DTI downplays US threat to file WTO case vs RP

The Philippines has downplayed the threat of the United States to file a suit at the World Trade Organization (WTO) for what it calls unfair trade practices in the local automotive industry where assemblers are required to source at least 40 percent of their requirements from local parts manufacturers.

The US announced the other day that it is filing a case against eight countries including the Philippines where US automotive companies account for less than 10 percent of the market.

Branding the move as a bullying tactic, the Department of Trade and Industry (DTI) said the US has been beaten to the punch since the Philippine government had made representations before the WTO as early as October 1999, requesting for the extension of the provisions being opposed by US automotive giants.

According to DTI Undersecretary Thomas Aquino, the Philippines already has a pending request for the extension of the local content and net foreign exchange earnings requirements until Dec. 31, 2004, invoking provisions under the WTO agreement on Trade-Related Investment Measures (TRIMs).

Aquino explained that under the TRIMs agreement, developing countries like the Philippines were required to eliminate all notified TRIMs by Dec. 31, 1999, after a five-year transitory period starting Jan. 1, 1995.

The same agreement, however, includes a leeway especially for developing countries and least developed countries depending on individual development and financial and trade needs of the member.

Under Article 5 Section 3 of the Uruguay Round of Multilateral Trade Negotiations, developing countries that demonstrate difficulties in implementing provisions of the agreement are allowed to ask the WTO Council of Trade in Goods (CTG) to extend the transition period for the elimination of the TRIMs notified under the agreement.

"The Philippine request is still under deliberations at the WTO-CTG," Aquino said. "Currently, the Philippine government is negotiating with the US government on the terms of the extension of the notified TRIMs."

According to Aquino, representatives of both governments are now narrowing down the differences, primarily on the length of time for the extension and the acceptability of the other elements included by the US government.

A top DTI official privy to ongoing negotiations revealed that the US has already entered the framework of an extension and is only negotiating for a shorter period than the five-year period requested by the Philippine government.

"When you have entered negotiations, it follows that you only take the case for dispute settlement when the talks have bogged down," the official said. "But the talks have definitely not bogged down."

The official said the US initial agreement to the extension of the local content requirement albeit for a shorter period, is already a settlement of the primary debate which is whether or not the Philippines is entitled to an extension.

Aside from the Philippines, the US is targetting eight other countries in the annual trade review for their local content requirements in various industries. Also marked were Romania, India, Argentina and Denmark for various trade restrictions.