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.
