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December 12, 1986

The Government of Canada (herein called "CANADA") and the Government of the Republic of the Philippines (hereinafter called "PHILIPPINES"), desiring to record an understanding concerning the provisions at Canadian fertilizer assistance in order to assist the Philippines with its balance of payments and budget deficit and to support its increased agricultural production hereby agree as follows:

ARTICLE I
  NATURE OF THE MEMORANDUM OF UNDERSTANDING

SECTION 1.01

This Memorandum of Understanding does not constitute an inter-national treaty: it is intended only to set out the responsibilities of the two Governments in relation to the Project.

ARTICLE II
  RESPONSIBLE AUTHORITIES

SECTION 2.01

CANADA designates the Canadian International Development Agency (hereinafter called ''CIDA" ) as the agency responsibilities for the implementation of its obligations under this Memorandum of Understanding,

SECTION 2.02

PHILIPPINES designates the National Economic Development Authority (hereinafter called "NEDA") as the agency responsible for the implementation of its obligations under this Memorandum of Understanding.

ARTICLE III
  THE PROJECT

SECTION 3.01

CANADA and PHILIPPINES shall participate in a Project to provide Canadian muriate of potash to the Philippines (hereinafter called the "Project") . The objectives of the Project are to:

a) maintain increase availability of potash to agricultural producers;

b) increase foreign exchange revenue for the Philippines through the export sale of ferti1izer; and

c) generate peso proceeds tor budgetary support.

ARTICLE IV
  PLAN OF OPERATION

SECTION 4.01

For implementation of the Project, CANADA and PHILIPPINES will develop a Plan of Operation which will constitute an operational document between NEDA and CIDA. The Plan of Operation will be completed and signed within ninety (90) days from the date of this Memorandum of Understanding, and, when duly signed on behalf of CANADA an PHILIPPINES , will be attached hereto as Annex A and will contain, inter alia, the following:

4.01.1 a detail description of the Project including identification of Project staff and their responsibilities.

4.01.2 an outline of the methods and means to be used to carry out the Project;

4.01.3 the reporting requirements for the Project;

4.01 4 the resources required for the Project;

4.01.5 a detailed statement of additional obligations, duties and responsibilities of CANADA and PHILIPPINES together with their contributions; and

4.01.6 arrangement for general budget support.

ARTICLE V
  CONTRIBUTION OF CANADA

SECTION 5.01

The contribution of CANADA shall consist of the provision of funds tor the procurement of Canadian muriate of potash by PHILIPPINES and the delivery of said potash to Philippine ports as set forth in the Plan of Operation and in Annex C The total value of CANADA's contribution shall, not exceed TEN MILLION CANADIAN DOLLARS (Cdn. 10,000,000).

ARTICLE VI
  CONTRIBUTION O F PHILLIPPINES

SECTION 6.01

The contribution of PHILIPPINES shall be in kind as set forth in the Plan of Operation and in Annex B,

ARTICLE VII
  OTHER OBLIGATIONS OF PHILIPPINES

SECTION 7.01

PHILIPPINES shall use the funds contributed by CANADA for the procurement of Canadian muriate of potash according to the procedures specified in the Plan of Operation.

SECTION 7.02

PHILIPPINES shall make available to the agricultural sector in the Philippines a portion of the Canadian muriate of potash acquired pursuant to this Memorandum of Understanding, as specified in the Plan of Operation,

SECTION 7.03

PHILIPPINES may arrange for a further portion of the Canadian muriate of potash acquired pursuant to this Memorandum of Understanding to be converted into fertilizer and sold for export.

SECTION 7.04

If the Phi1ippines at anytime undertakes to assume any financial obligations of Planters Products, Inc. (PPI) under any agreement to which PPI is a party, the Philippines will repay the amounts owing to Canpotex under a potash sales agreement between PPI and Canpotex.

ARTICLE VIII
  DEFINITIONS OF CANADIAN FIRMS AMD PERSONNEL

SECTION 8.01

For the purpose of this Memorandum of Understanding:

(a) " Canadian firm'' means Canadian institutions on firms or other non-Philippine firms or institutions established under any law other than those of the Philippines designated by Canada as engaged in the project;

(b) "Canadian personnel" means Canadian or non-Philippine nationals who are working in the Philippines on the project designated by Canada; and

(c) " Dependant'' means;

(i) the spouse of a member of the Canadian personnel, including a person of the opposite sex with whom the member of the Canadian personnel has lived and publicly represented as his/her spouse for a period of not 1ess than one year before the commencement of his/her period of service in the Philippines;

(ii) a child of the member of the Canadian personnel, or his/her spouse who is;

1. under twenty-one years of age and dependent on the member of the Canadian personnel or his / her spouse for support; or

2. twenty-one years of age or older and dependent on the member of the Canadian personnel or his / her spouse for support by reason of mental or physical incapacity.

ARTICLE IX
  INDEMNITY

SECTION. 9.01

PHILIPPINES shall indemnify and save harmless CANADA, Canadian firms and Canadian personnel from civil liability, for acts or omissions occurring in the course of the performance of their duties in the execution of the Project except for acts arising from gross negligence or willful misconduct of Canadian firms or Canadian personnel.

ARTICLE X
  TAX AND OTHER EXEMPTIONS

SECTION 10.01

PHILIPPINES shall ensure that development aid funds provided under this Memorandum of Understanding are not used to pay any taxes, fees, customs duties or any other levies and charges imposed directly or indirectly by PHILIPPINES on goods, material, equipment, vehicles and services purchased or acquired for, or related to, the execution of the Project.

SECTION 10.02

PHILIPPINES shall exempt Canadian firms and Canadian personnel and their dependants from taxes imposed on income, on the condition such income arises outside of the Philippines or from Canadian aid funds as provided in this Memorandum of Understanding. In addition, PHILIPPINES shall exempt Canadian firms and Canadian personnel, including their dependants, from any obligation to present written declarations in relation to this exemption. Philippine nationals shall not be entitled to this exemption.

SECT ION 10.03

PHILIPPINES shall exempt Canadian firms and Canadian personnel from, or bear the costs of, customs and excise duties, sales taxes and other charges of similar nature on all goods, materials, equipment, vehicles and services and on any other goods or services acquired in or imported into the Philippines directly related to the execution of the Project. Resale of any goods, materials, equipment or vehicles acquired under this section to non-exempt buyers will be subject to normal taxes and duties as provided for by the existing laws of the Philippines.

SECTION 10.04

PHILIPPINES shall exempt Canadian personnel from the payment of customs duties, excise duties and sales taxes in respect to bona fide personal effects and essential basic household equipment brought into, or purchased, in the Philippines for their own use or the use of their dependants. Canadian personnel may purchase duty free, locally manufactured/assembled items provided that such purchases shall be made from the manufacturers and paid fir Canadian or U.S. currency and delivery shall be made from bonded warehouse and provided, further, that resale of any of the personnel effects and household equipment to non-exempt buyers will be subject to normal tax and duties as provided for by existing tax laws of the Philippines. In the event of theft, fire or other destruction, the exemptions under this section may be re-exercised at any time during the assignment of the Canadian personnel.

SECTION 10.05

PHILIPPINES shall grant Canadian firms and Canadian personnel directly involved in the project freedom from currency exchange restrictions in respect of the re-exportation of their salaries, fees, remunerations or other revenues transferred from abroad through authorized banking institutions in the Philippines.

SECTION 10.06

PHILIPPINES to the extent possible, shall inform Canadian personnel of local laws and regulations which may concern them in the performance of their duties.

SECTION 10.07

PHILIPPINES shall facilitate the repatriation of Canadian personnel and their dependants in cases where, in the opinion of CANADA or PHILIPPINES, the life or safety of the said Canadian personnel or their dependants is endangered.

SECTION 10.08

PHILIPPINES shall provide all Canadian personnel and their dependants multiple entry and exit visas for travel to and from the Philippines and will be responsible for providing security clearances, permits and other similar documentation.

SECTION 10.09

PHILIPPINES shall accord all accredited representatives of CIDA and Canadian personnel all necessary opportunity to visit any part of the Philippines for official activities related to the project sites.

ARTICLE XI
  INFORMATION

SECTION. 11.01

CANADA and PHILIPPINES shall ensure that this Memorandum of Understanding is carried out with due diligence and efficiency and each shall furnish to the other all such information relating to the Project as shall reasonably be requested. PHILIPPINES shall inform CANADA as soon as possible of any condition or contingency which interferes with, or threatens to interfere with, the successful implementation of the Project.

ARTICLE XII
  COMMUNICATIONS

SECTION. 12.01

Any communications or documents given, made or sent by either CANADA or PHILIPPINES pursuant to this Memorandum of Understanding, shall be in writing and shall be deemed to have been duly given, made or sent to, the party to which it is addressed at the time of its delivery by hand, mail, telegram, cable or telex at its respective address, namely:

SECTION 12.02

Any one of the parties hereto may , by written notice to the other party hereto, change the address to which any notice or request intended for the party so giving such notice shall be addressed.

SECTION 12.03

All communications and documents submitted to CANADA shall be in either the English or the French language, and those submitted to PHILIPPINES shall be in the English language.

ARTICLE XIII
  INTERPRETATION

SECTION 13.01

Differences which may arise in the application of the provisions of this Memorandum of Understanding shall be settled by means of negotiations between CANADA and PHILIPPINES or by any other manner mutually agreed upon by CANADA and PHILIPPINES.

ARTICLE XIV
  ENTIRE UNDERSTAND

This Memorandum of Understanding together with Annexes 'A', 'B' and 'C' which form an integral part hereof constitutes the entire understanding between the Parties with respect to the Project.

ARTICLE XV
  CONSULTATION

SECTION 15.01

CANADA and PHILIPPINES will endeavour to consult each other in respect of any matter that may from time to time arise in connection with this Memorandum of Understanding.

ARTICLE XVI
  GENERAL PROVISIONS

SECTION 16.01

This Memorandum of Understanding shall come into force and effect on the date of signature and shall expire on the 31st day o-f March 1989. This Memorandum of Understanding may be amended from time to time, as deemed necessary, by mutual agreement by an exchange of letters between the Parties. The Flan of Operation annexed hereto as Annex 'A' may be amended From time to time, as deemed necessary, by an exchange of letters between CIDA and NEDA.

IN WITNESS WHEREOF, the undersigned have signed this Memorandum of Understanding in duplicate in Manila on the 12th day of December, 1986,

                               

ON BEHALF OF THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES	ON BEHALF OF THE GOVERNMENT OF CANADA
(Sgd.)	(Sgd.)
SALVADOR H. LAUREL	RUSSEL H. DAVIDSON
President of the Republic   of the Philippines	Canadian Ambassador to   the Republic of the   Philippines