1. What is the ASEAN-China Free Trade Area?

The ASEAN-China Free Trade Area (ACFTA) is a trade agreement among the ten
(10) Member States of the Association of Southeast Asian Nations (ASEAN) and China.

The Framework Agreement on Comprehensive Economic Cooperation between

ASEAN and China covering trade in goods, trade in services, investments and other
measures to develop new areas of economic cooperation was signed on November 4, 2002.

The Agreement on Trade in Goods containing the Parties commitment to establish

the ACFTA, covering trade in goods, by (a) 2010 for ASEAN 6 (Brunei, Indonesia, Malaysia,
Philippines, Singapore, Thailand) and China, and (b) 2015 for the newer ASEAN Member
States CLMV (Cambodia, Lao PDR, Myanmar, and Viet Nam), was signed on November 29,
2002.

2. What are the objectives of ACFTA?

Strengthen and enhance economic, trade and investment co-operation between

the Parties;

Progressively liberalize and promote trade in goods and services as well as

create a transparent, liberal and facilitative investment regime;

Explore new areas and develop appropriate measures for closer economic co-
operation between the Parties; and

Facilitate the more effective economic integration of the newer AMS and bridge
the development gap among the Parties.

3. What is the Early Harvest Programme (EHP) under ACFTA and what is its
product coverage?

The EHP aimed to accelerate the implementation of Article 6 of the Framework

Agreement on trade in goods.

The EHP covers all products falling under Harmonized System (HS) Chapters 1 to 8
(live animals, meat and edible meat offal, fish, dairy produce, other animal products, live
trees, edible vegetables and edible fruits and nuts). Parties were allowed to have an
Exclusion List.

4. What was the modality for tariff reduction and elimination under the EHP?

EHP Tariff Rate (%)

Not Later Than 01
Product Category January
2004 2005 2006
With applied MFN tariff rates higher than 15% 10 5 0
With applied MFN tariff rates between 5% and 15% (inclusive) 5 0 0
With applied MFN tariff rates lower than 5% 0 0 0

Implementation began on January 1, 2004 for ASEAN, except for the Philippines and
China. On December 29, 2005, the Philippines issued Executive Order (EO) 485 to implement
its EHP commitments.

Date of Last Revision: July 2017 Page 2

5. What are the timeframes for the Agreement on Trade in Goods?

Implementation began on July 1, 2005 with two (2) programs of tariff reduction:

a. Normal Track (NT): Reduction to 0%

For ASEAN 6 and China: 2005 to 2010, with flexibility up to January 1, 2012

For CLMV: 2005 to 2015, with flexibility up to January 1, 2018

b. Sensitive Track (ST)

Sensitive List (SL):

For ASEAN 6 and China: 20% by in 2012 to 0%-5% in 2018

For CLMV: 20% in 2015 to 0%-5% in 2020

Highly Sensitive List (HSL):

For ASEAN 6 and China: 50% by January 1, 2015

For CLMV: 50% by January 1, 2018

6. What are the modalities for tariff reduction and/or elimination for products
under the normal and sensitive tracks for ASEAN 6 and China?

Normal Track: Products were classified as belonging to either NT1 (2007 to 2010)
or NT2 (tariff elimination in 2012). The modality is shown below:

ASEAN-6 and China Tariff Reduction Modality

Tariff Rate
2005 2007 2008 2009 2010
X > 20% 20 12 10 5 0
15% < X < 20% 15 8 8 5 0
10% < X < 15% 10 8 5 5 0
5% < X < 10% 5 5 3 0 0
X < 5% Standstill 0 0
Thresholds:
40% of NT tariff lines at 0%-5% by July 1, 2005
60% at 0%-5% by January 1, 2007
100% at 0% by January 1, 2010, with flexibility to eliminate tariffs on
tariff lines not exceeding 150 by January 1, 2012 (except for the
Philippines whose tariff lines can exceed 150 and which list shall be
determined after a review in 2008)

Sensitive Track: ST is divided into two (2) Lists: SL and HSL. For SL products,
tariffs will be reduced to 20% in 2012 and to 0%-5% (ending rates) by 2018. For
HSL products, there is no commitment in 2012, but there is an ending rate of 50%
by 2015.

Date of Last Revision: July 2017 Page 3

7. What is reciprocal tariff treatment under the ACFTA?

Reciprocal tariff treatment is not automatically applied. Products that have been
placed in ST may be accorded reciprocal tariff treatment as governed by Paragraphs 5 and 6
of Annex 2 of the TIG, after notification has been received from the Party/Parties that the
rates of duty on its products in ST are at 10% and below.

8. How is reciprocal tariff treatment applied?

The following modality shows how reciprocal tariff treatment is applied:

Country A Country B
(Exporting (Importing Applicable ACFTA Rate
Country) Country)
EHP EHP rate of Country B*
EHP NT NT rate of Country B
ST ST rate of Country B
EHP EHP rate of Country B
NT NT NT rate of Country B
ST ST rate of Country B
EHP rate of Country B or ST rate of Country A,
EHP whichever is higher (provided that tariff rate to be
applied shall not exceed the MFN rate of Country B)
ST < 10% NT rate of Country B or ST rate of Country A, whichever
NT is higher (provided that tariff rate to be applied shall not
exceed the MFN rate of Country B)
ST ST ST rate of Country B
EHP MFN rate of Country B
ST > 10% NT MFN rate of Country B
ST ST rate of Country B
*
Article 6 (3)(a)(iii), Framework Agreement on ACFTA

Specific examples are shown below:

Exporting Country Importing Country Appli-

AHTN 2012 (China) (Philippines) cable
Product ACFTA
Code MFN ACFTA Cate- MFN ACFTA Cate-
Rate Rate
Rate gory Rate Rate gory
0409.00.00 Natural honey 15 0 NT 7 0 NT1 0
Cabbage lettuce
0705.11.00 10 0 NT 25 20 SL 20
(head lettuce)
1005.10.00 Maize seed 20 20 HSL 1 0 NT1 1
Polyethylene having a
3901.20.00 specific gravity of 0.94 6.5 6.5 HSL 10 10 SL 10
or more
Thai Hom Mali Rice,
50
1006.20.10A husked (brown) rice, 65 5 SL 40 HSL 50
(2015)
In-Quota
Thai Hom Mali Rice,
50
1006.20.10B husked (brown) rice, 65 5 SL 50 HSL 50
(2015)
Out-Quota

Date of Last Revision: July 2017 Page 4

9. What are the Rules of Origin (ROOs) under ACFTA?

Products which are wholly obtained or produced in the exporting party shall be
deemed originating and eligible for preferential tariff treatment.

The General Rule of Regional Value Content (RVC) 40 is applicable to all other
goods except where there is no Product Specific Rule (PSR). The PSR becomes either the
exclusive rule or an alternative to the General Rule depending on the provisions of Annex 3
of the TIG Agreement.

1. ROO Criteria General Rule RVC 40 or Change in Chapter/Change in Tariff

2. Certificate of Origin (CO) Form
3. Reciprocity Rule
Heading
Form E
Conditions:
1. The product to be imported is in the NT of the
Philippines and in the ST of the exporting FTA
partner.
2. The ST rate of FTA partner should be 10% and
below.
3. The applicable rate is whichever is higher
between the FTA partners ST rate and the
Philippines NT rate.
4. The applicable rate should not be greater than
the Philippines MFN rate.

10. What Executive Orders (EOs) were issued to implement the Philippines
commitments under the Agreement on Trade in Goods?

EO No. Date Issued Description

Early Harvest Program:
Implements the tariff commitments to reduce tariffs to
485 December 29, 2005
zero (0%) for certain products under Chapters 1 to 8
Normal Track:
487 January 12, 2006 Covers the 2005-2008 tariff reduction schedule
613 April 17, 2007 Covers the 2006-2008 tariff reduction schedule
Covers the 2009-2012 tariff reduction schedule;
814 June 30, 2009 transfer of certain tariff lines from ST to NT category
for elimination by 2010 with flexibility in 2012
Sensitive Track:
Covers the commitment to grant reciprocal tariff
618 April 23, 2007
treatment on tariff lines included in the ST
Implements the tariff commitments on certain
71 April 16, 2012
products included in HSL
Implements the tariff commitments on certain
72 April 16, 2012 products included in SL and the transfer of certain
tariff lines from ST to NT

Date of Last Revision: July 2017 Page 5

11. What is the frequency distribution of Philippine tariffs under the ACFTA?

ACFTA Number of AHTN 2017 Tariff Lines Percentage Share (%)

Rate (%)
2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022
0 9,304 9,304 9,304 9,304 9,304 9,304 82.25 82.25 82.25 82.25 82.25 82.25
1 155 155 155 155 155 155 1.37 1.37 1.37 1.37 1.37 1.37
10 142 3 3 3 3 3 1.26 0.03 0.03 0.03 0.03 0.03
15 330 82 82 82 82 82 2.92 0.72 0.72 0.72 0.72 0.72
20 618 8 8 8 8 8 5.46 0.07 0.07 0.07 0.07 0.07
25 2 2 2 2 2 2 0.02 0.02 0.02 0.02 0.02 0.02
3 138 138 138 138 138 138 1.22 1.22 1.22 1.22 1.22 1.22
30 393 393 393 393 393 393 3.47 3.47 3.47 3.47 3.47 3.47
35 14 14 14 14 14 14 0.12 0.12 0.12 0.12 0.12 0.12
40 67 67 67 67 67 67 0.59 0.59 0.59 0.59 0.59 0.59
5 41 1,069 1,069 1,069 1,069 1,069 0.36 9.45 9.45 9.45 9.45 9.45
50 31 31 31 31 31 31 0.27 0.27 0.27 0.27 0.27 0.27
7 31 0.27 - - - - -
GE 45 45 45 45 45 45 0.40 0.40 0.40 0.40 0.40 0.40
2716.00.00 1 1 1 1 1 1 0.01 0.01 0.01 0.01 0.01 0.01
Grand Total 11,312 11,312 11,312 11,312 11,312 11,312 100.00 100.00 100.00 100.00 100.00 100.00
GE (General Exclusion) - Excluded from any tariff concessions

Date of Last Revision: July 2017 Page 6