Article 6 of the Agreement on the Common Effective Preferential

Tariff (CEPT) Scheme for the ASEAN Free Trade Area (AFTA)
1. What is Article 6?
The ASEAN members signed the Agreement on the CEPT Scheme for the AFTA on 28
January 1992 in Singaore! Artic"e # of this Agreement ro$ides for emergency
measures as fo""o%s&
"Article 6: Emergency Measures
1. If, as a result of the implementation of this Agreement, import of a
particular product eligible under the E!" #cheme is increasing in such a
manner as to cause or threaten to cause serious in$ury to sectors producing
li%e or directly competiti&e products in the importing Member #tates, the
importing Member #tates may, to the e'tent and for such time as may be
necessary to pre&ent or to remedy such in$ury, suspend preferences
pro&isionally and (ithout discrimination, sub$ect to Article 6)*+ of this
Agreement. #uch suspension of preferences shall be consistent (ith the
,A"".
-. Without pre$udice to e'isting international obligations, a Member #tate,
(hich finds it necessary to create or intensify .uantitati&e restrictions or
other measures limiting imports (ith a &ie( to forestalling the threat of or
stopping a serious decline of its monetary reser&es, shall endea&or to do so
in a manner, (hich safeguards the &alue of the concessions agreed upon.
*. Where emergency measures are ta%en pursuant to this Article, immediate
notice of such action shall be gi&en to the ouncil referred to in Article /of
this Agreement, and such action may be the sub$ect of consultation as
pro&ided for in Article 0 of this Agreement.1
-. What are the re.uirements for suspension of concessions under Article 6?
Four '() e"ements must be ro$en& roduct comarabi"ity* increasing imorts 'due to
unforeseen de$e"oments and the grant of concessions)* serious in+ury or threat
thereof* and causa" "in,age!
Petitioners must submit data-e$idence on the abo$e e"ements!
*. What constitutes serious in$ury and threat thereof?
Among the factors to be considered in determining %hether in+ury to the domestic
industry is serious are& dec"ine in sa"es or rices. do%n%ard trends in roduction*
rofits* %ages* or roducti$ity. inabi"ity to generate caita" for moderni/ation or
maintain e0isting "e$e"s of e0enditures on research and de$e"oment. inabi"ity of
significant number of firms to carry out roduction at a rofit. significant id"ing of
roducti$e faci"ities inc"uding the c"osure of "ants or underuti"i/ation of roduction
caacity. significant unem"oyment- underem"oyment. significant reduction in
mar,et share as a roortion of mar,et demand. and gro%ing in$entories of sub+ect
artic"e* %hether maintained by domestic roducers* imorters* %ho"esa"ers or
retai"ers!
For threat of serious in+ury* the fo""o%ing factors are considered& significant increase
in imorts 'e$idenced* among others* by the e0istence of "etters of credit*
su"y-sa"es contracts* a%ards of a tender* irre$ocab"e offers or other simi"ar
contracts). dec"ine in sa"es* rices or mar,et share and do%n%ard trends in
roduction* rofits* %ages* roducti$ity or em"oyment. inabi"ity to generate caita"
for moderni/ation or maintain e0isting "e$e"s of e0enditures on research and
de$e"oment. sufficient free"y disosab"e* or an imminent substantia" increase in*
roduction caacity of foreign e0orters inc"uding access conditions they face in third
country mar,ets indicating the "i,e"ihood of substantia""y increased e0orts to the
Phi"iines. and gro%ing in$entories of sub+ect artic"e* %hether maintained by
domestic roducers* imorters* %ho"esa"ers or retai"ers!
2. If a E!" rate is suspended, (ill the M34 rate automatically apply?
1es* the 2FN rate %i"" automatica""y a"y on imorts from ASEAN members if the
CEPT rate is susended!
5. 6o( long can a E!" rate be suspended?
The CEPT rate can be susended on"y for such eriod of time as may be necessary to
re$ent-remedy the serious in+ury and to faci"itate ad+ustment! 3o%e$er* the eriod
of susension sha"" not e0ceed four '() years!
6. Is the !hilippines re.uired to pro&ide compensation (hen it suspends the
application of a E!" rate?
1es* the Phi"iines %i"" ha$e to ro$ide comensation as may be mutua""y agreed
uon %ith the affected ASEAN member countries!
/. an other A#EA4 members retaliate if the !hilippines is found not to ha&e
complied (ith the re.uirements of Article 6?
The 4nterretati$e Notes of Artic"e # re5uire that the susension of references be
consistent %ith Artic"e 646 'Emergency Action on 4morts of Particu"ar Products) of
the 7ATT! Artic"e 646 a""o%s a country affected by the emergency action to %ithdra%
substantia""y e5ui$a"ent concessions!
Artic"e 9 of the Protoco" on 8isute Sett"ement 2echanism a""o%s any arty in$o,ing
the disute sett"ement rocedures to susend the a"ication to the member state
concerned 'i!e!* the Phi"iines) of the concessions or any other ob"igation under the
AFTA9CEPT Agreement* if no satisfactory comensation has been agreed uon!
0. 6as Article 6 been in&o%ed pre&iously by the !hilippines?
No! 3o%e$er* under the erst%hi"e Preferentia" Trading Arrangements 'PTA) Scheme*
the Phi"iines susended its tariff concession '2argin of Preference or 2:P) on
refractory bric,s!
7. 6a&e other A#EA4 members in&o%ed Article 6?
No!
18. What is the process for suspension of E!" rate?
The Tariff Commission conducts a ub"ic consu"tation on etitions for susension of
tariff concessions under Artic"e #! The Commission then submits its reort of findings
and recommendations to the Tariff and ;e"ated 2atters Committee! The fina"
decision is ta,en by the NE8A <oard* after %hich the Commission reares the
im"ementing E0ecuti$e :rder!
As re5uired by the Agreement* the Phi"iines must notify the AFTA Counci" of any
emergency measures it underta,es under Artic"e #!
11. What is the timetable of the ommission9s Article 6 in&estigation?
Ta,ing into account the emergency nature of an Artic"e # etition* the Commission
sha"" com"ete its in$estigation and submit its reort of findings and recommendation
to the Tariff and ;e"ated 2atters 'T;2) Committee %ithin si0ty '#=) days from
receit of a roer"y documented etition!
Commission :rder No! =29=1 ro$ides the ru"es and regu"ations go$erning the
conduct of the Commission>s forma" in$estigation on the %ithdra%a" and-or
susension of concessions under Section (=2 of the Tariff and Customs Code
'a$ai"ab"e for reroduction at cost)!