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Open Regionalism and Deeper Integration: The Implementation of ASEAN Investment Area (AIA) and ASEAN Free Trade Area (AFTA)

Part 22

Moreover, individual ASEAN countries are unilaterally liberalising service trade and services FDI. In particular, the measures implemented(137) by individual ASEAN countries after the crisis have dramatically opened the ASEAN services market to foreigners(138) . Despite the Asian crisis, the inflow of services FDI into ASEAN in 1998, in the aftermath of the crisis, was surprisingly impressive(139) . The increased FDI flows to the region were directed mainly to the services sector notably banking, insurance and telecommunications (UNCTAD (Overview), 1998a: 17-18).

Dispute Settlement under AFAS

Regarding dispute settlement, the Protocol on Dispute Settlement Mechanism for ASEAN is generally referred to and applied with respect to any disputes between member countries concerning the interpretation or application of the agreement. A specific dispute settlement mechanism may be further established. However, there is no mechanism for settling disputes between private sectors under AFAS. Compared to the NAFTA, which provides the mechanism for settling disputes between private sectors, and between private sectors and government, ASEAN does not concern itself with this issue, and leaves it open for future circumstances without referring to any further solution either relying on domestic court or arbitration or other procedures(140) . This appears to be a problematic issue in practice since private sectors and business are the main engines propelling the implementation of AFAS and indeed, disputes between them may inevitably occur in business life. So a mechanism for amicably settling such disputes is necessary.

The Institutions specified for carrying out functions to facilitate the operation of this Framework Agreement(141) is the Senior Economic Officials Meeting (SEOM), and the ASEAN Secretariat will assist SEOM in providing support for supervising, co-ordinating and reviewing the implementation of the Agreement. In practice, the ASEAN Council for Trade in service may be necessary. For instance, the Council may help promote the harmonisation of rules and regulations in the region, enhance the co-operation in service trade among ASEAN countries, facilitate the process of mutual recognition in ASEAN as well as scrutinise practices of the Members.

ASEAN Framework Agreement on Intellectual Property


The objectives of the ASEAN Framework Agreement on Intellectual Property Co-operation are to strengthen ASEAN co-operation in the field of intellectual property through an open and outward looking attitude. The co-operation extends to the private sectors and professional bodies of ASEAN. Member countries of ASEAN agreed to explore the possibility to set up an ASEAN patent and trademark system, as well as an ASEAN patent and trademark office if feasible. This aims at creating ASEAN standards and practices in the development of their intellectual property regimes to be consistent with international standards, and to enhance the promotion of technological innovation and the transfer and dissemination of technology in the region(142) . ASEAN agreed to implement intra-ASEAN intellectual property arrangements in a manner in line with the objectives, principles, and norms set out in the Agreement on TRIPS and the relevant conventions. ASEAN countries shall abide by the principle of mutual benefits in the implementation of measures or initiatives aimed at enhancing ASEAN intellectual property co-operation.

The scope of co-operation includes the field of copyright and related rights, patents, trademarks, industrial designs, geographical indications, undisclosed information and layout designs of integrated circuits. To implement the objectives of this agreement, ASEAN countries agreed to enhance intellectual property protection and enforcement, by networking of judicial authorities and intellectual property enforcement agencies, and to strengthen cross-border measures of co-operation as well as intellectual property administration. They will explore the possibility of creating an ASEAN database for intellectual property registration, and automation to improve the administration of intellectual property. Moreover, they intend to strengthen intellectual property legislation by making a comparative study of the procedures, practices and administration of ASEAN intellectual property offices. They will exchange IP personnel and experts, network IP training facilities or centres of excellence on IP, establish a regional training institute for IP, and establish the ASEAN Intellectual Property Association membership of which will be open to all specialists in the IP field. ASEAN will provide arbitration services or other alternative dispute settlement mechanisms for the resolution of IP disputes and exchange information on IP.

The ASEAN mechanism on IP comprises representatives from member countries, with support from the Secretariat. This forum is to review the co-operative activities under the agreement by meeting on a regular basis and submitting its findings and recommendations to the ASEAN Senior Economic Officials Meeting (SEOM). Any disputes arising from differences concerning interpretation or application of the agreement are to be settled amicably between the parties. If such differences cannot be settled amicably, they shall be dealt with by the SEOM and finally by the ASEAN Economic Ministers Meeting(143) . However, the Agreement did not provide for any dispute settlement mechanism for the resolution of disputes arising between private sector entities or between private sector entities and the government.

Part 23


(137) The restructuring of certain service industries in the countries affected by the crisis is providing opportunities for foreign investors, and the liberalisation of policy in respect of M&A makes the entry of foreign investors through the acquisition of assets easier than before. In addition, a factor conducive to increasing FDI in the most affected ASEAN countries is the improvement in their international cost competitiveness due to depreciation in ASEAN countries. This seems the crisis was turn to be positive for the long-term development of ASEAN countries to adjust and streamline their legal infrastructure, institutional framework, prudential measures, adequate supervision and effective policy implemented in the region. This includes the well planned liberalisation in trade and investment. See UNCTAD, 1999: 52-58. Also see UNCTAD Press Release TAD/INF/2779, 2 November 1998.

(138) See UNCTAD (1999) World Investment Report 1999: Foreign Direct Investment and the Challenge of Development. pp. 52-58.

(139) See UNCTAD (1998) World Investment Report 1998: Trends and Determinants, chapter VII stated that despite the crisis, foreign investment remained positive and continued to add to the existing investment stock. Net inflows are estimated to have increased from US$ 77 billion in 1996 to US$ 80 billion in 1997. And especially inflows of service investment to Thailand even increased ten times from the 1997. (UNCTAD, 1998: 197-242)

(140) Even though AFAS Art. VII (2) provided that "2. A specific dispute settlement mechanism may be established for the purpose of this Framework Agreement which form an integral part of this Framework Agreement". This provision does not refer to private sectors directly. It is probably due to the fact that AFAS is a regional framework agreement and thus ASEAN countries may leave private issue to the national level. Alternatively, they may regard that Art. VII (2) is valid for further establishing a specific mechanism for settlement of private dispute.

(141) This includes the organization of the conduct of negotiations provided under this Agreement.

(142) Art. I: Objectives of the ASEAN Framework Agreement on Intellectual Property Cooperation.

(143) Art. 5: Consultations of the ASEAN Framework Agreement on Intellectual Property Co-operation.