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The process of reducing taxes in China-ASEAN Free Trade Area


2010-01-12 From:xinhua    [Large Medium small]
According to “China-ASEAN Framework Agreement on Comprehensive Economic Cooperation”, one of the tenets of China-ASEAN Free Trade Area is to cut tariff to the most extend and deepen economic relationship of both parties. “Agreement on Trade in Goods” stipulates: according to the tariff-cutting canceling goods list, all the tariff-cutting goods that aren’t included in “framework agreement” should be included. These goods are classified to normal and sensitive. In line with scheduling stipulated by ”Agreement on Trade in Goods”, the first class of normal products should be cut tariff as following process: for China and 6 of ASEAN countries (except Vietnam, Laos, Cambodia and Myanmar), tariff of 40% of goods be cut to below 5% in 2005; 60% be cut to below 5% in 2007 and 100% be cut to zero in 2010. for Vietnam, Laos, Cambodia and Myanmar: tariff of 40% goods be cut to below 5% in 2009; 40% to be cut to zero in 2013 and 100% to be cut to zero in 2015. The second class of normal products should be simultaneously done with the first class of normal products before their tariff is cut to below 5%, then it should be kept until 2012, after which it be cut to zero. In addition, the agreement stipulates the scheduling of tariff-cutting for sensitive products. As for general sensitive ones: for China and 6 of ASEAN countries, it be cut to below 20% in 2012 and to below 5% in 2018; for Vietnam, Laos, Cambodia and Myanmar: it be cut to below 20% in 2015 and to below 5% in 2020. As for highly sensitive ones: for China and 6 of ASEAN countries, it be cut to below 50% in 2015; for Vietnam, Laos, Cambodia and Myanmar: it be cut to below 50% in 2018. On 1st October, 2003, as the part of early harvest program, the zero tariff policy on vegetables and fruits between China and Thailand was carried out. The products cover what was list in the 7th chapter and the 8th chapter in the agreement. All the above products were cut to zero tariff in first time. From 1th January, 2004, the early harvest program within the framework agreement was carried out. Except Philippines, China and the other 9 ASEAN countries began to cut tariff on the products within the early harvest program. It was the first step on tariff cutting among China-ASEAN Free Trade Area. 570 kinds of products are included in this program and more than 30 kinds specific products were added due to the balance of trade. To 1st January 2006, China and all ASEAN countries completed this program. On April 2005, China and Philippines reached agreement on early harvest program. On 1st January 2006, both parties carried out zero tariff policy in line with the program immediately. On 20th July 2005, “China-ASEAN Framework Agreement on Comprehensive Economic Cooperation” was formally issued, tariff was comprehensively cutting in the Free Trade Area. In line with the stipulation, both parties began to cut tariff on about 7000 kinds products. Within 5 years, most of them would be cut to zero and part of sensitive products would be done step by step. The tariff-cutting products account for 95% of the total amount of trading products among China and ASEAN. China and 6 of the ASEAN countries (Brunei, Indonesia, Malaysia, Myanmar, Singapore and Thailand) began to implement agreed tariff among the free trade area. Cambodia, Laos, Philippines and Vietnam didn’t do that because some legal procedures hadn’t been passed. On 11th December 2005, China signed agreements with Cambodia, Laos and Myanmar in Kuala Lumpur in Malaysia and formally confirmed that China would unilaterally cut 83 products from Cambodia, 91 from Laos and 87 from Myanmar to zero tariff on 1st January 2006.
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