Modification of import duties under ACFTA

Section 402 of the Tariff and Customs Code of 1978 (Presidential Decree PD 1464), as amended, empowers the President, upon the recommendation of the National Economic and Development Authority (NEDA), to modify import duties for the promotion of foreign trade.
The Executive Order implements changes in import duty rates under the Tariff and Customs Code of 1978 (as amended) through tariff schedules referenced in its annexes.
Section 3 links the authority to issue tariff classification rulings to the Tariff Commission under Section 1313(a) of the Tariff and Customs Code of the Philippines (as amended).

The Executive Order is issued to implement the 2009-2012 Philippine schedule of tariff reduction under the Normal Track of the ASEAN-China Free Trade Area (ACFTA).
It is also issued to implement the transfer of certain tariff lines from the Sensitive Track to the Normal Track category of the ACFTA.
The ACFTA commitments reflected in the Framework Agreement on Comprehensive Economic Cooperation include phased reduction and elimination of tariffs in the Normal Track, with schedules tied to ACFTA modalities.
The instrument implements obligations under the Agreement on Trade in Goods of the Framework Agreement, including tariff concessions for imports from Parties applying tariff concessions to the same product under Article 3 of that Agreement.

Section 1 applies to the articles specifically listed in Annex “A” (2009-2012 Philippine Schedule of Tariff Reduction under the Normal Track of the ACFTA) (referred to as Annex aAa).
Section 2 applies to the articles specifically listed in Annex “B” (Articles Transferred from Sensitive Track to the Normal Track of the ACFTA) (referred to as Annex aBa).
For both Section 1 and Section 2, the listed articles “as classified under Section 104 of the Tariff and Customs Code of 1978 (as amended)” are subject to ACFTA rates.
The applicable ACFTA rates are the rates in the schedule shown in Columns 4-7 of the respective annexes (Annex aAa and Annex aBa).
The ACFTA rates apply to imports coming from the Parties to the Agreement on Trade in Goods of the Framework Agreement that apply tariff concession to the same product under Article 3 of that Agreement.

Section 3 governs applications of the ACFTA rate for ASEAN 9.
ASEAN 9 is defined in the Executive Order as: Brunei Darussalam, Cambodia, Indonesia, Lao Peoples Democratic Republic, Malaysia, Myanmar, Singapore, Thailand, and Vietnam.
For ASEAN 9 imports, the applicable rate is the ACFTA rate.
The ACFTA rate under Section 3 applies subject to the submission of the proper Certificate of Origin, Form E.
Upon request, the Tariff Commission may issue tariff classification rulings to confirm the applicable rates of duty of particular products subject to Section 3, under Section 1313(a) of the Tariff and Customs Code of the Philippines (as amended).

Section 4 provides that if subsequent changes are made in the basic MFN Philippine rates of duty for any article listed in Annexes aAa and aBa,
and the MFN rate is lowered to a rate lower than the rate prescribed in Columns 4-7 of the annexes,
then the article is automatically accorded the corresponding reduced duty.
This rule operates as a direct downward adjustment tied to the reduced basic MFN duty for the specified articles.

Section 5 covers entries that occur from the date of effectivity of the Executive Order.
It requires that all articles listed in Annexes aAa and aBa that are entered into or withdrawn from warehouses in the Philippines for consumption be imposed the rates of duty prescribed in those annexes.
The imposition of the prescribed rates in Section 5 is subject to compliance with the Rules of Origin provided in Article 5 of the Agreement on Trade in Goods of the Framework Agreement.

Section 6 revokes or modifies any presidential issuances, administrative rules and regulations, or parts thereof that are contrary to or inconsistent with the Executive Order.
Section 7 sets the effectivity at fifteen (15) days after complete publication in the Official Gazette or a newspaper of general circulation in the Philippines.