Page 5 of 23 Vientiane shall be requested to make an endorsement in-principle so that
Member Countries can commence with their internal procedures to have the ASW Agreement be signed by the ASEAN Ministers Responsible for
Economic Integration at the 11
th
ASEAN Summit in Kuala Lumpur in December 2005.
e The entry into force of the ASW Agreement shall be set independent of the
completion of the domestic processes of Member Countries. Appropriate provisions for Member Countries which would not be able to complete their
ratification process within the specified date should be incorporated into the Agreement.
12. The Philippines and Thailand briefed the Meeting on the progress made to implement
the ASW on a pilot basis. The Philippines highlighted that one of the remaining issues that she has to address is connectivity among the agencies involved in the implementation of the
ASW. Thailand, on the other hand, highlighted her intention to focus first on inter- government coordination before involving the private sector stakeholders. As for the next
stage of implementation for the ASW, Thailand raised that there may be a need to have a technical body to oversee the implementation of the ASW pointing our that the TF-ASW will
complete its task and disbanded accordingly as provided for in its TOR.
4.2 ASEAN Common Time ACT
13. The Meeting exchanged views on the economic feasibility of implementing an
ASEAN Common Time ACT with the view to making an appropriate recommendation to SOM. An ASEAN Secretariat Paper on this matter appears as ANNEX 7.
14. Taking into account the views expressed during the discussions, the Meeting agreed
to recommend to SOM that since the costs of adjusting to the ACT would outweigh the economic benefits, it would be unnecessary to adopt ACT.
4.3 ASEAN Business Advisory Council
15. The Meeting noted the ASEAN Secretariat paper containing the highlights and the
Report of the 16
th
Meeting of ASEAN Business Advisory Council ASEAN-BAC, held in
Bangkok on 29-30 July 2005, which appears as ANNEX 8. 16.
Dato’ Syed Amin Al-jeffri, the current ASEAN-BAC Chair, made a presentation highlighting preparations for the Business Investment Summit BIS being organised in Kuala
Lumpur in December 2005, the progress of the ASEAN Pioneer Project Scheme APPS, and the establishment of the ASEAN-BAC as a corporate entity, among others. The
presentation of the ASEAN-BAC appears as ANNEX 9. 17.
The Meeting underlined the importance of the ASEAN-BAC’s role in advising and providing policy inputs to the Leaders particularly on matters relevant to realising the AEC
goals. The Meeting noted the programme of the BIS and observed that current format of the BIS does not give much opportunity for interaction between the Leaders and the private
sector. The ASEAN-BAC was requested to consider a format that would encourage the participation of more industry leaders and promote interaction in the BIS.
18.
Responding to the request for them to be more involved in the area of economic integration, the ASEAN-BAC agreed to give emphasis on this issue in their report to the
Leaders. On the format of the BIS, the ASEAN-BAC mentioned that although it may be
Page 6 of 23 difficult for them to change the format at this point of time, SEOM’s suggestion would be
discussed at the next ASEAN-BAC meeting. 19.
The Meeting noted that the ASEAN Secretariat contributed US 40,000 towards BIS 2005 and that any refund would be remitted to the ASEAN Foundation.
4.3.1 Preparations for the SEOM – ASEAN-CCI Consultations, 26 August 2005, Bangkok, Thailand
20. The Meeting endorsed the provisional agenda for the SEOM – ASEAN-CCI
Consultations, which appears as ANNEX 10. 4.4
Dispute Settlement Mechanism
21. DSM Fund. The Meeting noted the status of the contributions to the DSM Fund,
which appear jointly as ANNEX 11. 22.
Brunei and Singapore informed the Meeting that their contributions to the DSM Fund were transferred to the specified account on 8 August 2005. Member Countries who have
not transferred their contributions to the DSM Fund were urged to do so as soon as possible. 23.
The Meeting noted that the TOR of the DSM Fund has been approved by the ASC 438 held in Vientiane, in July 2005. On the matter of funding the annual meeting of the
Appellate Body, which had been referred to the ASC, the Meeting noted that the ASC still has to revert back to the Secretariat on its position. It was also noted that should an
agreement be reached to support the annual meeting of the Appellate Body, the agreement at the ASC was for the fund to be drawn from the ASEAN Development Fund ADF. The
Meeting requested the ASEAN Secretariat to update SEOM of the developments in this issue.
24.
DSM Panellists, Appellate Body and Service Addresses. The Meeting also noted the list of DSM Panellists, nominations to the Appellate Body and updated Service Addresses,
which appear as ANNEX 12. The Meeting requested concerned Member Countries to submit as soon as possible their nominations to the DSM Panellists and Appellate Body.
25.
Brunei requested the ASEAN Secretariat to draw up the guidelines for remuneration of the Panel and Appellate Body members, which must be endorsed by AEM in accordance
with Article 17.3 of the Protocol on the Enhanced DSM, for consideration at the Preparatory SEOM for the 37
th
AEM.
4.5 Protocol Regarding the Implementation of the CEPT Scheme Temporary
Exclusion List TEL Protocol
4.5.1 Inclusion of Malaysia’s CBUs and CKDs into IL
26. The Meeting noted the status of the bilateral consultations between Malaysia and
Thailand on the issue relating to the transfer of CBUs from Malaysia’s TEL to the CEPT Inclusion List. It was further noted that while the consultations are slower than expected,
several proposals, including the possibility of AICO arrangements, are being explored by the two parties and that the matter would be highlighted to the AFTA Council, if necessary.
27.
Malaysia confirmed that an overall review of her auto policy is currently being undertaken and that while the review covers all the elements of her auto policy,
commitments made in ASEAN will not be affected.
Page 7 of 23 28.
The Meeting also noted that, because CBUs exported by Malaysia to Indonesia are not able to enjoy the prevailing CEPT concessions pending the resolution of the issue
between Thailand and Malaysia, Malaysia reserved the right to seek for refund should the resolution be in her favour. Indonesia informed the Meeting that her Trade Minister had
written to Malaysia conveying that Indonesia, as an interim measure, is prepared to extend reciprocal CEPT rate of 20 to Malaysian CBUs. However, Indonesia is not prepared to
commit to the Malaysian request for refunds.
4.5.2 Viet Nam’s Temporary Suspension of CEPT Concessions on Motorcycles and Certain Automotive Products
29. The Meeting considered the ASEAN Secretariat’s Legal Interpretation to Article 5 of
the TEL Protocol, which appears as ANNEX 13. In presenting its legal interpretation, the Secretariat highlighted that their interpretation was based on:
a the original objective and intent of the TEL Protocol;
b the decision of SEOM 331 held in Bangkok on 17-19 July 2000;
c the decision of the 14
th
AFTA Council Meeting on 4 October 2000 in Chiang Mai;
d the Interpretation and Application of Article XXVIII of the GATT 1994; and
e the precedent set by the case involving the Philippines and Singapore when
the former extended her compensatory adjustment measure to Member Countries on an MFN basis.
30. The Meeting concurred with the Secretariat’s legal interpretation. Taking into
account the views raised by some Member Countries, the Meeting agreed to come up with Interpretative Notes to the Article 5 of the TEL Protocol using as basis the agreed legal
interpretation, i.e. compensatory adjustment measures in the form of tariffs should be extended to all Member Countries on an MFN basis whereas extension of other forms of
compensation other than tariffs to other parties on an MFN basis shall only be done where applicable. The ASEAN Secretariat was requested to draft the appropriate text for the
Interpretative Notes for adoption by the AFTA Council. 31.
Viet Nam re-affirmed her position conveyed at the last SEOM that she would abide by any legal interpretation common understanding of Article 5 that will be agreed upon by
Member Countries and endorsed by the AFTA Council. AGENDA ITEM 5.
CONSIDERATION OF REPORTS OF SEOM’S COMMITTEES WORKING GROUPS
5.1 24
th
Meeting of ASEAN Working Group on Intellectual Property Cooperation AWGIPC, 20-21 July 2005, Manila, Philippines
32. The Meeting endorsed the ASEAN Secretariat paper on the highlights and Report of
the 24
th
AWGIPC meeting, which appears as ANNEX 14.
33. Brunei, the ASEAN Co-chair for the FTA negotiations with Australia and New
Zealand, informed the Meeting of Australia’s strong position on the inclusion of IP in the AANZFTA which has deterred the endorsement of the Terms of Reference TOR of four
Working Groups under the AANZTNC and the interest of these two Dialogue Partners for IP experts from both regions to get together in a forum that would provide better understanding
of each other’s position on IP. In this regard, the Meeting agreed to request the WGIPC to
Page 8 of 23 engage the two countries in a consultation. The Meeting further agreed that flexibility should
be given to the WGIPC on the areas to be discussed which could include capacity-building and the status of Member Countries’ compliance with TRIPS and accession to other IP-
related international conventions.
5.2 38
th
Meeting of Coordinating Committee on the Implementation of the CEPT Scheme for AFTA CCCA, 3-5 August 2005, Bangkok, Thailand
34. Indonesia, in her capacity as CCCA Chair, briefed the Meeting on the outcome of the
38
th
CCCA meeting held in Bangkok on 3-5 August 2005, The ASEAN Secretariat paper,
including the report of the said meeting appears as ANNEX 15. 35.
The Meeting exchanged views on the various issues highlighted in the CCCA report. The following transpired:
a Rules of Origin
36. The Meeting noted the discussion of the CCCA on the “anomaly in AFTA” which was
raised by CCI at the Brunei SEOM. The Meeting concurred that the Regional Business Model RBM, which the AFTA Council endorsed for implementation on a pilot-project basis,
could address the perceived “anomaly in AFTA”. Noting however that no request for an RBM arrangement has been received since the decision was made at the last AFTA Council
meeting, the Meeting agreed to report the status of the RBM to the AFTA Council which could include possible reasons for the lack of interest from the private sector in pursuing an
RBM arrangement. 37.
The Meeting also reiterated that, while other sectoral bodies e.g. CCI could raise issues relevant to ASEAN economic integration, matters relating to the CEPT-AFTA and the
ROO should be handled by the CCCA and ROO-TF. 38.
The Meeting emphasised that the overall review to determine the thrust of ASEAN’s ROO is crucial not only for the realisation of the ASEAN’s economic community goals but for
ASEAN’s FTA arrangements with Dialogue Partners most especially. Noting the on-going comprehensive exercise being undertaken by the ROO-TF, the Meeting urged countries
concerned to endeavour submitting their completed matrix by 26 August 2005 or, if not possible, not later than 31 October 2005.
39.
The Meeting endorsed the Substantial Transformation Rules for Iron and Steel,
which appears as ANNEX 16.
b Questionnaire on the Utilisation of the CEPT Form D
40. The Meeting noted that a preliminary survey on the utilisation of the CEPT Form D is
currently being undertaken and that the ASEAN-BAC and the ASEAN-CCI are helping in the distribution of the questionnaire endorsed by the CCCA. Highlighting the need to report to
the AFTA Council Form D utilisation, Lao PDR suggested that this be discussed with the ASEAN-CCI aimed at accelerating the process.
c Issuance of Legal Enactments
41. ASEAN documents, especially legal enactments to implement committed tariff
reduction schedules, while issued in national languages, should also have English translations not necessarily official or certified issued soon after the issuance of the legal
Page 9 of 23 enactment. The ASEAN Secretariat was requested to convey this decision to the relevant
bodies for issuing legal enactments, e.g. ECCMCustoms DGs, in Member Countries. d
Elimination of Non-Tariff Barriers 42.
The Meeting recalled the following mandate under the Bali Concord II: i set clear
criteria to identify NTBs by mid-2005; and ii set a clear and definitive work programme for the removal of NTBs by 2005. The Meeting noted that all Member Countries, except the
Philippines, endorsed, in principle, the criteria for classifying all NTMs according to the redgreenamber boxes appearing as ANNEX 17, on the understanding that the criteria
would only serve as guidelines for the elimination of NTBs and subject to flexibility where Member Countries would have the room to provide justifications for their measures or
introduce special measures should the need arise. 43.
The Philippines informed the Meeting that she cannot endorse the criteria because she is not clear on: i ASEAN’s work on NTMs vis-à-vis other international fora; and ii how
the NTMs in ASEAN’s existing database will be subject to the criteria, i.e. whether all the elements in each of the box would have to be satisfied for an NTM to be classified in that
particular box, or whether satisfaction of one or two elements would be enough for an NTM to be classified in that box.
44.
The Meeting explored possible options to address the concerns of the Philippines yet she was still unable to endorse the criteria. Noting that the deadline in the Bali Concord II
has lapsed, the Meeting requested the ASEAN Secretariat to complete its simulation exercise of the criteria vis-à-vis Member Countries’ list of NTMs so that concerned Member
Countries could have a better appreciation of the exercise and submit these to the Prep- SEOM in Vientiane for consideration. Meanwhile, the Philippines was requested to re-
consider her position, taking into account the views raised, and revert at the Prep-SEOM.
e Transfer of Sugar and Rice into the CEPT Inclusion List
45. The Meeting noted the difficulty of Indonesia and the Philippines to move rice and
sugar, for Indonesia out of the Highly Sensitive List. The Meeting agreed that these issues should be raised to the Ministers at the 19
th
AFTA Council meeting in Vientiane. f 10
th
ITWG March 1995 Decision on the Flexibility when Fixing the CEPT Rates within the 0-5 Range
46. The Meeting recalled that SEOM has tasked the CCCA to develop conditions
guidelines which Member Countries would adhere to in invoking the ITWG decision and have it ready for endorsement by the 19
th
AFTA Council meeting in September 2005 in Lao PDR.
47. The Meeting noted the ASEAN Secretariat’s proposed guidelines for the ITWG
decision and the compilation of Member Countries’ inputs to the guidelines, which appears as ANNEX 18. The Meeting further noted that, at the CCCA, only the Philippines and Viet
Nam could not support the recommendation to nullify the 10
th
ITWG decision. 48.
The Philippines reiterated that the flexibility provided by the ITWG decision was necessary to address unforeseen situations caused by economic uncertainties, political
instability and strategic and significant investments as well as other circumstances not covered in any of the agreementprotocol under the CEPT. This being the case, her
preference is as follows: a not to limit such flexibility only to those products which have CEPT rates of above 0 and below 5; b not to subject the option to pre-approval by the
Page 10 of 23 AFTA Council or any compensatory adjustment; and c not to have the option expire by
2010. 49.
In discussing the issue, the Meeting recalled that the mandate given by the 18
th
AFTA Council was for SEOM to study whether to make the ITWG option available to address extremely difficult situations or whether to instead look into other options that would
provide the same recourse to Member Countries while at the same time preserving the integrity of AFTA and ASEAN economic integration. To this end, the Meeting noted that the
CCCA is also considering the text of the proposed “Article ZZ”, appearing as ANNEX 19, which they agreed to incorporate into the CEPT Agreement as a “safeguard measure” for
Member Countries encountering economic and financial difficulties. Most Member Countries pointed out that the proposed “Article ZZ” would already provide sufficient recourse for
Member Countries when confronted with the difficulties described by the Philippines. Some Member Countries also expressed concern over the possibility of ASEAN being treated less
favourably than its FTA partners since these FTA agreements e.g. ACFTA do not provide the same flexibility offered by the ITWG decision.
50.
Recalling that no consensus was reached on the recommendation to nullify the ITWG decision at the 18
th
AFTA Council and that since no consensus could be reached at this Meeting on the proposed guidelines, the Meeting agreed to elevate the matter to the AFTA
Council confining the issues to: i whether the flexibility will also be made available to products whose tariffs have at any time been eliminated; ii the matter of securing prior
approval from the AFTA Council; and iii the expiry date of 2010 for ASEAN-6 and 2015 for CLMV, should a decision be taken to maintain the ITWG decision. The Meeting requested
the Philippines and Viet Nam to reconsider their position, taking into account the views and concerns raised during the discussion, and revert at the Prep-SEOM in Vientiane.
g Review of the General Exception List
51. The Meeting noted the on-going review of the General Exception List and tasked the
CCCA to discuss the modality for tariff reduction and elimination for products transferred out of the GE List and consider a modality for the subsequent phasing-out of the GE List. The
Meeting endorsed the Work Programme recommended by the CCCA, which has been amended to incorporate the decision on the modality. The revised work programme for the
GE review appears as ANNEX 20.
h Trade Data
52. The Meeting considered the proposal of the ASEAN Secretariat to establish a Task
Force on Trade Data to provide the forum for discussing matters pertaining to the issuesproblems in trade data submission. The Meeting, while recognising the perennial
problem on trade data submission, viewed that the establishment of a Task Force may not be the solution to the problems as these were more related to inadequacies in data
collection, generation and dissemination that may possibly be addressed by a format which countries could more easily adhere to or through capacity building e.g. workshops on data
collection. 53.
The Meeting also considered the request of the ASEAN Secretariat to allow to the use of trade data from other sources in its report to the AFTA Council on ASEAN’s trade
performance. In putting forward its request, the ASEAN Secretariat pointed out that the use of the sources would not allow the Secretariat to submit detailed report, especially in the
utilisation of existing Schemes in ASEAN such as the CEPT and AISP Schemes.
Page 11 of 23 54.
The Meeting agreed to seek guidance from the AFTA Council on the issue of trade data submission, highlighting the various problems raised by the Secretariat. The Meeting
also agreed to seek AFTA Council’s views on the use of other sources for ASEAN’s trade data. The Meeting noted the agreed format for the submission of general and Form D trade
data adopted in previous CCCA meetings, which appears as ANNEX 21. 55.
The Meeting endorsed the report to the 38
th
CCCA. 5.3 26
th
Meeting of ASEAN Consultative Committee on Standards and Quality ACCSQ, 3-5 August 2005, Makati, Philippines
56. The Meeting considered and endorsed the Report of the 26
th
ACCSQ held in Manila
on 3-5 August 2005, which appears as ANNEX 22. 57.
While the Meeting welcomed ACCSQ’s initiatives on the establishment of a Trust Fund, it has concerns over the potential vested interest by the private sector contributing to
the Trust Fund. The Meeting suggested the need for clear agreement on the definition of costs and profit to avoid unnecessary conflict between Member Countries. Responding to
the concerns raised, the ASEAN Secretariat informed the Meeting that it has cautioned the ACCSQ on this matter but was advised that the Fund would be mobilised from the
participation cost of the private sector in the meetings or workshop. The Secretariat added that endorsement from ASC would also be sought for the establishment of the Trust Fund.
58.
The Meeting endorsed the ASEAN Policy Guideline on Standards and Conformance,
appearing as ANNEX 23, which aim to guide all ASEAN bodies working in the areas of standards and conformance in implementing measures on standards, technical regulations
and conformity assessment procedures to facilitate the fast-track integration of priority sectors by 2010 and the realisation of the AEC by 2020.
59.
The Meeting also noted that the Draft Agreement on ASEAN Harmonised Electrical Electronic Equipment Regulatory Regime, which has to be revised to take out the reference
to the ASEAN Conformity Mark, is targeted for signing at the 11
th
ASEAN Summit in December 2005.
5.4 43
