Modifying the Rates of Import Duty on Certain Imported Articles as Provided Under the Tariff and Customs, Code of 1978, as Amended, in Order To Implement the Minimum 50% Margin of Preference on Certain Products Included in the Brand-To-Brand Complementation Scheme in the Automotive Industry Under the Basic Agreement on Asean Industrial Complementation

Case Overview and Summary

EXECUTIVE ORDER NO. 396

Modifying Import Duty Rates to Implement 50% Margin of Preference for Certain Products under ASEAN Industrial Complementation Scheme

- Philippines is a party to the Basic Agreement on ASEAN Industrial Complementation (BAAIC) and signatory to the Memorandum of Understanding on Brand-to-Brand Complementation in the Automotive Industry. (Whereas clauses)
- Philippines, Malaysia, and Thailand are participating countries in the approved Mitsubishi Motor Corporation Brand-to-Brand Complementation (BBC) Scheme. (Whereas clause)
- Philippines to import bumper system from Thailand and steering system from Malaysia, in exchange for exporting manual transmission. (Whereas clause)
- Philippines shall grant minimum 50% Margin of Preference (MOP) to BBC products approved by COIME, subject to terms and conditions. (Whereas clause)

Provisions:

- Articles listed in Annex "A" shall be accorded minimum 50% MOP and subject to Preferential Tariff for ASEAN as per schedule. (Section 1)
- MOP on bumper system for FUSO trucks and steering system for Lancer cars shall be accorded to BBC entities in Thailand and Malaysia, respectively, until May 3, 1993. (Section 2)
- After May 3, 1993, MOP may be granted to non-participating ASEAN country if it extends the same MOP. If not, exclusive application of MOP to Thailand and Malaysia shall be extended until May 3, 1997. (Section 2)
- Effective May 4, 1997, MOP shall be extended to any entity in any other ASEAN member country producing the subject BBC products. (Section 3)
- 50% MOP shall remain effective irrespective of any subsequent change in basic Philippine rate of duty. (Section 4)
- Articles shall be subject to qualification under Rules of Origin prescribed in the Agreement on ASEAN Preferential Trading Arrangements. (Section 5)
- Executive Order effective from May 3, 1989. (Section 6)

Annex "A" lists the articles granted 50% MOP, including bumper system for FUSO trucks and steering system for Lancer cars, with corresponding tariff rates and preferential rates.