Jehiel C.

Castillo
BSCA – 2102
CAd 2097 – Commodity and Classification System

THE ASEAN FREE TRADE AREA

DEFINITION OF TERMS
“CEPT” means the Common Effective Preferential Tariff, and it is an agreed effective tariff, preferential
to ASEAN, to be applied to goods originating from ASEAN Member States, and which have been identified
for inclusion in the CEPT Scheme.

“Non-Tariff Barriers” mean measures other than tariffs which effectively prohibit or restrict import or
export of products within Member States.

“Quantitative Restrictions” mean prohibitions or restrictions on trade with other Member States, whether
made effective through quotas, licenses or other measures with equivalent effect, including administrative
measures and requirements which restrict trade.

“Foreign Exchange restrictions” mean measures taken by Member States in the form of restrictions and
other administrative procedures in foreign exchange which have the effect of restricting trade.

“PTA” means ASEAN Preferential Trading Arrangements stipulated in the Agreement signed in Manila on
24 February 1977, and in the Protocol on Improvements on Extension of Tariff Preferences under the
ASEAN Preferential Trading Arrangements (PTA), signed in Manila on 15 December 1987.

“Exclusion List” means a list containing products that are excluded from the extension of tariff preferences
under the CEPT Scheme.

“Agricultural Products” mean :

(a) agricultural raw materials/unprocessed products covered under Chapters 1-24 of the Harmonised System
(HS), and similar agricultural raw materials/unprocessed products in other related HS Headings; and
(b) products which have undergone simple processing with minimal change in form from the original
products.

WHAT IS THE ASEAN FREE TRADE AREA

The ASEAN Free Trade Area (AFTA) is a trade bloc agreement which seeks to remove obstacles to freer
trade among AMSs through the abolition of tariff on traded goods and the scrapping of quantitative
restrictions and other non-tariff barriers that limit the entry of Imports.

The ASEAN Heads of Government agreed the establishment of AFTA by the 2008 at the 4th ASEAN
Summit held in Singapore on January 28, 1992.

When the AFTA agreement was originally signed, ASEAN had six members, namely:
 Brunei
 Indonesia
 Malaysia
 Philippines
 Singapore
 Thailand
 Vietnam joined in 1995
 Laos in 1997
 Myanmar in 1997
 Cambodia in 1999

PRIMARY GOALS OF AFTA

 To increase ASEAN's competitive edge as a production base in the world market through the
elimination, within ASEAN, of tariffs and non-tariff barriersTo attract more foreign direct
investments to ASEAN.
 To attract more foreign direct investments to ASEAN

WHAT IS THE COMMON EFFECTIVE PREFERENTIAL TARIFF?

The Common Effective Preferential Tariff (CEPT) Scheme is the main implementing mechanism of
AFTA. This means that AMSs shall have common effective tariffs among themselves in AFTA but the
level of tariffs vis-a-vis non-ASEAN countries shall continue to be determined individually.
It is a cooperative arrangement among AMSs to reduce intra-regional tariffs and remove non-tarif
barriers over a 15-year period commencing January 1, 1993
In September 1994 at the ASEAN Economic Ministers Meeting the target date of 2008 was accelerated
to 2003. The goal of the Scheme is to reduce tariffs on all manufactured goods to 0%-5% by the year 2003.

WHAT EOs HAVE BEEN ISSUED TO IMPLEMENT PHILIPPINE CEPT SCHEME?

EO 388
Modified the nomenclature and rates of import duty on zinc oxide, zinc peroxide and
dioctylorthophthalates under theCEPT-AFTA.

EO 453
Modified the rates of duty on certain imported articles toimplement the 1998-2003 Philippine
schedule of tarrif reduction of products transferred from the Temporary Exclusion List (TEL) to the
Inclusion List (IL) under the new timeframe of theAccelerated CEPT AFTA

EO 487
Modified the rates of duty on certain imported articles toimplement the 1998-2003 Philippine
schedule of tariff reduction of products transferred from TEL to IL under the new timeframe of the
Accelerated CEPT-AFTA

EO 71
Modified the rates of duty on certain imported articleimplement the 1999-2003 Philippine schedule
of tariff reduction of products transferred from TEL to IL under the new timeframe of the Accelerated
CEPT-AFTA

EO 234
Modified the rates of duty on certain imported articlesimplement the 2000-2003 Philippine
schedule oftariff reduction of products transferred from TEL and the Sensitive List (SL) of the Accelerated
CEPT-AFTA and the unification of CEPT rates on extracted tariff lines
EO 254
Modified the rates of duty on certain imported articles toimplement the 2000-2003 Philippine
schedule of tariff reduction under the Bold Economic Measure Initiatives of the Accelerated CEPT-AFTA

EO 49
Modified the rates of duty on certain imported articles toimplement the 2001-2003 Philippine
schedule of tariff reduction under the Bold Economic Measure Initiatives of the Accelerated CEPT-AFTA
and the transfer of products from the Unprocessed Agricultural Products-TEL and the General Exclusion
(GE)to the CEPT-IL

EO 163
Modified the rates of import duty of Information andCommunications Technology products to
implement the e-ASEAN Framework Agreement

EO 165
Modified the rates of duty on certain imported articles toimplement the 2002 Philippine schedule
of tariff reduction under the Bold Economic Measure Initiatives of the Accelerated CEPT-AFTA and the
transfer of products from the Agricultural Products-SL to the CEPT-IL

EO 166
Modified the rates of duty on certain imported articles toimplement the ASEAN Integration System
of Preferences(AISP) Package of the Philippines

EO 230
Modified the rates of duty on sugar to implement preferential rates under the CEPT-AFTA

EO 263
Modified the rates of duty on certain imported articles toimplement the transfer of the last tranche
of products from the Agricultural Products-SL to the CEPT-IL and the modification of the CEPT rates on
oil cake and other solid residues of maize (corn) germ, sodium tripolyphosphates and cassava starch

EO 268
Modified the rates of duty on certain imported articles toimplement the commitment to reduce the
tariff rates on 60% of the products in the IL to 0% under the CEPT-AFTA

EO 316
Temporarily granted a CEPT rate of 0% on certain importedarticles to implement the agreement
between the Philippinesand Singapore on the compensatory adjustment measuresrelating to the Philippine
suspension of concessions on certainpetrochemical products

EO 448
Modified the rates of import duty on certain articles to implement the ASEAN Integration System
of Preferences

EO 484
Modified the rates of duty on sugar to implement preferential rates under the CEPT-AFTA

EO 486
Lifted the suspension of the application of the tariff reduction schedule on petrochemicals and
certain plastic products under the CEPT-AFTA
EO 489
Modified the rates of duty on certain imported products to implement the tariff reduction schedule
for 2006-2010 ofsensitive agricultural products transferred from the Agricultural Products-SL to the CEPT-
IL

EO 490
Modified the rates of duty on certain imported articles toimplement the commitment to reduce the
tariff rates on 60% of the products in the IL to 0% under the CEPT-AFTA

EO 617
Modified the rates of duty on certain imported articles toimplement the commitment to reduce the
tariff rates on 80% of the products in the IL to 0% under the CEPT-AFTA

EO 703
Modified the rates of duty on certain imported articles toimplement the commitment to reduce the
CEPT rates on certain products to 0% under the AISP

EO 704
Amended Section 4 of EO 486 dated 12 January 2006 lifting the suspension of the application of
the tariff reduction schedule on petrochemicals and certain plastic products under the CEPT-AFTA

EO 768
Modified the rates of import duty on certain articles toimplement the AISP

EO 850
Modified the rates of duty on certain imported articles toimplement the commitment to eliminate
the tariff rates on the remaining products in the IL in year 2010 under the CEPT-AFTA/ASEAN Trade in
Goods Agreement (ATIGA)

EO 892
Modified the rates of import duty on sugar products toimplement the tariff reduction schedule on
sugar productsthrough the invocation of the protocol to provide specialconsideration for rice and sugar
under the CEPT-AFTA/ATIGA

EO 894
Modified the rates of import duty on rice products to implement the tariff reduction schedule on
rice products through the invocation of the Protocol to provide Special Consideration for Rice and Sugar
under the CEPT-AFTA/ATIGA