Customs-Related Trade Facilitation in ASEAN

Lee Tiow Yong

Chair, ASEAN Customs Procedures & Trade Facilitation Working Group

WTO Trade Facilitation Symposium

8-9 Nov 2011

OutlineI. Overview of ASEANII. ASEAN Economic CommunityIII. Comparison of WTO TF Agreement and ASEAN TF

MeasuresIV. Updates on Key ASEAN Customs-related TF InitiativesV. Conclusion

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Growth in ASEAN Trade

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Sources: ASEAN Finance and Macroeconomic Surveillance Database and IMF-World Economic Outlook April 2010, ASEAN Trade Statistics Database as of September 2010

Basic Data of ASEAN Member States

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Country Land area (sq km)

Population (thousand)

GDP per capita Total Trade

(US$) (PPP$) (US$ million)

Brunei Darussalam

5,765 406 26,486 49,411 9,568

Cambodia 181,035 14,958 693 1,801 8,887

Indonesia 1,860,360 231,370 2,364 4,180 213,339

Lao PDR 236,800 6,128 910 2,350 2,962

Malaysia 330,252 28,307 6,822 13,594 280,221

Myanmar 676,577 59,534 419 1,093 10,191

Philippines 300,000 92,227 1,750 3,525 83,869

Singapore 710 4,988 36,631 49,766 515,617

Thailand 513,120 66,903 3,951 8,072 286,267

Viet Nam 331,051 86,025 1,120 3,111 125,922

ASEAN 4,435,670 590,844 2,533 4,840 1,536,843

Diversity does not stop ASEAN from pursuing trade facilitation

Becoming Easier to Trade

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Improvement in rankings for “Trading Across Borders” in World Bank Doing Business 2012 report

Out of the 9 countries surveyed, 6 have improved in their rankings

Rankings for Trading Across Borders

Country 2010 2012

Brunei Darussalam 48 35

Cambodia 127 120

Indonesia 45 39

Malaysia 35 29

Philippines 68 51

Viet Nam 74 68

Lao PDR 168 168

Singapore 1 1

Thailand 12 17

Myanmar - -

Source: Doing Business 2012: Doing Business in a More Transparent World, The World Bank, , published on Oct 20, 2011

The Declaration of ASEAN Concord II (signed by ASEAN Leaders in Bali, Indonesia, 7 Oct 03) mandated the establishment of an ASEAN Community with 3 pillars: the ASEAN Security Community, the ASEAN Economic Community (AEC) and the ASEAN Socio-Cultural Community

The end goal of the AEC is to create a stable, prosperous and highly competitive ASEAN economic region in which there is a free flow of goods, services, investment, skilled labour and a freer flow of capital, equitable economic development and reduced poverty and socio-economic disparities by 2015 (original date was 2020; subsequently brought forward to 2015)

Declaration on the AEC Blueprint was signed by ASEAN Leaders in Singapore on 20 Nov 07

AEC is not a customs union

ASEAN Economic Community

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The AEC Blueprint outlines economic integration measures to be implemented by ASEAN Member States

The AEC has 4 key characteristics:

(i) single market & production base;

(ii) a highly competitive economic region;

(iii) a region of equitable economic development; and

(iv) a region fully integrated into the global economy Strategic Schedule details the implementation timelines for the

measures To monitor compliance, an AEC Scorecard has been developed;

detailing timelines, implementation bodies (the ASEAN sectoral committees) and tracking implementation status (at ASEAN-level and national-level)

ASEAN Economic Community

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Single market and production base

5 core elements Free flow of goods Free flow of services Free flow of investment Freer flow of capital Free flow of skilled labour

In addition, the single market and production base also include two important components, i.e. the priority integration sectors, and food, agriculture and forestry.

Key Componentso Elimination of Tariffso Elimination of Non-Tariff Barrierso Rules of Origin o Trade facilitationo Customs Integrationo ASEAN Single Windowo Standards and Technical Barriers to Trade

AEC Blueprint

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WTO TF Agreement ASEAN TF Measures

Article 1: Publication And Availability of Information

• Articles 12 (Publication and Administration of Trade Regulations), 65 (Transparency) and 66 (Enquiry Points) of ASEAN Trade in Goods Agreement (ATIGA)• Article 48 (Availability of Information) of ASEAN Agreement on Customs (AAC) (to be signed)

Article 3: Advance Rulings • Article 62 (Advance Rulings) of ATIGA • Article 34 (Advance Rulings) of AAC

Article 4: Appeal/Review Procedures

• Article 69 (Review and Appeal) of ATIGA • Article 52 (Right of Review and Appeal) of AAC

Article 6: Disciplines on Fees And Charges

• Article 7 (Fees and Charges Connected with Importation and Exportation) of ATIGA

Article 7.1: Pre-arrival Processing

• Article 55 (Pre-arrival Documentation) of ATIGA• Article 10 (Lodging and Registering of the Goods Declaration) of AAC

Article 7.2: Separation of Release from Final Determination and Payment of Customs Duties, Taxes, Fees and Charges

• Articles 16 (Release of Goods) and 23 (Customs Duties and Taxes) of AAC

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Comparison of WTO TF Agreement and ASEAN TF Measures

WTO TF Agreement ASEAN TF Measures

Article 7.3: Risk Management • Article 56 (Risk Management) of ATIGA • Article 27 (Risk Management) of AAC

Article 7.4: Post-clearance Audit • Article 61 (Post Clearance Audit) of ATIGA • Article 28 (Post Clearance Audit) of AAC

Article 7.6: Authorized Operators • Article 59(Authorised Economic Operators) of ATIGA • Article 35 (Authorised Economic Operators) of AAC

Article 7.7: Expedited Shipments • Article 36 (Express Consignments) of AAC

Article 9: Border Agency Cooperation

• Articles 46 (Partnership with Other Governmental Agencies for Coordinated Border Management) and 47 (Joint and Coordinated Border Control) of AAC

Articles 10.1/10.2: Review, Reduction of Formalities and Documentation Requirements

• Article 54 (Customs Procedures and Control) of ATIGA• Article 6 (Customs Procedures) of AAC

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Comparison of WTO TF Agreement and ASEAN TF Measures

WTO TF Agreement ASEAN TF Measures

Article 10.3: Use of International Standards

• Articles 9 (Goods Declaration) and 38 (Data and Information Parameters) of AAC

Article 10.4: Single Window • Agreement to Establish and Implement the ASEAN Single Window (ASW)• Protocol to Establish and Implement the ASW• Memorandum of Understanding on the Implementation of the ASW Pilot Project

Article 10.10: Temporary Admission of Goods/Inward and Outward Processing

• Article 32 (Temporary Admission of Goods) of AAC

Article 11: Freedom of Transit • ASEAN Framework Agreement on the Facilitation of Goods in Transit

Article 12: Customs Cooperation • Article 85 (Co-operation) of ATIGA • Articles 43 (Areas of Cooperation) and 44 (Mechanisms for Cooperation) of AAC

Article 14: National Committee on Trade Facilitation

• Article 50 (Implementation Arrangement) of ATIGA

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Comparison of WTO TF Agreement and ASEAN TF Measures

ASEAN Directors-General of Customs

Customs Procedures &

TradeFacilitation

Working Group

Customs Enforcement &

Compliance Working Group

Customs Capacity Building

Working Group

Coordinating Committee On

Customs

ASW Technical Working Group

ASWLegal Working

Group

ASWSteering

Committee

Senior Economic Officials Meeting

ASEAN Finance Ministers Meeting ASEAN Economic Ministers Meeting

Structures for Customs Cooperation

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Strategic Plan of Customs DevelopmentStrategic Plan of Customs Development (SPCD) under the Customs Procedures and Trade Facilitation Working Group

SPCD 1 Tariff Classification SPCD 2 Customs Valuation SPCD 3 Origin Determination SPCD 4 ASEAN e-Customs & ICT Customs Applications SPCD 5 Customs Clearance SPCD 6 Customs Transit SPCD 7 Partnership with Businesses and the Trading Community SPCD 8 Authorised Economic Operator Programme

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ASEAN Harmonized Tariff Nomenclature

ASEAN Customs Transit System

ASEAN Self-Certification

ASEAN Single Window

Examples of ASEAN TF Measures

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ASEAN Harmonized Tariff Nomenclature

Implementation of the AHTN 2007 Implemented by all Member States Number of tariff lines reduced from 10,689 to 8,300 CEPT and MFN lines included in the AHTN 2007 Supplementary Explanatory Notes to the AHTN also strengthened

Review of the AHTN 2007 AHTN Task Force Meetings convened to review AHTN 2007 Develop AHTN 2012 (in line with WCO HS 2012 amendments) Agreed to use AHTN for intra-ASEAN and extra-ASEAN trade

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ASEAN Customs Transit System

Based on 5 key elements:1. Fully computerised: electronic messages used for (i) communications

between traders and Customs for the lodgement of transit declarations and the discharge of completed transit movements; and (ii) the exchange of transit movement data between customs authorities

2. System open to all "suitable" traders irrespective of their type of business based on an assessment by the Competent Authorities according to minimum agreed criteria based on international best practice

3. Risk profiling scheme: To allow reliable traders "simplifications” or exemptions from a range of standard requirements

4. One guarantee valid in all countries to cover the goods throughout the entire journey

5. Single regional customs document for transit

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ASEAN Self-Certification of Origin

23rd AFTA Council in Aug 2009 endorsed the work plan towards the operationalisation of self-certification in ASEAN

Exporters able to self-certify that the goods meet the rules of origin criteria and enjoy the preferential treatment

Promote utilisation of the ASEAN rules of origin and facilitate trade by reducing the upfront administrative burden of applying for the conventional certificate of origin Form D

MOU to implement pilot project signed by participating AEM in August 2010 (Brunei, Malaysia and Singapore)

Pilot project commenced 1 Nov 2010

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ASEAN Single Window

Definition of ASW under the ASW Agreement “the environment where National Single Windows (NSW) of Member

Countries operate and integrate” ASW Agreement – Timeline for Implementation of NSW

ASEAN-6 by 2008 ASEAN-4 by 2012

Implementation status of NSW: ASEAN-6 in varying phases of implementation: basic system in place,

expand to more ports, increase no. of government agencies connected to NSW, add new functionalities, etc

ASEAN-4 (CLMV) in the preparatory stages of NSW development: steering committees formed

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ASEAN Single Window

ASW Pilot Project Component 1: Study the establishment of the most feasible network

architecture; does not involve a central server Component 2: Set up the network infrastructure to implement the Pilot

Project Component 3: Evaluation of outcomes of the Pilot Project and formulate

recommendations for the eventual ASW 7 AMS as participants, 3 AMS as observers Use of test data for exchanging ASEAN Customs Declaration Document

Certificate of Origin Form D Development of legal framework agreement for ASW Alignment of ASEAN Data Model to WCO Data Model

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Examples of Technical Assistance from Dialogue Partners

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TA Provider: Areas:ASEAN- EU Programme for Regional Integration Support Programme (APRIS)

•ASEAN Customs Transit System•ASEAN Enhanced Air Cargo Processing Model• Self-certification of origin•Training Needs Analysis• Implementation of ASEAN Customs Declaration Document•Development of Risk Management Framework

USAID •ASW Pilot Project•Review of AHTN 2007 for the establishment of AHTN 2012

ASEAN-China Cooperation Fund (ACCF) • Training course on Risk Management for CLMV• Training course on Customs Reform and Modernization

for CLMV

Japan-ASEAN Integration Fund (JAIF) •Regional survey of customs procedures and customs Clearance•Capacity building to strengthen implementation of the

preferential ROOs

Australia •ASEAN Cargo Processing Model

Korea •Various capacity building workshops for customs officials

Conclusion Strong commitments and clear mandates from Leaders

Striking a balance between “flexibilities in implementation” and achieving uniformity

Role of technical assistance

Need to progress from capacity building to actual implementation – proper follow through from regional commitments to national level implementation

Take into account different state of readiness of AMS – pilot project approach, differentiated timeline, etc

Need strong institutional capacity (ASEAN Secretariat) to support implementation of TF measures

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Thank You

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