PROTOCOL TO AMEND THE FRAMEWORK AGREEMENT

ON COMPREHENSIVE ECONOMIC CO-OPERATION BETWEEN THE ASSOCIATION OF SOUTH EAST ASIAN NATIONS AND THE PEOPLE’S REPUBLIC OF CHINA

 

 

The Governments of Brunei Darussalam, the Kingdom of Cambodia, the Republic of Indonesia, the Lao People’s Democratic Republic, Malaysia, the Union of Myanmar, the Republic of the Philippines, the Republic of Singapore, the Kingdom of Thailand, the Socialist Republic of Vietnam, Member States of the Association of South East Asian Nations (collectively “ASEAN” or “ASEAN Member States”) and the People’s Republic of China (“China”);

 

RECALLING the Framework Agreement on Comprehensive Economic Co-operation between ASEAN and China (hereinafter referred as “the Framework Agreement”) signed on 4 November 2002;

 

RECOGNISING that any Party may accelerate its tariff reduction and elimination for products covered under the Framework Agreement, including any commitments covered under the Early Harvest Programme of the Framework Agreement;

 

RECOGNISING also the requirement for some ASEAN Member States to complete their negotiations with China in respect of the Early Harvest Programme provided under the Framework Agreement;

 

SEEKING to incorporate into the Framework Agreement the Rules of Origin applicable to the products covered under the Early Harvest Programme of the Framework Agreement;

 

SEEKING also to revise the contents of the existing Annex 1 and Annex 2 of the Framework Agreement in order to include the subsequent Early Harvest agreements between some ASEAN Member States and China and to insert the relevant HS Codes and product descriptions;

 

DESIRING to clarify the implementation of the provisions of the Early Harvest Programme of the Framework Agreement;

 

DESIRING also to provide for the terms and conditions for the acceleration of tariff reduction and/or elimination for products covered under the Early Harvest Programme of the Framework Agreement through bilateral or plurilateral arrangements and to provide for such arrangements to be administratively annexed to the Framework Agreement;

 

NOTING that Article 14 of the Framework Agreement provides for any amendments thereto to be mutually agreed upon in writing by the Parties;

 

 

HAVE AGREED AS FOLLOWS:

 

 

ARTICLE 1

Amendment of Article 6(3)(a)(iv) of the Framework Agreement

 

Article 6(3)(a)(iv) of the Framework Agreement shall be deleted and substituted entirely by a new Article 6(3)(a)(iv) as set out below:

 

“(iv)   For those parties which are unable to complete the appropriate product lists in Annex 1 or Annex 2, the lists may still be drawn up by mutual agreement consistent with the implementation timeframe set out in Annex 3 to this Agreement.”

 

 

ARTICLE 2

Amendment of Article 6(3)(b)(i) of the Framework Agreement

 

Article 6(3)(b)(i) of the Framework Agreement shall be substituted by a new Article 6(3)(b)(i) as set out below:

 

          “(i)     All products covered under the Early Harvest Programme shall be divided into 3 product categories for tariff reduction and elimination as defined and to be implemented in accordance with the timeframes set out in Annex 3 to this Agreement.  This paragraph shall not prevent any Party from accelerating its tariff reduction and/or elimination if it so wishes, subject to the following terms and conditions:

 

(1)               A Party may accelerate its tariff reduction and/or elimination under this Article in relation to the rest of the parties on a unilateral basis;

 

(2)               One or more ASEAN Member States may also conduct negotiations and enter into a bilateral or plurilateral acceleration arrangement with China to accelerate their tariff reduction and/or elimination under this Article;

 

(3)               Before the commencement of negotiations of any arrangement pursuant to subparagraph 2 of Article 6(3)(b)(i) of this Agreement, all parties which decide to enter into such negotiations shall give joint written notification to the other ASEAN Member States at least one month before entering into such negotiations, so that any one or more of the ASEAN Member States may participate in such negotiations if they so wish.  Any ASEAN Member State that intends to participate in such negotiations shall notify the original parties intending to enter into such negotiations of its intention in writing, and shall provide copies of such notification to the other ASEAN Member States through the ASEAN Secretariat;

 

(4)               Any individual ASEAN Member State shall be permitted to accede to any arrangement concluded pursuant to subparagraph 2 of Article 6(3)(b)(i) of this Agreement, provided that it undertakes to be fully bound by the entire package of commitments under such arrangement with respect to product coverage, tariff schedule, and implementation timeframe, as prescribed by such arrangement. For newer ASEAN Member States, special and differential treatment and flexibility on the implementation timeframe shall be provided;

 

(5)               In implementing tariff reduction and/or elimination under any arrangement concluded pursuant to subparagraph 2 of Article 6(3)(b)(i) of this Agreement, the Rules of Origin as set out in Annex 5 of this Agreement shall be applicable;

 

(6)               Any arrangement concluded pursuant to subparagraph 2 of Article 6(3)(b)(i) of this Agreement shall be jointly notified by the concluding parties to the rest of the ASEAN Member States through the ASEAN Secretariat, which shall annex it administratively to this Agreement without the need for any Protocol to amend this Agreement.  The ASEAN Secretariat shall provide every ASEAN Member State and China with a copy of such arrangement with the appropriate annex numbering;

 

(7)               Any ASEAN Member State that intends to accede to any arrangement concluded pursuant to subparagraph 2 of Article 6(3)(b)(i) of this Agreement shall notify the original parties to such  arrangement of its intention in writing, and shall provide copies of such notification to the other ASEAN Member States through the ASEAN Secretariat; and

 

(8)               Any acceleration arrangement concluded pursuant to the terms and conditions set forth in Article 6(3)(b)(i) of this Agreement, including any acceleration arrangement concluded before the entry into force of this Agreement, shall form an integral part of this Agreement.”

 

 

ARTICLE 3

Amendment of Article 6(3)(c) of the Framework Agreement

 

 

1.           Article 6(3)(c) of the Framework Agreement shall be amended by inserting a new paragraph immediately after the existing Article 6(3)(c) of the Framework Agreement and by renumbering those paragraphs as Article 6(3)(c)(i), Article 6(3)(c)(ii) and Article 6(3)(c)(iii) respectively as follows:

 

“(c)    Rules of Origin

 

(i)                The Rules of Origin are set out in Annex 5 of this Agreement.

 

(ii)              The text of the Rules of Origin shall be applicable to the products covered under the Early Harvest Programme.

 

(iii)     Negotiations on the Product Specific Rules, which appear as Attachment B of the Rules of Origin, shall commence in January 2004.”

 

2.       The Framework Agreement is amended by inserting as Annex 5 the Rules of Origin set out in Appendix 1 of this Protocol.

 

 

ARTICLE 4

Amendment to insert new Article 12A into the Framework Agreement

 

The Framework Agreement shall be amended by inserting a new Article 12A immediately after the existing Article 12 of the Framework Agreement as follows:

 

“ARTICLE 12A

Agreements Outside this Agreement

 

Nothing in this Agreement shall prevent or prohibit any individual ASEAN Member State from entering into any bilateral or plurilateral agreement with China and/or the rest of the ASEAN Member States relating to trade in goods, trade in services, investment, and/or other areas of economic co-operation outside the ambit of this Agreement. The provisions of this Agreement shall not apply to any such bilateral or plurilateral agreement.”

 

 

ARTICLE 5

Substitution of Annex 1 of the Framework Agreement

 

The existing Annex 1 of the Framework Agreement shall be substituted by the new Annex 1 as set out in Appendix 2 of this Protocol.

 

 

 

 

 

ARTICLE 6

Substitution of Annex 2 of the Framework Agreement

 

The existing Annex 2 of the Framework Agreement shall be substituted by the new Annex 2 as set out in Appendix 3 of this Protocol.

 

 

ARTICLE 7

Incorporation of Early Harvest Schedules of Commitments

 

All Parties shall incorporate all of their commitments under the Early Harvest Programme of the Framework Agreement, as contained in Appendix 2 and Appendix 3 of this Protocol, in their respective schedules of the Early Harvest Concessions, which will form an integral part of the Framework Agreement, and shall promptly deposit such Schedules of Commitments with the ASEAN Secretariat.

 

 

ARTICLE 8

Entry into Force

                  

1.       This Protocol shall form an integral part of the Framework Agreement and shall enter into force upon the date of signature.

 

2.       For ASEAN Member States, this Protocol shall be deposited with the ASEAN Secretariat which shall promptly furnish a certified copy thereof to each ASEAN Member State.

 

 

IN WITNESS WHEREOF, the undersigned being duly authorised by their respective Governments, have signed this Protocol to Amend the Framework Agreement on Comprehensive Economic Co-operation between the Association of South East Asian Nations and the People’s Republic of China.

 

 

DONE at Bali, Indonesia this Sixth Day of October in the Year Two Thousand and Three, in duplicate copies in the English language.

 

 

 

 

 

 

Appendix 1

 

Annex 5

 

RULES OF ORIGIN FOR THE

ASEAN–CHINA FREE TRADE AREA

 

In determining the origin of products eligible for the preferential tariff concession pursuant to the Framework Agreement on Comprehensive Economic Co-operation between the Association of Southeast Asian Nations and the People’s Republic of China (hereinafter referred to as “the Agreement”), the following Rules shall be applied:

 

Rule 1:      Definitions

 

For the purpose of this Annex:

 

(a)     “a Party” means the individual parties to the Agreement i.e. Brunei Darussalam, the Kingdom of Cambodia, the Republic of Indonesia, the Lao People’s Democratic Republic (“Lao PDR”), Malaysia, the Union of Myanmar, the Republic of the Philippines, the Republic of Singapore, the Kingdom of Thailand, the Socialist Republic of Vietnam and the People’s Republic of China (”China”).

 

(b)     “materials” shall include ingredients, parts, components, subassembly and/or goods that were physically incorporated into another good or were subject to a process in the production of another good.

 

(c)     "Originating goods" means products that qualify as originating in accordance with the provisions of Rule 2.

 

(d)     "production" means methods of obtaining goods including growing, mining, harvesting, raising, breeding, extracting, gathering, collecting, capturing, fishing, trapping, hunting, manufacturing, producing, processing or assembling a good.

 

(e)     “Product Specific Rules” are rules that specify that the materials have undergone a change in tariff classification or a specific manufacturing or processing operation, or satisfy an ad valorem criterion or a combination of any of these criteria.

 

Rule 2:      Origin Criteria

 

For the purposes of this Agreement, products imported by a Party shall be deemed to be originating and eligible for preferential concessions if they conform to the origin requirements under any one of the following:

 

(a)             Products which are wholly obtained or produced as set out and defined in Rule 3; or

 

(b)     Products not wholly produced or obtained provided that the said products are eligible under Rule 4, Rule 5 or Rule 6.

 

Rule 3:      Wholly Obtained Products

 

Within the meaning of Rule 2 (a), the following shall be considered as wholly produced or obtained in a Party:

 

(a)             Plant[1] and plant products harvested, picked or gathered there;

 

(b)             Live animals[2] born and raised there;

 

(c)             Products[3] obtained from live animals referred to in paragraph (b) above;

 

(d)             Products obtained from hunting, trapping, fishing, aquaculture, gathering or capturing conducted there;

 

(e)             Minerals and other naturally occurring substances, not included in paragraphs (a) to (d), extracted or taken from its soil, waters, seabed or beneath their seabed;

 

(f)      Products taken from the waters, seabed or beneath the seabed outside the territorial waters of that Party, provided that that Party has the rights to exploit such waters, seabed and beneath the seabed in accordance with international law;

 

(g)     Products of sea fishing and other marine products taken from the high seas by vessels registered with a Party or entitled to fly the flag of that Party;

 

(h)     Products processed and/or made on board factory ships registered with a Party or entitled to fly the flag of that Party, exclusively from products referred to in paragraph (g) above;

 

(i)      Articles collected there which can no longer perform their original purpose nor are capable of being restored or repaired and are fit only for disposal or recovery of parts of raw materials, or for recycling purposes[4]; and

 

(j)      Goods obtained or produced in a Party solely from products referred to in paragraphs (a) to (i) above.

 

Rule 4:      Not Wholly Produced or Obtained

 

(a)     For the purposes of Rule 2(b), a product shall be deemed to be originating if:

 

(i)      Not less than 40% of its content originates from any Party; or

 

(ii)      If the total value of the materials, part or produce originating from outside of the territory of a Party (i.e. non-ACFTA) does not exceed 60% of the FOB value of the product so produced or obtained provided that the final process of the manufacture is performed within the territory of the Party.

 

(b)     For the purposes of this Annex, the originating criteria set out in Rule 4(a)(ii) shall be referred to as the “ACFTA content”. The formula for the 40% ACFTA content is calculated as follows:

 

Value of                  +    Value of materials of Non-ACFTA materials           Undetermined origin ________________________________________   x 100 % < 60%                       FOB Price   Therefore, the ACFTA content:  100% - non-ACFTA material = at least 40%

 

(c)     The value of the non-originating materials shall be:

 

(i)      the CIF value at the time of importation of the materials; or

 

(ii)      the earliest ascertained price paid for the materials of undetermined origin in the territory of the Party where the working or processing takes place.

 

(d)     For the purpose of this Rule, "originating material" shall be deemed to be a material whose country of origin, as determined under these rules, is the same country as the country in which the material is used in production.

 

Rule 5:      Cumulative Rule of Origin

 

Unless otherwise provided for, products which comply with origin requirements provided for in Rule 2 and which are used in the territory of a Party as materials for a finished product eligible for preferential treatment under the Agreement shall be considered as products originating in the territory of the Party where working or processing of the finished product has taken place provided that the aggregate ACFTA content (i.e. full cumulation, applicable among all Parties) on the final product is not less than 40%.

 

Rule 6:      Product Specific Criteria

 

Products which have undergone sufficient transformation in a Party shall be treated as originating goods of that Party. Products which satisfy the Product Specific Rules provided for in Attachment B shall be considered as goods to which sufficient transformation has been carried out in a Party.

 

Rule 7:      Minimal Operations and Processes

 

Operations or processes undertaken, by themselves or in combination with each other for the purposes listed below, are considered to be minimal and shall not be taken into account in determining whether a good has been wholly obtained in one country:

 

(a)     ensuring preservation of goods in good condition for the purposes of transport or storage;

 

(b)     facilitating shipment or transportation;

 

(c)     packaging[5] or presenting goods for sale.

 

Rule 8:      Direct Consignment

 

The following shall be considered as consigned directly from the exporting Party to the importing Party:

 

(a)             If the products are transported passing through the territory of any other ACFTA member states;

 

(b)             If the products are transported without passing through the territory of any non-ACFTA member states;

 

(c)             The products whose transport involves transit through one or more intermediate non-ACFTA member states with or without transshipment or temporary storage in such countries, provided that:

 

(i)                the transit entry is justified for geographical reason or by consideration related exclusively to transport requirements;

 

(ii)              the products have not entered into trade or consumption there; and

 

(iii)            the products have not undergone any operation there other than unloading and reloading or any operation required to keep them in good condition.

 

Rule 9:      Treatment of Packing

 

(a)             Where for purposes of assessing customs duties, a Party treats products separately from their packing, it may also, in respect of its imports consigned from another Party, determine separately the origin of such packing.

 

(b)             Where paragraph (a) above is not applied, packing shall be considered as forming a whole with the products and no part of any packing required for their transport or storage shall be considered as having been imported from outside the ACFTA when determining the origin of the products as a whole.

 

Rule 10:    Accessories, Spare Parts and Tools

 

The origin of accessories, spare parts, tools and instructional or other information materials presented with the goods therewith shall be neglected in determining the origin of the goods, provided that such accessories, spare parts, tools and information materials are classified and collected customs duties with the goods by the importing member state. 

 

Rule 11:    Neutral Elements

 

Unless otherwise provided, for the purpose of determining the origin of goods, the origin of power and fuel, plant and equipment, or machines and tools used to obtain the goods, or the materials used in its manufacture which do not remain in the goods or form part of the goods, shall not be taken into account.

 

Rule 12:    Certificate of Origin

 

A claim that products shall be accepted as eligible for preferential concession shall be supported by a Certificate of Origin issued by a government authority designated by the exporting Party and notified to the other Parties to the Agreement in accordance with the Operational Certification Procedures, as set out in Attachment A.

 

Rule 13:    Review and Modification

 

These rules may be reviewed and modified as and when necessary upon request of a Member State and may be open to such reviews and modifications as may be agreed upon by the AEM-MOFCOM.