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Managing International Trade: Customs and Trade Updates

Managing International Trade: Customs and Trade Updates. Agaton Teodoro O. Uvero October 28, 2008, Tuesday Alabang , Muntinlupa City. Presentation Outline. Introduction Managing International Trade Rules of Origin Customs & Trade Updates Conclusion. INTRODUCTION.

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Managing International Trade: Customs and Trade Updates

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  1. Managing International Trade:Customs and Trade Updates AgatonTeodoro O. Uvero October 28, 2008, Tuesday Alabang, Muntinlupa City

  2. Presentation Outline • Introduction • Managing International Trade • Rules of Origin • Customs & Trade Updates • Conclusion

  3. INTRODUCTION • Growing complexity of import and export rules (free trade rules, marking and licensing, security measures, etc) • Increasing risks in international trade (supplier and buyer default, security measures, credit crunch, compliance, etc.) • ‘Death’ of multilateralism (WTO); rise of bilateral and regional agreements

  4. Rules of Origin

  5. Current State of Play • Ongoing FTAs • AFTA • ASEAN-China • ASEAN-Korea • ASEAN-Japan • ASEAN-India • JPEPA • Final stages of Negotiation • ASEAN-AUS/NZ

  6. Rules of Origin / Certificate of Origin • With Preferential Treatment • Generalized System of Preferences GSP (Form-A) • ASEAN-Common Effective Preferential Tariff (Form-D) • ASEAN-CHINA Free Trade Agreement (Form-E) • ASEAN-KOREA Free Trade Agreement (Form-AK) • Without Preferential Treatment • CO for General Merchandise (White CO)

  7. Rules of Origin for FTAs FTAs extend preferential tariffs (lower duty rates) ONLY on products originating from the country/area ROO determines which products are considered originating ROO provides transparent and predictable rules for granting preference

  8. Rules of Origin:Origin Criteria ORIGIN WHOLLY OBTAINED SUBSTANTIAL TRANSFORMATION VALUE ADDED (VA) RULE CHANGE IN TARIFF CLASSICATION (CTC) RULE PROCESS RULE

  9. Rules of Origin:Origin Criteria (cont.) • Wholly Obtained • Enntirely grown, extracted or harvested within the exporting country • Manufactured exclusively without any imported components or materials • Substantial Transformation • Value Added (VA) Rule • Change in Tariff Classification (CTC) Rule • Process Rule (‘chemical reaction rule’)

  10. Rules of Origin:Change in Tariff Classification (CTC) • Level of Change in Tariff Classification (CTC) • Change of Chapter (CC) – Change from one HS chapter to another Chapter • Change of Tariff Heading (CTH) – Change from HS tariff heading to another tariff heading • Change of Tariff Subheading (CTSH) – Change from HS tariff subheading to another tariff subheading

  11. Harmonized System (HS):Chapter, Heading and Subheading 7 1 0 1 . 2 1 Two Dash Subheading Number One Dash Subheading Number Heading Number Chapter Number Heading HS Code Description 71.01 Pearls, natural or cultured, whether or not worked or graded but not strung, mounted or set; pearls, natural or cultured, temporarily strung for convenience of transport. 7101.10 - Natural Pearls - Cultured Pearls: 7101.21 - - Unworked 7101.22 - - Worked

  12. Change of Tariff Heading (CTH); De Minimis Rule Imported Parts: • Motor (8501.20) - USD5.00 CIF • Switches (8536.50) - USD3.00 CIF • Fan Blade (8414.90) - USD1.50 CIF • Direct Processing Cost; Overhead and General Expense; Profit - USD10.50 Finished Product: Stand Fan (8414.50) – USD20.00 FOB • De MinimisRule – Cost of non-originating material that does not change classification should not be 10% of FOB price of the finished product • While the Fan Blade has same Tariff Heading (8414) as Stand Fan (8414), its value is only 7.5% of the FOB export price. Therefore, the stand fan is ‘ORIGINATING’.

  13. Preferential Tradingunder the FTAs KOREA cotton fabric Form AK Form AK CHINA cotton fabric MALAYSIA T-shirts BRUNEI Form E Form E Form D PHILIPPINES cotton fabric Form D Source: Philippine Tariff Commission

  14. Regional Warehouse Singapore Regional Office Philippine Toll Manufacturer Using VariousCertificates of Origin Distributors China Japan Korea India China Supplier Thailand Supplier Vietnam Supplier Finished Goods with ASEAN+3 preferential rates? Raw Materials with FTA preferential rates Distributors Malaysia Indonesia Vietnam Thailand Brunei Finished Goods with FTA preferential rates

  15. Thank you agatonuvero@yahoo.com 0918.903.4554

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