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Open Regionalism and Deeper Integration: The Implementation of ASEAN Investment Area (AIA) and ASEAN Free Trade Area (AFTA)
Part 16
In maritime transport: passenger services, freight services and maintenance and repair of vessels, there are fewer limitations on market access and national treatment in this sector compared to the others. Brunei has no limitation at all on market access; Singapore has limitations on market access only on the presence of natural persons; Thailand has restrictions involving freight traffic between Thailand and Vietnam as well as Thailand and China that may be not fully participated in by third countries.
As regards the air transport sector, Indonesia and Singapore have no specific schedule of commitments in air transport, and the others made commitments but subject to limitations on market access. On leasing of aircraft, Brunei and Malaysia allow commercial presence only through a representative office while the Philippines allows lease contracts subject to approval by its air transport authority (the Civil Aviation Board). The Philippines has no limitations on commercial presence in case of maintenance and repair of aircraft, while Thailand's measures with regards to commercial presence are unbound. In the case of general sales and cargo sales, distribution through CRS is allowed by Thailand only for airline offices and one general sales agent office. In addition, such providers must use the Thai public telecommunication network.
Finally, as regards MFN exemptions (see Table 3), ASEAN countries have extensive MFN exemptions under GATS. These exemptions include limitations on foreign equity participation and the entry of semi-skilled or unskilled workers. All ASEAN countries have MFN exemptions in their financial and transport sectors. Brunei, Malaysia, the Philippines, and Singapore have MFN exemptions covering all sectors. Also Brunei and Singapore have exemptions in legal services. Singapore has exemptions in broadcasting, computer reservation systems, reinsurance and retrocession, Malaysia has an exemption in advertising, and Thailand has exemptions in business services, and computer reservation systems. Most of these sectoral MFN exemptions are the result of broad national policies (e.g. limitations on equity participation of foreign investors) or the result of bilateral agreements involving reciprocal favourable treatment that are allowed under the GATS (Art. II. 2)
(117). For instance, Thailand has restrictions involving freight traffic as mentioned above, based on bilateral agreements made between Thailand and Vietnam, and Thailand and China.From this review, ASEAN countries need to consider, under GATS-Plus, to improve the coverage of service sectors to be liberalised, both horizontal and specific sectoral service commitments and mode of service supply as well as to refrain from MFN exemptions in such service sectors. Since Art. V of GATS permits preferential treatment among members of a regional economic integration agreement, provided that such arrangements have substantial sector coverage and eliminate substantially all discrimination among the members, AFAS cannot be implemented on a piecemeal or selective basis. Therefore, ASEAN countries need to liberalise service sectors on a broad base of both horizontal commitments and specific sectors.
Preferential Treatments Extended to ASEAN Countries under GATS-Plus
Packages
ASEAN countries' offers under GATS-Plus scheme (see detailed offers in Table 6) are an improvement on their commitments under GATS in some or all of the seven sectors and sub-sectors involving modes of supply, market access and national treatment. The service sectors in which individual ASEAN countries offer preferences over GATS are summarised in Table 7
Air Transport Business Services Construction Financial Services Marine Transport Telecommunications Tourism Source: Compiled by the author from ASEAN countries schedules under GATS-Plus as at September 1998.
It needs to be made clear here that offers made by each individual ASEAN country summarised in Table 6 and 7 are the GATS-Plus commitments. So if an individual ASEAN country did not make further offers in a particular sector here it does not mean that the country did not commit in such sector at all, but rather that it may already have made offers in such sector under GATS quite extensively (see Table 1-5). On the other hand, where ASEAN countries made offers under GATS-Plus it does not mean offers have not been made at all under GATS, but rather that the additional offers were made in more sub-sectors of that sector under GATS-Plus.
Laos and Vietnam
(118), who are non-WTO members, made offers in all sectors because they did not commit under GATS before. Malaysia did not make further offers in financial sectors other than those made under GATS, because after the 1997 crisis Malaysia has been cautiously overseeing its financial sector. Scholars(119)also widely accepted that before liberalising the financial sector there should be a strengthening of the legal infrastructure, and of supervision and prudential measure, and this increasing scrutiny may entail a slow-down in liberalisation or deregulation for a time. In some cases, like the financial sector, it is possible that activities that have never been regulated will become regulated because of greater attention to prudential concerns. The restructuring of the financial sector in Asia after the crisis shows that adequate prudential measures, supervision and legal framework should be established before further liberalisation._______________________________________________________________
(117)WTO reported that "MFN exemptions have been claimed by most current and prospective WTO Members. Roughly 350 measures are involved, mainly bilateral or plurilateral agreements without a fixed termination date". See World Trade Organization, 1999: 193.
(118)Vietnam did not commit to liberalise its telecommunication sector in this schedule because the country has modest telecommunication infrastructure and it needs to develop this service sector before welcoming foreign service providers.
(119)See, for example, Raghavan, Chakravarthi, (1997) "Financial Liberalisation" Third World Resurgence. No. 86, October. Also UNCTAD's Secretary-General, Rubens Ricupero has advised the countries of the South to retain a degree of flexibility on measures to control movements of capital until a satisfactory international agreement is reached on this issue. He further suggested that "you need to take into your level of development, the financial institutions of each country, the current state of domestic supervisory capabilities, the current state of your financial system as a whole". The situation varies from country to country, and it is difficult to generalise. But I hope each country will make its decisions in the light of their own situations, and this will be seen as a valuable contribution to the liberalisation of the financial services sector.' (TWR, No. 86, October, 1997).