Upgraded ASEAN-China FTA protocol effective Aug in PH

Upgraded ASEAN-China FTA protocol effective Aug in PH


The protocol upgrading the economic cooperation agreement between the Association of Southeast Asian Nations (ASEAN) and China will be implemented next month, according to the Bureau of Customs (BOC).

Customs commissioner Rey Leonardo Guerrero, in Customs Memorandum Circular (CMC) No. 176-2019 signed on July 24, said implementation of the Protocol to Amend the Framework Agreement on the Comprehensive Economic Cooperation and Certain Agreements Thereunder Between the ASEAN and China—also called the ACFTA (ASEAN-China Free Trade Agreement) Upgrading Protocol—will begin on August 1, with a two-week transition period.

The protocol includes the revised ACFTA Product Specific Rule (PSR), Certificate of Origin (CO) Form E, Operational Certification Procedure (OCP), and Rules of Origin (ROO).

Guerrero noted that the two-week transition period was agreed on during the 12th meeting of the ASEAN-China Joint Committee-Working Group on Rules of Origin last May.

During the transition, Guerrero said the preferential tariff shall be granted to importers submitting the old CO Form E applying the old rules, and issuing authorities may still accept processing of the old CO Form E applying the old ROO rules.

The ACFTA Upgrading Protocol, which was signed in November 2015 and entered into force in 2016, aims to improve the ACFTA by increasing the depth and expanding the scope of cooperation, and promoting trade, services, and investment between ASEAN member countries and China.

ASEAN member countries include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam.

The ACFTA Upgrading Protocol amends provisions of the Framework Agreement on the Comprehensive Economic Cooperation between ASEAN and China signed in November 2002, including agreements under the framework. These agreements are the Agreement on Trade in Goods (TIG Agreement) signed in November 2004, Agreement on Trade in Services (TIS Agreement) signed in January 2007, and Investment Agreement signed in August 2009.

During the 25th ASEAN-China Senior Officials’ Consultation last May, both sides agreed to enhance economic ties to meet the target of US$1 trillion in trade volume and $150 billion in investments by 2020 through implementing ACFTA and the ACFTA Upgrading Protocol. Both sides also reiterated the importance of promoting open and free trade, and looked forward to concluding negotiations on the Regional Comprehensive Economic Partnership this year to boost regional growth.

Some of the key amendments in the ACFTA Upgrading Protocol, specifically for TIG, include upgrading and simplifying the ROO provisions by revising the PSR and introducing a new de minimis rule; clarifying the OCP for applying and obtaining an ACFTA preferential tariff CO Form E; and introducing a new section on customs procedures and trade facilitation.

On TIS, key amendments include improving the services commitments of China, covering the sectors of engineering services, integrated engineering services, construction services, sporting and other recreational services, securities services, and travel agency and tour operator services.

The ACFTA Upgrading Protocol also strengthens provisions for investment promotion and facilitation, and for building e-commerce capabilities, especially for micro, small and medium-sized enterprises.

Interestingly, the ACFTA Upgrading Protocol does not address much the issue of non-tariff barriers despite evidence these continue to grow and suppress trade, according to Asian Development Bank lead economist Jayant Menon and consultant Anna Cassandra Melendez in a report in the June 2019 issue of ASEANFocus, a publication of the ASEAN Studies Centre at ISEAS-Yusof Ishak Institute, Singapore.


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