ASEAN-CHINA

MALIT, AZEL RUTH B.

INTRODUCTION
China’s relationship with the Association of Southeast Asian
Nations (ASEAN) has seen its ebbs and flows. Historically, China
considered ASEAN as an instrument designed to “encircle China”
and therefore kept a safe distance from the regional body. As China
started to develop its economy beginning in the 1980s under Deng
Xiaoping, and in the following decades harboured ambitions for a
global role, it realised that it needed to first achieve dominance
regionally, close to home. As Yuen Foong Khong, Professor at the
Lee Kuan Yew School of Public Policy, once wrote, “Asia is where
China must establish its prestige or “reputation for power.”[ In the
1990s, Beijing opened up, “to seek the settlement of divergences
and disputes among nations through peaceful means.
INTRODUCTION
• China positioned its approach to regionalism in terms of its
aim for a “peaceful rise”
• In 1991 ASEAN and China began a dialogue process
•  in 1996, China became a full dialogue partner of the regional
body.
• As the financial crisis hit Asia in 1997, China decided not to
devalue its international currency, the Renminbi (RMB) and
also to financially support the most crisis-ridden countries like
Thailand, with over USD 4 billion in aid through either the
IMF framework or bilateral channels, as well as Indonesia in
the form of export credit and emergency medicine. The same
year saw the first informal ASEAN-China summit in Kuala
Lumpur, during which the leaders of both sides decided to
create “a 21st century-oriented partnership for good
neighborliness and mutual trust between ASEAN and China.
INTRODUCTION
• China actively engaged itself in various ASEAN-led institutions
including the ASEAN Regional Forum (ARF), ASEAN plus One
(China), ASEAN plus Three (China, Japan, South Korea), and the
East Asia Summit. 
• China first proposed the idea of a free trade area in November 2000.
Leaders of ASEAN and China thus decided to explore measures aimed
at economic integration within the region In Brunei the following
year, they endorsed the establishment of an ASEAN-China Free Trade
Area.
• The framework agreement was signed on 4 November 2002 in
Phnom Penh, Cambodia by eleven heads of government; Brunei,
Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore,
Thailand, Vietnam and China.
INTRODUCTION
The first stage implied the 6 first signatories who engaged in the
elimination of their tariffs on 90% of their produccta by 2010. Between
2003 and 2008, trade with ASEAN grew from US$192.5 billion. Chinas
transformation into a major economic power in the 21st century has led to
an increase of foreign investments in the bamboo network, a network of
overseas Chinese businesses operating in the markets of Southeast Asia
that share common family and culture ties. ASEAN members and the
people s Republic of China had combined nominal gross domestic
product of approximately US$6 trillion in 2008.

In 2010, the ASEAN-China Free Trade Area became the largest in terms
of nominal GDP. It was also the third largest trade volume after the
European Economic Area and the North American Free Trade Area.
A ‘21ST-CENTURY PARTNERSHIP’

China and ASEAN began the 21st century with active engagement.

In 2003, China acceded to the Treaty of Amity and Cooperation in
Southeast Asia, leading the way among all of ASEAN’s dialogue
partners. (The relationship between them was upgraded to
“strategic partnership for peace and prosperity), in the same year,
and by 2005, some 46 mechanisms at various levels in 16 fields,
including 12 at the level of ministers, had been established
between ASEAN and China. In 2008, China sent its first
ambassador to ASEAN, and in 2011, the ASEAN-China Centre
(ACC) was established in Beijing. In 2012, China established its
Permanent Mission in ASEAN.
A ‘21ST-CENTURY PARTNERSHIP’

The second decade of the new century was marked by the

anniversary celebrations of the ‘dialogue partnership’ and the
‘strategic partnership’. President Xi Jinping, during his visits to
Indonesia and Malaysia in 2013 spoke about “a closer ASEAN-
China Community with a Shared Future” and the Maritime Silk
Road of the 21st century. Almost each year of the decade was
marked by some important collaborative event.

Over the years, China has made a sustained effort to project its
power in the region through Track-II diplomacy. In aiming to
create an alternative architecture of rules and institutions in
Southeast Asia, China is not merely focusing on economic
development and relations in the arena of non-traditional security
in the region, but also on developing shared beliefs and norms
that will build what its leaders often identify as a “community of
shared destiny.
IN THE ERA OF US-CHINA TRADE WAR

In response to US trade policies under former President Donald

Trump and especially in the first year of the Covid-19 pandemic,
China looked to other regions, most notably to Southeast Asia,
with which to reinforce engagement in trade. Indeed, ASEAN has
replaced the US as the second largest trading partner of China
after the EU. In the first quarter of 2020, ASEAN-China trade
increased by 6 percent year-on-year to US$140 billion, accounting
for 15 percent of China’s total trade volume. China’s imports from
Vietnam and Indonesia rose by 24 and 13 percent year-on-year,
respectively.
Other sectors where China is looking to engage the ASEAN
countries more actively include trade in agricultural commodities,
and tourism. China expects the ASEAN industrial sector will
further benefit from post-Covid-19 resetting of China’s
consumption expenditure and more in-depth coordination
between them will result.
IN THE ERA OF US-CHINA TRADE WAR

China is also eyeing to play an active role in promoting digital

connectivity in ASEAN. Companies like Alibaba and Huawei are helping
to promote online trading and AI innovation in ASEAN member
countries. Through its “Digital Silk Road”, China aims to build the
backbone for much of the digital infrastructure across Central and
Southeast Asia.
 ASEAN-CHINA FREE TRADE AREA

The ASEAN-China Free Trade Area (ACFTA) was signed in 2004 and was
implemented in July 2005.
Through this FTA, China has consistently ranked as ASEAN’s largest
investor over the last decade, with total trade of over US$731 billion in
2020.
The FTA reduced tariffs on more than 7,000 product categories — or 90
percent of imports — to zero by 2010, although initially only applicable to
Indonesia, Malaysia, Singapore, Brunei, the Philippines, Singapore, and
Thailand. The remaining ASEAN members (Myanmar, Laos, Vietnam, and
Cambodia, followed suit in 2015.
 ASEAN-CHINA FREE TRADE AREA

In 2019, ACFTA was upgraded to simplify rules of origin (ROO), trade

facilitation measures, investment procedures, and customs procedures.
Under the amendment, there are multiple ways in which the ROO is
decided:
The origin of the goods is deemed according to the country they were
produced or obtained;
However, if the goods were obtained from multiple countries, the regional
value content (RVC) must be at least 40 percent of the value of the goods,
and the final process of production must be done in a country that is a
member of the FTA; and
Various Product Specific Rules was introduced to clarify goods that have
undergone significant transformation in the tariff classification or supply
chain.
 ASEAN-CHINA FREE TRADE AREA

In Q1 2020, ASEAN overtook the EU to become China’s 

largest trading partner, increasing year-on-year to US$140 billion and
accounts for 15 percent of China’s total trade volume. This comes as
China’s traditional largest trading partner, the EU, went under extensive
lockdown.
Electronics were the biggest contributor to this trade, with China
importing US$14.9 billion worth of integrated circuits, such as
microprocessor chips, analog-to-digital converters, and chip capacitors
from ASEAN countries.
Certification Rules
General Description ACFTA adopts a government-certification system
only. Under ACFTA, certificates of origin (CO) must be issued by the
government authorities of the exporting Party. Provisions for COs
under ACFTA are detailed in Rules 1 to 22 in Attachment A to Annex 3
of the OCP. The importer must present the CO (Form E) to qualify for
preferential treatment at the time of importation. Before exportation,
the exporter should submit a written application for the CO together
with proper supporting documents proving that the products to be
exported qualify for the issuance of a CO. Form E is valid for 12 months
and for a single shipment. An importer does not need to use Form E for
shipments equivalent to USD 200 and should use a simplified exporter
declaration instead.
Back-to-Back Certification of Origin
Currently not applicable under ACFTA; however, in August 2009 China
finally agreed with ASEAN to accept the back-to-back CO process. China
notified that it had some technical problems with the use of the term
“back-to-back" and proposed the term "movement certificate" instead.
The new term will be used in the Form E once the revised OCP enters into
effect on June 1, 2010. ASEAN members agreed to modify the term used
on their respective CO Form Es in accordance with China's proposal to
avoid confusion among traders.

Third-party Invoicing
Currently not applicableunder ACFTA; however, after a series of
negotiations, China agreed with ASEAN to accept the process. Exporters
and/or producers can utilize the process after June 1, 2010. Advance
Rulings Currently not applicable under ACFTA.
Post-Exportation Examination
Currently not applicable under ACFTA; however, relevant provisions will be
included in the revised OCP, which is scheduled to take effect on June 1,
2010.

Document Retention Requirements

Authorized authorities must maintain records relating to the goods origin
for at least two years from the CO issuance date.
CMO-27-2004

Consolidated Procedures in the issuance of

Certificate of Origin (CO) With or Without
Preferential Tariff Treatment, and the conduct of
Retroactive Verification (on CO-Form D and Form
E) by the Import Group.
OBJECTIVES

1. To consolidate and simplify the existing procedures

in the issuance of Certificate of Origin (CO), with
preferential tariff treatment, (GSP Form A, ASEAN-
CEPT Form D and ASEAN-CHINA Free Trade Area
(ACFTA) Form E, and without preferential tariff
treatment or CC for General Merchandise (White CO)
2. To plug loopholes in the system and prevent the use
of spurious documents.
3. To serve as exporters guide, and encourage export-
oriented industries to avail of the preferential
treatment under the simplified procedures in the
issuance of CO GSP Form A/ASEAN CEPT Form D /
ASEAN-CHINA FTA Form E.
4. To verify imported goods covered by CO Form D and
Form E ASEAN Member States, as to weather or not
they satisfy the conditions under the Rules of Origin
of ASEAN-CEPT and ACFTA, respectively.
OBJECTIVES
Definition of Terms/Administrative Provisions:
1. Preferential Tariff Treatment under the GSP, the ASEAN
CEPT and ACFTA Schemes are systems whereby reduced or
total elimination of tariff are granted.
1.a) For GSP- by the importing developed countries (known as
preference giving or donor countries) to certain eligible
products exported by the Philippines as a beneficiary country.
GSP Form A shall be issued for products that are eligible under
the GSP Scheme and are destined to either of the following
countries:
Australia Estonia
Switzerland New Zealand
Turkey
Norway
Japan
People s Republic of Bulgaria
Czechoslovak Socialist Republic
Hungarian People s Republic
Polish People s Republic
Union of Soviet Socialist Republics
EUROPIAN UNION:
Austria Italy
Belgium Luxembourg
Denmark Netherlands
Federal Republic of Germany Portugal
France Spain
Greece Sweden
Finland United Kingdom
Ireland Including French Overseas
For Canada and United States of America (USA), the
issuance of Form A is covered by the guidelines under
CMC No. 182-96 dated April 16, 1966 and CMC 170-2000,
dated April 10, 2000, supplemented by CMC No. 240-
2003 dated July 7, 2003, respectively.
1.b) For ASEAN CEPT- among the ASEAN Member to
certain eligible products exported by the Philippines, as
signatory and regional member thereof.
ASEAN-CEPT Form D shall be issued for products that
are eligible under the ASEAN CEPT scheme, and is
destined to either of the following countries:
Brunei Darussalam Philippines
Cambodia Singapore
Indonesia Thailand
Lao PDR Vietnam
Malaysia
Myanmar
1.c) For ASEAN-CHINA Free Trade Area (ACFTA)-
among the ASEAN Member States and the People s
Republic of China to certain eligible products exported
by the Philippines, as signatory and member thereof
pursuant to the Framework Ageement on
Comprehensive Cco-operation.

Member States which accept Form E for the purpose of

preferential treatment under the ACFTA are:
Brunei Darussalam China
Indonesia Malaysia
Myanmar Singapore
Thailand
Cambodia
Lao PDR
Philippines
Vietnam
2. CO for General Merchandise (White CO)- shall be
issued for products that do not qualify or not eligible
under the GSP of the ASEAN-CEPT scheme, or any other
schemes with preferential tariff treatment.

3. To qualify for GSP treatment:

3.a) The product must be included in the GSP product
list of the importing preference-giving country.
3.b) The Philippines must be eligible for GSP treatment
with respect to the product in question, and
3.c) The origin rules of the importing preference-giving
country applicable to the product must be complied
with.
4. To qualify for ASEAN-CEPT treatment.
4.a) The product must be included in the positive list of
the importing ASEAN member state; and
4.b) The origin rules for process goods under the ratio of
60% imported and 40% local have been complied with.
5. To qualify for ACFTA treatment the goods:
5.a) must fall within a description of products eligible for
concessions in the country of destination;
5.b) must ccomply with the condignment cconditions that the
goods must be consigned directly from any ACFTA Member
State to the importing Member State but transport that
involves passing through one or more intermediate non-
ACFTA Member States is also accepted provided that any
intermediate transit, transhipment or temporary storage
arises only for geographic reasons or transportation
requirements; and
5.c) must comply with the origin criteria i.e that the origin
rule for process goods under the ratio of 60% parts
originating from non-ACFTA Member States and the
aggregate ACFTA content is not less than 40% have been
complied with.
6. To qualify for CO for General Merchandise (White CO)
The export goods shall be categorized under any of the
following circumstances:
6.a) the articles are wholly grown, produced or
manufactured in the Philippines
6.b) The foreign material content of the articles is
ascertainable and therefore it shall be indicated.
6.c) The exact foreign material content is not
ascertainable. However, its estimated value in relation
to the ex-factory price should be indicated.
7. The Bureau s Export Coordination Division, OCOM/
Export Division of the Port/Subport concerned shall
evaluate on whether or not the export product will
qualify for the issuance of CO under any of the above
schemes.
8. If the product is found qualified, the same may upon
request of the exporter concerned be issued CO with or
without preferential tariff treatment, in accordance with
GSP/ASEAN CEPT/ACFTA scheme, and Customs rules,
regulations and procedures.
9. Under no circumstances, however, shall a CO be issued
for products that passed through the Philippine soil merely
for transit purposes.

III Operational Provisions

A. Procedure in the issuance of CO (with Preferential
Treatment)
1. Exporter or would be exporters are advised to request for
the evaluation of their export products, officially in writing,
at least five (5) working days prior to the exportation of the
products, so that the Office concerned where necessary
conduct inspection of said products. The request may be
addressed to:
Chief, Export Coordination Division
Office of the Commissioner
Bureau of Customs, Port of Manila
Or
Chief, Export Division

2. The Export Coordination Division (ECD) /Export

Division (ED) shall, upon request/application of the
exporter, issue the Form A/ Form D, if the origin of the
product can be easily ascertained by its own nature (e.g
handwoven abaca placemat) otherwise the product shall
be subject to pre-exportation verification, and for which
purpose ECD/ED shall furnish the exporter with
checklist (copy is attached as Annex A), together with its
attachments, for guidance of the exporters.
3. The ECD/ED may also take any step necessary, including
plant visits and examination of office books of account and
records, in order to verify the origin of the products in
accordance with the respective GSP/ASEAN/ACFTA
Schemes
4. The supporting evidence/papers used for pre-
exportation verification especially the cost breakdown,
shall be subject to periodic review consistent with the
prevailing economic conditions. While said evidence may
be used as basis for the issuance of Form A/Form D/Form
E for particular shipment on a particular time, the same
shall not always be construed as also applicable and
binding for another subsequent shipment at a different
future time.
5. In General, the Office which processed the Export
Declarations Issues the corresponding CO, Thus, export
products for:
Manila Loading:
1. Export Division, Port of Manila/ Manila
International Container Port/Ninoy Aquino
International Airport.

2. Export Coordination Division, if the ED were

processed at the GTEB-BOC Unit or at the OSEDC,
Philtrade.

Provincial Loading:
a. Export Division/Unit of the Port of Loading
concerned

b. Export Coordination Division, if the ED were

processed by the same Division.
6. Form A/Form D/Form E shall be issued by the
ECD/ED at the time of exportation or as soon thereafter
it the product has been found to be eligible for
preferential treatment.

7. The declaration of the exporter or his authorized

signatory on Form A/ form D Form e shall be supported
by ompetent and valid documents.

B. Required Documents in the Issuance of CO (with or

without Preferential Treatment ):
a.) Clear Exporter Copy of the Export Declaration (ED)
bearing the AUTHORITY TO LOAD and the Control No.
of the Office that processed the said ED.
b.) Clear copy of the Commodity Clearance/Permit to
Export Issued by the Government Agency which clearance
to export the commodity is required. (e.g
BFAR/GTEB/BOI/SRA)

c.) Inspector s Certificate of Loading (ICL)

d.) Commercial Invoice

e.) Original Duplicate Non-negotiable copy of Master Bill

of Loading/AWB

f.) Additional requirements:

f.1) For CO Form A- documents which may be required by

the Export Office to prove the originating status of the
product.
f.2) For CO Form D- documents to show that the 60/40
requirements have been complied with

C. Procedure in the Retroactive Verification of Imported

Products covered by ASEAN CEPT Form D:

1. Pursuant to the revised CEPT Rules of Origin, the

Philippines, as importing member state may request a
retroactive check at random and or when it has
reasonable doubt as to the authenticity of the document
or as to the accuracy of the information regarding the
true origin of the products in question or of certain parts
thereof.

1.a) The request for retroactive check shall be accompanied

with the Certificate of Origin (CO) concerned and shall
specify the reasons and any additional information
suggesting that the particulars given on the said CO may be
inaccurate, unless the retroactive check is requested on a
random basis.
1.b) Import Office concerned may suspend the
provisions on preferential treatment while awaiting the
result of verification. However, it may release the
products to the importer subject to any administrative
measures deemed necessary, provided thath they are not
hed to be subject to import prohibition or restriction
and there is no suspicion of fraud.

1.c) The retroactive check process, including the actual

process and the determination of wether the subject
product is originating or not, should be completed
within six months. While awaiting the results of the
retroactive check, Rules 1 b shall be applied.

2. If the Import Office concerned is not satisfied with the

outcome of the retroactive check, it may, under
exceptional cases, request for verification visits to the
exporting Member state.
2.a) Prior to the conduct of a verification visit, the
import office concerned shall:

(i) Deliver a written notification of its intention to

conduct he verification visit to:
(a) The exporter/producer whose premisies are to be
visited;
(b) The issuing Authority of the Member State in whose
territory the verification visit is to occur;
(c) The customs administration of the Member State in
whose territory the verification visit is to occur; and
(d) The importer of the product subject of the
verification visit.

(II) The written notification mentioned in paragraph

2(a)(i) shall be as comprehensive as possible including,
among others.
(a) The name of the customs administration issuing the
notification
(b) The name of the customs exporter/importer whose
premises are to be visited
(c) The proposed date for the verification visir
(d) The coverage of the proposed verification visit, including
reference to the product subject of the verification; and
(e) Obtain the written consent of the exporter/producer whose
premises are to be visited.

2.b) When a written consent from the exporter/producer is not

obtained within 30 days upon receipt of the notification
pursuant to paragraph 2(a)(i) the notifying import office may
deny preferential treatment to the product that would have
been subject of the verification visit.
2.c) The import office conducting the verification visit
shall provide the exporter/producer whose product is
the subject of the verification and the relevant issuing
Authority with a written determination of whether or
not the subject product qualifies as an originating
prodcut.

(i) The determination of whether the product qualifies

as an originating product shall take effect upon
receipt of the written notification by both exporter
and producer, and the relevant issuing Authority.
Any suspended preferential treatment shall be
reinstated upon the effectivity of the determination.
(ii) The exporter/producer will be allowed 30 days from
receipt of the written determination to provide in
writing comments or additional information regarding
the eligibility of the product. If the product is still found
to be non-originating , the final written determination
will be communicated to the issuing Authority within 30
days from receipt of the comments/additional
information from the exporter/producer.
2.d) The verification visit process, including the actual
visit and determination of whether the subject product is
originating or not, shall be carried out and its results
communicated to the issuing Authorities within a
maximum of six months.

3. The BOC Office concerned shall maintain, in

accordance with its laws, the confidentiality of classified
business information collected in the process of
verification and shall protect that information from
disclosure that could prejudice the competitive position
of the person who provided the information. The
classified business information may only be disclosed to
those authorities responsible for the administration and
enforcement of origin determination.