Presentation before the Tariff Commission Hearing Room, 5 th Floor, Philippine Heart Center, East Avenue, Q.C.

Petition under Section 401 of the Tariff and Customs Code of the Philippines, As Amended Section 401. Flexible Clause a. In the interest of national economy, general welfare and/or national security, and subject to the limitations herein prescribed, the President, upon recommendation of the National Economic and Development Authority (hereinafter referred to as NEDA), is hereby empowered: (1) to increase, reduce or remove existing protective rates of import duty (including any necessary change in classification).

Nature of Request/Petition: i.The creation/extraction from the present ASEAN Harmonized Tariff Nomenclature a specific heading for the following Articles: Hydrous ethanol of ethanol strength, by volume, of AHTN code exceeding 94% but not more than 99%, for use as fuel in an internal combustion engine or other motive power Anhydrous ethanol of ethanol strength, by volume, AHTN code of 93.2% and above but not more than 99%, for use as fuel in an internal combustion engine or other motive power

ii.The implementation of 10% MFN rate of duty for AHTN code hydrous ethanol of ethanol strength, by volume, of exceeding 94% but not more than 99%, for use as fuel in an internal combustion engine or other motive power iii.The implementation of 1% MFN rate of duty for AHTN code , to be increased to 20% MFN rate of duty two years after the effectivity of the Biofuels Act of 2006 when local production of bioethanol has already been established anhydrous ethanol of ethanol strength, by volume, of 93.2%and above but not more than 99%, for use as fuel in an internal combustion engine or other motive power

Reasons for Request/Petition for Creation/Extraction of AHTN codes and a)Provide more accurate classification of imported ethanol for fuel i (- - -Ethyl alocohol strength by volume of exceeding 99%vol) the current tariff subheading for ethanol (for fuel) does not provide an adequate description for ethanol imported by oil company participants to the Fuel Ethanol Program ii. Under the current subheading ( ), an anomaly exists where oil company participants must meet ethyl alcohol strength of exceeding 99%(in order to avail 1% duty) after denaturing with 1.96%-2.44% unleaded gasoline, the prescribed PNS standard for denaturing fuel ethanol b)Facilitate the implementation of the Fuel Ethanol Program c)Prevent/Mitigate the diversion of ethanol imported under the Fuel Ethanol Program d)Align Philippine denaturing practices with international standards

e)Provided under the Biofuels Act of 2006: Section 11. Role of Government Agencies – To ensue the effective implementation of the National Biofuel Program, concerned agencies shall perform the following functions: f) The Tariff Commission, in coordination with the appropriate government agency, shall create and classify a tariff line for biofuels and biofuel blends in consideration of WTO and AFTA agreements f)Volume of trade: Anhydrous Ethanol (AHTN code ) For 2006, 4,000,000,000 liters imported, valued at PhP 120,000,000.00

Reason for Request/Petition for 10% MFN duty for hydrous ethanol (AHTN code ) a)Hydrous ethanol currently not used for fuel Revenue Regulation provides: Section 4. Minimum Physical Properties of Bioethanol and Imposition of the Applicable Excise Tax – For purposes of the Fuel Bioethanol Program, only pure anhydrous bioethanol containing an alcoholic strength of more than 99% bioethanol shall be used, as blending component, in the production of E-gasoline. b)Hydrous ethanol poses biggest threat for diversification to beverage manufacture

Reasons for Request/Petition for implementation of 1% MFN rate of duty for anhydrous ethanol to be increased to 20% two years after the effectivity of the Biofuels Act of 2006 a)Executive Order No. 449 provides 1% duty for imported ethanol ( ), when imported with certification from DOE that the Articles will be used for the Fuel Ethanol Program - since there is currently no local producer of bioethanol fuel, a reduction in tariff on subject article would assure the price competitiveness of ethanol- blended gasoline vis-à-vis other gasoline products b)Protection for a developing domestic industry * 87,000 employees directly involved in production * PhP 1.5 billion investment per ethanol distillery c)Comparative Global Ethanol Tariffs (as of May 2006)

Thank you And Have A Nice Day!