Modality in the sensitive track

By：app.1 Agreement on TIG Update：2016-05-27

1.The number of tariff lines which each Party can place in the Sensitive Track shall be subject to a maximum ceiling of:
(i) ASEAN 6 and China:   400 tariff lines at the HS 6-digit level and 10% of the total import value, based on 2001 trade statistics;
(ii) Cambodia, Lao PDR and Myanmar:    500 tariff lines at the HS 6-digit level; and
(iii) Viet Nam:   500 tariff lines at the HS 6-digit level, and the ceiling of import value shall be determined not later than 31 December 2004.

2. Tariff lines placed by each Party in the Sensitive Track shall be further classified into Sensitive List and Highly Sensitive List. However, tariff lines placed by each Party in the Highly Sensitive List shall be subject to the following ceilings:
(i) ASEAN 6 and China:   not more than 40% of the total number of tariff lines in the Sensitive Track or 100 tariff lines at the HS 6 -digit level, whichever is lower;
(ii) Cambodia, Lao PDR and Myanmar:   not more than 40% of the total number of tariff lines in the Sensitive Track or 150 tariff lines at the HS 6 -digit level, whichever is lower; and
(iii) Viet Nam: shall be determined not later than 31 December 2004.

3. The Parties shall reduce and, where applicable, eliminate the applied MFN tariff rates of tariff lines placed in the Sensitive Track according to the following Schedules:
(i) ASEAN 6 and China shall reduce the applied MFN tariff rates of tariff lines placed in their respective Sensitive Lists to 20% not later than 1 January 2012. These tariff rates shall be subsequently reduced to 0-5% not later than 1 January 2018.

(ii) Cambodia, Lao PDR and Myanmar shall reduce the applied MFN tariff rates of tariff lines placed in their respective Sensitive Lists to 20% not later than 1 January 2015. These tariff rates shall be subsequently reduced to 0-5% not later than 1 January 2020.
Viet Nam shall reduce the applied MFN tariff rates of tariff lines placed in its Sensitive Lists not later than 1 January 2015 to a rate to be determined not later than 31 December 2004. These tariff rates shall be subsequently reduced to 0-5% not later than 1 January 2020.
(iii) The Parties shall reduce the applied MFN tariff rates of tariff lines placed in their respective Highly Sensitive Lists to not more than 50% not later than 1 January 2015 for ASEAN 6 and China, and 1 January 2018 for the newer ASEAN Member States.

4. Tariff lines in the Sensitive Track, which are subject to specific tariff rates, shall have such tariffs reduced in accordance with the timeframes provided in paragraph 3 of this Annex. The proportion of tariff reduction for these tariff lines shall be equal to the average margin of tariff reduction of the tariff lines with ad-valorem tariff rates under the Sensitive Track, which are subject to tariff reduction in the same year.

5. Notwithstanding the Schedules in paragraph 3, any Party may unilaterally accelerate the tariff reduction and/or elimination for its tariff lines placed in the Sensitive Track at any time if it so wishes. Nothing in this Agreement shall prevent any Party from unilaterally transferring any tariff line from the Sensitive Track into the Normal Track at any time if it so wishes.

6. The reciprocal tariff rate treatment of tariff lines placed by a Party in the Sensitive Track shall be governed by the following conditions:
(i) the tariff rate for a tariff line placed by a Party in the Sensitive Track must be at 10% or below in order for that Party to enjoy reciprocity;
(ii) the reciprocal tariff rate to be applied to a tariff line placed by a Party in the Sensitive Track shall be either the tariff rate of that Party’s tariff line, or the Normal Track tariff rate of the same tariff line of the other Party or Parties from whom reciprocity is sought, whichever is higher; and
(iii) the reciprocal tariff rate to be applied to a tariff line placed by a Party in the Sensitive Track shall in no case exceed the applied MFN rate of the same tariff line of the Party or Parties from whom reciprocity is sought.
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7. The treatment of tariff lines of the Parties subject to in-quota and outquota rates, including the modalities for tariff reduction/elimination, shall be discussed and mutually agreed by the Parties not later than 31 March 2005. The discussions shall include, but not be limited to, the in-quota and out-quota rates.

8. The tariff lines listed by each Party in the Sensitive List and Highly Sensitive List under the Sensitive Track are respectively set out in Appendix 1 and Appendix 2 of this Annex.