2006 The Philippines And The Wto_0

THE PHILIPPINES AND THE WTO: SURVEY OF CURRENT PRACTICES WITH EMPHASIS ON ANTI-DUMPING, COUNTERVAILING DUTIES AND SAFEGUARD MEASURES

H. Harry L. Roque∗

ABSTRACT This paper will present a survey of current Philippine practices in the WTO and will evaluate the country’s level of compliance with its treaty obligations under the WTO. It will also examine some specific WTO issues affecting the country with the endview of providing a theoretical framework of how to approach, if not resolve, these issues.

KEYWORDS: anti-dumping; countervailing duties; safeguard measures; Philippines

∗

Of the Philippine Bar, BA (Mich), LL.B. (UP), LL.M (LSE), Director, Institute of International Legal Studies and Assistant Professor of Law, University of the Philippines Law Center; Partner, Roque and Butuyan Law Offices, Makati, Metro-Manila, Philippines.

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I. CONSTITUTIONAL FRAMEWORK The Philippines is unique among World Trade Organization (WTO) Members in that it is probably the only jurisdiction worldwide where the local Supreme Court has had occasion to pronounce on the constitutionality of the country’s entry into the WTO. In the case of Tanada v. Angara,1 the primary issues adjudicated upon by the Supreme Court were one, whether or not the Chief Executive’s decision to ratify the WTO, as well as the Senate’s concurrence with the Executive decision to ratify, violated the Filipino first policy enshrined in the Philippine Constitution and thus, was tantamount to a grave abuse of discretion; and two, whether specific provisions of the WTO resulted in a derogation of powers exclusively granted to both the Supreme Court of the Philippines and the Congress of the Philippines. Here, the contention of the Petitioners, nationalists all, was that the WTO provisions, such as the most-favored-nation (MFN) clause, the national treatment principle and the Agreement on Trade-Related Investment Measures (TRIMS Agreement) provisions violated Articles II and XII of the 1987 Constitution. Article II of the 1987 Constitution reads: Sec. 19. The State shall develop a self reliant and independent national economy effectively controlled by Filipinos. Article XII in turn reads: Sec. 10. The Congress shall enact measures that will encourage the formation and operation of enterprises whose capital is owned by Filipinos. In the grant of rights, privileges and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos. .... Sec. 12. The State shall promote the preferential use of Filipino labor, domestic materials, and locally produced goods, and adopt measures that make them competitive. In ruling that the WTO was not in violation of these provisions, the Court explained that in the first place, both Articles II and XII of the Constitution are mere declarations of State Policy and are not 1

Tanada v. Angara, 272 SCRA 18 (May 2, 1997). (Phil.)

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self-executing provisions, the disregard of which cannot give rise to a cause of action in court. Accordingly, such provisions are not enforcing constitutional rights, but mere guidelines for legislation.2 Having said this, the Court nonetheless added that by reading the Constitution in its entirety, there is a bias in favor of Filipino goods, services, labor, and enterprises, but only in the grant of rights, privileges, and concessions covering national economy and patrimony. It does not, said the Court, provide for an isolationist policy.3 The Court went on to add that in fact, the Constitution “recognizes the need for business exchange with the rest of the world on the basis of equality and reciprocity and frowns only on foreign competition that is unfair.”4 It further ruled that contrary to the claims of the Petitioners, the WTO will not wipe out local industries and enterprises, as in fact the WTO has built in protection against unfair trade practices, such as provision on anti-dumping, countervailing and safeguard measures against import surges, which developing countries such as the Philippines may avail of.5 It added that contrary to the arguments of the Petitioners, the MFN clause, the national treatment principle, and the trade without discrimination principle cannot be struck down as unconstitutional as they are rules of equality and reciprocity that apply to all WTO Members. The Court stated: Aside from envisioning a trade policy based on ‘equality and reciprocity,’ the fundamental law encourages industries that are competitive in both domestic and foreign markets, thereby demonstrating a clear policy against sheltered domestic trade environment, but one in favor of the gradual development of robust industries that can compete with the best in foreign markets.6 On the issue of derogation of sovereignty, the Court stated that sovereignty, albeit absolute, may be subject to restrictions and limitations voluntarily agreed upon by the country. In the words of the Court: “Unquestionably, the Constitution did not envision a hermit type isolation from the rest of the world.”7 It then justified that the binding nature of the WTO on the basis of the principle of pacta sunt servanda, which, as a recognized principle of 2 3 4 5 6 7

Id. at 54. Id. at 59. Id. Id. at 61. Id. at 63. Tanada, 272 SCRA, at 66.

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international law, forms part of the laws of the land. According to the Court, the binding nature of the WTO is “automatic” and “creates the legal obligation to make in its legislations such modifications as may be necessary to ensure the fulfillment of the obligations undertaken.”8 In the end, while the Court stated that the Executive’s decision to enter into the WTO is a matter of treaty obligation which does not contravene any provision of the Constitution, it nonetheless clarified that it was not for the Court to rule upon the wisdom of this executive decision, as such was a matter for which only the sovereign people may decide upon.9 Ironically, despite the Court’s avowed refusal to pass judgment on the wisdom of ratifying the WTO, it nonetheless did when it ended its decision as follows: Notwithstanding objections against possible limitations on national sovereignty, the WTO remains as the only viable structure for multilateral trading and the veritable forum for the development of international trade law. The alternative to the WTO is isolation, stagnation, if not economic destruction. Duly enriched with original membership, keenly aware of the advantages and disadvantages of globalization with its on-line experience, and endowed with a vision of the future, the Philippines now straddles the crossroads of an international strategy for economic prosperity and stability in the new millennium.10 The decision of the Court was unanimous and quite propitiously, written by a member of the Court who is more renowned as a businessman and a prophet of free enterprise, rather than as a member of the legal professional. Perhaps, the decision may be criticized on the basis that the Court only considered arguments in support of the WTO without necessarily examining the antithetical arguments so well articulated in the streets of Seattle in 1999. Why, for example, did the Court invite no less than the Philippine Ambassador to Geneva as amicus curiae, a person who could not be expected to articulate the criticisms against the WTO by the very nature of her post, without inviting another person from the opposite perspective to stand as amicus curiae? It is indeed ironical that while anti-WTO personalities such as our very own Dr. Walden Bello of the University of Philippines could be invited by no less than the President of the Czech Republic to participate in a debate on the WTO, Dr. Bello’s own national Supreme Court was not interested in what he had to say on the subject. Further criticisms may be made on reliance placed by the Court on 8

Id. Id. at 79. 10 Id. at 81–82. 9

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such works appearing in the Readers Digest,11 rather than on more serious, intellectual and retrospective works either for or against the WTO.12 These criticisms notwithstanding, the fact remains that as a matter of treaty obligation, the Philippine Supreme Court has, in the case of Tanada, removed any doubts as the country’s unequivocal commitment to the WTO: it is not only constitutional, but is also a treaty obligation which must be complied with. Its provisions furthermore, are enforceable in the entire territory of the country as forming part of the law of the land. It is now in this context this article will now proceed to analyze how the Philippines has been faring in carrying out its treaty obligations under the WTO.

II.

CASE STUDY ON COMPLIANCE: ANTI-DUMPING, COUNTERVAILING, AND SAFEGUARD MEASURES

The choice of anti-dumping, countervailing and safeguard measures for this case study has a specific purpose. In addition to the fact that these measures constitute the newest field of practice in the legal profession, and that more than half of all disputes pending before the WTO in Geneva involve challenges on the validity of these imposed measures, 13 these measures are more importantly, intended to promote fairness in the regime of free trade amongst nations. Because the WTO compels Member nations to reduce tariffs as well as eliminate non-tariff barriers, save for reasons of Balance of Payments problems and other very specific exceptions,14 the subject of litigation in the international trade arena has quite obviously shifted from the imposition of tariffs and non-tariff barriers to ensuring a level playing field amongst trading nations. This was what our own Supreme Court had in mind in debunking the claim that free trade will wipe out our domestic industries. According to the Court, anti-dumping, countervailing, and safeguard measures may be utilized by developing countries to counteract unfair trade practices.15 11

Id. at 81. See David Morris, Free Trade – the Great Destroyer, in THE CASE AGAINST THE GLOBAL ECONOMY 218, 218-228 (Jerry Mander & Edward Goldsmith eds., 1996). See also Herman Daly, From Adjustments to Sustainable Development - the Obstacle of Free Trade, in THE CASE AGAINST “FREE TRADE “: GATT, NAFTA, AND THE GLOBALIZATION OF CORPORATE POWER 121, 124-130 (William Greider & Ralph Nader eds., 1993); Edmund G. Brown, Free Trade is Not Free, in THE CASE AGAINST “FREE TRADE “: GATT, NAFTA, AND THE GLOBALIZATION OF CORPORATE POWER 65, 65-68 (William Greider & Ralph Nader eds., 1993); ROBERT GILPIN, THE POLITICAL ECONOMY OF INTERNATIONAL RELATIONS 180-183 (1987). 13 See WTO Home Page, http://www.wto.org. 14 General Agreement on Tariffs and Trade 1994, arts. I, X–XI, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, http://www.wto.org/english/do cs_e/legal_e/legal_e.htm [hereinafter GATT 1994]. 15 Tanada, 272 SCRA at 61. 12

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What are anti-dumping, countervailing, and safeguard measures? Simply put, these are duties which may be imposed as tools of fair trade to correct instances of dumping, unfair advantage because of subsidies, and surges in imports of commodities. Article VI of the GATT 1994 provides that dumping occurs when the “export price of a commodity is less than its normal value in the exporting state.”16 Under the Agreement on Subsidies and Countervailing Measures (ASCM), “a subsidy is a financial contribution by a government body or any public body where there is either a direct fund transfer, a revenue which otherwise due is foregone or not collected, or when a government provides goods or services.”17 There a subsidy also exists when a state maintains any form of income or price support and a benefit is conferred. Safeguard measures, on the other hand, are resorted to when there is a dramatic increase in the imports of a particular commodity.18 The WTO does not prohibit the imposition of these duties, merely regulating the conditions under which they may be imposed. It seeks to achieve this by requiring Member nations to amend their domestic laws and regulations to conform to the provisions of the Marrakesh Agreement.19 Substantially, the Agreements seek to achieve consistency in the laws of Member nations by one, requiring Member nations to observe due process before these measures are imposed;20 two, requiring Member nations to have a local body to conduct the required procedure before resorting to the imposition of these measures;21 three, prescribing the kind of evidence that it may consider in deciding whether or not it may be imposed;22 and fourth, the amount of duties that may be imposed. 23 On the merits, the Antidumping Agreement and ASCM require Member nations to impose the measures only upon a finding that one, there is either an instance of dumping, or a subsidy; two, that there was an injury to the domestic industry; and three, that there is a causal relationship between either the dumping, or the subsidy. All these three elements must be duly proved at every stage of the investigation: from its initiation, to the preliminary stage,

16

GATT 1994 art. IV. ASCM art. 1. 18 Agreement on Safeguards, art. 2, Apr. 15, 1994, Marrakesh Agreement, infra note 19 [hereinafter SA]. 19 Marrakesh Agreement Establishing the World Trade Organization, Apr. 15, 1994, Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, http://www.wt o.org/english/docs_e/legal_e/legal_e.htm [hereinafter Marrakesh Agreement]. 20 Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, art. 5 , Apr. 15, 1994, Marrakesh Agreement, supra note 19 [hereinafter Antidumping Agreement]; ASCM art. 11; SA art. 3. 21 Antidumping Agreement art. 5; ASCM art. 11; SA art. 3. 22 Antidumping Agreement arts. 5-6; ASCM arts. 11-12; SA arts. 3-4.2(a) 23 Antidumping Agreement arts. 5, 7; ASCM arts. 11,19; SA arts. 3, 5. 17

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and to formal investigation stage.24 Nuisance cases are minimized under the Marrakesh Agreement since these measures may only be initiated at the instance of a “domestic industry” whose standing is defined as comprising producers who collectively account for more than 50% of the total production of the product alleged to be dumped.25 No action for the imposition of these measures may be initiated unless it is shown that it is being initiated by at least 25% of all domestic producers of the commodity involved.26 Under the de minimis or the negligible rule, the investigation must be terminated if the dumping, subsidy, or surge in imports is minimal.27 It also enjoins Member nations to entertain price undertakings, or voluntary undertakings to raise the export prices of commodities.28 Under the so-called sunset clause, these measures may not be imposed indefinitely as Member states are required to review the propriety of these measures every five years.29 Cognizant that these measures may be utilized in furtherance of protectionist goals, the Agreements limit the period within which the duties may be imposed, as well as the amount of duties that may be imposed, be it as a provisional measure or as a final finding. As a provisional duty, neither an anti-dumping duty nor a countervailing duty may be imposed any sooner than sixty days from date of initiation of investigation, and its duration may not exceed four months.30 Here, the amount of the duty should be equal to the margin of dumping, in the case of an anti-dumping duty,31 and should not be in excess of the amount of the subsidy found to exist in the case of countervailing duty.32 In the case of safeguard measures, it must be only to the extent necessary to prevent or remedy serious injury and to facilitate adjustment. To ensure that these investigations do not take too long, specific periods are provided in the Agreements with the end view of terminating formal investigations within periods specified in the Agreements. By way of compliance, the Philippines enacted Republic Act 878233 to implement the Antidumping Agreement, Republic Act 8751 34 to 24

Antidumping Agreement art. 5.2; ASCM art.11.2. Antidumping Agreement art. 4; ASCM art. 11.4. 26 Antidumping Agreement art. 5.4; ASCM art. 11.4. 27 Antidumping Agreement art. 9.4; ASM art. 11.4. 28 Antidumping Agreement art. 8; ASCM art. 18. 29 Antidumping Agreement art. 11.3; ASCM art. 21.3. 30 Antidumping Agreement art. 7.3; ASCM art.17.3. 31 Antidumping Agreement art. 9.3. 32 ASCM art. 19.4. 33 An Act Providing the Rules for the Imposition of an Anti-Dumping Duty, Amending for the Purpose Section 301, Part 2, Title II, Book I of the Tariff and Customs Code of the Philippines, as Amended by Republic Act No. 7843; and for other Purposes, Rep. Act 8752 (August 12, 1999), 96 O.G. 12 No. 1 (January 3, 2000). (Phil.). 34 An Act Strengthening the Mechanisms for the Imposition of Countervailing Duties on Imported Subsidized Products, Commodities or Articles of Commerce in Order to Protect Domestic 25

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implement the ASCM, and Republic Act 8800 to implement the AS.35 By way of content, these laws comply substantially with the provisions of the WTO as in fact; the proceedings during the drafting of these laws do provide that this was the legislative intent. Note though that there has only been substantial compliance. Having served as a technical consultant in the drafting of both the anti-dumping and the countervailing laws, it may be said that full compliance was impossible given the intense lobby exerted by protectionist forces in the Congress. In other words, compromises had to be made if the existing laws were to be amended at all. Given the provisions of our pre-WTO laws on anti-dumping and countervailing duties, even the most avid free trade exponent would have to concede that since these contained provisions grossly inconsistent with the WTO, some compliance was preferable compared to no compliance at all. It was inevitable thus that trade-offs had to be made. Consider the state of the former laws: 1. Dumping and countervailing measures were proper even for alleged dumpings which might injure or likely to injure the domestic industry. The WTO requires an actual material injury and not a mere likelihood; 2. Domestic industry was merely the “major proportion of total domestic production”; 3. Provisional duties could be issued earlier than 60 days from date of initiation of the investigation; 4. Dumping duties were twice the dutiable value; 5. The test for like products was merely that it be substantially the same, a substitute, or serves the same or similar purpose. Under the WTO, test of like product is only identical in all respects or characteristics resembling product under consideration.36 The lobby of protectionist groups was so effective that at one point it was suggested that then Ambassador Lilia Bautista be asked to write a memorandum on the repercussions of the provisions that the protectionist

Industries from Unfair Trade Competition, Amending for the Purpose Section 302, Part 2, Title II, Book I Of Presidential Decree No. 1464, otherwise Known as the Tariff and Customs Code of the Philippines, as Amended, Rep. Act 8751 (Aug. 7, 1999), Customs Code of the Philippines, Philippine Tariff Commission. (Phil.) 35 An Act Protecting Local Industries by Providing Safeguard Measures to be Undertaken in Response to Increased Imports and Providing Penalties for Violation thereof, Rep. Act 8800 (July 19, 2000), 97 O.G. 263 No. 1 (January 1, 2001). (Phil.) 36 Amending Section 301 of Presidential Decree No. 1464 Otherwise Known as the Tariff and Customs Code of 1978 as amended, Pres. Dec. No. 1999 (Nov. 9, 1985). (Phil.); Rep. Act 8751; An Act Rationalizing and Strengthening the Provisions on Anti-Dumping, Amending for the Purpose Section 301, part 2, Title II, Book I of the Tariff and Customs Code of the Philippines, as amended, Rep. Act 7843 (Dec. 21, 1994). (Phil.)

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lobby wanted to enact.37 In addition to the provisions of the old law, this lobby wanted quite frankly to use these measures not as instruments of fair trade, but as non-tariff barriers. They could have accomplished this with proposals such as to authorize the customs commissioner to withhold the goods at customs, 38 imposing dumping duties which were beyond the margin of dumping,39 and a process which would not have given the protestees enough time to defend themselves with such requirements as a mere ten day period to answer the written questionnaires.40 They also sought to include a provision that for purposes of satisfying due process, notice to the importer alone was enough.41 One lobby group even sought to classify dumping and the grant of subsidies as criminal in nature with penalties corresponding to those imposed for economic sabotage.42 In the end, Ambassador Bautista complied and, in her letter to then Secretary Pardo, warned: I would say that most anti-dumping and countervail disputes in the WTO today have arisen from the incorrect implementation of consistent legislation. Should any member successfully challenge us under WTO dispute policy for an allegedly faulty investigation and/or inconsistent legislation. At the end XXX we would be compelled to amend the inconsistent provision of law XXX I dread to think that by then, sectors and industries which have benefited from and savored the potency of anti-dumping and countervail actions would even more aggressively advocate for the retention of the WTO inconsistent law.43 The House of Representatives fortunately heeded Ambassador Bautista’s warning. Nonetheless, protectionist interests did not lose heart as they had the upper hand in the Senate since most, if not all, of the objectionable matters as contained in Ambassador Bautista’s letter, were incorporated in the Senate version of the Bill. This made it even more imperative for the proponents of the pro-WTO version of the Bills to compromise with the protectionist lobby. Consequently, the House versions 37 See Letter of Ambassador Lilia R. Bautista to Secretary Jose T. Pardo (Feb. 24, 1999) [hereinafter Letter]. 38 H.B. 22, Cong. sec. D (An Act Providing the Rules for the Imposition of an Anti-Dumping Duty, Amending for the Purpose Section 301, Part II, Book 1 of the Tariff and Customs Code of the Philippines, Amending Republic Act No. 7843, and for other purposes). (Phil.) 39 See S.B. 765, 10th Cong. (authored by Senator Juan Ponce Enrile). (Phil.) 40 Id. 41 Id. 42 Position Paper of the Federation of Philippine Industries on House Bills 22 and 553 (Dec. 2, 1998). 43 S.B. 765.

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for both the anti-dumping and countervailing laws were adopted for purposes of the Bicameral Conference Committee. Several crucial provisions, by way of compromise, were however inserted. The most important of which was a provision which shifted the burden of proof and evidence to the protestee after the Department of Trade and Industry (DTI) had concluded that there is a prima facie case for anti-dumping or countervailing measure. 44 Litigators will, of course, know why this is objectionable. In any proceedings, he who prays for relief must prove his allegations in support of the relief sought for. While our existing laws substantially comply with those of the WTO, they nonetheless provide that it is the protestee that has the burden to disprove that there exists dumping or a subsidy that materially injures the domestic industry. Other provisions in our law still inconsistent with the WTO include: 1. The Secretary of either Trade and Industry or Agriculture may motu propio initiate a preliminary investigation for dumping and countervailing;45 2. A provision providing for a penalty equivalent to double the dutiable amount was added, in addition to the anti-dumping duty.46 By way of a trade-off and to dampen the effects listed above, the Pro-WTO lobby successfully inserted a provision that required the filing of a surety bond by the Petitioner to discourage malicious or frivolous petitions.47 The good news is that despite these compromises, the records of the Tariff Commission nonetheless show that rather than relying on the legal presumption on the existence of dumping and material injury, the Commission seems to have disregarded this presumption and has not only required the Protestant to prove all the elements required by the WTO; but more importantly, it has conducted investigations of its own, apart from evidence submitted by the parties, to satisfy itself that the required elements concur in the investigations it has thus far conducted. Since the WTO took effect in 1995, the Tariff Commission had the opportunity to rule on at least six investigations; to wit: anti-dumping investigations against Cold Rolled Coils/Sheets (CRC’s) from Taiwan48 44

Rep. Act 8752, sec. 3 (e). Id. sec. 3 (b). Id. sec. 4. 47 Id. sec. 3 (b). 48 Report of Findings on the Anti-Dumping Protest against the Importation of Cold Rolled Coils/Sheets from Taiwan under Section 301 of the Tariff and Customs Code, as Amended, Anti-Dumping Invest. No. 00-02 (Tariff C. Apr. 24, 2001) [hereinafter Taiwan CRC] (Phil.). 45 46

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and Malaysia,49 Steel Billets from Russia,50 figured glass from China,51 and polypropylene resins from Korea.52 Of these cases, it found positive evidence of dumping against the CRC’s from Malaysia,53 steel billets from Russia 54 and resins from Korea. 55 In all three cases, though, the collections of the anti-dumping duties were suspended. In the case of CRC’s from Malaysia and steel billets from Russia, the collections were suspended until such time that the Protestant, the moribund National Steel Corporation, resumes its operations. 56 It is noteworthy that an anti-dumping duty was levied on CRC’s from Malaysia only by reason of default since both the Malaysian exporter and the Malaysian Embassy refused to participate in the investigation.57 In the case of resins from Korea, the collection of the duty was suspended, in response to consultations against the duty requested by Korea in Geneva pursuant to the WTO dispute resolution mechanism. In the other cases, the Tariff Commission refused to impose the duty even if Protestants in all instances were able to prove dumping and even material injury. Such refusal was because the Protestants failed to prove the required causal connection between dumping and the material injury. In the case filed by the National Steel Corporation for the imposition of anti-dumping duties against CRC’s from Taiwan, the Commission rightfully ruled that the injury to it, as the domestic industry, was due to the other reasons other than the dumping. There, the Commission reasoned that the injury, in fact the demise of the Company, was due not to imports, but to the Asian crisis of 1997 and further attributable to debt servicing, and inefficient and uncompetitive technology of the National Steel Corporation.58 Safeguard measures are thus controversial for a reason. By its very nature, the imposition of a safeguard measure has a lower evidentiary threshold because in the first place, one need not prove dumping or an 49

Report of Findings on the Anti-Dumping Protest against the Importation of Cold-Rolled Steel Coils (CRC) and Sheets from Malaysia under Section 301 of the Tariff and Customs Code, as Amended, Anti-Dumping Invest. No. 99-05 (Tariff C. Dec. 27, 2000) [hereinafter Malaysia CRC] (Phil.). 50 Report of Findings on the Anti-Dumping Protest against the Importation of Steel Billets from Russia under Section 301 of the Tariff and Customs Code, as Amended, Anti-Dumping Invest. No. 99-01 (Tariff C. Aug. 28, 2000) [hereinafter Russia Steel Billets] (Phil.) 51 Report of Findings on the Anti-Dumping Protest against the Importation of Cleared Figured Glass from the People’s Republic of China under Section 301 of the Tariff and Customs Code, as Amended (Tariff C. June. 29, 2001). (Phil.) 52 Report of Findings on the Anti-Dumping Protest against the Importation of Polypropylene Resins from Korea under Section 301 of the Tariff and Customs Code, as amended by R.A. 8752, Anti-Dumping Invest. No. 99-04 (Tariff C. Aug. 30, 2000). (Phil.) 53 Malaysia CRC, supra note 49. 54 Russia Steel Billets, supra note 50. 55 Malaysia CRC, supra note 49. 56 Russia Steel Billets, supra note 50; Malaysia CRC, supra note 49; SA art. 2; H.B. 22. 57 Malaysia CRC, supra note 49; GATT 1994 art. IV. 58 Rep. Act 8752, sec. 3(e); Taiwan CRC, supra note 48.

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unfair subsidy. All that is required by the WTO is to prove a surge of imports either due to unforeseen circumstances or due to the implementation of the provisions of the WTO such as tariff reduction, and a serious injury or a threat thereof to the domestic industry.59 Here, it must be stressed that intentionally, the threshold for safeguards is made lower than dumping duties and countervailing duties – only a serious injury or a threat thereof, not material injury, may resort to safeguards temporarily, and only to accord them the opportunity to compete against these sudden surges of imports. 60 Here, the temptation to resort to safeguard measures is tempered at least by two factors: first, that safeguard measures are applied on commodities regardless of origin; 61 and second, by the stringent reportorial requirements provided under the Agreement which, unlike in the cases of dumping and subsidies, require Member nations to report, even the initiation of a safeguard investigation.62 Safeguard measures, by way of a case study on the Philippines’ compliance with the WTO, are illustrative not because our enabling law deviates in material terms from the provisions of the SA – in fact, it differs only on the maximum period that a safeguard measure may be imposed, a maximum of ten years under our law,63 and eight years under the SA64 – but in terms of the Philippine State Practice, how much our competent authorities know about the WTO. Thus far, our Tariff Commission has decided on two safeguard investigations: one on Portland cement,65 and the other one on cement tiles. 66 In the Portland cement investigation, the decision was not to impose safeguard measures, while in the cement tile investigation, the decision was to impose safeguard measures. These differing findings were nonetheless, based on the same criteria: to wit: a finding that a surge in imports was a result of unforeseen developments and of the effect of obligations granted under the WTO; 67 a finding that the product in consideration was being imported in such increased quantities as to cause or threaten to cause a serious injury, if the domestic product is a like

59

SA art. 2. Id. art. 7.1. Safeguard measures may only be imposed for a maximum period of eight years. 61 Id. art. 2.2. 62 Id. art. 22.1(a). 63 Rep. Act 8800, sec.15. 64 SA art. 2.2. 65 Formal Investigation Report, Cement Industry: Safeguard Action Against Imports (SG Investigation No. 01-01) 13 March 2002. 66 Formal Investigation Report, Ceramic Tiles Industry: Safeguard Action Against Imports (SG Investigation No. 01-02) 26 March 2002, http://www.tariffcommission.gov.ph/25March%20Final %20report%20ceramic%20tiles_public.pdf. 67 Antidumping Agreement art. 4; ASCM art. 11.4.; SA art. 2.2; H.B. 22; SG Invest. No. 01-01, supra note 65. 60

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product, be it in absolute or relative terms;68 the presence and extent of serious injury or threat to the domestic industry of the like product; and the existence of a causal relationship between increased imports and the serious injury or threat thereof.69 Where the two cases differed drastically was in the issue of whether there were increased imports of the relevant commodities in the first place and consequently, in the further elements of serious injury and the causal relationship. In the ceramic tile case, it was concluded that there was a dramatic increase in imports in absolute terms from 1.9 M sq. m in 1996 to 8.9 M sq. m in 2001,70 and an increase relative to domestic production from 17% of total production in 1996 to as high as 68% in 2002;71 and that the surge commenced in 2000.72 It was also concluded that there was a decline in the market share of the domestic industry and an erosion of its competitive position, which taken together constitute serious impairment of the overall market position for the domestically produced like product.73 This impairment was also shown by the fact that despite constant demand, industry production and sales lagged behind.74 It was further pointed out that during the period of the surge, employment decreased, industry capacity was underutilized, and losses were incurred.75 In the case of Portland cement, while the Commission did determine the existence of the surge in imports during the period 1996-2000,76 it concluded that there was no serious injury or a threat thereof to the domestic industry, and consequently, there was no need to prove a causal relationship.77 In arriving at this conclusion, the Commission noted that the decline in domestic consumption, and not the entry of imports, caused the decline in domestic sales of local like products.78 Further, it noted that: there were no significant decline in both production and total goods sold,79 and no underutilization of capacity as on the contrary, there was an increase in utilization during the period of surge. 80 Most importantly, the Commission noted that there was no uniformity in the financial performance of the domestic producers during the period of the surge 68

Antidumping Agreement art. 4; ASCM art. 11.4.; SA art. 2.2; H.B. 22; SG Invest. No. 01-01, supra note 65. 69 Antidumping Agreement art. 4; ASCM art. 11.4.; SA art. 2.2; H.B. 22; SG Invest. No. 01-01, supra note 65. 70 Antidumping Agreement art. 7.3; ASCM art.17.3; SG Invest. No. 01-02, supra note 66. 71 SG Invest. No. 01-02, supra note 66 at 33. 72 Id. 73 Id. at 45. 74 Id. at 38. 75 Id. at 45. 76 SA art. 2.2; SG Investigation No. 01-01, supra note 65. 77 SG Invest. No. 01-01, supra note 65, at 54. 78 Id. at 48. 79 Id. at 47. 80 Id. at 48.

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because only the petitioning companies incurred losses – their non-petitioning competitors registered profits during the same period.81 For those who incurred losses, the Commission observed that it was the result of the company’s debt burdens, foreign exchange losses and other expenses.82 The decision not to impose safeguard measures was based on positive evidence that one of the elements required for the imposition of the measures was lacking. Further, all sixty-one pages of the Commission’s findings detailed the factual and legal basis for its findings. Despite all these, no less than the Secretary of our DTI described the decision as wrong at the very least, although some will swear that he used the term “stupid.”83 Accordingly, the Secretary declared that “he would impose permanent safeguard measures or extend the provisional duty on cement.”84 When he was probably informed that such an act would be illegal under our domestic law – as such a power is instead granted to the Tariff Commission – he modified his position and this time, he said he was bringing the matter up to the Cabinet Committee on Tariff Related Matters. Either way, his proposed acts would have constituted both a violation of the law and the SA.85 Needless to say, Secretary Roxas’s response to the Portland case was improper and bereft of legal basis. By way of a case study, it would probably be fair to state that on the basis of the actuations of no less than the Secretary of Trade and Industry, much has to be done not just on the issue of compliance, but even on the level of educating even our highest ranking competent authorities on our treaty obligations under the WTO. Secretary Roxas, although disagreeing with the conclusion of the Tariff Commission that no serious injury was present, promulgated a decision stating that it was bound by the negative finding of the Tariff Commission and has no alternative but to abide by the Tariff Commission’s recommendations. The application for safeguard measures against the importation of gray Portland Cement filed by the Philippine Cement Manufacturers Corporation (PHILCEMCOR), the requesting corporation, was duly denied. Ten days after its receipt of the decision, PHILCEMCOR filed a petition for certiorari, prohibition and mandamus with the Court of Appeals. After receiving the comment of Southern Cross, the importing corporation of gray Portland Cement, the Court of Appeals granted the writ sought. 81

Id. at 52. Id. http://www.inq7.net/bus/2002/apr/04bus_7-1.htm. 84 http://www.inq7.net/bus/2002/mar/25/bus_2-1.htm. 85 Rep. Act 8800 provides that the DTI Secretary may only increase or decrease final definitive safeguard measures to take into account the public interest. The Secretary cannot reverse a negative finding of the Tariff Commission. 82 83

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Although refusing to annul the factual findings of the Tariff Commission, the Court of Appeals held that the DTI Secretary is not bound by the factual findings of the Commission since such findings are merely recommendatory and fall within the ambit of the Secretary’s discretionary review. Southern Cross filed a petition before the Supreme Court,86 alleging that the decision departed from the accepted and usual course of judicial proceedings. It argued that the Court of Appeals has no jurisdiction as the proper remedy being a petition for review with the Court of Tax Appeals (CTA) conforms to the Safeguard Measures Act. Although the timely filing prevented the Court of Appeals’ decision from becoming final, the DTI Secretary issued a new decision that there was no longer any legal impediment to his decision on PHILCEMCOR’s application for definitive safeguard measures – he concluded that there was serious injury as a result of the import surges and thus, a definitive safeguard measure on the importation of gray Portland Cement in the amount of P20.60/4- kg. bag for three years on imported gray Portland Cement was imposed. Southern Cross filed with the CTA a petition for Review, assailing the DTI Secretary’s Decision. PHILCEMCOR, in return, filed before the Supreme Court a Manifestation and Motion to Dismiss in regard to Southern Cross petition. During the oral arguments before the Supreme Court, counsel for Southern Cross manifested that due to the imposition of the general safeguard measures, Southern Cross was forced to cease operations in the Philippines. The Supreme Court held that indeed the CTA has the jurisdiction to review the DTI Secretary’s decision and not the Court of Appeals. First, it opined that statutory construction leading to split jurisdiction is abhorred. Second, the interpretation of the provisions of the Safeguard Measures Act favored vesting untrammeled appellate jurisdiction on the CTA. Third, the interpretation which PHILCEMCOR proposed would only result to an absurd interpretation not favored by the Court. Whether to impose or to impose a safeguard measure was within the CTA’s jurisdiction. Given that the CTA has jurisdiction and not the Court of Appeals, the decision of the Court of Appeals is void. Since such was the basis of the DTI Secretary’s second decision, then his decision is likewise void. The Court also noted that the DTI Secretary was seeking to enforce a judicial decision which was not yet final and actually pending review on appeal, which was described by the Court as an unfortunate spectacle.

86 Southern Cross Cement Corp. v. Philippine Cement Manufacturers Corp., G.R. No. 158540, 434 SCRA 65 (July 8, 2004). (Phil.)

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This case acknowledges the independence of the Tariff Commission and its factual findings concerning whether (a) a product is being imported into the country in increased quantities, irrespective of whether the product is absolute or relative to the domestic production; and (b) whether the importation in increased quantities is such that it causes serious injury or threat to the domestic industry, constitute the final determination, which may be either positive or negative.

III. THE PHILIPPINES AND THE WTO DISPUTE SETTLEMENT MECHANISM A survey of Philippine experience with the WTO would be incomplete without a summary of WTO disputes involving the Philippines, either as a complainant or as a respondent. To date, out of a total disputes of 243 pending with the WTO since 1995, the Philippines was a complainant once, in the desiccated coconut case against Brazil,87 and a respondent to two other disputes where the complaining countries actually requested for the creation of a panel, to wit: against the anti-dumping measure imposed by us on resins from Korea,88 and the other against the Car Development Program (CDP), Commercial Vehicle Developments Program and the Motorcycle Development Program plan filed against us by the US.89 In addition, we requested consultations against the US on the latter’s import prohibition of certain shrimp and shrimp products; 90 while the US requested consultations with the Philippines on a measure affecting Pork and Poultry.91 Other measures involving the Philippines that may reach the WTO dispute resolution mechanisms include: The ban imposed on Philippine bananas by Australia, 92 and discriminatory tariff rates imposed by the European Community and the US on Philippine tuna exports.93 87 Constitution of Panel Established at the Request of the Republic of the Philippines, Brazil – Measures Affecting Desiccated Coconut, WT/DS22/6 (Apr. 18, 1996) [hereinafter Philippine Panel]. 88 Request for Consultations by Korea, Philippines – Anti-Dumping Measures Regarding Polypropylene Resins from Korea, WT/DS215/1, G/L/428, G/ADP/D29/1 (Dec. 20, 2000) [hereinafter Korean Request]. 89 Request for the Establishment of a Panel by the United States, Philippines – Measures Affecting Trade and Investment in the Motor Vehicle Sector, WT/DS195/3 (Oct. 13, 2000). 90 Request for Consultations by the Republic of the Philippines, United States – Import Restrictions of Certain Shrimp and Shrimp Products, WT/DS61/1, G/L/130, G/TBT/D/11, G/VAL/9 (Nov. 4, 1996). 91 Request for Consultations by the United States, Philippines – Measures Affecting Pork and Poultry, WT/DS74/1, G/L/158, G/AG/W/31, G/LIC/D/5, G/TRIMS/D/7 (Apr. 7, 1997). 92 Request for the Establishment of a Panel by the Philippines – Revision 1, Australia – Certain Measures Affecting the Importation of Fresh Fruit and Vegetables, WT/DS270/5/Rev.1 (July 11, 2003). 93 Philippines, Thailand seeking WTO help in EU tuna dispute, ASIAN ECON. NEWS, Apr. 29, 2002,

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The desiccated coconut case filed by the Philippines against Brazil constitutes thus far our biggest knock out defeat at the WTO. The case was filed by a very confident Philippines delegation shortly after a Filipino, Justice Feliciano, was elected to be the first ever President of the Appellate Body of the WTO. The complaint arose from a 121.5% countervailing duty levied on Philippine desiccated coconut,94 despite the minimal amounts of coconut exported by the country to Brazil, which incidentally, is another coconut producing country. Apparently, Brazil is not only good at football, but at trade litigation as well. The Philippines never really had a chance after Brazil pointed out a technicality, namely that the proper venue for the Philippine action was not the WTO but the GATT95 dispute settlement mechanism since the levy was imposed under the GATT. In a dismal defeat in both the Panel and the Appellate Body, the jurisprudence established by the WTO was that the dividing line between the application of the GATT and the WTO Agreement is determined by the date on which the application was made for the duty investigation. Hence, proper recourse for the Philippines was under the GATT and not the WTO.96 Probably to spare the Filipino President of the Appellate Body from further embarrassment, the Philippines has since desisted from filing any further complaints in Geneva, and seem to be satisfied with conducting bilateral negotiations to resolve its trade disputes with other nations. Adopting the same practice as some Filipino lawyers with phobias of the litigation process, since 1995 we have preferred to settle all claims against us, save perhaps for the car development program which has reached the point where the US has formally requested that a panel be constituted, while desisting from filing any further complaints in the WTO. Thus, the Korean challenge on the anti-dumping duty imposed on resins was effectively abandoned after we raised the white flag and undertook to suspend collection of the duty.97 Likewise, we have since abandoned our matter against American import restraints against shrimp and shrimp products, opting to stay on the sidelines and allowed India, Malaysia, Pakistan, Thailand and Japan to continue with their own challenge against the same US trade restraint. These countries who did stand up for their rights proceeded to score a victory against the US as this particular restraint was struck down by the Appellate Body as violation of the chapeau standard of Article XX (g) of the GATT 1994,98 while the Philippines was http://www.findarticles.com/p/articles/mi_m0WDP/is_2002_April_29/ai_85096418. 94 Philippine Panel. 95 General Agreement on Tariffs and Trade, Oct. 30, 1947, 61 Stat. A-11, 55 U.N.T.S. 194, reprinted in GATT B.I.S.D. (Vol. IV) at 1 (1969) [hereinafter GATT]. 96 Id. 97 Korean Request. 98 Appellate Body Report, United States – Import Prohibition of Certain Shrimp and Shrimp

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left out in the cold holding unto an empty bag. The controversy resolved around a US regulation that required importers of shrimp and shrimp products to certify that the shrimps were caught under conditions which would exclude turtles. This was not really a one-of-a-kind restriction as the Americans had a similar restriction in the case of imported tuna fish as well. Article XX(g) of the GATT 1994 is an exception applicable to measures relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption. In ruling against the validity of the import restraints, the Appellate Body, echoing its earlier ruling on the tuna controversy99 and the reformulated gasoline100 cases, noted that while the measure was indeed one relating to the conservation of an exhaustible resource, turtles, it was not justified for the reason that it was not in conjunction with restrictions on domestic production or consumption and it was imposed only on imported shrimps, and not on those locally harvested.101 The request for the creation of a panel against our car development program promises yet to be an embarrassing defeat for the country. To begin with, decisions that have been rendered by the GATT and the Appellate Body on similar facts and against similar Trade-Related Investment Measures, to wit, against Canada102 and Indonesia,103 are so alike that, despite the fact that rulings of the WTO have no precedential effect, the WTO will almost certainly rule in the same manner, if only because of the need to achieve consistency in its pronouncements. Under Articles III and XI of the GATT 1994, Member nations to the WTO committed to accord national treatment to imported products, as well as to eliminate quantitative restrictions. Under the TRIMS Agreement, an illustrative list of TRIMS inconsistent with both the national treatment principle and the duty to eliminate tariffs was provided.104 Developed countries were given two years from date of effectiveness of the WTO to eliminate these TRIMS, while developing countries like the Philippines were given five years to do so, and least developing countries seven

Products, WT/DS58/AB/R (Oct. 12, 1998). 99 Report of the Panel, United States – Restrictions on Imports of Tuna, DS/21/R (Sep. 3, 1991), GATT B.I.S.D. (39th Supp.) at 155 (1993) [hereinafter Tuna] (unadopted). 100 Appellate Body Report, United States – Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R (Apr. 29, 1996). 101 Tuna, DS/21/R. 102 Report of the Panel, Canada – Administration of the Foreign Investment Review Act, L/5504 (July 25, 1983), GATT B.I.S.D. (30th Supp.), at 140 (1984). 103 Panel Report, Indonesia – Certain Measures Affecting the Automobile Industry, WT/DS54/R, WT/DS55/R, WT/DS59/R, WT/DS64/R (July 2, 1998). 104 See TRIMS Annex.

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years.105 In 1995, pursuant to the notification requirement of the Agreement, the Philippine Representative to the WTO gave notice to the WTO Committee on Trade Related Investment Measures of the existence of the so-called CDP – according to the notice, the CDP fell squarely under 1(a) and 2(b) of the illustrative list. In the notification, the Philippines described the CDP as requiring participant thereto a local input requirement of 40%-45% (1(a) of illustrative list) and a net foreign exchange requirement ranging from 5 to 75%. In the same notification, it was stated “the authorities envisaged that these requirements would be terminated by the year 2000 consistent with the TRIMS Agreement.”106 In the year 2000, however, instead of honoring the terms of the notification filed in 1995, then President Estrada issued Memorandum Order No. 95 extending the local content and net foreign exchange earning requirements in the motor vehicle programs. By way of a legal basis, the Philippines pointed to the fact that in October 4, 1999, it filed a request with the WTO Council of Trade in Goods for the extension of the implementation of the local content and net foreign exchange earnings requirements until December 31, 2004, citing the Agreement’s provisions on the possibility of a TRIMS extension. Accordingly, it was declared that the TRIMS were extended indefinitely or until conclusion of negotiations.107 The US request for consultation on Pork and Poultry was reported to have been settled with the amendment of Administrative Order 8.108 The problem of course with this Order is that it did not cite the specific provision, which allegedly provided for the possibility of a further extension beyond the periods stipulated in the GATT 1994 and the TRIMS Agreement. Instead, what we do find are simply instances where Articles III and XI may be suspended, namely, by reason of balance of payments crisis.109 Worse, the Philippines filed its claim in the wrong forum, the Council on Trade in Goods, when pursuant to the Agreement; the relevant body should have been a Committee on Trade Related Investment Measures.110 Clearly, the Philippines was not guided by a mistaken belief that it could negotiate for an extension of the mandatory periods, but rather 105

TRIMS art. 5.3. Notification under Article 5.1 and 5.5 of the Agreement on Trade Related Investment Measures – Philippines, G/TRIMS/N/1/PHL/1 (Apr. 25, 1995). 107 Memorandum Order No. “Extending the Local Content and Net Foreign Exchange Earnings requirements in the Motor Vehicle development Programs Under Memorandum Order No. 346 Dated 26 February 1996, as Amended” (Apr. 7, 2000). 108 Philippines – Measures Affecting Pork and Poultry -- Notification of Mutually Agreed Solutions, WT/DS74/5, WT/DS102/6 (Mar. 13, 1998). 109 TRIMS art. 5.3. 110 TRIMS arts. 5.3, 7. 106

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by the fact that the local program was serving the national interest since it has resulted in increasing export revenues, increasing receipt of foreign exchange, and generating both employment and investments relative to the metal and engineering industries111 – not that these motivations are bad, in fact they are commendable. The problem though is as stated in the case of Tanada,112 WTO obligations have the force of law, self-executing, and enforceable in the entire territory of the country. Perhaps, President Estrada and his successor, by insisting on the continuation of the CDP, may, among others, be held liable of gross violation of the Constitution and of our laws, insofar as international obligations form part of the laws of our land. Certainly though, we are sure that the WTO dispute settlement mechanism will certainly decide against the CDP and thereby inflict yet another blow to our national pride in the realm of international trade litigation. The rest of our pending issues involve correcting instances of bias against the entry of our products into the foreign markets, notably in Australia, the EU and the US. A trade war between the Philippines and Australia nearly erupted when Australia banned the importation of Philippine bananas on the ground that they contained fruit flies which were thought to be injurious to plant and animal life in Australia, and also because of the use of the banned pesticide, ethyldibromide. After negotiations bogged down, the Philippines retaliated by, for all interests and purposes, prohibiting the entry into the country of Australian beef products on health reasons (Administrative Order 25) during the time of then Secretary Edgardo Angara. 113 While the controversy seemed to have subsided somewhat, since the Philippines has suspended the effect of Administrative Order 25, Philippine bananas continue to be banned in Australia for the reasons listed above. The relevant principle in the resolution of our banana controversy with Australia is the Agreement on the Application of Sanitary and Phytosanitary Measures (the SPS Agreement). 114 Under the SPS Agreement, Member states were granted the right to impose measures to protect human, animal or plant life or health in the territory of Member states from risks arising either from: 1. the entry, establishment, or spread of pest or diseases;115 2. risks arising from an additive, contaminant toxin, or disease causing organism;116 111

Memorandum Order No. 68 dated December 21, 1992, “Approving and Promulgating the Supplemental Guidelines to the Car Development Program (CDP)” 112 Tanada v. Angara, 272 SCRA 18 (May 2, 1997). (Phil.) 113 http://apec.bworldonline.com/Articles/Nov2000/11212000a.html. See also Media Release, Mark Vail, Austl. Minister for Trade, Dep’t of Foreign Affairs and Trade, Austl. Gov’t (June 26, 2000), http://www.dfat.gov.au/media/releases/trade/2000/mvt066_00.html. 114 Agreement on the Application of Sanitary and Phytosanitary Measures, supra note 14. 115 SPS Agreement Annex A, ¶ 1(a).

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3. from a risk arising from a disease or pest carried by an animal or plant;117 or 4. to prevent or limit other damages in the territory of Member states arising from the introduction, establishment or spread of a pest.118 Like other provisions of the WTO, the recourse to the SPS Agreement is subject to limitations such as: 1. It may be applied only to the extent necessary to protect human, animal, or plant life or health;119 2. It must be based on scientific principles and SPS measures may not be maintained without scientific basis;120 3. It must not be applied in an arbitrary or discriminatory manner where identical conditions prevail;121 4. It should not be imposed as a disguised restriction on international trade;122 5. Governments must use relevant international standards in the imposition of SPS;123 and 6. Governments must ensure that their SPS are based on a risk assessment to assess the risk against human, animal and plant life.124 Countries who assert that an SPS constitutes a restraint on trade must show that there is another measure that is reasonably available to the country applying the SPS, which alternative measure achieves the level of protection that is deemed appropriate, and that such a measure is significantly less restrictive to trade.125 In the settlement of this particular dispute between the Philippines and Australia, guidance may be derived from the decision of the Appellate Body in the Beef Hormones case filed by the US against the EC.126 In responding to a long standing ban imposed by the EC on American beef injected with growth hormones on the ground that such hormones were dangerous to human life, the US instituted proceedings against the EC for the reason that such a ban was not based on valid scientific evidence and constituted an unjustifiable non-tariff trade barrier. 116

Id. ¶ 1(b). Id. ¶ 1(c). 118 Id. ¶ 1(d). 119 SPS Agreement art. 2.2. 120 Id. 121 Id. art. 2.3. 122 Id. 123 Id. art. 3.1. 124 Id. art. 2.2. See id. art. 5.1. 125 See SPS Agreement art. 5.6 n. 3. 126 Appellate Body Report, European Communities – Measures Concerning Meat and Meat Products (Hormones), WT/DS48/AB/R (Jan. 16, 1998) [hereinafter EC – Hormones]. 117

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The Appellate Body rendered a “draw decisions” granting both parities partial victories. For the EU, the partial victory was that the immediate removal of the ban was not ordered;127 and the recognition was made that the EU had the right to impose more stringent standards so long as the measures are backed by scientific evidence.128 The Appellate body further ruled that the EU could base its scientific study on a minority scientific report because the definition of material is qualitative and not quantitative science.129 It ruled, however, that a ban based on a minority view is impermissible unless the product poses a life-threatening risk and perceived to be a clear and an imminent threat to public health.130 The victory, on the other hand for the US, was that the Appellate Body found that the EU failed to undertake a risk assessment to support the import ban. It thus found the ban to be inconsistent with Articles 3.3 and 5.1 of the SPS Agreement for lack of a scientific risk assessment that include an evaluation of the potential adverse effect on human health.131 It also pointed out that the EU did not provide a rational basis to sustain the ban.132 Simply put, the Appellate Body asked the EU to put up or shut up, or to submit its scientific basis behind its ban within a reasonable time. A reasonable period, per results of binding arbitration, was said to be fifteen months.133 Applying these principles to our dispute with Australia, it has been four years since the inception of our banana controversy and as yet, Australia still fails to present its own pest risk assessment or import risk assessment to justify the ban against Philippine bananas. Perhaps, given the definition of what constitutes a reasonable period of time in the context of the Beef hormones case, it is now opportune for the Philippines to request the establishment of a Panel to settle this controversy. The final controversy that confronts us is not a prohibition against the admission of our products in the territory of the EU and the US, but a case of discriminatory treatment towards us in that similar products from specified countries are given tariff concessions not awarded to our like products, specifically tuna, and thus violate the MFN clause. Both the EU and the US allow tuna from some less developed countries to enter their respective jurisdictions without tariffs, while tuna from the Philippines are levied a duty of up to 24% in both jurisdictions.134 127

Id. ¶ 247(l). Id. ¶ 245. 129 Id. ¶ 205. 130 Id. 131 Id. ¶ ¶ 207, 209. 132 EC – Hormones, ¶ 208. 133 Communication from the Appellate Body, EC – Measures Concerning Meat and Meat Products (Hormones), WT/DS26/12, WT/DS48/10 (Jan. 16, 1998). 134 Jowel F. Canuday, US assures protection of Mindanao’s tuna exports, MINDA NEWS, Apr. 28, 128

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While it is not surprising that the EU has this preferential system of tariffs in favor of its very poor former colonies, it is surprising, to say the very least, that the US has a similar practice – as in fact, it was the US that successfully challenged this EC practice of granting preferential tariff treatment for being discriminatory in the famous Bananas case135 it filed against the EC. In this latter case, the EC maintained a scheme where bananas from its very poor former colonies were granted zero tariffs, while those from other countries were subject to tariffs at different level. In a resounding victory for the Dole and Chiquita banana, the Appellate Body ruled that this preferential tariff scheme was a violation of the MFN and was furthermore a discriminatory form of quantitative restrictions. 136 I see no reason therefore why the WTO should not rule in our favor when and if we choose to challenge the similar preferential tariff scheme on tuna currently being implemented by the EU and the US.

IV. CONCLUSION In closing, I find that as a matter of law, our Supreme Court has ruled that the WTO is both constitutional and that it forms part of the laws of our land. By and large, our laws, as exemplified by our anti-dumping, countervailing and safeguard measures, as well as the case law from our Tariff Commission on these measures, are in substantial compliance with our treaty obligations except insofar that some compromises had to be made in the drafting of our enabling legislation. In terms of our actual participation in the dispute settlement mechanism of the WTO, ours has been a case of non-exercise of treaty rights since we have but once resorted to this mechanism, despite the fact that case law seem to be in our favor in some other controversies confronting us, such as the banana case against Australia, and the case against the EU and the US for their respective preferential tariff schemes for tuna. This failure to resort to enforcement of treaty rights under specific mechanisms under the WTO may have been due in part to our stunning defeat in the first and only case that we have filed thus far, the desiccated coconut case against Brazil; and probably, by way of an acknowledgement that our laws until recently, were not in consonance with the WTO, as may have been the case in our decision to suspend collection of anti-dumping duties against Korean resin, a case decided under our old anti-dumping law, 2002, http://www.mindanews.com/2002/05/1st/biz-tuna.html. See also http://www.genderandtra de.net/Asia/Asia_Tuna.pdf. 135 Appellate Body Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/AB/R (Sept. 9, 1997). 136 Id. ¶ 255.

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although already initiated and imposed after the effectiveness of the WTO. Further, there has been a propensity to resort to retaliatory measures instead of availing of the dispute settlement procedures, as exemplified by our knee jerk reaction against Australia in the banana controversy. There is, finally, either an intentional misreading of our treaty obligations as a basis for persisting with a program inconsistent with the WTO such as in the case of the CDP, or a simple ignorance of what the WTO is all about, as exemplified by the reaction of no less than the Secretary of the Department of Trade and Industry to a refusal by the Tariff Commission to impose safeguard measures on Portland Cement.