MVDP needs revisions to conform with WTO rules

Government has to make its tax and duty incentives to participants of the Motor Vehicle Development Program (MVDP) consistent with the country’s trade agreements under the World Trade Organization (WTO) to promote investments and strengthen the local automatic industry, according to White & Case LLP.

Government is planning to hire the services of White & Case LLP, a private consultancy firm, to review the existing MVDP and make it consistent with the country’s various trade agreements under the WTO.

W & C said the local automotive industry’s "tax and duty preferences, along with the local content requirement, foreign exchange requirement appear to be inconsistent with the Most Favored Nations (MFN) and Trade-related Investment Measures (TRIMs) agreement obligations of the WTO."

W & C is offering to help the government review and reform the MVDP and make it WTO-consistent. Without the reform, W & C said, the MVDP would eventually be "rendered obsolete."

W & C is proposing to conduct the review in four stages, a process that is estimated to take at least 12 weeks.

The first stage will involve a review of the current MVDP, particularly on such aspects as the criteria, procedures and incentives, in consultation with the Board of Investments (BOI). The objective is to identify all the elements that are not consistent with the WTO.

The second stage will involve consolidating the findings and making recommendations to either modify or replace those elements in the MVDP that are non-WTO consistent to be WTO consistent.

W & C said this stage will be done outside Manila and a report will subsequently be submitted to the BOI containing the findings and recommendations of W & C.

The third stage is when the BOI will evaluate the W & C report and initiate discussions with the industry. The BOI will consolidate the industry feedback and prepare its own report taking into consideration the W & C report and industry comments.

In stage four, the W & C staff will return to Manila to work with the BOI and incorporate the selected revisions to the MVDP.