The ASEAN-China Free Trade Agreement (ACFTA) implemented in July 2005 aims to achieve the following:
- Progressive elimination of tariffs and non-tariffs barriers;
- Progressive liberalisation of trade in services and investment;
- Strengthen trade facilitation and measures; and
- Economic co-operation in areas of common interest.
Trade in Goods
- Tariff liberalisation on all other products other than Early Harvest Programme (EHP) has been implemented beginning 1 July 2005 and to be conducted in four trenches in 2005, 2007, 2009 and 2010.
- ASEAN-6 and China is required to reduce tariffs to 0-5% on 40% of their products by 2005 and 60% of their products by 2007. Normal Track will be realised by 2010 for China and ASEAN-6, and 2015 for CMLV.
- Sensitive Track
- Products in the Sensitive Track are divided into Sensitive List and Highly Sensitive List.
- Duties for Sensitive List will be reduced to 20% by 2012 and to 0-5% by 2018 for ASEAN-6 and China, and 2020 for CMLV.
- Duties for Highly Sensitive List will be reduced to 50% by 2015 for ASEAN-6 and China, and 2018 for CMLV. There will be no further tariff cuts.
ASEAN-6 = Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore and Thailand
CMLV = Cambodia, Myanmar, Laos and Vietnam
Rules of Origin (ROO)
- Continuous improvements are being undertaken on the ROO and Operational Certification Procedures to simplify the rules and trading procedures under the ACFTA. These include the possibility of adopting the:
- Back-to-Back Certificate of Origin arrangement to facilitate exports of partial shipments, of which the bulk-break activities are conducted in an intermediate ACFTA party; and
- Third-Party reinvoicing arrangement, whereby sales invoice to the importer are allowed to be issued by companies located in a non-ACFTA territory.
- ASEAN and China has also adopted Product Specific Rules (PSR) for the following products:
- textiles and apparel;
- plastic products;
- footwear products;
- iron and steel products;
- preserved fish canned products;
- palm oil and ice cream; and
- jewelry product.
- With the adoption of PSR, ASEAN and Chinese exporters or manufacturers have the flexibility of choosing the most convenient rule in meeting the origin criteria of the products which is 40% Regional Value Content (RVC) or PSR, in order to enjoy the ACFTA preferential rate.
Trade in Services
- ASEAN-China Services Agreement was signed on 14 January 2007. First package of liberalisation commitment was implemented on 1 July 2007.
- The Agreement excludes services liberalisation pertaining to government procurement and government related services.
- Negotiations on the second package of liberalisation commitment are on-going and expected to be completed by 1 July 2008.
Agreement Text
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