FTA policy and strategy
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The document discusses several topics related to international trade agreements: 1. It discusses the inclusion of services and investment provisions in Free Trade Agreements (FTAs), noting different approaches used. 2. It examines requirements for FTAs to be legally compatible with the World Trade Organization (WTO) rules to protect most favored nation treatment and reduce trade distortions. 3. It describes the relationship between WTO agreements and FTAs, noting there is no hierarchy but also no exception from WTO most favored nation rules if an FTA is inconsistent.
![Investment in FTAs
NATIONALTREATMENT [KORUS]
1. Each Party shall accord to investors of the other Party treatment no less
favorable than that it accords, in like circumstances, to its own investors with
respect to the establishment, acquisition, expansion, management, conduct,
operation, and sale or other disposition of investments in its territory.
2. Each Party shall accord to covered investments treatment no less favorable
than that it accords, in like circumstances, to investments in its territory of its
own investors with respect to the establishment, acquisition, expansion,
management, conduct, operation, and sale or other disposition of
investments.
22](https://image.slidesharecdn.com/ftapolicyandstrategy-150525020143-lva1-app6891/85/FTA-policy-and-strategy-21-320.jpg)
![Investment in FTAs
EXPROPRIATION AND COMPENSATION [KOR-ASEAN]
1. A Party shall not nationalise or expropriate covered investments of an investor of
any other Party, either directly or through measures equivalent to expropriation or
nationalisation (referred hereto as “expropriation”), except:
(a) for public purpose;
(b) in accordance with due process of law;
(c) on a non-discriminatory basis; and
(d) upon payment of prompt, adequate and effective compensation.
• no specific provisions regarding requirements for indirect expropriation
24](https://image.slidesharecdn.com/ftapolicyandstrategy-150525020143-lva1-app6891/85/FTA-policy-and-strategy-23-320.jpg)
FTA policy and strategy
- 1. Kementerian Perindustrian 22 Mei 2015
- 2. FTA Competition in theWorldTrading System Services and Investment in FTAs Intellectual Property Protection in FTA
- 3. GATT (General Agreement onTariff andTrade) - 1948 –1994: Only dealt with trade of goods - Conducted 8 rounds of multilateral trade negotiations - Members: 128 countries WTO (WorldTrade Organization) - Established in1995: Deals with trade of goods, services and trade-related intellectual property rights - Launched its first multilateral trade negotiations called “Doha Development Round” in 2001 - Members: 160 countries
- 4. Doha Round: 13 yrs have passed without results - Expectations of gains are different between emerging developing nations and advanced nations - Developing and least developed nations are frustrated since development issues are not properly dealt with - Proliferation of regionalism (FTAs and RTAs) - Lack of political leadership from advanced nations: world economic recession - Lack of willingness to make concessions by large emerging nations The multilateral trading system is currently in deep trouble
- 5. Bali Package - Advanced nations and emerging large developing nations showed their leadership at the MC 9 held in Bali on Dec. 3-7, 2013 and finally produced a small but reasonably balanced package which includes agreement on oTrade Facilitation o Some Agricultural issues: o Some Development issues to help developing and least developed countries
- 6. Significance of Bali Package - Showed to the world that the WTO is alive and can produce some outcome - Commitment to the whole Doha Development Round was reaffirmed - If the agreement is properly implemented, it is estimated to create US$ 1 trillion worth of economic benefits to the world economy o It will also add 21 million new jobs and lower the transaction cost of international trade by 10-15 %
- 7. WTO still faces serious difficulties despite the success achieved at the Bali MC9 last December -The implementation of theTrade Facilitation Agreement (TFA) has been delayed since India blocked the adoption of the legal document of theTFA last year - How to make developing countries effectively implement the trade facilitation measures still remains a fundamental question - Preparing the work program on the remaining DDA issues seems extremely difficult due to stark differences in positions among major participants
- 8. Relevant parties will make efforts to conclude the ongoing plurilateral negotiationsTrade in Services Agreement (TISA) - 24 countries (70% of world trade in services) Document only for participant only Focus on Licensing, financial services, telecoms, e-commerce, maritime transport, and professionals moving abroad temporarily to provide services.
- 9. Since the early failure of the Doha Round, the pendulum has moved rapidly towards a bilateral FTA- based regionalism - More than 370 FTAs are in force Recently, there is a trend emerged of forming RTAs with a participation of multiple countries (Mega-RTAs) - China-Japan-Korea (CJK) FTA , ASEAN + 6 (RCEP) FTA Trans-Pacific Partnership (TPP),Trans-AtlanticTrade and Investment Partnership (TTIP)
- 10. Korea-China FTA: Started on May, 2012 and negotiations have been virtually concluded and in the final signing stage China-Japan-Korea (CJK) FTA: Started in November 2012 and negotiations moves rather slowly The RCEP (Regional Comprehensive Economic Partnership) Agreement : Started in November 2012 and negotiations moves slowly - ASEAN 10 countries plus 6 (China, Japan, Korea, India, Australia, NZ) - Ministers agreed to complete the RCEP by 2015
- 11. TPP (Trans-Pacific Partnership) Agreement: Started in 2008 and currently 12 countries are negotiating - P4 (Chile, NZ, Singapore, Brunei), U.S., Australia,Vietnam, Peru, Malaysia, Canada, Mexico, Japan -Tried to complete the negotiations in December 2013 but failed - Could be concluded within the first half of 2015 Recently, Korea showed its interest in joining theTPP and started its bilateral consultations The US and the EU started the TTIP negotiations in 2013 - Making slow progress
- 12. RCEP : ASEAN+6 (ASEAN) TPPKorea China Japan Malaysia Vietnam Singapore Brunei Myanmar Laos Cambodia Thailand Philippine s Indonesia India Chile Peru USA Mexico Canada Australia New Zealand C-J-K Trade Integrations in Asia-Pacific
- 15. Trade Volume (2013) Population (2013) GDP (2013) Billion USD % in Total Million % in Total Billion USD % in Total Korea-China- Japan 6,780 18.4 1,538 21.6 15,446 20.4 RCEP 10,672 29.0 3,434 48.2 21,418 28.3 TPP 9,484 25.8 798 11.2 27,808 36.8 APEC 18,107 49.2 2,804 39.4 42,741 56.5 EU 11,631 31.6 506 7.1 17,958 23.8 TTIP 15,479 42.0 823 11.6 34,758 46.0
- 16. Various forms of Mega-RTA negotiations are expected to simultaneously progress for the time being At the moment, the “Trans-pacific approach” is expected to move faster than the “EastAsian approach” - Experts predict that theTPP negotiations could be concluded in the first half of this year However, scopes and depths of these trade integrations may differ quite substantially from one another
- 17. One important issue to be noted is on the relationship between the two very large trading nations in the world, the US and China This circumstance may potentially cause serious conflicts in the world trading environment, especially at theWTO
- 18. Introduction (1) Inclusion of services in FTAs • improving access to foreign markets • developing and establishing international rules on trade in services (2) Requirements which FTAs meet with for legal compatibility withWTO • to protect MFN • to reduce trade-distortive effects of FTAs (3) Relationship b/w WTO agreements & FTAs • no hierarchy b/w multilateral agreements and bilateral agreements •WTO agreements have no legal supremacy over FTAs • no effect ofWTO inconsistency on existence & validity of FTAs • if inconsistent, no exception from MFN
- 19. • Practices in the past - liberalization of ServiceTrade: WTO GATS, FTAs & domestic laws - liberalization of Investment in Manufacturing Industry: domestic laws - protection of foreign investor & investment • Current Practices in FTAs - liberalization of ServiceTrade + protection of foreign investor & investment - liberalization of supply is liberalization of investment in service industries 20
- 20. Service & Investment in FTAs • Ways of Concession 21 Approach Principle Reservation Negative-List Approach In principle. Liberalization in all sectors/items The uncommitted sectors/items are listed Positive-List Approach Only the committed sectors/items are listed No commitments in unlisted sectors/items
- 21. Investment in FTAs NATIONALTREATMENT [KORUS] 1. Each Party shall accord to investors of the other Party treatment no less favorable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory. 2. Each Party shall accord to covered investments treatment no less favorable than that it accords, in like circumstances, to investments in its territory of its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments. 22
- 22. Investment in FTAs Korea reserves the right to adopt or maintain any measure that accords differential treatment to countries under any bilateral or multilateral international agreement in force or signed prior to the date of entry into force of this Agreement. • “so called” future MFN - Benefits that KOR is willing to give are already reflected - Restrict MFN not to extend preferential treatment, which a party does not want to give - concern over imbalance of interests may frustrate future liberalization 23
- 23. Investment in FTAs EXPROPRIATION AND COMPENSATION [KOR-ASEAN] 1. A Party shall not nationalise or expropriate covered investments of an investor of any other Party, either directly or through measures equivalent to expropriation or nationalisation (referred hereto as “expropriation”), except: (a) for public purpose; (b) in accordance with due process of law; (c) on a non-discriminatory basis; and (d) upon payment of prompt, adequate and effective compensation. • no specific provisions regarding requirements for indirect expropriation 24
- 25. Evolution of IP in Trade
- 26. Some members of the IP family Copyright Trademark Patent Industrial Design Trade Secret Circuit Layout Design Geographical Indication Appellation of Origin Protection Against Unfair Competition Database right Plant Varieties Artists’ Resale Right Traditional Knowledge Traditional Cultural Expression.
- 27. Why IP and Trade? Technological advancement Globalization Growing awareness of IP as asset Problems with existing international institutions regarding IP IP = $$$