Common Effective Preferential Tariff (CEPT)

The CEPT is the mechanism by which tariffs on goods traded within the ASEAN region, which meet a 40% ASEAN content requirement, will be reduced to 0-5% by the year 2002/2003 (2006 for Vietnam, 2008 for Laos and Myanmar, and 2010 for Cambodia). The tariff reductions are moving ahead on both the "fast" and "normal" tracks. Tariffs on goods in the fast track were largely reduced to 0-5% by 2000. Tariffs on goods in the normal track will be reduced to this level by 2002, or 2003 for a small number of products. Currently, about 81% of ASEAN's tariff lines are covered by either the fast or normal track.

ASEAN members have the option of excluding products from the CEPT in three cases: 1.) Temporary exclusions; 2.) Sensitive agricultural products; 3.) General exceptions.

Temporary exclusions refer to products for which tariffs will ultimately be lowered to 0-5%, but which are being protected temporarily by a delay in tariff reductions. This is permissible under the AFTA agreement, and is spelled out under a Protocol Regarding the Implementation of the CEPT Scheme Temporary Exclusion List. Malaysia invoked this protocol in 2000, delaying tariff reductions on completely-built-up automobiles, and automobile knock-down kits, in order to protect its local auto industry.

A small number of sensitive agricultural products will be extended a deadline of the year 2010 for their integration into the CEPT scheme. In an agreement that has yet to be fully spelled out, the process of tariff reduction on these products will begin between 2000-2005, apparently depending on the country and the product.

General Exceptions refer to products which a country deems necessary for the protection of national security, public morals, the protection of human, animal or plant life and health, and protection of articles of artistic, historic, or archaelogical value. Approximately one percent of ASEAN tariff lines fall into this category.

The CEPT scheme will cover nearly 98 percent of all tariff lines in ASEAN by the year 2003; by then, the only products not included in the CEPT Scheme will be those in the General Exceptions category and sensitive agricultural products.

In the longer term, the ASEAN countries have agreed to enact zero tariff rates on virtually all imports by 2010 for the original signatories, and 2015 for the four newer ASEAN members.