Worldwide: Asia Trade Update - January–February 2015

Keywords: Free Trade Agreement, regulatory, trade developments,

Mayer Brown Consulting, based in Asia, is pleased to bring you the latest Asia Trade Update for January–February 2015. This Newsletter contains Free Trade Agreement, regulatory and trade developments around the region.

FREE TRADE AGREEMENT DEVELOPMENTS

Indonesia Considering Termination Of Japan-Indonesia EPA

Indonesia is reviewing its bilateral trade agreement with Japan, the Japan-Indonesia Economic Partnership Agreement ("JIEPA"). The government is concerned that the JIEPA has resulted in the growing trade imbalance with Japan. It claims that Japan's inconsistent realization of their commitments, particularly in terms of open market access for Indonesia's priority sectors, and the lack of technology transfer which is an essential part of Japan's JIEPA commitment, are major contributing factors.

The Industrial International Cooperation of the Ministry of Industry ("KII-MOI") highlighted three possible options that Indonesia may take with regard to the JIEPA:

  • Indonesia could undertake a general review and propose to suspend its commitments under the JIEPA. At the ministerial level, Indonesia could request Japan to realize its commitments on market concession for Indonesia's priority products;
  • Modify the JIEPA agreement through negotiations with Japan; or
  • Terminate the JIEPA.

The MOI indicated that both Indonesia and Japan have agreed to further discuss the JIEPA evaluation. Thus far, there is no exact date scheduled for the bilateral meeting, but it will likely be conducted in the first quarter of 2015.

FTA Negotiations Between Philippines And EFTA Countries To Commence In March 2015

The Philippines and the European Free Trade Association ("EFTA") countries agreed to start negotiations on a bilateral free trade agreement ("FTA") in March 2015. The two sides expect to conclude negotiations by 2016 or before the Aquino Administration ends its term.

The Philippines and the EFTA countries had signed a Joint Declaration on Cooperation ("JDC") in June 2014, which provides, among others, that "the EFTA states and the Philippines will examine the feasibility of establishing a FTA , taking into account WTO commitments".

Currently, the two sides are preparing for the negotiations. For EFTA, a chief negotiator will be appointed by the EFTA Secretariat in Geneva. For the Philippines, the Department of Trade and Industry ("DTI") will be in charge of the negotiations, assisted by various representatives from other government agencies.

DTI Secretary Gregory Domingo said that DTI's target is to complete the discussions by March 2016. For the Secretary, it is a very tight schedule but doable. The Philippine government had scheduled consultations in January 2015 while some Philippine experts have finalized technical studies.

Malaysia To Re-Launch FTA Negotiations With Bangladesh

On January 13, 2015, Malaysia and Bangladesh agreed to reinitiate consideration of FTA negotiations, which had been set aside five years ago. Malaysian Minister of International Trade and Industry ("MITI") Datuk Seri Mustapa Mohamed agreed with his counterpart Bangladesh Commerce Minister, Tofail Ahmed, that a joint commission will conduct further discussions on the matter in Kuala Lumpur in March. In addition, the two countries will also hold the first meeting of the Malaysia- Bangladesh business forum before June 2015.

Thailand And Pakistan Undertake FTA Feasibility Study

Thailand and Pakistan are undertaking a feasibility study on a proposed Thailand-Pakistan free trade agreement ("FTA"). The feasibility study is expected to be finalized in March 2015 and its results will be discussed in more detail during the 3rd Thailand-Pakistan Joint Trade Committee meeting which will be held in Pakistan in April 2015.

Earlier during the 2nd Joint Trade Committee meeting held in Thailand in December 2014, Thailand and Pakistan had set the goal of increasing bilateral trade to reach USD 2 billion in 2018. In addition, the meeting also discussed bilateral economic cooperation on automobile, jewellery, fisheries, textile and garments, agricultural goods and food processing, energy, leather goods, services, public healthcare and infrastructure.

POLICY DEVELOPMENTS

China

China Simplifies Processes for Importing Used Equipment

On December 31, 2014, the General Administration of Quality Supervision, Inspection and Quarantine ("AQSIQ") issued Circular AQSIQ [2014] No145, clarifying that the new policy for supervising used equipment importation includes (1) pre-shipment inspection, (2) inspection at port, and (3) inspection after delivery. The pre-registration requirement is no longer applicable. AQSIQ also published the revised Catalogs to further clarify the types of used equipment that are:

  • Prohibited from importation;
  • Allowed to be imported but are subject to pre-shipment inspection; and
  • Allowed to be imported and are exempted from pre-shipment inspection.

The circular also makes it clear that companies violating the above requirements will be penalized, in addition to a mandatory order to return the equipment.

China Allows Car Parallel Imports in Shanghai FTZ

On January 7, 2015, the Committee of Shanghai FTZ announced that the central government has approved the pilot scheme for "parallel car imports" in the Shanghai FTZ. The pilot program has formally started, and local sales of parallel imported cars will start in February. the prices of parallel imported cars are expected to be 20 percent lower than cars imported via regular channels.

China is also in the process of revising the relevant regulations. The current 2005 Enforcement Measures on Administration of Automobile Brands Sales prevents parallel car imports. Under the 2005 Measures, dealers can only sell cars after getting authorization to do so by the vehicle maker. Overseas carmakers have to set up or authorize a local company to be their chief dealer for selling cars in China. In late 2014, the State of Administration of Industry and Commerce had already withdrawn the registration requirement of "chief dealer".

The 2005 Measures are expected to be replaced by the new Measures on Administration of Automobile Sales. According to the latest draft of this new regulation, parallel car imports will be allowed. However, importing and sale of cars already registered or used in other countries will be prohibited.

Indonesia

MOT Mandates L/C Payment for Exports of Certain Products

On January 5, 2015, the Ministry of Trade ("MOT") issued MOT regulation no. 04/M-DAG/PER/1/2015 ("MOT-04-2015") stipulating that payment for exports of certain goods, namely mineral products, coal, oil & gas and crude palm oil ("CPO") and CPO kernel, must be in the form of a Letter of Credit ("L/C"). MOT-04-2015 will be effective on April 1, 2015.

MOT-04-2015 requires an exporter of affected products to do the following prior to exportation:

  • Payment for the export transaction shall be in the form of a L/C;
  • The price stated on the L/C should be at least the same as the international market price;
  • The L/C payment should be received by foreign banks in Indonesia;
  • For goods that require surveyor report prior to exportation (i.e., pre-shipment-inspection), the surveyor shall also confirm that the payment method is through L/C. Otherwise, the surveyor shall not release its report.

Any export of affected goods not using the L/C payment method would not secure an export permit, and the goods could not be exported.

According to informal discussions with the ESDM, this policy was triggered by the government's need to monitor the trade flow of sensitive products such as oil & gas, mineral products, and CPO. It appears that a common practice for trade in such goods is to not route payments through financial institutions (including banks) in Indonesia although the transactions occur in Indonesia. In other words, the government is concerned that exporters are "parking" the profits overseas and that Indonesia is losing revenues from its natural resources.

Government to Limit Cash Outflow from Indonesia

On December 23, 2014, the Director General of Customs and Excise ("DGCE") announced the government policy to monitor the flow of cash into and out from Indonesia through a permit mechanism. This would apply to:

  1. Persons (and corporate) carrying out cash of not less than IDR 100 million, as well as those bringing in other currencies of equivalent amount to IDR 100 million and above. Permit application can be done through filing the Customs Declaration ("CD") and submitting it to the Customs officer at the airport. A penalty of 10% of the amount will be imposed for missing or false declaration.
  2. Other forms of payment, such as check, traveler's checks or electronic transfers, are also subject to the same requirement. However, this would only apply to Indonesia citizen (warga negara Indonesia – WNI).

Philippines

European Parliament Approves Philippine Eligibility under EU GSP Plus

On December 18, 2014, the European Parliament approved the Philippines' inclusion in the EU Generalized System of Preferences Plus ("GSP+") program. Under the GSP+, about 6,274 products from the Philippines are eligible for zero-duty entry into the EU. The program will be in place for 10 years starting on December 25, 2014.

The Philippines is already a beneficiary of the EU's standard GSP. The Standard GSP covers a total of 6,209 Philippine products, of which 2,442 products or 39.33% have duty-free status while 3,767 are dutiable at reduced tariffs.

To qualify for GSP+ status, the Philippines had to show implementation of a number of good governance measures which are measured by having ratified and adopted 27 conventions on human rights, genocide, labor rights, child labor, etc. Thus far, there are only 13 other GSP+ beneficiary countries. The Philippines is the only ASEAN country eligible for the program.

According to the Department of Trade and Industry ("DTI"), Philippine exports under the GSP+ are estimated to increase by 611.8 million Euros in the first year. This translates into 267,587 jobs generated in both the agriculture and industrial sectors. The DTI has laid out plans to enable more domestic exporters to maximize the benefits of GSP+. Activities include investment and economic briefings for business chambers, councils and industry associations.

Bills on Competition Policy Advance in Congress

The respective bills on competition policy have advanced through the two chambers of the Philippine Congress.

  1. On December 18, 2014, the Senate approved the third and final reading of Senate Bill ("SB") No. 2822 entitled "Fair Competition Act of 2014".
  2. Rep. Apostol, one of the authors of the bills, consolidated the 12 bills on competition policy into the "Philippine Fair Competition Act". On October 28, 2014, the House Committees on Trade and Industry and Appropriations approved the consolidated bill. The next step was the second reading after the Christmas holiday.

As soon as the Lower House has approved its version, a bicameral conference will be held to consolidate both versions.

Some common elements of the Senate-approved bill and the Lower House consolidated bill are as follows:

  1. Creation of a Fair Trade Commission to, among others, ensure that industrial concentration will not limit economic power to a few firms or groups;
  2. Heavy penalties on violators;
  3. Definition of monopolies; and
  4. Listing of unfair trade or business practices.

In view of the need to legislate competition policy in order to make local firms more competitive amid an integrated regional economy, legislators from both chambers have identified the enactment of a law on competition policy as a priority measure. The private sector also supports this Congressional action.

It is likely that the law on competition policy will be approved before the Aquino Administration ends its term in July 2016.

Singapore

Singapore and the US Sign MRA Enabling Faster Customs Clearance for Certified Companies

On December 1, 2014, Singapore Customs and the United States Customs and Border Protection ("U.S. CBP") signed a mutual recognition agreement ("MRA") to enhance supply chain security and facilitate trade between the two countries.

Under the MRA, the US will recognize the supply chain security measures implemented by companies certified under Singapore Customs' Secure Trade Partnership ("STP") program while Singapore will similarly recognize validated members of the U.S. CBP's Customs-Trade Partnership Against Terrorism ("C-TPAT") program. These companies will have their exports recognized by their respective Customs authorities as being low-risk, allowing them to enjoy faster customs clearance of their goods when they export to the United States and Singapore, respectively.

The two Customs authorities further strengthened cooperation with the signing of a US-Singapore Customs Mutual Assistance Agreement ("CMAA"). This agreement allows the US and Singapore to exchange information and provide assistance (such as sharing of experiences on enforcement best practices) in the prevention and investigation of customs offences.

Thailand

Thailand and Russia to Strengthen Bilateral Trade by 2016

Thailand and Russia held their second trade and economic cooperation meeting in November 2014, discussing the possibility of doubling bilateral trade to USD 10 billion by 2016, focusing mainly on tourism, investment and other areas.

Proposals include :

  1. Thailand to supply more agricultural and fishery products to Russia;
  2. Thailand to grant tax privileges to encourage Russia to invest in rubber processing in Songkhla province;
  3. Thailand to provide more Russian-speaking tour guides to attract more Russian tourists;
  4. Russia to relax its import regulations and sanitary requirements for products from Thailand, especially for those in high demand by Russia; and
  5. The two countries to promote investment in research and development, aircraft-and -parts production and machinery-and-parts production.

Certain quarters in Thailand see the trade sanctions against Russia by Western countries as a game-changer. Before the Ukraine crisis, for example, the US was Russia's largest poultry supplier (47.8 percent), followed by Brazil (27 percent) and Ukraine (9.75 percent). Thailand was ranked in 12th place (0.51 percent). Under the current circumstances, Thailand would have greater opportunity to export chickens to Russia.

Vietnam

MOIC Issues Guidance on License Application for Import of Radio Equipment

The Ministry of Information and Communication ("MOIC") issued Circular No. 18/2014/TT-BTTTT dated November 26, 2014 ("Circular 18") providing detailed guidance on the issuance of import license for radio equipment. Circular 18 came into effect on January 16, 2015.

Circular 18 sets out the conditions and procedures for issuance of import license in respect of microwave equipment, equipment for radio broadcasting and radio broadcasting recorder having frequency ranges from 9KHz to 400GHz and capacity of 60MW or more (hereinafter referred to as "Radio Equipment") under the management of the MOIC.

Radio Equipment that needs an import license is listed in Schedule 1 to Circular 18.

Circular 18 also exempts the following entities from the import license requirement: diplomatic representative offices, foreign consular offices, representative offices of international organizations, foreign senior delegates visiting Vietnam entitled to diplomatic incentives status and exemptions, foreign journalists conducting journalism activities and not residing in Vietnam (provided that they obtain a permit for journalism activities issued by the MOIC). Terrestrial mobile phones are also exempt from an import license.

An import license is only valid for a particular shipment under a particular commercial contract.

Learn more about Mayer Brown's International Trade practice and Mayer Brown Consulting.

Visit us at www.mayerbrownjsm.com

Mayer Brown is a global legal services organization comprising legal practices that are separate entities (the Mayer Brown Practices). The Mayer Brown Practices are: Mayer Brown LLP, a limited liability partnership established in the United States; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; Mayer Brown JSM, a Hong Kong partnership, and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2015. The Mayer Brown Practices. All rights reserved.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein. Please also read the JSM legal publications Disclaimer.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions