Law Summary
Introduction
This Executive Order, issued by President Gloria Macapagal-Arroyo on March 31, 2003, modifies the rates of duty on certain imported articles under the Tariff and Customs Code of 1978 to implement preferential tariff rates for specific products under the ASEAN Industrial Cooperation (AICO) Scheme, specifically benefiting Toyota Motor Philippines Corporation and Toyota Autoparts Philippines, Inc.
Background
- Contracting Party: The Philippines is a signatory to the AICO Basic Agreement signed on April 27, 1996.
- Participation: The Philippines is involved in the AICO Arrangement with Toyota, along with Thailand.
- AICO Arrangement: The Philippines will import OEM automotive parts from Thailand, while Thailand will import complementary parts from the Philippines.
- Certificate of Eligibility: AICO Certificate No. Toyota/2002/28 was issued to the participating companies on December 19, 2002.
- Preferential Tariff Rates: Under the AICO Scheme, eligible companies will receive preferential tariff rates ranging from 0% to 5%.
Section 1: Tariff Rate Modification
- Legal Provision: Articles listed in Annex "A" shall be accorded an AICO tariff rate of 3% for specific automotive parts.
- Classification: The parts/components pertain to Toyota Corolla and Camry (HS 8703.90.10).
• Articles in Annex "A" will have a 3% tariff rate. • This applies specifically to parts for Toyota Corolla and Camry.
Section 2: Applicability of AICO Rate
- Effective Date: The AICO rate will be available to the AICO entity in Thailand (Toyota Motor Thailand Co. Ltd.) immediately upon the Executive Order's effectivity.
• The AICO tariff rate is effective immediately upon this Executive Order.
Section 3: Adjustment to Tariff Rates
- Future Adjustments: Should the basic Philippine duty rate on any articles in Annex "A" be reduced below the AICO rate, the lower rate will automatically apply.
• Articles will receive the lower corresponding duty rate if the basic rate decreases.
Section 4: Compliance Requirements
- Entry Procedures: Articles listed in Annex "A" must comply with the applicable AICO preferential tariff rates when entered or withdrawn from warehouses in the Philippines.
- Rules of Origin: Compliance is subject to the Rules of Origin for the CEPT, verified by a Certificate of Origin - Form "D".
• Articles must be qualified under Rules of Origin to benefit from AICO rates. • Compliance with the Certificate of Origin is mandatory.
Section 5: Communication of Part Number Revisions
- Responsibility: Any changes to part numbers in Column 4 of Annex "A" must be reported to the Bureau of Customs by the Board of Investments within five days of receipt from the ASEAN Secretariat.
• Notification of part number revisions must occur within five days.
Section 6: Effectivity Clause
- Immediate Effect: This Executive Order shall take effect immediately upon issuance.
• The Executive Order is effective immediately.
Key Takeaways
- The Executive Order modifies duty rates under the Tariff and Customs Code to implement preferential rates for specified automotive parts under the AICO Scheme.
- A 3% tariff rate is established for specific parts related to Toyota vehicles, effective immediately.
- Future changes to the basic duty rate will automatically adjust the tariff rate applied.
- Compliance with the Rules of Origin and proper documentation is essential to benefit from the preferential rates.
- Timely communication regarding any part number changes is required to maintain compliance.