We had two major developments affecting ASEAN at mid-week.
First, three years after its signing, the ASEAN Comprehensive Investment Agreement (ACIA) will take effect today. This was decided at the informal ASEAN Economic Ministers’ meeting in Naypyidaw, Myanmar, held this past weekend (we’ll have more on the AEM meeting in a later post).
The ACIA attempts to ensure a single market for investment, by providing national treatment for ASEAN investors and investor-state dispute resolution (including arbitration). Of note, the ACIA automatically applies to portfolio investments and automatically applies to investments.
The predecessor agreements, the agreement on the ASEAN Investment Area and the Agreement for the Promotion and Protection of Investments did not apply to portfolio investments and required the investor to invoke the agreements in writing with the local national government before making the investment. The former excluded much of the investments in ASEAN, and the latter would be like asking for a pre-nuptial agreement before getting married. In any event, the ACIA does away with both requirements.
Article 48.1 of the ACIA called for its ratification within 6 months after its signing.
The delay in the ACIA ratification was due to the delays in ratification in Thailand and Indonesia. In addition, ASEAN member states had delayed submitting their reservations from the ACIA (e.g., those sectors for which the ACIA protections do not apply), even though Article 9.2 of the ACIA calls for submitting the reservations to the ASEAN Secretariat within 6 months after its signing. In any event, the delay only affects the applicability of the ACIA to investments, not its substantive provisions.
Second, US Trade Representative Ron Kirk said yesterday that the Obama administration will seek special trade negotiating authority from the U.S. Congress. This is important because unlike in a Westminster parliamentary system, the U.S. executive branch does not have both negotiating authority and implementing authority. The U.S. Congress has control of the latter. The U.S. president thus needs so-called “trade promotion authority” (TPA, formerly known as “fast track” authority) from the Congress in order to have full authorization. Without TPA, trading partners are not assured that any deals negotiated by the U.S. president will not be later undone by the Congress.
USTR Kirk said that the Obama administration needed TPA to conclude the Trans Pacific Partnership (TPP) by the end of the year. This should reassure the other TPP negotiation parties, which include ASEAN members Brunei, Singapore, Malaysia and Vietnam, that the United States will have full authority to implement any deals concluded in the TPP talks. Whether or not TPP will actually get concluded this year depends on many other factors, but the step of asking for, and getting, TPA would be a major step forward.