AGREEMENT ON CEFT
ARTICLE I
Derinition
For the purposes of this Agreernent
1. "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 in accordance with Articles 2 (5) and 3.
2. "Non-Tariff Barriers" mean measures other than tariffs which effectively prohibit or restrict import or export of products within Member States.
3. "Quantitative restrictions" mean prohibitions or restrictions on trade with other Member States, whether made effective through quotas, licences or other measures with equivalent effect, including administrative measures and requirements which restrict trade.
4. "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.
5. "PTA" means ASEAN Preferential Trading Arrangements stipulated in the Agreements, 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 I)ecernber 1987.
6. "Exclusion List" means a list containing products that are excluded from the extension of
tariff preferences under the CEPT Scheme.
7. "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.
ARTICLE 2
General Provisions
1. All Member States shall participate in the CEPT Scheme.
2. Identificationofproductstobeincludedinthe CEPT Scheme shall be on a sectoral basis, i.e., at :HS 6-digit level.
3. Exclusions at the HS 8/9 digit level for specific products are permitted for those Member States, which are temporarily not ready to include such products in the CEPT Scheme. For specific products, which are sensitive to a Member States, pursuant to Article 1 (3) of the Framework Agreement on Enhancing ASEAN Economic Cooperation, a Member State may exclude products from the CEPT Scheme, subject, to a waiver of any concession herein provided for such products. These temporarily excluded products are to be gradually included into the CEPT by I January 2000.
4. A product shall be deemed to be originating from ASEAN Member States, if at least 40% of its content originates from any Member State.
5. All manufactured products, including capital goods and agricultural products, shall be in the CEFIT Scheme. These products shall automatically be subject to the schedule of tariff reduction, as set out in Article 4 of this Agreement. In respect of PTA items, the schedule of tariff reduction provided for in Article 4A of this Agreement shall be applied, taking into account the tariff rate after the application of the existing margin of preference (MOP) as at 31 December 1992.
6. All products under the PTA which are not in the list for tariff reductions of the CEPT Scheme shall continue to enjoy the MOPs existing as at 31 December 1992.
7. Member States, whose tariffs for the agreed products are reduced from 20% and below to 0%- 5%, even though granted on an MFN basis, shall still enjoy concessions. Member States with tariff rates at MFN rates of 0%-5% shall be deemed to have satisfied the obligations under this Agreement and shall also enjoy the concessions.
ARTICLE 3
Product Coverage
This Agreement shall apply to all manufactured products, including capital goods, and agricultural products.
ARTICLE 4 Schedule of Tariff Reduction and Enjoynteist of Concessions
A. Schedule of Tariff Reduction
1. Member State agree to the following schedule of effective preferential tariff reductions:
a) The reduction from existing tariff rates to 20% which shall be announced at the start of the programme. Member States are encouraged to adopt an annual rate of reduction, which shall be (X-20)%/S, where X equals the existing tariff rates of individual Member States.
(b) The subsequent reduction of tariff rates from 20% or below shall be completed within a time frame of 5 years. ne rate of reduction shall be at a minimum of 5% quantum per reduction. A programme of reduction to he decided by each Member State shall be announced at the start of the programme.
(c) For products with existing tariff rates of 20% or below as at I January 1993, Mernber States shall decide upon a programme of tariff reductions, and announce at the start, the schedule of tariff reductions.
2. The above schedules of tariff reduction shall not prevent Member States from immediately reducing their tariffs to 0%-S% or following an accelerated schedule of tariff reduction.
B. Enjoymetit of Concessions
Subject to Articles 4(A) (lb) and 4(A)(1c) of this Agreement, products which reach, or are at tariff rates of 20% or below, shall automatically enjoy the concessions.
ARTICLE 5
Other Provisions
A. Quantitative Restrictions and Non-Tariff Barriers
1. Member States shall eliminate all quantitative restrictions in respect of products under the CEPT Scheme upon enjoyment of the concessions applicable to those products.
2. Member States shall eliminate other non-tariff barriers on a gradual basis within a period of five years after the enjoyment of concessions applicable to their products.
B. Foreign Exchange Restrictions
Member States shall make exception to their foreign exchange restrictions relating to payments for the products under the CEFIT Scheme, as well as repatriation of such payments without prejudice to their rights under Article XVIII of the General Agreement on Tariffs and Trade (GATT) and relevant provisions of the Article of Agreement of the International Monetary Fund.
C. Other Areas of Cooperation
Member States shall explore further measures on border and non-border areas of cooperation to supplement and complement the liberalization of trade. These may include, among, others, the harmonization of standards, reciprocal recognition of tests and certification of products, removal of barriers to foreign investment, macroeconomic consultations, rules for fair competition and promotion of venture capital.
D. Maintenance of Concessions
Member States shall not nullify or impair any of the concessions as agreed upon through the application of methods of customs valuation, any new charges or measures restricting trade, except in cases provided for in this Agreement.
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 sector 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 he consistent with the GATT.
2. Without prejudice to existing international obligations, a Member State, which finds it neces sary 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 endeavour 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 7 of this Agreement, and such action may be the subject of consultation as provided for in Article 8 of this Agreement.
ARTICLE 7
Institutional Arrangements
1. The ASEAN Economic Ministers (AEM) shall, for the purposes of this Agreement, establish a ministerial-level Council comprising one nominee from each Member State and the Secretary-General of the ASEAN Secretariat. The ASEAN Secretariat shall provide the support to the ministerial-level Council for supervising, coordinating and reviewing the implementation of this Agreement, and assisting the AEM in all matters relating thereto. In the performance of its functions, the ministerial-level Council shall also be supported by the Senior Economic Officials Meeting (SEOM).
2. Member States which enter into bilateral arrangements on tariff reductions pursuant to Article 4 of this Agreement shall notify all other Member States and the ASEAN Secretariat of such arrangements.
3. The ASEAN Secretariat shall monitor and report to the SEOM on the implementation of the Agreement pursuant to th@Article 111(2)(8) of the Agreement on the Establishment of the ASEAN Secretariat. Member States shall cooperate with the ASEAN Secretariat in the performance of its duties.
ARTICLE 8 Consultations
1. Member States shall accord adequate opportunity for consultations regarding any representations made by other Member States with respect to any matter affecting the implementation of this Agreement. The Council referred to in Article 7 of this Agreement, may seek guidance from the AEM in respect of any matter for which it has not been possible to find a satisfactory solution during previous consultations.
2. Member States, which consider that any other Member State has not carried out its obligations under this Agreement, resulting in the nuilifications or impairment of any benefit accruing to them, may, with a view to achieving Member States concerned, which shall give due consideration to the representations or proposal made to it.
3, Any differences between the Member States concerning the interpretation or application of this Agreement shall, as far as possible , be settled amicably between the parties. If such differences cannot be settled amicably, it shall be submitted to the Council referred to in Article 7 of this Agree- ment, and if necessary, to the AEM. I
ARTICLE 9
Accession of New Members and General Exceptions
A. New Members of ASEAN shall accede to this Agreement on terms and conditions which are consistent with the Framework Agreement on Enhancing ASEAN Economic Cooperation (1992) and the Agreement, and which have been agreed between them and the existing Members of ASEAN.
B. Nothing in this Agreement shall prevent any Member State from taking action and adopting measures, wkich 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 and archaeological value.
ARTICLE 10
Final Provisions
1. The respective Governments of Member States shall undertake the appropriate measures to fulfill the agreed obligations arising from this Agreement.
2. Any amendment to this Agreement shall be made by consensus and shall become effective upon acceptance by all Member States.
3. This Agreement shall be effective upon signing.
4. This Agreement shall he deposited with the Secretary General of ASEAN who shall likewise promptly furnish a certified copy thereof to each Member State
5. No reservation shall be made with respect to any of the provisions of this Agreement.
Interpretative Notes
"Unprocessed Agricultural Products" shall refer to the list of products that Member Countries exchanged in the
Fourth AFTA Council Meeting in 1993.
Article 2(3)
1) The CEPT Exclusion List should be temporary. Jt should compromise only sensitive items and the number of items and the value of traded goods should be less than that of the PTA Exclusion List
2) All products in the Temporary Exclusion List will be transferred to the Inclusion List in five equal installements of 20% annually beginning I January 1995. The first installment will be effected on January 1, 1996. The last will be implemented on January 1, 2000.
3) Products transferred from the Temporary Exclusion List should be accompanied by a tariff reduction schedule in accordance with the following guidelines:
a) For products with tariff rate above 20%, the tariff rate should be reduced to 20% by January 1, 1998 . However, products brought into the Inclusion List after January 1, 1998, the tariff rate should be reduced to 20% or less upon transfer. The tariff rate should be subsequently reduced to 0-5% by January 1, 2003; and
b) For products with tariff rate at or below 20%, the tariff rate should be reduced to 0-5% by January 1, 2003.
4) Products in the CEPT Exclusion List do not in anyway relate to products which are provided for exclusion by way of General Exception under the CEPT Agreement.
Articie 2(4)
1) The 40% local content requirement refers to both single country and cumulative ASEAN content.
Article 2(5)
1) The CEPT base rates of PTA in the Inclusion Lists, Temporary Exclusion List and Sensitive List should take into account the MOPs under the PTA. Thereafter, the MOPs shall no longer be applied as tariff rates are subsequently reduced under the CEPT Scheme in accordance with Article 4 (A) of this Agreement. Member States should also notify the AFFA Council through the ASEAN Secretariat of any tariff classification or duty changes.
2) In instances where there is a further breakdown of HS Codes involving CEPT products, the benefits granted to all products in the original HS code should be extended to the same products under the relevant new US codes or extracts thereof.
3) Concessions under the CEPT Scheme shall not be less favourable than the PTA concessions existing at 31 December 1992 and in the case of Indonesia and the Philippines shall be in accordance with the target level of MOP laid down by the 1987 PTA Protocol.
4) The MOP mentioned in this Article refers only to MOP of FITA.
Article 2(6)
1) These PTA products shall continue to enjoy the MOPs by using the CEPT Certificate of Origin from January 1, 1996 in accordance with the Protocol to Arnend the Agreement on ASEAN Preferential Trading Arrangements.
2) For Indonesia and the Philippines, PTA products in the Ternporary Exclusion List, Sensitive List and General Exception List, the commitment to deepen the MOPs under the 1987 Protocol will be continued.
Article 2(7)
Any change in the MFN rate is to be correspondingly reflected in the CEPT rate and tariff reduction schedule of Member States as soon as possible.
Article 3
1) Sensitive Unprocessed Agricultural products shall be subject to a special arrangement.
2) The Temporary Exclusion List of Unprocessed Agricultural Products shall be phased into the Inclusion List in equal installements by I January 2003, beginning I January 1997. Products transferred should be accompanied by a tariff reduction schedule with the following guidelines:
a) Products transferred by or after 1998 shall have a tariff rate of 20% or below. The tariff rate should be subsequently reduced to 0-5%
in 2003;
b) Products transferred in 2003 shall have a tariff rate of 0-5%.
Article 4(A)(1a)
1) The existing tariff rates for PTA products transferred to the CEPT Scheme mean PTA rates after the application of the existing margins of preference (MOP) as of 31 December 1992. Existing tariff rates for non- PTA products mean the MFN tariff rates as of I January 1992. The definition of existing tariff rates is also applicable to Article (4A)(1c). For the program of reductions to be announced on I January 1993, due consideration shall be given to tariff changes, including lariffication resulting from the removal of non-tariff barriers in 1992 in determining the starting point for tariff reductions under CEPT.
2) It is understood that the tariff reduction schedule is to be determined by each Member State provided that at the end of the 5th year period, the CEPT rate should not be more than 20%. However, this does not preclude Member States from adopting a faster rate of reduction.
Article 4(A)lb
In order to promote the commonality of tariff rates in subsequent years, Member States should reduce the tariff rates in three tranches according to the following schedule:
Year 1999 - 15%
Year 2001 - IO%
Year 2003 - 0% to 5%
However, the above schedule does not preclude Member States from adopting a faster rate of
reduction. An option for a Fast Track Mechanism is provided in Article 4 (A)(2).
Article 4(A)(1c)
1) For products with existing tariff rates of 20% or below as at I January 1993, the Mernber States agreed that by I January 2000 the tariff rates for such products shall be reduced to 0-5% level.
Article 4 (A) (2)
Member Countries have the option to accelerate their tariff reduction programme via the Fast Track mechanism. This involves the following schedules:
- to reduce tariff rates above 20% to 0-5% by I January 2000; and
- to reduce tariff rates at or below 20% to 0-5% by I January 1998.
Article 4 (B)
1) A Member State shall automatically enjoy the concessions, with respect to a product, if the tariff rate of the same product of that Member State, applicable to imports from other ASEAN Member States, has been reduced to, or is at 20% or lower, and if the AFRA Council has accepted a program of tariff reductions for the product as provided in Article 4 (A)(1c).
2) Member States with tariff rates above 20% while effecting tariff reductions under Article 4(A)(1a) shall enjoy each others concession.
3) Member States with tariff rates above 20% while effecting tariff reductions under Article 4(A)(1)(a) shall not enjoy the tariff reductions of other Member States effecting tariff reduction schedule under Article 4(A)(1)(b) and 4(A)(1)(c).
4) In cases where Member Countries, in the course of tariff reductions, reduce their tariff rates from above 20% to 20% and below, the CEPT rate immediately prior to the reduction of 20% or below shall be applied on products from Member Countries whose tariff rates are still above 20%. Bat tariff rate shall be reinstated either through the issuance of legal enactments or in the CEPT Concessions Exchange Manual (CCEM).
Article 5(A)(1)
1) Member States shall notify the Council through the ASEAN Secretariat on their existing quantitative restrictions (QR) by 31 December 1992 and non-tariff barriers (NTB) by 31 December 1993.
2) This does not preclude Member States with L-uiff higher than 20% to remove QR and NTB
Article 5(A)(2)
1) Member States shall also notify the Council through the ASEAN Secretariat on the elimination of their QR and NTB.
Article 5(D)
1) Customs Valuation procedures should be transparent and equitable. Where new customs valuation procedures are introduced, ASEAN Member States should explain and discuss the matter, when requested by other ASEAN Member States.
Article 6(l)
1) Products included in the CEPT Scheme shall not be subjected to increase of CEPT rates except under emergency situation as provided in Article 6 of the CEPT Agreement.
2) The suspension of CEPT preferences under Article 6 of the CEPT Agreement shall be consistent with Article XIX (Emergency Action Imports of Particular Products) of the GATT.
Article 6(3)
1) Where imports of particular products eligible under the CEPT 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 suspend preferences provisionally and without discrimination, and send an immediate notice to the Council through the ASEAN Secretariat.
Article 8
Procedures for Consultations and Dispute Settlement shall be in accordance with the Protocol on Dispute Settlement Mechanism
Article 9 (B)
1) Member States shall inform the Council through the ASEAN Secretariat on their products that fall under the General Exceptions clause by 31/12/92.
2) Member States shall inform the Council through the ASEAN Secretariat of any changes to the list of products as they occur, and these changes must be consistent with Article XX of the GATT.
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