About the Customs and Trade Facilitation Committee
Customs Integration in ASEAN
The creation of the ASEAN Free Trade Area (AFTA) and the Common Effective Preferential Tariff (CEPT) in the 1990s promised great strides in regional trade and supply chain integration, which could lead to a significant increase in trade and investment flows in Southeast Asia. To implement the agreements and classify goods, the ASEAN Customs Administrations signed the ASEAN Harmonized Tariff Nomenclature (AHTN) in 2003. With these rules in place, the average tariff in ASEAN fell from 8.9 percent to 4.5 percent between 2000 and 2015 and has continued falling since. Tariffs have now been completely removed on 99 percent of traded goods.
However, despite successes in dismantling these tariffs, many non-tariff measures remain significant barriers to trade. The number of non-tariff measures reported to UNCTAD increased from 1,634 to 5,975 between 2000 and 2015. While higher number of NTMs does not mean that ASEAN is becoming more protectionist, many of the regulations do not take into consideration the cumbersome impact they may have on businesses and are holding back further integration. Addressing these non-tariff barriers is the latest focus of ASEAN’s Member States and the private sector.The ASEAN Trade in Goods Agreement (ATIGA), implemented in 2010, aims to establish an even more integrated market and production base, consolidating AFTA and the CEPT into a comprehensive agreement. It covers tariff liberalization, removal of non-tariff barriers, rules of origin, trade facilitation, customs, standards and conformance, and sanitary and phytosanitary measures. This lead in 2015 to the declaration of the ASEAN Economic Community (AEC), which was followed by the adoption of the AEC Blueprint 2025 to declare the strategic direction for the region’s cohesive growth in the next decade.
To implement the Blueprint’s priorities, the ASEAN Trade Facilitation Framework (ATFF) was adopted in 2016 with an even broader scope than the WTO Trade Facilitation Agreement. The ASEAN Trade Facilitation Joint Consultative Committee (ATF-JCC) was launched soon after to coordinate these policies across ASEAN’s governments and ministries. Its main objective is to ensure competitive, efficient, and seamless movement of goods by implementing international trade facilitation measures, improving monitoring mechanisms, minimizing impact of non-tariff measures, engaging with private sector, addressing implementation gaps, and enhancing institutional coordination.
ASEAN Trade Facilitation Projects:
ASEAN Single Window (ASW):
To facilitate information exchange, ensure compliance with customs regulations, and expedite clearance, the ASEAN Customs Community plans to build and the integrate member countries’ National Single Windows (NSWs) into an ASEAN Single Window (ASW). More developed members have already completed their NSWs and have connected to the ASW, but less developed members are taking longer. Currently, seven Member States have their NSWs in place and operational: Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore, Vietnam, and Thailand. At the beginning of 2018, these member states began connecting to the ASW and exchanging ASEAN’s electronic certificates of origin (e-ATIGA Form D). They are now exploring the exchange of e-phytosanitary certificates and the ASEAN Customs Declaration Document by the end of 2018. Meanwhile, Cambodia, Lao PDR, Myanmar are in the process of developing their NSWs. ASEAN Customs Transit System (ACTS)
ACTS will enable free movement of trucked goods between participating countries without the need for Customs declaration at each border or a change of vehicle. Duties and taxes are covered by a single guarantee for all the countries involved in the transit operation. The ACTS is a joint effort between Customs and Land Transport authorities. The first two phases of the ACTS Pilot, which include an electronic exchange of test data and a Parallel Run, were successfully completed in Malaysia, Singapore and Thailand in April 2017. The first live run, the final phase of implementation, will launch on ACTS’ North-South corridor between Malaysia, Singapore, and Thailand when ratification of the legal framework is completed in 2018
- ASEAN Solutions for Investment, Solutions and Trade (ASSIST)
ASSIST provides ASEAN-based businesses a channel to submit challenges they are experiencing when exporting their goods or services or when investing into other ASEAN Member States. ASEAN Member States aim to provide solutions through ASSIST within 40-60 working days.
- ASEAN Authorized Economic Operator (AEO)
The ASEAN AEO program supports member states in implementing national AEO programs based on the World Customs Organization’s SAFE Framework of Standards (FoS) and ultimately aspires to integrate the national AEO programs through a network of mutual recognition agreements. The program promises to help trusted traders operate more smoothly across the ASEAN Economic Community. National AEO programs are active in Brunei, Indonesia, Malaysia, Thailand, and Vietnam while the Philippines, Laos, Myanmar, and Cambodia are in various stages of development.
- ASEAN Self-Certification of Origin
ASEAN is gradually moving to a system where more traders will be able to self-certify that their goods qualify for ASEAN’s preferential tariffs, lowering the cost of using the ASEAN Trade in Goods Agreement and giving smaller business easier access to the system. After several years of tests and legal updates, the Member States are launching the new system in 2018.
- ASEAN Guidelines for Non-Tariff Measures
In 2017, the AFTA Council instructed the ATF-JCC to find a new strategy to reduce non-tariff measures in ASEAN. The ATF-JCC is now working with stakeholders to draft the guidelines. The development marks an important step to taking trade integration beyond simple reductions in tariffs. Sectoral bodies are tasked to realize a target of 10percent reduction in trade transaction costs by 2020
- ASEAN Seamless Trade Facilitation Indicators (ASTFI) and reducing trade transaction costs
The ATF-JCC launched a new project in 2018 to measure the costs of trading across borders in ASEAN, including through a time release study and by gathering data on port dwell times. The data will inform future work on reducing the costs of trading.
- ASEAN Work Programme on Electronic Commerce 2017-2025
The ASEAN Work Programme on e-Commerce is a cross-sectoral initiative to facilitate the e-commerce industry by updating and upgrading infrastructure, technology capacity, consumer protection, legal frameworks, payment systems, competition rules, and logistics. In 2018, Member States finalized a regional ASEAN Agreement on E-commerce through the ASEAN Coordinating Committee on e-Commerce, a cross sectoral body that is leading most e-commerce development initiatives. The agreement is an opportunity for countries to commit to upgrading customs clearance systems to facilitate the international shipping of e-commerce products.
ASEAN +1 Agreements and Multilateral Trade Agreements
The ASEAN+1 trade agreements encourage businesses of all sizes in ASEAN to trade with the wider Asia Pacific. Though the depth of these agreements varies, businesses operating in ASEAN can use these FTAs to gain better access to new export markets for their products at low costs with simplified export and import procedures.
- ASEAN-Australia-New Zealand Free Trade Area
- ASEAN-China Free Trade Area
- ASEAN-India Free Trade Area
- ASEAN-Japan Free Trade Area
- ASEAN-Korea Free Trade Area
The proliferation of FTAs in the region has, however, created complications for businesses and raised compliance costs. This often deters companies, especially SMEs, from taking advantage of the agreements’ benefits. ASEAN announced in 2013 that it would address this problem by merging the +1 agreements into a single treaty, the Regional Comprehensive Economic Partnership (RCEP). RCEP, with 16 countries, is one of the largest free trade agreements attempted to date, covering 30 percent of both global trade and GDP. RCEP would allow companies to access bigger markets while streamlining the rules and procedures. Instead of having to navigate five different FTAs, businesses need only to work with one. The negotiations, which are still underway, cover trade in goods, trade in services, investment, economic and technical cooperation, intellectual property, competition, dispute settlement, e-Commerce, SMEs and other issues.
Beyond RCEP, most ASEAN members are involved in APEC, further extending their economic reach. Brunei, Malaysia, Singapore, and Vietnam are also parties to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). In addition to those four, Thailand, Cambodia, the Philippines, and Indonesia have all expressed interest in joining the CPTPP in the future.
The committee’s goal is to improve members’ understanding of customs systems, build working relationships with regulators, support the implementation of ASEAN’s Trade Facilitation Framework, and support its expansion to new policy areas. This is achieved by engaging the ASEAN customs administrations, the ASEAN Secretariat, and other related ASEAN Ministries in discussions on customs and trade facilitation matters. The committee serves as a formal, permanent resource to ASEAN as well as to individual member economies.
- Enhancing cooperation between ASEAN Customs Administrations and the private sector
- Advocating for solutions to supply chain barriers to cross-border e-commerce
- Advocating for measures that could further improve customs clearance times and cost in ASEAN
- Supporting enhanced efforts to improve supply chain efficiency and security through strengthened anti-counterfeiting efforts and enforcement coordination
- Advocating for international best practices and harmonization of customs standards and valuation
- Encouraging the implementation of the WTO Trade Facilitation Agreement in ASEAN
The Council's Customs and Trade Facilitation Committee focuses on the elimination of trade barriers and the promotion of trade facilitation in the ASEAN region through policy proposals and activities.
- Advocacy and relationship building
- ASEAN-level engagement
The Council regularly meets with the ASEAN Customs Directors-General, the ASEAN Coordinating Committee on Customs, the ASEAN Trade Facilitation – Joint Consultative Committee, the ASEAN Economic Ministers, and other related ministries to discuss trade and investment issues and provide private sector input on how ASEAN can be more attractive to foreign investors. US-ABC’s Customs and Trade Facilitation Committee has joined the ASEAN Directors-General of Customs Meeting for the past 20 years. In 2016, the Council deepened its partnership with ASEAN customs officials by hosting seminars at the side-lines of the ASEAN Customs Enforcement and Compliance Working Group (CECWG) and the ASEAN Customs Procedures and Trade Facilitation Working Group (CPTFWG). In early 2017, the Council also began to directly engage the ASEAN Coordinating Committee on Customs (CCC) to explore the potential for collaborative projects. New engagements with the ASEAN Trade Facilitation – Joint Consultative Committee and the ASEAN Coordinating Committee on e-Commerce additionally support whole-of-government approaches to critical trade facilitation issues.
We also propose initiatives to support the ASEAN Customs community in adapting to changes in the global economy. The committee is developing an education program for e-commerce consumers and for micro and small online retailers in ASEAN on customs compliance.
- Country-level engagement
The Committee works with the Council’s country teams to advocate for members on specific issues and improve relationships between members and governments. The Council is active on challenges surrounding counterfeit goods, licensing, valuation, supply chain security, transfer pricing, permitting and import procedures, and e-commerce regulation. The Committee frequently submits input on Customs laws, drafts policy papers, and participates in public consultations to appeal to individual governments for policy changes.
- Ad hoc intelligence:
Another goal of the committee is to improve members’ understanding of the customs systems in ASEAN by providing frequent updates and analysis of regulatory changes as well as access to key points of contact and documents.