Association of Southeast Asian Nations (ASEAN) economic ministers (AEM) have signed the First Protocol to amend the ASEAN Trade in Goods Agreement (ATIGA), a move expected to facilitate implementation of the ASEAN-Wide Self-Certification (AWSC) Scheme.
The AWSC is a simplified procedure that will help businesses use zero tariffs under the free trade agreement (FTA) between ASEAN member states.
The AEM also signed the Protocol to Implement the 10th Package of Commitments under the ASEAN Framework Agreement on Services (AFAS). This will provide preferential markets for Filipinos engaging in export services such as IT-BPO, tourism, and logistics sectors when doing business across the nine other ASEAN member states.
The two protocols were signed during the 50th ASEAN Economic Ministers’ Meeting on August 29.
Trade Secretary Ramon Lopez as the Philippine AEM Leader said in a statement: “ASEAN is virtually tariff-free, and efforts are now focused on trade facilitation initiatives that will ensure the ease in the flow of goods within the region to complement free trade.
Cutting transaction costs
“The AWSC will minimize burdens associated with administrative compliance and decrease transaction costs. Overall, the scheme is expected to improve the ease of doing business, thereby making it easier for PH companies to use the preferential tariff treatment under the ATIGA.”
ATIGA has been in place since 2010 and provides for import duties to be eliminated for 98.7% of the product lines of ASEAN member states.
Under the AWSC, exporters may apply for Certified Exporter (CE) status and support their claim that their goods are eligible for duty-free tariff under ATIGA. The CE status may be used as an alternative to a Certificate of Origin (CO) Form D.
In the current regime, for exported Philippine goods to enjoy ATIGA benefits, exporters must apply, manually and only during office hours on regular work days, for a CO Form D for every shipment.
The AWSC promotes convenience and leads to cost savings. It also improves distribution timelines as weekend shipments will not be delayed due to the administrative limitations of the CO Form applications.
“This will be good for businesses, especially our micro, small, and medium enterprises (MSMEs). It will make it easier for them to use the FTA, as well as enjoy zero tariffs when they sell to other ASEAN countries,” Lopez explained.
According to the trade chief, the use of FTA will make exports more cost competitive as exporters will no longer have to pay import duties.
AWSC, a new scheme that is user-friendly and supports the business models of today, is one of the priority requests of the ASEAN Business Advisory Council.
Under ATIGA, import duties have mostly been brought down to zero percent, but businesses are having a hard time accessing this benefit because of complicated procedures.
CEs can make the claim that their goods meet the requirements of the ATIGA at their own convenience and exactly when they need it, be it on weekends or on holidays. CEs are not required to make repeated applications for CO Form D, thus, saving time and money.
The ATIGA Protocol and AWSC are expected to be implemented by all ASEAN member states by the first semester of 2019. ASEAN is composed of Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
“We have this FTA in place and we want our exporters to maximize its use. It will help make our MSMEs more competitive in the global market,” Lopez noted.
The Department of Trade and Industry and other government agencies such as the Bureau of Customs and the Tariff Commission will be going around the Philippines to promote the ATIGA and the AWSC Scheme.
Trade services exports get boost
Lopez also emphasized the importance of trade services in the region following the signing of the 10th AFAS Package.
“We are confident that this package will be a catalyst towards a conducive export environment for service providers and businesses, including our MSMEs,” the Cabinet official said.
First signed in December 1995, the AFAS pushed for succeeding liberalization packages as part of efforts to reduce barriers to the service sector in the region.
The latest AFAS package allows market access and export to a range of new sectors, namely, communication services (e.g. export of Filipino soap operas), health services (e.g. medical tourism), distribution services (e.g. franchising), education services, construction and related services, and transport services, among others. These sectors comprise export interest to the Philippines.
The country’s merchandise trade with ASEAN in 2017 is valued at US$10 billion and accounted for 14.7% of total Philippine exports.
The country’s total services export has also continued to increase in recent years, amounting to $9.34 billion in the first quarter of 2018, an increase of 17.5% from $7.95 billion last year. – Roumina Pablo