Regional economic integration in East Asia: Prospect and jurisprudence

Journal of International Economic Law

Volumn 6, Issue 1, 2003, Pages 49-77

  Choi, Won Mog ^a,b  

^a Ewha Womans University   (South Korea)

^b WTO Law Center   (South Korea)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0037230395     PISSN: 13693034     EISSN: None     Source Type: Journal    
DOI: 10.1093/jiel/6.1.49     Document Type: Review

References (133)

1. See below n 10 and accompanying text.
2. I b i d.
3. One of the rare discussions of the legal dimension of regionalism is: Robert E. Hudec and James D. Southwick, 'Regionalism and WTO Rules: Problems in the Fine Art of Discriminating Fairly', in Miguel Rodriguez Mendoza et al., Trade Rules in the Making (Washington, DC: Brookings Institution Press 1999). The author frequently relied upon this article in regard to legal analysis on GATT Article XXIV and GATS Article V.
4. Boasting a combined market of 1.7 billion people, GDF of USS2 trillion and total trade of USS 1.23 trillion.
5. See Derek Loh, 'Japan-Singapore Economic Partnership Agreement: Underpinning of an East Asian Trade Bloc?', Journal of World Investment 535 (June 2002), at 554 (fn 47).
6. Statement by Long Yong-tu, Chief Representative for Trade Negotiatons, MOFTEC, at the 14th General Meeting of the Pacific Economic Cooperation Council in November 2001. Ibid, at 555 (fn 52).
7. Statement by Long Yong-tu, Chief Representative for Trade Negotiatons, MOFTEC, at the 14th General Meeting of the Pacific Economic Cooperation Council in November 2001. Ibid, at 555 (fn 52).
8. It is expected that in the short-term, the emphasis of the CFTA would be on regional co-operation in developing tourism, harnessing human resources and promoting co-operation in information technology. Then, elimination of tariff and non-tariff barriers and liberalization in services trade would follow. Political significance of CFTA to China lies in the fact that eventual inclusion of Taiwanese economy would substantially reduce the risk of Taiwan breaking away from the mainland. Ibid.
9. It is expected that in the short-term, the emphasis of the CFTA would be on regional co-operation in developing tourism, harnessing human resources and promoting co-operation in information technology. Then, elimination of tariff and non-tariff barriers and liberalization in services trade would follow. Political significance of CFTA to China lies in the fact that eventual inclusion of Taiwanese economy would substantially reduce the risk of Taiwan breaking away from the mainland. Ibid.
10. The official title is the 'Agreement between Singapore and Japan for a New-Age Economic Partnership (JSEPA)'.
11. According to various media reports, the JSEPA allows Japan to keep tariffs on 2,000 agricultural products, i.e. 2,000 lines attracting tariffs were not included in its Schedule by Japan. Products from other sectors such as polyethylene, polypropylene, and polystyrene have also been excluded from the agreement. See Loh, above n 5, at 538 (fn 10).
12. For the comprehensive explanation of this change, see Hitoshi Tanaka, 'Can Japan Find a Breakthrough? - Free Trade Agreements as Tools for Foreign Policies', Chuo-koron (Japan, November 2000).
13. I b i d.
14. Above n 5, at 346.
15. I b i d.
16. In 2001, an ASEAN-Japan FTA feasibility study was agreed; Koizumi and Goh both suggest that the JSEPA could be used to forge an FTA with the whole of ASEAN: TM Goh, Koizumi Call for Japan-ASEAN Pact', The Straits Times (10 January 2002).
17. In 2001, an ASEAN-Japan FTA feasibility study was agreed; Koizumi and Goh both suggest that the JSEPA could be used to forge an FTA with the whole of ASEAN: 'PM Goh, Koizumi Call for Japan-ASEAN Pact', The Straits Times (10 January 2002).
18. Other considerations were involved such as a similar approach to trade liberalization and Chile's willingness and location as a hub in Latin America.
19. The key point of the disagreement was the scope of concession in the agricultural sector - specifically, the scope of the category of 'exceptional products' which would enjoy special treatment of tariff elimination beyond a ten-year period. It is known that some agricultural products such as rice, apples, and pears were ultimately excluded from the coverage of the FTA for the benefit of Korea, while some manufactured goods such as refrigerators and laundry machines were also excluded for the benefit of Chile.
20. Chile's major agricultural exports are confined to several items of fruits including grapes, apples, and pears.
21. A game against foreign partners as well as against domestic interest sectors.
22. An FTA among Singapore, New Zealand, and Chile.
23. Adding Australia and the United States to P3.
24. A precondition of this scenario would be that pragmatic leadership supported by realist economist group takes power in the North Korean regime.
25. 'Sunshine policy' is a policy driven by South Korea, aiming to promote friendly relations with North Korea and to open up the North Korean economy.
26. Regarding the legislative background of GATT Article XXIV, see e.g. John H. Jackson, World Trade and the Law of GATT, (Indianapolis: The Bobbs-Merrill Company, Inc. 1969) 376-77.
27. This latter feature makes the free trade area technique better suited to the needs of integration among countries undergoing different degrees of development.
28. Paragraph 2 of the Understanding.
29. Paragraph 2 of the Understanding.
30. Paragraph 2 of the Understanding.
31. It should be noted that this provision is a result of codification of a sub-committee report at the Havana Conference. Original text of the GATT (Geneva Draft Charter) used the words 'the average level' instead of the words 'the general incidence'. Recommending this phrase to be replaced by 'general incidence of the duties' at the Havana Conference, the Sub-Committee opined that it should 'not require a mathematical average of customs duties but should permit greater flexibility so that the volume of trade may be taken into account' (Havana Reports, p 51, para 24). WTO Secretariat, GATT Analytical Index: Guide to GATT Law and Practice, (updated 6th edn, Geneva: WTO 1995) 803.
32. It should be noted that this provision is a result of codification of a sub-committee report at the Havana Conference. Original text of the GATT (Geneva Draft Charter) used the words 'the average level' instead of the words 'the general incidence'. Recommending this phrase to be replaced by 'general incidence of the duties' at the Havana Conference, the Sub-Committee opined that it should 'not require a mathematical average of customs duties but should permit greater flexibility so that the volume of trade may be taken into account' (Havana Reports, p 51, para 24). WTO Secretariat, GATT Analytical Index: Guide to GATT Law and Practice, (updated 6th edn, Geneva: WTO 1995) 803.
33. See ibid.
34. Sungjoon Cho, 'Breaking the Barrier Between Regionalism and Multilateralism: A New Perspective on Trade Regionalism', Harv Int'l LJ (Summer 2001), at 444.
35. Opposing this logic, critics might indicate that another way to achieve the 'balancing' could be the balancing between the constituent parties in the same sector and that paragraphs 4 and 5 presuppose only that way of balancing.
36. It seems that the Appellate Body agrees to this interpretation of the word 'overall'. See WTO Appel-late Body Report, Turkey - Restrictions on Imports of Textile and Clothing Products, WT/DS34/AB/R, adopted 22 October 1999, para 55.
37. Indeed, this is why the words 'on the whole' are absent in Article XXIV.5(b).
38. GATT Article XXIV.5(b).
39. Therefore, parties forming an FTA must not raise applied rates of duty in respect of any product sector (tariff-line) and to the trade of any individual third country.
40. GATT Article XXIV.5.
41. Hudec and Southwick, above n 3, at 57-58.
42. I b i d.
43. For example, various methodologies are adopted such as change in tariff classification, substantial transformation, regional value content, manufacturing process in the region, etc.
44. Above n 3, at 59.
45. Thus, this standard allows balancing or offsetting between more restrictive rules in one sector and less stringent rules elsewhere.
46. Above n 3, at 60.
47. Since FTAs do not maintain the common external tariff system (differently from CUs), nonmembers have an incentive to import their products into a member's territory maintaining the lowest tariffs and then to transport them into other members' territories. In order to prevent this circumvention, FTAs have to maintain stricter rules of origin than CUs do.
48. Some discipline including transparency and procedural requirement of rules of origin is already made under the Agreement on Rules of Origin. See Agreement on Rules of Origin, Annex 2.
49. GATS Article V.4 (emphasis added). It is interesting that this language is a sort of combination between the 'overall assessment . . . on the whole' for CUs in GATT Article XXIV:5(a), and the 'corresponding' for FTAs in Article XXIV: 5 (b).
50. GATS negotiators considered the adoption of the least restrictive regime standard in any of the members in the event that the regional agreement included common measures. But this concept was eventually dropped in drafting the final text of Article V. See Terence P. Stewart (ed), The GATT Uruguay Round: A Negotiating History (1986-1992), (Vol 2, Annex 1, Boston: Kluwer Law and Taxation 1993).
51. 'With respect to a customs union, or an interim agreement leading to the formation of a customs union, the duties . . . shall not . . . be higher . . .' GATT Article XXTV.5(a) and (b).
52. GATS Article V.I (internal requirement) contains the language 'either at the entry into force of that agreement or on the basis of a reasonable time-frame'. Such language is absent in GATS Article V.4 (external requirement). This means that the external requirement should be met by any type of integration including interim agreements, whereas the internal requirement is not imposed to the interim agreements for a reasonable period.
53. Above n 3, at 53.
54. John H. Jackson et al., Legal Problems of International Economic Relations, (3rd edn, St. Faul, MN: West Publishing Co. 1995) 481.
55. Above n 3, at 51.
56. I b i d.
57. I b i d.
58. See above n 51.
59. GATT, 6th Supp. BISD 70, 99 (1958).
60. Jackson et al., above n 50, at 475.
61. Raj Bhala, International Trade Law: Theory and Practice, (2nd edn, Lexis Publishing 2001) 625.
62. I b i d.
63. The Preamble of the Understanding recognizes that 'an RTA's contribution to the expansion of world trade is increased if the elimination between constituent territories of duties and other restrictive regulation of commerce extends to all trade, and diminished if any major sector of trade is excluded'. (Emphasis added)
64. GATS Article V.1 (b).
65. GATS fn 1.
66. I b i d.
67. There was a debate on whether NAFTA's exclusion of aviation and maritime services made the Agreement inconsistent with the substantial sectoral coverage rule. See 'Examination of the North American Free Trade Agreement' (Note on the Meeting of 24 February 1997), WT/REG4/M/4 (16 April 1997).
68. GATS Article V.1 (b).
69. Above n 3, at 66.
70. I b i d.
71. 'In order to safeguard its financial position . . . , a contracting party . . . may . . . control the general level of its imports by restricting the quantity or value of merchandise permitted to be imported . . .' GATT Article XVIII.B.
72. Above n 3, at 67.
73. Ibid. 'It is entirely possible that the drafters of Article XVIII.B simply overlooked amending the Article XXIV.8 exemptions list to include Article XVIII.' Ibid.
74. Ibid. 'It is entirely possible that the drafters of Article XVIII.B simply overlooked amending the Article XXIV.8 exemptions list to include Article XVIII.' Ibid.
75. Ibid. 'It is entirely possible that the drafters of Article XVIII.B simply overlooked amending the Article XXIV.8 exemptions list to include Article XVIII.' Ibid.
76. See paragraph 1 and preamble of UR Declaration on Trade Measures Taken for Balance-of-Payments Purposes.
77. See a note from the GATT Secretariat, MTN.GNG/NG7/W/13/add.1, p 3.
78. The restrictions on imports may need to be more severe or to last longer to make up for the fact that imports from other RTA parties will continue to flow in, and producers in the other RTA parties may gain a share in the market at the expense of non-parties restricted by the safeguard. Above n 3, at 68.
79. See Article 2.2 of the Agreement on Safeguard ('irrespective of its source').
80. Footnote 1 of the Agreement on Safeguard.
81. See WTO Panel Report, Argentina - Safeguard Measures on Imports of Footwear, WT/DS121/R, paras 8.93-8.102.
82. I b i d.
83. I b i d.
84. See GATT Article XXIV.8(a)(i).
85. The case in which 'other restrictive regulations of commerce are eliminated with respect to substantially all the trade between the constituent territories of the union' under Article XXIV.8(a)(i).
86. The case in which 'other restrictive regulations of commerce are eliminated with respect to substantially all the trade in products originating in such territories' under Article XXTV.8(a)(i).
87. See GATT Article XXIV.8(b).
88. When it comes to FTAs (rather than CUs), transfer imports tend to occur more frequently because of absence of common external tariffs. Thus, the necessity of taking safeguards against transfer imports becomes larger among FTA parties.
89. Similarly to fn 1 of Safeguard Agreement, Article 4.3 of ADA and 16.4 of ASCM avoid the answer.
90. AD and CVD measures are applied only to those countries that are sources of dumping or subsidy.
91. Compare with above n 72.
92. Above n 3, at 71.
93. According to Article 14 of ADA, the authorities of a third country may request an antidumping action. If RTA parties eliminate antidumping actions for each other, such a right to a non-party toward a party would be lost.
94. 88 Above n 3, at 71.
95. Since GATS does not have safeguard or AD/CVD mechanism, the issue whether or not safeguard or AD/CVD measures are subject to the substantiality rule does not arise under the GATS.
96. GATT Article XXIV.8 does not mention 'interim agreements' as opposed to Article XXIV.5. From this omission, one can understand that the internal requirement is not imposed to the interim agreement for a reasonable period, i.e. until it becomes an RTA. This understanding is explicitly stated in case of GATS. See GATS Article V.1: ' . . . (internal requirements should be met) . . . either at the entry into force of that agreement or on the basis of a reasonable time-frame.'
97. Agricultural trade between the two countries has been minimal. Agriculture, forestry, and fishery products constituted a mere 1.7% of total bilateral trade between Japan and Singapore in 1999. Above n 5, at 538 (fn 11).
98. In general, the time is up to 10 years in case of interim agreements leading to RTAs in goods. See the Understanding, para 3.
99. See GATT Article XXI(b)(ii).
100. Similarly to GATT, GATS presupposes a kind of interim agreement leading to RTAs in services. See above n 92 and GATS Article V.7(b) (' . . . agreement . . . which is implemented on the basis of a time-frame').
101. GATT Article XXIV.7 & GATS Article V.7(a).
102. GATT Article XXIV.7 & GATS Article V.7(a).
103. The Understanding, para 7.
104. GATS Article V.7(a).
105. The Understanding, para 7, & GATS Article V.7(c).
106. Subject to the 'further review' procedure, such recommendations are given with regard to 'the proposed time-frame and on measures required to complete RTAs'. GATT Article XXIV.7(b) and the Understanding, para 8.
107. I b i d.
108. GATS Article V.7(c).
109. GATT Article XXIV.7(c), the Understanding, paras 9 and 11, GATS Article V.7(a).
110. GATT Article XXIV.7(c), the Understanding, paras 9 and 11, GATS Article V.7(a).
111. The Understanding, para 11.
112. GATS Article V.7(b).
113. GATS Article V.7(a).
114. All that is mandated under the GATT is that a working party submits 'a report' including 'its findings' (whatever it is) and makes some recommendations. See the Understanding, paras 7, 8 and 10.
115. They might argue that the location of Article XXIV in GATT bears out this point: GATT Article XXIV is located in Part III, separated from Articles XXII and XXIII in Part II.
116. See also paragraph 14 of the Understanding.
117. See WT/DS34/2, para 60 (especially the Appellate Body's reference to its ruling in India - Quantitative Restrictions on Imports of Agricultural, Textile and Industrial Products, WT/DS90/AB/R).
118. See the texts of GATT Article I and GATS Article II ('any other country').
119. This argument was raised, with regard to Article XXIV.5, during the working party procedure on both the 'EFTA - Examination of Stockholm Convention' and the 'LAFTA - Examination of Montevideo Treaty'. See GATT Analytical Index, above n 28, at 798.
120. Sungjoon Cho, above n 30, at 440
121. GATT Article XXIV.5.
122. GATS Article V.1 (emphasis added).
123. In order for this exemption to occur, not only the WTO-member party but also the non-WTO member party must meet the internal as well as external requirements. See the languages of GATS Articles V.1 and V.4.
124. In such an event, focus might be given on tourism services or labour market integration. See Article V bis of GATS.
125. See Differential and More Favourable Treatment Reciprocity and Fuller Participation of Developing Countries, L/4903, November 28, 1979, GATT B.I.S.D. (26th Supp.), para 2(c) (1980).
126. In case of RTAs or interim agreements involving only developing countries, further special treatment is permitted for RTA parties: more favourable treatment may be granted to juridical persons owned or controlled by natural persons of the parties to such an agreement. See GATS Article V.3(b).
127. See GATS Article V.3 ('developing countries').
128. I b i d.
129. GATS Article V.2.
130. WTO Members may prescribe criteria or conditions of the mutual reduction or elimination of tariffs and non-tariff barriers. Above n 117, at para 2(c).
131. Parties to the MERCOSUR and the AFTA chose this option.
132. See Jagdish Bhagwati, Stream of Windows: Unsettling Reflections on Trade, Immigration and Democracy, (Cambridge, MA, & London: The MIT Press 1998) 290-92.
133. See above Section D of Chapter II.