AGREEMENN TO THE COMMON EFFECTIVE PREFERENTIAL TARIFF (CEPT) SCHEME FOR THE ASEAN FREE TRADE AREA (AFTA)

e GovernmentTh f Bruneo s i Darussalam e Republith , c of ,

Malaysia, the Republic of the , the Republic of and the Kingdom of , Member States of the Association of South East Asian Nations (ASEAN):

MINDFU Declaratioe th f Lo ASEAf no N Concord signe Balldn i , Indonesia on 24 February 1976 which provides that Member States shall cooperate in the field of trade in orde promoto rt e developmen growtd productiow tan ne f ho traded nan ;

RECALLING tha ASEAe tth N Head Governmentf so t thei,a r Third Summit

Meetin Decembe5 g1 hel- Maniln di 3 1 rn o a1987 , declared that Member States shall strengthen intra-ASEAN economic cooperatio maximiso nt realisatioe eth region'e th f no s potential in trade and development;

NOTING tha Agreemene tth ASEAn to N Preferential Trading Arrangements

(PTA) signed in Manila on 24 February 1977 provides for the adoption of various instruments on trade liberalisation on a preferential basis;

ADHERING to the principles, concepts and ideals of the Framework

Agreement on Enhancing ASEAN Economic Cooperation signed in Singapore on 28 January 1992; -2-

CONVINCED that preferential trading arrangements among ASEAN Member States will act as a stimulus to the strengthening of national and ASEAN economic resilience, and the development of the national economies of Member States by expanding investment and production opportunities, trade, and foreign exchange earnings;

DETERMINED to further cooperate in the economic growth of the region by accelerating the liberalisation of intra-ASEAN trade and investment with the objective of creating the ASEAN Free Trade Area using the Common Effective Preferential Tariff (CEPT) Scheme;

DJESIREV effecGo t t improvement ASEAe th n so N PT Aconsonancn i e with ASEAN's international commitments;

HAVE AGREE FOLLOWS DA S:

Article 1 : Definitions

For the purposes of this Agreement:

1 "CEPT" means the Common Effective Preferential Tariff, and it is an agreed effective tariff, preferential to ASEAN, to be applied to goods originating from ASEAN Member States whicd an , h have been identifie r inclusio fo de CEP th n Tni Schemn ei accordance with Article. s3 2(5d )an

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1 2 "Non-Tariff Barriers mea1 n measures other than tariffs which effectively prohibi restricr o t t impor exporr to productf to s within Member States.

3 " Quantitative restrictions" mean prohibition restrictionr so tradn so e with other Member States, whether made effective through quotas, licences or other measures with equivalent effect, including administrative measure requirementd san s which restrict trade.

4 "Foreign exchange restrictions" mean measures take Membey nb r Statee th sn i for restrictionf mo othed san r administrative procedure foreign si n exchange which have eth effec f restrictino t g trade.

5 "PTA" means ASEAN Preferential Trading Arrangements stipulatee th n di Agreement on ASEAN Preferential Trading Arrangements, signed in Manila on 24 February 1977, and in the Protocol on Improvements on Extension of Tariff Preferences under the ASEAN Preferential Trading Arrangements (PTA), signed in Manila on 15 December 1987.

6 "Exclusion List" mean lissa t containing products thaexcludee ar t d froe mth extensio tariff no f preferences unde CEPe rth T Scheme.

7 "Agricultural products" mean:

(a) agricultura materials/unprocessew lra d products covered under Chapters 1-24 e Harmoniseth of d System (HS)d similaan , r agriculturaw ra l materials/unprocessed products in other related HS Headings; and -4- * (b) products which have undergone simple processing with minimal changn ei form fro originae mth l products.

Article 2 : General Provisions

Membel Al r States shal1 l participat CEPe th n Tei Scheme.

2 Identification of products to be included in the CEPT Scheme shall be on a

sectoral basis 6-digi, S i.e.H t ,a t level.

3 digi9 8/ Exclusion t S leve H specifir e fo l th t sa c product permittee sar r dfo those Member States, which are temporarily not ready to include such products in the CEPT Scheme r specifiFo . c products, whic sensitive har Membea o et r State, pursuan Articlo t t e 1 (3) of the Framework Agreement on Enhancing ASEAN Economic Cooperation, a Member State may exclude products from the CEPT Scheme, subject to a waiver of any concession herein provided for such products. A review of this Agreement shall be carried out in the eighth yea decidfinao e rt th ln eExclusioo amendmeny n Lisan r to thio t s Agreement.

producA t shal deemee lb originatine b 4 o dt g from ASEAN Member Statesf i , at least 40% of its content originates from any Member State. l manufactureAl d products 5 , including capital goods, processed agricultural products and those products falling outside the definition of agricultural products, as set out

in this Agreement, shall be in the CEPT Scheme. These products shall automatically be -5-

subject to the schedule of tariff reduction, as set out in Article 4 of this Agreement.* In

respect of PTA items, the schedule of tariff reduction provided for in Article 4 of this Agreement shall be applied, taking into account the tariff rate after the application of the existing margin of preference (MOP) as at 31 December 1992.

productl Al t transferre whicA sno undee CEPe PT har th e o Tth rdt Schem6 e shall continu Decembeexistin1 P 3 t a enjoo eMO t s ge a yth r 1992.

7 Member States, whos eagreee tariffth r dfo s product reducee sar d from 20% and below to 0%-5%, even though granted on an MFN basis, shall still enjoy concessions. Member States with tariff rates at MFN rates of 0%-5% shall be deemed to have satisfied the obligations under this Agreemen shald an t l also enjo concessionse yth .

Article 3 : Product Coverage

This Agreement shall apply to all manufactured products, including capital goods, processed agricultural products, and those products falling outside the definition of agricultura thin i lt s productAgreementou t se s sa . Agricultural products shal excludee b l d from the CEPT Scheme.

Articl Schedul: e4 Tariff eo f Reduction

1 Member States followinagree th o et g schedul effectivf eo e preferential tariff reductions : -6-

-t reductioe Th n) fro(a m existing tarif shalf% done rate20 b l o est withi ntima e frame of 5 years to 8 years, from 1 January 1993, subject to a programme of reduction to be decided by each Member State, which shall be announced at the start of the programme. Member States are encouraged to adopt an annual rat reductionf eo , which shal (X-20)%/e lb , wher8 r 5 o equal eX existine sth g

tariff rate individuaf so l Member States.

e subsequenTh (b) t reductio f tarifno f rate r beloo s fro% wm 20 shal done b l e withi ntima e fram years 7 rat e f reductiof eo eo Th . minimuna t shala e lb m of 5% quantum per reduction. A programme of reduction to be decided by each Member State shall be announced at the start of the programme.

(c) For products with existing tariff rates of 20% or below as at 1 January 1993, Member States shall decide upon a programme of tariff reductions, and announce at the start, the schedule of tariff reductions. Two or more Member States may enter into arrangements for tariff reductions to 0%-5% on specific product acceleraten a t sa d announcepace b programmeo ee t stare th f th o t d a .

2 Subject to Articles 4(l)(b) and 4(l)(c) of this Agreement, products which t tarifbelowr a o reache f% ar rate ,r 20 shalo ,f so l automatically enjo concessionse yth .

3 The above schedules of tariff reduction shall not prevent Member States from immediately reducing their tariffs to 0%-5% or following an accelerated schedule of tariff reduction. -7-

Article 5 ; Other Provisions

A Quantitative Restriction Non-Tarifd san f Barriers

1 Member States shall eliminat quantitativl eal e restriction respecn si productf to s under the CEPT Scheme upon enjoyment of the concessions applicable to those products.

2 Member States shall eliminate other non-tariff barrier a gradua n o s l basis withi periona fivf do e years afte enjoymene th r concessionf o t s applicabl thoseo t e products.

B Foreign Exchange Restrictions

Member States shall make exceptions to their foreign exchange restrictions relating to payments for the products under the CEPT Scheme, as well as repatriation of such payments without prejudice to their rights under Article XVm of the General Agreement on

Tariffs and Trade (GATT) and relevant provisions of the Articles of Agreement of the

International Monetary Fund (IMF);

C Other Area f Cooperatioso n

Member States shall explore further measures on border and non-border areas of cooperation to supplement and complement the liberalisation of trade. These may include, among others harmonisatioe th , standardsf no , reciprocal recognitio test f ncertificatioo d san n -8- of products, removal of barriers to foreign investments, macroeconomic consultations; rules for fair competition, and promotion of venture capital.

D Maintenance of Concessions

Member States shal t concessionnullife th no l impair f yo o y agreeran s sa d upon through the application of methods of customs valuation, any new charges or measures restricting trade, excep casen ti s provide thin i sr dAgreementfo ,

Article 6 : Emergency Measures

1 If, as a result of the implementation of this Agreement, import of a particular product eligible unde CEPe th r T Schem s increasinei sucn gi ha manne causo t s r a ero threate causo nt e serious injur sectoro yt s producing lik directlr eo y competitive productn si the importing Member States, the importing Member States may, to the extent and for such time as may be necessary to prevent or to remedy such injury, suspend preferences provisionally and without discrimination, subject to Article 6(3) of this Agreement. Such suspension of preferences shall be consistent with the GAIT.

2 Without prejudic existino et g international obligations Membea , r State, which finds it necessary to create or intensify quantitative restrictions or other measures limiting imports wit vieha forestallinwo t threa e stoppinr go th f to gserioua s declin monetars it f eo y reserves, shala manner n i l endeavouo s , o whicd o t hr safeguarde e valuth th sf o e concessions agreed upon. -9-

3 Where emergency measures are taken pursuant to this Article, immediate notice of such action shall be given to the Council referred to in Article 7 of this Agreement, and subjece sucth h e f consultationb o actiot y nma s providea s Articln i f thir o dfo se8 Agreement.

Articl Institutiona: e7 l Arrangements e ASEATh N Economi 1 c Ministers (AEM )purposee th shall r fo f thi,o s s Agreement, establish a ministerial-level Council comprising one nominee from each Member State and the Secretary-General of the ASEAN Secretariat. The ASEAN Secretariat shall

provide the support to the ministerial-level Council for supervising, coordinating and reviewin e implementatioth g f thino s Agreement aln i l matterM assistind an AE , e s th g relating thereto performance th n I . functionss it f eo ministerial-levee th , l Council shall also be supported by the Senior Economic Officials' Meeting (SEOM).

2 Member States which enter into bilateral arrangement tarifn o s f reductions pursuant to Article 4 of this Agreement shall notify all other Member States and the ASEAN Secretaria f suco t h arrangements.

3 The ASEAN Secretariat shall monitor and report to the SEOM on the

implementatio Agreemene th f no t pursuan Article th o t te III(2)(8 Agreemene th f e )o th n o t Establishmen ASEAe th f o t N Secretariat. Member States shall cooperate wit ASEAe hth N Secretaria performance th n i t dutiess it f eo . -10-

Artict Constipation: e8 s

1 Member States shall accord adequate opportunity for consultations regarding any representations made by other Member States with respect, to any matter affecting the implementatio thif no s Agreement Councie Th . l referre Articln i thif o dt o se7 Agreement, may seek guidanc respec matten beet i y no an whic M n r s f epossiblrtfo o froha AE ht e i mth e to find a satisfactory solution during previous consultations.

2 Member States, which consider that any other Member State has not carried out its obligations under this Agreement, resulting in the nullification or impairment of any benefit accruin themo gt , may, wit vieha achievinwo t g satisfactory adjustmen mattere th f to , make representation proposalr so othee th o rst Member States concerned, which shall give due consideratio representatione th o nt proposalr so s mad. it o et

3 Any differences between the Member States concerning the interpretation or application of this Agreement shall, as far as possible, be settled amicably between the parties f sucI . h differences canno settlee b t d amicably t shali , submittee b l Councie th o dt l referre Articln i thif o dt o se7 Agreement, and necessaryf ,i AEMe th o t ,.

Article 9 : General Exceptions

Nothin thign i s Agreement shall preven Membey tan r State from taking action and adopting measures, which it considers necessary for the protection of its national -11-

security protectioe th , f publino c morals protectioe th , f humanno , anima r plano l t d lifean health, and the protection of articles of artistic, historic and archaeological value.

Articl :0 Finae1 l Provisions

1 The respective Governments of Member States shall undertake the appropriate measures to fulfil the agreed obligations arising from this Agreement.

2 Any amendment to this Agreement shall be made by consensus and shall

become effective upon acceptanc l Membeal y eb r States.

3 This Agreement shall be effective upon signing.

4 This Agreement shal depositee b l d wit Secretare hth y Genera ASEAe th f o l N Secretariat shalo wh l, likewise promptly furnis certifiea h d copy thereo eaco t f h Member

State, reservatioo N n shal made b l 5 eprovisione witth f ho respec y f thio san so t t Agreement.

IN WITNESS WHEREOF, the undersigned, being duly authorised thereto by their respective Governments, have signed this Agreemen Common o t n Effective Preferential Tariff (CEPT) Scheme for the ASEAN Free Trade Area (AFTA). - 12-

DONE at Singapore, this 28th day of January, 1992 in a single copy in the English Language.

FoGovernmene rth Brunef o t i Darussalam:

iBDTJL RAHMAN TAIB Minister of Industry andE&narffiesources

Governmene th r Fo f o t Republie th Indonesiaf co :

DR ARIFI SIREGANM R Minister Tradeof

Governmene th r Fo Malaysiaf o t :

^ , RAFEDAHAZIZ Minister Internationalof Trade Industryand

Governmene th r Fo f o t the Republic of the Philippines:

PETER DGARRUCHOR J Secretary of Trade and Indust*

Governmene th r Fo f o t Republie th f Singaporeco :

LEE HSIEN LOONG Deputy Prime Ministerand Minister Trade for Industry and

For the Government of the Kingdom of Thailand:

AMARET SILA-OK— Minister Commerceof