ASEAN-China Free Trade Agreement (ACFTA)

The ASEAN-China Free Trade Agreement (ACFTA) is a trade agreement between the ten ASEAN Member States and China. It was established through the Framework Agreement on Comprehensive Economic Cooperation signed on November 4, 2002 in Cambodia. The agreement covers trade in goods, trade in services, investment, and other areas of economic cooperation, making it one of the largest free trade areas in the world.

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ACFTA aims to improve economic, trade, and investment cooperation between ASEAN and China. It promotes the gradual reduction of tariffs, encourages market access, and supports a more open and predictable business environment. For Philippine importers, ACFTA can significantly reduce import duties and taxes on eligible goods from China.

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ACFTA Objectives

• Strengthen economic and trade cooperation between ASEAN and China
• Promote the gradual reduction of tariffs on goods and services
• Support a more open and predictable business investment environment
• Encourage new areas of economic cooperation
• Help reduce development gaps among member countries

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Early Harvest Programme (EHP)

A program designed to speed up tariff reduction on selected goods, covering products under HS Chapters 1 to 8 such as live animals, meat and fish, dairy products, and vegetables and fruits. Tariffs were reduced or removed in stages starting in 2004. Countries were allowed to exclude certain products.

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Tariff Reduction Programs

ACFTA uses two main tracks for tariff reduction:

Normal Track (NT)

• Covers most goods with tariffs reduced to 0 percent
• ASEAN-6 and China: 2005 to 2010 with some flexibility until 2012
• CLMV countries: up to 2015 with flexibility until 2018

Sensitive Track (ST)

• For products that need protection
• Sensitive List (SL): tariffs reduced to 0-5 percent over time
• Highly Sensitive List (HSL): tariffs reduced but remain higher than NT

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Reciprocal Tariff Treatment

Reciprocal tariff treatment is not automatically applied to all products. It applies when a product is under the Normal Track in the importing country and Sensitive Track in the exporting country, and the exporting country's tariff is 10 percent or lower. The applied tariff must not exceed the Most Favored Nation (MFN) rate.

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Rules of Origin (ROO)

To qualify for lower tariffs under ACFTA:

• Goods must be wholly obtained or produced in the exporting country
• Must meet at least 40 percent Regional Value Content (RVC 40), unless a specific rule applies
• A Certificate of Origin (Form E) must be submitted

For a broader explanation of how rules of origin work across different trade agreements, see our guide on Rules of Origin.

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Eligibility for Tariff Benefits

• Products must be listed under the Normal Track of both countries, or meet reciprocal tariff conditions
• Must comply with Rules of Origin
• Must have a valid Certificate of Origin (Form E)

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Implementation in the Philippines

The Philippines implemented its commitments through several Executive Orders, including EO 485 for the Early Harvest Program, EO 487, 613, and 814 for Normal Track tariff reductions, and EO 618 and EO 71-72 for Sensitive Track commitments.

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Understanding ACFTA's rules on tariffs, product classification, and origin requirements is important for companies involved in international trade and supply chain operations. For guidance on how to claim benefits and prepare the correct documents, see our Import Documentation Checklist.