ACFTA began in 2001 when the ASEAN-China Summit held in Bandar Seri Begawan, Brunei Darussalam. The fifth meeting among ASEAN and China is China approved the proposal to establish a FTA within ten years. Five key areas of cooperation agreed to do is agriculture, telecommunications, human resource development, inter-state investment and development in the Mekong area. This meeting was followed by a meeting between Minister of Economy in ASEAN-China Summit in Phnom Penh in 2002, Vietnam. This meeting agreed a "Framework Agreement on Comprehensive Economic Cooperation" (CEC), which includes an FTA. Since the meeting was declared ACFTA.
CEC in the meeting's agreement contains three pillars: liberalization, facilitation and economic cooperation. The liberalization of free trade include covering goods, services and investments within the ACFTA. But there are also given a 'differential treatment and flexibility' for the members who have not developed in ASEAN, such as Cambodia, Laos, Myanmar and Vietnam will applies a new one in 2015. CEC also set up implementation mechanisms, including dispute settlement procedures.
There are three stages of tariff reduction, the Common Effective Preferential Tariff scheme (CEPT) the Early Harvest Program (EHP), Normal Track and Sensitive Track covering the Sensitive List and Highly Sensitive List. EHP is a program to accelerate the implementation of the FTA where tariffs Most Favored Nation (MFN) has to be removed for several categories of specific commodities. MFN is a status given to a country who by other countries in a trading relationship. This status gives a country an advantage in the treatment of trade in the form (for example) low tariffs or import quotas higher. Countries with MFN status must obtain the same trade treatment of donor country status.
The Technical Committee, Tariff and Related Matters (TRM-TC) formed in 2003 EHP. The program includes the release of the trade of meat, fish, dairy and other livestock products; live trees, vegetables, fruits and nuts from all customs duties. Created three categories of reduction and elimination of import duties. Countries which impose tariffs above 15 percent, countries with rates ranging from 5-10 percent and the state with less than 5 per cent import duty. As from July 2003, within three years of import duties for all commodities should be zero. Thus, in 2006 advanced six ASEAN members (Brunei, Indonesia, Malaysia, Philippine, Singapore and Thailand) have had to eliminate all tariffs on commodities that are mentioned above. However, rice and palm oil are not included in this agreement.
While the category of commodities included in the normal track, its MFN tariffs to be removed based on an agreed schedule. Almost all the commodities included in this category, unless the requested exception (thus entering the sensitive track). Scheduling are all over the country have had to reduce tariffs to 0-5% to 40% of commodities are on the normal track before July 1, 2006. The whole country had to reduce tariffs to 0-5% to 60% of commodities are on the normal track before January 1, 2007. And the whole country had to reduce tariffs to 0-5% for 100% of normal commodities are on track before January 1, 2010. Maximum of 150 tariff may be filed until January 1, 2012 suspension.
Furthermore, in the sensitive track is divided into two parts, the sensitive list and the highly sensitive list. Rate sensitive list of commodities have to be reduced to 20% before January 1, 2012 and to 0-5% before January 1, 2018. While the commodity rates are highly sensitive list should be reduced no more than 50% before January 1, 2015.
CEC in the meeting's agreement contains three pillars: liberalization, facilitation and economic cooperation. The liberalization of free trade include covering goods, services and investments within the ACFTA. But there are also given a 'differential treatment and flexibility' for the members who have not developed in ASEAN, such as Cambodia, Laos, Myanmar and Vietnam will applies a new one in 2015. CEC also set up implementation mechanisms, including dispute settlement procedures.
There are three stages of tariff reduction, the Common Effective Preferential Tariff scheme (CEPT) the Early Harvest Program (EHP), Normal Track and Sensitive Track covering the Sensitive List and Highly Sensitive List. EHP is a program to accelerate the implementation of the FTA where tariffs Most Favored Nation (MFN) has to be removed for several categories of specific commodities. MFN is a status given to a country who by other countries in a trading relationship. This status gives a country an advantage in the treatment of trade in the form (for example) low tariffs or import quotas higher. Countries with MFN status must obtain the same trade treatment of donor country status.
The Technical Committee, Tariff and Related Matters (TRM-TC) formed in 2003 EHP. The program includes the release of the trade of meat, fish, dairy and other livestock products; live trees, vegetables, fruits and nuts from all customs duties. Created three categories of reduction and elimination of import duties. Countries which impose tariffs above 15 percent, countries with rates ranging from 5-10 percent and the state with less than 5 per cent import duty. As from July 2003, within three years of import duties for all commodities should be zero. Thus, in 2006 advanced six ASEAN members (Brunei, Indonesia, Malaysia, Philippine, Singapore and Thailand) have had to eliminate all tariffs on commodities that are mentioned above. However, rice and palm oil are not included in this agreement.
While the category of commodities included in the normal track, its MFN tariffs to be removed based on an agreed schedule. Almost all the commodities included in this category, unless the requested exception (thus entering the sensitive track). Scheduling are all over the country have had to reduce tariffs to 0-5% to 40% of commodities are on the normal track before July 1, 2006. The whole country had to reduce tariffs to 0-5% to 60% of commodities are on the normal track before January 1, 2007. And the whole country had to reduce tariffs to 0-5% for 100% of normal commodities are on track before January 1, 2010. Maximum of 150 tariff may be filed until January 1, 2012 suspension.
Furthermore, in the sensitive track is divided into two parts, the sensitive list and the highly sensitive list. Rate sensitive list of commodities have to be reduced to 20% before January 1, 2012 and to 0-5% before January 1, 2018. While the commodity rates are highly sensitive list should be reduced no more than 50% before January 1, 2015.
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