About the author

Associate Professor, Shanghai Customs College

WCO Accredited Customs Expert in ROO (first phase)

Commissioner of China National Customs Origin

Supervision Technique Committee

Phd in Law, Post-phd in economics

Visiting scholar in CCES in 2013

Expertise: Customs Supervision and Control, Rules of Origin and International

Commercial Laws, FTA

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02

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Development of ASEAN-China FTA

Impact on Regional Trade in Goods

Utilization of FTA Preferential Concessions

04 Challenges for Customs

ACFTA: 10+1>11ACFTA＝ASEAN Association of Southeast Asian Nations (10) + China 1

Full implementation 2002

2005

2007

2010

Trade in goods

Trade in services

Framework Agreement on ComprehensiveEconomic Cooperation

ASEAN-China FTA: 10 years back

No. 1 in terms of population

No. 3 in terms of nominal GDP

No. 3 in terms of trade volume

Significance of ASEAN-China FTA

ACFTA: Surging Trade Volume

Source: China Statistics Yearbook

Trade Volume in ACFTA (1994-2010)

ACFTA: Trade Pattern

Both rely significantly on American and

European Markets

More competitive than complementary

Traded products: labour-intensive goods and low

added value under HS Chapters 84, 85 and 27

Trade with Singapore is more complementary

Trade Volume and Balance

Trade Volume and Trade Deficit of ACFTA (2002-2010)

Source: China Statistics Yearbook, Unit: $ billions

Top ASEAN Trade Partners

Top 4 Trade Partners with China and Trade Volume (2004-2010)

Source: China Statistics Yearbook, Unit: $ billions

ACFTA utilization rate in China

Keep steadily increasing year by year since

2005

Still behind the expectation of China government

Rose from 0.7% in 2005 to 13.2% in 2010

Much lower than 40% utilization rate in NAFTA

Utilization of FTA Concessions: Export

China Exportation Utilization of ACFTA (2005 to 2010

Source：General Administration China Customs (GACC) and General Administration of Quality Supervision, Inspection and Quarantine (GAQSIQ)

Utilization of FTA Concessions: Import

China Importation Utilization of ACFTA (2008 to 2010)

Source：General Administration China Customs (GACC) and General Administration of Quality Supervision, Inspection and Quarantine (GAQSIQ)

Utilization of ASEAN Members

Import UtilizationRate

2008 2009 2010

ASEAN 9.5 % 15.8 % 19.3 %

Countries

Thailand 11.7 % 25.8 % 33.2 %

Vietnam 12.0 % 26.5 % 27.7 %

Indonesia 10.4 % 15.8 % 23.7 %

Myanmar 28.5 % 20.7 % 21.9 %

Singapore 11.7 % 15.9 % 18.9 %

Malaysia 8.7 % 10.2 % 11.2 %

Cambodia 0.4 % 13.9 % 9.2 %

Philippines 2.5 % 4.3 % 8.3 %

Brunei 0.00008% 0.4 % 6.1 %

Laos --- --- 0.4 %

Performance of Import Utilization Rate of ASEAN members

Source：General Administration of China Customs (GACC)

On ROO Negotiation

Rules of Origin are the core issue of FTA

negotiations on goods and also the urgent issue

asking for capacity building

Rules: too strict or loose

NAFTA model or EU model

�40% Regional Value Content (RVC) to

�Change of Tariff Classification + 40%RVC�

mixed criteria

On ROO Formulation

� Specific origin rules also ask for amendment

- Minimal operations an processes

On Origin Certificate Issuing

� Authority is not Customs and lack of knowledge

� Mistakes in FORM E

� Lack of training for issuing officials

� Self-certificate is not allowed.

� Consideration of WCO SAFE and AEO

Challenges on Verification

� Misusing in good faith

� Counterfeiting and fraudulence

� physical investigation

� Electronic verification system is not available

� Cost of administrative cooperation

� Weakness of export control

FTA for Customs: trouble or Opportunity

� Challenges- Reduced duty & revenue collection

- cost of capacity training for the local Customs and especially the on-field officials

- new infrastructure, particularly the risk analysis and management system

- independent branch composed of FTA experts

� Opportunity - more involved in the national trade policies� formulation

- capability in impacting the policies of domestic industry protection

- better inter-agency relationship with other domestic competent authorities

- learn better to protect community

Findings and Conclusions

� Regional trade under ACFTA is expanded rapidly and trade relationship

is more competitive.

� To increase utilization rate, partners need to develop regional industry

chains and complementarity among bilateral traders.

� Besides challenges on implementation and administration, FTAs also

brings opportunities for Customs.

� Customs should adjust relevant rules and procedures in order to

promote trade facilitation and utilization rate.

� Capacity building is urgent both for officials, traders & issuing bodies.

� Value of the WCO Guidelines on Preferential Origin Verification

Discussion Points

Q1: For Customs in developing countries, duty collection is one important responsibility. With development of FTAs, fewer duty and revenue could be levied due to tariff concession arrangements. What is the sensible attitude for Customs towards FTAs? Welcome or refuse?

Discussion Points

Q2: To establish electronic certificate verification system among FTA member countries will improve the accuracy and efficiency of the origin verification. In your opinion, what is the feasibility to establish such a system in CAFTA?

Discussion Points

Q3: How do you evaluate the administrative cooperation among CAFTA countries? What measures could be taken to strengthen the Customs cooperation?

Discussion Points

Q4: While calculating FTA export utilization rate, the data should rely on the assistance of the other import country. Since only the import side has actual statistics of traded goods that given tariff concession. Each country�s import utilization data is a very important reference for other members� export utilization statistics. How to better share those data?

The value of knowledge lies in sharing!

Shujie ZHANG Deputy Director Department of Training & International Cooperation Shanghai Customs CollegeTel: 86 21 28991073 shujiezhang@customs.gov.cn