2023 Tariff Laws Tutorial - Day 8 PDF

CLAP CUSTOMS REVIEW & CENTER FOR PROFESSIONAL DEVELOPMENT, INC. in coordination with PEDREZA CUSTOMS AND TARIFF WEBINARS Room 209, 2nd Floor, M...

CLAP CUSTOMS REVIEW & CENTER FOR PROFESSIONAL DEVELOPMENT, INC. in coordination with PEDREZA CUSTOMS AND TARIFF WEBINARS Room 209, 2nd Floor, Manuel F. Tiaoqui Bldg., Plaza Sta. Cruz, Manila Contacts - Globe: 09063811016 / 09068172757 Email: [email protected] FB: www.facebook.com/clap.stacruz/ 2023 TARIFF LAWS TUTORIAL – DAY 8 FREE TRADE AGREEMENTS ASEAN WITH DIALOGUE PARTNERS AND PHILIPPINE BILATERALS ENG’R RAMON G. LUCERO, JR. ASEAN WITH DIALOGUE PARTNERS A C F T A, A K F T A, A A N Z F T A, A J C E P, A I F T A, AHKFTA ASEAN-China Free Trade Area (ACFTA) It is a Free Trade Area among the 10 Member States of ASEAN and China. The ACFTA Framework Agreement, signed at Phnom Penh, Cambodia on 04 November 2002, provided the legal basis for ASEAN and China to negotiate further agreements leading to the creation of the ACFTA by 01 Jan. 2010. The Agreement on Trade in Goods (TIG) was signed in Vientiane, Laos on 29 November 2004. The Agreement on TIG of the ACFTA covers 2 programs of tariff reduction, namely: I. Normal Track (NT): (covers general goods) - ACFTA tariff reduction to 0%: Up to 01 Jan. 2012 (ASEAN-6 & China) Up to 01 Jan. 2018 (CLMV) II. Sensitive Track (ST): (covers sensitive goods) a) Sensitive List (SL) - ACFTA tariff reduction to 0-5%: Up to 01 Jan. 2015 (ASEAN-6 & China) Up to 01 Jan. 2018 (CLMV) b) Highly Sensitive List (HSL) - ACFTA tariff reduction to 50%: Up to 01 Jan. 2015 (ASEAN-6 & China) Up to 01 Jan. 2018 (CLMV) EARLY HARVEST PROGRAM UNDER THE ACFTA Accelerated the implementation of the Agreement on TIG for the ACFTA. – Covers the reduction to 0% import duty on products under Harmonized System (HS) Chapters 01 to 08 not later than 01 Jan. 2006. – Under EO No. 485 (s. of 2005), the Philippines implemented its commitment under the Early Harvest Program (EHP) of the ACFTA. Mechanisms on the Application of Preferential Tariff under the ACFTA A product can enjoy the preferential tariff rate if: It is placed under the NT list of both the importing and exporting countries; It is Wholly-Obtained or complied with at least 40% Regional Value Content (RVC) rule or under the Product Specific Rules (PSR); With Certificate of Origin (CO) Form “E”; and In the Exporter’s ST list with tariff rates of 10% or below (Reciprocity Rule). TARIFF RECIPROCITY RULE Exporter’s ST rate of duty of such Sensitive Products have been reduced to 10% or below; and In importer’s NT or EHP list Applicable Tariff Rate: ENGR. RAMON G. LUCERO JR. Page 1 of 8  CLAP CUSTOMS REVIEW & CENTER FOR PROFESSIONAL DEVELOPMENT, INC. in coordination with PEDREZA CUSTOMS AND TARIFF WEBINARS Room 209, 2nd Floor, Manuel F. Tiaoqui Bldg., Plaza Sta. Cruz, Manila Contacts - Globe: 09063811016 / 09068172757 Email: [email protected] FB: www.facebook.com/clap.stacruz/ NT rate of the importing party or ST rate of the exporting Party, whichever is HIGHER. However, the applied import duty SHOULD NOT EXCEED the MFN rate of the importing party. * Further, nothing in the Agreement prevents the importing Party from granting to the exporting Party the Normal Track or Early Harvest Programme rate even if such rate is lower than the exporter’s tariff rate. APPLICATION OF TARIFF RATE UNDER THE ACFTA 1 APPLICATION OF TARIFF RATE ENGR. RAMON G. LUCERO JR. Page 2 of 8  CLAP CUSTOMS REVIEW & CENTER FOR PROFESSIONAL DEVELOPMENT, INC. in coordination with PEDREZA CUSTOMS AND TARIFF WEBINARS Room 209, 2nd Floor, Manuel F. Tiaoqui Bldg., Plaza Sta. Cruz, Manila Contacts - Globe: 09063811016 / 09068172757 Email: [email protected] FB: www.facebook.com/clap.stacruz/ RECIPROCAL TARIFF TREATMENT EXAMPLE: What Rate to Apply? (1) ST rate (exporter) : 9% (2) ST rate (exporter) : 9% EHP rate (importer) : 0% EHP rate (importer) : 0% MFN rate (importer) : 10% MFN rate (importer) : 7% NOTE: The applied import duty rate should NOT be higher than the importer’s MFN rate. EXAMPLE: What Rate to Apply? (1) ST rate (exporter) : 8% (2) ST rate (exporter) : 8% NT rate (importer) : 3% NT rate (importer) : 5% MFN rate (importer) : 10% MFN rate (importer) : 7% EXPORTER: ST rate of 8% ENGR. RAMON G. LUCERO JR. Page 3 of 8  CLAP CUSTOMS REVIEW & CENTER FOR PROFESSIONAL DEVELOPMENT, INC. in coordination with PEDREZA CUSTOMS AND TARIFF WEBINARS Room 209, 2nd Floor, Manuel F. Tiaoqui Bldg., Plaza Sta. Cruz, Manila Contacts - Globe: 09063811016 / 09068172757 Email: [email protected] FB: www.facebook.com/clap.stacruz/ Executive Orders issued for ACFTA 485 December 29, 2005 814 June 30, 2009 487 January 7, 2006 71 April 16, 2012 613 April 17, 2007 72 April 16, 2012 618 April 23, 2007 EO 485 Published: January 21, 2006 MODIFYING THE RATES OF DUTY ON CERTAIN IMPORTED ARTICLES AS PROVIDED FOR UNDER THE TARIFF AND CUSTOMS CODE OF 1978, AS AMENDED, IN ORDER TO IMPLEMENT THE COMMITMENT TO REDUCE THE TARIFF RATES ON CERTAIN PRODUCTS TO ZERO PERCENT UNDER THE EARLY HARVEST PROGRAMME OF THE ASEAN - CHINA FREE TRADE AREA ASEAN-Korea Free Trade Area (AKFTA) It is a Free Trade Area Agreement among the 10 Member States of ASEAN and South Korea. The AKFTA Framework Agreement was signed at Kuala Lumpur, Malaysia on 13 December 2005 and came into force on 01 July 2006. The Agreement on Trade in Goods under the Framework Agreement was signed at Kuala Lumpur, Malaysia on 24 August 2006. The Agreement on TIG of the AKFTA covers 2 programs of tariff reduction, namely: I. NORMAL TRACK: - AKFTA tariff reduction to 0% Up to 01 Jan 2010 (ASEAN 6 & Korea) Up to 01 Jan 2016 (Viet Nam) Up to 01 Jan 2018 (CLM) II. SENSITIVE TRACK: a) Sensitive List (AKFTA tariff reduction to 0-5%) Up to 01 Jan 2016 (ASEAN 6 & Korea) Up to 01 Jan 2021 (Viet Nam) Up to 01 Jan 2024 (CLM) b) Highly Sensitive List (AKFTA tariff reduction to 50-20%) Up to 01 Jan 2016 (ASEAN 6 & Korea) Up to 01 Jan 2021 (Viet Nam) Up to 01 Jan 2024 (CLM) Mechanisms on the Application of Preferential Tariff under the AKFTA A product can enjoy the preferential tariff rate if It is placed under the NT list of both the importing and exporting countries; It is Wholly-Obtained or complied with RVC 40 or PSR of the governing ROO; With Certificate of Origin Form “AK”; and In the Exporter’s ST list with tariff rates of 10% or below (Subject to Reciprocity Rule). TARIFF RECIPROCITY RULE Exporter’s ST rate of duty of such Sensitive Products have been reduced to 10% or below (with Notification); o In the importer’s NT list Applicable Tariff Rate: NT rate of the importing party or ST rate of the exporting Party, whichever is HIGHER. However, the applied import duty SHOULD NOT EXCEED the MFN rate of the importing party. * Upon the discretion of the importing Party, the Normal Track rate can be applied even if such rate is lower than the exporting Party’s tariff rate. ENGR. RAMON G. LUCERO JR. Page 4 of 8  CLAP CUSTOMS REVIEW & CENTER FOR PROFESSIONAL DEVELOPMENT, INC. in coordination with PEDREZA CUSTOMS AND TARIFF WEBINARS Room 209, 2nd Floor, Manuel F. Tiaoqui Bldg., Plaza Sta. Cruz, Manila Contacts - Globe: 09063811016 / 09068172757 Email: [email protected] FB: www.facebook.com/clap.stacruz/ APPLICATION OF TARIFF RATEUNDER THE AKFTA ASEAN-AUSTRALIA-NEW ZEALAND FREE TRADE AREA (AANZFTA) The AANZFTA Agreement was signed at Cha-am, Phetchaburi, Thailand on 27 February 2009 and entered into force on 01 Jan. 2010. 2 programs of tariff reduction: – Normal Track (AANZ tariff to 0% by yr. 2015) and – Sensitive Track - - SL – 0-5% up to yr. 2020 - - HSL – 20% by yr. 2020. To avail of the preferential AANZFTA tariffs, the imported product/s must be accompanied by a CO Form “AANZ” and have complied with the requirements of the governing ROO (Wholly-Obtained, RVC 40 or PSR). Product coverage: – All products falling under Harmonized System (HS) Chapters 1 to 97 are covered – Except for rice, sugar and selected articles of iron and steel Implementing Executive Orders (EOs) : EO 851 issued on December 23, 2009 and which took effect on January 1, 2010 EO 191 issued on November 5, 2015 and which took effect on November 12, 2015 ASEAN-JAPAN COMPREHENSIVE ECONOMIC PARTNERSHIP AGREEMENT (AJCEPA) The Framework Agreement for Comprehensive Economic Partnership to establish the ASEAN-Japan Free Trade Area (AJFTA). The Philippines signed and ratified the Agreement on 02 April 2008 and 24 December 2008, respectively. To avail of the preferential tariffs under AJFTA, imported goods must be covered by a CO Form “AJ” and have complied with the requirements of the governing ROO (Wholly-Obtained, RVC 40 or PSR). ENGR. RAMON G. LUCERO JR. Page 5 of 8  CLAP CUSTOMS REVIEW & CENTER FOR PROFESSIONAL DEVELOPMENT, INC. in coordination with PEDREZA CUSTOMS AND TARIFF WEBINARS Room 209, 2nd Floor, Manuel F. Tiaoqui Bldg., Plaza Sta. Cruz, Manila Contacts - Globe: 09063811016 / 09068172757 Email: [email protected] FB: www.facebook.com/clap.stacruz/ AJFTA Product Coverage All products falling under Harmonized System (HS) Chapters 1 to 97. Following are the categories and schedules of tariff reduction: Category Schedule of Tariff Reduction A Immediate tariff elimination B4* 4 years grace period, zero in fifth year B5 5 years = 6 equal annual instalments B5* 5 years; 1 year grace period; 5 equal annual instalments B5** 5 years grace period; zero on the sixth year B7 7 years = 8 equal annual instalments B10 10 years = 11 equal instalments B10* 10 years; 1 year grace period; 10 equal annual instalments B10** 10 years; 5 years grace period; 6 equal annual instalments R (a) 11 equal annual instalments, 5% end rate R (b) 1 year grace period; reduced to20% in the second year R (c) 8 years grace period; 5% on the ninth year X Excluded from any tariff commitments The Philippines excluded rice, salt, certain chemical products and articles of iron and steel, and motor vehicles of Heading 87.03. Executive Order (EO) that implements Philippine tariff commitments under the AJCEPA ▪ EO 852 issued on December 23, 2009 and which took effect on July 1, 2010 ASEAN-INDIA COMPREHENSIVE ECONOMIC COOPERATION AGREEMENT (AICECA/AIFTA) The AIFTA (ASEAN-India Free Trade Area) Agreement was signed at Bali, Indonesia on 08 October 2003 and entered into force on 01 July 2004. The Trade in Goods Agreement for the AIFTA was signed at Bangkok, Thailand on 13 Aug. 2009 and at Ha Noi, Viet Nam. To avail of the preferential tariff under AIFTA, imported goods must be covered by a CO Form “AI” and have complied with the requirement of the governing ROO (Wholly-Obtained, RVC 35 + CTSH). AIFTA Product coverage and tariff schedule All products falling under Harmonized System (HS) Chapters 1 to 97 Except for about 14% of tariff lines A. Normal Track (NT): Normal Track 1: ▪ January 1, 2010 to December 31, 2013 for ASEAN 5 (Brunei Darussalam, Indonesia, Malaysia, Singapore and Thailand) and India ▪ January 1, 2010 to December 31, 2018 for the Philippines and India ▪ January 1, 2010 to December 31, 2013 for India, and January 1, 2010 to 31, December 2018 for Cambodia, Lao PDR, Myanmar and Viet Nam (CLMV) Normal Track 2: ▪ January 1, 2010 to December 31, 2016 for ASEAN 5 and India ▪ January 1, 2010 to December 31, 2019 for the Philippines and India ▪ January 1, 2010 to December 31, 2016 for India and January 1, 2010 to December 31, 2021 for CLMV B. Sensitive Track (ST): i. Base rates above 5% for tariff lines in the ST will be reduced to 5% in accordance with the following tariff reduction schedules: ▪ January 1, 2010 to December 31, 2016 for ASEAN 5 and India ▪ January 1, 2010 to December 31, 2019 for the Philippines and India ENGR. RAMON G. LUCERO JR. Page 6 of 8  CLAP CUSTOMS REVIEW & CENTER FOR PROFESSIONAL DEVELOPMENT, INC. in coordination with PEDREZA CUSTOMS AND TARIFF WEBINARS Room 209, 2nd Floor, Manuel F. Tiaoqui Bldg., Plaza Sta. Cruz, Manila Contacts - Globe: 09063811016 / 09068172757 Email: [email protected] FB: www.facebook.com/clap.stacruz/ ii. Base rates above 5% for tariff lines in the ST will be reduced to 5% in accordance with the following tariff reduction schedules: ▪ January 1, 2010 to December 31, 2016 for ASEAN 5 and India ▪ January 1, 2010 to December 31, 2019 for the Philippines and India January 1, 2010 to December 31, 2016 for India and January 1, 2010 to December 31, 2021 for CLMV iii. Base rates on 4% of the tariff lines placed in the ST, as will be identified by each Party on its own accord and exchanged with other Parties, will be eliminated by: ▪ December 31, 2019 for ASEAN 5 and India ▪ December 31, 2022 for the Philippines and India ▪ December 31, 2024 for CLMV C. Special Products refer to India’s crude and refined palm oil, coffee, black tea and pepper. Applied MFN tariffs on these products will be reduced in accordance with mutually agreed end rates and end dates. D. Highly Sensitive List Tariff lines placed by the Parties (except Brunei Darussalam, Lao PDR, Myanmar and Singapore) in the HSL are classified into three (3) categories: ▪ Category 1: reduction of applied MFN tariff rates to 50%; ▪ Category 2: reduction of applied MFN tariff rates by 50%; ▪ Category 3: reduction of applied MFN tariff rates by 25%. Tariff reduction shall be achieved by December 31, 2019 for Indonesia, Malaysia and Thailand, December 31, 2022 for the Philippines, and December 31, 2024 for Cambodia and Viet Nam. E. General Exceptions Certain products are excluded from the tariff reduction program for reasons of national security, public morals, human, animal and plant life, conservation of exhaustible natural resources and protection of articles with artistic, historic, and archaeological value. Exclusion Lists shall be subject to an annual tariff review for improvement in market access. ASEAN-India Comprehensive Economic Cooperation Agreement AICECA/AIFTA Executive Order which implemented the Philippines’ tariff commitments under AIFTA ▪ EO 25 issued on February 10, 2011 and which took effect on May 17, 2011 ASEAN-Hong Kong Free Trade Agreement AHKFTA Executive Order 10 implemented the Philippines’ tariff commitments under AHKFTA: - signed on 10 January 2020 - took effect on 12 May 2020 AHKFTA MODALITY OF TARIFF REDUCTION ENGR. RAMON G. LUCERO JR. Page 7 of 8  CLAP CUSTOMS REVIEW & CENTER FOR PROFESSIONAL DEVELOPMENT, INC. in coordination with PEDREZA CUSTOMS AND TARIFF WEBINARS Room 209, 2nd Floor, Manuel F. Tiaoqui Bldg., Plaza Sta. Cruz, Manila Contacts - Globe: 09063811016 / 09068172757 Email: [email protected] FB: www.facebook.com/clap.stacruz/ PHILIPPINE BILATERALS ▪ PJEPA ▪ PH-EFTA FTA PHILIPPINES – JAPAN ECONOMIC PARTNERSHIP AGREEMENT (PJEPA) The PJEPA is an economic partnership agreement concerning bilateral investment and free trade agreement between Japan and the Philippines signed at Helsinki, Finland on 09 September 2006 and ratified 08 October 2008 pursuant to Senate Resolution No. 131. To avail of the preferential tariffs under PJEPA, the imported product/s must be accompanied by a CO Form “JP” and have complied with the requirements of its governing ROO (Wholly-obtained or PSR, that is, the materials used undergo a change in tariff classification or a specific manufacturing or processing operation). PJEPA Product Coverage Except for rice and salt, all products falling under Harmonized System (HS) Chapters 1 to 97 The implementation period of PJEPA tariff commitments is ten (10) years from the date of entry into force of the Agreement. Category Modality A Immediate tariff elimination B4 4-years = 5 equal annual instalments B4** One single instalment on the fourth year B5 5-years = 6 equal annual instalments B5* 5 years, 1 year grace period, 5 equal annual instalments B5** One single instalment at the beginning of the 6th year B7 7-years, 8 equal annual instalments B10 10 year = 11 equal annual instalments B10* 10 years, 1 year grace period, 10 equal annual instalments B10** 10 years, 5 years grace period, 6 equal annual instalments R Renegotiation S Special tariff treatment X Excluded from any commitment of preferential treatment or renegotiation ’ ▪ EO 767 issued on November 7, 2011 and which took effect on December 11, 2008 ▪ EO 905 issued on June 29, 2010 and which took effect on July 1, 2010 ▪ EO 157 issued on February 13, 2014 and which took effect on February 20, 2014 Philippines-European Free Trade Association Free Trade Area PH-EFTA FTA Bilateral agreement between the Philippines and EFTA states composed of Iceland, Liechtenstein, Norway and Switzerland Product coverage: Products in Chapters 1 to 97 except products like live animals, meat and meat offal, vegetables, tunas and tilapia Rules of origin: Wholly Obtained or Product Specific Rules EO 61 August 2, 2018 Separate agricultural product lists for: Switzerland/Liechtenstein (Annex A) Norway (Annex B) and Iceland (Annex C) Non-agricultural products from all EFTA states (Annex D) No CO required, only exporters’ declaration ENGR. RAMON G. LUCERO JR. Page 8 of 8