Framework
Agreement on the ASEAN Investment Area (AIA)
Dr.
Lawan Thanadsillapakul
Conclusion
The
most important issue of ASEAN regionalisation is to generate a common
political will of ASEAN countries to agree to the implementation of deeper
integration in the region. Over three decades, ASEAN countries have preferred
to have their commitment based on "consensus" and have provided
loose framework-agreements with flexible practice rather than a concrete
legally binding regime. This is the main obstacle to the upgrading of
ASEAN regional integration, as evidenced by the modest success in economic
co-operation of ASEAN in the past.
From
a legal point of view, ASEAN needs to take implementation of all new schemes
seriously, and institutional, legal, and administrative requirements are
needed to ensure implementation. Davidson has pointed out that "As
has been said, in international economic law, the economist tells us what
should be done while the lawyer is left to figure out how to do it"
(Davidson, 1992: 139). To construct regional economic integration is largely
a problem of managing interdependence. Governments may be limited in their
choices by sets of rules, procedures and principles. Even though at present,
each ASEAN country is free to regulate economic transactions that take
place within its boundaries, its international economic relations are
governed by an international legal framework, which comprises multilateral,
plurilateral and bilateral agreements. Such laws establish parameters
within which international trade in goods and services and foreign investment
is conducted. An international framework is necessary in order to promote
increased order and predictability in international transactions. Therefore,
private sector entities that participate in the ASEAN scheme need a clear
rule system that ensures stability and predictability to potential investment
and trade. This can take place only if ASEAN members enter into binding
agreements and implement the agreed framework through domestic legislation.
The
success of ASEAN in economic integration is very crucial for sustaining
economic growth and development in the region. Also the success of ASEAN
will contribute to the global economy. This is evidenced by the recession
of global trade in 1998 soon after the crisis took place in Asia. According
to the report of World Trade Organisation: "world trade growth slowed
in 1998 after unusually strong growth in 1997", the rate of growth
in the volume of world merchandise exports slowed to 3.5% in 1998 from
over 10% in 1997, due largely to continuing economic contraction in much
of Asia"(61). The trend of global trade
reflects the interdependence of the world market and the ASEAN country
economies. This further implies the need for a global regime that also
encourages economic growth of regions of the world, especially the sustainability
of Asia and ASEAN economic growth, which would help to contribute to the
global economy, since this region's trade accounts for a quarter of global
trade(62).
Finally,
a new direction of ASEAN regional integration is the emergence of new
approach to balance regionalism and globalisation. ASEAN has adopted "Open
Regionalism" and is moving toward deeper regional integration based
on a harmonious legal system and the mutual recognition principle. Open
economic integration can be consistent with globalisation and the worldwide
liberalisation of trade and investment, as this integration process does
not create an economic bloc against non-member of the group. ASEAN has
been implementing deeper economic integration in the region while opening
its market to outsiders. This is a new direction of ASEAN regional integration.
However, to implement Open Regionalism ASEAN still needs a certain level
of legal and policy harmonisation or mutual recognition among ASEAN member
countries. Therefore, legal and institutional frameworks for implementing
"Open Regionalism" are required even though the system is not
necessarily the same as the ones implemented in other regions, such as
the EU.
_______________________________________________________________
(61)
WTO reports on 16th April 1999. The report further stated that Trade contraction
in Asia has been the biggest factor in the global trade slowdown, imports
into Asia fell by 8.5%. This also results in global exports of commercial
services recorded the first annual decline in value terms since comprehensive
statistics became available in the mid-1980s. World GDP and trade growth
slowed in 1998 as the Asian crisis deepened and its repercussions were
felt increasingly outside Asia (these are the countries that were most
immediately affected by the financial crisis that broke in mid-1997 Indonesia,
Malaysia, Philippines, the Republic of Korea and Thailand.)
See http://www.wto.org/wto/intltrad/internat.htm.
(62) World
Trade Report of WTO in April 1999. Total global trade amounted to US$
10,635 billion and the Asian trade is recorded at US$ 2,384 billion, which
is the lowest level of stagnation for the region in history. |