1.
What is Article 6?
The
ASEAN members signed the Agreement on the CEPT
Scheme for the AFTA on 28 January 1992 in
Singapore. Article 6 of this Agreement provides
for emergency measures as follows:
"Article
6: Emergency Measures
1.
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.
2. 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.
3. Where emergency measures are taken
pursuant to this Article, immediate notice
of such action shall be given to the
Council referred to in Article 7of 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 and 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 productive 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 a CEPT
rate is suspended, will the MFN rate automatically apply?
Yes, the MFN
rate will automatically apply on imports from ASEAN
members if the CEPT rate is suspended.
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. However, the period of suspension
shall not exceed four (4) years.
6. Is the
Philippines required to provide compensation when it
suspends the application of a CEPT rate?
Yes, the
Philippines 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 procedures to
suspend the application to the member state concerned
(i.e., the Philippines) of the concessions 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?
