Testing FTA Sustainability (27/4)
27/04/2011 - 12 Lượt xem
In 1994, the Uruguay Round Negotiation in the framework of the General Agreement on Trade and Tariffs (GATT) was successfully organized with the establishment of the World Trade Organization (WTO). WTO is the newest and most perfect multilateral trade system so far. WTO has created a new motive force that was expected to boost the development of the global trade in the coming years. However, on the contrary, WTO has showed its inefficiency to create an open and free trade environment globally. In 2001, the ambitious negotiation round of Doha was started, but have faced a lot of difficulties and gradually lost its motive force. Up to now, people have still seen a doom future for Doha Round. No countries, even the most loyal members of the multilateral trade system have patience to wait for WTO strong development because they will lose opportunities for trade expansion and economic development. This leads to establishment of FTA. Basically, FTA has created a clear boundary between the FTA members and the countries which are not FTA members. In other world, FTA is a legitimate rejection of one of the basic principle of WTO that is the principle of equality and non-discrimination. Despite different operation mechanism, WTO and FTA share the same purpose that is building an open and free trade environment. Therefore, FTA standards have been detailed in WTO regulations. A FTA matches WTO regulations only when it includes liberalization roadmaps for almost trade activities in a certain time (no later than 10 years as usual).
However, it is not completely right to say that the failure of Doha Round leads to the establishment of FTA trend. FTA had been present for a long time before the establishment of WTO. However, at that time, FTA was developing in small scale. FTA has its own principles, characteristics and motive force.
Generally, FTA member countries have two motivations:
First, political motivation is indispensable in any FTA. With the wish to foster diplomatic relations, countries often give priorities to each other in trade and economic relations. FTA has become an ideal tool to realize their wish, especially when the trend of confrontation has been gradually replaced with the trend of dialogue. In the past, FTA was signed by the countries which share the same characteristics of political regime, development level, regional features and market structure. The ASEAN Free Trade Area (AFTA), South America Common Market Group (Mercosur), European Economic Community (EEC), North American Free Trade Agreement (NAFTA), and Gulf Cooperation Council (GCC) are the typical model for the political motivation. Recently, FTA has been established based on more flexible criteria and without any exception of differences of geographical conditions and political characteristics. FTAs have attracted participation of many economies, especially newly emerging countries of China, India, Russia and Brazil, regional economic cooperation blocs such as ASEAN, GCC, Mercosur and economic giants of the EU countries, the US and Japan. Those countries want to take part in FTAs to maintain their competitiveness and influences on other countries. FTAs between China, Japan, Republic of Korea, Australia, India and ASEAN, between China and GCC, between the EU and ASEAN, the EU and Malaysia, the US and Jordan and Trans-Pacific Partnership Agreement (TPP) are the clear proofs for this wish. Generally, despite taking various forms, FTAs have been established based on political intention or a good diplomatic relationship.
Second, economic motivation plays a decisive role in FTA content and association forms. Economic motivation in FTA is a flexible concept. FTA members determine equal benefits together based on their partners’ characteristics and interrelation of development level. Normally, FTA is an agreement on reducing or lifting tax imposed on goods between two sides or among many sides such as AFTA in 1996, ASEAN-China Free Trade Area and ASEAN-Republic of Korea Free Trade Area. In a higher level, FTA may be referred to service and investment liberalization agreements and other economic agreements. When a FTA has reached a certain development level, member countries can go to build tax alliances such as EEC, Mercosur and the EU. At a higher level, there is a harmonization in domestic policies among FTA member countries. However, commitments of domestic policy harmonization can be present in any association forms and become an urgent demand such as in TPP. The diversification of association forms in FTA allows member countries to look for equal benefits for all of them.
To developing countries, the demand of expanding export market is the main motivation to jump in a FTA negotiation, especially FTAs with their important export markets and developed countries in general. In many cases, this motivation has created a domino effect. There seem to be a race among the countries which share the same export goods structure to establish FTA with their large partners such as the US, the EU, Japan and Australia because they do not want to lose its export markets. Agreements between Thailand, Malaysia and Singapore with Australia, New Zealand and the EU are obvious proofs for this trend. Some economies which critically depend on foreign trade activities and foreign investment trend to take part in FTAs to promote their position in regional associations. The most typical are Singapore and Brunei and FTAs between ASEAN countries and the countries out of the association. In some cases, FTA can be considered a tool to establish a stable import channel, especially materials and machines serving their development targets. FTA between China and ASEAN countries, Australia and GCC countries are a part of this trend.
To developed countries of Japan, the EU countries, the US, economic benefits from FTA is put under a wider point of view. Apart from commercial benefits, developed countries are interested in issues of food safety, technical standards, and even standards of the environment, security and labor quality which are not mentioned in WTO commitments. Having strength in technology and capital, developed countries want to look for investment opportunities in the fields of manufacturing and services, gradually building and diversifying value supply chains at regional and global levels. This has not engaged attention of developing countries. Through FTA, developed countries can expand their economic border far from traditional geographical border and maintain close relations with their partners. Therefore, developed countries can take part in FTA with any countries as long as they can "export" their commercial philosophy which is not mentioned in WTO regulations to other countries. Differences in opinions and benefits have created many opportunities and challenges for FTA establishment.
Through studying FTA motivation, it is obvious that FTA establishment is not a temporary phenomenon in the context that multilateral trade system of WTO has reached a deadlock. FTAs are under WTO regulations, however, they always find new development way out of traditional commercial regulations to create an open trade environment in accordance with the participants' interests. FTAs have ceaselessly changed their content, forms and legal characteristics to enhance its adaptability and meet development needs.
To Vietnam, FTA is not a new playground. The country took part in AFTA in 1996 and has so far engaged in seven regional and bilateral FTAs with different contents and in different forms. Vietnamese FTAs have had deeper integration commitments compared to those of WTO in 2007. In the coming time, Vietnam has more opportunities to deeply integrate into the world through more complicated playgrounds such as the roadmap to realizing ASEAN Economic Community by 2015, TPP negotiation, Vietnam - EU Free Trade Agreement, Vietnam - Russia Free Trade Agreement… In the context, defining real motivation in each negotiation will be the key for Vietnam to achieve success, promoting economic development./.
Source: VEN
Source: VEN
