Open
Regionalism and Deeper Integration: The Implementation of ASEAN Investment
Area (AIA) and ASEAN Free Trade Area (AFTA)
Dr.
Lawan Thanadsillapakul
Part
14
AIA
thus indicates a new direction for ASEAN to balance deeper regional integration
and "Open Regionalism". While it enhances intra-ASEAN economic
i]ntegration, it also opens the door to non-ASEAN investors. Moreover,
individual ASEAN countries have also unilaterally liberalised their trade
and investment regime, by keeping their margin of preference as low as
they can so that market access is more available for non-ASEAN enterprises(104) .
The
ASEAN Framework Agreement on Services
Introduction
The ASEAN Framework Agreement on Services (AFAS) was signed on 15th December
1995(105) resulting from
the 5th ASEAN Summit Meeting, pursuing the objectives of the Singapore
Declaration of 1992, which provided that ASEAN shall move towards a higher
plane of economic co-operation and regional integration. AFAS thus aims(106) to liberalise trade in services in the region to facilitate the realisation
of AFTA by substantially eliminating restrictions on trade in services(107) among ASEAN countries in order to improve the efficiency and competitiveness
of the provision of services in the region.
Since
the majority of the ASEAN countries(108) are members of GATT/WTO and they individually have to comply with GATT/WTO
rules, they concertedly agreed to commit to the rules and principles of
GATS at a regional level(109) . Art. V of GATS(110) permits
any WTO member to enter into an agreement to further liberalise trade
in services with other countries, provided that such agreement has "substantial
sectoral coverage", and aims at the elimination of substantially
all discrimination among the members in the sectors covered through the
stand still and roll back principles. Art. V is an exemption to the MFN
requirement under the GATS, in addition to services specified in individual
MFN exemption lists (which are subject to a review and time limit under
the Annex). Its rationale is to encourage regional economic integration
and it is modelled on Art. XXIV of the GATT, recognising that implementation
of regional liberalisation of trade in services may well form part of
a wider process of economic integration and further integrate a regional
market into the global market (World Trade Organisation, 1999: 166). Therefore,
the AFAS is intended as a GATS-Plus scheme, to liberalise trade in services
by expanding the depth and scope of liberalisation beyond the commitments
undertaken by the member countries under the GATS, with the aim of realising
a free trade area in services in this region(111) . Thus, ASEAN countries affirm to extend one another preference in trade
in services.
The
AFAS can be regarded as the selective liberalisation model, which offers
right of entry and establishment only in specific sectors committed by
member countries, since AFAS, like GATS, is a 'bottom up' approach. Therefore,
a right of entry or establishment of service suppliers in receiving countries,
either in the mode of commercial presence or presence of natural person,
may exist only where member countries make specific commitments on market
access. In service sectors for which a member country undertakes market
access commitments, the member country must specify any condition or limitations
which it wishes to maintain, either on (i) market access, or (ii) on (post-entry)
national treatment. Thus, in the absence of an express reservation, member
countries cannot restrict or require, for instance, specific forms of
legal entity or joint venture through which a service must be provided,
or impose limits on participation of foreign capital or limits on foreign
shareholding. The receiving countries therefore have considerable discretion
in determining the extent of the market access, and they may expressly
reserve powers to limit the mode of supply (UNCTAD, 1999: 20). Under AFAS,
ASEAN countries committed themselves to offer market access in more specific
sectors and sub-sectors than they did in GATS and also fewer limitations
on market access and national treatment.
Part
15
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(104)
For example, Indonesia has reduced tariff rates beyond WTO commitments,
see http:/www.wto.org/wto/reviews/indonesia.htm,
WTO-TPRP report on Indonesia, meeting date 3rd-4th December 1998.
(105)
The ASEAN Framework Agreement on Services was done at Bangkok, Thailand
on 15th December 1995 and The Protocol to Implement the Initial Package
of Commitments under the ASEAN Framework Agreement on Services was done
at Kuala Lumpur, Malaysia on 15th December 1997.
(106)
Art. 1 of the Framework Agreement on Services stated its objectives that
"(a) to enhance cooperation in services amongst Member States in
order to improve the efficiency and competitiveness, diversify production
capacity and supply and distribution of services of their services suppliers
within and outside ASEAN; (b) to eliminate substantially restrictions
to trade in services amongst Member States; and (c) to liberalize trade
in services by extending the depth and scope of liberalization beyond
those undertaken by Member States under the GATS with the aim to realise
a free trade area in.
(107)
Art. 1 (a) and (b) of the ASEAN Framework Agreement on Services stated
its aims as "to enhance cooperation in services among ASEAN member
countries in order to improve the efficiency and competitiveness, diversify
production capacity and supply and distribution of services of their suppliers
within and outside ASEAN", and "to eliminate substantially restrictions
to trade in services among member countries".
(108)
Only Vietnam and Laos are not members of GATT/WTO.
(109)
The ASEAN Framework Agreement on Services provided in the preamble that
"Reiterating their commitments to the rules and principles of the
General Agreement on Trade in Services (hereinafter referred to as 'GATS')
and noting that Art. V of GATS permits the liberalizing of trade in services
between or among the parties to an economic integration agreement".
(110)
Art. V of GATS permits the liberalizing of trade in services between or
among the parties to an economic integration agreement provided that such
agreement "(a) has substantial sectoral coverage, and (b) provides
for the absence or elimination of substantially all discrimination, in
the sectors covered under subparagraph (a) through: (i) elimination of
existing discriminatory measures, and/or (ii) prohibition of new or more
discriminatory measures, either at the entry into force of that agreement
or on the basis of a reasonable of time frame, except for measures permitted
under Arts. XI, XII, XIV and XIV bis."
(111)
Art. I (c) of the ASEAN Framework Agreement on Services. |