Question & AnswerQ&A (Republic Act No. 1602)
The primary purpose of Republic Act No. 1602 is to provide for the allocation, reallocation, and administration of quotas for cordage, buttons of pearl or shell, cigars, scrap and filler tobacco, and coconut oil, as well as for other related purposes.
Quotas for cordage, a Philippine product, are allocated annually to manufacturers in the Philippines whose products were exported to the U.S. during any of the years 1947 to 1955, or to their successors in interest, proportionately based on their highest export volume during that period.
Regular quota holders from 1947 to 1955 who actively manufactured and exported buttons of pearl or shell and have not transferred, leased, or sold their quotas retain their quotas as provided under the 1946 Trade Agreement.
Unallocated balances shall be assigned to the government for disposition and made available for allocation to qualified manufacturers, distributing 50% to regular quota holders who filled their quotas, 50% to other quota holders who filled theirs, and finally to non-quota holders who have engaged in production since 1956.
A quota holder will permanently lose their right to their allotment if they fail to submit the required report of unused allotment within the first eight months of the calendar year or if they submit a falsified report.
Manufacturers are defined as persons or entities who physically or chemically alter raw materials or products to prepare them for special uses or to make them marketable, for the purpose of sale or distribution to others.
If a quota holder fails to fill their yearly quota, their allotment for the next year is automatically reduced by the amount of the deficiency and they are only allowed to export an amount equal to their previous year's exportation.
The President is authorized to carry out the provisions of the Act directly or through designated government agencies and to issue necessary rules and regulations governing allotments, licenses, and other related matters.
Duty-free allotments for quotas in sections 2 and 3 are set for three-year periods from 1959 to 1961 and for succeeding three-year periods until 1973, with proportional reductions if total quotas diminish.
Penalties for failing to use or fill quotas do not apply if such failures are due to circumstances or conditions beyond the control of the quota holders.