WTO Members Reviews ASEAN FTA
WTO members considered five regional trade agreements (RTAs)
involving the Association of Southeast Asian Nations (ASEAN), Azerbaijan,
Georgia, Honduras, Hong Kong (China), Japan, the Republic of Korea, Moldova,
Peru and Ukraine at the meeting of the Committee on RTAs on 27 July. The new
chair of the Committee, Ambassador Mārtinš Kreitus of Latvia, presided at the meeting.
The
Committee on RTAs considered the Free Trade Agreement
between ASEAN and Japan, which entered into force for the
parties between 2008 and 2010. The parties noted that by the time this
agreement had entered into force for all parties, bilateral economic
partnership agreements (EPAs) between Japan and seven ASEAN member states had
already entered into force. The Agreement served as an important building block
for the economic integration and integrity of the region. By April 2026, ASEAN
states will have liberalized 76 to 100 per cent of tariff lines for imports from
Japan. Japan will have liberalized almost 88 per cent of its tariff lines for
imports from ASEAN.
Japan
said the Agreement applies a rule that allows for the cumulation
of rules of origin, meaning that products made up of components manufactured
among the FTA parties can qualify for preferential tariffs. Two-way trade in
value terms has expanded by 14.8 per cent in ten years since 2008 although it
was difficult to evaluate separately the effects of this agreement from the
relevant bilateral EPAs.
ASEAN
is the second-largest trade partner of Japan while Japan is the fourth-largest
trade partner of ASEAN. The parties have expanded the Agreement's initial
provisions on trade in services and investment by concluding the First Protocol
to Amend the Agreement. This will enter into force on 1 August 2020 and
includes concrete provisions in these two areas.
Members
also considered the goods aspects of the Free Trade Agreement
between ASEAN and the Republic of Korea, which entered into force
on 1 January 2010. The goods aspects of the Agreement will also be considered
in a forthcoming meeting of the Committee on Trade and Development. The trade
in services aspects of the Agreement had been considered by the Committee in
2018.
Korea
will liberalize over 76 per cent of its tariff lines for imports from ASEAN
while ASEAN members will liberalize between 85 and 100 per cent of their tariff
lines for imports from Korea. Korea noted the increase in bilateral trade
volumes, which it said will continue through the close cooperation among
parties to the Agreement. Korea added that parties are currently negotiating
market access for sensitive goods to enjoy additional benefits. Thailand, on
behalf of ASEAN, said the Agreement builds on existing WTO commitments and
provides for a progressive liberalization of trade through substantial coverage
of various sectors. Thailand noted that Korea is currently the fifth-largest
trading partner of ASEAN and its tenth largest source of foreign direct
investment.
For
the Free Trade Agreement
between Hong Kong (China) and Georgia, parties to the Agreement,
which entered into force on 13 February 2019, highlighted the benefits it has
brought to trade and investment in both parties. Georgia eliminated tariffs on
96.5 per cent of its tariff lines on imports from Hong Kong (China) while Hong
Kong (China) bound its existing zero duty tariff regime.
Hong
Kong (China) said the Agreement provides legal certainty and enhances trade and
investment flows. It further noted that the Agreement covers a comprehensive
range of services sectors and includes provisions on investor protection,
intellectual property rights, competition, environmental sustainability,
transparency and dispute settlement. Georgia said the Agreement is a positive
tool to increase attractiveness to traders and investors. It added that the
Agreement, the first instrument of Hong Kong (China) with the region, serves as
a platform for trade with markets in the European Union, the Commonwealth of
Independent States and Turkey.
Peru,
speaking on behalf of the parties to the goods and services aspects of
the Free Trade Agreement
between Peru and Honduras, said the Agreement underlines the
importance of using trade as a motor for growth, particularly in the aftermath
of the COVID-19 crisis. The Agreement entered into force on 1 January 2017.
Peru
and Honduras will liberalize around 99 per cent of their tariff lines on
imports from each other by 2031. Moreover, the liberalization of trade in
services goes beyond the parties' respective commitments under the WTO's General
Agreement on Trade in Services. Peru said the Agreement establishes a legal
framework that is predictable for all trading activities and it will open up
new opportunities for small enterprises. Bilateral trade amounted to only US$
66 million in 2019 but this figure should grow in the post-pandemic phase, Peru
added.
Members
also considered the Free Trade Agreement
between the GUAM participating states of Georgia, Ukraine,
Azerbaijan and Moldova. The Agreement eliminated tariffs on all goods among the
parties upon its entry into force on 10 December 2003. The Agreement also has a
rendezvous clause to liberalize trade in services in the future.
Georgia
said the Agreement will significantly support investment in the participating
states. The parties are working on regulating rules of origin for the
Agreement, Georgia added. Ukraine said the full implementation of the Agreement
will help parties achieve a predictable trade environment and will stimulate
development. Moldova said free trade agreements like this are an important
supplement to the multilateral trading system. Azerbaijan, a WTO observer, said
the Agreement builds on positive developments parties have already enjoyed with
individual GUAM member states under existing free trade agreements.
The
Chair of the Committee informed members that 53 RTAs have still not been
notified to the WTO. In addition, there are 27 RTAs involving WTO members only
and a further 25 involving non-members for which a factual presentation has to
be prepared, counting goods and services separately. The Chair said he had held
consultations with delegations for which the RTA factual consideration remains
delayed due to the lack of comments or data from the members involved.