RP’s export subsidies are not against WTO rules

The government is not violating any World Trade Organization (WTO) rules by granting export subsidies for its car manufacturing activity.

Government sources who declined to be identified said yesterday that the Philippines is invoking a provision of the WTO which allows developing countries with a per capita income of less than $1,000 to continue granting export subsidies.

Export subsidies, under the rules of the WTO, are considered non-tariff barriers which should be removed by WTO members.

Only the Philippines, Vietnam and Indonesia are qualified to avail of the WTO provision.

Malaysia and Thailand cannot avail of the WTO provision since their per capita income already exceeds $1,000.

The government is already in the process of drawing up an export incentives package for the local car manufacturing industry in a bid to entice more car manufacturing firms to locate their assembly operations in the Philippines.

At least one automotive manufacturing firm has confirmed its plan to make the Philippines its manufacturing hub.

Mitsubishi Motor Philippines Corp. has confirmed its decision to make the Philippines its manufacturing hub for its Asian utility vehicles.

AUVs manufactured in the Philippines would then be exported to other ASEAN countries.

The sources said the incentives to be given will be included in the revised Omnibus Investment Code which has to be passed by Congress.

Among the possible incentives are longer income tax holiday and tax credits. – Marianne Go