STRUCTURE OF THE CEPT PRODUCT LIST
The CEPT Product Lists is a compilation of the products which Member Countries have offered to include in the CEPT Scheme, whether in the Fast Track, Normal Track or Temporary Exclusloin Lists. Since the exchange of CEPT concessions is based on reciprocity, the, size of the inclusion list by a Member Country indicates the coverage of those concessions that it would be eligible to receive.
Using Member Country submissions to the ASEAN Secretariat as of December 1993, there are a total of 44,095 tariff lines in these lists. There are a number of caveats to consider when measuring the size of the inclusion list by the number of tariff lines. First, Member Countries differ in the degree of disaggregation of their tariff lines. For example, the Philippines’ tariff lines are disaggregated only up to the eight-digit level. Thailand uses a mix of 6-digit and 9-digit codes. All the other Member Countries use tariff codes at the 9-digit level. Hence, countries using 6-digit or 8-dicrit tariff codes will necessarily have fewer tariff lines than countries using 9-digit level codes. Second, for any given sector the number of tariff lines included in the CEPT need not be indicative of a more comprehensive coverage of the CEPT for that sector. This is because some sectors have inherently Greater differentiation of products hence they will necessary have more tariff lines. Nevertheless, even while noting these caveats, it is important to consider that the tariff lines included in the CEPT represent almost 957( of the total number of tariff lines iii the 6 ASEAN countries.
There are a total of 14,855 tariff lines in the Fast Track, 25,918 tariff lines in the Normal Track and 3,322 tariff lines in the temporary Exclusion List (see Table 1). Products in the Temporary Exclusion List are items that are deemed sensitive by each Member Country. Products in this list will not enjoy any concessions until they are brought into the Inclusion Lists.
Finally, unprocessed agricultural products are not included in the CEPT Scheme. The nature of products in this group is discussed more fully later in this section. The remaining products are products in the General Exception list. These are products that meet the qualification under Article XX of the GATT.
Overall Tariff Reduction under the CEPT Scheme
The ultimate objective of the CEPT scheme is to reduce tariff rates among Member Countries to 5% or below. There are 40,773 tariff lines in the Fast and Normal tracks of the CEPT. The simple average of these tariff rates in 1993 was 12.76%. By the year 1999, this average will be reduced to 4.48% or to less than half of the average base rate of 1993. By 2008, average tariff rates will be down to 2.3%.
The average base rate differs among countries. Thailand has the highest rate at 22.56% while Singapore has the lowest at 0.36%. The tariff reduction is faster during the first five years of the CEPT Scheme. This is depicted in Figure 1 where the slope of the line (indicating the rate of tariff reduction) is steeper for the period 1993 to 2001 than for the period 2001 to 2008.
One notable effect of the CEPT is to lower the dispersion of tariff rates among ASEAN Member Countries. One measure of the degree of dispersion in tariff rates is the range (the difference between the highest and lowest average tariff rate). In 1993, the range was 22.20%. Under the CEPT tariff reduction schedule, the range will eventually fall to something like 4.82% (see Table 5).
Normal Track of the CEPT
There are a total of 25,918 tariff lines included iii the normal track of the tariff reduction scheme of AFTA (see Table 2). Malaysia has the most number of tariff lines under the normal track (5,7 1 0) while the Philippines has the lowest (3,432). The breakdown by commodity is also shown in Table 2. The biggest submissions are in base metals and metal articles, machinery and electrical appliances and chemicals.
The benchmark years for the Normal Track of the CEPT tariff reduction pro
Fast Track program
The CEPT also includes a fast track program where products are scheduled to undergo an accelerated tariff reduction program to reduce the level of protection down to 0-5% in ten years. The sectors covered by the Fast Track program includes:
- Fats & oils
- Mineral products
- Chemicals
- Plastics
- Hides & leather
- Pulp & paper
- Textiles & apparel
- Cement
- Gems
- Base metals & metal articles
- Machinery & electrical appliances
- Miscellaneous manufactured articles
It should be noted that the sectors covered by the Fast Track program actually includes more than the 15 products originally agreed upon in the 1992 Singapore Declaration. The notable additions are mechanical appliances and mineral products. There are a total of 14,855 tariff linesincluded in the fist track program (see Table 3). About 45% of the tariff line submissions are in the textiles and apparel sector alone. Chemicals accounts for about a fourth while plastics and appliances account for a little less than a fifth.
The benchmark years for the Fast Track Programm of the CEPT are the fifth year (1998) and the tenth year (2003). By the fifth year, all products in the Fast Track must have applied CEPT tariff rates it or lower than 20%. By the tenth year of the CEPT, all products in the Fast Track must have tariff rates within the 0-5% range.
Temporary Exclusion List
As of December 1993, the six ASEAN countries have submitted a total of 3,322 tariff lines for temporary exclusion from tile CEPT (see Table 4). This is less than 8% of the total tariff lines committed under the CEPT Scheme.
The bulk of submissions in the temporary exclusion list is in the chemicals, plastics and vehicles sectors. Too-ether these three sectors account for a little over 45% of the temporary exclusion list. This ranking is however biased by the fact that Indonesia has made a large number of submissions in these sectors. If we look at each Country individually to determine which products bulk large in the temporary exclusion list, we find that machinery and electrical appliances is ranked first in Brunei; chemicals in Indonesia; vehicles in Malaysia; textiles in the Philippines; and vehicles in Thailand.
The temporary exclusion list will be reviewed by the eighth year of the CEPT scheme. The ASEAN countries will make an effort to remove products in the exclusion list and subject them to a schedule of tariff reduction to bring the tariffs down to 0-5% within the remaining seven years of the program.
Unprocessed Agricultural Products
Unprocessed agricultural products are defined in Article 7 of the CEPT Agreement as :
(a) agricultural raw materials/ unprocessed products covered under Chapter 1-24 of the Harmonised System (HS), and similar agricultural raw materials/ unprocessed products in other related HS Headings; and
(b) products which have undergone simple processing with minimal change in form the original products.
Member countries have submitted a list of processed agricultural products that are based on this definition. However, all Member Countries have also Included some products that fall under this definition in the CEPT. This leaves only a small number of Unprocessed agricultural products that are excluded from the CEPT.
There are 1,823 tariff lines in the list of unprocessed agricultural products submitted by Member Countries (see Table 5). This accounts for about 4% of the total number of tariff lines in ASEAN. Fish (Chapter 3), edible vegetable (Chapter 7) and edible fruits (Chapter- 8) are the three biggest chapters in terms of number of tariff lines. Apart from HS Chapters 1-24, other HS Chapters where Unprocessed agricultural products in the sense of definitions (a) and (b) can be found are Chapter 40 (rubber), Chapter 41 (raw hides) and Chapter 44 (wood).
October 3rd, 2012
