct the protectionist measures which remained in
place from the early 1930s.
The meetings lead to the birth of The General Agreement on Tariffs and Trade in
Geneva on October 30, 1947 (GATT 1947). Its 23 founding members were officially called
the contracting parties. The GATT 1947 took effect on January 1, 1948. The GATT 1947
provided the guidelines and rules for much of international trade for 47 years, or until
1994.
The General Agreement on Tariffs and Trade considered the 23 founding nations
as the original contracting parties. They are:

The Governments of the Commonwealth of Australia, the
Kingdom of Belgium, the United States of Brazil, Burma, Canada, Ceylon,
the Republic of Chile, the Republic of China, the Republic of Cuba, the
Czechoslovak Republic, the French Republic, India, Lebanon, the Grand-
Duchy of Luxemburg, the Kingdom of the Netherlands, New Zealand, the
Kingdom of Norway, Pakistan, Southern Rhodesia, Syria, the Union of
South Africa, the United Kingdom of Great Britain and Northern Ireland,
and the United States of America. [Annex 3, General Agreement on Tariffs
and Trade, Protocol for the Accession of Signatories of the Final Act of 30
October 1947.
The objectives of the agreement are explicitly stated in its text:
“Recognizing that their relations in the field of

trade and economic endeavour should be conducted with
a view to raising standards of living, ensuring full
employment and a large and steadily growing volume of
real income and effective demand, developing the full use
of the resources of the world and expanding the
production and exchange of goods [.]”
[Emphasis supplied]
These objectives are “desir[ed]” to be achieved “by entering into reciprocal and
mutually advantageous arrangements directed to the substantial reduction of tariffs and
other barriers to trade and to the elimination of discriminatory treatment in
international commerce[.]”
The GATT 1947 which contains 38 articles is summarized as follows:
Article I: General Most-Favoured-Nation Treatment. This provides
the concept of Most-Favoured-Nation (MFN) treatment. It states that
trade concessions, such as any advantage, favour, privilege or immunity,
granted to any contracting party are applied immediately and without
conditions to all other contracting parties.
Article II: Schedules of Concessions. Any trade concession, other
duties or charges made by each contracting party must be recorded and
incorporated into the legal agreement called Schedule of concessions.

Tariff distinction of individual contracting parties is basically a
legitimate means of trade policy. A Member which alleges to be
prejudiced by such practice bears the burden of proving that such tariff
arrangement has been redirected from its ordinary purpose. This, by
becoming a means of discrimination in international trade. 13
Article III: National Treatment on Internal Taxation & Regulation.
Any GATT member nation may not use internal measures to discriminate
between local goods and those imported from another GATT member
nation. That such imported goods “of any contracting party imported into
the territory of any other contracting party shall not be subject, directly
or indirectly, to internal taxes or other internal charges of any kind in
excess of those applied, directly or indirectly, to like domestic products”.
These must be accorded the same treatment as those of its own national
product, “in respect of all laws, regulations and requirements affecting
their internal sale, offering for sale, purchase, transportation, distribution
or use.”
13
Article II. Analytical Index of the GATT, p. 68.
https://www.wto.org/english/res_e/publications_e/ai17_e/gatt1994_art2_gatt47.pdf . GATT-AI-2012-
art02, [Accessed: December 11, 2018].
But this article does not prevent the application of distinctive
internal transportation fees based on the local means of transport and
not on the nationality of the goods.
Article IV: Special Provisions relating to Cinematograph Films.
Internal regulations of exposed cinematographic films of any contracting
party must be in the form of screen quotas. The requirements for screen
quotas under this article are, among others: a.) The minimum proportion
of the exhibition of national cinematographic films with those of another
nations’ must be specified. The reference period must not be less than
one year. The computation shall be based on screen time per theatre per
year or its equivalent; and b.) Screen quotas shall be subject to
negotiation as to their limitation, liberalization and elimination.

Article V: Freedom of Transit. Only standard customs procedures
shall be applied by the contracting parties to goods in transit between
them. Goods “shall be deemed to be in transit across the territory of a
contracting party when the passage across such territory xxx is only a
portion of a complete journey beginning and terminating beyond the
frontier of the contracting party across whose territory the traffic passes.
Traffic of this nature is termed in this article "traffic in transit".
Article VI: Anti-Dumping & Countervailing Duties. Any
contracting party may apply duties and other measures, to be applied to
goods originating fromanother contracting party which are dumped
and/or enjoy export subsidies subject to specific conditions.
Article VII: Valuation for Customs Purposes. This article provides
for the fair valuation of imports from contracting member countries for
customs purposes in determining any liability, fees or other charges for
duties.
Article VIII: Fees & Formalities Connected with Importation &
Exportation. The article states that there should be a fair and transparent
reporting and recording of costs. Such fees should not be used as a means
of protection.
Article IX: Marks of Origin. Treatment with regard to marks of
origin requirements should be applied without discriminating the
products coming from any contracting parties vis a vis those from any
non-GATT Member country. “The difficulties and inconveniences which
such measures may cause to the commerce and industry of exporting
countries should be reduced to a minimum”. Due regard shall be
observed in protecting consumers against fraudulent or misleading
indications.
Article X: Publication & Administration of Trade Regulations.
Trade measures of contracting parties must be published. Transparency
should be observed.
Article XI: General Elimination of Quantitative Restrictions. Trade
restrictions are required to only be in the form of duties, taxes and other
charges.These may be effected through quotas, import and export
licenses, and other measures. The end is towards tariffication of all
quantitative restrictions.
Article XII: Restrictions to Safeguard the Balance of Payments.
Notwithstanding the general rule in the preceding article, any contracting
party may apply a quantitative restriction or a restriction on the value of
imported merchandise in order to safeguard its external financial position
and its balance of payments. Conditions are set in this provision to justify
the application of restrictive measures other than tariffs.
Furthermore, this article states that persistent application of
import restrictions may indicate a general instability in international
trade. That in this case, the contracting parties should discuss the other
measures to remove the underlying causes of this imbalance.
Article XIII: Non-Discriminatory Administration of Quantitative
Restrictions. This is also referred to as the Rule of Non-Discrimination.
There should be no discrimination between any contracting parties as to

the application of quantitative restrictions. That prohibitions or
restrictions may only be applied if the same are also enforced on the
importation or exportation of merchandise to third countries.
Specific details of any restrictions should be recorded with
transparency and negotiated with any affected contracting party.
Article XIV: Exceptions to the Rule of Non-Discrimination. This
provision applies to Articles XII and XVIII.
That any contracting party which is allowed to put quantitative
restrictions on its merchandise under Article XII, and/or which case may
be covered by Governmental assistance to Economic Development under
Article XVIII may deviate from the general Rule on Non-Discrimination
(Article XIII) “in a manner having equivalent effect to restrictions on
payments and transfers for current international transactions.”
Such deviation is also permitted “where the benefits to the
contracting party concerned substantially outweigh any injury which may
result to the trade of other contracting parties”.

Article XV Exchange Arrangements. The contracting parties, in
cooperation with the International Monetary Fund (IMF) may pursue a
coordinated trade measures policy. The subject policy is subject to
matters within the jurisdiction of the IMF and of the cooperating
contracting party or parties.
Article XVI: Subsidies. Any party, the subsidies of which affects
the exports and imports between contracting parties should notify the
contracting parties in writing. Discussion to limit the subsidization must
be done in case such subsidies are prejudicial to the interests of the latter.
In addition, the use of subsidy must be avoided where it may
cause undue disturbance to the objectives of the GATT 1947.
Article XVII: State Trading Enterprises. Contracting parties should
guarantee that if it establishes or maintains a State enterprise, it shall act
in a manner consistent with the general principles of non-discriminatory
treatment prescribed in this Agreement for governmental measures
affecting imports or exports by private traders.

Article XVIII: Governmental Assistance to Economic
Development. Recognition of the position of developing countries which
economy can only support low standards of living and is in the early
stages of development.
In this regard, such contracting parties may need to take
protective measures affecting imports. Thus, the GATT members agree
that contracting parties may, in order to implement policies of economic
development, a) enjoy sufficient flexibility in their tariff structure; and b)
apply quantitative restrictions for balance of payments purposes.
“Provided that the import restrictions instituted, maintained or
intensified shall not exceed those necessary: (a) to forestall the threat of,
or to stop, a serious decline in its monetary reserves, or (b) in the case of
a contracting party with inadequate monetary reserves, to achieve a
reasonable rate of increase in its reserves.”
Article XIX: Emergency Action on Imports of Particular Products.
This gives the scope for remedial action, such as, but not limited to, the
suspension of trade measures, if imports of certain products increase in

such a manner as to be injurious to like products, domestic producers and
competition.
Article XX: General Exceptions. Provides that nothing in the GATT
1947 shall be construed to impede the enforcement of measures
necessary to protect public morals, human, animal or plant life,
exhaustion of natural resources, health, prison labour, national
historic/cultural treasures, and those relating to the international trade of
silver or gold. Measures to protect obligations under intergovernmental
commodity agreement, and those involving export restrictions of
essential domestic products which sufficient local supply is necessary, are
included among the general exceptions.
Article XXI: Security Exceptions. Nothing in this Agreement shall
be construed to commit contracting parties to actions contrary to their
national security or the maintenance of international peace and security
under the United Nations Charter.
Article XXIII: Nullification & Impairment. Any contracting party
whose beneficial interests under the Agreement are being nullified or

impaired by the failure of other parties to fulfill their obligations may
make representations and seek satisfactory adjustment.
Article XXIV: Territorial Application – Frontier Traffic – Customs
Unions & Free Trade Areas. This article favors, as between the territories
of contracting parties, the formation of a customs union or of a free-trade
area.
“[A] customs territory shall be understood to mean any

territory with respect to which separate tariffs or other
regulations of commerce are maintained for a substantial part of
the trade of such territory with other territories.”
“A free-trade area shall be understood to mean a group
of two or more customs territories in which the duties and other
restrictive regulations of commerce xxx are eliminated on
substantially all the trade between the constituent territories in
products originating in such territories.”
“A customs union shall be understood to mean the
substitution of a single customs territory for two or more
customs territories[.]”
Article XXV Joint Action by the Contracting Parties.
Representatives of the contracting parties must regularly meet in order to
give effect to the provisions of the GATT 1947 which involve joint action.
Article XXVI Acceptance, Entry into Force and Registration. “1.
The date of this Agreement shall be 30 October 1947; 2. This Agreement
shall be open for acceptance by any contracting party which, on 1 March
1955, was a contracting party or was negotiating with a view to accession
to this Agreement xxx; 6. This Agreement shall enter into force, as among
the governments which have accepted it, on the thirtieth day following
the day on which instruments of acceptance have been deposited with
Executive Secretary xxx; 7. The United Nations is authorized to effect
registration of this Agreement as soon as it enters into force.”
Article XXVII Withholding or Withdrawal of Concessions. A
contracting party who withholds or withdraws any concession should
notify the other parties of its action.
Article XXVIII: Modification of Schedules & Tariff Negotiations. In
special circumstances, contracting parties may, at any time, authorize
another contracting party to enter into negotiations for modification or
withdrawal of a concession.
The use of negotiations to further reduce tariffs and other trade
measures between contracting parties is on a reciprocal and mutually
advantageous basis.
(Article XXIX The Relation of this Agreement to the Havana Charter ) 14
Article XXX Amendments. Amendments shall be effective upon
acceptance of all the contracting parties.
Article XXXI Withdrawal. Without prejudice to relevant provisions
of this GATT 1947, any contracting party may withdraw from this
Agreement. It may do the same, separately, on behalf of any of the
separate customs territories under its international responsibility.
“The withdrawal shall take effect upon the expiration of six
months from the day on which written notice of withdrawal is received by
the Secretary-General of the United Nations.”
14
“In Havana in 1948, the UN Conference on Trade and Employment concluded a draft charter for the
International Trade Organization, known as the Havana Charter, which would have created extensive rules
governing trade, investment, services, and business and employment practices. However, the United
States failed to ratify the agreement. Meanwhile, an agreement to phase out the use of import quotas and
to reduce tariffs on merchandise trade, negotiated by 23 countries in Geneva in 1947, came into force as
the GATT on January 1, 1948.” [Emphasis supplied] Kym Anderson. World Trade Organization
INTERNATIONAL TRADE. https://www.britannica.com/topic/World-Trade-Organization#ref750263.
[Accessed December 12, 2018].
Article XXXII Contracting Parties. The contracting parties to this
Agreement shall be understood to mean those governments which are
applying the provisions of this Agreement or pursuant to the Protocol of
Provisional Application.
Article XXXIII: Accession. A government not party to this
Agreement may accede to this Agreement, on its own behalf or on behalf
of a separate customs territory on terms to be agreed between itself and
the Members of the GATT 1947. Decisions of the contracting parties
under this provision shall be taken by a two-thirds majority.
(Article XXXIV Annexes )
Article XXXV Non-application of the Agreement between
Particular Contracting Parties. 1. This Agreement shall not apply as
between any contracting party if: (a) the two contracting parties have not
entered into tariff negotiations with each other; and (b) either of the
contracting parties, at the time either becomes a contracting party, does
not consent to such application.

Part IV Trade & Development
Article XXXVI: Principles & Objectives. The provision is being

quoted as follows:
“1. The contracting parties,

(a) recalling that the basic objectives of this Agreement include the
raising of standards of living and the progressive development
of the economies of all contracting parties, and considering that
the attainment of these objectives is particularly urgent for less
developed contracting parties;
xxx
(f) noting that the CONTRACTING PARTIES may enable less-
developed contracting parties to use special measures to
promote their trade and development;
xxx
7. There is need for appropriate collaboration between the
CONTRACTING PARTIES, other intergovernmental bodies and
the organs and agencies of the United Nations system, whose
activities relate to the trade and economic development of less-
developed countries.
8. The developed contracting parties do not expect reciprocity
for commitments made by them in trade negotiations to reduce
or remove tariffs and other barriers to the trade of less-
developed contracting parties.
9. The adoption of measures to give effect to these principles
and objectives shall be a matter of conscious and purposeful
effort on the part of the contracting parties both individually
and jointly.”
Thus, in view of the principle of providing favorable economic
facilities for developing country members, they are provided with more
auspicious access to world markets without reciprocity for commitments
made by developed country Members.
Article XXXVII: Commitments. The developed contracting parties
shall be committed to accord higher priority and have special regard to
the elimination of trade barriers on products of interest to developing
countries. Less developed countries shall also agree to do this with
respect to other developing country Members.
Article XXXVIII: Joint Action. That contracting parties should
concur to improve the situation of developing countries with respect to
the latter’s national concerns, including those relating to international
trade.
2.1.1 The Flight Path of the GATT Era

During the 1950s and the 1960s, continuous reductions in tariff by the
contracting parties resulted to world trade growth at the rate of about 8% a year on
the average.15
However, a downturn in the GATT era came during the 1970s and the 1980s.
Series of economic recessions, high rates of unemployment, several factory closures,
among others, befell many countries. These drove the governments to resort to other
protective measures in the face of foreign competition vis a vis low level of tariffs.
Some of the measures that were adopted by several countries were exclusive
trade agreements between States, and subsidies race. These are applied in order to
gain advantage in agricultural trade. But they weakened the credibility and
effectiveness of the GATT.
In the 1980s, businesses and organizations developed international influence.
They started to operate on international scale. This globalization of the world economy
made international trade more complex. GATT rules became irrelevant.
These situations and other factors continuously brought the GATT Members to
attempt to strengthen and extend the multilateral system. From 1947 up until 1994,
15
World trade Organization, “The GATT years: from Havana to Marrakesh”,
https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact4_e.htm [Accessed: December 5, 2018].
series of multilateral negotiations were held, which are commonly known as the GATT
“trade rounds”.
GATT trade rounds
Year Place/name Subjects covered Countries
1947 Geneva Tariffs 23
1949 Annecy Tariffs 13
1951 Torquay Tariffs 38
1956 Geneva Tariffs 26
1960-1961 Geneva / Dillon Round Tariffs 26
1964-1967 Geneva / Kennedy Round Tariffs and anti-dumping measures 62
1973-1979 Geneva / Tokyo Round Tariffs, non-tariff measures, “framework” 102

agreements
1986-1994 Geneva / Uruguay Round Tariffs, non-tariff measures, rules, services, 124
intellectual property, dispute settlement,
textiles, agriculture, creation of WTO, etc
For almost half a century, the basic legal principles of GATT 1947 remained much
as they were in 1947. It was the only multilateral instrument governing international
trade from 1948 until the WTO was later established.
Only the rounds which are related to this study will be discussed in this review:
The Tokyo Round and the Uruguay Round.

2.2 The Tokyo Round
The Tokyo Round, was held in 1973 in Tokyo, Japan by 102 participating countries
as the contracting parties. This seventh GATT trade round was directed at trade barriers
that do not take the form of tariffs, and at the improvement of the system.
In this round, the participating countries failed to make a consensus on the
fundamental problems affecting farm trade. They were also deficient in according
adaptive modification on the rules regarding “safeguards” or emergency import
measures.
On non-tariff barriers, agreements were reached from the negotiations. This
became possible through applicable and adaptive construction of the existing GATT rules
in certain cases. In other cases, entirely new grounds were subsumed.
These concurrences notwithstanding, only a relatively small number of (mainly
industrialized) participating countries went along with the deals in many cases. As such
deals were not accepted by all GATT members, they were often informally called
“codes”.
“The Tokyo Round ‘codes’

Subsidies and countervailing measures — interpreting Articles 6, 16 and 23 of
GATT
Technical barriers to trade — sometimes called the Standards Code
Import licensing procedures
Government procurement
Customs valuation — interpreting Article 7
Anti-dumping — interpreting Article 6, replacing the Kennedy Round code 16
Bovine Meat Arrangement
International Dairy Arrangement
Trade in Civil Aircraft”17
Several codes were eventually amended in the Uruguay Round and turned into
multilateral commitments accepted by all WTO members.
The Tokyo Round lasted until 1979.
2.3 The Uruguay Round
16
1964: Kennedy Round. Held in Geneva; named after assassinated U.S. President John F. Kennedy. This
round increased the scope of GATT agreements. Its final act is signed in June 1967 with 62 participating
countries.HISTORY OF GATT ROUNDS, Dec 14, 1993. https://www.joc.com/history-gatt-
rounds_19931214.html, [Accessed: November 12, 2018]
17
World Trade Organization. “Pre-WTO Legal Texts”,
https://www.wto.org/english/docs_e/legal_e/prewto_legal_e.htm [Accessed: November 12, 2018]
The eighth and final round was launched at Punta del Este, Uruguay, in
September 1986.
The agenda was to expand the trading system into new areas: trade in services
and intellectual property, reform of trade in the vulnerable segments of agriculture and
textiles. The articles of GATT 1847 would be reviewed. It was the most comprehensive
trade negotiations made ever since.
After some impasse and subsequent meetings, concessions on market access for
tropical products from developing countries were made. Dispute settlement system was
restructured and updated. Other policy reviews were made.
In December 1990, the parties endured another standoff on how to reform
agricultural trade. At that time, agricultural trade remained to be given special status in
the areas of important quotas and export subsidies. Further meetings on the matter
proved futile.18
The extended negotiations lead to the discussion of issues which were not
originally in the agenda. Globalization opened controversies that are relevant in world
18
World Trade Organization. Understanding the WTO Basics, “The Uruguay Round”,
https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact5_e.htm [Accessed:
December 10, 2018
trade and international relations. These are matters of services and intellectual property.
All these served as a catalyst for the creation of World Trade Organization (WTO). The
WTO’s agreements are often referred to as the Final Act of the 1986 —1994 Uruguay
Round of trade negotiations.
Thus on December 15, 1993, all issues were finally worked through. Deliberations
on market access for goods and services were concluded. On April 15, 1994, the
agreement was signed by ministers from most of the 124 participating governments at a
meeting in Marrakesh, Morocco:
“The Final Act Embodying the Results of the Uruguay Round of
Multilateral Trade Negotiations, signed by ministers in Marrakesh on 15
April 1994 is 550 pages long and contains legal texts which spell out the
results of the negotiations since the Round was launched in Punta del
Este, Uruguay, in September 1986.”19
2.4 The World Trade Organization
19
World Trade Organization, “WTO Legal Texts – A Summary of the Final Act of the Uruguay Round”.
https://www.wto.org/english/docs_e/legal_e/ursum_e.htm [Accessed : December 10, 2018]
The seat of the WTO is in Geneva, Switzerland. It is created by the Uruguay
Rounds negotiations from 1986 to 1994. WTO was finally established through the
“Agreement Establishing the World trade Organization” (more commonly known as the
Marrakesh Agreement) executed in Marrakesh, Morocco by 124 nations on April 15,
1994. WTO replaced the General Agreement on Tariffs and Trade (GATT) of 1947.
The purpose of the Marrakesh Agreement was to create an integrated
multilateral trading system covering the General Agreement on Tariffs and Trade
(GATT) and the results of all the trade rounds (including the Uruguay Round) that had
been conducted since the GATT was signed in 1947.
The WTO is the only global international organization concerned with the rules of
trade between its member nations.20
“Essentially, the WTO is a place where member governments
go, to try to sort out the trade problems they face with each other. At
its heart are the WTO agreements, negotiated and signed by the bulk
of the world’s trading nations. But the WTO is not just about
20
Article II
Scope of the WTO

liberalizing trade, and in some circumstances its rules support
maintaining trade barriers — for example to protect consumers,
prevent the spread of disease or protect the environment.” 21
WTO agreement, particularly the Agreement on Agriculture, will be discussed in
detail in Chapter 4.
CHAPTER 3
THE RESEARCH METHODS
In this research, numerous academic existing research and articles, heavily from
the official publications of the World Trade Organization, are used. There exists
innumerable academic researches and dissertations, since the creation of the GATT
1947, relating to the international trade relations and agreements. The WTO
Agreements and the GATT are, in themselves, products of a thorough study and
negotiations relating to trade liberalization between officials of different nations. This
World Trade Organization. “Understanding the WTO”.

21
https://www.wto.org/english/thewto_e/whatis_e/tif_e/tif_e.htm [Accessed : November 30, 2018]

being the case, the paper took the design of a new research but on an existing research
subject.
3.1. Qualitative Research Method
In order to satisfy the aims of the thesis, a qualitative research method is used. It
is basically appropriate for analytical research. The focus is not only to describe but also
to analyse; it seeking to look at the why of events not just the what. 22 Its outcome is not
quantifiable or measurable.
In contrast from a quantitative research method, quantitative method of
research offers a complete explanation and description, as well as analysis of a research
subject. This, without limiting the coverage of the research.
Furthermore, peculiar to this method is the data gathering instrument, which is
the researcher. The data come in the form of texts, pictures and objects.
3.2. Documentary Analysis
22
Tuckman, B.W. (1988) Conducting Educational Research (3rd ed.). San Diego: Harcourt, Brace,
Jovanovich.
Documentary analysis is used to obtain data from existing documents without
the need to question people through interview, questionnaires or observe their
behaviour.
Documents are palpable materials in which facts or concepts are recorded.
These include written materials or those produced on paper: newspaper articles,
government policy records, minutes of meetings, and the like. Publications in other
media can also be the subject of documentary analysis, including films, songs, websites
and photographs.
Some documents are of the public domain and are freely accessible. Others may
be restricted, classified, confidential or otherwise unavailable to public access. 23
3.3. Mode of Analysis: the Research Approach
An inductive approach. This approach is began with specific observation.
Generalized theories are then created from such observations. Conclusion follows,
drawn from the research itself.
23
Bowen, G. A. (n.d.). Document Analysis as a Qualitative Research
Method. Qualitative Research Journal, 9, 27–40. https://doi.org/10.3316/QRJ0902027
[Accessed: January 10, 2019]
Inductive method is followed as it is the most appropriate approach for the
production qualitative data.
3.4 Ethical Considerations
Qualitative data collection techniques proposes two ethical issues. These are
confidentiality and the role of the researcher as a data collection instrument.
When confidential documents are used as data for research, the researcher must
come to an agreement with the holder of the documents as to how the contents can and
cannot be used and how confidentiality will be preserved.
For this thesis, only those which are published or opened and accessible to the
public through ordinary means of research in the internet are printed and attached as
annexes (see Annexes 1 to 7). In accessing the published records of the Senate of the
Republic of the Philippines, a visit was made at its Legislative Records and Archives
Service in the City of Pasay [Appendix 1, Certificate of Appearance].

CHAPTER 4
FINDINGS AND ANALYSIS
The Second World War resulted to famine and scarcity of resources in many
nations. This prompted the countries to gather together to try to address these rampant
domestic issues. The gathering resulted to the creation of the General Agreement on
Tariffs and Trade or the GATT. They thought that tariffication is the key to achieve free
trade.
4.1 How should tariffication be understood in the light of the WTO Agreements?
Tariffication refers to the procedure relating to the “Agricultural Market-
Access” provision of the WTO Agreement on Agriculture in which all non-tariff measures
are converted into tariffs.
Tariffs are customs duties on merchandise imports. Tariffs provide a price
advantage to locally-produced goods over similar goods which are imported. They raise
revenues for governments. The Uruguay Rond agreements elicited commitments from
member countries to cut tariffs and to “bind” their customs duty rates to levels which
are difficult to raise. In some cases, tariffs are being cut to zero. There is also a significant
increase in the number of “bound” tariffs — duty rates that are committed in the WTO
and are difficult to raise.24
4.2 Why is the Philippines obligatedto tarrify rice?
This question will be answered in Part I of this chapter, particularly, of the
Philippines’ accession to the GATT and to the WTO Agreement.
Chapter 4 consists of two parts: 4.1 . A discussion on the accession of the
Philippines to the GATT, and to the WTO Agreement. This includes a brief discussion of
the contents of such agreements; and 4.2. The WTO Agreement on Agriculture
24
World Trade Organization, Understanding the WTO: Agreements, “Tariffs: more bindings and closer to
zero, https://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm2_e.htm [Accessed: January 5, 2019]
provisions applied by the Philippines to exempt its rice from tariffication,
notwithstanding the agreements.
4.2.1 Accession of the Philippines to the GATT and to the WTO
Since the Philippines’ accession to the General Agreement on tariffs and Trade in
1980, it had protected its rice from open trade. This, despite knowledge of the aims of
GATT 1947.
On January 1, 1980, Philippines acceded to the General Agreement on Tariffs and
Trade [Annex 1], as the eighty-fifth (85 th) contracting party. Under such accession,
Philippines bound itself to the aims of the GATT 1947, to wit:
GATT/1250
27 November 1979
ACCESSION OF THE PHILIPPINES TO THE

GENERAL AGREEMENT ON TARIFFS AND TRADE
The Republic of the Philippines is about to become the
eighty-fifth contracting party to the General Agreement. Its
accession will take effect on 1 January 1980. The Protocol of
Accession was signed by Ambassador Wilfredo Vega, Philippines
Special Trade Representative, in Geneva today.
xxx
On becoming a contracting party to the General
Agreement, the Philippines will be able to participate actively
in all GATT's work, and will benefit from all tariff concessions
negotiated by GATT contracting parties since the inception of
the General Agreement in 1948; these concessions are bound
against increase in the tariff schedules of GATT's member States.
With its accession to GATT in the context of the Tokyo

Round of multilateral trade negotiations, the Philippines has
agreed to bind a certain number of its customs duties under
the GATT consistently with its development, financial and trade
needs; these customs duties are listed in the Philippines
Schedule attached to the Protocol of Accession.
xxx
GATT's basic aim is to liberalize world trade through
the reduction or elimination of tariff and non-tariff barriers,
thereby contributing to economic growth and development. The
General Agreement has a number of provisions which deal
particularly with the trade interests and needs of developing
countries; some of these provisions have been reinforced as a
result of the Tokyo Round of multilateral trade negotiations.
[Emphasis supplied]
Thus, since 1979, the Philippines has obligated itself to participate actively to the
works of the GATT towards the achievement of world trade liberalization.
The first paragraph of Article XI of The General Agreement on Tariffs and Trade of
1947 states:
Article XI
General Elimination of Quantitative Restrictions
1. No prohibitions or restrictions other than duties,
taxes or other charges, whether made effective through quotas,
import or export licenses or other measures, shall be instituted
or maintained by any contracting party on the importation of
any product of the territory of any other contracting party or on
the exportation or sale for export of any product destined for
the territory of any other contracting party.
[Emphasis supplied]
The Philippines is bound to this provision, together with the rest of the
agreements under the GATT 1947. 25 However, it only guaranteed “a certain number of its
25
“Philippine undertakings under the WTO Agreements included a significant increase in tariff bindings,
extensive tariff reductions, elimination of quantitative and other non-tariff measures, and commitments in
many services sectors. Under the General Agreement on Trade In Services (GATS), the Philippines made
commitments in financial, communication, transport, and tourism and travel-related services; it also
participated in the Financial Services Negotiations and the Negotiations on Basic Telecommunication
Services concluded in 1997. The Philippines had yet to sign the Fifth Protocol of the GATS as of June 1999.
In some cases, existing legislation offers more liberal treatment to foreign providers than the Philippines'
bindings under the GATS.” World trade Organization, Trade Policy Reviews: First Press Release, Secretariat
and Government Summaries “Trade Policies and Foreign Trading Partners”,
customs duties” (Philippines Schedule, Protocol of Accession) which definitely, among
others, did not include rice.
Since the provisional character of the GATT 1947 lasted until the establishment of
the World Trade Organization in 1995, the stipulations in our “Accession of the
Philippines to the General Agreement on Tariffs and Trade” was also held as part of our
multilateral agreement with other contracting parties during that period.
4.2.2 The World Trade Organization Agreement
The 1986 to 1994 Uruguay Round of world trade negotiations was held under the
auspices of the GATT. The Final Act Embodying the Results of the Uruguay Round of
Multilateral Trade Negotiations was signed by ministers in Marrakesh on 15 April 1994.
This so called Marrakesh Agreement established the World Trade Organization.
In December 1994, the Senate of the Philippines ratified the "Marrakesh
Agreement Establishing the World Trade Organization"26:
https://www.wto.org/english/tratop_e/tpr_e/tp114_e.htm, [Accessed: December 28, 2018].

26
World Trade Organization, The WTO Agreements Series 1, Agreement Establishing the WTO, pp. 13-22,
OIES_WTO.PDF, https://www.wto.org/english/res_e/booksp_e/agrmntseries1_wto_e.pdf [Accessed:
January 3, 2018].
MARRAKESH AGREEMENT ESTABLISHING

THE WORLD TRADE ORGANIZATION
The Parties to this Agreement,
Recognizing that their relations in the field of trade and

economic endeavour should be conducted with a view to raising
standards of living, ensuring full employment and a large and
steadily growing volume of real income and effective demand,
and expanding the production of and trade in goods and
services, while allowing for the optimal use of the world’s
resources in accordance with the objective of sustainable
development, seeking both to protect and preserve the
environment and to enhance the means for doing so in a
manner consistent with their respective needs and concerns at
different levels of economic development, Recognizing further
that there is need for positive efforts designed to ensure that
developing countries, and especially the least developed among
them, secure a share in the growth in international trade
commensurate with the needs of their economic development,
Being desirous of contributing to these objectives by entering

into reciprocal and mutually advantageous arrangements
directed to the substantial reduction of tariffs and other barriers
to trade and to the elimination of discriminatory treatment in
international trade relations, Resolved, therefore, to develop an
integrated, more viable and durable multilateral trading system
encompassing the General Agreement on Tariffs and Trade, the
results of past trade liberalization efforts, and all of the results
of the Uruguay Round of Multilateral Trade Negotiations,
Determined to preserve the basic principles and to further the

objectives underlying this multilateral trading system,
Agree as follows:
Article I
Establishment of the Organization
The World Trade Organization (hereinafter referred to as “the

WTO”) is hereby established.
xxx
By virtue of this ratification, the Philippines became a founding Member of the
WTO as the Agreement entered into force on 1 January 1995. Thus, the Philippine
Government subscribed to strive for further trade liberalization. It acceded to pursue a
firm policy objective of becoming more unified with the multilateral trading system
(MTS).
WTO is now the only formal international organization for negotiating and
administering multilateral trade rules.
A description of WTO Agreements or set of rules is summarized as follows:

The current set were the outcome of the 1986–94 Uruguay Round negotiations
which included a major revision of the original General Agreement on Tariffs and
Trade (GATT).
GATT is now the WTO’s principal rule-
book for trade in goods. Xxx The
complete set runs to some 30,000
pages consisting of about 30
agreements and separate
commitments (called schedules) made
by individual members in specific areas
such as lower customs duty rates and
services market-opening.27
The provisions of the GATT 1994 in capsule are:
Annex 1A of the WTO Agreement contains the GATT 1994, which

incorporates by reference (and with a few adjustments to reflect the fact
that, contrary to the GATT 1947, the WTO is an authentic international
organization) “the provisions of the GATT 1947”; the GATT 1994 also
includes six Understandings on Articles of the GATT 1947, tariffs and
accession Protocols, and GATT decisions adopted between 1948 and 1994 as
part of what is often called the “GATT acquis”. The GATT 1994 and the
GATT 1947 are “legally distinct”, as confirmed by Article II:4 of the
WTO Agreement.
The provisions of the GATT 1947, incorporated into the GATT 1994,
continue to have legal effect as part of the GATT 1994, itself a component of
the WTO Agreement.
Thus, WTO Agreements is centered on the General Agreements on Tariffs and
Trade itself.
27
The WTO in Brief: Part 3, “The WTO Agreements”, Worl Trade Organization,
https://www.wto.org/english/thewto_e/whatis_e/inbrief_e/inbr03_e.htm [Accessed January 5, 2019].
The United Nations Conference on Trade and Development (UNCTAD) has given a
comprehensible explanation how GATT 1947 is incorporated into GATT 1994:
The GATT was concluded in 1947 and is now referred to

as the GATT 1947. The GATT 1947 was last amended, last in
1965. Later on, additional disciplines were agreed to in side
agreements, such as the Tokyo Round agreements, which did
not amend the GATT 1947 as such, but only bound the GATT
Contracting Parties that became a party to these side
agreements. The GATT 1947 was terminated in 1996. However,
the provisions of the GATT 1947 as well as all legal instruments
concluded under the GATT 1947 are integrated into the GATT
1994, subject to clarifications brought about by Understandings
which also form integral parts of the GATT 1994. 28
[Emphasis supplied]
4.2.3 Important principles of GATT 1947 carried over to the GATT 1994
The important principles of GATT 1947 are carried over to the GATT 1994, which
are:
28
Dispute Settlement World Trade Organization 3.5 GATT 1994, “GATT 1947”,
NCTAD/EDM/Misc.232.Add.33, https://unctad.org/en/Docs/edmmisc232add33_en.pdf, [Accessed January
2, 2019]
1. the most-favoured-nation (MFN) principle,
2. the principle of reduction and binding of tariffs,
3. the precept of national treatment, and
4. the prohibition of protective and restrictive measures other than tariffs.
The MFN or the non-discrimination rule is basic in the GATT. It directs a GATT or
WTO member country which grants a more favourable term to another country to
immediately and unconditionally hand out the same treatment to other GATT or WTO
signatory countries. This MFN obligation applies to duties and charges related to
importation and exportation, and to internal taxes and charges.
Reductions and bindings of national tariffs. Under this principle, the members
bind themselves to state the maximum level of import duty or other charges or
restrictions that they will impose on specified types of goods. This rule is embodied in
Article II and XXVIII which guide negotiations under the WTO for the reduction of
barriers to trade in goods.
UNDERSTANDING ON THE INTERPRETATION OF ARTICLE II:l (b)

OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994
Members hereby agree as follows:

1. In order to ensure transparency of the legal rights and
obligations deriving from paragraph 1 (b) of Article II, the nature
and level of any "other duties or charges" levied on bound tariff
items, as referred to in that provision, shall be recorded in the
Schedules of concessions annexed to GATT 1994 against the
tariff item to which they apply. It is understood that such
recording does not change the legal character of "other duties
or charges xxx.
xxx.
Article XXVIII
Modification of Schedules
xxx
4. The CONTRACTING PARTIES may, at any time, in special

circumstances, authorize a contracting party to enter into
negotiations for modification or withdrawal of a concession
included in the appropriate Schedule annexed to this Agreement
xxx.
[Italics and emphasis in the original]
National treatment rule under Article III of the GATT. This complements the
MFN rule. While in MFN under Article I, the goods are placed on the same favourable
terms between all trading countries; in National Treatment, such goods are placed under
the same terms with those of the importing country itself.
This means that, after import duties and other charges has been paid for the
goods and it has entered the importing country, taxes, laws and regulations affecting
their internal sale, purchase, transportation, distribution or use must be no less
favourable than those governing the importing country’s domestic goods.
The principle of prohibition of protective and restrictive measures other than
tariffs. Quantitative restrictions on the importation and exportation of goods are, in
general, banned by Article XI.
Article XI
1. No prohibitions or restrictions other than duties, taxes or

other charges, whether made effective through quotas, import
or export licences or other measures, shall be instituted or
maintained by any contracting party on the importation of any
product of the territory of any other contracting party or on the
exportation or sale for export of any product destined for the
territory of any other contracting party.
xxx
[Underscoring supplied]
However, the same article already provided the exceptions:
Article XI
2. The provisions of paragraph 1 of this Article shall not extend

to the following:
xxx
(c) Import restrictions on any agricultural or fisheries

product, imported in any form,* necessary to the
enforcement of governmental measures which operate:
(i) to restrict the quantities of the like domestic

product permitted to be marketed or produced,
or, if there is no substantial domestic production
of the like product, of a domestic product for
which the imported product can be directly
substituted; or
xxx
[Emphasis in the original; underscoring supplied]
Clearly, the contracting parties, since the GATT 1947, already saw the peculiarity
of issues surrounding agricultural products. Expectedly, as a result of the series GATT
Round negotiations, a specific Agreement on Agriculture was drafted, finalized, and
became part of the WTO Agreements.
4.2.4 WTO Agreement on Agriculture (AoA)
The WTO Agreement on Agriculture 29, enforced in 1995, governs the multilateral trading
rules on agriculture.
The general aim of this agreement is to institute a more equitable and
competitive trading system that will improve market access and uplift the livelihoods of
farmers around the world.
The long-term objective of the AoA as specified in its preamble is “to provide for
substantial progressive reductions in agricultural support and protection sustained over
an agreed period of time, resulting in correcting and preventing restrictions and
distortions in world agricultural markets".
29
World Trade Organization, https://www.wto.org/english/docs_e/legal_e/14-ag.pdf, 14-AG.PDF
[Accessed: December 25, 2018]
Developed Countries Developing Countries
Schedules Average tariff reductions Average tariff reductions

The World
of 36% (minimum 15%) of 24% (minimum 10%)
over 6 years. over 10 years;
Trade
Where "ceiling bindings"
commitments undertaken
reductions not required
except on ad hoc basis;
Least developed not
required to undertake
reduction commitments.
Organization has itself summarized the AoA provisions as follows: 30
Key elements of the Agreement on Agriculture and related commitments
Market Access
Instrument What it says or deals with
Article 4.2 Prohibition on the use of restrictions on

imports other than tariffs;
Article 4.1 and All tariffs bound;

Schedules
Article 5 Special agriculture safeguard mechanism

against import volume surges or import price
declines below a trigger level (limited to
"tariffied" products and not applicable to
imports under related tariff quota
commitments);
30
World Trade Organization, Agriculture: Explanation, “Summary”,
https://www.wto.org/english/tratop_e/agric_e/ag_intro07_summary_e.htm [Accessed: December 31,
2018]
Schedules Tariffs resulting from conversion of non-tariff

border measures under negotiating modalities
("tariffication") plus pre-existing tariffs on all
other agricultural products to be reduced;
Schedules Implementation of current and minimum

access opportunity commitments in respect of
tariffied products.
Domestic support
Article 6, 7 and Policies divided into two groups; (i) permitted

Annex 2 policies (Green Box), (ii) other policies included
in the Aggregate Measure of Support (AMS)
subject to reduction commitments (Amber
Box);
Article 6.5 Decoupled direct payments associated with

production limiting programmes (Blue Box) not
in Green Box but excluded from AMS.
Article 6.2 De minimis provision Developing countries

allows exclusion of allowed to use some
support less than 5% types of investment and
of output value from input subsidies under
AMS; certain conditions;
Article 6.4(a) and (b) Total AMS support to De minimis provision
be reduced by 20% allows exclusion from
over 6 years. AMS of product-specific
and non-product specific
support less than 10% of
respective current
output value;
Schedules Total AMS support to be

reduced by 13.3% over 10
years;
Schedules Least-developed
countries must bind
AMS support level if
applicable but not
required to reduce it.
Export subsidies
Article 9 Definition of export subsidies subject to

reduction;
Article 10 Other export subsidies subject to anti-

circumvention provisions which include
disciplines relating to food aid;
Article 3.3 Prohibition on the use of export subsidies on
products not subject to reduction
commitments.
Schedules Distinct reduction Two-thirds of the

commitments on both reduction required
volume (21%) and for developed
budgetary outlays (36%) countries over ten
over six years; years;
Article 11 For
incorporated/processed
products budgetary
outlays only (36%).
Article 9.4 Exception during the

implementation
period in respect of
certain marketing and
internal transportation
subsidies.
Export prohibitions and restrictions
Article 12 Requirement for advance notice and

obligation to consult on request and supply
information in case of new export
restrictions on foodstuffs.
Developed Developing Countries

Countries
Article 12.2 Exception for developing

countries that are net-
exporters of the foodstuff
concerned.
Other aspects
Article 13 Peace Clause;

Article 17 WTO Committee on Agriculture given the
task of overseeing the implementation of
the Agreement and related commitments;
Article 16 Marrakesh Ministerial Decision on

Measures Concerning the Possible
Negative Effects of the Reform
Programme on Least-Developed and Net
Food-Importing Developing Countries.
Sanitary and phytosanitary measures
Article 14 Separate Agreement31: Reaffirms right to

countries to set their own health and
safety standards provided they are
justified on scientific grounds and do not
result in arbitrary or unjustified barriers to
trade; encourages use of international
standards; includes certain special and
differential treatment provisions
31
There is a separate “Agreement on the Sanitary and Phytosanitary Measures”.
The AoA has 5 Annexes: Annex 1 – “Domestic Coverage”; Annex 2 – “Domestic
Support: The Basis for Exemption from Reduction Commitment” ; Annex 3 – “Domestic
Support Calculation of Aggregate Measurement of Support”; Annex 4 – “Domestic
Support Calculation of Equivalent Measurement of Support”; Annex 5 – “Special
treatment with Respect to Paragraph 2 of Article 4”
Briefly, the AoA may be understood as follows:
Product Coverage. The AoA applies to the products specified and defined in its
Annex 1, i.e., agricultural products by reference to the harmonised system (HS) of
product classification.
Annex 1 of AoA is reproduced as follows:
Annex 1
PRODUCT COVERAGE
1. This Agreement shall cover the following products:
(i) HS Chapters 1 to 24 less fish and fish products, plus*

(ii) HS Code 2905.43 (mannitol)
HS Code 2905.44 (sorbitol)
HS Heading 33.01 (essential oils)
HS Headings 35.01 to 35.05 (albuminoidal substances, modified
starches, glues)
HS Code 3809.10 (finishing agents)
HS Code 3823.60 (sorbitol n.e.p.)
HS Headings 41.01 to 41.03 (hides and skins)
HS Heading 43.01 (raw furskins)
HS Headings 50.01 to 50.03 (raw silk and silk waste)
HS Headings 51.01 to 51.03 (wool and animal hair)
HS Headings 52.01 to 52.03 (raw cotton, waste and cotton
carded or combed)
HS Heading 53.01 (raw flax)
HS Heading 53.02 (raw hemp)
2. The foregoing shall not limit the product coverage of the
Agreement on the Application of Sanitary and Phytosanitary
Measures.
*The product descriptions in round brackets are not necessarily

exhaustive.
The description covers the basic agricultural products such as wheat, milk and
live animals, and the products derived from them such as bread, butter and meat. It also
includes all processed agricultural products such as chocolate and sausages. It further
covers wines, spirits, tobacco products, fibres such as cotton, wool and silk, and raw
animal skins destined for leather production. Fish and fish products, and forestry
products are not included.
Rules and Responsibilities. This agreement bound the contracting parties to the
specific commitments in each of the following areas: market access; domestic support;
export competition; and to reaching an agreement on sanitary and phytosanitary issues.
The commitals take into account food security, the need to protect the environment.
Special and differential treatment for developing countries, including an improvement in
the opportunities and terms of access for agricultural products of particular export
interest to the Members are also provided.

Implementation and Execution period. The implementation period for the
country-specific commitments is six (6) years, commencing in 1995. However,
developing countries may implement their specific commitments within 10 years.
For the peace clause, the period is nine (9) years commencing in 1995.
Committee on Agriculture. This committee is established, both to oversee the
enforcement of the AoA, and to afford the parties an avenue to consult on issues related
to the implementation commitments. Meetings are usually held four times a year.
Special conventions are also held when deemed necessary.
Market access is through bound tariffs. Subject to the reform programme, the
Members of the WTO converted their non-tariff measures to equivalent bound tariffs.
Other market access is also through tariff rate quotas, and reduction of the tariffs.
Special safeguards and transparency are also provided as contingency protection.
Domestic support (Annexes 2-4). The rules and commitments include reduction
in subsidies, protection and other disciplines in trade.
Export competition and subsidies. The agreements in the AoA lay out
undertakings to scale down subsidized export quantities, and the expenses in subsidizing
exports.
Other matters on issue. The other provisions include export restrictions, a peace
clause, dispute settlement and further negotiations.
Thus, it is incumbent upon the Philippines to tariffy rice by virtue of the clear and
unequivocal objective of the GATT and the WTO Agreement on agriculture, to which it
acceded.
4.3 Would it be legal for the Philippines to further extend the special treatment of
rice?
This part discusses the WTO provisions applied by the Philippines to exempt
rice from tariffication.
The Philippine Government obtained “Special Treatment” for rice under Article
4.2 and Section B of Annex 5 of the WTO Agreement which temporarily allowed the
country to impose quantitative restrictions in the importation of rice [Executive Order
No. 627 [Annex 4]; Executive Order No. 190 [Annex 5]; and Executive Order No. 23
[Annex 2].
Article 4
Market Access
xxx
2. Members shall not maintain, resort to, or revert to any

measures of the kind which have been required to be converted
into ordinary customs duties, except as otherwise provided for
in Article 5 and Annex 5.
[Underscoring supplied].
ANNEX 5
SPECIAL TREATMENT WITH RESPECT TO PARAGRAPH 2 OF
ARTICLE 4
xxx
Section B
7. The provisions of paragraph 2 of Article 4 shall also not apply
with effect from the entry into force of the WTO Agreement to a
primary agricultural product that is the predominant staple in
the traditional diet of a developing country Member xxx.
[Underscoring supplied]
The period for Special Treatment for rice permitted the developing countries,
such as the Philippines, is ten (10) years or from 1995 to 2005.

This period was extended [Annex 4, Executive Order No. 627] for seven years or
from 1 July 2005 to 30 June 2012, by still applying Section B, Annex 5 of the AoA:
ANNEX 5
SPECIAL TREATMENT WITH RESPECT TO PARAGRAPH 2 OF
ARTICLE 4
xxx
Section B
Xxx
8. Any negotiation on the question of whether there can be a

continuation of the special treatment as set out in paragraph 7
after the end of the 10th year following the beginning of the
implementation period shall be initiated and completed within
the time-frame of the 10th year itself following the beginning of
the implementation period.
9. If it is agreed as a result of the negotiation referred to in

paragraph 8 that a Member may continue to apply the special
treatment, such Member shall confer additional and acceptable
concessions continue to apply the special treatment, such
Member shall confer additional and acceptable concessions
as determined in that negotiation.
10. In the event that special treatment under paragraph 7 is not
to be continued beyond the 10 th year following the beginning of
the implementation period, the products concerned shall be
subject to ordinary customs duties, established on the basis of a
tariff equivalent to be calculated in accordance with the
guidelines prescribed in the attachment hereto, which shall be
bound in the Schedule of the Member concerned. In other
respects, the provisions of paragraph 6 shall apply as modified
by the relevant special and differential treatment accorded to
developing country Members under this Agreement.
Thus, after ordinary duties may already be imposed after the agreed period. But within
the period of extension of the Waiver, the Philippines is bound to impose only 35% tariff rate on
rice, with the commitment of 805,200 metric tons Minimum Access Volume (MAV).
Before the expiration of the period of extension, the Philippines put through its
intention to again extend the special treatment. It began negotiations with other
Members. The request for a waiver of its obligations under Articles 4.2, paragraphs 8
and 10 of Section B of Annex 5 of the Agreement on Agriculture was filed before the
Council for Trade in Goods on March 20, 2012. The justifications are: a) the need to
continue protecting domestic rice farmers from foreign competition until the farmers
become more competitive; and b) the desire to promote food security through self-
sufficiency with respect to rice.32 But this request was not granted until after two years of
negotiations and conclusions of bilateral agreements with interested Members. 33
Thus, on July 24, 2014, the “Decision on Waiver Relating to Special Treatment for
Rice of the Philippines” [Annex 6] was adopted by the WTO. The Special Treatment for
rice in the Philippines was reinstated [Annex 5, Executive Order No. 190] until June 30,
2017 by virtue of this “Waiver Decision”, to wit:
32
Council for Trade in Goods, Request for Waiver Relating to Special Treatment for Rice of the Philippines,
WTO Doc. G/C/W/665/Rev.4 (Mar. 27, 2014); This paper, Annex 12.
33
“No open multilateral debate was conducted on the questions of whether the WTO’s authority should
be restricted in order to allow the Philippines to protect its rice farmers from foreign competition or
whether such protection could be considered a collective preference enjoying broad public support in the
Philippines. Rather, the request triggered an intransparent bargaining process between the Philippines and
a number of WTO members that argued a waiver would negatively affect their export interests. To
accommodate these concerns, the Philippines had requested that any member with a substantial interest
in rice communicate this interest to the Philippines. Consequently, a process of bilateral negotiations
between the Philippines and interested members ensued, leading to several revisions by the Philippines of
its waiver request, in particular the envisaged country-specific quotas for rice imports. This kind of process
in response to individual waiver requests is not uncommon in the WTO. Waiver decisions are mostly
prepared in informal meetings, and the process is strongly influenced by particular trade interests.” ISABEL
FEICHTNER, SUBSIDIARITY IN THE WORLD TRADE ORGANIZATION: THE PROMISE OF WAIVERS, “A CHANGE
IN PERSPECTIVE: SUBSIDIARITY THROUGH DECISIONMAKING BY THE POLITICAL
ORGANS OF THE WTO”, p 90, https://scholarship.law.duke.edu/cgi/viewcontent.cgi?
article=4780&context=lcp [Accessed: January 4, 2019]
DECISION ON WAIVER RELATING TO

SPECIAL TREATMENT FOR RICE OF THE PHILIPPINES
WAIVER DECISION OF 24 JULY 2014
The General Council,
xxx
Recalling that pursuant to Section B of Annex 5 of the

Agreement on Agriculture (AOA), the Philippines extended its
special treatment for rice from 1 July 2005 to 30 June 2012, as
provided in the Rectification and Modification of Schedule LXXV -
Republic of the Philippines G/MA/TAR/RS/99/Rev.1 dated 27
September 2006 (the "Extension Agreement"), which was certified
by the WTO under WT/Let/562 on 8 February 2007;
xxx
Noting that the Philippines will, no later than 30 June

2017, subject rice to ordinary customs duties on the basis of a tariff
equivalent calculated in accordance with paragraph 10 of Annex 5
to the Agreement on Agriculture and the Guidelines for the
Calculation of Tariff Equivalents attached to Annex 5 of the
Agreement on Agriculture;
xxx
Noting the commitment of the Philippines to apply its

import regime for rice in full compliance with the WTO covered
agreements at all times, except to the extent that non-compliance
is specifically authorized under this temporary waiver which will
last until 30 June 2017.
Decides, in view of these exceptional circumstances, as

follows:
1. Subject to the terms and conditions set out hereunder, the WTO
obligations of the Philippines under Article 4.2 and paragraphs 8
and 10 of Annex 5, Section B, of the Agreement on
Agriculture, and the Philippines' commitment under the Extension
Agreement3, shall be waived until 30 June 2017.
xxx
5. In the event that, at any time during the term of the waiver, the
Philippines fails to afford a Member the benefits of concessions
referred under paragraph 2 and Annex A herein or any other
concessions entered into by the Philippines under this waiver, this
waiver shall terminate and the importation of rice shall be subject
to ordinary customs duties in accordance with the provisions of
paragraph 10 of Annex 5, Section B, of the Agreement on
Agriculture.
6. At the expiration of this waiver, and no later than 30 June 2017,
the importation of rice shall be subject to ordinary customs duties
in accordance with paragraph 10 of Annex 5, Section B, of the
Agreement on Agriculture.
7. The concessions referred under paragraph 2 and Annex A herein

and all other concessions entered into by the Philippines under this
waiver shall cease to exist upon the termination or expiration of
this waiver.
8. This decision does not affect Members' rights as set out in the
Understanding in Respect of Waivers of Obligations under the
General Agreement on Tariffs and Trade 1994.
Xxx
ANNEX A TO THE WAIVER DECISION OF 24 JULY 2014 RELATING

TO SPECIAL TREATMENT FOR RICE OF THE PHILIPPINES:
xxx
[Upper case and italics of texts in the original;
bold fonts and underscoring supplied]

Still, before June 30, 2017, National Economic Development Authority of the
Philippines (NEDA) approved the extension of the reduced rates of duty on agricultural
products (hereinafter referred to as “extension”) in Executive Order No. 190 for another
three (3) years”34. Thus, authorized by Section 1608, RA No. 10863 35, President Rodrigo
R. Duterte signed on April 27, 2017 Executive Order No. 23 36 to, among others, extend
the quantitative restriction on rice.
The Executive Order No. 23 continued the Most Favored Nation Rate of 35% duty
on rice. This duty should have been already raised to 40% upon the expiration of the
extension on June 30, 2017. Another concession retained was “[t]he MAV commitments
of 805,200 metric tons on rice made in exchange for the waiver shall likewise remain in
force and effect.”
34
Executive Order No. 23
35
SEC. 1608. Flexible Clause. – (a) In the interest of the general welfare and national security, and, subject
to the limitations prescribed under this Act, the President, upon the recommendation of the NEDA, is
hereby empowered to:
(1) Increase, reduce, or remove existing rates of import duty including any necessary change in
classification. The existing rates may be increased or decreased to any level, in one or several stages, but in
no case shall the increased rate of import duty be higher than a maximum of one hundred percent
(100%) ad valorem; (2) Establish import quotas or ban imports of any commodity, as may be necessary;
and xxx
36
EXTENDING THE EFFECTIVITY OF THE MOST-FAVOURED-NATION RATES OF DUTY ON CERTAIN
AGRICULTURE PRODUCTS UNDER REPUBLIC ACT NO. 10863, OTHERWISE KNOWN AS THE CUSTOMS
MODERNIZATION AND TARIFF ACT, AND THE OTHER PHILIPPINE COMMITMENTS UNDER THE WORLD
The extended commitments were made in order that the other WTO members
do not get “infuriated”37 by the Philippines’ unilateral extension of the QR on rice.
Some of the other agricultural products which were “sacrificed” in order to retain
the rice QR:
1.) Meat and edible offal, of the poultry, fresh, chilled, frozen
37
NEDA Director general Ernesto Pernia “The Philippines plans to offer trade concessions for several
products in exchange for the extension of the quantitative restriction (QR) on rice for three more years,
the National Economic and Development Authority (NEDA) said. Xxx ‘In the meantime, because
deliberations in Congress can take some time, what we plan to do so as not to infuriate members of the
World Trade Organization (WTO) is to extend trade concessions for lower tariffs to certain products under
minimum access volume. This will be granted to interested WTO parties up to June 2020 or up to the time
Congress approves the official lifting of the QR,’ said Pernia, noting the possibility of a trade backlash from
WTO member states.” philstar GLOBAL, “Philippines offers trade concessions to extend rice QR”, (The
Philippine Star) - July 12, 2017 - 4:00pm,
https://www.philstar.com/business/2017/07/12/1718937/philippines-offers-trade-concessions-extend-
rice-qr [Accessed: January 4, 2019]
– mechanically deboned or separated : percentage rate of duty is only 5%
instead of 40%;
- Not cut in pieces is only 205 instead of 40%;
2.) Buttermilk – 1% instead of 3%;
3.) Buttermilk and other fats and oils derived from milk; dairy spreads – 5%
instead of 7%;
4.) Grated and powdered cheese, of all kinds, in packages of a gross weight
exceeding 20kg – 1% instead of 3%;
5.) Other prepared or preserved meat, meat offal and blood – mechanically
deboned or separated – 5% instead of 40%;
6.) Other vegetables prepared or preserved otherwise than by vinegar or acetic
acid, frozen – 0% instead of 10%; and
7.) Oil-cake and other solid residues, whether or not ground or in the form of
bellets, resulting from the extraction of vegetable fats or oils – 1% istead of 35. 38
Thus, the extension is not without a burden on the agricultural sector. And since
2017, the Philippines is negotiating with other member countries, at least for some
preferential agreements.39 The unilateral extension of concessions made by the
38
Temporary Modification of MFN Rates of Duty on Non-Rice Products, Annex A, Executive Order No. 190
dated November 5, 2015
39
Trade Policy Review Body , “TRADE POLICY REVIEW REPORT BY THE SECRETARIAT THE PHILIPPINES”, p.
35, s368_e.pdf, [Accessed: January 20, 2019]
Philippines is only based on the previous concessions agreed upon with the other
countries before the expiration of the period granted in the Waiver Decision.
Unless and until a decision for the approval of the present extension is adopted
by the WTO, sanctions may be imposed against the Philippines upon proper complaint
from other WTO member-countries. The extension has expired and we are bound by our
agreement with the other member countries.
CHAPTER 5
CONCLUSION AND RECOMMENDATION

5.1. CONCLUSION
The World trade Organization Decision on Waiver Relating to Special Treatment
of Rice of the Philippines gave the country only until June 30, 2017 to impose
quantitative restrictions in the importation of rice. But the Philippines has not tariffied
the rice as of this date, January of 2019.
On November 28, 2018, Senate Bill 1998 has passed both Houses.
The bill is entitled “AN ACT REPLACING THE QUANTITATIVE IMPORT RESTRICTIONS ON
RICE WITH TARIFFS, LIFTING THE QUANTITATIVE EXPORT RESTRICTIONS ON RICE, AND
CREATING THE RICE COMPETITIVENESS ENHANCEMENT FUND, AMENDING FOR THE PURPOSE
REPUBLIC ACT NO. 8178, AS AMENDED BY REPUBLIC ACT NO. 9496, AND AS FURTHER
AMENDED BY REPUBLIC ACT NO. 10848, AND FOR OTHER PURPOSES” [Annex 7]. This bill is
the key so that tariffication of rice may already be implemented in the Philippines.
Unless and until a WTO Decision for the extension of the waiver is obtained, or a
law is passed for the tariffication of rice, the Philippines has no legal ground in imposing
quantitative restrictions in the importation of rice.
5.2. RECOMMENDATION
Rice tariffication is the only track towards which all members of the World Trade
Organization may proceed. This is the main objective of the WTO Agreement: trade
liberalization.
Varied trade restrictions impose a burden on the world trade market, affecting
the erratic shifts in the prices of commodities. While a more stable system of tariff duties
will eliminate a lot of complicated factors in trade. Per consequence, supply and demand
in trade are, economically, more manageable. Looking at the situation through this big
picture will open our minds to look at opportunities rather than at the shackles behind
this tariffication labyrinth.
Thus, it is recommended that a further study be made to unravel the truth
behind the country’s inefficiency in coping up with its own rice supply needs. More than
30 years has passed and the Philippines has never achieved agricultural competitiveness,
most especially for rice. In learning the truth, the government can better face the
problem squarely, rather than blindly hoping for something or pushing for something
that is never effective. Appropriate laws can be passed to address the actual problems.
It is also recommended that a further study be made on the existing agricultural
laws in order to open up avenues for the agricultural sector to take advantage of the
effects of free trade.

ANNEX 1
ACCESSION OF THE PHILIPPINES TO THE
GENERAL AGREEMENT ON TARIFFS AND TRADE

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San Sebastian College – Recoletos 1

THE PROBLEM RATIONALE

trade liberalization is presently covered by the World Trade Organization Agreements on

Agriculture (Agriculture Agreement).2 The Philippines is bound by The Agriculture

prohibited. Effectively, all agricultural products traded internationally should have no

other restriction besides tariff limits.

However, under Annex 5 of the Agriculture Agreement, the Philippines, together

Thus, in 1996, the Philippines established a tariffication system through Republic

in order to extend the effectivity of World Trade Organization “Decision on Waiver

Relating to Special Treatment of Rice for the Philippines” [Annex 6].

Philippines, Congress sought to amend the Agricultural Tariffication Act or RA 8178.

House Bill No. 7735 or the “Revised Agricultural Tariffication Act” 6.

Rice Competitiveness Enhancement Fund.

1.2. Statement of the Problem

This tendency notwithstanding, would it be legal for the Philippines to further

extend the special treatment of rice?

How then should tariffication be understood in the light of the WTO

Why is the Philippines bound to tariffy rice?

1.3. Scope and Limitations

Trade Organization Agreements on Agriculture. Its impact on the international

special treatment. In addition, a minimal discussion of the other countries’ availment of

1.4. Definition of Terms:

In international trade, tariffs are taxes imposed by sovereign states on both

protection of domestic products.

imposition of tariffs. One of them are quantitative restrictions.

Quantitative restrictions (QR) include measures such as quotas, bans and

licensing requirements imposed to limit the volume of a particular commodity entering

into the country during a specified period of time.

Multilateral negotiations are those negotiations involving all the WTO

Plurilateral trade agreements involve several countries with a common

Agriculture Agreement between themselves.10

A country's balance of payments is the difference, over a period of time,

THE RESEARCH LITERATURE

In order to understand international trade agreements and relations under the

World Trade Organization, a brief history of its establishment is being presented, in

Collins. Definition of 'balance of payments'.

negotiations after the Second World War.

liberalization, and to begin to correct the protectionist measures which remained in

place from the early 1930s.

as the original contracting parties. They are:

Kingdom of Belgium, the United States of Brazil, Burma, Canada, Ceylon,

Czechoslovak Republic, the French Republic, India, Lebanon, the Grand-

Duchy of Luxemburg, the Kingdom of the Netherlands, New Zealand, the

Kingdom of Norway, Pakistan, Southern Rhodesia, Syria, the Union of

and the United States of America. [Annex 3, General Agreement on Tariffs

The objectives of the agreement are explicitly stated in its text:

“Recognizing that their relations in the field of

mutually advantageous arrangements directed to the substantial reduction of tariffs and

other barriers to trade and to the elimination of discriminatory treatment in

The GATT 1947 which contains 38 articles is summarized as follows:

Article I: General Most-Favoured-Nation Treatment. This provides

the concept of Most-Favoured-Nation (MFN) treatment. It states that

trade concessions, such as any advantage, favour, privilege or immunity,

granted to any contracting party are applied immediately and without

conditions to all other contracting parties.

Article II: Schedules of Concessions. Any trade concession, other

duties or charges made by each contracting party must be recorded and

incorporated into the legal agreement called Schedule of concessions.

legitimate means of trade policy. A Member which alleges to be

arrangement has been redirected from its ordinary purpose. This, by

becoming a means of discrimination in international trade. 13

Article III: National Treatment on Internal Taxation & Regulation.

or indirectly, to internal taxes or other internal charges of any kind in