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The Economics of International Trade Scenario: Imagine two countries, Alpha and Omega.
Comparative Advantage - Each country has 1,000 workers and can make two goods, computers and
cars.
- Paul Samuelson: the principle of comparative advantage was the only big - Alphas economy is far more productive than Omegas.
idea that Economics had produced that was both true and surprising. - To make a car, Alpha needs two workers, compared with Omegas four.
- One of the oldest theories in economics; favorite of David Ricardo - To make a computer, Alpha uses 10 workers, compared with Omegas 100.
- If there is no trade, and in each country half the workers are in each
- What is it? industry, Alpha produces 250 cars and 50 computers and Omega produces
The theory underpins the economic case for FREE TRADE. 125 cars and 5 computers.
But it is often misunderstood or misrepresented by opponents of free
trade. What if the two countries specialise?
It shows how countries can gain from trading with each other even if one - Although Alpha makes both cars and computers more efficiently than
of them is more efficient it has an ABSOLUTE ADVANTAGE in Omega (it has an absolute advantage), it has a bigger edge in computer
every sort of economic activity. making.
Comparative advantage is about identifying which activities a country (or - So it now devotes most of its resources to that industry, employing 700
firm or individual) is most efficient at doing. workers to make computers and only 300 to make cars.
the ability of an individual or group to carry out a particular economic - This raises computer output to 70 and cuts car production to 150.
activity (such as making a specific product) more efficiently than another - Omega switches entirely to cars, turning out 250.
activity
Effect:
- What is its main effect? - World output of both goods has risen.
In essence, the theory of comparative advantage says that it pays - Both countries can consume more of both if they trade, but at what PRICE?
countries to trade because they are different. - Neither will want to import what it could make more cheaply at home.
It is impossible for a country to have no comparative advantage in - So Alpha will want at least 5 cars per computer, and Omega will not give
anything. up more than 25 cars per computer.
It may be the least efficient at everything, but it will still have a - Suppose the terms of trade are fixed at 12 cars per computer and 120 cars
comparative advantage in the industry in which it is relatively least bad. are exchanged for 10 computers.
- Then Alpha ends up with 270 cars and 60 computers, and Omega with 130
- What is a possible future effect? cars and 10 computers.
There is no reason to assume that a countrys comparative advantage will - Both are better off than they would be if they did not trade.
be static. - This is true even though Alpha has an absolute advantage in making both
If a country does what it has a comparative advantage in and sees its computers and cars.
INCOME grow as a result, it can afford better education and - The reason is that each country has a different comparative advantage.
INFRASTRUCTURE. - Alphas edge is greater in computers than in cars.
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- Omega, although a costlier producer in both industries, is a less expensive
maker of cars.
- If each country specialises in products in which it has a comparative
advantage, both will gain from trade.
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International Trade Law and the WTO Economic integration, as defined here, can take several forms that represent
Stages of Economic Integration varying degrees of integration.
What does economic integration mean? Free Trade Area tariffs (and quantitative restrictions) between the
In everyday usage: the word integration denotes the bringing together of participating countries are abolished, but each country
parts into a whole. retains its own tariffs against non-members.
In the economic literature: the term economic integration does not have
Customs Union involves, (1) suppression of discrimination in the field
such a clear-cut meaning. of commodity movements within the union and (2) the
- Some authors include social integration in the concept, equalization of tariffs in trade with non-member
- others subsume different forms of international cooperation under this countries.
heading, and
- the argument has also been advanced that the mere existence of trade Common Market abolition of (1) trade restrictions and (2) restrictions on
factor movements
relations between independent national economies is a sign of integration.
Economic Union combines the suppression of restrictions on commodity
Authors proposed definition of economic integration: as a process and as a and factor movements with some degree of
state of affairs. harmonization of national economic policies, in order
- Regarded as a process, it encompasses measures designed to abolish to remove discrimination that was due to disparities in
discrimination between economic units belonging to different national these policies
states;
- viewed as a state of affairs, it can be represented by the absence of Complete Economic unification of monetary, fiscal, social, and
various forms of discrimination between national economies. Integration countercyclical policies; requires the setting-up of a
supra-national authority whose decisions are binding
for the member states
In interpreting our definition, distinction should be made between integration
and cooperation.
What is the theory of economic integration concerned with?
Integration Cooperation (1) with the economic effects of integration in its various forms and
(2) with problems that arise from divergences in national monetary, fiscal,
comprises measures that entail includes actions aimed at and other policies.
the suppression of some forms of lessening discrimination
discrimination How should the theory of economic integration regarded?
(1) as a part of international economics and
Ex. removal of trade barriers Ex. international agreements on (2) as one that enlarges the field of international trade theory by
trade policies (a) exploring the impact of a fusion of national markets on growth and
(b) examining the need for the coordination of economic policies in a
abolition of discrimination within union
an area
Finally, the theory of economic integration should incorporate elements
of location theory, too. Why?
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- The integration of adjacent countries amounts to the removal of artificial
barriers that obstruct continuous economic activities through national
frontiers, and
- the ensuing relocation of production and regional agglomerative and
deglomerative tendencies cannot be adequately discussed without making
use of the tools of location analysis.
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Chapter 1 Basics c)Although negotiated and signed by governments, the goal is
to
I. What is the WTO? (1) help producers of goods and services, exporters, and
A. Background importers conduct their business,
1. Born on 1 January 1995 (2) while allowing governments to meet social and
2. Trading system, however, came about in 1948 environmental objectives.
a) Thank GATT I found you - GATT provided rules for the 3. Overriding Purpose: help trade flow as freely as possible
system a) Why? This is important for economic development and well-
3. GATT (trade in goods) vs WTO (trade in goods, services and being
inventions, creations and designs [intellectual property]) b) What does it mean?
(1) removing obstacles,
B. Generally (2) ensuring individuals, companies and governments know
1. It is the organization that deals with the rules of trade between what the trade rules are around the world, and
nations at a global or near global level. (3) giving individuals, companies and governments the
2. Its an organization for liberalizing trade. confidence that there will be no sudden changes of
3. Its a forum for governments to negotiate trade agreements. policy.
4. Its a place for them to settle trade disputes. c) Bottomline: Be Transparent. Be Predictable.
5. It operates a system of trade rules.
E. It helps settle disputes.
C. It is a negotiating forum. 1. Why is it necessary?
1. The WTO is a place where member governments go, to try to sort a) Trade relations often involve conflicting interests.
out the trade problems they face with each other. b) Agreements, including those painstakingly negotiated in the
2. The WTO was born out of negotiations. WTO system, often need interpreting.
a) Mainly the 1986-94 negotiations aka the Uruguay Round 2. What is the purpose behind the dispute settlement process written
b) Also earlier negotiations under the General Agreement on in WTO agreements?
Tariffs and Trade a) The most harmonious way to settle these differences is
3. Everything the WTO does is the result of negotiations. through some neutral procedure based on an agreed legal
foundation.
D. Its a set of Rules.
II. Principles of the Trading System [foundation of the multilateral
1. Its rules support maintaining trade barriers.
trading system]
a) Ex. protection of consumers
A. What do WTO agreements usually deal with? Agriculture, textiles
b) Ex. prevent the spread of disease and clothing, banking, telecommunications, government purchases,
2. At its heart are the WTO Trade agreements. industrial standards and product safety, food sanitation regulations,
a) These documents provide the legal ground-rules for intellectual property, and much more
international commerce.
b) They are essentially contracts, binding governments to keep B. Trade without discrimination
their trade policies within agreed limits. 1. Most-favoured-nation: treating other people equally
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a) What is it? (3) Under GATT and now the WTO, the MFN club is no
(1) Under the WTO agreements, countries cannot normally longer exclusive.
discriminate between their trading partners. (4) The MFN principle ensures that each country treats its
(2) Grant someone a special favour (such as a lower customs over-140 fellow members equally.
duty rate for one of their products) and you have to do
the same for all other WTO members. 2. National treatment: treating foreigners and locals equally
(3) Rule: Every time a country lowers a trade barrier or a) What is it?
opens up a market, it has to do so for the same goods (1) Giving others the same treatment as ones own
or services from all its trading partners whether rich nationals
or poor, weak or strong. b) How is it applied?
b) How important is it? (1) Imported and locally-produced goods should be treated
(1) It is the first article of the GATT. equally at least after the foreign goods have entered
(2) It is also the priority of the General Agreement on Trade the market.
in Services (GATS, Art. 2) and Agreement on Trade- (2) The same should apply
Related Aspects of IP rights (TRIPS, Art. 4). (a) to foreign and domestic services, and
c) Exceptions (only under strict conditions) (b) to foreign and local trademarks, copyrights and
(1) Countries can set up a free trade agreement that applies patents.
only to goods traded within the group discriminating c) How important is it?
against goods from outside. (1) Article 3 of GATT,
(2) Countries can give developing countries special access to (2) Article 17 of GATS and
their markets. (3) Article 3 of TRIPS
(3) A country can raise barriers against products that are d) When does it apply?
considered to be traded unfairly from specific countries.
(1) Treatment only applies once a product, service or item of
(4) In services, countries are allowed, in limited intellectual property has entered the market.
circumstances, to discriminate.
(2) Effect: Charging customs duty on an import is not a
d) Why most favoured? violation of national treatment even if locally-produced
(1) Each member treats all the other members equally as products are not charged an equivalent tax.
most-favoured trading partners.
(2) If a country improves the benefits that it gives to one C. Freer trade: gradually, through negotiation
trading partner, it has to give the same best treatment to
1. How is it achieved? By lowering trade barriers
all the other WTO members so that they all remain
most- favoured. 2. What kind of trade barriers?
e) MFN history a) customs duties (or tariffs) and
(1) Most-favoured nation (MFN) status did not always mean b) measures such as import bans or quotas that restrict quantities
equal treatment. selectively
(2) The first bilateral MFN treaties set up exclusive clubs c) red tape
among a countrys most- favoured trading partners. d) exchange rate policies
3. How many rounds of trade negotiations have there been?
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a) 8 since the GATTs creation in 1947-48. (b) In developed countries, the rates actually charged and
b) 9th round is underway (Doha Development Agenda) the bound rates tend to be the same.
4. What is the focus of these negotiations? (3) Can a country change its bindings?
a) Lowering tariffs on imported goods (a) Yes, but only after negotiating with its trading
b) Expanded to: non-tariff barriers partners, which could mean compensating them for
c) Expanded to: services and IP loss of trade.
5. What is the benefit of WTO agreements? b) Discourage the use of quotas and other measures used to
a) Opening markets can be beneficial, but it also requires set limits on quantities of imports administering quotas
adjustment. can lead to more red-tape and accusations of unfair play.
b) The WTO agreements allow countries to introduce changes c) Make countries trade rules as clear and public
gradually, through progressive liberalization. (transparent) as possible.
c) Developing countries are usually given longer to fulfil their (1) Many WTO agreements require governments to disclose
obligations. their policies and practices publicly within the country or
by notifying the WTO.
D. Predictability: through binding and transparency d) Regular surveillance of national trade policies through the
Trade Policy Review Mechanism provides a further means of
1. Sometimes, promising not to raise a trade barrier can be as
encouraging transparency both domestically and at the
important as lowering one - why?
multilateral level
a) Because the promise gives businesses a clearer view of their
future opportunities.
E. Promoting fair competition
2. What is the importance of stability and predictability?
1. The WTO is a system of rules dedicated to open, fair and
a) investment is encouraged,
undistorted competition
b) jobs are created and
2. What is the objective of MFN, national treatment, dumping1,
c) consumers can fully enjoy the benefits of competition subsidies?
choice and lower prices
a) Secure fair conditions of trade
3. What is the objective of a multilateral trading system?
3. What are the rules for?
a) It is an attempt by governments to make the business
a) the rules try to establish
environment stable and predictable.
(1) what is fair or unfair, and
4. How?
(2) how governments can respond,
a) In the WTO, when countries agree to open their markets for
goods or services, they bind their commitments. What (a) in particular by charging additional import duties
does bind mean? calculated to compensate for damage caused by
unfair trade
(1) For goods, these bindings amount to ceilings on customs
tariff rates.
(2) Sometimes, countries tax imports at rates that are lower F. Encouraging development and economic reform
than the bound rates. 1. Developing countries need flexibility in the time they take to
(a) Frequently, this is the case in developing countries. implement the systems agreements.
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the general incidence of the duties and regulations of
3) Weiler, Unit II, pp. 5-6 commerce
A. GATT Article XXIV: 4-10 applicable in the constituent territories prior to
- the formation of such union or
1. Paragraph 4: - the adoption of such interim agreement, as the case
a) What do the contracting parties recognize? may be;
(1) the desirability of increasing freedom of trade by the
development of closer integration between the (2) [subparagraph b]with respect to a free-trade area, or
economies of the countries parties to such agreements an interim agreement leading to the formation of a
How? through voluntary agreements, free-trade area?
(2) that the purpose of a customs union or of a free-trade area the duties and other regulations of commerce
should be to facilitate trade between the constituent - maintained in each of the constituent territories and
territories - applicable at the formation of such free-trade area or
not to raise barriers to the trade of other contracting parties the adoption of such interim agreement to the trade of
with such territories contracting parties
not included in such area or
2. Paragraph 5: not parties to such agreement
a) What shall these provisions NOT prevent? shall not be higher or more restrictive than
(1) the formation of a customs union or of a free-trade area - the corresponding duties and
or - other regulations of commerce
(2) the adoption of an interim agreement necessary for the existing in the same constituent territories
formation of a customs union or of a free-trade area; prior to the formation of the
- free-trade area, or
b) As between? - interim agreement as the case may be; and
(1) as between the territories of contracting parties,
(3) [subparagraph c]any interim agreement referred to
c) What are the conditions/provisos in subparagraphs (a) and (b)?
(1) [subparagraph a]with respect to a customs union, or shall include a plan and schedule
an interim agreement leading to a formation of a for the formation of such a customs union or of such a free-
customs union? trade area
the duties and other regulations of commerce within a reasonable length of time.
- imposed at the institution of any such union or
interim agreement 3. Paragraph 6:
- in respect of trade with contracting parties not parties a) What shall apply if, in fulfilling the requirements of
to such union or agreement subparagraph 5 (a), a contracting party proposes to
shall not increase any rate of duty inconsistently with the
- on the whole provisions of Article II?
be higher or more restrictive than The procedure set forth in Article XXVIII shall apply.
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(a) The CONTRACTING PARTIES shall make
b) What shall be considered in providing for compensatory recommendations to the parties to the agreement.
adjustment? (b) The parties shall not maintain or put into force, as the
Due account shall be taken of the compensation already case may be, such agreement if they are not
afforded by the reduction prepared to modify it in accordance with these
- brought about in the corresponding duty of the other recommendations.
constituents of the union.
d) What must be done if there is any substantial change in
4. Paragraph 7: the plan or schedule referred to in paragraph 5 (c)?
a) [subparagraph a] What is obligation of any contracting (1) It shall be communicated to the CONTRACTING
party deciding to enter into a customs union or free-trade PARTIES.
area, or an interim agreement leading to the formation of (2) What may they do? They may request the contracting
such a union or area? parties concerned to consult with them
(1) Promptly notify the CONTRACTING PARTIES and (a) What instance? If the change seems likely to
(2) Make available to them such information regarding jeopardize or delay unduly the formation of the
the proposed union or area customs union or of the free-trade area
(a) For what? As will enable the contracting parties to
make such reports and recommendations to 5. Paragraph 8: For the purposes of this Agreement:
contracting parties as they may deem appropriate. a) [subparagraph a] What is customs union understood to
mean?
b) [subparagraph b] What must CONTRACTING PARTIES (1) the substitution of a single customs territory for two or
do with respect to an interim agreement? more customs territories,
(1) Study plan and schedule included in an interim (2) For what purposes?
agreement referred to in paragraph 5 (a) [subparagraph a(1)] so that duties and other
(a) How? restrictive regulations of commerce are eliminated
i) in consultation with the parties to that agreement i) With respect to what?
and (1) with respect to substantially all the trade
ii) taking due account of the information made between the constituent territories of the
available in accordance with the provisions of union or
subparagraph (a) (2) at least with respect to substantially all the
trade in products originating in such
c) After that, what happens if the CONTRACTING territories
PARTIES find ii) Any exceptions?
(1) that such agreement is not likely to result in the (1) except, where necessary, those permitted
formation of a customs union or of a free-trade area under Articles XI, XII, XIII, XIV, XV and
within the period contemplated by the parties to the XX are eliminated, and,
agreement or (b) [subparagraph a(2)] so that substantially the same
(2) that such period is not a reasonable one? duties and other regulations of commerce are applied
6. Paragraph 9:
a) The preferences referred to in paragraph 2 of Article I 2
(i) shall not be affected by the formation of a customs union
or of a free-trade area
(ii) but may be eliminated or adjusted by means of
negotiations with contracting parties affected.*
(b) This procedure of negotiations with affected contracting
parties shall, in particular, apply to the elimination of
preferences
(i) required to conform with the provisions of paragraph 8
(a)(i) and paragraph 8 (b).
2 2. The provisions of paragraph 1 of this Article shall not require the elimination of any preferences in respect of import duties or charges which do not exceed the levels provided
for in paragraph 4 of this Article and which fall within the following descriptions:
(a) Preferences in force exclusively between two or more of the territories listed in Annex A, subject to the conditions set forth therein;
(b) Preferences in force exclusively between two or more territories which on July 1, 1939, were connected by common sovereignty or relations of protection or suzerainty and
which are listed in Annexes B, C and D, subject to the conditions set forth therein;
(c) Preferences in force exclusively between the United States of America and the Republic of Cuba;
(d) Preferences in force exclusively between neighbouring countries listed in Annexes E and F.
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IV. Convinced also of the need to reinforce the effectiveness of the role of the
B. Understanding on the Interpretation of Article XXIV of the Council for Trade in Goods in reviewing agreements notified under
General Agreement on Tariffs and Trade 1994 Article XXIV, by
A. clarifying the criteria and procedures for the assessment of new or
Preliminary Considerations enlarged agreements, and
I. Having regard to the provisions of Article XXIV of GATT 1994; B. improving the transparency of all Article XXIV agreements;
3in Article XXVIII, as elaborated in the guidelines adopted on 10 November 1980 (BISD 27S/26-28) and in the Understanding on the Interpretation of Article XXVIII of
GATT 1994,
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3. In regard to interim agreements, what may the working party make in 1. When may the provisions of Articles XXII and XXIII of GATT 1994 as
its report? elaborated and applied by the Dispute Settlement Understanding be
1. appropriate recommendations invoked?
1. on the proposed time-frame and 1. With respect to any matters arising from the application of those
2. on measures required to complete the formation of the provisions of Article XXIV
customs union or free-trade area. 1. relating to customs unions, free-trade areas or interim
2. if necessary, provide for further review of the agreement agreements leading to the formation of a customs union or
4. What must be done with respect to substantial changes in the plan free-trade area
and schedule?
1. Members parties to an interim agreement shall notify substantial 6. Article XXIV:12
changes in the plan and schedule included in that agreement to 1. What are the duties of Each Member?
the Council for Trade in Goods and, 1. fully responsible under GATT 1994 for the observance of all
2. if so requested, the Council shall examine the changes. provisions of GATT 1994, and
5. What if an interim agreement notified under paragraph 7(a) of 2. shall take such reasonable measures as may be available to it to
Article XXIV does not include a plan and schedule, contrary to ensure such observance by regional and local governments and
paragraph 5(c) of Article XXIV? authorities within its territory
1. The working party shall in its report recommend such a plan and 2. When may the provisions of Articles XXII and XXIII of GATT 1994 as
schedule. elaborated and applied by the Dispute Settlement Understanding be
2. The parties shall not maintain or put into force, as the case may invoked?
be, such agreement if they are not prepared to modify it in 1. In respect of measures affecting its observance taken by
accordance with these recommendations. regional or local governments or authorities within the territory
3. Provision shall be made for subsequent review of the of a Member.
implementation of the recommendations. 3. What must be done when the Dispute Settlement Body has ruled that
6. What are the reportorial requirements? a provision of GATT 1994 has not been observed?
1. Customs unions and constituents of free-trade areas shall report 1. The responsible Member shall take such reasonable measures
periodically to the Council for Trade in Goods, as may be available to it to ensure its observance.
2. Report on what? 4. When do the provisions relating to compensation and suspension of
1. on the operation of the relevant agreement concessions or other obligations apply?
2. Any significant changes and/or developments in the 1. In cases where it has not been possible to secure such
agreements, as they occur observance
3. What is the basis of this requirement? 5. What does each Member undertake to do?
1. As envisaged by the CONTRACTING PARTIES to GATT 1. accord sympathetic consideration to and
1947 2. afford adequate opportunity for consultation regarding
2. in their instruction to the GATT 1947 Council concerning 1. any representations made by another Member
reports on regional agreements (BISD 18S/38) 2. concerning measures affecting the operation of GATT 1994
3. taken within the territory of the former
5. Dispute Settlement
F. GATS Article V
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in accordance with the level of development of the
Article V countries concerned,
Economic Integration - both overall and in individual sectors and subsectors.
1. This Agreement shall not prevent any of its Members from
(1) being a party to or (b) Notwithstanding paragraph 6,
(2) entering into in the case of an agreement of the type referred to in paragraph 1
an agreement liberalizing trade in services involving only developing countries,
between or among the parties to such an agreement, more favourable treatment may be granted to
provided that such an agreement: juridical persons owned or controlled by natural persons
(a) has substantial sectoral coverage, and of the parties to such an agreement.
(b) provides for the absence or elimination of substantially all
discrimination, 4. Any agreement referred to in paragraph 1
in the sense of Article XVII, shall be designed to facilitate trade between the parties to the
between or among the parties, agreement and
in the sectors covered under subparagraph (a), shall NOT
through: - in respect of any Member outside the agreement
(i) elimination of existing discriminatory raise the overall level of barriers to trade in services
measures, and/or within the respective sectors or subsectors
(ii) p r o h i b i t i o n o f n e w o r m o r e compared to the level applicable
discriminatory measures, prior to such an agreement.
either
- at the entry into force of that agreement or 5. If,
- on the basis of a reasonable time-frame, - in the conclusion,
except for measures permitted under Articles XI, XII, XIV and XIV enlargement or any significant modification of any agreement under
bis. paragraph 1,
- a Member intends to withdraw or modify a specific commitment
2. In evaluating whether the conditions under paragraph 1(b) are met, - inconsistently with the terms and conditions set out in its Schedule,
consideration may be given it shall provide at least 90 days advance notice of such
to the relationship of the agreement modification or withdrawal and
to a wider process of economic integration or trade liberalization the procedure set forth in paragraphs 2, 3 and 4 of Article XXI shall
among the countries concerned. apply.
3.
(a) Where developing countries are parties to an agreement 6. A service supplier of any other Member
of the type referred to in paragraph 1, that is a juridical person
- flexibility shall be provided for regarding the conditions constituted under the laws of a party to
set out in paragraph 1, an agreement referred to in paragraph 1
- particularly with reference to subparagraph (b) thereof, - shall be entitled to treatment granted under such agreement,
Page !15 of !47
provided that it engages in substantive business operations from such agreement.
in the territory of the parties to such agreement.
7.
(a) Members which are parties to any agreement referred to in paragraph
1
shall promptly notify
- any such agreement and any enlargement or
- any significant modification of that agreement
to the Council for Trade in Services.
Following negotiations within the framework of the Multilateral Trade (d) Special treatment on the least developed among the developing
Negotiations, the CONTRACTING PARTIES decide as follows: countries
1. Notwithstanding the provisions of Article I of the General Agreement, - in the context of any general or specific measures
contracting parties may accord - in favour of developing countries.
differential and more favourable treatment to developing
countries4 , 3. Any differential and more favourable treatment provided under this
without according such treatment to other contracting parties. clause:
(a) shall be designed
2. The provisions of paragraph 1 apply to the following5: to facilitate and promote the trade of developing countries and
(a) Preferential tariff treatment not to
- accorded by developed contracting parties (a) raise barriers to or
- to products originating in developing countries (b) create undue difficulties for
- in accordance with the Generalized System of Preferences6, - the trade of any other contracting parties;
(b) Differential and more favourable treatment (b) shall not constitute an impediment to
- with respect to the provisions of the General Agreement (1) the reduction or elimination of tariffs and
- concerning non-tariff measures (2) other restrictions to trade on a most-favoured-nation basis;
- governed by the provisions of instruments
- multilaterally negotiated (c) in the case of such treatment accorded by developed contracting
- under the auspices of the GATT; parties to developing countries
shall be
(c) Regional or global arrangements entered into (a) designed and,
- amongst less-developed contracting parties (b) if necessary, modified,
for the mutual reduction or elimination of tariffs and, - to respond positively to the development, financial and trade
for the mutual reduction or elimination of non-tariff needs of developing countries.
measures,
4 The words "developing countries" as used in this text are to be understood to refer also to developing territories.
5 It would remain open for the CONTRACTING PARTIES to consider on an ad hoc basis under the GATT provisions for joint action any proposals for differential and more
favourable treatment not falling within the scope of this paragraph.
6 Asdescribed in the Decision of the CONTRACTING PARTIES of 25 June 1971, relating to the establishment of "generalized, non-reciprocal and non discriminatory preferences
beneficial to the developing countries" (BISD 18S/24).
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4. Any contracting party - the particular development, financial and trade needs of the least-developed
- taking action to introduce an arrangement pursuant to paragraphs 1, 2 countries,
and 3 above or the developed countries shall exercise the utmost restraint
- subsequently taking action to introduce modification or withdrawal in seeking any concessions or contributions for commitments made by them
of the differential and more favourable treatment so provided to reduce or remove tariffs and other barriers to the trade of such countries,
- shall:7
(a) and the least-developed countries shall not be expected
- notify the CONTRACTING PARTIES and to make concessions or contributions
- furnish them with all the information they may deem appropriate that are inconsistent with the recognition of their particular situation and
relating to such action; problems.
(b) afford adequate opportunity for prompt consultations
- at the request of any interested contracting party 7.
- with respect to any difficulty or matter that may arise. - The concessions and contributions made and
- the obligations assumed
The CONTRACTING PARTIES shall, by developed and less-developed contracting parties
if requested to do so by such contracting party, under the provisions of the General Agreement
consult with all contracting parties concerned with respect to the matter should promote the basic objectives of the Agreement,
with a view to reaching solutions satisfactory to all such contracting parties. including those embodied in the Preamble and in Article XXXVI.
5. The developed countries Less-developed contracting parties expect that their capacity to
- do not expect reciprocity - make contributions or negotiated concessions or
- for commitments made by them - take other mutually agreed action
- in trade negotiations to reduce or remove tariffs and other barriers under the provisions and procedures of the General Agreement
- to the trade of developing countries, would improve with
i.e., the developed countries do not expect the developing countries, - the progressive development of their economies and
- in the course of trade negotiations, - improvement in their trade situation and
to make contributions which are inconsistent with their individual they would accordingly expect to participate more fully
development, financial and trade needs. in the framework of rights and obligations
- Developed contracting parties shall therefore not seek, under the General Agreement.
- neither shall less-developed contracting parties be required to make,
concessions that are inconsistent with the latter's development, financial 8. Particular account shall be taken
and trade needs. of the serious difficulty
of the least-developed countries
6. Having regard to in making concessions and contributions
- the special economic difficulties and in view of
7 Nothing in these provisions shall affect the rights of contracting parties under the General Agreement.
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- their special economic situation and
- their development, financial and trade needs.
5. To PROMOTE FIFTH, that the Association represents the collective will of the nations of
1. regional peace and stability through South-East Asia to
abiding respect for justice and the rule of law in the relationship - bind themselves together in friendship and cooperation and,
among countries of the region and - through joint efforts and sacrifices, secure for their peoples and for
adherence to the principles of the United Nations Charter; posterity the blessings of peace, freedom and prosperity.
2. active collaboration and mutual assistance on matters of common
interest DONE in Bangkok on the Eighth Day of August in the Year One Thousand
in the economic, social, cultural, technical, scientific and Nine Hundred and Sixty-Seven.
administrative fields;
3. South-East Asian studies
THIRD, that to carry out these aims and purposes, the following machinery
shall be established:
(a) Annual Meeting of Foreign Ministers,
which shall be by rotation and referred to as ASEAN Ministerial
Meeting. Special Meetings of Foreign Ministers may be convened as
required.
4. Foreign Exchange Restrictions 3. Exclusions at the HS 8/9 digit level for specific products are permitted for
1. measures taken by Member States those Member States, which are temporarily not ready to include such
2. in the form of products in the CEPT Scheme.
1. restrictions and
2. other administrative procedures in foreign exchange For specific products,
3. which have the effect of restricting trade - which are sensitive to a Member State,
- pursuant to Article 1 (3) of the Framework Agreement on
5. Preferential Trading Arrangements Enhancing ASEAN Economic Cooperation,
1. stipulated a Member State may exclude products from the CEPT Scheme,
(c) For products with existing tariff rates of 20% or below as at 1 January 3. The provisions of Articles 4(C)(1) and 4(C)(2) of the Agreement
1993, shall not apply to the list of products of Member States
Member States shall contained in Annexes 1 and 2 of the Protocol
- decide upon a programme of tariff reductions, and on the Special Arrangement for Sensitive and Highly Sensitive
- announce at the start, the schedule of tariff reductions. Products.
Two or more Member States may enter into
arrangements for tariff reduction to 0%-5% on specific products The tariff reduction schedule for these products
at an accelerated pace to be announced at the start of the programme. shall be governed by Article III of the Protocol
[The above schedules of tariff reduction on the Special Arrangement for Sensitive and Highly Sensitive Products.
shall not prevent Member States from
- immediately reducing their tariffs from 0%-5% or Article V Other Provisions
- following an accelerated schedule of tariff reduction]
A. Quantitative Restrictions and Non-Tariff Barriers
B. Enjoyment of Concessions
2. Subject to Articles 4 (1) (b) and 4 (1) (c) of this Agreement, products 1. Member States shall eliminate all quantitative restrictions
which reach, or are at tariff rates of 20% or below, shall automatically - in respect of products
enjoy the concessions. - under the CEPT Scheme
- upon enjoyment of the concessions
3. The above schedules of tariff reduction shall not prevent Member States - applicable to those products.
from
- immediately reducing their tariffs to 0%-5% or 2. Member States shall eliminate other non-tariff barriers
- following an accelerated schedule of tariff reduction. - on a gradual basis
- within a period of five years
[2003 AMENDMENT!] - after the enjoyment of concessions
C. Elimination of Import Duties - applicable to those products.
1. Import duties on products in the Inclusion Lists
D. Maintenance of Concessions 3. Where emergency measures are taken pursuant to this Article,
Member States shall not nullify or impair - immediate notice of such action shall be given to the Council referred
- any of the concessions as agreed upon through the application of methods to in Article 7 of this Agreement, and
of customs valuation, - such action may be the subject of consultation as provided for in
- any new charges or measures restricting trade, Article 8 of this Agreement.
except in cases provided for in this Agreement.
Article VII Institutional Arrangements
Article VI Emergency Measures
1. The ASEAN Economic Ministers (AEM) shall,
1. If, for the purposes of this Agreement,
as a result of the implementation of this Agreement, establish a ministerial-level Council comprising
import of a particular product eligible under the CEPT Scheme is - one nominee from each Member State and
increasing - the Secretary- General of the ASEAN Secretariat.
Page !27 of !47
The ASEAN Secretariat shall provide the support to the ministerial- which consider that any other Member State
level Council for has not carried out its obligations under this Agreement,
- supervising, coordinating and reviewing the implementation of resulting in the nullifications or impairment
this Agreement, and of any benefit accruing to them,
- assisting the AEM in all matters relating thereto. may,
with a view to achieving satisfactory adjustment of the matter,
In the performance of its functions, make representations or proposal
the ministerial-level Council shall also be supported to the other Member States concerned,
by the Senior Economic Officials Meeting (SEOM). which shall give due consideration
to the representations or proposal made to it.
2. Member States which enter into bilateral arrangements on tariff
reductions 3. Any differences between the Member States
pursuant to Article 4 of this Agreement concerning the interpretation or application o f this Agreement shall,
shall notify all other Member States and the ASEAN Secretariat as far as possible,
of such arrangements. be settled amicably between the parties.
3. The ASEAN Secretariat shall monitor and report to the SEOM If such differences cannot be settled amicably,
on the implementation of the Agreement it shall be submitted
pursuant to the Article III (2) (8) of the Agreement - to the Council referred to in Article 7 of this Agreement, and
on the Establishment of the ASEAN Secretariat. - if necessary, to the AEM.
Member States shall cooperate with the ASEAN Secretariat Article IX General Exceptions
in the performance of its duties.
Nothing in this Agreement shall prevent any Member State
Article VIII Consultations from taking action and adopting
measures,
1. Member States shall accord adequate opportunity for consultations which it considers necessary for
regarding any representations made by other Member States - the protection of its national security,
with respect to any matter affecting the implementation of this - the protection of public morals,
Agreement. - the protection of human, animal or plant life and health, and
- the protection of articles of artistic, historic and archaeological value.
The Council referred to in Article 7 of this Agreement,
may seek guidance from the AEM Article IX-A Accession of New Members
in respect of any matter for which it has not been possible
to find a satisfactory solution during previous consultations. New Members of ASEAN shall accede to this Agreement
on terms and conditions,
2. Member States,
Page !28 of !47
- which are consistent with the Framework Agreement on Enhancing
ASEAN Economic Cooperation (1992) and the Agreement, and
- which have been agreed between them and the existing Members of
ASEAN.
This Protocol
- shall enter into force upon the deposit of instruments of ratification or
acceptance
- by all signatory governments with the Secretary-General of ASEAN
- which shall be done not later than 1 January 1996.
- shall be deposited with the Secretary-General of ASEAN,
- who shall promptly furnish a certified copy thereof to each Member
Country.
UNITED by a common desire and collective will to live in a region of lasting The Purposes of ASEAN are:
peace, security and stability, sustained economic growth, shared prosperity
and social progress, and to promote our vital interests, ideals and aspirations; 1. To
maintain and enhance peace, security and stability and
RESPECTING the fundamental importance of amity and cooperation, and the further strengthen peace-oriented values in the region;
principles of sovereignty, equality, territorial integrity, non-interference,
consensus and unity in diversity; 2. To enhance regional resilience
Page !30 of !47
- by promoting greater political, security, economic and socio-cultural
cooperation; 9. To promote sustainable development so as to ensure
- the protection of the regions environment,
3. To preserve Southeast Asia - the sustainability of its natural resources,
- as a Nuclear Weapon-Free Zone and - the preservation of its cultural heritage and the high quality of life of its
- free of all other weapons of mass destruction; peoples;
4. To ensure that the peoples and Member States of ASEAN live 10. To develop human resources
- in peace with the world at large through closer cooperation
- in a just, democratic and harmonious environment; - in education and life-long learning, and
- in science and technology,
5. To create a single market and production base for the empowerment of the peoples of ASEAN and
- which is stable, prosperous, highly competitive and economically for the strengthening of the ASEAN Community;
integrated
- with effective facilitation for trade and investment 11. To enhance the well-being and livelihood of the peoples of ASEAN
- in which there is by providing them with equitable access to opportunities
free flow of goods, services and investment; for human development, social welfare and justice;
facilitated movement of business persons, professionals, talents and
labour; and 12. To strengthen cooperation
freer flow of capital; in building a safe, secure and drug-free environment
for the peoples of ASEAN;
6. To alleviate poverty and narrow the development gap within ASEAN
through mutual assistance and cooperation; 13. To promote a people-oriented ASEAN
in which all sectors of society are encouraged
7. To to participate in, and benefit from,
- strengthen democracy, the process of ASEAN integration and community building;
- enhance good governance and the rule of law, and to
- promote and protect human rights and fundamental freedoms, 14. To promote an ASEAN identity
with due regard to the rights and responsibilities of the Member States of through the fostering of greater awareness
ASEAN; of the diverse culture and heritage of the region; and
8. To respond effectively, 15. To maintain the centrality and proactive role of ASEAN
in accordance with the principle of comprehensive security, as the primary driving force in its relations and cooperation
to all forms of with its external partners in a regional architecture
- threats, that is open, transparent and inclusive.
- transnational crimes and
- transboundary challenges;
Page !31 of !47
ARTICLE 2 PRINCIPLES (i) respect for fundamental freedoms, the promotion and protection of
human rights, and the promotion of social justice;
1. In pursuit of the Purposes stated in Article 1,
ASEAN and its Member States (j) upholding the United Nations Charter and international law, including
reaffirm and adhere to the fundamental principles international humanitarian law, subscribed to by ASEAN Member States;
contained in the
- declarations, (k) abstention from participation in any policy or activity, including the
- agreements, use of its territory, pursued by any ASEAN Member State or non-ASEAN
- conventions, State or any non-State actor, which threatens the sovereignty, territorial
- concords, integrity or political and economic stability of ASEAN Member States;
- treaties and
- other instruments of ASEAN. (l) respect for the different cultures, languages and religions of the peoples
of ASEAN, while emphasising their common values in the spirit of unity
in diversity;
2. ASEAN and its Member States shall act in accordance with the following
Principles:
(m) the centrality of ASEAN in external political, economic, social and
(a) respect for the independence, sovereignty, equality, territorial integrity
cultural relations while remaining actively engaged, outward-looking,
and national identity of all ASEAN Member States;
inclusive and non-discriminatory; and
(b) shared commitment and collective responsibility in enhancing regional
(n) adherence to multilateral trade rules and ASEANs rules-based
peace, security and prosperity;
regimes for effective implementation of economic commitments and
progressive reduction towards elimination of all barriers to regional
(c) renunciation of aggression and of the threat or use of force or other economic integration, in a market-driven economy.
actions in any manner inconsistent with international law;
CHAPTER II LEGAL PERSONALITY
(d) reliance on peaceful settlement of disputes;
ARTICLE 3 LEGAL PERSONALITY OF ASEAN
(e) non-interference in the internal affairs of ASEAN Member States; ASEAN, as an inter-governmental organisation, is hereby conferred legal
personality.
(f) respect for the right of every Member State to lead its national existence
free from external interference, subversion and coercion; CHAPTER III MEMBERSHIP
(g) enhanced consultations on matters seriously affecting the common ARTICLE 4 MEMBER STATES
interest of ASEAN;
The Member States of ASEAN are
(h) adherence to the rule of law, good governance, the principles of - Brunei Darussalam,
democracy and constitutional government;
- the Kingdom of Cambodia,
- the Republic of Indonesia,
Page !32 of !47
- the Lao Peoples Democratic Republic, CHAPTER IV ORGANS
- Malaysia, ARTICLE 7 ASEAN SUMMIT
- the Union of Myanmar,
- the Republic of the Philippines, 1. The ASEAN Summit shall comprise the Heads of State or Government
- the Republic of Singapore, of the Member States.
- the Kingdom of Thailand and
- the Socialist Republic of Viet Nam. 2. The ASEAN Summit shall:
(a) be the supreme policy-making body of ASEAN;
ARTICLE 5 RIGHTS AND OBLIGATIONS
1. Member States shall have equal rights and obligations under this (b) deliberate, provide policy guidance and take decisions on
Charter. key issues pertaining to the realisation of the objectives of ASEAN,
important matters of interest to Member States and
2. Member States shall take all necessary measures, all issues referred to it by
including the enactment of appropriate domestic legislation, - the ASEAN Coordinating Council,
to effectively implement the provisions of this Charter and - the ASEAN Community Councils and
to comply with all obligations of membership. - ASEAN Sectoral Ministerial Bodies;
3. In the case of a serious breach of the Charter or noncompliance, (c) instruct the relevant Ministers in each of the Councils concerned to
the matter shall be referred to Article 20. hold ad hoc inter-Ministerial meetings, and
address important issues concerning ASEAN that cut across the
ARTICLE 6 ADMISSION OF NEW MEMBERS Community Councils.
1. The procedure for application and admission to ASEAN shall be Rules of procedure for such meetings
prescribed by the ASEAN Coordinating Council. shall be adopted by the ASEAN Coordinating Council;
2. Admission shall be based on the following criteria: (d) address emergency situations affecting ASEAN by taking appropriate
(a) location in the recognised geographical region of Southeast Asia; actions;
(b) recognition by all ASEAN Member States;
(c) agreement to be bound and to abide by the Charter; and (e) decide on matters referred to it under Chapters VII and VIII;
(d) ability and willingness to carry out the obligations of Membership.
(f) authorise the establishment and the dissolution of Sectoral
3. Admission shall be decided by consensus by the ASEAN Summit, Ministerial Bodies and other ASEAN institutions; and
upon the recommendation of the ASEAN Coordinating Council.
(g) appoint the Secretary-General of ASEAN,
4. An applicant State shall be admitted to ASEAN with the rank and status of Minister,
upon signing an Instrument of Accession to the Charter. who will serve
1. The Secretary-General of ASEAN shall be 3. The Secretary-General shall also be the Chief Administrative Officer of
- appointed by the ASEAN Summit for a non-renewable term of office of ASEAN.
five years,
- selected from among nationals of the ASEAN Member States based on 4. The Secretary-General shall be assisted by four Deputy Secretaries-
alphabetical rotation, General with the rank and status of Deputy Ministers. The Deputy
with due consideration to Secretaries-General shall be accountable to the Secretary-General in
- integrity, carrying out their functions.
- capability and professional experience, and
- gender equality. 5. The four Deputy Secretaries-General
shall be of different nationalities from the Secretary-General and
2. The Secretary-General shall: shall come from four different ASEAN Member States.
(a) carry out the duties and responsibilities of this high office in
accordance with the provisions of this Charter and relevant ASEAN 6. The four Deputy Secretaries-General shall comprise:
instruments, protocols and established practices; (a) two Deputy Secretaries-General
- who will serve a non-renewable term of three years,
(b) - selected from among nationals of the ASEAN Member States based
- facilitate and monitor progress in the implementation of ASEAN on alphabetical rotation,
agreements and decisions, and - with due consideration to integrity, qualifications, competence,
- submit an annual report on the work of ASEAN to the ASEAN experience and gender equality; and
Summit; (b) two Deputy Secretaries-General
- who will serve a term of three years,
(c) participate in meetings of - which may be renewed for another three years.
- the ASEAN Summit, - These two Deputy Secretaries-General shall be openly recruited based
- the ASEAN Community Councils, on merit.
- the ASEAN Coordinating Council, and
- ASEAN Sectoral Ministerial Bodies and 7. The ASEAN Secretariat shall comprise
- other relevant ASEAN meetings; the Secretary-General and
Page !35 of !47
such staff as may be required. (d) coordinate and support the national preparations of ASEAN meetings;
(e) promote ASEAN identity and awareness at the national level; and
8. The Secretary-General and the staff shall: (f) contribute to ASEAN community building.
(a) uphold the highest standards of integrity, efficiency, and competence
in the performance of their duties; ARTICLE 14 ASEAN HUMAN RIGHTS BODY
(b) not seek or receive instructions from any government or external 1. In conformity with the purposes and principles of the ASEAN Charter
party outside of ASEAN; and relating to the promotion and protection of human rights and
(c) refrain from any action which might reflect on their position as fundamental freedoms, ASEAN shall establish an ASEAN human rights
ASEAN Secretariat officials responsible only to ASEAN. body.
2. This ASEAN human rights body shall operate in accordance with the
9. Each ASEAN Member State undertakes terms of reference to be determined by the ASEAN Foreign Ministers
- to respect the exclusively ASEAN character of the responsibilities of Meeting.
the Secretary-General and the staff, and
- not to seek to influence them in the discharge of their responsibilities. ARTICLE 15 ASEAN FOUNDATION
1. The ASEAN Foundation shall
ARTICLE 12 COMMITTEE OF PERMANENT REPRESENTATIVES - support the Secretary-General of ASEAN and
TO ASEAN collaborate with the relevant ASEAN bodies
1. Each ASEAN Member State shall appoint a Permanent Representative to - to support ASEAN community building
ASEAN with the rank of Ambassador based in Jakarta. - by promoting
greater awareness of the ASEAN identity,
2. The Permanent Representatives collectively constitute a Committee of people-to-people interaction, and
Permanent Representatives, which shall: (a) support the work of the close collaboration among the business sector, civil society,
ASEAN Community Councils and ASEAN Sectoral Ministerial Bodies; academia and other stakeholders in ASEAN.
(b) coordinate with ASEAN National Secretariats and other ASEAN
Sectoral Ministerial Bodies; (c) liaise with the Secretary-General of 2. The ASEAN Foundation shall be accountable to the Secretary-General of
ASEAN and the ASEAN Secretariat on all subjects relevant to its work; ASEAN,
(d) facilitate ASEAN cooperation with external partners; and (e) perform - who shall submit its report to the ASEAN Summit through the
such other functions as may be determined by the ASEAN Coordinating ASEAN Coordinating Council.
Council.
CHAPTER V ENTITIES ASSOCIATED WITH ASEAN
ARTICLE 13 ASEAN NATIONAL SECRETARIATS
Each ASEAN Member State shall establish an ASEAN National Secretariat
ARTICLE 16 ENTITIES ASSOCIATED WITH ASEAN
which shall:
1. ASEAN may engage with entities which support the ASEAN Charter, in
particular its purposes and principles. These associated entities are listed
(a) serve as the national focal point; in Annex 2.
(b) be the repository of information on all ASEAN matters at the national 2. Rules of procedure and criteria for engagement shall be prescribed by the
level; Committee of Permanent Representatives upon the recommendation of
(c) coordinate the implementation of ASEAN decisions at the national level; the Secretary-General of ASEAN.
Page !36 of !47
3. Annex 2 may be updated by the Secretary-General of ASEAN upon the CHAPTER VII DECISION-MAKING
recommendation of the Committee of Permanent Representatives without
recourse to the provision on Amendments under this Charter. ARTICLE 20 CONSULTATION AND CONSENSUS
1. As a basic principle, decision-making in ASEAN shall be based on
CHAPTER VI IMMUNITIES AND PRIVILEGES consultation and consensus.
2. Where consensus cannot be achieved, the ASEAN Summit may decide
ARTICLE 17 IMMUNITIES AND PRIVILEGES OF ASEAN how a specific decision can be made.
1. ASEAN shall enjoy in the territories of the Member States such 3. Nothing in paragraphs 1 and 2 of this Article shall affect the modes of
immunities and privileges as are necessary for the fulfilment of its decision-making as contained in the relevant ASEAN legal instruments.
purposes. 4. In the case of a serious breach of the Charter or noncompliance, the
2. The immunities and privileges shall be laid down in separate agreements matter shall be referred to the ASEAN Summit for decision.
between ASEAN and the host Member State.
ARTICLE 21 IMPLEMENTATION AND PROCEDURE
ARTICLE 18 IMMUNITIES AND PRIVILEGES OF THE 1. Each ASEAN Community Council shall prescribe its own rules of
SECRETARY-GENERAL OF ASEAN AND STAFF OF procedure.
THE ASEAN SECRETARIAT 2. In the implementation of economic commitments, a formula for flexible
participation, including the ASEAN Minus X formula, may be applied
1. The Secretary-General of ASEAN and staff of the ASEAN Secretariat where there is a consensus to do so.
participating in official ASEAN activities or representing ASEAN in the
Member States shall enjoy such immunities and privileges as are CHAPTER VIII SETTLEMENT OF DISPUTES
necessary for the independent exercise of their functions.
2. The immunities and privileges under this Article shall be laid down in a ARTICLE 22 GENERAL PRINCIPLES
separate ASEAN agreement. 1. Member States shall endeavour to resolve peacefully all disputes in a
timely manner through dialogue, consultation and negotiation.
ARTICLE 19 IMMUNITIES AND PRIVILEGES OF THE 2. ASEAN shall maintain and establish dispute settlement mechanisms in all
PERMANENT REPRESENTATIVES AND OFFICIALS fields of ASEAN cooperation.
ON ASEAN DUTIES
ARTICLE 23 GOOD OFFICES, CONCILIATION AND MEDIATION
1. The Permanent Representatives of the Member States to ASEAN and 1. Member States which are parties to a dispute may at any time agree to
officials of the Member States participating in official ASEAN activities resort to good offices, conciliation or mediation in order to resolve the
or representing ASEAN in the Member States shall enjoy such dispute within an agreed time limit.
immunities and privileges as are necessary for the exercise of their 2. Parties to the dispute may request the Chairman of ASEAN or the
functions. Secretary-General of ASEAN, acting in an ex-officio capacity, to provide
2. The immunities and privileges of the Permanent Representatives and good offices, conciliation or mediation.
officials on ASEAN duties shall be governed by the 1961 Vienna
Convention on Diplomatic Relations or in accordance with the national
ARTICLE 24 DISPUTE SETTLEMENT MECHANISMS IN
law of the ASEAN Member State concerned.
SPECIFIC INSTRUMENTS
ARTICLE 27 COMPLIANCE
iii. Remove all NTBs 16. Trade facilitation. Simple, harmonised and standardised trade and
- by 2010 for ASEAN-5, customs, processes, procedures and related information flows are
- by 2012 for the Philippines, and expected to reduce transaction costs in ASEAN which will
- by 2015 with flexibilities to 2018 for CLMV, - enhance export competitiveness and
in accordance with the agreed Work Programme on Non- Tariff Barriers - facilitate the integration of ASEAN into
(NTBs) elimination; a single market for goods, services and investments and
a single production base.
iv. Enhance transparency of Non-Tariff Measures (NTMs); and
Actions:
v. Work towards where possible having regional rules and regulations i. Assess trade facilitation conditions in ASEAN;
consistent with International best practices. ii. Develop and implement a comprehensive trade facilitation work
programme which aims at simplifying, harmonising and standardising
15. Rules of Origin (ROO): Putting in place ROO which are responsive to trade and customs, processes, procedures and related information flows;
the dynamic changes in global production processes so as to: iii. Promote transparency and visibility of all actions and interventions by
- facilitate trade and investment among ASEAN Member Countries; all stakeholders within international trade transactions;
- promote a regional production network; iv. Establish a regional trade facilitation cooperation mechanism;
- encourage development of SMEs and the narrowing of development gaps; v. Establish ASEAN Trade Facilitation Repository;
and vi. Develop national level measures to support and ensure effective
- promote the increased usage of the AFTA CEPT Scheme. implementation of regional level initiatives; and
vii. Develop a comprehensive capacity building programmes to ensure
smooth implementation of the work programme.
Page !41 of !47
- information exchange where possible;
17. Customs Integration. In light of the acceleration of AEC, the realisation
of ASEAN Customs Vision 2020 is brought forward to 2015. In v. Implement ASEAN e-Customs; and
particular, the 2005-2010 Strategic Plan of Customs Development aims vi. Promote mutual assistance for better customs efficiency and
to: effectiveness.
(a) integrate customs structures;
(b) modernise tariff classification, customs valuation and origin 18. ASEAN Single Window.
determination and establish ASEAN e-Customs; -
(c) smoothen customs clearance; The implementation of measures of simplifying, harmonising and
(d) strengthen human resources development; standardising trade and customs, processes, procedures and
(e) promote partnership with relevant international organisations; the application of ICT in all areas related to trade facilitation
(f) narrow the development gaps in customs; and - would be paramount in the ultimate creation of an ASEAN Single
(g) adopt risk management techniques and audit-based control (PCA) for Window.
trade facilitation. - The ASEAN Single Window is an environment where ten National Single
Windows of individual Member Countries operate and integrate.
Actions:
i. Modernise customs techniques, - National Single Window enables
- guided by simple and harmonised customs procedures and formalities a single submission of data and information,
- in line with international standards and best practices a single and synchronous processing of data and information and
- through the implementation of regional models of processing of cargoes a single decision-making for customs clearance of cargo, which
and shipments (ASEAN Cargo Clearance and ASEAN Customs - expedites the customs clearance,
Declaration Document in 2007); - reduce transaction time and costs, and
- thus enhance trade efficiency and competitiveness.
ii. Establish ASEAN Customs Transit system to facilitate movement of
goods and means of transport; Actions:
i. ASEAN-6 (Brunei Darussalam, Indonesia, Malaysia, Philippines,
iii. Establish ASEAN Customs systems dealing with special customs regimes Singapore and Thailand) shall operationalise their National Single
such as Windows by 2008 at the latest;
- Temporary Admission, ii. ASEAN-4 (Cambodia, Lao PDR, Myanmar and Viet Nam) shall
- Outward Processing and operationalise their National Single Windows no later than 2012; and
- Inward Processing iii.
with the view to facilitate integration of production and supply chains; - Standardisation of data elements based on WCO data model, the WCO data
set and United Nation Trade Data Elements Directory (UNTDED) and
iv. Adopt international standards and practices to secure - acceleration of introduction of information, communication and technology
- a uniform system of tariff classification, (ICT) for digitalised processing and exchange.
- a synchronised system of value assessment for customs purposes and
- a harmonised system of origin determination, and 19. Standards and Technical Barriers to Trade.
Actions:
i. Harmonise standards, technical regulations and conformity assessment
procedures through their alignment with international practices, where
applicable; 8
(iv) Promote the principles of good governance, transparency, and II. CHARACTERISTICS AND ELEMENTS OF ASEAN ECONOMIC
responsive regulatory regimes COMMUNITY BLUEPRINT 2025
- through active engagement with the
private sector, A. A Highly integrated and cohesive Economy
community-based organisations, and
other stakeholders of ASEAN; 7. The main objective of this characteristic is
- to facilitate the seamless movement of goods, services, investment, capital,
(v) Widen ASEAN people-to-people, institutional, and infrastructure and skilled labour within ASEAN
connectivity in order to enhance ASEANs trade and production networks, as well as
through ASEAN and sub-regional cooperation projects - to establish a more unified market for its firms and consumers.
that facilitate movement of capital as well as skilled labour and
talents; 8. The key elements of a highly integrated and cohesive ASEAN economy
include:
(vi) Create a more dynamic and resilient ASEAN,
- capable of responding and adjusting to emerging challenges A.1. Trade in Goods
- through robust national and regional mechanisms that address 9. The implementation of AEC Blueprint 2015 measures relating to tariff
food and energy security issues, elimination in accordance with the ASEAN Trade in Goods Agreement
(ATIGA) and trade facilitation have contributed to greater free ow of
natural disasters, goods. In AEC 2025, ASEAN will continue to reduce or eliminate border
economic shocks, and and behind-the-border regulatory barriers that impede trade, so as to
other emerging trade-related issues as well as achieve competitive, ef cient, and seamless movement of goods within
global mega trends; the region.