The 1992 CEPT Agreement excluded unprocessed agricultural products from the CEPT Scheme. In Article 1 of the Agreement, unprocessed agricultural products are defined as:
- raw materials/unprocessed products covered under Chapters 1-24 of the Harmonised System (HS), and similar agricultural raw materials/unprocessed products in other related Headings; and
- products which have undergone simple processing with minimal change in from the original products.
The 26th AEM held in Chiang Mai September 1994 decided to include all unprocessed agricultural products into the CEPT Scheme. In implementing this decision, Member Countries have decided to group unprocessed agricultural products into three lists: (a) Immediate Inclusion List; (b) Temporary Exclusion List and (c) Sensitive List.
Unprocessed agricultural products in the Immediate Inclusion List are to be transferred to either the normal or fast-tracks by 1 January 1996. These products will have a tariff reduction schedule to bring their tariff rates down to 0-5% in 2003. It is also required that quantitative restrictions and other non-tariff barriers on these products be removed.
Products in the Temporary Exclusion List can be kept out of the normal or fast-track of the CEPT Scheme only for a limited time. Any unprocessed agricultural product in the Temporary Exclusion List will be transferred into the Inclusion List in equal installment each year and be subject to the same tariff reduction schedule as other CEPT products. These products, however, will be transferred into the Inclusion List by 2003.
However, unprocessed agricultural products in the Sensitive List will face different treatment compared to the products in the first two lists. A special arrangement will be created for these products with the understanding that the features of the special arrangement need not be the same as the arrangement in the CEPT Scheme. This means that the time frame may be longer than 2003 and tariff rates are not required to be reduced to the 0-5% range as in the CEPT. However, the tariff reduction commitment under the special arrangement will have to be deeper than the Uruguay Round commitments of Member Countries.
The fact that the special arrangement will have features different from the CEPT is a concession to the special nature of the agricultural sector. In many Member Countries, a significant portion of the rural population depends on farm production, and over the past, strong protection has been extended to this sector. Immediate lifting of this protection is bound to create significant adjustment costs which can lead to unemployment of resources and social disruption. Hence, the decision to create a special arrangement with features which differs from the CEPT Scheme is an attempt to balance the need for lowered levels of protection and lightening the adjustment cost of trade liberalisation for the farm sector.
A working group under the purview of both the Senior Economic Officials Meeting (SEOM) and the Senior Officials of the ASEAN Ministers on Agriculture and Forestry (SOM AMAF) has been created to work out the features of the special arrangement. This working group has met twice already. once in Jakarta in December 1994, and again in April 1995 in Kuala Lumpur. The outcome of these meetings has been the Submission of the three Lists from each country as well as initial discussion on the features of the special arrangement.
A summary of the lists is provided in Table 2. A significant proportion of those products originally excluded from the CEPT have been submitted for immediate inclusion. They represent some 1,358 tariff lines or 68% of the unprocessed agricultural products. Another 402 tariff lines representing 20% of the total have also been submitted for temporary exclusion. Only a small number is left Outside of the CEPT framework although this admittedly includes some of the most important crops grown in the region.
Table 2
UNPROCESSED AGRICULTURAL PRODUCTS, BY CATEGORY
| Item | Number of TariffLines | Percent |
|---|---|---|
| Immediate Inclusion | 1,358 | 68% |
| Temporary Exclusion | 402 | 20% |
| Sensitive | 235 | 12% |
| TOTAL | 1,995 | 100% |
Source: The ASEAN Secretariat
In their Meeting in Phuket in April 1995, the Sixth AFTA Council looked at these Lists and decided that the present Lists should be improved by minimizing the number of products in the Sensitive List and expanding the Inclusion List as much as possible. These additional instructions from the AFTA Council will guide the next meeting of the working group which is scheduled before August 1995.
October 4th, 2012
