LPU Laguna 2024 Tariff Laws - Day 7 PDF

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

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/ LPU LAGUNA : COMPETENCY IN TARIFF & CUSTOMS 2024 TARIFF LAWS – DAY 7 Free Trade Agreements (WTO, APEC & ASEAN) ENG’R RAMON G. LUCERO, JR. Free Trade Agreements Main purpose is trade liberalization that includes: free flow of trade settle trade disputes trade negotiations TYPES OF FREE TRADE AGREEMENTS Multilateral Trade Agreement (MTA) Multilateral trade agreements are between three or more countries. The main benefit of multilateral agreements is that all parties get treated equally, and so it levels the playing field, especially for poorer nations that are less competitive by nature. Example: AFTA Bilateral Trade Agreement (BTA) Agreement between two parties. Each side could be a country or a country and a trade bloc. Example: PJEPA, PH-EFTA World Trade Organization The only formal and international organization composed of member governments, dealing with the rules of trade between nations: - to help trade flow as freely as possible - to settle trade disputes - to organize trade negotiations Main Objectives 1. to raise living standards 2. to ensure full employment 3. to ensure a large and steadily growing volume of real income 4. to expand production of and trade in goods and services 5. to make possible efforts to ensure developing countries a share in the growth of international trade The World Trade Organization (WTO) ▪ Created during the GATT Uruguay Round and entered into force on 01 January 1995. ▪ 164 members as of December 2017 representing more than 97% of the world’s population. ▪ The Philippines is a WTO member since 01 January 1995. ▪ The WTO headquarter is in Geneva, Switzerland. ▪ An institutional body overseeing the rules of INTERNATIONAL TRADE that encompasses trade in goods, services and IPRs. ▪ Serves as a negotiating forum and trade dispute settlement body on TRADE PROBLEMS between members. ▪ Consists of Agreements providing the legal basis for international commerce. ▪ Aside from liberalizing trade, its rules also support maintaining trade barriers - for example to protect consumers, prevent the spread of disease or protect the environment. General Agreement on Tariffs and Trade (GATT) Set up in 1947 as a Negotiating Forum on the reduction of trade barriers. Is a Multilateral Treaty which provides rules for international trade. Is an International “COURT” for the settlement of trade disputes. Consisted of 8 rounds (series of negotiations) starting at the Geneva Round of 1947 up to the Uruguay Round (1986 - 1994). The Final Act concluding the Uruguay Round and officially establishing the WTO regime was signed on 15 April 1994, during the ministerial meeting at Marrakesh, Morocco, and hence is known as the Marrakesh Agreement. UNDERLYING PRINCIPLES ▪ trade without discrimination ▪ prohibition of quantitative restrictions (QRs) ▪ protection only through tariffs ▪ recognition of regional trading arrangements ▪ a stable basis for trade ▪ waiver and emergency action ▪ consultations WTO STRUCTURE 1. MINISTERIAL CONFERENCE (highest authority) - The topmost decision-making body of the WTO; - Meets at least once every two years; - Can take decisions on all matters under any of the multilateral trade agreements. 2. GENERAL COUNCIL (second level) - Acts on behalf of the Ministerial Conference; - It meets as the Dispute Settlement Body and the Trade Policy Review Body to oversee procedures: - - for settling disputes between members; & - - to analyze members’ trade policies. 3. Third level: Councils for each broad area of trade - Council for Trade in Goods (Good Council) ENG’R RAMON G. LUCERO, JR. Page 1 of 6  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/ - Council for Trade in Services (Services Council) --- Council for Trade-Related Aspects of Intellectual Property Rights (Trips Council) - - Each handling different areas of trade - - Report to the General Council AGREEMENT ON AGRICULTURE  Embodies the multilateral trading rules governing agriculture  Covers agricultural products under Chapters 1-24 (except fish and fish products plus certain products in Chapters 29, 33, 35, 38, 41, 43, 50, 51, 52 and 53)  Parties entered into binding commitments on market access, domestic support, export competition and agreement on sanitary and phytosanitary issues WTO : Uruguay Round (UR)  Under its “Agreement on Agriculture”, the UR provided for the conversion of quantitative restrictions (QRs) to tariffs – “TARIFFICATION” and for a periodic reduction of tariffs. Notes on Quantitative Restrictions: - In-quota tariffs are applied to the minimum access volume (MAV); - Out-quota tariffs are applied to volumes outside the MAV. AGREEMENT ON AGRICULTURE - Products subject to MAVs are the sensitive agricultural products listed in the Philippine Schedule LXXV - The MAV management committee implements and administers all importation under the MAV scheme. The Committee is composed of DA Secretary as chairman and the Secretaries of DAR, DOF, DOST, DTI and the NEDA DG as members Objectives: 1. Establish a fair and market-oriented agricultural trading system 2. Provide substantial progressive reductions on agricultural support and protection 3. Achieve a specific binding commitments on areas of market access 4. Reach an agreement on SPS measures - Under the Agreement, the Philippines secured a “Special Treatment” which temporarily permitted the country to impose quantitative restrictions in the importation of RICE. - The Special Treatment is effective up to 30 June 2017 by virtue of the WTO Decision on Waiver Relating to Special Treatment for Rice of the Philippines. - As concession for the requested Waiver, the Philippines issued EO 191 (s. of 2015) under the AANZFTA Agreement to accelerate tariff reduction on certain agricultural products and EO 190 (s. of 2015) to reduce the MFN rates on certain agricultural products while the Waiver is in effect. Non-Agricultural Market Access (NAMA)  Focuses on the reduction or elimination in tariffs, particularly on exportable goods of interest to developing countries.  NAMA products refer to those not covered under the WTO’s Agreement on Agriculture, more specifically, manufacturing products, fuels and mining products, fish and fish products, and forestry products.  NAMA negotiations aim to reduced or eliminate tariffs such as, tariff peaks, high tariffs and tariff escalation on product interest of developing countries - Tariff peaks are relatively high tariffs, usually on “sensitive” products, amidst generally low tariff levels. For industrialized countries, tariffs of 15% and above - Tariff escalation refers to a situation where tariffs increase by degree of processing.  For developing countries, the most important contribution of NAMA in market access, are the tariff bindings. ➔ TARIFF BINDING is a ceiling level tariff or maximum tariff that may be applied by a member.  NAMA also targets the removal of Non-Tariff Barriers. ➔ NON-TARIFF BARRIERS refer to any measure other than a tariff which protects domestic industry, or simply put, they are trade barriers that restrict imports but are not in the usual form of a tariff. Examples are: quotas, import licensing requirements, & anti- dumping and countervailing measures. Philippine Tariff Commitments Under the UR ▪ Bind tariffs on industrial products (2,800 tariff lines) and agricultural products (744 tariff lines) at ceiling rates (i.e., 10 percentage points above the 1995 applied rates, as a general rule) ▪ Reduce tariffs on 42 agricultural and 24 textile and clothing products (i.e., 1995 applied rates to be reduced by 10% to 30% over 10 years, 1995 – 2004) Philippine Commitments under the Agreement on Agriculture ▪ remove all existing QRs and replace with tariff equivalents (“tariffication”) - in-quota tariffs are applied to the minimum access volume (MAV) - out-quota tariffs are applied to volumes outside the MAV Example: 17.01 Cane sugar In-quota 50% Out-quota 65% Information Technology Agreement (ITA)  A WTO Agreement to eliminate tariffs on information technology products by the year 2000.  Initiated by the QUAD countries (US, Canada, Japan and the EU).  Was concluded at the Singapore Ministerial Conference in December 1996 and entered into force on 01 July 1997.  The commitments undertaken under the ITA are on an MFN basis, and therefore benefits all other WTO Members.  On 01 April 1997, the Philippines formally signed the Agreement. Legal enactments to ITA are: ➔ Binding of tariffs at zero duty in year 2000: Executive Order No. 465 (s. 1998) and Executive Order No. 163 (s. 1999). ➔ Binding at zero duty on the remaining tariff lines in 2005: Executive Order No. 395 (s. 2004). ENG’R RAMON G. LUCERO, JR. Page 2 of 6  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/ Product Landscape computer hardware and peripherals telecommunications equipment computer software semiconductor manufacturing and testing equipment analytical instruments semiconductors and other electronic components Philippine Commitments Under the Information Technology Agreement Bind tariffs on 234 lines in HS Chapters 38, 70, 84, 85 and 90 - bind 169 tariff lines at zero duty in 2000 - bind 65 tariff lines at zero duty in 2005 ITA UPDATE The Nairobi Ministerial Declaration on the Expansion of Trade in IT Products last December 2015, aims to eliminate tariffs on an additional 201 IT products. It was established that the first set of tariff cuts were to be implemented on 1 July 2016 and the second set no later than 1 July 2017, with successive reductions taking place on 1 July 2018 and effective elimination no later than 1 July 2019. Negotiations were conducted by over 50 WTO members but all 162 WTO members will benefit from the Agreement as they will all enjoy duty-free market access to the markets of the members eliminating tariffs on these products. ITA II Expanded product coverage (201 products) EO 21 MAY 18, 2917 Product landscape – New generation multi-component integrated circuits (MCOs) – Touch screens – GPS navigation system – Medical equipment – Portable interactive electronic education devices – Video game consoles – Semiconductor manufacturing equipment and pats WTO: Doha Round  Also known as The Doha Development Agenda.  Is the latest trade-negotiation Round of the WTO.  Officially launched at the WTO’s 4th Ministerial Conference in Doha, Qatar, in November 2001.  Its aim is to achieve major reform of the international trading system through the: - introduction of lower trade barriers; and - revised trade rules. A fundamental objective of the Round is to improve the trading prospects of developing countries. The main areas of negotiation of the DDA are: - Agriculture - Trade and environment - NAMA - Trade facilitation - Services - WTO rules - Intellectual property rights - Dispute settlement understanding - Trade and development THE ASIA PACIFIC ECONOMIC COOPERATION (APEC) FORUM ASIA PACIFIC ECONOMIC COOPERATION (APEC) Established in 1989 in Canberra, Australia with 12 countries that later grew to 21 member economies Cooperative effort of members with common goals of improving free trade Every year one member country plays host to the meeting APEC represents 41% of the global population and 49% of international trade Headquarter is in Singapore Members of APEC Australia * Mexico Brunei Darussalam * New Zealand * Canada * Papua New Guinea Chile Peru China Philippines * Hong Kong SAR Russia Indonesia * Singapore * Japan * Chinese Taipei Korea * Thailand * Malaysia * USA * Vietnam  Established in 1989 as an informal Ministerial-level dialogue group with 12 members (The Philippines being one of the founding members). In 1998, it reached full membership at 21 Pacific Rim countries.  APEC's activities are focused in three key areas “APEC’s Three Pillars”, namely: 1) Trade and Investment Liberalization; 2) Business Facilitation; and 3) Economic and Technical Cooperation. ENG’R RAMON G. LUCERO, JR. Page 3 of 6  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/  Unlike the WTO or other multilateral trade bodies, APEC has no treaty obligations required of its participants. Decisions made within APEC are reached by consensus and commitments are undertaken on a voluntary basis. APEC’s Three Pillars (Scope of Work) 1) Trade and Investment Liberalization - To reduce and eventually eliminate tariff and non-tariff barriers to trade and investment. 2) Business Facilitation - Focuses on reducing the costs of business transactions, improving access to trade information and aligning policy and business strategies to facilitate growth, and free and open trade. 3) Economic and Technical Cooperation - Dedicated to providing training and cooperation to build capacities in all APEC Member Economies to take advantage of global trade. APEC currently has 21 members, the criterion for membership is that the member is a separate economy, rather than a state. As a result, APEC uses the term “Member Economies” rather than member countries to refer to its members. An annual APEC Economic Leaders' Meeting is attended by the heads of government of all APEC members except Taiwan (which is represented by a ministerial-level official). - The location of the meeting rotates annually among the Member Economies ► EO 185 (s. of 2015) was issued to implement the Philippines’ tariff commitment on certain products included in the environmental goods list under the APEC. Objectives ✓ to sustain the growth and development of the region and contribute to the growth of the world economy ✓ to encourage the flow of goods, services, capital, and technology ✓ to develop and strengthen the open multilateral trading system in the interest of Asia Pacific and all other economies ✓ to reduce barriers to trade in goods, services and investment in a manner consistent with WTO principles The Early Voluntary Sectoral Liberalization (EVSL) Scheme means liberalization before 2010/2020 a collective action which identifies industries in which the progressive reduction of tariffs and non-tariff measures would have a positive impact on trade and economic growth or for which there is regional industry support for early liberalization three-track approach: market opening measures, trade facilitation activities, and ecotech initiatives 15 EVSL Sectors environmental goods and services * medical equipment and instruments * fish and fish products * oilseeds and oilseed products toys * food forest products * natural and synthetic rubber gems and jewelry * fertilizers chemicals * automotive goods telecommunications mutual recognition civil aircraft agreement * energy * APEC Leaders’ Meetings 1993 - Blake Island, Seattle, USA 1998 - Kuala Lumpur, Malaysia 1994 - Bogor, Indonesia 1999 - Auckland, New Zealand 1995 - Osaka, Japan 2000 - Bandar Seri Begawan, Brunei 1996 - Subic Bay, Philippines 2001 - Shanghai, China ……… 1997 - Vancouver, Canada 2015- Manila, Philippines Key Results  Blake Island Economic Vision - the Asia Pacific community working towards stronger cooperation, more open trade, continuous growth, a stable world economy, higher living standards & a secure future  Bogor Declaration of Common Resolve - full trade and investment liberalization and facilitation by 2010 for industrialized members and 2020 for developing members  Osaka Action Agenda - three pillars: trade and investment liberalization, trade and investment facilitation, economic and technical cooperation (ecotech)  Manila Action Plan - individual action plans for trade and investment liberalization - collective action plans for trade and investment facilitation - joint activities for ecotech Individual Action Plan Are annual reports that record the unilateral steps taken by the members to meet the Bogor goals. Members submit their IAPs: - to improve transparency of trade and investment regimes - to encourage members to focus on policy issues that need to be addressed - to maintain and demonstrate the momentum of APEC trade and investment efforts - to enable members to learn from the liberalization and facilitation experiences of others Philippine Individual Action Plan on Tariffs for 2002 continue implementation of Tariff Reform Program reduce bound tariffs in line with WTO commitments eliminate tariffs on IT products under the WTO ITA ENG’R RAMON G. LUCERO, JR. Page 4 of 6  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/ reduce CEPT rates under the AFTA ensure transparency of tariff regime EOs issued to implement liberalization measures adopted under APEC 264, 288, 465, 486, 334, 241, 264, 574, 678, 790, 890, 896, 898, 61, 185 and 20 (July 22,1995 to June17, 2017) Example: EO 20 MFN tariff schedule from July 2017 to 2020 ASSOCIATION OF SOUTHEAST ASIAN NATIONS (ASEAN) ❖ ASEAN was established on 08 August 1967 in Bangkok, Thailand, with the signing of the ASEAN Declaration (Bangkok Declaration) by the Ministers of Indonesia, Malaysia, the Philippines, Singapore and Thailand – the Founding Fathers of ASEAN. ❖ ASEAN aims to accelerate the economic growth, social progress, cultural development, protection of the peace and stability of the region. Treaty of Amity and Cooperation in Southeast Asia was signed in 1976 ❖ Brunei Darussalam joined on 07 January 1984, Viet Nam on 28 July 1995, Lao PDR and Myanmar on 23 July 1997, and Cambodia on 30 April 1999, completing the 10 Member States of ASEAN today. Birth of the ASEAN Free Trade Area (AFTA) ASEAN Heads of Government formally agreed to establish an ASEAN Free Trade Area during the 4th ASEAN Summit in Singapore in 1992. Objectives: ▪ Increase ASEAN’s competitive edge as a production base geared for the world market. ▪ liberalization of trade through the elimination of tariffs and non-tariff barriers. ▪ Attract more foreign direct investment MEMBERS OF THE AFTA  Six original signatories:  Four new members: - Brunei Darussalam - Viet Nam (1995) - Indonesia - Laos (1997) - Malaysia - Myanmar (1997) - Philippines - Cambodia (1999) - Singapore - Thailand The Common Effective Preferential Tariff (CEPT) Scheme  It is the main mechanism for the realization of AFTA.  Preferential tariff applied to goods originating from and traded between ASEAN Member States.  The Scheme covers all products except unprocessed agricultural products.  The Agreement on the CEPT Scheme for the AFTA was signed at Singapore on 28 January 1992. Roadmap for ASEAN Integration Elimination of all import duties by the 10 ASEAN Member States:  ASEAN 6  Viet Nam  Laos and Myanmar  Cambodia 2003 – 60% 2006 – 60% 2008 – 60% 2010 – 60% 2007 – 80% 2010 – 80% 2012 – 80% 2015 – 100% with 2010 – 100% 2015 – 100% with 2015 – 100% with flexibility up to 2018 flexibility up to 2018 flexibility up to 2018 ASEAN Integration System of Preferences (AISP) Scheme for CLMV Countries  Under the Initiative for ASEAN Integration (IAI), to accelerate the integration of the four new members into the regional economy , the original ASEAN Member States will apply the AISP Scheme on certain goods of these new members.  Under the Scheme, preferential tariffs (exempted or reduced to a rate lower than that of normal ATIGA rate) are OFFERED TO THE NEWER MEMBERS BY THE OLDER MEMBERS on voluntary and bilateral basis starting on 01 January 2002.  AISP is implemented based on products proposed by the CLMV Countries. The ASEAN COMMUNITY The ASEAN Vision 2020, adopted by the ASEAN Leaders on the 30th Anniversary of ASEAN, agreed on a shared vision of ASEAN as a concert of Southeast Asian nations, outward looking, living in peace, stability and prosperity, bonded together in partnership in dynamic development and in a community of caring societies. At the 9th ASEAN Summit in October 2003, the ASEAN Leaders resolved that an ASEAN Community shall be established. At the 12th ASEAN Summit in January 2007, the Leaders affirmed their strong commitment to accelerate the establishment of an ASEAN Community by 2015 and signed the Cebu Declaration on the Acceleration of the Establishment of an ASEAN Community by 2015. The ASEAN Community THREE PILLARS 1. ASEAN Political-Security Community - To establish a rules-based community promoting political development and stability in the region. 2. ASEAN Economic Community - Economic integration to establish ASEAN as single market and production base. 3. ASEAN Socio-Cultural Community - Represents the human dimension of ASEAN cooperation addressing the region’s aspiration to lift the quality of life of its people. The ASEAN ECONOMIC COMMUNITY BLUEPRINT 2025 ENG’R RAMON G. LUCERO, JR. Page 5 of 6  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/ The ASEAN Economic Community’s vision for the next 9 years are laid out in the AEC Blueprint 2025, as follows: 1. A highly integrated and cohesive economy 2. A competitive, innovative, and dynamic ASEAN 3. Enhanced connectivity and sectoral cooperation 4. A resilient, inclusive, people-oriented and people-centered region 5. A global ASEAN. ATIGA ASEAN Trade in Goods Agreement It was signed on 26 February 2009 at Cha-am, Thailand, and entered into force on 17 May 2010. KEY ELEMENTS OF THE ATIGA (i) ATIGA is the enhancement and consolidation of all existing provisions of the CEPT-AFTA Scheme and relevant ASEAN economic agreements and instruments. KEY ELEMENTS OF THE ATIGA (ii) ATIGA provides the product schedule for tariff reduction / elimination of each Member State. (iii) ATIGA ensures the free flow of goods within ASEAN thru: Tariff liberalization, removal of NTB, ROO (OCP and PSR), trade facilitation, customs, standards and conformance, and sanitary and phytosanitary measures. ATIGA : Product Eligibility for Concessions  The product is an ASEAN product, if it satisfies the Rules Of Origin requirements; Wholly Obtained, 40% value added or CTH or PSR  The product is covered by a Certificate of Origin (Form “D”); and  The tariff on the product of the exporting Member State is at the rate of 20% or below. Note that products listed in Schedule H (GENERAL EXCEPTION LIST) of each Member State shall not be entitled for tariff concessions. ANNEXES TO THE ATIGA 1. List of Notifiable Measures 2. Tariff Schedules (ATIGA rates schedule of each Member State) 3. Product Specific Rules (ROO Origin Criteria) 4. ITA Products in AHTN 2007 5. Principles and Guidelines for Calculating Regional Value Content on the ATIGA 6. Implementing Guidelines for Partial Cumulation under Article 30(2) on ASEAN Cumulative ROO ENG’R RAMON G. LUCERO, JR. Page 6 of 6