ASEAN's Commitment under the CEPT Scheme

• In 2005, ASEAN 6 included 98.5 per cent of its products into the CEPT, of which 98.9 per cent of the products have duties ranging between 0 to 5 per cent . This includes the transfer of products previously placed in the Highly Sensitive List (HSL) and Temporary Exclusion List (TEL) into the CEPT Scheme in January 2005.
  
  
• The CLMV countries also fulfilled their obligations by transferring products into the CEPT scheme for tariff concessions. Beginning 2005, these countries have included 87.8 per cent of their products, of which 71.1 per cent products have duties ranging from 0 to 5 per cent.
  
  
• Detailed breakdown of the total number of products in the Inclusion List are as follows:

Products in the Inclusion List of CEPT for ASEAN 6

Source : ASEAN Secretariat - Based on ASEAN Harmonised Tariff Nomenclature (AHTN)

• Under the e-ASEAN initiatives, ASEAN 6 and the CLMV are required to eliminate tariffs on ICT products in three tranches, beginning 2003 to 2010.
  
  
• In 2005, ASEAN 6 eliminated duties on 487 ICT products under the third tranche, whilst the CLMV is finalising schedule for ICT products offered for tariff elimination. Malaysia eliminated tariffs on 219 ICT products, including 45 products in 2005.

Malaysia's Commitment under the CEPT Scheme

• As at 1 January 2005, Malaysia has transferred all completely built-up (CBU) and completely knocked-down (CKD) motor vehicles, which were previously not offered preferential tariff concession, into the Common Effective Preferential Tariff (CEPT) Scheme. The CBU motor vehicles were included in the CEPT at 20 per cent, whilst the CKD motor vehicles were phased-in at zero duty.
  
  
• On 19 October 2005, Malaysia further reduced the duties on CBUs to 15 per cent and by 1 January 2008, the duties will be reduced to 0 to 5 per cent. The CEPT rates for two CBU public transportation vehicles (motor buses) were further reduced to 5 per cent effective 16 January 2006.
  
  
• In addition, Malaysia has also transferred eight rice products into the CEPT in 2005. With these transfers, Malaysia has phased-in 99.3 per cent of its products into the CEPT. The remaining 0.7 per cent of Malaysia's products, comprising alcoholic beverages and arms and ammunition, are permanently excluded from the Scheme.

Improvement to the Rules of Origin (ROO) of the CEPT Scheme

• Continuous improvements were made to the ROOs and procedures of trading under the CEPT. A guideline to implement Cumulative Rules of Origin (CRO) was adopted.
  
  
• For the purpose of calculating the 40 per cent value added (VA) content, member countries can now cumulate inputs within the region (not for the purpose of enjoying tariff concession) with a minimum threshold of 20 per cent local/regional value content compared with the existing "40 local/regional value content all-or-nothing approach".
  
  
• Product Specific Rules (PSR) for textiles and apparel , wheat flour , wood and wood based products , aluminium products and iron and steel were also developed and adopted for implementation in 2005.
  
  
• ASEAN exporters/manufacturers can now chose to comply either with the 40 per cent local/regional value content or respective PSRs to benefit from the preferential tariff concessions of the CEPT scheme.
  
  
• Using PSR, exporters/manufacturers will have to prove that their manufactured goods have undergone substantial transformation (ST) to qualify for tariff concessions.

• Given the satisfactory performance of tariff liberalisation under the CEPT, ASEAN's work programme in 2006 will focus on addressing the Non-Trade Measures ( NTMs) in order to facilitate and enhance intra-ASEAN trade.
  
  
• Products of member countries, which are listed under the General Exclusion List (GEL) of the CEPT and permanently excluded from preferential tariff concession, are currently being reviewed, and expected to be completed by end 2006.
  
  
• This is to ensure that products excluded are justified for reasons of protection of human, animal, health, security and protection of artistic and historic value, in accordance with provisions under the CEPT Agreement.
  
  
• Similarly, the classification criteria of NTMs have been developed and ASEAN is currently developing a work programme to eliminate NTMs.
  
  
• ASEAN is also exploring the possibility of establishing an ASEAN Trade Facilitation Committee to pursua trade facilitation agenda in a concerted manner.

ASEAN Integration System of Preferences

• The ASEAN Integration System of Preferences (AISP) is a scheme where ASEAN 6 gives unilateral import duty exemption to products of export interests to the CLMV.
  
  
• Since its inception in 2002, ASEAN 6 have offered duty exemptions on 2,857 products to the CLMV. Myanmar is the biggest preference-receiving country with 1,637 products, followed by Cambodia (477 products), Lao PDR (359 products) and Viet Nam (320 products).
  
  
• In 2005, Malaysia further eliminated duties on 231 additional products as requested by the CLMV, with Cambodia as the biggest preference-receiving country with 91 products, followed by Lao PDR (71 products), Viet Nam (67 products) and Myanmar (2 products). Click here to view the Legal Enactment to effect the duty exemption
  
  
• To date, Malaysia has offered duty exemption on 783 products covering fruits and vegetables, chemicals and chemical products, rubber products, wood and wood based products, paper and paper products, electric and electronics, plastics products, footwear, furniture and textiles and apparel.
  
  
• Various initiatives are currently being undertaken by ASEAN to further promote the utilisation of AISP among the CLMV. This includes:
  • standardising the issuance of the Legal Enactment (to effect the duty exemption) by ASEAN 6 based on open ended basis, instead of yearly expiration dates; and
  • harmonisation of the ROO in accordance to the 40 per cent local/regional