The ASEAN-India Free Trade Area (AIFTA)

is a trade agreement between the ten (10) Member States of the Association of Southeast Asian Nations (ASEAN) and India. The Framework Agreement on Comprehensive Economic Cooperation Between the ASEAN and India, which was signed on October 08, 2003, supports the establishment of an FTA by:

i) year 2013 for Brunei, Indonesia, Malaysia, Singapore, Thailand and India, and

ii) by year 2018 for the Philippines, Cambodia, Laos, Myanmar, Viet Nam, and India, with flexibility on sensitive sectors and commodities. 

The Agreement on Trade in Goods under the AIFTA entered into force on January 1, 2010, was ratified on April 10, 2010, and implemented on May 17, 2011. Negotiations for Trade in Services and Investment are still ongoing. Future negotiations will include other areas of economic cooperation such as agriculture, mining and energy, science and technology, standards and conformity assessment, travel facilitation, non-tariff measures and customs cooperation. The Parties agreed not to pursue an Early Harvest Programme.

What is the product coverage and program of tariff reduction under the Trade in Goods Agreement of the AIFTA?

Except for about 14% of tariff lines based on ASEAN Harmonized Tariff Nomenclature (AHTN) 2012, all products falling under Harmonized System (HS) Chapters 1 to 97 are covered by a program of progressive reduction/elimination of tariffs. The applied MFN tariffs as of July 01,  2007 (Base Rates) are subject to reduction and/or elimination under the following categories:

Normal Track (NT): Base rates of tariff lines placed in the NT will be reduced and subsequently eliminated in accordance with the following tariff reduction and elimination schedules:

Normal Track 1:

· January 1, 2010 to December 31, 2013 for ASEAN 5 (Brunei Darussalam, Indonesia, Malaysia, Singapore and Thailand) and India

· January 1, 2010 to December 31, 2018 for the Philippines and India

· January 1, 2010 to December 31, 2013 for India, and January 1, 2010 to 31,  December 2018 for Cambodia, Lao PDR, Myanmar and Viet Nam (CLMV)

Normal Track 2:

· January 1, 2010 to December 31, 2016 for ASEAN 5 and India

· January 1, 2010 to December 31, 2019 for the Philippines and India

· January 1, 2010 to December 31, 2016 for India and January 1, 2010 to December 31, 2021 for CLMV

Sensitive Track (ST):

Base rates above 5% for tariff lines in the ST will be reduced to 5% in accordance with the following tariff reduction schedules:

§ January 1, 2010 to December 31, 2016 for ASEAN 5 and India

§ January 1, 2010 to December 31, 2019 for the Philippines and India

§ January 1, 2010 to December 31, 2016 for India and January 1, 2010 to December 31, 2021 for CLMV

Base rates of 5% can be maintained for up to 50 tariff lines. For the remaining tariff lines, base rates are reduced to 4.5% upon entry into force of the Agreement for ASEAN 6 (ASEAN 5 plus the Philippines) and five (5) years from entry into force of the Agreement for Cambodia, Lao PDR, Myanmar and Viet Nam. The AIFTA preferential tariff rate for these tariff lines are further reduced to 4% in accordance with the end-date set in subparagraph (i). iii) Base rates on 4% of the tariff lines placed in the ST, as will be identified by each Party on its own accord and exchanged with other Parties, will be eliminated by:

§ December 31, 2019 for ASEAN 5 and India

§ December 31, 2022 for the Philippines and India

§ December 31, 2024 for CLMV

Special Products – refer to India’s crude and refined palm oil, coffee, black tea and pepper. Applied MFN tariffs on these products will be reduced in accordance with mutually agreed end rates and end dates.

Highly Sensitive List. Tariff lines placed by the Parties (except Brunei Darussalam, Lao PDR, Myanmar and Singapore) in the HSL are classified into three (3) categories:

§ Category 1: reduction of applied MFN tariff rates to 50%;

§ Category 2: reduction of applied MFN tariff rates by 50%; and

§ Category 3: reduction of applied MFN tariff rates by 25%. Tariff reduction shall be achieved by December 31, 2019 for Indonesia, Malaysia and Thailand, December 31, 2022 for the Philippines, and December 31, 2024 for Cambodia and Viet Nam.

Exlusion List/General Exceptions. Certain products are excluded from the tariff reduction program for reasons of national security, public morals, human, animal and plant life, conservation of exhaustible natural resources and protection of articles with artistic, historic, and archaeological value. Exclusion Lists shall be subject to an annual tariff review for improvement in market access.

What are the Rules of Origin (ROOs) under AIFTA?

Products which are wholly obtained or produced in the exporting Party shall be deemed originating and eligible for preferential tariff treatment. The “General Rule” of Regional Value Content (RVC) 35 and change in tariff subheading is applicable to all other goods.

1. ROO Criteria – General Rule RVC 35 and change in tariff subheading

2. Certificate of Origin (CO) Form Form AI

3. Reciprocity Rule None

4. What Executive Order implemented the Philippines’ tariff commitments under AIFTA?

§ EO 25 issued on February 10, 2011 and which took effect on May 17, 2011