Open
Regionalism and Deeper Integration: The Implementation of ASEAN Investment
Area (AIA) and ASEAN Free Trade Area (AFTA)
Dr.
Lawan Thanadsillapakul
Part
6
Thus
ASEAN practice raises questions about the compatibility of ASEAN schemes
with GATT/WTO obligations since AFTA was notified under the "Enabling
Clause". One is concerning the status as developing countries of
some ASEAN members(43) and
the other is the reverse grant(44) of preferences to GATT/WTO contracting parties. ASEAN should resort to
Art. XXIV of GATT in the implementation of AFTA instead of the Enabling
Clause, since in practice ASEAN has already implemented AFTA according
to Art. XXIV of GATT rather than according to the "Enabling Clause".
The implementation of AFTA under Art. XXIV may enable ASEAN countries
to realise intra-ASEAN integration while they also integrate themselves
into the world economy by implementing "Open Regionalism" or
in the other words, to balance regional preferences with generalised liberalisation.
An FTA under Art. XXIV needs to be compatible and consistent with the
GATT principles that encourage global liberalisation. Therefore, regionalisation
under Art. XXIV is complementary and interactive with generalised liberalisation.
This is, in fact, the main aim of ASEAN's regionalisation, in balancing
regional integration with the strengthening the integration of ASEAN economy
into the global economy. This point leads to the consideration of the
critical ASEAN policy changes, which would result in the strengthening
of the ASEAN legal and institutional framework for the proper form and
pattern of regionalisation in ASEAN. It is clear that ASEAN is committed
to "Open Regionalism" because its economic interests lie outside
the region. In fact the deepening and widening of ASEAN regionalisation
is almost entirely inspired and promoted by the achievements of the WTO
(Pelkmans, 1997: 230).
Most
recently, the launching of the Framework Agreement on ASEAN Investment
Area (AIA), the ASEAN Framework Agreement on Services (AFAS), and the
Framework Agreement on Intellectual Property Rights aims to liberalise
trade and investment in the region, and signal the crucial turning point
of ASEAN to achieve closer economic co-operation that even goes beyond
AFTA. I now turn to a discussion of these new agreements.
Framework
Agreement on the ASEAN Investment Area (AIA)
Background
and Nature of the Agreement
The
Framework Agreement on the ASEAN Investment Area was signed on 8th October
1998 aiming at the establishment of "the ASEAN Investment Area".
This was a result of the decision made in the fifth ASEAN Summit(45) , which called for the establishment of a regional investment arrangement
to enhance the attractiveness of the region for direct investment flows.
The establishment of AIA also pursues the objective of the Framework Agreement
on Enhancing ASEAN Economic Co-operation signed in Singapore on 28th January
1992(46) .
The
objective(47) of the Framework
Agreement on AIA is to establish a competitive ASEAN Investment Area in
order to "attract greater and sustainable levels of FDI into the
region and to realise substantially increasing flows of FDI from both
ASEAN and non-ASEAN sources by making ASEAN an attractive, competitive,
open and liberal investment area"(48) . The agreement binds the member countries to "progressively reduce
or eliminate investment regulations and conditions, which may impede investment
flows and the operation of investment projects in ASEAN"(49) and to ensure the implementation of AIA within the agreed time frame.
The agreement on AIA provided three pillars of broad-based programs for
encouraging investment in the ASEAN region:
1)
co-operation and facilitation;
2) promotion and awareness;
3) liberalisation(50) .
Part
7
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(43)
Singapore has been regarded as more developed than the other ASEAN members
and Singapore has been graduated from GSP due to the fact that its developing
country status is untenable.
(44)
Davidson has pointed out that "The question becomes one of the role
of a developed country participating in such scheme with developing countries.
The enabling clause provides for the regional or global arrangements entered
into among less developed contracting parties. Although the enabling clause
also enables a developed country to give preferences to trade coming from
developing countries, it does not permit the reverse, that the preferences
to be given by developing countries to trade coming from developed countries.
Moreover, such preferences have to be on a non-discriminatory basis in
accordance with the Generalized System of Preferences". Thus it would
appear that a developed country couldn't enter into a free trade area
on the basis of the enabling clause. See Davidson, 1997b.
(45)
The fifth ASEAN Summit was held in December 1995, in Bangkok, Thailand.
(46)
The preamble of Framework Agreement on AIA reaffirms the importance of
sustaining economic growth and development in all member states through
joint efforts in liberalizing trade and promoting intra-ASEAN trade an
investment flows enshrined in the Framework Agreement on Enhancing ASEAN
Economic Co-operation.
(47)
Art. 3: Objectives of the Framework Agreement on the ASEAN Investment
Area.
(48)
Joint Press Release, Inaugural Meeting of the ASEAN Investment Area (AIA)
Council, 8th October 1998, Manila, the Philippines.
(49)
Art. 3 (iv) of the Framework Agreement on the ASEAN Investment Area.
(50)
This results from the Meeting of the 4th ASEAN Heads of Investment Agencies,
24th July 1998, Singapore, Joint Press Statement. paragraph 6. They are
incorporated in the Framework Agreement on AIA Art. 6 (1) (a), (b), (c). |