September 06, 1996

Have agreed on the exchange of traffic Tights under the following terms:

ARTICLE 1
DESIGNATION OF AIRLINES

1. Each Contracting Party may designate in writing multiple airlines to operate the agreed services and commercial air routes specified in the Annex hereto.

2. On receipt of the designation and upon application by the designated airline for operating authorization, the other Contracting Party shall, without unnecessary delay, grant to the designated airline the appropriate operating authorization: Provided, that:

a.
substantial ownership and effective control of the airline are vested in the Contracting Party designating the airline or in nationals of such Contracting Party or both;

b.
the designated airline is qualified to fulfill the conditions prescribed under the laws and regulations normally applied to the operation of international commercial air services by the Contracting Party considering the application.

ARTICLE 11
REVOCATION AND SUSPENSION OF AUTHORIZATION

Notwithstanding the provisions of Article I, each Contracting Party shall have the right to recommend to its appropriate authorities the revocation, suspension or limitation by the imposition of conditions, the operating authorization granted to the designated airline of the other Contracting Party if such designated airline, in operating its air services pursuant to this Agreement, fails to comply with any applicable law or regulation of the first mentioned Contracting Party, or fails to comply with any terms or conditions prescribed in this Agreement and its Annex: Provided, that, unless immediate action is essential to prevent further infringement of laws or regulations or terms or conditions abovementioned, this right shall be exercised only after consultations with the other Contracting Party.

The revocation, suspension, or limitation shall take effect upon notification of confirmation by the appropriate authorities of the Contracting Party recommending such action.

ARTICLE III
TRAFFIC RIGHTS

1. The designated airlines of both Contracting Parties shall have the right to take on and discharge passengers, cargo and mail at the points on the respective route they operate, and shall also have the rights of flying across and landing for non-traffic purposes in each other's territory.
2. Nothing in this Article shall be deemed to confer on the airline of one Contracting Party the right of taking up in the territory of the other Contracting Party, passengers, cargo or mail carried for remuneration or hire and destined for another point in the territory of that other Contracting Party.

ARTICLE IV
APPLICABILITY OF LAWS AND REGULATIONS

The applicable laws and regulations of the appropriate authorities of either Contracting Party governing entry into or departure from its territory of aircraft engaged in international air services, or the operation and navigation of such aircraft while within its territory, shall be applied to the aircraft of the designated airlines of the other Contracting Party.

ARTICLE V
FARES AND RATES

The fares and rates to be charged for the carriage of passengers, cargo or mail by the designated airlines on their respective routes shall be submitted fort the approval of the appropriate authorities of the Contracting Parties and shall normally be fares and rates established by the International Air Transport Association (IATA).

ARTICLE VI
RECOGNITION OF CERTIFICATES AND LICENSES

Each Contracting Party shall recognize as valid, for the purpose of operating the air services provided for in this Agreement, certificates of airworthiness, certificates of competency, and licenses issued or validated by the other Contracting Party: Provided, that, the requirements for such certificates or licenses meet the minimum standards which may be established pursuant to the Convention on International Civil Aviation signed in Chicago in 1944. Each Contracting Party reserves the right to refuse to recognize as valid for purpose of flight above its own territory, certificates of competency and licenses granted to its own nationals by the other Contracting Party.

ARTICLE VII
ESTABLISHMENT OF REPRESENTATIVE OFFICES

The designated airlines of either Contracting Party is authorized to establish representative offices in the territory of the other Contracting Party.

ARTICLE VIII
MAINTENANCE OF PERSONNEL

Without prejudice to the regulations of the respective Contracting Party and subject to reciprocity, the technical and administrative personnel of the designated airlines of either Contracting Party shall be issued appropriate visas and each designated airline is authorized to maintain in the territory of the other Contracting Party such personnel.

ARTICLE IX
EXEMPTION FROM CUSTOMS DUTIES AND OTHER CHARGES

1. Aircraft operated on international services by the designated airline of either Contracting Party, as well as their regular equipment, supplies of fuel and lubricants and aircraft stores (including food, beverages and tobacco) on board such aircraft shall be exempt from all customs duties, inspection fees and other duties or taxes on arriving in the territory of the other Contracting Party: Provided, such equipment and supplies remain on board the aircraft up to such time as they are re-exported.

2. Subject to existing rules and regulations of the appropriate authorities, there shall also be exempt from the same duties and taxes, aircraft spare parts and tools entered into the territory of either Contracting Party for the maintenance or repair of aircraft used on international air services by the designated airline of the other Contracting Party.

ARTICLE X
TRANSFER OF NET REVENUE

Each Contracting Party undertakes to grant to the designated airlines of the other Contracting Party the right to remit to its head office the excess of receipts over expenditure and taxes earned in its territory in connection with the carriage of passengers, cargo and mail. The procedure for such remittance shall be in accordance with the foreign exchange rules and regulations of the territory in which the revenue accrues.

ARTICLE XI
APPLICABILITY OF CONVENTION

The principles set forth in the Convention on International Civil Aviation signed in Chicago in 1944 shall be applied in connection with the services provided for in this Agreement.

ARTICLE XII
CONSULTATIONS

Either Contracting Party may, at any time, request consultation in relation to this Agreement. Such consultation shall begin within a period of sixty (60) days from the date the other Contracting Party receives a written request, unless the Contracting Parties agree otherwise.

ARTICLE XIII
TERMINATION

This Agreement shall remain in force unless terminated by either Contracting Party through a written notice given twelve (12) months prior to the intended dale of termination.

ARTICLE XIV
ENTRY INTO FORCE

The Agreement and the Annex hereto shall come into force upon the date of the exchange of letters between the Contracting Parties confirming that the appropriate procedures necessary for this Agreement to enter into force have been completed.

In witness whereof, the undersigned, being duly authorized, have signed this Agreement.

Done at Taipei, in the English language, on the 6th day of September 1996.

ANNEX

Annex to the Agreement on the Exchange of Traffic Rights between the Manila Economic and Cultural Office in Taipei and the Taipei Economic and Cultural Office in Manila signed on 06 September 1996.

I. Category 1

1. Route Schedule

(A) Route to be operated by the airlines designated by the appropriate authorities in Manila with full traffic rights:

(B) Route to be operated by the airlines designated by the appropriate authorities in Taipei with full traffic rights:

(C) The designated airlines of either party may, on any or all flight(s), omit any point or points on the route specified above, provided that the point of origin or destination is in the Philippines or Taiwan, as the case may be.

(D) Co-terminal and stop-over rights shall be allowed on domestic sectors of the other party.

2.Capacity

(A) On the routes specified above, not more than two combination airlines of each party shall be allowed to operate a total maximum number of weekly passenger seats in each direction as follows:

(Note: It is agreed that the capacity of B747 Combi aircraft shall be counted as 386 seats. Other types of Combi aircraft will be counted based on standard configuration of the non-Combi passenger version of said aircraft.)

(B) On the routes specified above, not more than two all-cargo airlines of each party shall be allowed to operate a total maximum number of weekly tonnage in each direction as follows:

3. Fifth Freedom Capacity

With the applicable maximum capacity and routings specified above, the exercise of the fifth freedom rights for both passenger and cargo shall be subject to the following limitations:

The designated airlines shall be allowed to operate a total maximum capacity of 4,500 seats provided that capacity on a per sector basis shall not exceed 2,560 seats for each fifth freedom sector. For purposes of calculating the capacity of all-cargo aircraft, the standard configuration for the passenger version of each aircraft type shall apply.

In any case, the maximum capacity for fifth freedom capacity by the designated airlines of one party in a given sector shall not exceed the total 3rd/4th freedom capacity of the designated airlines of the other party in such sector. This limitation shall not apply if there is no operation by the 3rd/4th freedom earners of the other party on such sector.

II. Category 2

Effective Summer 1997, the parties shall be entitled to designate one additional airline each to operate combination services on the routes specified below with capacity entitlements of 450 seats per week in each direction:

(A) Route to be operated by the airline designated by the appropriate authorities in Manila:

(B) Route to be operated by the airline designated by the appropriate authorities in Taipei:

(C) The designated airlines of either party may, on any or all flight(s), omit any point or points on the route specified above, provided that the point of origin or destination is in the Philippines or Taiwan as the, case may be.

(D) The designated airlines shall not exercise fifth freedom traffic lights on their intermediate and/or beyond points.

(E) Co-terminal and stop-over rights shall be allowed on domestic sectors of the other party.

III. Any increase of passenger seats and tonnage as well as additional designation of airlines shall be subject to future consultations between the Contracting Parties.

AGREED MINUTES

1. Being duly authorized, the delegations of Manila Economic and Cultural Office in Taipei (MECO) and Taipei Economic and Cultural Office in Manila (TECO) met in Taipei on 5th and 6th September 1996 for discussion on concluding an agreement on the exchange of traffic rights.

2. The lists of both delegations are attached.

3. The meeting was held in a friendly and cordial atmosphere and both parties agreed on the text of the attached AGREEMENT ON EXCHANGE OF TRAFFIC RIGHTS and its ANNEX.

4. It was also agreed that after the appropriate procedures necessary for this Agreement to enter into force have been completed, both Parties shall notify each other and, thereafter, formally sign the Agreement.

Done in Taipei on 6th September 1996.

DELEGATION OF MECO

1. Mr. Armando C. Fernandez Resident Representative (Chairman/Managing Director) Manila Economic and Cultural Office (MECO)

2. Mr. Franklin M. Ebdalin (Co-Chairman) MECO Adviser Members

3. Mr. Silvestre M. Pascual MECO Adviser

4. Ms. Lelicia B. Duinlao MECO Adviser

5. Mr. Francisco Noel Fernandez III MECO Adviser

6. Ms. Violeta O. Padua MECO Adviser

7. Ms. Adelaida S. Olboc MECO Adviser

8. Mr. Henry So Uy Philippine Airlines

9. Mr. Domingo T. Ligot Philippine Airlines

10. Ms. Ma. Theresa B. Busmente Philippine Airlines

11. Mr. Ruperto R. Ordillano, Jr. Philippine Airlines

12. Mr. Reynaldo L. Rodriguez Pacific East Asia Cargo Corporation

13. Mr. Manuel A. Barcelona, Jr. Pacific East Asia Cargo Corporation

14. Mr. Leslie W. Espino Grand International Airways

15. Mr. Jemy See MECO Adviser

DELEGATION OF TECO

Head of Delegation

1. Mr. Chang, Kuo-cheng Acting Director General Civil Aeronautics Administration Ministry of Transportation and Communications Members

2. Mr. Tien, Chu-cheng (Joseph) Director Planning, Legal & International Affairs Division Civil Aeronautics Administration Ministry of Transportation and Communications

3. Mr. Hou, Chien-wen (Peter) Deputy Director Planning, Legal & International Affairs Division Civil Aeronautics Administration Ministry of Transportation and Communications

4. Mr. Clement K. C. Huang Specialist, Aviation Division Navigation & Aviation Department Ministry of Transportation and Communications

5. Ms. Cheng, Chia-li Branch Chief, International Affairs Branch Planning, Legal & International Affairs Division Civil Aeronautics Administration Ministry of Transportation and Communications

6. Mr. Huang, Tson-fong Deputy Division Director Department of East Asian and Pacific Affairs Ministry of Foreign Affairs

7. Mr. Wang, Chih-bang Secretary Department of Legal & Treaty Affairs Ministry of Foreign Affairs

8. Mr. Herman Liu Deputy Director Corporate & Marketing Planning Division China Airlines

9. Mr. Andy Sun Manager, International Affairs Corporate & Marketing Planning Division China Airlines

10. Mr. Su, Horng-yih (Tony) Executive Vice President International Affairs Division EVA Airlines Corporation

11. Mr. Wang, Yuan-shyuang (Bruce) Acting Deputy Manager International Affairs Division EVA Airways Corporation

12. Mr. Shen, Evan Acting Vice President TransAsia Airways

Entry into Force: February 28, 1998