Law Summary

Introduction

Executive Order No. 162, issued on January 10, 2003, modifies the rates of duty on specific imported articles to implement preferential tariff rates under the ASEAN Industrial Cooperation (AICO) Scheme, specifically benefitting Philippine Auto Components, Inc. (PAC).

Background and Participation

• Legal Basis: The Philippines, as a Contracting Party to the Basic Agreement on the AICO Scheme, signed on April 27, 1996, participates in trade arrangements designed to facilitate industrial cooperation.
• Involved Parties: The PAC AICO Arrangement includes participation from the Philippines and Thailand.
• Import/Export Details:
  • The Philippines will import specific auto components from Thailand (Denso Thailand Co., Ltd.), including:
    • Fan assembly and shroud assembly (HS Hdg No. 8414.90 00)
    • Evaporators for air-conditioning machines (HS Hdg. No. 8419.89 10)
    • Aluminum radiator components (subassemblies) (HS Hdg. No. 8708.91 10 and HS Hdg. No. 8708.91 20)
  • In return, Thailand will import a fuel pump module assembly from the Philippines (HS Hdg. No. 8413.30 00).

Tariff Modification

• AICO Rates:
  • The articles listed in Annex "A" of the order will be subjected to a preferential tariff rate of 3% as classified under Section 104 of the Tariff and Customs Code of 1978.
• Effective Date: The AICO rate is effective from November 12, 2002.

Adjustments to Tariff Rates

• Automatic Rate Adjustment:
  • If the basic (Most Favored Nation) Philippine rate of duty for any article listed in Annex "A" decreases below the AICO rate, the lower rate will automatically apply.
  • The final Common Effective Preferential Tariff (CEPT) rate will be effective starting January 1, 2003.

Compliance and Documentation

• Certificate of Origin:
  • Articles imported under this Executive Order must comply with the Rules of Origin for the CEPT, demonstrated by a Certificate of Origin - Form "D".

Implementation and Effectivity

• Immediate Effectivity: The Executive Order takes effect immediately upon issuance, allowing the preferential tariff rates to apply to qualifying imports.

Key Takeaways

• Executive Order No. 162 provides a structured framework for preferential tariff rates for specific imported auto components under the AICO Scheme, promoting bilateral trade between the Philippines and Thailand.
• The AICO rate of 3% applies to designated articles, with automatic adjustments to lower rates if applicable.
• Compliance with the CEPT's Rules of Origin is crucial for the preferential tariff benefits, supported by necessary documentation.

This summary encapsulates the essential provisions and implications of Executive Order No. 162, ensuring clarity on the changes to tariff rates and their operational requirements.