How Companies Can Benefit from ACFTA & CSFTA Title (ARIAL 32 pts)

Lim Bee Suan date month year (ARIAL 20 pts) Senior Manager, FTA Division Trade Services & Policy Group
THE SINGAPORE PUBLIC SERVICE: INTEGRITY SERVICE EXCELLENCE

26 March 2010
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Outline
1 Singapore 1. Singapores s Network of FTAs 2. ASEAN-China FTA 3. Singapore-China FTA 4. Rules of Origin 5 How companies can benefit from 5. ACFTA & CSFTA
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1. Singapores Network of Free Trade Agreements (FTAs)

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Singapores Network of FTAs - 18 FTA s In Force with 24 trading partners

ASEAN Jan 1993

New Zealand Jan 2001

Japan Nov 2002

* EFTA - Switzerland, Liechtenstein, Norway, Iceland, Jan 2003

Australia Jul 2003

US Jan 2004

ASEAN-China (TIG) Jul 2005 (TIS) Jul 2007 (Investment) Feb 2010

Jordan Aug 2005

India Aug 2005

S. Korea S Mar 2006

** TPSEP - Brunei, Brunei Chile Chile, New Zealand May 2006

Panama Jul 2006

ASEAN-Korea ASEAN Korea (TIG) Jun 2007 (TIS) May 2009 (Investment) Aug 2009

China Jan 2009

ASEAN-Japan (TIG) Jan 2009

Peru A 2009 Aug

ASEAN-India (TIG) Jan J 2010

ASEAN-Australia & New Zealand Jan 2010

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* EFTA: Europe Free Trade Association

** TPSEP: Trans-Pacific Strategic Economic Partnership Agreement

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Singapores Network of FTAs Signed/ Concluded/ Under Negotiations

Signed / Concluded Undergoing Negotiations

Mexico GCC Dec 2008

Canada

Pakistan

Ukraine

ASEAN-Japan ASEAN J (Services & Investment)

ASEAN-India ASEAN I di (Services & Investment)

Costa Rica

ASEAN-EU

EU

Trans-Pacific Partnership p( (TPP) ) (Australia, Brunei, Chile, New Zealand, Peru, US & Vietnam)

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2. ASEAN-China FTA (ACFTA)

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ACFTA 11 Parties
ASEAN 6: Brunei Indonesia Malaysia Philippines Singapore Thailand CLMV: Cambodia Laos Myanmar Vietnam CHINA
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ASEAN-China Free Trade Agreement

History of ACFTA Negotiations

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Coverage of ACFTA
First ASEANs FTA with a Dialogue Partner g free trade area in the world with a total p population p of Largest 1.9 billion ACFTA includes: Trade in Goods Trade in Services Investment Economic Cooperation: ICT Agriculture A i lt Human Resource Development Mekong River Basin Development Dispute Settlement Mechanism
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ACFTA Legal Text

FTA Website: http://www.fta.gov.sg

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ACFTA Trade in Goods Tariff Schedule

Tariff reduction / elimination is staged under 5 different lists, submitted by y each participating p p g country: y
ACFTA TradeinGoods

EarlyHarvest Programme

NormalTrack

SensitiveTrack

NormalTrack1

SensitiveList

NormalTrack2

HighlySensitive List
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ACFTA Trade in Goods Tariff Structure

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Determining Which Track The Product Is On

Know the products HS Code. Check if the HS Code is listed in the importing countrys list of products:
Early Harvest Programme Chapters 1-8 and over 100 industrial products Exclusion List at Attachment 1 products. 1, Annex 1 of Second Protocol to Amend the Framework Agreement (8 Dec 2006) Normal Track 2 Annex 1, Appendix 1 of Trade in Goods Agreement (21 Nov 2004) Sensitive Track - Attachment 8, Appendix 2 of Protocol to Amend the Trade in Goods Agreement (8 Dec 2006) Highly Sensitive Track - Attachment 9 9, Appendix 3 of Protocol to Amend the Trade in Goods Agreement (8 Dec 2006)

Products on Normal Track 1 are not listed. All products d t not t listed li t d in i the th mentioned ti d attachments tt h t are in Normal Track 1.
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ACFTA Tariff Reduction Schedule

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www.aseansec.org/19105.htm
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ACFTA Tariff Reduction Schedule

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3. China-Singapore FTA (CSFTA)

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History of CSFTA Negotiations

Established Joint Expert Group in April 2006 to study t d feasibility f ibilit of f th the FTA Launched negotiations in August 2006 Held 8 rounds of negotiations over 2 years in both Singapore and China Concluded negotiations on 3 September 2008 in Beijing Signed on 23 October 2008 in Beijing Entered into force on 1 January 2009
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Key Elements of CSFTA

First comprehensive bilateral FTA that China has signed y with another Asian country The CSFTA comprises the following chapters: Trade in Goods Customs Procedure Trade Remedies Trade in Services Movement of Natural Persons Investment Economic Cooperation Dispute Settlement Mechanism
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CSFTA Trade in Goods Tariff Schedule

Builds on commitments of China and Singapore under ASEAN-China FTA (ACFTA) Accelerate tariff elimination of NT products by 1-3 years from 2012 to 2010
ACFTA TradeinGoods EarlyHarvest Programme NormalTrack Sensitive Track

NormalTrack1

SensitiveList

NormalTrack2
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Highly SensitiveList
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CSFTA Legal Text

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Chinas Tariff Elimination Schedule

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4. Rules of Origin

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Rules of Origin
Rules of Origin to ensure that only goods originating from Singapore, Singapore China or ASEAN will benefit from tariff concessions. Criteria: 1. Wholly-Obtained or Produced entirely in the Party 2. Goods Not Wholly-Obtained or Produced
Local or Regional Value Content (RVC) of not less than 40% Product Specific Rules (PSR)
Exclusive and Alternative Rule

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Final process of manufacture must be performed in Singapore.

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Rules of Origin Wholly-Obtained

Wholly-Obtained or Produced entirely in the Party:
(a) (b) (c) (d) (e) (f) plant and plant products harvested harvested, picked or gathered there; live animals born and raised there; products obtained from live animals; products obtained from hunting, trapping, fishing, aquaculture, gathering or capturing conducted there; minerals and other naturally occurring substances, extracted or taken from its soil, waters, seabed or beneath their seabed; products taken from the waters, seabed or beneath the seabed outside the territorial waters of that Party, provided that that Party has the rights to exploit such waters, seabed and beneath the seabed in accordance with international law; products of sea fishing and other marine products taken from the high seas by vessels registered with a Party or entitled to fly the flag of that Party; products processed and/or made on board factory ships registered with a Party or entitled to fly the flag of that Party, exclusively from products referred to in sub-paragraph (g) above; articles collected in the territory of that Party that can no longer perform their original purpose nor are capable of being restored or repaired and are fit only for disposal or recovery of parts of raw materials, or for recycling purposes; goods obtained or produced in a Party solely from products referred to in sub-paragraphs (a) to (i) above.
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(g) (h) (i)

(j)

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ACFTA Rules of Origin Value Content

Formula:
Single Country Content Local Material Cost + Direct Labour & Direct Overheads + Profit -------------------------------------------------------- X 100 = > 40% FOB Free on Board (FOB) Price Or ASEAN-China Cumulative Content (Regional Value Content) Local, ASEAN and China Material Cost + Local Direct Labour & Direct Overheads + Profit -------------------------------------------------------- X 100 = > 40% FOB Free on Board (FOB) Price
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CSFTA Rules of Origin Value Content

Formula:
Single Country Content Local Material Cost + Direct Labour & Direct Overheads + Profit -------------------------------------------------------- X 100 = > 40% FOB Free on Board (FOB) Price Or China-Singapore Cumulative Content (Regional Value Content) Local and China Material Cost + Direct Labour & Direct Overheads + Profit -------------------------------------------------------- X 100 = > 40% FOB Free on Board (FOB) Price

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Rules of Origin PSRs

Product Specific Rules (PSRs): E l i and Exclusive d Alt Alternative ti R Rules l f for ACFTA Refer to Attachment 10, Attachment B in Protocol to Amend the Trade in Goods Agreement (8 Dec 2006) CSFTA Refer to Annex 2 (effective 1 June 2009)

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Rules of Origin PSRs

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Rules of Origin PSRs

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4. How Companies Can Benefit from ACFTA & CSFTA

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How does it benefit the company?

Example:
E Exports t of f Electric El t i Irons I (HS 85164090) to t China Chi

CSFTA
MFNRate PreferentialRate TariffSavings ExportValue DutyPayablewithoutFTA DutyPayablewithFTA 35% 0% 35% $100,000 $35,000 $0

ACFTA
35% 5% 30% $100,000 $35,000 $5,000

DutySavingsforImporter
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$35,000

$30,000
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How does it benefit the company?

To enjoy the tariff savings of $35 $35,000 000 or $30,000,
1.the irons must satisfy the rules of origin under the CSFTA or ACFTA and 2. be exported with a Preferential Certificate of Origin (PCO) issued by Singapore Customs ie CSFTA PCO or ACFTA F Form E E.

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Steps to Obtain Tariff Concessions

Step 1: Know the HS code of your product

Step 2: Check that the product is offered tariff concessions under the FTA

Step p 3: Compare p MFN and FTA rates

Step 4: Check that your product satisfy the Rule of fO Origin

Step 5: Comply with documentary requirement

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More Resources on the Internet

FTAs and Singapores network: http://www.fta.gov.sg http://www.aseansec.org Preferential Certificate of Origin Procedures & Guide to Rules of Origin: http://www.tradexchange.gov.sg http://www.customs.gov.sg p g g Chinas FTA Website: http://fta.mofcom.gov.cn Further enquires with IE: Email : enquiry@iesingapore.gov.sg enquiry@iesingapore gov sg Phone: 1800 437 7673
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More Resources on the Internet

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Thank You

www iesingapore com www.iesingapore.com

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