Title
FREE TRADE AGREEMENT BETWEEN THE EFTA STATES AND THE PHILIPPINES
Preamble
Iceland, the Principality of Liechtenstein, the Kingdom of Norway and the Swiss Confederation (hereinafter referred to as the "EFTA States"), and the Republic of the Philippines (hereinafter referred to as "the Philippines"), hereinafter each individually referred to as a "Party" or collectively as the "Parties",
RECOGNISING the common wish to establish close and lasting relations between the EFTA States and the Philippines;
DESIRING to create favourable conditions for the development and diversification of trade between the Parties and for the promotion of commercial and economic cooperation in areas of common interest on the basis of equality, mutual benefit, non-discrimination and international law;
DETERMINED to promote and further strengthen the multilateral trading system, building on their respective rights and obligations under the Marrakesh Agreement Establishing the World Trade Organization (hereinafter referred to as the "WTO Agreement") and the other agreements negotiated thereunder to which they are a party, thereby contributing to the harmonious development and expansion of world trade;
REAFFIRMING their commitment to democracy, the rule of law, human rights and fundamental freedoms in accordance with their obligations under international law, including as set out in the United Nations Charter and the Universal Declaration of Human Rights;
AIMING to create new employment opportunities, improve living standards, and raise levels of protection of health and safety, and of the environment;
REAFFIRMING their commitment to pursue the objective of sustainable development and recognising the importance of coherence and mutual supportiveness of trade, environment and labour policies in this respect;
DETERMINED to implement this Agreement in line with the objectives to preserve and protect the environment through sound environmental management and to promote an optimal use of the world's resources in accordance with the objective of sustainable development;
RECALLING their rights and obligations under multilateral environmental agreements to which they are a party, and the respect for the fundamental principles and rights at work, including the principles set out in the International Labour Organization (hereinafter referred to as the "ILO") Conventions to which they are a party;
RECOGNISING the importance of ensuring predictability for the trading communities of the Parties;
AFFIRMING their commitment to prevent and combat corruption in international trade and investment and to promote the principles of transparency and good public governance;
ACKNOWLEDGING the importance of good corporate governance and corporate social responsibility for sustainable development, and affirming their aim to encourage enterprises to observe internationally recognised guidelines and principles in this respect, established by international organisations such as the Organisation for Economic Cooperation and Development (OECD) and the United Nations (UN);
CONVINCED that this Agreement will enhance the competitiveness of their enterprises in global markets and create conditions encouraging economic, trade and investment relations between the Parties;
HAVE AGREED, in pursuit of the above, to conclude the following Free Trade Agreement (referred to as this "Agreement"):
Body
Chapter 1. General Provisions
Article 1.1. Establishment of a Free Trade Area
The EFTA States and the Philippines hereby establish a free trade area in accordance with the provisions of this Agreement.
Article 1.2. Objectives
The objectives of this Agreement are:
(a) To achieve the liberalisation of trade in goods, in conformity with Article XXIV of the General Agreement on Tariffs and Trade 1994 (hereinafter referred to as the "GATT 1994");
(b) To achieve the liberalisation of trade in services, in conformity with Article V of the General Agreement on Trade in Services (hereinafter referred to as the "GATS");
(c) To mutually enhance investment opportunities;
(d) To prevent, eliminate or reduce unnecessary technical barriers to trade and to further the implementation of the WTO Agreement on the Application of Sanitary and Phytosanitary Measures (hereinafter referred to as the "SPS Agreement") and the WTO Agreement on Technical Barriers to Trade (hereinafter referred to as the "TBT Agreement");
(e) To promote competition in their economies, particularly as it relates to the economic relations between the Parties;
(f) To achieve further liberalisation on a mutual basis of the government procurement markets of the Parties;
(g) To ensure adequate and effective protection of intellectual property rights, in accordance with international standards;
(h) To develop international trade in such a way as to contribute to the objective of sustainable development and to ensure that this objective is integrated and reflected in the Parties' trade relations; and
(i) To contribute to the harmonious development and expansion of world trade.
Article 1.3. Geographical Scope
1. This Agreement shall, except as otherwise specified in Annex I (Rules of Origin), apply to:
(a) The land territory, internal waters, archipelagic waters and the territorial sea of a Party, and the air-space above the territory of a Party, in accordance with international law; and
(b) The exclusive economic zone and the continental shelf of a Party, in accordance with international law.
2. This Agreement shall not apply to the Norwegian territory of Svalbard, with the exception of trade in goods.
Article 1.4. Trade and Economic Relations Governed by this Agreement
1. This Agreement shall apply to the trade and economic relations between the Philippines and the individual EFTA States. This Agreement shall not apply to the trade and economic relations between individual EFTA States, unless otherwise provided for in this Agreement.
2. As a result of the customs union established by the Customs Treaty of 29 March 1923 between Switzerland and Liechtenstein, Switzerland shall represent Liechtenstein in matters covered thereby.
Article 1.5. Relation to other Agreements
1. Each Party reaffirms its rights and obligations under the WTO Agreement and the other agreements negotiated thereunder to which it is a party, and any other international agreement to which it is a party.
2. If a Party considers that the maintenance or establishment of a customs union, free trade area, arrangement for frontier trade or another preferential agreement by another Party has the effect of altering the trade regime provided for by this Agreement, it may request consultations. The Party concluding such agreement shall afford adequate opportunity for consultations with the requesting Party.
Article 1.6. Fulfilment of Obligations
Each Party shall take any general or specific measures required to fulfil its obligations under this Agreement.
Article 1.7. Central, Regional and Local Governments
Each Party shall, subject to the provisions of this Agreement, ensure the observance of all obligations and commitments under this Agreement by its respective central, regional and local governments and authorities, and by non-governmental bodies in the exercise of governmental powers delegated to them by central, regional and local governments or authorities.
Article 1.8. Transparency
1. The Parties shall publish, or otherwise make publicly available, their laws, regulations, judicial decisions, administrative rulings of general application as well as their respective international agreements, that may affect the operation of this Agreement.
2. The Parties shall promptly respond to specific questions in English and provide, upon request, information to each other on matters referred to in paragraph 1. The information to be provided should, as far as practicable, be in English.
3. Nothing in this Agreement shall require any Party to disclose confidential information, the disclosure of which would impede law enforcement or otherwise be contrary to the public interest or would prejudice the legitimate commercial interests of particular enterprises, public or private.
4. In case of any inconsistency between paragraphs 1 and 2 and provisions relating to transparency in other parts of this Agreement, the latter shall prevail to the extent of the inconsistency.
Chapter 2. TRADE IN NON-AGRICULTURAL PRODUCTS
Article 2.1. Scope
This Chapter shall apply to trade between the Parties relating to goods as set out in Annex II (Product Coverage of Non-Agricultural Products).
Article 2.2. Rules of Origin
The rules of origin are set out in Annex I (Rules of Origin).
Article 2.3. Import Duties
1. Upon entry into force of this Agreement, the Philippines shall eliminate its import duties and charges having equivalent effect to import duties on goods originating in an EFTA State covered by this Chapter, except as otherwise provided for in Annex III (Schedule of Tariff Commitments of the Philippines on Non-Agricultural Products Originating in the EFTA States).
2. Upon entry into force of this Agreement, the EFTA States shall eliminate all import duties and charges having equivalent effect to import duties on goods originating in the Philippines covered by this Chapter.
3. No new import duties or charges having equivalent effect to import duties shall be introduced by the Parties.
4. Import duties and charges having equivalent effect to import duties include any duty or charge of any kind imposed in connection with the importation of goods, including any form of surtax or surcharge, but does not include any charge imposed in conformity with Articles III and VIII of the GATT 1994.
Article 2.4. Export Duties
1. The Parties shall, upon entry into force of this Agreement, eliminate all customs duties and other charges, including any form of surcharges and other forms of contributions, in connection with the exportation of goods to another Party, except as provided for in Annex IV (Export Duties).
2. No new export duties or charges having equivalent effect to export duties shall be introduced by the Parties.
Article 2.5. Customs Valuation (1)
Article VII of the GATT 1994 and Part I of the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 shall apply and are hereby incorporated into and made part of this Agreement, mutatis mutandis.
Article 2.6. Quantitative Restrictions
1. Article XI of the GATT 1994 shall apply and is hereby incorporated into and made part of this Agreement, mutatis mutandis.
2. Before taking a measure in accordance with paragraph 2 of Article XI of the GATT 1994, the Party considering taking such measures shall provide the Joint Committee with all relevant information, with a view to arriving at a mutually acceptable solution. If no mutually acceptable solution has been reached within 30 days from the receipt of the notification to the Joint Committee, the Party may apply the necessary measures in accordance with this Article.
3. In the selection of measures, priority shall be given to those which least disturb the functioning of this Agreement. Any measure applied pursuant to this Article shall be immediately notified to the Joint Committee. Such measure shall not be applied in a manner, which would constitute a means of arbitrary or unjustifiable discrimination where the same conditions prevail, or a disguised restriction on trade. The measure shall be subject to periodic consultations in the Joint Committee and shall be eliminated when the conditions no longer justify their maintenance.
4. Any measure taken by a Party pursuant to this Article shall be terminated no later than three years from its imposition.
Article 2.7. Import Licensing
1. The WTO Agreement on Import Licensing Procedures shall apply and is hereby incorporated into and made part of this Agreement, mutatis mutandis.
2. In adopting or maintaining non-automatic import licensing procedures, the Parties shall implement the measures consistent with this Agreement. A Party adopting non-automatic import licensing procedures shall indicate clearly the purpose of such licensing procedures.
Article 2.8. Article Trade In Fish and other Marine Products
Additional provisions related to trade in fish and other marine products are set out in Annex V (Trade in Fish and Other Marine Products).
Article 2.9. Fees and Formalities
Article VIII of the GATT 1994 shall apply and is hereby incorporated into and made part of this Agreement, mutatis mutandis, subject to Article 9 of Annex VI (Trade Facilitation).
Article 2.10. Internal Taxation and Regulations
Article III of the GATT 1994 shall apply and is hereby incorporated into and made part of this Agreement, mutatis mutandis.
Article 2.11. Trade Facilitation
With the aim to facilitate trade between the EFTA States and the Philippines, the Parties shall, in accordance with Annex VI (Trade Facilitation):
(a) simplify, to the greatest extent possible, procedures for trade in goods and related services;
(b) promote multilateral cooperation among the Parties in order to enhance their participation in the development and implementation of international conventions and recommendations on trade facilitation; and
(c) cooperate on trade facilitation within the mandate of the Sub-Committee on Trade in Goods.
Article 2.12. Subsidies and Countervailing Measures
1. The rights and obligations of the Parties relating to subsidies and countervailing measures shall be governed by Articles VI and XVI of the GATT 1994 and the WTO Agreement on Subsidies and Countervailing Measures, except as provided for in paragraph 2.
2. Before a Party initiates an investigation to determine the existence, degree and effect of any alleged subsidy in another Party, as provided for in Article 11 of the WTO Agreement on Subsidies and Countervailing Measures, the Party considering initiating an investigation shall notify in writing the Party whose goods are subject to an investigation and allow for a 60 day period for consultations with a view to finding a mutually acceptable solution. The consultations shall take place in the Joint Committee if a Party so requests within 20 days from the receipt of the notification. (2)
Article 2.13. Anti-dumping
1. The rights and obligations of a Party relating to anti-dumping measures shall be governed by Article VI of the GATT 1994 and the WTO Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (hereinafter referred to as the “WTO Anti-dumping Agreement”), subject to paragraphs 2 to 8. The Parties shall endeavour to refrain from initiating anti-dumping procedures against each other.
2. When a Party receives a petition and before initiating an investigation under the WTO Anti-dumping Agreement, the Party shall notify in writing the Party whose goods are allegedly being dumped and allow for a 60 day period for consultations with a view to finding a mutually acceptable solution. The consultations shall take place in the Joint Committee if a Party so requests within 20 days from the receipt of the notification. (3)
3. A Party shall not initiate an anti-dumping investigation within one year of a determination regarding the same product from the same Party, which resulted in the non-application or revocation of anti-dumping measures.
4. If an anti-dumping measure is applied by a Party, the measure shall be terminated no later than five years from its imposition.
5. An investigation shall not be initiated unless the application has been made by or on behalf of the domestic industry. The application shall be considered to be made “by or on behalf of the domestic industry” if it is supported by those domestic producers whose collective output constitutes more than 50 percent of the total production of the like product produced by the domestic industry. (4) The term “domestic industry” shall be interpreted as referring to the domestic producers as a whole of the like products. In the case of an application made or supported by a trade association, only the production of those member producers who support the application shall count towards the standing threshold.
6. If a Party decides to impose an anti-dumping duty, the Party shall apply the “lesser duty” rule if such lesser duty would be adequate to remove the injury to the domestic industry.
7. When anti-dumping margins are established, assessed or reviewed under Articles 2, 9.3, 9.5, and 11 of the WTO Anti-dumping Agreement regardless of the comparison bases under Article 2.4.2 of the WTO Anti-dumping Agreement, all individual margins, whether positive or negative, shall be counted toward the average.
8. Five years after the entry into force of this Agreement, the Parties shall in the Joint Committee review whether there is a need to maintain the possibility to take anti- dumping measures between them. If the Parties decide after the first review to maintain this possibility, biennial reviews shall thereafter be conducted in the Joint Committee.
Article 2.14. Global Safeguard Measures
The rights and obligations of a Party in respect of global safeguards shall be governed by Article XIX of the GATT 1994 and the WTO Agreement on Safeguards. In taking measures under these WTO provisions, a Party shall, in accordance with WTO rules, exclude imports of an originating product from one or several Parties if such imports do not in and of themselves cause or threaten to cause serious injury.
Article 2.15. Transitional Safeguard Measures
1. Where, as a direct result of the reduction or elimination of an import duty under this Agreement, any product originating in a Party is being imported into the territory of another Party in such increased quantities, in absolute terms or relative to domestic production, and under such conditions as to constitute a substantial cause of serious injury or threat thereof to the domestic industry of like or directly competitive products in the territory of the importing Party, the importing Party may take transitional safeguard measures to the minimum extent necessary to remedy or prevent the injury, subject to paragraphs 2 to 14.
2. Transitional safeguard measures shall only be taken upon clear evidence that increased imports have caused or are threatening to cause serious injury pursuant to an investigation in accordance with the procedures laid down in the WTO Agreement on Safeguards.
3. If the conditions set out in paragraph 1 are met, the importing Party may take measures consisting in increasing the rate of import duty for the product to a level not to exceed the lesser of:
(a) the MFN rate of duty applied at the time the transitional safeguard measure is taken; or
(b) the MFN rate of duty applied on the day immediately preceding the date of the entry into force of this Agreement.
4. Transitional safeguard measures shall be taken only for a period not exceeding one year. In exceptional circumstances, transitional safeguards measures may be extended beyond one year to a maximum period of three years. The Party extending transitional safeguard measures beyond one year shall provide compensation for the duration of the extension in the form of substantially equivalent concessions.
5. The Party intending to take or extend a transitional safeguard measure under this Article shall immediately, and in any case before taking or extending a measure, notify the other Parties. The notification shall contain all pertinent information, including evidence of serious injury or threat thereof caused by increased imports, a precise description of the product concerned, and the proposed measure, as well as the proposed date of introduction, expected duration and timetable for the progressive removal of the measure. In case of extension of the measure pursuant to paragraph 4 the notification shall also contain the intended compensation.
6. A Party may request consultations within 30 days from the receipt of the notification. The Joint Committee shall, within a 60 day period, examine the information provided under paragraph 5 in order to arrive at a mutually acceptable solution.
7. In the absence of a mutually acceptable solution, the importing Party may adopt or extend the transitional safeguard measure. In case of extension of the measure and in the absence of mutually agreed compensation, the Party against whose product the transitional safeguard measure is taken may take compensatory action by withdrawing substantially equivalent concessions under this Agreement. The transitional safeguard measure and the compensatory action shall be immediately notified to the other Parties. The Party taking compensatory action shall apply the action only for the minimum period necessary to achieve the substantially equivalent trade effects and in any event, only while the extended transitional safeguard measure under paragraph 4 is being applied.
8. In the selection of the transitional safeguard measure and the compensatory action, priority must be given to the action or measure which least disturbs the functioning of this Agreement.
Article 2.16. State Trading Enterprises
Article XVII of the GATT 1994 and the Understanding on the Interpretation of Article XVII of the General Agreement on Tariffs and Trade 1994 shall apply and are hereby incorporated into and made part of this Agreement, mutatis mutandis.
Article 2.17. General Exceptions
Article XX of the GATT 1994 shall apply and is hereby incorporated into and made part of this Agreement, mutatis mutandis.
Article 2.18. Security Exceptions
Article XXI of the GATT 1994 shall apply and is hereby incorporated into and made part of this Agreement, mutatis mutandis.
Article 2.19. Balance-of-Payments
1. A Party, in serious balance of payments difficulties, or under imminent threat thereof, may, in accordance with the conditions established under the GATT 1994 and the WTO Understanding on the Balance of Payments Provisions of the General Agreement on Tariffs and Trade 1994, adopt trade restrictive measures, which shall be of limited duration and non-discriminatory, and may not go beyond what is necessary to remedy the balance of payments situation.
2. The Party introducing a measure under this Article shall promptly notify the Joint Committee.
Article 2.20. Modification of Concessions
In exceptional circumstances, where a Party faces unforeseen difficulties in implementing its tariff commitments, that Party may, subject to an agreement with the other interested Parties, modify or withdraw a concession contained in its schedule of tariff commitments. In order to reach such agreement, a Party shall engage in negotiations with the other interested Parties. In such negotiations, the Party proposing to modify or withdraw a concession shall maintain a level of reciprocal and mutually advantageous concessions no less favourable to the other interested Parties than that provided for in this Agreement prior to such negotiations, which may include compensatory adjustments with respect to other goods. The mutually agreed outcome of the negotiations, including any compensatory adjustments, shall be incorporated into this Agreement in accordance with Article 14.2 (Amendments).
Article 2.21. Consultations
A Party may request consultations regarding any matter under this Chapter. The requested Party shall promptly reply to the request and enter in consultations in good faith. The Parties shall make every attempt to arrive at a mutually acceptable solution. (5)
Article 2.22. Contact Points
The Parties shall exchange names and addresses of contact points for this Chapter in order to facilitate the communication and the exchange of information.
Article 2.23. Sub-Committee on Trade In Goods
1. A Sub-Committee on Trade in Goods (hereinafter referred to as “Sub- Committee”) is hereby established.
2. The mandate of the Sub-Committee is set out in Annex VII (Mandate of the Sub-Committee on Trade in Goods).
Article 2.24. Review
1. No later than five years from the entry into force of this Agreement, or on request of a Party, consultations shall be held in the Joint Committee with the aim to accelerate the elimination of import duties or otherwise improving tariff commitments. An agreement among all Parties to accelerate or improve tariff commitments shall be incorporated into this Agreement, in accordance with Article 14.2 (Amendments).
2. A Party may, at any time, unilaterally accelerate the reduction and elimination of customs duties or otherwise improve tariff commitments. A Party intending to do so shall inform the other Parties before the new rate of customs duties takes effect, or in any event, as early as practicable.
Chapter 3. TRADE IN AGRICULTURAL PRODUCTS
Article 3.1. Scope
This Chapter shall apply to trade between the Parties relating to goods other than those covered in Annex II (Product Coverage of Non-Agricultural Products).
Article 3.2. Tariff Concessions
1. The Philippines shall grant tariff concessions for goods originating in an EFTA State as specified in Annexes VIII to X (Schedules of Tariff Commitments on Agricultural Products).
2. Each EFTA State shall grant tariff concessions for goods originating in the Philippines as specified in Annexes VIII to X (Schedules of Tariff Commitments on Agricultural Products).
Article 3.3. Agricultural Export Subsidies
The Parties shall not apply export subsidies, as defined in Article 9 of the WTO Agreement on Agriculture, to trade in originating products for which a tariff concession is granted in accordance with this Agreement.
Article 3.4. Other Provisions
1. With respect to trade in goods covered by this Chapter, the following provisions of Chapter 2 (Trade in Non-Agricultural Products) shall apply, mutatis mutandis: Articles 2.2 (Rules of Origin), 2.4 (Export Duties), 2.5 (Customs Valuation), 2.6 (Quantitative Restrictions), 2.7 (Import Licensing), 2.9 (Fees and Formalities), 2.10 (Internal Taxation and Regulations), 2.11 (Trade Facilitation), 2.13 (Anti-dumping), 2.14 (Global Safeguard Measures), 2.15 (Transitional Safeguard Measures), 2.16 (State Trading Enterprises), 2.17 (General Exceptions), 2.18 (Security Exceptions), 2.19 (Balance-of-Payments), 2.20 (Modification of Concessions), 2.21 (Consultations) and 2.23 (Sub-Committee on Trade in Goods).
2. The rights and obligations of the Parties with respect to subsidies and countervailing duties shall be governed by the applicable WTO Agreements.
3. With respect to Article on Rules of Origin, only bilateral accumulation between an EFTA State and the Philippines shall be allowed for goods covered by this Chapter.