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Open Regionalism and Deeper Integration: The Implementation of ASEAN Investment Area (AIA) and ASEAN Free Trade Area (AFTA)
Art. V encourages ASEAN countries to enter into agreements or arrangements to recognise education or experiences obtained, requirements met, or licenses or certifications granted in another ASEAN country, the country of residence of the service providers. Thus the conditions made by all ASEAN countries regarding qualifications or requirements of service providers would be mutually recognised for their qualifications, provided that such qualifications meet the requirements of the receiving country (substantive standard). Mutual recognition among ASEAN countries may be accorded autonomously or based upon an agreement or arrangement with the member countries concerned. However, this provision is not mandatory as Art. V stated that:
"Nothing in paragraph 1 shall be so construed as to require any Member State to accept or to enter into such mutual recognition agreement or arrangement".
From a legal point of view, this is a weak point of the AFAS, as mutual recognition is not made a mandatory requirement. Nevertheless, ASEAN countries tend to concertedly adopt the principle of mutual recognition and some ASEAN countries such as Singapore, Brunei and Malaysia have already extensively recognised each other's national qualifications. This is probably because of their proximity in culture, education, legal systems, religion and general social standards. These developments were validated under Art. VII GATS.
A key issue of mutual recognition in service provision is whether to recognise that the "standard" or "qualifications" of service providers and services provided complies with the substantive standards and the procedural requirements of each individual country which has adopted the principle of mutual recognition. The host or importing country may wish to retain its own substantive standard, but maybe willing to accept certification by the exporting country that an item/service provider complies with that standard. Alternatively, countries may be willing to agree a common standard, e.g. for a professional qualification, but may wish to retain certification in their own hands so that they can assure that the certification granted really reaches their standard requirements compliance, or the agreed common standard. For instance, according to Thai regulations, a medical doctor can carry out surgery only if he/she has passed certain procedural requirements tests and may be granted a certificate for surgery even though he/she may hold a medical degree from somewhere else. Also, a lawyer can practice in court and provide legal services only if he/she reaches a substantive standard. This has a series of requirements: having a law degree, passing a bar exam, being in legal practice for two years and being granted a certificate from the Thai Lawyers Society, be aged above 25 years, being of sound background, prudence and of good behaviour (these qualifications will be scrutinised by the Committee), not being physically handicapped, and having Thai nationality. Those not able to comply with all these requirements may apply for a license from the Thai Lawyers Society as international lawyers who can provide legal services in business but cannot practice in court. Therefore, if Thailand adopted and was bound by a MRA, medical doctors or lawyers who hold their degree from their home country may be accepted by Thailand, but they may nevertheless need to satisfy procedural requirements such as passing a test to obtain a surgery certificate or passing a bar exam to obtain the certificate for practising in court.
Another key issue is whether MR is subject to MFN treatment or not. For example, if Thailand entered into a MRA with Singapore, the question is whether the commitment under such agreement will extend to other ASEAN countries automatically on a MFN basis, or even might extend to other WTO Members. On this issue, Art. V AFAS has narrowed down the applicability of such agreements so that they bind only ASEAN Members. Art. V reads:
"These agreements or arrangements are concluded for Member State only. In the event a Member State wishes to join such agreements or arrangements, it should be given equal opportunity to do at any time".
Therefore, MRAs concluded between ASEAN countries will not automatically be extended to other WTO Members, or to other ASEAN countries that did not enter into such MRA. Art. V AFAS, like Art. VII GATS, allows Members to treat service providers of other Members differently depending on the type of qualifications granted in their country of origin. However, it does not allow Members to discriminate in the application of their substantive standards or criteria for authorisation, licensing or certification of service suppliers. In other words, there is a distinction between allowing services suppliers of certain Members to have access to the market through a fast track on the basis of a recognition arrangements on the one hand, and applying different substantive requirements to service suppliers on the other hand: an individual who can meet the substantive standards should be allowed to qualify whatever his country of origin
(131). Since MR is either unilateral (autonomous) or based on country-by-country agreements, a MRA will not automatically extend to all WTO or ASEAN Members on a MFN basis. However, members who are parties to recognition agreements are required under Art. VII GATS to afford adequate opportunity for other interested Members to negotiate their accession to such agreements or to negotiate comparable ones with them. If recognition is granted on an autonomous basis, the Member concerned must give adequate opportunity for any other Member to demonstrate that qualifications acquired in its territory should be recognised
The further issue to be considered is whether the ASEAN limitation restricting parties to the MRA is valid since, Art. VII GATS bound WTO Members to grant adequate opportunity to negotiate MRA on similar terms. Also, Member States need to notify the Council for Trade in Services of their existing recognition measures and to state whether such measures are based on agreements or granted autonomously. However, Art. IV of GATS allows WTO Members to implement regional integration and grant preferences among the member countries of such agreements, and may be considered to apply also to MRAs that give preferential recognition to member countries of the regional agreement. As mentioned above, GATS allows states to treat services providers of other Members differently depending on the level of qualifications granted in their country of origin. Therefore, states are likely to prefer to negotiate MRAs with countries that may already have levels of qualification equivalent to their own qualification. It should be noted that GATS is based on a bottom-up or positive list approach that, in principle, allows a certain level of discretion for the recipient country to commit itself in market access. Since Art. V permits WTO Members to enter into regional agreements for preferential treatment among some other Members for trade in services, thus to implement such regional integration, preferences such as MR limited to member countries of the regional agreement should be accepted as valid.
(131)See GATS: Recognition, WTO web site: http://www.wto.org/eol/e/wto06/wto6_19.htm.
(132)See GATS: Recognition, WTO web site: http://www.wto.org/eol/e/wto06/wto6_19.htm.