Law Summary

Introduction

Executive Order No. 72, issued on January 15, 1999, modifies the rates of duty on specific imported articles in compliance with the Tariff and Customs Code of 1978, as amended. This order aims to implement a minimum 50% Margin of Preference (MOP) for certain products under the Brand-to-Brand Complementation (BBC) Scheme in the automotive industry, as established by the Basic Agreement on ASEAN Industrial Complementation (BAAIC).

Background and Context

• The Philippines is a signatory to the BAAIC and the MOU concerning the BBC Scheme for the automotive industry.
• The country is part of a collaborative agreement with Malaysia and Thailand to import and export certain automotive component parts under specific conditions.
• The MOP will facilitate trade by lowering duty rates on imported articles as part of the BBC arrangements.

Modifications to Duty Rates

• Section 1: Articles listed in Annex "A" will receive a minimum 50% MOP.

  • Key Definitions:
    • Minimum 50% Margin of Preference (MOP): A reduced tariff rate for products under the BBC.
  • Requirements:
    • Articles must be classified under Section 104 of the Tariff and Customs Code.
  • Timeframes:
    • The MOP is applicable until December 31, 2002.

• Section 2: Specific components for Model (KZ) Light Commercial Vehicles are to be exclusively granted MOP to the BBC entity in Malaysia (PROTON) from May 1, 1997, to June 30, 2001.

  • Requirements:
    • MOP to be extended to a non-participating ASEAN country if they also extend MOP until December 31, 2002.
  • Expiration: Final CEPT rate applies starting January 1, 2003.

• Section 3: Similar provisions for engine components exclusively granted to the BBC entity in Thailand (MMC Sittipol Co., Ltd) from January 1, 1998, to December 31, 2002.

  • Expiration: Final CEPT rate applies starting January 1, 2003.

General Provisions

• Section 4: The 50% MOP remains effective until December 31, 2002, regardless of subsequent changes in duty rates.
• Section 5: Articles entered or withdrawn for consumption must pay the applicable BBC Preferential Tariff and comply with Rules of Origin.
• Section 6: Any changes to part numbers in Annex "A" must be reported to the Bureau of Customs within five days.
• Section 7: This Executive Order takes effect immediately upon signing.

Key Takeaways

• Executive Order No. 72 establishes a framework for reduced import duties on specific automotive components, promoting ASEAN trade.
• The MOP applies to designated articles until the end of 2002, with specific entities in Malaysia and Thailand receiving preferential treatment.
• Compliance with the rules set forth in the Executive Order, including timely reporting of part number changes, is critical for the implementation of the MOP.
• These provisions are part of broader international trade agreements aimed at enhancing cooperation and economic integration among ASEAN member states.