CUSTOMS Primer Summary

TARIFF REFORM PROGRAM *Two (2) main instruments of structural adjustments* a. Tariff Reform Program b. Import Liberalization Program Tariff Reform Program – is the review/restructuring of the Phils. tariff system TRP I – scheduled from 1981 -1985; emphasized inter-industry & inter-sectoral linkages in the economy Nominal Protection Rate – percent tariff paid by consumers on a particular industry’s output Effective Protection Rate – percent by w/c the entire set of nation’s trade barriers raises the industry’s value added per unit of output TRP II – E.O 470 effective on August 24, 1991 signed by Corazon Aquino; period from 1991 - 1995 – to reduce overall level of protection & disperse tariff protection w/n and across industries TRP III – uniform level of protection across all sectors; aimed at promoting global competitiveness, simplify tariff structure and provide level playing field for local manufacturers vis-à-vis foreign competition E.O 189 – marked the onset of TRP III E.O 264 – tariff modifications on industrial products E.O 288 – tariff reductions on non-sensitive agricultural products those not covered by QR E.O 313 – interim tariff protection to sensitive agricultural products E.O 461 – 3% tariff on imported crude oil & refined petroleum products TRP IV – correct any remaining tariff distortions E.O 465 – evaluate the tariff schedule of residual items E.O 486 – re-calibrated tariff schedule of residual items E.O 334 – tariff schedule from 2001 – 2004 of all products E.O 83 & 91 – 1% MFN rates on various imported raw materials, intermediate inputs, machinery & parts E.O 84 – tariff schedule from 2002 – 2004 on sensitive agricultural products E.O 196 – 1% MFN rate on critical inputs to agriculture & fisheries sectors E.O 197 – raised tariff on certain vegetables E.O 241 – 2003 – 2005 MFN rate for locally produced industrial finished products E.O 264 – tariff schedule from 2004 – 2005 for residual products not covered by E.O 241 E.O 450 – promote competitiveness of paper & aerosol industries E.O 440 – increasing prices of petroleum products E.O 419 & 449 – energy conservation & independence in transport sector E.O 418, 443 & 477 – support clean air act & promote road safety E.O 691 – temporarily modified the MFN rate on crude oil & refined petroleum products E.O 765 – aims to help stabilize the price of bread & other baked foods E.O 766 – cement & cement clinker E.O 790 – 1% MFN rate on certain not locally produced raw material inputs & – 3% MFN rate on biofuels & biofuel blend E.O 877 – identified the motor vehicle industry as significant contributor to country’s economic output E.O 885 – 0% MFN rate on imported educational, technical, scientific, & historical or cultural books E.O 898 – Hot-rolled Coils (HRC) and Cold-Rolled Coils (CRC)

AGRICULTURE AND FISHERIES MODERNIZATION ACT OF 1997 AFMA – RA 8435, signed on December 22, 1997 by Pres. Fidel V. Ramos *objectives of AFMA* a. modernize agricultural & fishery sectors b. enhance profits & incomes in agriculture & fishery sectors c. ensure accessibility, availability & stability of food supply at all times d. encourage horizontal & vertical integration, consolidation & expansion of agriculture & fishery activities e. promote people empowerment f. pursue a market-driven approach g. induce the agricultural & fishery sectors to continuously ascend the value-added ladder h. adopt policies that will promote industry dispersal & rural industrialization i. provide social & economic adjustment measures j. improve the quality of life of all sectors Sec. 109 of RA 8435 – provides that all enterprise engaged in agriculture & fishery duly certified by Department of Agriculture in consultation w/ DOF & BOI, shall for 5 years exempted from payment of D&T on all types of imported agricultural & fishery inputs, equipment and machinery *who are eligible for exemption?* a. Agricultural Sectors e. Fishery Enterprises b. Cooperatives f. Fishery Sectors c. Farmers & Fisherfolk g. Import Consolidators d. Farmers & Fisherfolk organizations & associations *role of the Tariff Commission in the AFMA* – actively participate in preparation of IRR of AFMA – preparation & review of the product list in consultation w/ concerned agencies & private sector – conduct public hearings; provide interested parties the opportunity to be heard & submit position papers

THE PHILIPPINE FISHERIES CODE OF 1998 RA 8550 RA 8550 – signed on February 25, 1998 by Pres. Fidel V. Ramos *objectives of RA 8550* a. conservation, protection & sustained management of country’s fishery & aquatic resources b. poverty alleviation among municipal fisherfolk c. improvement of productivity of aquaculture d. optimal utilization of offshore & deep-sea resources e. upgrading post-harvest technology Sec. 35 of RA 8550 – provides for the availment of incentives for commercial fishers; a. long-term loans b. tax & duty exemptions on importation of fishing vessels not more than 5yrs. old, equipment & paraphernalia for a period of five(5) years – items eligible for tax-and-duty-free importation for a period of 5yrs. under E.O 209 1. Fishing vessel, fishery equipment & paraphernalia listed in ANNEX B of EO 209 – secure first an Authority to Import (ATI) form MARINA & Cert. of Eligibilty from BFAR 2. Fishing vessel, fishery equipment & paraphernalia listed in ANNEX C – secure Certificate of Non-Availability from BOI c. commercial fishing operators for high seas shall have duty & tax rebates on fuel consumption – fuel involved is consumed within 1 year from date of purchase – subject to submission of the ff. to the DOF – One-Stop-Shop and Duty Drawback Center 1. Document attesting inspection of vessels as for high seas (certified true copy by MARINA) 2. Commercial Fishing Boat License issued by BFAR 3. Notarized Certificate of Fuel Loaded issued by BOC Inspector 4. Documents proving fuels consumed 5. Documents proving fuel purchased 6. Documents proving fuel delivered d. All applicable incentives available under Omnibus Investment Code of 1987 Sec. 61 of RA 8550 – provisions w/c governs the importation & exportation of fishery products a. export of fishery products shall be regulated whenever it affects domestic food security & production – exportation of live fish is prohibited except those w/c are hatched or propagated from accredited hatcheries b. protect & maintain local biodiversity or ensure the sufficiency of domestic supply – spawners, breeders, eggs & fry of bangus, prawn shall not be exported or caused to be export c. Fishery products may imported only if certified as necessary by the DA in consultation w/ FARMC – all requirements have been complied – fish imports for canning/processing purposes only may allowed without necessary certification d. No person shall import/export fishing products without securing permit from Department of Agriculture *role of Tariff Commission of the Fisheries Code* – the TC, in coordination w/ DA, other government agencies & private sector, provide technical expertise in the tariff Classification & preparation of list of products entitled to tax & duty exemption

JEWELRY INDUSTRY DEVELOPMENT ACT OF 1998 RA 8502 RA 8502 – an act to promote the development of & providing incentives to jewelry manufacturing industry – signed on Feb. 13, 1998, took effect on July 9. 1998 Sec. 3 of RA 8502 – incentives granted under this act to a qualified jewelry industry a. zero(0) duty on imported raw materials b. exemption from excise tax on goods commercially known as jewelry whether real/imitations c. zero(0) duty on imported capital equipment, including spare parts & toolings d. additional deduction from taxable income of 50% of expenses e. gold & silver sales by the Bangko Sentral ng Pilipinas under minimal margins to jewelry enterprises f. authority for jewelry enterprises to buy gold & silver directly from other sources g. inclusion of locally-manufactured jewelry in the government’s tourist duty-free shop including promotion, advertisements & sale thereof h. jewelry enterprises availing the incentives under this act shall still be eligible to incentives by other special laws – no double availment of the same incentives Sec. 4 of RA 8502 – jewelry enterprises availing incentives must be duly registered with the Board of Investments (BOI) Jewelry enterprise – any enterprise engaged in any aspect in the manufacture of goods commonly or commercially known as fine and imitation jewelry

ANTI-DUMPING DUTY Dumping – occurs when foreign producers sell their products to an importer at prices lower than in their own national markets or at prices below the cost of production – a form of price discrimination between two national markets *elements of dumping* 1. Like Product – product produced by domestic industry w/c is identical/alike in all respects 2. Price Difference – amount by w/c normal value (exporting country price) exceeds export price (selling price to importer in PH) 3. Injury – material injury to a domestic industry 4. Causal Link – a finding that material injury is the direct result of importation of dumped products

LPIC

Normal value – foreign producer’s domestic selling price – the comparable price for like-product when destined for consumption in the country of export Export price – the ex-factory price at the point of sale for export; price assessed at the FOB level – the price at which such product has been purchased or agreed to be purchased at arm’s length transaction Arm’s length transaction – a transaction where the price is not affected by any relationship between buyer & seller Domestic Industry – the domestic producers of like-product Comparable Price – the domestic price of the product in the exporting country Country of export – the country from where the product was shipped to the Philippines Country of origin – the country where the product either wholly obtained where the last substantial transformation took place New foreign exporter – an exporter who did not export the allegedly dumped product during investigation period Non-selected foreign exporter/producer – a foreign exporter who has not been initially selected for the purpose of computing the individual margins of dumping Non-market economy – the country of export/origin where the government has monopoly of trade Price depression – the domestic producer reduces its selling price to compete w/ dumped product Price suppression – the dumped product prevents domestic producer from increasing the selling price of its own like -product Price undercutting – the dumped product is sold at price below the domestic selling price Dumping protest – any specific kind/class of a foreign product w/c is being imported, sold or likely to be sold into the Philippines at a price lesser that its normal value Price undertaking – a voluntary commitment by the exporter to increase his price or to cease exporting to PH at a dumped price – shall be made only after a preliminary affirmative determination & injury to domestic industry – a voluntary undertaking by government of exporting country to eliminate/limit subsidy *importations exempted from anti-dumping protest* a. Products imported by, or consigned to government agencies not organized for profit b. Conditionally free importations RA 8752 – Anti-Dumping Act 1999 (Sec.301 of TCCP); signed on August 12, 1999, took effect on September 4, 1999. JAO 1-2000 – (Joint Administrative Order) the Implementing Rules & Regulation (IRR) of the act, took effect on July 10, 2000 CO No. 00-01 – (Commission Order) prescribes the internal rules & regulations governing the conduct of formal investigation by TC – deposited on June 20, 2000 w/ the University of Philippines Law Center, took effect on July 5, 2000 *agencies administer anti-dumping legislation* a. DTI-BIS – in case of industrial goods; Department of Trade & Industry – Bureau of Import Services b. Department of Agriculture – in case of agricultural products c. Tariff Commission (TC) – conducts formal investigation & submits report of findings to either Secretary for the issuance of a Department Order d. Bureau of Customs – imposes the dumping bond and/or definitive duty upon receipt of Department Order through the Secretary of Finance *who may file anti-dumping protest* a. domestic industry (in writing & in a notarized form) b. DTI or DA *the threshold of support by producers for the protest to be accepted* a. collective output of more than 50% of total production of like-product produced by domestic industry b. accounting for atleast 25% of total domestic production of product to be dumped *Protestant shall post a surety bond to answer for any damages to the importer may sustain by reason of frivolous petition the bond will be release only upon affirmative preliminary determination *the de minimis rule of anti-dumping* protest shall be immediately rejected & investigation terminated if: a. margin of dumping is less than 2% of the export price b. volume of imports is less than 3% of all imports of like products into the importing country c. the injury is negligible Stages of Anti-Dumping Investigation A. Prima Facie Determination – DTI-BIS or DA, upon acceptance of the protest/application, has 5 working days to decide whether the facts would constitute a dumping case; undertake an in-depth evaluation B. Preliminary Determination – DTI-BIS or DA notifies the government of the country of export about the i nvestigation – within 2 days from initiation of the investigation, DTI-BIS /DA notifies all known interested parties and send questionnaire – not later than 30 working days from receipt of the answer of the respondents, Secretary shall make a preliminary determination *the requirement of dumping bond (equivalent to the amount of dumping margin) - shall be made not sooner than 60 days from date of initiation of investigation; only for a period of 4 months *Secretary shall immediately terminate the investigation upon finding the de minimis rule C. Final Determination – the Commission notifies all interested parties & holds preliminary conference and public consultations – from its receipt from Secretary of DTI/DA, the Commission has 120days to complete its own inquiry and submit its report of findings to either Secretary – before making final determination, Commission is required to disclose the essential facts to the interested parties on w/c the decision to apply the duty is made; Parties are given 5days from date of receipt of essential facts to defend it in writing D. Issuance of Department Order – from receipt of affirmative final determination by the Commission, the DTI or DA Secretary within 10 working days issue a Department Order imposing an anti-dumping duty on dumped product *in case of negative finding by the Commission, either Secretary shall issue, through Secretary of Finance, after lapsed of period for the petitioner to appeal to the Court of Tax Appeals, an Order for the Commissioner of Customs to immediately release the anti-dumping bond to the importer.

*measures/remedies imposed against dumping* a. Provisional Measure – a cash or documentary security equal to the estimated difference between normal value & export price of the protested article – applied only after DTI-BIS or DA has made a preliminary affirmative determination no sooner than 60days from initiation of the case – DURATION: 4 months, extendable to 6 months b. Definitive duty – final anti-dumping duty imposed; it may be a full margin of dumping / a lesser amount adequate to remove the the injury to the domestic industry – DURATION: 5 years from imposition Sunset review – a review that may be initiated by any interested party or upon own motion of the Commission before sunset date whether the expiry of anti-dumping duty would likely lead to a continuation of dumping & injury Interim review – a review conducted by the Commission upon the direction of the Secretary or upon petition of any interested party to determine whether : a. the need for the continued imposition of anti -dumping duty in no longer necessary b. existing duty is not sufficient to counteract the dumping Note: Atleast 1 year should have elapsed since imposition of anti-dumping duty Newcomer review - a review carried out on an accelerated basis for determining individual margins of dumping for new exporters

SUBSIDIES & COUNTERVIELING MEASURES Subsidy – refers to any specific assistance directly/indirectly provided by the government of the country of export of the products imported into the Philippines *industry is deemed to have received subsidy if:* a. direct and/or potential transfer of government funds (e.g., grants, loans, equity infusion, loan guarantees) b. government offer tax credits c. government providing goods/services or purchasing goods Countervailing duty – a special duty levied, in addition to the regular duty&other charges on imports w/c have been found to be subsidized in the country of origin/exportation; equal to the amount of subsidy – imposed after an affirmative final determination Countervailing bond – a security (cash deposit/ bond) equal to the amount of the calculated amount of subsidy *Types of subsidies* 1. Actionable/yellow subsidies – those falling the definition of ‘subsidy’ w/c neither non-actionable nor prohibited subsidies 2. Non-actionable/ green subsidies – those permitted as general in nature ; cannot be subjected to countervailing measures Examples: a. for research activities conducted by firms b. to adapt existing production facilities to new environment requirements c. to assist in development of industries in disadvantaged regions but not directed to specific enterprises w/n the region 3. Prohibited/ red subsidies – include export subsidies; An importing country alleging this kind of subsidy can avail of remedy measures by bringing to the matter before the WTO Dispute Settlement Body Examples: a. direct subsidy based on export performance b. currency retention schemes or a bonus on exports c. exemption from direct taxes (e.g., tax on profits) d. exemption/ remission of indirect taxes (e.g., VAT) e. remission/ drawback of import charges f. export guarantee programs at premium rates inadequate to cover the cost of programs *elements of countervailing duty* 1. Product comparability – a product is identical or alike in all respects 2. Subsidy – any specific assistance directly/indirectly provided by government 3. Injury – material injury to a domestic industry 4. Causal Link – material injury is direct result of the importation of subsidized product RA 8751 – Countervailing Duty Act of 1999 (Sec.302 of TCCP) – signed on August 7, 1999, took effect on August 31, 1999 JAO 2-2000 – the IRR of the act; took effect on September 25, 2000 *who may file a petition for countervailing action* a. domestic industry (in writing & notarized form b. DTI or DA *threshold support by producers for the petition to be accepted* a. support by producers whose collected output of more than 50% of total production of like product b. accounting for atleast 25% of total domestic production *de minimis rule of countervailing* petition shall be immediately rejected & investigation terminated if: A. in case of product from developed country – amount of subsidy is less than 1% – volume of subsidized imports is negligible B. in case of product from developing countries – level of subsidies granted not exceed 2% of the value – level of subsidies granted not exceed 3% of the value (for least-developed countries) – subsidized imports are less than 4% of total imports

PSIC

*Stages of countervailing investigation* A. Prima Facie Determination – DTI-BIS / DA has 10 days to examine the accuracy& adequacy of the petition; determine sufficient evidence – before the initiation of investigation, either Secretary shall notify government of exporting country & invited for consultation B. Preliminary Determination – DTI-BIS /DA initiates investigation & makes preliminary determination (whether or not provisional measure may be imposed) not later than 20days from receipt of answer of the respondents – AFFIRMATIVE FINDING: Secretary issues Department Order for imposition of provisional countervailing duty (cash bond) bond shall be made not sooner than 60days from date of initiation of investigation (the date when Secretary publishes such notice in two(2) newspapers of general circulation – Secretary shall immediately terminate the countervailing investigation upon finding the de minimis rule C. Final Determination – TC notifies all interested parties, holds preliminary conference & public consultations – TC has 120 days from receipt of advice from Secretary to complete its own inquiry & submit reports to either Secretary D. Issuance of Department Order – either Secretary shall within 10 days from receipt of affirmative final determination by TC, issue Department Order imposing a definitive countervailing duty unless he has earlier accepted price undertaking from foreign exporter/ government *duration of countervailing measures* 1. Provisional countervailing duty – four(4) months 2. Definitive countervailing duty – five(5) years from imposition *three(3) countervailing cases by Philippines* 1. Wheat flour from France (FR) & Germany (DE) 2. Spanners & wrenches from India (IN) 3. Transmission & conveyor belts from India *Brazil (BR) file 121.5% countervailing duty to Philippines on Coconut product

SAFEGUARD MEASURES *Importing government may take temporary(general) safeguard measures (high tariffs, tariff quotas, or QR) against imports if t he products at issue are being imported in such increased quantities, to cause/threaten to cause serious injury to domestic industry *Special transitional safeguards (additional duty not exceeding 1/3 of level of effective tariff) against importations of: 1. agricultural products whose QR’s were tariffied into ordinary customs duties 2. agricultural products designated w/ symbol “SSG” in GATT Schedule of Concessions *special safeguards may invoke if:* a. volume of imports exceeds a trigger level b. price of imports falls below a trigger price *injury to domestic industry need not to be established *purpose of safeguard measures* – to give the affected domestic industry time to prepare itself for & adjust to increased import competition resulting from multinational trade negotiations RA 8800 – Safeguards Measures Act of 2000; signed by Joseph Estrada on July 19, 2000; took effect on August 9, 2000 JAO 3-2000 – the IRR of this act; published on Manila Standard on Oct. 4, 2000, took effect on Oct. 11, 2000 *who may file petition for safeguard measures* General Safeguard Measures: a. domestic producers b. President, House/Senate Committee on Agriculture, or House/Senate Committee on Trade and Commerce c. DTI Secretary (non-agriculture products) or DA Secretary (agriculture products) Special Safeguard Measures: 1. Any person (natural/juridical) 2. DA Secretary *stages of general safeguard investigation* A. Prima Facie Determination – DTI-BIS or DA has 5 calendar days to decide whether prima facie case exists – if no prima facie case exists, the application is denied B. Preliminary Determination – w/n 2 calendar days after decision to initiate preliminary investigation is made, Secretary notify all interested parties and government of exporting country about the investigation & send respondent’s questionnaire to all parties – not later than 30 calendar days from receipt of documented petition, Secretary shall make a preliminary determination that increased imports are threaten/cause to serious injury to domestic industry – AFFIRMATIVE FINDINGS: w/n 3 calendar days the Secretary advises the Secretary of Finance to instruct BOC to impose provisional safeguard measure (form of tariff increase/ cash bond); in case of agriculture products where tariff Increase is not sufficient, a QR may applied – Secretary shall transmit its preliminary affirmative findings to the TC for formal investigation C. Formal Investigation – the TC shall conduct the formal investigations; TC shall conclude & submit its report of findings to either Secretary within 120 calendar days from receipt of request from Secretary except when it is urgent, in this case the TC shall submit report within 60 calendar days D. Decision – within 15 calendar days from receipt of Report of the Commission, Secretary shall make decision consider the measures recommended by the TC – AFFIRMATIVE Final Determination: Secretary shall issue w/n 2 calendar days after making his decisions, a written instruction to heads of government agencies to implement appropriate general safeguard measure – NEGATIVE/ excess of definitive safeguard duty, Secretary shall issue, through Secretary of Finance, a written instruction to Commissioner of Customs, authorizing the return of cash bond within 10 days from date of final decision was made

*stages of special safeguard investigation* A. Verification – DA Secretary shall verify if the cumulative import volume of an SSG dominated agricultural product in a given year exceeded its trigger volume OR its CIF import price is less than its trigger price B. Findings – Secretary shall come up a findings within 5 workings days from date of receipt of request C. Imposition of special safeguard measure – Secretary shall issue Department Order requesting the Commissioner of Customs through Secretary of Finance to impose an additional special safeguard duty ---- injury is not an element in the imposition of special safeguard measure *duration of safeguard measures* A. General Safeguard measures Provisional measure – shall not exceed 200 calendar days from date of imposition – applied after affirmative preliminary determination by BIS or DA Definitive measure – maximum of 4 years including the period of provisional relief – extendable up to maximum of 8 years (10 years for developing countries) – applied after affirmative final determination by the Tariff Commission B. Special Safeguard Measures – the additional duty shall be maintained only until the end of the year Adjustment plan – the action plan indicating a set of quantified goals , specific programs & timetables that a concerned industry commits to undertake in order to facilitate the industry’s positive adjustment to import competition *when is the adjustment plan submitted to the Commission* ---- within 45 calendar days upon receipt of notice ---- within 30 calendar days upon receipt of notice (URGENT) *example of safeguard measure cases of the Philippines* a. glass mirror – Malaysia c. figured glass – China e. cement – India b. float glass – Malaysia d. sodium tripolyphosphate – China f. ceramic tiles – Indonesia COMPARISON OF ANTI-DUMPING, COUNTERVAILING AND SAFEGUARD MEASURES 1. RELEVANT AGREEMENT Anti-dumping/Countervailing WTO Anti- Dumping Agreement (GATT Art. 6) WTO Agreement on Subsidies & Countervailing Measures (GATT Art.16) 2. NATURE OF MEASURE UNFAIR traded imports  Export price is lower than normal value  Subsidized production or exportation of foreign merchandise

6. ELEMENTS to be established  Product comparability (like-product)  Price differences/subsidy  Material Injury  Causal Link

7. FORMS of MEASURE a. Provisional measure – dumping/countervailing bond b. Definitive – dumping/countervailing duty

General/Safeguard WTO Agreement on Safeguards (GATT Art. 19) WTO Agreement on Agriculture FAIRLY traded imports  Export price at level of normal value  Increased level of imports absolute/relative to production (general safeguards)  Import volume exceed base trigger level OR price below the trigger price level (safeguard measure) General Safeguard:  Product comparability (like or directly competitive product)  Increased imports  Serious Injury  Causal Link Special Safeguard:  Product comparability  Import volume exceeds a base trigger level  Price falls below a trigger price level General Safeguards: a. Provisional – tariff increase b. Definitive – tariff increase, quantitative restrictions (e.g., import quota, import licensing) Special Safeguards: a. Additional duty not exceeding 1/3 of level of ordinary customs duty

WORLD TRADE ORGANIZATION (WTO) GATT – a multilateral treaty w/c provides a code of agreed rules for international trade; tackle trade in goods alone Contracting parties – call to the members of GATT WTO –the successor of GATT; headquarter in Geneva, Switzerland – a single, formal & permanent international trade organization, has the institutional capacity to oversee the implementation of various agreements negotiated in Uruguay Round that encompass services and intellectual property rights – began operation on January 1, 1995 – an int’l body administers trade laws & a forum for settling trade disputes among nation *3 main objectives of WTO* a. to help trade flow as freely as possible b. to achieve further liberalization of trade through negotiation c. to set up an impartial means of settling disputes

Final Act – signed by Philippines embodying 30 agreements & 22 ministerial decisions resulting from Uruguay Round – agreement to establish the WTO on April 15, 1994 at Marrekesh, Morocco Ministerial Conference – meeting at least once every 2 years – highest decision-making body; composed of representatives of all member’s governments General Council – FUNCTIONS: a. oversees operation of the Agreements & Ministerial decisions b. act as dispute settlement body & trade policy review mechanism c. establishes subsidiary bodies: (1) Goods Council (2) Committee on Agriculture (3) Services Council (4.) Trade-related Intellectual Property Rights (TRIPS) Council Single Undertaking Approach – membership in WTO entails accepting all the results of the Round w/o exception *WTO operates in 3 ways* (1) as a set of multilaterally agreed rules (2) as a forum for trade negotiations (3) as an international court *fundamental principles of GATT-WTO* 1. Trade w/o discrimination – non-discrimination trade and that all contracting parties are bound to grant to each other treatment as favorable as they give to any country 2. Protection only through tariffs – protection can only be given to a domestic industry through customs tariffs 3. A stable basis for trade – the binding of tariff levels 4. Consultation (to General Council) – countries can call on WTO for a fair settlement of cases; such consultations help to clarify difficulties & find equitable solutions 5. Quantitative Restrictions – a general prohibition to maintain quantitative restrictions (QR) 6. Regional trading arrangements (Art. 24 of GATT) – group of countries agreed to abolish barriers against imports from one another (e.g., AFTA, NAFTA, APEC & EU 7. Waiver & possible emergency action (Art. 25 of GATT) waiver – a member country may seek a derogation from particular GATT/WTO obligations Uruguay Round – the 8 th and the most ambitious round *three(3) key result of Uruguay Round* 1. Market Access – encompassed negotiations in industrial tariffs, agriculture, textiles & clothing & services 2. Rules & Discipline – negotiating topics form trade measures against unfair trade 3. Institutional Topics – to improve the conduct of multilateral trading system RA 8181 – an act changing the Ad Valorem rate of duty from Home Consumption Value (HCV) to Transaction Value (TV) RA 8178 – an act replacing Quantitative Import Restrictions on Agricultural Products except Rice E.O 313 – set the tariff rates on agricultural products previously covered by quantitative restrictions *WTO Director-Generals* 1 st – Peter Sutherland 2 nd – Renato Ruggiero 3 rd – Mike Moore 4 th – Supachai Panithpakdi 5 th – Pascal Lamy 6 th – Roberto Azevedo

– Ireland – Italy – New Zealand – Thailand – France – Brazil

(July 1993 – May 1995) (May 1995 – September 1999) (Sept. 1999 – Sept. 2002) (2002 –2005) (2005-2013) (2013-Present)

WTO MINISTRIAL MEETINGS 1. Singapore (1996) – first WTO ministerial meeting; eliminate tariffs in information technology (IT) products – duty-free treatment on 465 pharmaceutical products 2. Geneva (1998) – 50 th Anniversary of Multilateral Trading System – negotiations on basic telecommunications&financial services & implementation of Information Technology Agreement (ITA) 3. Seattle (1999) – hosted by US in Seattle, Washington 4. Doha, Qatar (2001) – launched the Doha Development Agenda 5. Cancun (2003) – Mexico; mid-term review on Doha Development Agenda – major challenges of TRIPS, public health, west africa’s proposal on cotton, agriculture subsidies, NAMA modalities and Singapore issues – Cambodia and Nepal were welcomed as first least-developed countries 6. Hongkong (2005) – adopted a decision known as the July Package; the adoption of Swiss Formula – accession of Saudi Arabia and Tonga 7. Geneva (2009) 8. Geneva (2011) 9. Bali, Indonesia (2013) 10. Nairobe, Kenya (2015) 11. Buenos Aires (2017) Tariff binding – members commit to bind the tariff reduction/ elimination at a fixed level Binding commitment – a promise not to raise tariffs beyond specified rate Tariff ceiling rate – a level that is higher than the applied (existing) tariff

WTO AGREEMENT ON AGRICULTURE Agreement on Agriculture – the agreement covering agricultural products (HS Chapter 1-24) Tariffication – all quantitative import restrictions (QR’s) have to be removed & converted into ordinary customs duties Tariff quotas – a mechanism which tariffication system operates MAV’s – Minimum Access Volume; also called in-quota tariff; lower tariff rates Out-qouta tariff – volume outside MAV; higher rates MAV Plus – (RA 8178); authorize the President to increase the MAV’s w/ concurrence of Congress – EFFECT: in-quota volume of products to be in short supply OR domestic prices risen abnormally MAV Management Committee – composed of: Chairman: Secretary of Agriculture Members: Secretary of Agrarian reform Secretary of Science & Technology Director General of NEDA Secretary of Finance Secretary of Trade & Industry NAMA – Non-Agricultural Market Access; objective is to reduce or eliminate tariffs, including the reduction/ elimination of tariff peaks, high tariffs, tariff escalation & non-tariff barriers on particular products of export interest to developing countries Linear reduction – the method where all tariffs are reduced by an agreed percentage; applied for industrial products during Kennedy Round Harmonization formula – seeks to reduce high tariffs more than those that are relatively low; used during Tokyo Round Sector formula – aims to complete the elimination (or harmonization) in a given sector applied during Uruguay Round Cocktail approach – a combination of the three above to achieve more meaningful tariff reductions; used in Uruguay Round Swiss Formula – is a special case of harmonizing tariff cuts; basic approach for tariff reduction/ elimination – proposed by Switzerland in Tokyo round INFORMATION TECHNOLOGY AGREEMENT (ITA) ITA – a multilateral agreement aims to eliminate tariff and non-tariff barriers to trade in information technology products – concluded at the Singapore Ministerial Conference – proposed by the Quad countries: a. United States c. Japan b. Canada d. European Union *original signatories to the ITA* 1. Australia 8. Japan 2. Canada 9. Korea 3. Chinese Taipei 10. Norway 4. European Communities 11. Singapore 5. Hong Kong 12. Switzerland 6. Iceland 13. Turkey 7. Indonesia 14. United States *product landscape of ITA* (1) computer hardware products (4) Telecommunications equipment (2) Semiconductor & integrated circuits (5) Other IT products (3) Computer software Ms. Zsofia Tvarusko (Hungary) – newest chairperson of ITA *Philippines signed ITA on April 1, 1997 *benefits from membership in ITA* 1. easier access to latest technology 4. improved productivity 2. heightened speed & accuracy of information exchange 5. lower cost of computers 3. accelerated development of information technology highway

WORLD CUSTOMS ORGANIZATION WCO – an independent intergovernmental body w/ world-wide membership whose mission is to enhance the effectiveness & efficiency of customs administration – the successor of Customs Cooperation Council established in 1952 – the only international organization dealing exclusively w/ customs matters Council – the highest body in WCO composed of Directors-General of Customs from all member countries – meets once a year assisted by: a. Finance Committee (17 members) b. Policy Commission (24 members) *technical committees of WCO* A. Nomenclature & Classification (1) Harmonized System Committee – administer the Int’l Convention on Harmonized Commodity & Coding System – resolves specific classification problems; the arbitrator in customs disputes (2) Harmonized System Review Sub-Committee – has the task of revising the HS in accordance w/ the Committee’s general indications & preparation for amendments to HS Nomenclature (3) Scientific Sub-Committee B. Valuation (1) Technical committee on Customs Valuation – responsible for matters pertaining to customs valuation C. Customs Technique (1) Permanent Technical Committee – assisting the Council; study all aspects of customs technique & contribute to the simplification & harmonization of customs procedures (2) Enforcement Committee – fight against commercial fraud & illicit traffic in narcotics (3) ADP sub-committee D. Origin (1) Technical committee on Rules of Origin – together w/ the WTO Committee on Rules of Origin, is charged w/ the implementation of work program on harmonization of rules of origin

Nairobi convention – aimed at achieving mutual administrative assistance for the prevention, investigation and prevention of customs offenses Kyoto convention – is an outline of a worldwide customs code & is an instrument to facilitate, simplify and harmonized customs procedures *Philippines is the 104th member of WCO *Kosovo - 181 st newest member of WCO *Kunio Mikuriya (Japan) – Secretary-General of WCO Secretaries – General of ASEAN Name Country Year 1. Hartono Dharsono Indonesia Jun 1976 – Feb 1978 2. Umarjadi Notowjono Indonesia Feb 1978 – Jun 1978 3. Ali Abdullah Malaysia Jul 1978 – Jun 1980 4. Narciso G. Reyes Philippines Jul 1980 – Jul 1982 5. Chan Kai Yau Singapore Jul 1982 – Jul 1984 6. Phan Wannamethee Thailand Jul 1984 – Jul 1986 7. Roderick Yong Brunei Jul 1986 – Jul 1989 8. Rusli Noor Indonesia Jul 1989 – Jan 1993 9. Ajit Singh Malaysia Jan 1993 – Dec 1997 10. Rodolfo Severino Jr. Philippines Jan 1998 – Dec 2002 11. Ong Keng Yong Singapore Jan 2003 – Dec 2007 12. Surin Pitsuwan Thailand Jan 2008 – Dec 2012 13. Lê Lương Minh Vietnam Jan 2013 - Present

HARMONIZED SYSTEM HS – Harmonized Commodity & Coding System; update once every 5 years – internationally accepted coding system ; developed by the WCO – patterned after the Customs Cooperation Council (CCCN) & Standard Int’l Trade Classification (SITC) Rev.2 drafted by U.N. – a systematic grouping into sections, chapters, headings & subheadings of products arranged to the degree of processing E.O 688 – mandating the TC to align the Philippine Tariff & Customs Code to the CCCN HS Convention – the intergovernmental commitment of the contracting parties to agree to use the HS up to 6 -digit level – Philippine Instrument of Accession was signed by Joseph Estrada on Sept. 23, 1998; the instrument of accession finally deposited to WCO on June 25, 2001 tariff shift – the change in classification in the HS nomenclature *other publications complement the HS Code* a. explanatory notes - constitute the official interpretation of HS at international level b. alphabetical index – the alphabetical list of articles mentioned in HS & explanatory notes – facilitates the location of references in HS Nomenclature OR in Explanatory Notes to any of products/ articles mentioned therein c. compendium of classification opinions – consists of Classification Opinions adopted by the WCO CITES – Convention on International Trade in Endangered Species of Fauna & Flora ICAT – International Convention of Atlantic Tuna Basel Convention – waste Convention on Psychotropic Substances – narcotics & psychotropic substances; amended the Single Convention on Narcotic Drugs Rotterdam Convention – pesticides Montreal Protocol – ozone-depleting substances INBAR (FAO) RULES OF ORIGIN ROO – are laws, regulations & administrative determination of general application to ascertain a product’s country of origin – set of criteria to determine the economic content & nationality of a product *uses of ROO* (a) implement measures & instrument of commercial policy (e.g., anti-dumping duty, qoutas, etc.) (b) determine whether imported goods shall be subject to a MFN treatment or preferential treatment (c) for purpose of trade statistics & issuance of certificate of origin (d) for application of labeling & marking requirements (e) for public procurement (f) for process patent *types of ROO* 1. Non-preferential ROO – implements measure & instruments of commercial policy (imposing of special duties) 2. Preferential ROO – whether a product is qualified to preferential tariff or MFN tariff *criteria in determining the rules of origin* Wholly obtain & Substantial transformation (1) Wholly obtain goods: a. agricultural products harvested there b. animals born & raised there c. products obtained from animals referred to (b) above d. products obtained from hunting or fishing e. products obtained of sea fishing & other products taken from the sea by its vessel f. products made on board its factory ships exclusively from the products referred to in (e) g. mineral products extracted from its soil or seabed h. used articles collected there i. waste & scrap resulting from manufacturing operations conducted there j. products obtained there

(2) Substantial transformation: has three(3) criterion (dapat present tanang criterion para maconsider as originating) 1. value added rule – minimum value added content expressed in percentage of the total product cost – 40% RVC (regional value content) must come from ASEAN countries *value added can be determined either by: a. Direct /Build up Method - dividing the sum of the value of originating materials, overhead cost, by the FOB value of finished product(%) b. Indirect/Build-down Method – to determine percentage by adding the values of imported materials, parts & components including those unknown origin, divided by FOB value of finished good 2. change in tariff classification (dapat mausab ang classification sa final product gikan sa raw materials) (a) Change of Chapter (CC) (b) Change of Tariff Heading (CTH) - mostly used by ASEAN; dapat mulahi ang heading sa finished good from heading sa raw m. (c) Change of Tariff Subheading (CTSH) (d) Change of Tariff Heading Split (CTHS) (e) Change of Tariff Subheading Split (CTSHS) 3. Process Rule – these processes do not confer origin: a. preservation of products (e.g., drying, chilling, adding salt,etc) b. sifting/examine/segregate, sorting, classifying, matching, washing, painting, or cutting up c. changes of packing, breaking up & assembling of consignment d. simple slicing, cutting & repacking/placing in bottle, flasks, bags, boxes (simple packing operations) e. affixing marks, labels or other distinguishing signs on products f. simple mixing of products g. simple assembly of parts of products h. combination of 2 or more operations in (a) to (f) i. slaughter of animals Accumulation rule – products that subsequently used in a member state as inputs for a finished product eligible for preferential treatment in another member state, shall be considered as products originating in a member state where working or processing took place *types of accumulation* a. Full accumulation – the full value of the product from a party in an FTA territory b. Partial accumulation – accumulate inputs w/ other member countries to hurdle ROO criterion Indirect materials – are materials used in the production but do not form part of the good – they are considered originating regardless of origin: a. Fuel d. Gloves, glasses, footwear, clothing, safety equipment b. Tools, dies & moulds e. Catalyst & solvents c. Lubricants, greases, compounding materials *accessories, spare parts & parts imported w/ originating goods will be treated as originating if: a. not invoiced separately from the originating good that they are imported with b. their quantities & value are customary for the imported good Certificate of Origin (CO) – a declaration of the exporter as certified by BOC, that export product complies with the origin requirement *kinds of certificate of origin* A. With preferential treatment 1. Generalized System of Preferences GSP (Form-A) 5. ASEAN-India FTA (Form-AI) 2. ASEAN Trade in Goods Agreement (Form-D) 6. ASEAN-Australia & New Zealand FTA (Form-AANZ) 3. ASEAN-China Free Trade Agreement (Form-E) 7. PH-Japan Economic Partnership Agreement (Form-JP) 4. ASEAN-Korea Free Trade Agreement (Form-AK) 8. ASEAN-Japan Comprehensive Economic Partnership (Form-AJ) B. Without preferential treatment 1. CO for General Merchandise (White C.O) Agreement on Rules of Origin – aims to harmonize non-preferential rules of origin

ASSOCIATION OF SOUTEAST ASIAN NATION (ASEAN) ASEAN – founded in Bangkok, Thailand in August 1967 – permanent secretariat in Jakarta, Indonesia – established during Vietnam War ASEAN Summit – highest decision-making body; meets twice a year – is a semi-annual meeting held by the member of the ASEAN in relation to economic & cultural development among member countries 4 TH ASEAN Summit – to establish an Asean Free Trade Area (AFTA) CEPT – Common Effective Preferential Tariff; main implementing mechanism of AFTA – cooperative arrangement among ASEAN member states CEPT Scheme – main instrument for making ASEAN a free trade area CEPT-AFTA – was signed in Singapore on January 28, 1992 AFTA – ASEAN Free Trade Area; signed during Singapore Declaration Vietnam – 1 st Communist member of Asian *ASEAN – 6* *CLMV* 1. Brunei 1. Cambodia 2. Indonesia 2. Lao PDR / Laos 3. Malaysia 3. Myanmar 4. Philippines 4. Vietnam 5 original signatories of ASEAN 5. Singapore 6. Thailand Treaty of Amity & Cooperation – a peace treaty among Southeast Asian Countries

ASEAN Observer:

a. Papua New Guinea c. Bangladesh b. East Timor d. Fiji ATR – ASEAN Trade Repository – shall be maintain/update by ASEAN Secretariat – like a library that contains all information of/about ASEAN E.O issued to implement Philippine CEPT Scheme 388

Zinc oxide, zinc peroxide & diotyl orthophthalates

453

1997-2003

487

1998-2003

71

1999-2003

234

2000-2003

254

2000-2003 Bold economic measure

49

2001-2003

163

Information & communications technology (ICT)product

165

2002

166

Implement AISP package in PH

230

Modify ROD of Sugar

263

Oil cake & solid residues of maize (Corn germ), cassava starch, sodium tripolyphosphates

486

Petrochemicals & plastic products

489

2006-2010

892

Tariff reduction on Sugar

894

Tariff reduction on Rice

ASEAN SUMMITS #

City

1 st 2 nd 3 rd 4 th 5 th 6 th 7 th 8 th 9 th 10 th 11 th 12 th 13 th

Bali Kuala Lumpur Manila Singapore Bangkok Hanoi Bandar Seri Begawan Phnom Penh Bali Vientiane Kuala Lumpur Cebu Singapore Cha Am & Hua Hin Pattaya Cha Am & Hua Hin

14

th

15 th 16 th 17 th 18 th 19 th 20 th 21 st 22 nd 23 rd 24 th 25 th 26 th 27 th 28 th 29 th 30 th 31 st

Country Indonesia Malaysia Philippines Singapore Thailand Vietnam Brunei Cambodia Indonesia Laos Malaysia Philippines Singapore

“One ASEAN at the Heart of Dynamic Asia”

Thailand

Hanoi

Vietnam

Jakarta Bali

Indonesia

Phnom Penh

Cambodia

Bandar Seri Begawan

Brunie

Naypidaw

Myanmar

Kuala Lumpur & Langkawi Kuala Lumpur

Malaysia

Vientiane

Laos

Cebu/Pampanga/ Davao

Philippines

1 st 2 nd 3 rd 4 th

Theme

“Towards the ASEAN Community: from Vision to Action”

“Turning Vision into Reality for a Dynamic ASEAN Community”

ASEAN Informal Summits Jakarta Indonesia November 1996 Kuala Lumpur Malaysia December 1997 Manila Philippines November 1999 Singapore Singapore November 2000

ASEAN Theme – “One Vision, One Identity, One Community” ASEAN Charter – most important documents that create a legal & institutional framework for cooperation of an ASEAN Community 13 th ASEAN Summit – 10 leaders of member states of ASEAN signed the Charter; held in Singapore Minister – rank & status of Secretary-General of ASEAN *Procedure for Admission to be an ASEAN Member ASEAN Coordinating Council prescribe the procedure for application & admission Admission will be based on: a. geographical location in Southeast Asia b. recognition by all ASEAN member c. agreement to abide the Charter d. ability & willingness to carry obligation as member – Admission be decided by consensus by ASEAN Summit upon recommendation of ACC – Applicant shall be admitted upon signing an Instrument of Accession to the Charter *What comprises ASEAN Summit? 1. ASEAN Coordinating Council – comprise the ASEAN Foreign Ministers – meet at least twice a year 2. ASEAN Community Councils a. ASEAN Political-Security Community Council (APSC) – promote peace & security in the Region b. ASEAN Economic Community Council (AEC) – enhance economic competitiveness & establishes the region as a single market & production base c. ASEAN Socio-Cultural Community Council (ASCC) – envisions a common regional identity by pursuing social development and building a people-centered, responsible, caring & sharing community *each member designates a representative for each community council meetings 3. ASEAN Sectoral Ministerial Bodies Secretary-Gen. of ASEAN – appointed by the ASEAN Summit – Non-renewable term of office of 5 years – selected among members based on Alphabetical Rotation – initiate, advice, coordinate & implement ASEAN activities – responsible to Heads of Government Meetings – chairs all meetings of the ASEAN Standing Committee (ASC) *Happenings in every ASEAN Summits* 1 st Summit – the leaders of ASEAN member countries endorsed the Treaty of Amity and Cooperation in Southeast Asia and the Declaration of ASEAN Concord 2 nd Summit – a joint communique was signed 3 rd Summit – approved the Manila Declaration 1987 and four major economic agreements aimed at promoting economic cooperation within the organization 4 th Summit – signed the Singapore Declaration and a framework agreement on enhancing ASEAN economic cooperation. They decided to hold a summit every three years 5 th Summit – Bangkok Declaration was adopted; agreed to hold informal meetings every year 6 th Summit – approved Hanoi Declaration, the Hanoi Plan of Action and a number of what they called "bold measures" to strengthen economic, political and security cooperation 7 th Summit – endorsed the Mid-Term Review of the Hanoi Plan of Action and identified new priorities which included ASEAN integration, information and communications technology along with human capacity building – adopted a 2001 ASEAN Declaration on Joint Action to Counter Terrorism and a Declaration on HIV/AIDS th 8 Summit – signed the ASEAN Tourism Agreement 9 th Summit – seen as "very productive," the leaders adopted a milestone document - the Declaration of ASEAN Concord II, also known as Bali Concord II, which envisions the establishment of an ASEAN Community by 2020 10 th Summit – adopted the Vientiane Action Program, a vehicle to build an ASEAN community through realizing comprehensive Integration 11 th Summit – adopted the Kuala Lumpur Declaration on the Establishment of the ASEAN Charter 12 th Summit – endorsed the Cebu Declaration on the blueprint of the ASEAN Chart to form the basis of a mini constitution that seeks to transform the ASEAN into a legal entity with binding rules and regulations 13 th Summit – signed the ASEAN Charter and the Declaration on the ASEAN Economic Community Blueprint 14 th Summit – signed Cha-am Hua Hin Declaration on the Roadmap for an ASEAN Community (2009-2015) 15 th Summit – adopted Cha-am Hua Hin Declaration on Inauguration of the ASEAN Intergovernmental Commission on Human Rights (AICHR), Cha-am Hua Hin Declaration on Strengthening Cooperation on Education to Achieve an ASEAN Caring and Sharing Community and Draft ASEAN Joint Statement on Climate Change 16 th Summit – leaders pledged to effectively implement the bloc's cooperation pacts over the next five years 17 th Summit – adopted several key documents on strengthening connectivity within the bloc, on the improvement of human resources development and on the protection of women and children 18 th Summit – agreed & adopted three joint statements on "ASEAN Community in a Global Community of Nations," "Establishment of the ASEAN Institute for Peace and Reconciliation" and "Enhancing Cooperation against Trafficking in Persons in Southeast Asia 19 th Summit – adopted Bali Declaration on ASEAN Community in a Global Community of Nations, or the Bali Concord III, the Agreement of the Establishment of the ASEAN Coordinating Center for Humanitarian Assistance on Disaster Management, and the ASEAN Declaration on Unity in Diversity: Toward Strengthening the ASEAN Community 20 th Summit – adopted four(4) outcome documents, namely the (a) Phnom Penh Agenda on ASEAN Community Building, (b) the Phnom Penh Declaration on "ASEAN: One Community, One Destiny," (c) the ASEAN Leaders' Declaration on Drug-Free ASEAN 2015 and (d) the Global Movement of Moderates 21 st Summit – three(3) outcomes were adopted: (a) Phnom Penh Agenda on ASEAN Community Building, (b) Phnom Penh Declaration on "ASEAN: One Community, One Destiny," (c) ASEAN Leaders' Declaration on Drug-Free ASEAN 2015 and the Global Movement of Moderates

22 nd Summit –to push ahead with the ASEAN Roadmap and ASEAN Economic Community (AEC) Blueprint – starting negotiations on the Regional Comprehensive Economic Partnership (RCEP) 23 rd Summit – adopted the Bandar Seri Begawan Declaration on the ASEAN Community's Post-2015 Vision 24 th Summit – adopted Nay Pyi Taw Declaration on Realization of the ASEAN Community in 2015 25 th Summit – focused on ASEAN community building and a post-2015 vision for the group 26 th Summit – adopted Kuala Lumpur Declaration on a People-Oriented, People-Centered ASEAN, a milestone in the history of the grouping, and the Langkawi Declaration on the Global Movement of Moderates as well as the Declaration on Institutionalizing the Resilience of ASEAN and its Communities and People to Disasters and Climate Change 27 th Summit – endorsed Kuala Lumpur Declaration on ASEAN 2025: Forging Ahead Together ASEAN TRADE IN GOODS AGREEMENT (ATIGA) ATIGA – ASEAN Trade In Goods Agreement – free flow of goods by 2015 in ASEAN Economic Community – improvement of CEPT-AFTA Scheme – (objtv) to achieve free flow of goods in ASEAN – to establish single market and production base – signed on February 2009; entered into force on May 17, 2010 39 th Meeting – ASEAN Economic Ministers agreed to sign ATIGA *Conditions for a product to be eligible for concessions under ATIGA a. Products on which tariff of exporting member have reached 20% or below. b. RVC of not less than 40% or all non-originating materials undergone CTC (4digit level/CTH) c. Preferential tariff shall supported by Certificate of Origin (CO Form D) *When can member apply for temporary suspension of concessions? – Member shall notify in writing to AFTA Council at least 180days before temporary suspension Protocol for Rice & Sugar – special consideration for rice and sugar; request waiver – recognize political sensitivity of basic commodities – ensure self-efficiency & food security *How does member invoke protocol? - Member requesting for waiver, make a written submission to AFTA Council At least 90 days before waiver to take effect - ASEAN Secretariat submits waiver copy to: SEOM – Senior Economic Officials Meting CCCA – Coordinating Committee on the Implementation of CEPT Scheme for AFTA *How can request of waiver be considered? - CCA submit report to SEOM within 30days from date of request - SEOM forward its own report to AFTA Council within 30days from date report of CCA - AFTA Council considers & decides not exceeding 30days from date report of SEOM *Time limit of member states’ waiver - ASEAN member submit annual report for review to AFTA Council - Based on review, AFTA Council decides whether to continue or terminate the waiver Dispute Settlement Mechanism – shall apply to any dispute arising between members concerning the Protocol on Enhanced Dispute Settlement Mechanism for ASEAN ASEAN Priority Integration Program Under ASEAN-CEPT Scheme AEC – ASEAN Economic Community – commitment toward “closer cohesion & economic integration” – sets a goal to achieve an integrated (single) market & production base – reaffirmed at 10th ASEAN Summit on November 2004 *12 Priority Sectors under ASEAN Priority Integration Program E.O 617 – covers 1 st & 2 nd phases of tariff elimination under priority integration Wood-based & Automotive Indonesia Rubber-based & Textiles Malaysia Agro-based & Fisheries Myanmar Electronics & Logistics Philippines e-ASEAN & Healthcare Singapore Airlines & Tourism Thailand

I M M P S T

ASEAN Integration System of Preferences (AISP) AISP – ASEAN-6 give preferential treatment to CLMV countries 4 th ASEAN Informal Summit – in Singapore, ASEAN Leaders agreed to launch an Initiative for ASEAN Integration (IAI) AMM – ASEAN Ministerial Meeting 34 th AMM – in Hanoi, adopted the Hanoi Declaration on Narrowing the Development Gap for Closer ASEAN Integration Phnom Penh, Cambodia – a Summit Meeting where IAI Work Plan approved AISP Scheme – preferential tariffs are offered to the newer members by the older embers on voluntary & bilateral basis E.O 166 – Philippines granted 1st package tariff preference to Myanmar & Vietnam on certain agricultural, industrial, pharmaceutical and electrical goods E.O 448 – 2 nd package extended to CLMV on certain plant products & wood sawn timbers

ASEAN Industrial Cooperation (AICO) Scheme AICO Scheme – is the latest industrial cooperation program in ASEAN that superseded the ASEAN Industrial Joint Ventures (AIJV) & Brand-to Brand Complementation (BBC) Schemes – Company to Company – signed during ASEAN Economic Minister Meeting in Singapore – seeks to promote the sharing industrial activities between ASEAN-based companies – offers 0%-5% preferential tariff rate AICO Arrangement – a cooperative arrangement involving a minimum of two (2) companies from two different ASEAN countries Intra-firm AICO Arrangement – applied for manufacturing companies that belong to the same group of companies AICO Final Product – it’s all intermediate products and/or raw materials are entitled preferential tariff rates *How is an AICO Arrangement formed? Companies must: – incorporated & operating in any ASEAN country – 30% minimum national equity – undertake resource sharing (A waiver is possible for companies cannot meet equity condition if it meets other criteria) *Application Procedures for AICO Arrangement – Companies apply to their respective national authorities by providing the ff: a. proof of legal incorporation & equity holding b. identification of products & partner company c. documentary proof of resource sharing – Applications are processed within 45 days from submission – Certificate of Eligibility (COE) issued by ASEAN Secretariat to the companies within 10 days after approval by the participating countries – approved AICO products then granted AICO privileges within 45 days thereafter *Documents require by BOC to accompany AICO products a. Normal shipping documents c. Certificate of Origin (Form D) b. Copy of COE d. Pre-Shipment Assessment Report (PSI) *AICO’s Product Coverage (3-tier product ranges) a. AICO Final Product – final output w/c does not undergo any further processing b. AICO Intermediate Product – used within AICO arrangement as an input to the AICO Final Product c. AICO Raw Material – used as an input to an Intermediate product or as direct input to the AICO Final Product

ASEAN Harmonized Tariff Nomenclature (AHTN) AHTN – an 8-digit commodity nomenclature adopted by 10 ASEAN Member in 2004 – comprised of: a. General Interpretative Rules of HS b. Section & Chapter Notes including Subheading Notes c. list of headings arranged in systematic order – 7 th & 8 th digit codes are assigned to ASEAN subheadings – beyond 8t-digit code is for national subheadings *Uses of AHTN a. uniform tariff nomenclature in ASEAN b. a base for preferential tariff purposes in AFTA & other FTA’s c. a base for collection of trade statistics *Advantages of AHTN a. uniformity of application in classification of goods in ASEAN b. enhances transparency in classification process for goods in the region c. simplifies the tariff nomenclature system of ASEAN Member States E.O 688 – mandated the Commission to align Phil. Tariff nomenclature to the CCCN AHTN Protocol – the legal framework governing the implementation of the AHTN – signed in Manila on August 7, 2003 by: 1. Brunei Darussalam 6. Union of Myanmar 2. Kingdom of Cambodia 7. Republic of the Philippines 3. Republic of Indonesia 8. Republic of Singapore 4. Lao People’s Democratic Republic 9. Kingdom of Thailand 5. Malaysia 10. Socialist Republic of Vietnam ASEAN Directors-General (ADG) of Customs – responsible for monitoring, reviewing, supervising, relating to AHTN Protocol ASEAN Finance Ministers Meeting – the forum for all decisions relating to the Protocol ASEAN Secretariat – provide necessary support for supervising, coordinating & reviewing relating to AHTN Protocol; assist the ADG of Customs – responsible of assisting experts panel & assisting member states in monitoring & reviewing the AHTN *How do countries provide for national subdivisions? – beyond 8-digit AHTN level, member state can create new national subheadings – Member states made proposals for amendments to the ADG of Customs through ASEAN Secretariat – ADG of Customs shall be the forum to allow amendments in AHTN – ADG of Customs may convene an experts panel consists of representatives from all member states – the Decision of ADG of Customs shall be made by consensus *Publications related to implementation of AHTN 1. Supplementary Explanatory Notes (SEN) – compilation of official interpretation of ASEAN subheadings 2. Alphabetical Index – alphabetical list of articles to facilitate location of references 3. Correlation Table – essential guide for the transposition of AHTN 4. Compendium of Classification – compilation of tariff classification rulings

ASEAN – China Free Trade Area (ACFTA) Framework Agreement – Framework Agreement on Comprehensive Economic Cooperation – agreement between ASEAN & People’s Republic of China (PROC) – signed by ASEAN Members & China on Nov.4,2002 in Cambodia ACFTA – world’s biggest free trade area *Economic benefits of the agreement 1. Increased bilateral trade 3. Greater economic efficiency 2. Expanded GDP 4. Lower cost 5. Increased investment *Objectives of the Agreement 1. Strengthen & enhance economic, trade, investment co-operation between parties 2. Progressively liberalize & promote trade in goods & services Create a transparent, liberal & facilitative investment regime 3. Explore new areas & develop measures for closer economic cooperation 4. Facilitate more effective economic integration of the newer ASEAN Member and Bridge the development gap among parties EHP – Early Harvest Program – aims to accelerate the implementation of the Agreement for trade in goods – covers all products at 8/9 digit level in HS Chapter 1-8 E.O 485 – issued to implement Philippine commitment on EHP Reciprocal Tariff Rate Treatment – a party shall enjoy the tariff concessions other parties have made for the same tariff line as long as that party adheres to its own commitment for tariff reduction & elimination for that tariff lines NT – Normal Track Rate ST – Sensitive Track Rate Country (A)

Country (B)

(Export Country)

(Import Country)

EHP NT ST EHP NT ST

EHP

NT

EHP ST ≤ 10% ST ST › 10%

NT ST EHP NT ST

ACFTA Rate EHP of Country (B) NT of Country (B) ST of Country (B) EHP of Country (B) NT of Country (B) ST of Country (B) EHP of (B) or ST of (A) whichever is higher (Provided: MFN of (B) is not less than the ST of (A) NT of (B) or ST of (A) whichever is higher (Provided: MFN of (B) is not less than the ST of (A) ST of (B) MFN of (B) MFN of (B) ST of (A) or MFN of (B) whichever is higher

(Naay reciprocity if ang ST (A) is equal/less than 10%)

ASEAN – JAPAN Comprehensive Economic Partnership (AJCEP) *ASEAN-JAPAN relations have further enhanced by: a. signing of “Tokyo Declaration for the Dynamic & Enduring ASEAN-JAPAN Partnership in the New Millennium” b. adoption of “ASEAN-JAPAN Plan of Action” at the ASEAN-JAPAN Commemorative Summit in Tokyo on Dec. 11-12, 2003 *Areas of Cooperation (a) Trade related Measures ( b) Business Environment ( c) Intellectual Property Rights E.O 767 – issued to implement the Philippines commitment to reduce tariff in this agreement

ASEAN-KOREA Free Trade Area AKFTA) AKFTA – agreement between ASEAN & Republic of Korea – signed by Economic Ministers of the parties on August 24, 2006 in Kuala Lumpur Thailand – the only ASEAN member has not signed the agreement – only became member on 2006 ASEAN-Korea – 5 th largest trading partners for each other *Products covered of the AKFTA All except: 1. arms & ammunitions 2. clinical & municipal wastes 3. specialized medicine for cancer, AIDS, & other dreaded diseases

ASEAN – India Free Trade Area (AIFTA) ASEAN-India Summit–in 2003, ASEAN & Republic of India signed Framework Agreement RVC is only 30%; CTSH (6-digits level) ASEAN – Australia & New Zealand FTA (AANZ) AANZ – leaders of ASEAN agreed this agreement at the ASEAN-Australia & New Zealand Commemorative Summit in Vientiane, Laos on November 30, 2004

ASIA PACIFIC ECONOMIC COOPERATION (APEC) APEC – association of economies that share boundaries of the Pacific Ocean – created by the initiative of Australia in 1989 Member economies – called to the members of APEC Canberra, Australia – 1 st ministerial meeting of APEC was held on Nov.6-7, 1989 *Twelve (12) Founding members of APEC A-B-C-I-J-K-M-N-P-S-T-U 1. Australia 5. Japan 9. Philippines 2. Brunei Darussalam 6. Korea 10. Singapore 3. Canada 7. Malaysia 11. Thailand 4. Indonesia 8. New Zealand 12. United States *9 other member economies C-H-C-M-P-C-P-V-R 13. China 16. Mexico 19. Peru 14. Hong Kong 17. Papua New Guinea20. Viet Nam 15. Chinese Taipei 18. Chile 21. Russia *Asian Tigers a. South Korea b. Taiwan c. Hong Kong d. Singapore APEC Secretariat – based on Singapore & operates as the core support mechanism for the APEC process – performs a central project management role – headed by Executive Director (Present: Dr. Alan Bollard)\ APEC Economic Leaders' Meetings – attended by the heads of government from all member countries except Taiwan, w/c represented by a ministerial-level official – annual Leader’s Meetings are not called Summits APEC SUMMIT MEETINGS 1 ST – Canberra, Australia on Nov. 6-7, 1989 2 nd – Singapore, Singapore on July 29-31, 1990 3 rd – Seoul, South Korea on Nov. 12-14, 1991 4 th – Bangkok, Thailand on September 10-11, 1992 5 th The Blake Island Economic Vision – 1 st APEC Economic Leaders Meeting on Nov. 20, 1993 in Blake Island, Seattle – hosted by U.S President Bill Clinton 6 th The Bogor Declaration of Common Resolve – Bogor, Indonesia on Nov. 15, 1994 – hosted by President Suharto – the foundation of “APEC 2020” – economic growth through open trade, equal partnership, shared responsibility & mutual respect 7 th The Osaka Action Agenda – Osaka, Japan on Nov. 19, 1995 – hosted by Prime Minister Tomiichi Murayama – served as a roadway towards achieving APEC’s agenda – translated the Seattle vision & Bogor goals into reality th 8 The Manila Action Plan (MAPA) –Subic, Philippines on 1996 – hosted by Fidel v. Ramos – the realization of Seattle Vision & the attainment of Bogor objectives 9 th The Vancouver Summit –Vancouver, Canada on November 1997 – hosted by Prime Minister Jean Chretien – admission of Peru, Russia and Viet Nam as new member 10 th The Kuala Lumpur Summit –Kuala Lumpur, Malaysia on 1998 – Leaders pledged to pursue a cooperative growth strategy 11 th The Auckland Summit –Auckland, New Zealand on 1999 – three (3) themes w/c serve as focus of agenda & decisions of 11 th Ministerial Meeting: 1. expanding opportunities for business around the region – Ministers reaffirmed the central role of individual Action Plans 2. strengthening the functioning of markets – Ministers agreed to a “road map” setting out for future work by APEC to strengthen markets 3. expanding support for APEC th 12 The Brunei Summit – Bandar Seri Begawan, Brunei on November 15-16, 2000 – Ministers laid out APEC’s vision to capture the full economic & social benefits of the emerging new global economy. – e-Commerce assessment, paperless trading, electronic Individual Action Plans – guidelines on Osaka Action Agenda provide critical guidance to APEC 13 th The Shanghai Accord – Shanghai, China on October 20-21, 2001 – strengthen commitments in achieving Bogor Goals – the e-APEC strategy is adopted – APEC members reaffirm support to the Multilateral Trading System and issue the 1st Counter Terrorism Statement 14 th The Los Cabos Summit – Los Cabos, Mexico on 2002 – fight against all form of terrorism & strengthen Multilateral Trading System – APEC adopts the Secure Trade in APEC Region (STAR) initiative

15 th The Bangkok Summit – Bangkok, Thailand on 2003 – APEC pushed for renewed negotiation on WTO Doha Development Agenda (DDA) – curb terrorist threats posed by Man Portable Air Defense Systems 16 th The Santiago Summit – Santiago, Chile on 2004 – APEC’s 2004 theme: “One Community, Our Future” – APEC’s strong statement of support for progress in WTO DDA – December 2005 – 6 th WTO Ministerial Conference – APEC adopts Best Practices for RTAs & FTAs, the Santiago Initiative for Expanded Trade & Data Privacy Framework 17 th The Busan Roadmap – Busan, South Korea on 2005 – leaders commit to confront pandemic health threats – APEC completes the Mid-Term Stocktake w/c found its way to meet Bogor Goals 18 th The Ha Noi Declaration – Hanoi, Vietnam on 2006 – Leaders call for balance outcomes on the WTO Doha Development Agenda 19 th The Sydney Summit – – Sydney, Australia on 2007 – highlights issues on climate change, energy security & clean development 20 th Lima Declaration –Lima, Peru on 2008 – theme: “A new commitment to Asia-Pacific Development” 21 st – Singapore, Singapore on 2009 22 nd – Yokohama, Japan on 2010 23 rd – Honolulu, United States on 2011 24 th – Vladivostok, Russia on 2012 25 th – Bali, Indonesia on 2013 26 th – Beijing, China on 2014 27 th – Manila, Philippines on 2015 28 th – Lima, Peru on 2016 29 th – Da Nang, Vietnam on 2017 30 th – Port Moresby, Papua New Guinea on 2018