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THE ASEAN COMMON EFFECTIVE PREFERENTIAL TARIFF 
SCHEME FOR THE ASEAN FREE TRADE AREA

1.                  Background

 At the Fourth ASEAN Summit in January 1992, the ASEAN Heads of Government agreed to establish an ASEAN Free Trade Area (AFTA) by the year 2008 to open up their economies in the era of globalization.  During the ASEAN Economic Ministers (AEM) Meeting in September 1994, the target date was advanced to 2003.

 A free trade area would allow the companies within the ASEAN region to take advantage of the economies of scale.  The main implementing mechanism of AFTA is the Common Effective Preferential Tariff (CEPT) Scheme.

 2.                  What is AFTA?

AFTA stands for ASEAN Free Trade Area which involves the removal of obstacles to freer trade among member states. This includes the abolition of high tariffs or taxes on traded goods and the scrapping of quantitative restrictions (QR’s) and other non-tariff barriers (NTB’s) that limit the entry of imports.

 There are ten (10) ASEAN member countries. The six original members are Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore, and Thailand. The other members are Vietnam (1995), Laos and Myanmar (1997), and Cambodia (1999).

 3.                  What are the objectives of AFTA?

 The AFTA program was initiated in 1992 to create an integrated market among ASEAN’s close to half a billion people making the ASEAN economies more efficient and competitive, and attract investments into the region.

The ultimate objective of AFTA is to increase ASEAN's competitive edge as a production base geared for the world market. A critical step in this direction is the liberalization of trade in the region through the elimination of intra-regional tariffs and non-tariff barriers. This will have the effect of making ASEAN's manufacturing sectors more efficient and competitive in the global market. At the same time, consumers will source goods from the more efficient producers in ASEAN thus expanding intra-ASEAN trade.

 As the cost competitiveness of manufacturing industries in ASEAN is enhanced and with the larger size of the market, investors can enjoy economies of scale in production. In this manner, ASEAN hopes to attract more direct foreign investments into the region. This will, in turn, stimulate the growth of support industries in the region for many direct foreign investments.

 4.               What is the CEPT scheme?

 The Common Effective Preferential Tariff Scheme, or CEPT, is a cooperative arrangement among ASEAN Member States that will reduce intra-regional tariffs and remove non-tariff barriers over a 10-year period commencing January 1, 1993. The goal of the Scheme is to reduce tariffs on all manufactured goods to 0-5% by the year 2003. This will benefit Philippine exporters to ASEAN.  The lower CEPT rates make the country’s products cheaper in these markets, thus stimulating greater demand.  The increase in exports to ASEAN would depend on the price elasticity of demand.

 The CEPT Scheme is the main instrument for making ASEAN a free trade area in ten (10) years. This means that ASEAN Member States shall have common effective tariffs among themselves in AFTA but the level of tariffs vis-à-vis non-ASEAN countries shall continue to be determined individually.

 What products are covered under the CEPT scheme?

 All manufactured products, including capital goods and processed agricultural products, and those falling outside the definition of “unprocessed agricultural products” are covered by the CEPT Scheme.

 What kind of exclusions or exceptions are allowed under the CEPT scheme?

 There are three (3) instances when a product may be excluded from the CEPT Scheme:

a.         General Exceptions - A Member State may exclude a product which it considers necessary for the protection of its national security, the protection of public morals, the protection of human, animal or plant life and health, and the protection of articles of artistic, historic or archaeological value. The provision on General Exceptions in the CEPT Agreement is consistent with Article X of the General Agreement on Tariffs and Trade (GATT) 1994.

b.         Temporary Exclusions - Member States which are, in the interim, not ready to include certain sensitive products in the CEPT Scheme may exclude such products on a temporary basis. Products in the Exclusion List cannot enjoy the CEPT tariff from other ASEAN Member States. The Exclusion List does not in any way relate to products covered under the General Exceptions provisions.

 c.         Unprocessed Agricultural Products - These are agricultural products defined as:

1          agricultural raw materials and unprocessed products covered under Chapters 1 to 24 of the Harmonized System (HS) Code and similar agricultural raw materials and unprocessed products in other related HS headings; and

2          products which have undergone simple processing with minimal change in form from the original products.

 5.                  What is the program of tariff reduction under the CEPT Scheme?

There are two programs of tariff reduction under the CEPT Scheme: the Normal Track Program and the Fast Track Program. 

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Normal Track

Products with tariff rates above 20% had their rates reduced to 20% by January 1,1998 and subsequently from 20% to 0-5% by January 1, 2003.

Products with tariff rates at or below 20% had their rates reduced to 0-5% by  January 1, 2000.

 

bullet

Fast Track

Products with tariff rates above 20% had their rates reduced to 0-5% by January 1, 2000.

Products with tariff rates at or below 20% had their rates reduced to 0-5% by  January 1, 1998.

 6.                   What are the conditions for a product to be eligible for concessions under the CEPT?

There are three (3) conditions, namely:

a.         The product has to be included in the Inclusion Lists of both the exporting and the importing countries and must belong to the same tariff band, i.e., above 20% or 20% and below.

b.         It has to have a program of tariff reduction approved by the AFTA Council.

c.         It has to be an ASEAN product, i.e., it has to satisfy the local content requirement of at least 40%.

Products with tariff rates of 0-5% are deemed to have satisfied these conditions under the CEPT Agreement and shall also enjoy the concessions.

 7.                What other measures, apart from tariff reductions, are covered under the CEPT scheme to promote free trade within ASEAN?

 Apart from tariff reductions, the CEPT Scheme provides for the elimination of QRs (quotas, licenses, etc.) and Non Tariffs Barriers (NTBs)  as well as exceptions to foreign exchange restrictions on CEPT products.

 Member States shall eliminate all QRs on CEPT products upon enjoyment of concessions applicable to these products.

As regards NTBs, these shall be eliminated by Member States on a gradual basis within a period of five years after the enjoyment of concessions applicable to the CEPT products.

 Member States shall also make exceptions to their foreign exchange restrictions relating to payments, as well as repatriation of such payments, on CEPT products.

 8.                  What are the safeguard provisions of the CEPT Agreement?

If, as a result of the implementation of the CEPT, the import of a particular product is increasing to an extent that it causes injury to sectors or industries producing like or competitive products, the importing Member State may suspend preferences provisionally as an emergency measure. Such suspension shall be consistent with Article XIX of GATT 1994.

A Member State taking such an emergency action shall give immediate notice to the AFTA Council through the ASEAN Secretariat, and such action may be subject of consultations between concerned Member States.

 9.                 What appeals procedure is available to parties interested in requesting a modification, suspension or withdrawal of CEPT concessions?

Petitions for modification, suspension or withdrawal of CEPT concessions may be filed by interested parties under Section 402 of the Tariff and Customs Code, as amended. The Tariff Commission conducts investigations  on   petitions   it receives during the course of which public hearings are held to afford interested parties reasonable opportunity to present their  views.  The Commission  submits its  findings  and   recommendations  to  the National Economic and Development Authority (NEDA) which then schedules these for deliberation by both the Tariff and Related Matters (TRM) Technical and Cabinet Committees. The final decision is made by the NEDA Board after which the Commission prepares the implementing Executive Order.

10.             What are “Rules of Origin”?

Taken as a whole, the Rules of Origin compose the set of criteria used to determine the country or customs territory of origin of a good or service in international trade. It is a crucial component of any regional trading arrangement and serves to prevent non-members of a free trade area from taking advantage of different external tariff rates imposed by individual member countries. It is used to determine the eligibility of a product to receive concessions.

Rules of Origin rest on the concept of "substantial transformation" so that origin is assigned to the country where the last substantial transformation occurred. Substantial transformation may be defined on the basis of a change in tariff heading, achieving a threshold proportion of value-added, or on the basis of certain manufacturing processes. In AFTA, the rule of origin is based on value-added  with the threshold level set at 40% of the value of the product.

 11.             How is the Temporary Exclusion List eliminated?

 Products from the Temporary Exclusion List are phased-in into the Inclusion List in five equal installments annually. The first installment was effected on January 1, 1996 and the last installment was effected on  January 1,  2000 and included in E.O. 234.

 12.             What tariff reduction schedules will products transferred from the temporary exclusion list have?

 a.         Products with tariffs above 20% must have had tariffs of 20% by January 1, 1998.  Products above 20% and brought into the Inclusion List after  January  1, 1998 must have a tariff of 20% or less upon transferring. Tariffs should be subsequently reduced to 0-5% by January 1,  2003.

b.                  Products with tariff rates of or below 20% must have their tariffs reduced to 0-5% by  January 1, 2003.

 13.             How will unprocessed agricultural products be phased-in into the CEPT Scheme?

 a.                  Sensitive List - Products in this category, due to their sensitivity, have a special arrangement or mechanism (e.g., a longer timeframe of implementation, final CEPT rate higher than the existing 0-5%). The 9th AFTA Council Meeting held in Singapore on  April 26, 1996 agreed that products in the Sensitive List would be divided into two sub-categories: sensitive and highly sensitive.

 For products in the “Sensitive” category, the following agreements were reached:

·                    the beginning year for phasing-in was scheduled for  January 1,  2001 but not later than  January 1, 2003;

·                    the ending year for phasing-in will be  January 1, 2010;

·                    tariffs will be at 0-5% by January 1, 2010; and

·                    NTB’s will be removed by January  1, 2010.

Products in the “Highly Sensitive” category refer to rice for Indonesia, Malaysia, and the Philippines. It was agreed that the ending year for the phasing-in of this product will be 2010. There shall also be a flexibility option for safeguard measures.

b.                  Temporary Exclusion List - Products in this list will be phased-in into the Inclusion List in equal installments beginning January 1, 1997 and ending January 1, 2003. Products transferred by or after 1998 should have tariffs reduced to 20% or below. Products transferred in 2003 should have tariffs reduced to 0-5%.

c.                  Inclusion List - Products in this list are for immediate transfer to the CEPT Scheme. The program of tariff reduction is such that by  January 1, 2003, the final CEPT rate is 0-5%.

14.             Can indirect consignments be accepted under the CEPT Scheme?

No. The CEPT concessions are granted only to direct consignments. “Direct consignments” refer to products that are: (a) transported without passing through the customs territory of a non-ASEAN country or (b) whose transport through the customs territory of a non-ASEAN country can be justified for geographical reasons, and has not entered into trade or consumption there, or undergone any operation beyond unloading or reloading.

 15.             How does a firm trading in a CEPT-eligible product apply for a Certificate of Origin Form D to comply with the local content requirement?

The firm applies in writing to the relevant government authorities in his country requesting the pre-exportation verification of the origin of the product. At the time of carrying out the formalities for exporting the product under preferential treatment, the exporter applies for a Certificate of Origin (CO) Form D. The authorities designated to issue the CO (in our case the Bureau of Customs) carry out the proper examination to determine conformity with the Rules of Origin. The CO is issued at the time of exportation or soon thereafter.

16.             What Executive Orders Implementing the Philippine CEPT Scheme have been issued?

Products with CEPT rates are included in the Inclusion List (IL) being implemented by the Philippines under the following Executive Orders:

Executive Order

 Date Issued

Executive Order

 Date Issued

388

December 27, 1996

165

January 10, 2003

453

October 31, 1997

263

December 30, 2003

487

June 11, 1998

268

January 9, 2004

71

January 15, 1999

316

May 21, 2004

234

April 27,  2000

489

January 12, 2006

254

June 12, 2000

490

January 12, 2006

49

November 3, 2001

 

 

 

Article 6 of the Agreement on the Common Effective Preferential Tariff (CEPT) Scheme for the ASEAN Free Trade Area

 1.                  What is Article 6 of the CEPT Agreement?

 The ASEAN members signed the Agreement on the CEPT Scheme for the AFTA on January 28, 1992 in Singapore.  Article 6 of this Agreement provides for emergency measures as follows:

Article 6:  Emergency Measures

 

i.                    If, as a result of the implementation of this Agreement, import of a particular product eligible under the CEPT Scheme is increasing in such a manner as to cause or threaten to cause serious injury to sectors producing like or directly competitive products in the importing Member States, the importing Member States may, to the extent and for such time as may be necessary to prevent or to remedy such injury, suspend preferences provisionally and without discrimination, subject to Article 6(3) of this Agreement.  Such suspension of preferences shall be consistent with the GATT.

 

ii.                  Without prejudice to existing international obligations, a Member State which finds it necessary to create or intensify quantitative restrictions or other measures limiting imports with a view to forestalling the threat of or stopping a serious decline of its monetary reserves, shall endeavor to do so in a manner which safeguards the value of the concessions agreed upon.

 iii.                Where emergency measures are taken pursuant to this Article, immediate notice of such action shall be given to the Council referred to in Article 7 of this Agreement, and such action may be the subject of consultation as provided for in Article 8 of this Agreement.

 2.                  What are the requirements for suspension of concessions under Article 6?

Four  (4) elements must be proven:  product comparability, increasing imports  (due to unforeseen developments and the grant of concessions), serious injury or threat thereof, and causal linkage.

Petitioners must submit data/evidence on the above elements.

 3.                  What constitutes serious injury or threat thereof?

 Among the factors to be considered in determining whether injury to the domestic industry is serious are:

·                    decline in sales or prices; downward trends in production, profits, wages, or productivity;

·                    inability to generate capital for modernization or maintain existing levels of expenditures on research and development;

·                    inability of significant number of firms to carry out production at a profit; significant idling of production facilities including the closure of plants or underutilization of production capacity;

·                    significant unemployment/ underemployment; significant reduction in market share as a proportion of market demand; and

·                    growing inventories of subject article, whether maintained by domestic producers, importers, wholesalers or retailers.

For threat of serious injury, the following factors are considered:

 ·                    significant increase in imports (evidenced, among others, by the existence of letters of credit, supply/sales contracts, awards of a tender, irrevocable offers or other similar contracts);

·                    decline in sales, prices or market share and downward trends in production, profits, wages, productivity or employment;

·                    inability to generate capital for modernization or maintain existing levels of expenditures on research and development;

 ·                    sufficient freely disposable, or an imminent substantial increase in production capacity of foreign exporters including access conditions they face in third country markets indicating the likelihood of substantially increased exports to the Philippines; and

·                    growing inventories of subject article, whether maintained by domestic producers, importers, wholesalers or retailers.   

 4.                                  If the CEPT rate is suspended pursuant to Article 6 of the CEPT Agreement, what rate of duty will apply?

        The Most-Favored-Nation (MFN) rate will apply. The preferential rate may however be suspended to the extent as may be necessary to prevent or to remedy the serious injury.

 5.                  How long can a CEPT rate be suspended?

The CEPT rate can be suspended only for such period of time as may be necessary to prevent/remedy the serious injury and to facilitate adjustment.

6.                  Is a member country required to provide compensation when it suspends the application of a CEPT rate?

            Yes, a member country will have to provide compensation as may be mutually agreed upon with the affected ASEAN member countries.

 7.                  Can other ASEAN members retaliate if the Philippines is found not to have complied with the requirements of Article 6?

             The Interpretative Notes of Article 6 require that the suspension of preferences be consistent with Article XIX (Emergency Action on Imports of Particular Products) of the GATT.  Article XIX allows a country affected by the emergency action to withdraw substantially equivalent concessions.

Article 9 of the Protocol on Dispute Settlement Mechanism allows any party invoking the dispute settlement mechanism to suspend the application of the concessions of the member state concerned (i.e., the Philippines) or any other obligation under the AFTA-CEPT Agreement, if no satisfactory compensation has been agreed upon.

8.                  Has Article 6 been invoked previously by the Philippines?

No.  However, under the erstwhile Preferential Trading Arrangements (PTA) Scheme, the Philippines suspended its tariff concession (Margin of Preference or MOP) on refractory bricks.

9.                  Have other ASEAN members invoked Article 6?

             No.

10.             What is the process for suspension of CEPT rate?

             The Tariff Commission conducts a public consultation on petitions for suspension of tariff concessions under Article 6.  The Commission then submits its report of findings and recommendations to the Tariff and Related Matters Committee (TRM).  The final decision is taken by the NEDA Board after which the Commission prepares the implementing Executive Order.

As required by the Agreement, the Philippines must notify the AFTA Council of any emergency measures it undertakes under Article 6.

 11.             What is the timetable of the Commission’s Article 6 investigation?

Taking into account the emergency nature of an Article 6 petition, the Commission shall complete its investigation and submit its report of findings and recommendation to the TRM Committee within sixty (60) days from receipt of a properly documented petition. 

         Commission Order No. 02-01 provides the rules and regulations governing the conduct of the Commission’s formal investigation on the withdrawal and/or suspension of concessions under Section 402 of the Tariff and Customs Code.

12.       What is ASEAN Charter?

ASEAN Charter is one of the most important  documents  that create a legal and institutional framework for cooperation within the region and towards the formation of an ASEAN community.  It  also laid the foundation for ASEAN to restructure is existing mechanisms and improve its decision-making process to enhance efficiency and ensure prompt implementation of all ASEAN agreements and decisions.  The  Leaders of the 10-member Association of Southeast Asian Nations (ASEAN) signed the document on 20 November 2007 at the 13th ASEAN Summit held in Singapore.   The ASEAN Charter  focused at committing the ASEAN to the ideals of democracy, a single market and the protection of human rights.  

 13.      What are the main declarations of the ASEAN Charter?

§                     To maintain and enhance peace and security in the region, and to preserve Southeast Asia as a nuclear weapon-free zone.

 §                     To create a single market and production base, which is highly competitive and economically integrated and has free flow of goods, services and investment, with facilitated movement of labour and freer flow of capital.

 §                     To strengthen democracy, enhance good governance and the rule of law, and to promote human rights. ASEAN shall establish a human rights body, with terms to be decided by foreign ministers.

 §                     To respect the independence, sovereignty, territorial integrity and national identity of all ASEAN member states.

 §                     The renunciation of aggression and threat or use of force in any matter inconsistent with international law, and reliance on peaceful settlements of disputes.

 §                     Non-interference in the internal affairs of member states.

 §                     To alleviate poverty and narrow the development gap within ASEAN.

 §                     To promote sustainable development to protect the environment, natural resources and cultural heritage.

 §                     To develop human resources and well-being through co-operation on education, equitable access to development opportunities, social welfare and justice.

 §                     To promote an ASEAN identity through awareness of culture.

Protocol on the Implementation of the CEPT Scheme Temporary Exclusion List

1.                   What is the Protocol on the CEPT-TEL?

           The Protocol on the Implementation of the CEPT Scheme Temporary Exclusion List signed on November 23, 2000 is an exception window of the AFTA-CEPT Scheme which  allows limited flexibility on the implementation of the CEPT Scheme Temporary Exclusion List (TEL).

2.                  What is the objective and scope of the Protocol?

The objective of this Protocol is to allow a Member State to temporarily delay the transfer of a product from its TEL into the Inclusion List (IL), or to temporarily suspend its concession on a product already transferred into the IL, if such a transfer or concession would cause or have caused real problems, by reasons which are not covered by Article 6 (Emergency Measures) of the Agreement.

The provisions of this Protocol shall apply only to the last tranche of TEL manufactured products which were in the TEL as of  December 31, 1999 or the relevant dates applicable to Cambodia, Lao PDR, Myanmar and Vietam.

 3.                     How does a Member State invoke the Protocol?

    A member State which seeks to invoke the provisions of the Protocol shall make a written submission (herein referred to as the “Submission”) to the ASEAN Free Trade Area (AFTA) Council.  A copy of the Submission shall be extended by the ASEAN Secretariat to the Senior Economic Officials’ Meeting (SEOM) and to the Coordinating Committee on the Implementation of the CEPT Scheme for AFTA.

 4.                  What is the right of affected ASEAN Member State/s?

     Member States having principal or substantial supplying interest in the particular product shall submit a written request for consultation to discuss provision for compensatory adjustment measures which may take any form.  Member States shall ensure a general level of reciprocal and mutually advantageous concessions not less favorable to trade than that provided for and prevailing under Agreement prior to such discussions.

 5.                  Is a Member State required to pay compensations?

     An ASEAN Member State shall provide compensatory adjustment as agreed upon and shall be extended on the most favored nation (MFN) basis to all Member States.

6.                  If no agreement is reached, can a Member State retaliate?

If no agreement is reached on the Submission at the latest by 180 days of the date of  receipt of the Submission by the AFTA Council and the applicant Member State nevertheless insists on proceeding with the delay of the transfer or the suspension of the concession, Member States with principal or substantial supplying interest and which have entered into separate discussions with the applicant Member State shall be free, not later than 90 days after such action is taken, to withdraw substantially equivalent concessions from the applicant Member State, upon the expiration of 30 days from the date on which written notice of the intention to make such withdrawal is received by all Member States.

 7.                  Has the Philippines invoked the Protocol?

    Yes, the Philippines in December 2002 sent its notification to suspend the tariff concessions on petrochemical products already transferred into the CEPT IL to the AFTA Council.  The petrochemical products composed of polymers of polyethylene, propylene, polyvinyl  chloride, polystyrene; PVC floor coverings; sheets, plates, film, foil and strip of PVC; twine, cordage, rope, and cables of polyethylene and polypropylene.

 8.                  What  EO  implemented the suspension of tariff concessions on petrochemical products?

Executive Order No. 161 (issued on January 9, 2003) implemented the suspension of the tariff reduction schedule on certain plastic products under the Protocol Regarding the Implementation of the CEPT Scheme Temporary Exclusion List. 

ASEAN Priority Integration Program under the ASEAN-CEPT Scheme

 1.         Background

 As declared in the Bali Concord II in 2003, the formation of an ASEAN Economic Community  (AEC) by 2020 is a large step in the evolution of ASEAN. The AEC not only signifies the region’s commitment toward “closer cohesion and economic integration”, but also sets a concrete goal to achieve an integrated (single) market and production base for the region.  This commitment was further reaffirmed at the 10th ASEAN Summit in November 2004 when the Leaders identified the eleven (11) Priority Sectors that would accelerate the region’s economic integration by 2010 under the Framework Agreement for the Integration of Priority Sectors.

2.         What are the priority sectors under the ASEAN Priority Integration Program?

The 11 priority sectors and the corresponding country coordinators (selected on the basis of comparative advantage, skills and cost competitiveness, and value-added contribution to ASEAN’s economy)  are:

Wood-based & Automotive

-

Indonesia

Rubber-based & Textiles

-

Malaysia

Agro-based & Fisheries

-

Myanmar

Electronics

-

Philippines

e-ASEAN & Healthcare

-

Singapore

Airlines & Tourism

-

Thailand

 3.                  What are the measures drawn-up   to realize the integration of the eleven (11) sectors?

 The basis for economic integration for each of the priority sectors was prepared with active involvement of the private sector. The roadmaps aim to:

(i)                 enhance the competitiveness of ASEAN;

(ii)               strengthen regional integration efforts through liberalization, facilitation and promotion measures; and

(iii)             promote private sector participation. This includes specific measures that are of direct relevance to each sector, as well as common measures that cut across all priority integration sectors to be implemented with timelines from now on to the year 2010.  Amongst these measures are:

·        the elimination of all tariffs in relation to products (other than those in the sensitive, highly sensitive and general exception lists) covered by the priority sectors by 2007 for ASEAN 6 and 2012 for the CLMV; or 3 years earlier than the original target under the ASEAN Free Trade Area (AFTA).  Under the liberalization plan, each country has a quota to exclude no more than 15 percent of the total tariff  lines in the priority sectors.

·        the establishment of a definitive work program for the elimination of non-tariff measures and the standardization of ROO;

·        the harmonization of customs declaration forms and the development of the Single Window approach for customs;

·        the harmonization of standards;

·        acceleration of trade in services liberalization;  and

·        progressive elimination of restrictive investment measures by 2010 for

ASEAN 6, 2013 for Viet Nam and 2015 for Cambodia, Lao PDR and  Myanmar.

As outlined in the Roadmap, the measures to be pursued are grouped into two broad categories, namely:

 (a)     Common or horizontal measures which cut across all priority sectors.

·        Under the existing Roadmap there are  15 categories:  (i) Tariff Elimination; (ii) Non-Tariff Measures (NTMs); (iii) Rules of Origin (ROO); (iv) Customs procedures; (v) Standard & Conformance; (vi) Logistic Services; (vii) Outsourcing and Industrial Complementation; (viii) ASEAN Integration System of Preferences; (ix) Investments; (x) Trade and Investment Promotion; (xi) Intra-ASEAN Trade and Investment Statistics; (xii) Intellectual Property Rights; (xiii) Movement of Business Persons, Skilled Labor, Talents and Professionals; (xiv) Facilitation of Travel in ASEAN; and (xv) Human Resource Development.                                        

 (b)     Specific measures that are of direct relevance to each sector.  The integration approaches are premised on (i) combining the economic strengths of ASEAN member countries for regional advantage;  (ii) facilitate  and promote intra-ASEAN trade and investments;  (iii)  improve the condition to attract and retain manufacturing and other economic activities within the region;  (iv)  promote outsourcing program within ASEAN;  and  (v) promote the development of “Made in ASEAN” products and services.

 4.         Implementing Bodies

To ensure the implementation of the Roadmap in an effective and sustainable manner, implementing bodies have been assigned to look after each of the respective measures. As indicated by the Vientiane Action Programme, the implementing bodies should “streamline the decision-making process and ensure effective implementation of all ASEAN economic initiatives”.

  Ø                   Senior Economic Officials Meeting (SEOM) as overall in charge
 Ø                    
Implementation by various ASEAN Working Groups

ü      Examples

         CCCA: Coordinating Committee on the Implementation of the CEPT-AFTA

        CCS: Coordinating Committee on Services

        CCI: Coordinating Committee on Investments

        ACCSQ: ASEAN Consultative Committee on Standards and Quality

        TELSOM: Telecommunications Senior Officials Meeting

5.                  What EO implemented the Philippine commitment under the Integration of the Priority Sectors?

EO 417 was issued on April 23, 2007 to implement the Philippine commitments.  This covers the first and second phases of tariff elimination under the priority integration.

 

The ASEAN Integration System of Preferences (AISP)

 1.                  Background

 At the Fourth ASEAN Informal Summit held on November 22-25, 2000 in Singapore, the ASEAN Leaders agreed to launch an Initiative for ASEAN Integration (IAI), which gives direction to and sharpens the focus of collective efforts in ASEAN to narrow the development gap within ASEAN as well as between ASEAN and other parts of the world.

In pursuing the decision to launch the IAI, the Thirty Fourth Meeting of ASEAN Ministerial Meeting (AMM)   on July 23-24, 2001 in Hanoi,    adopted the Hanoi Declaration on Narrowing the Development Gap for Closer ASEAN Integration.  At the 35th AMM held on  July 29, 2002 in Brunei Darussalam, Foreign Ministers endorsed the IAI Work Plan and the list of programs and project proposals.  The Ministers agreed to devote special efforts and resources to promote effective cooperation and mutual assistance to narrow the development gap among ASEAN Member Countries for the sake of dynamic and sustained growth of the region and prosperity of the people.  ASEAN Leaders approved the IAI Work Plan at their Summit Meeting on November 4,  2002 at Phnom Penh, Cambodia.

Within this context, the work plan will assist new member countries to reduce the development gaps among ASEAN Member Countries and expedite greater regional economic integration, promote equitable economic development and help alleviate poverty in Cambodia, Laos, Myanmar and Viet Nam (CLMV).

ASEAN has adopted the ASEAN Integration System of Preferences (AISP) scheme whereby preferential tariffs are offered to the newer members by the older members on voluntary and bilateral basis starting on  January 1, 2002. AISP is implemented based on products proposed by the CLMV Countries.

 2.         Has the Philippines granted tariff preferences under the AISP?      

The Philippines  granted its first package of tariff preferences under the AISP to Myanmar and Vietnam covering certain agricultural, industrial, pharmaceutical and electrical goods under Executive Order No. 166 issued in January 2003.  The second package  was extended to  CLMV under Executive Order 448 in 2005,  comprising certain plant products and wood sawn timbers.

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