Global marketing

Global Markets and Multinational Groups

Contents:

1. Introduction2. European Union3. Latin American Economic Corporation4. SAARC5. NAFTA6. Mercosur7. CAFTA8. ASEAN9. India’s trade with Asia10.Bibliography

Introduction: Multinational entities have played a role in international trade for several centuries. Multinational operations can be traced back several centuries to the British and Dutch trading companies. •After the above declined, the European overseas investments, mainly in the extractive industries dominated international trade. The phenomenon as it is known today is the result of the lead taken by U.S. based companies in the post World War II period. Western European and Japanese firms followed later. By 1995 the total number of multinationals exceeded 37,000 with 206,000 affiliates around the world. They are engaged in activities ranging from extractive to manufacturing and they account for a significant share of the world's output.

European Union

The European Union, or EU, describes itself as a family of democratic European countries, committed to working together for peace and prosperity. The European Union (EU) is an economic and political union of 28 member states that primarily are located in Europe. The EU operates through a system of supranational independent institutions and intergovernmental negotiated decisions by the member states. institutions of the EU include the European Commission, the Council of the European Union, the European Council, the Court of Justice of the European Union, the European Central Bank, the Court of Auditors, and the European Parliament. The European Parliament is elected every five years by EU citizens.

History

Over half a century earlier, it was the devastation caused in Europe by World War II which underlay the imperative to build international relationships to guard against any such catastrophe recurring.

French statesmen Jean Monnet and Robert Schuman are regarded as the architects of the principle that the best way to start the European bonding process was by developing economic ties.

This philosophy was the foundation for the Treaty of Paris which was signed in 1951. It established the European Coal and Steel Community (ECSC) which was joined by France, Germany, Italy, the Netherlands, Belgium and Luxembourg.

Under the Treaty of Rome which came into force in 1958, these six countries founded the European Economic Community and European Atomic Energy Community to work alongside the ECSC.

In 1967 the three communities merged to become collectively known as the European Communities (EC) whose main focus was on cooperation in economic and agricultural affairs.

Denmark, Ireland and the UK became full EC members in 1973, Greece joined in 1981, Portugal and Spain in 1986, Austria, Finland and Sweden in 1995.

Geography

The EU's member states cover an area of 4,423,147 square kilometres (1,707,787 sq mi). The EU's highest peak is Mont Blanc in the Graian Alps, 4,810.45 metres (15,782 ft) above sea level. The lowest point in the EU is Zuidplaspolder in the Netherlands, at 7 m (23 ft) below sea level. The landscape, climate, and economy of the EU are influenced by its coastline, which is 65,993 kilometres (41,006 mi) long.

Including the overseas territories of France which are located outside of the continent of Europe, but which are members of the union, the EU experiences most types of climate from Arctic (North-East Europe) to tropical (French Guyana), rendering meteorological averages for the EU as a whole meaningless. The majority of the population lives in areas with a temperate maritime climate (North-Western Europe and Central Europe), a Mediterranean climate (Southern Europe), or a warm summer continental or hemiboreal climate (Northern Balkans and Central Europe).

Politics

The EU operates within those competencies conferred on it by the treaties and according to the principle of subsidiarity (which dictates that action by the EU should only be taken where an objective cannot be sufficiently achieved by the member states alone). Laws made by the EU institutions are passed in a variety of forms. Generally speaking, they can be classified into two groups: those which come into force without the necessity for national implementation measures and those which specifically require national implementation measures.

Governance

The European Union has seven institutions: the European Parliament, the Council of the European Union, the European Commission, the European Council, the European Central Bank, the Court of Justice of the European Union and the European Court of Auditors. Competencies in scrutinizing and amending legislation are divided between the European Parliament and the Council of the European Union while executive tasks are carried out by the European Commission and in a limited capacity by the European Council (not to be confused with the aforementioned Council of the European Union). The monetary policy of the Eurozone is governed by the European Central Bank. The interpretation and the application of EU law and the treaties are ensured by the Court of Justice of the European Union. The EU budget is scrutinized by the European Court of Auditors. There are also a number of ancillary bodies which advise the EU or operate in a specific area.

Council

The Council of the European Union (also called the "Council" and sometimes referred to as the "Council of Ministers") forms the other half of the EU's legislature. It consists of a government minister from each member state and meets in different compositions depending on the policy area being addressed. Notwithstanding its different configurations, it is considered to be one single body. In addition to its legislative functions, the Council also exercises executive functions in relations to the Common Foreign and Security Policy.

Budget of the European Union

The 2011 EU budget (€141.9 bn. in total; commitment appropriations):

  Cohesion and competitiveness for growth and employment (45%)

  Citizenship, freedom, security and justice (1%)

  The EU as a global partner (6%)

  Rural development (11%)

  Direct aids and market related expenditures (31%)

  Administration (6%)

The EU had an agreed budget of €120.7 billion for the year 2007 and €864.3 billion for the period 2007–2013, representing 1.10% and 1.05% of the EU-27's GNI forecast for the respective periods. By comparison, the United Kingdom's expenditure for 2004 was estimated to be €759 billion, and France was estimated to have spent €801 billion. In 1960, the budget of the then European Economic Community was 0.03% of GDP.

In the 2010 budget of €141.5 billion, the largest single expenditure item is "cohesion & competitiveness" with around 45% of the total budget. Next comes "agriculture" with approximately 31% of the total "Rural development, environment and fisheries" takes up around 11%. "Administration" accounts for around 6%. The "EU as a global partner" and "citizenship, freedom, security and justice" bring up the rear with approximately 6% and 1% respectively.

Acts

The main legal acts of the EU come in three forms: regulations, directives, and decisions. Regulations become law in all member states the moment they come into force, without the requirement for any implementing measures, and automatically override conflicting domestic provisions. Directives require member states to achieve a certain result while leaving them discretion as to how to achieve the result. The details of how they are to be implemented are left to member states. When the time limit for implementing directives passes, they may, under certain conditions, have direct effect in national law against member states.

Decisions offer an alternative to the two above modes of legislation. They are legal acts which only apply to specified individuals, companies or a particular member state. They are most often used in competition law, or on rulings on State Aid, but are also frequently used for procedural or administrative matters within the institutions. Regulations, directives, and decisions are of equal legal value and apply without any formal hierarchy.

Foreign relations

The High Representative of the Union for Foreign Affairs and Security Policy, Catherine Ashton.

Foreign policy co-operation between member states dates from the establishment of the Community in 1957, when member states negotiated as a bloc in international trade negotiations under the Common Commercial policy. Steps for a more wide ranging co-ordination in foreign relations began in 1970 with the establishment of European Political Cooperation which created an informal consultation process between member states with the aim of forming common foreign policies. It was not, however, until 1987 when European Political Cooperation was introduced on a formal basis by the Single European Act. EPC was renamed as the Common Foreign and Security Policy (CFSP) by the Maastricht Treaty.

Besides the emerging international policy of the European Union, the international influence of the EU is also felt through enlargement. The perceived benefits of becoming a member of the EU act as an incentive for both political and economic reform in states wishing to fulfill the EU's accession criteria, and are considered an important factor contributing to the reform of European formerly Communist countries. This influence on the internal affairs of other countries is generally referred to as "soft power", as opposed to military "hard power

Internal market

EU member states have a standardized passport design with the name of the member state, the national arms, and the words "European Union" given in their official language.

Two of the original core objectives of the European Economic Community were the development of a common market, subsequently renamed the single market, and a customs union between its member states. The single market involves the free circulation of goods, capital, people, and services within the EU, and the customs union involves the application of a common external tariff on all goods entering the market. Once goods have been admitted into the market they cannot be subjected to customs duties, discriminatory taxes or import quotas, as they travel internally. The non-EU member states of Iceland, Norway, Liechtenstein and Switzerland participate in the single market but not in the customs union. Half the trade in the EU is covered by legislation harmonized by the EU.

Latin American Economic Corporation

Latin American Economic corporation, Spanish Sistema Económico Latino Americano ,  association formed to promote economic cooperation and development throughout the region of Latin America. Established in 1975 through the Panama Convention, SELA succeeded the Special Committee for Latin American Coordination (CECLA). Nearly 30 Latin American and

Caribbean countries are members. SELA’s principal organ, the Latin American Council, meets annually. Headquarters are in Caracas, Venez.

The group’s activities include promoting regional economic strategies, aiding in the development of multinational enterprises, promoting agreements on agricultural and industrial production, and enhancing the sharing of scientific, technological, and cultural resources.

In the 1980s SELA was primarily occupied by international debt reduction. By the 1990s policies were being developed in relation to such international bodies as the World Trade Organization. By the beginning of the 21st century SELA had shifted its objectives toward assisting member states in joining the world economy by encouraging global trade in the region.

Objectives

International relations scholar Sheldon Liss, in Diplomacy and Dependency: Venezuela, the United States, and the Americas (1978) described the initial objectives of SELA:

SELA, composed of twenty-five member states, and to which Venezuela contributes the largest share (17 per cent) of the budget, hopes to: restructure international commerce in basic commodities in order to raise developing states' export values, improve trade conditions, stimulate industrial development, control foreign-based transnational corporations, create Latin American multinational companies which will use to better advantage the human, technological, and financial resources of the area, sponsor organizations to process and market raw materials, improve the negotiating power of the member states, and plan joint economic strategies.

Work areas

SELA carries out consultation, coordination and cooperation activities in the following work areas:

Globalization

Analysis of international scenarios of change, through networks and meetings of experts and academic centers, and follow-up of policies related to international macroeconomic coordination.

External Economic Relations

Evaluation and follow-up of the relations of Latin America and the Caribbean with other countries and regions - the United States of America, Canada, Japan, the European Union, Central and Eastern Europe, the Asian Pacific region – in order to raise mutual awareness, take advantage of business and investment opportunities, and increase international cooperation. The Secretariat provides technical assistance to the Group of Rio, to GRULAs, and other subregional and regional coordination bodies.

International Trade

Analysis of trends and negotiations in hemispheric and multilateral trade, particularly World Trade Organization (WTO) decisions, trade in services, the link between trade and environment, rules of origin, and the implementation of the Uruguay Round agreements.

Financing and Foreign Investment

Studies on the situation of capital flows, regional external debt, and domestic savings, analysis of multilateral financial institutions, and exchange of experiences and information on the modernization of national financial systems.

Regional Integration

Analysis of intraregional trade and investments, follow-up of integration mechanisms - MERCOSUR, Andean Community, Central American Common Market, CARICOM, Group of Three, Association of Caribbean States, and ALADI - and the process of creating the Free Trade Area of the Americas (FTAA), as well as the analysis of possibilities for linkage and convergence of integration schemes.

Activities

Annually holds the meeting of the Latin American Council, at ministerial level, and convenes regional consultation and coordination meetings with high-level officials of its 27 Member States.

Organizes fora with the participation of government and private sector representatives, and organizes meetings of experts on specific issues of the regional and global economic agenda.

Maintains close relations, based on cooperation, with the most important organizations, public institutions, and private entities at regional and international levels.

Develops seminars, courses, and workshops on issues of economic interest for the Latin American and Caribbean region, addressing the needs of government officials, businesspeople, workers, parliamentarians, and academicians.

SAARC:

The South Asian Association for Regional Cooperation (SAARC) is an economic and geopolitical cooperation among eight member nations that are primarily located in South Asia continent. Its secretariat is headquartered in Kathmandu, Nepal.

The idea of regional political and economic cooperation in South Asia was first coined in 1980 and the first summit held in Dhaka on 8 December in 1985 led to its official establishment by the governments of Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. In the intervening years, its successors have grown in size by the accession of new member states. Afghanistan was the first to have been accessed in the physical enlargement of the SAARC in 2007

SAARC Charter

Desirous of promoting peace, stability, amity and progress in the region through strict adherence to the principles of the UNITED NATIONS CHARTER and NON-ALIGNMENT, particularly respect for the principles of sovereign equality, territorial integrity, national independence, non-use of force and non-interference in the internal affairs of other States and peaceful settlement of all disputes.

Conscious that in an increasingly interdependent world, the objectives of peace, freedom, social justice and economic prosperity are best achieved in the SOUTH ASIAN region by fostering mutual understanding, good neighborly relations and meaningful co-operation among the Member States which are bound by ties of history and culture.

Aware of the common problems, interests and aspirations of the peoples of SOUTH ASIA and the need for joint action and enhanced co-operation within their respective political and economic systems and cultural traditions.

Convinced that regional co-operation among the countries of SOUTH ASIA is mutually beneficial, desirable and necessary for promoting the welfare and improving the quality of life of the peoples of the region.

Convinced further that economic, social and technical co-operation among the countries of SOUTH ASIA would contribute significantly to national and collective self-reliance.

Recognizing that increased co-operation, contacts and exchanges among the countries of the region will contribute to the promotion of friendship and understanding among their peoples.

Recalling the DECLARATION signed by their Foreign Ministers in NEW DELHI on 2 August 1983 and noting the progress achieved in regional co-operation.

Reaffirming their determination to promote such co-operation within an institutional framework.

Objectives of SAARC

The objectives and the aims of the Association as defined in the Charter are:

to promote the welfare of the people of South Asia and to improve their quality of life;

to accelerate economic growth, social progress and cultural development in the region and to provide all individuals the opportunity to live in dignity and to realise their full potential ;

to promote and strengthen selective self-reliance among the countries of South Asia;

to contribute to mutual trust, understanding and appreciation of one another's problems;

to promote active collaboration and mutual assistance in the economic, social, cultural, technical and scientific fields;

to strengthen co-operation with other developing countries;

to strengthen co-operation among themselves in international forums on matters of common interest; and

to co-operate with international and regional organisations with similar aims and purposes.

to maintain peace in the region

Principles

The principles are as follows

Respect for sovereignty, territorial integrity, political equality and independence of all members states

Non-interference in the internal matters is one of its objectives

Cooperation for mutual benefit

All decisions to be taken unanimously on the basis of consensus and need a quorum of all eight members

All bilateral issues to be kept aside and only multilateral(involving many countries) issues to be discussed without being prejudiced by bilateral issues

Afghanistan was added to the regional grouping on April 2007,With the addition of Afghanistan, the total number of member states were raised to eight (8). In April 2006, the United States of America and South Korea made formal requests to be granted observer status. The European Union has also indicated interest in being given observer status, and made a formal request for the same to the SAARC Council of Ministers meeting in July 2006. On 2 August 2006 the foreign ministers of the SAARC countries agreed in principle to grant observer status to the US, South Korea and the European Union. On 4 March 2008, Iran requested observer status. Followed shortly by the entrance of Mauritius. Myanmar has expressed interest in upgrading its status from an observer to a full member of SAARC while Russia is interested in becoming an observer.

Secretariat

The SAARC Secretariat was established in Kathmandu on 16 January 1987 and was inaugurated by Late King Birendra Bir Bikram Shah of Nepal.

It is headed by the Secretary General appointed by the Council of Ministers from Member Countries in an alphabetical order for a three-year term. He is assisted by the Professional and the General Service Staff, and also an appropriate number of functional units called Divisions assigned to Directors on deputation from Member States. The Secretariat coordinates and monitors implementation of activities, prepares for and services meetings, and serves as a channel of communication between the Association and its Member States as well as other regional organizations.

The Memorandum of Understanding on the establishment of the Secretariat which was signed by Foreign Ministers of member countries on 17 November 1986 at Bangalore, India contains various clauses concerning the role, structure and administration of the SAARC Secretariat as well as the powers of the Secretary-General.

In several recent meetings the heads of state or government of member states of SAARC have taken some important decisions and bold initiatives to strengthen the organization and to widen and deepen regional co-operation.

The SAARC Secretariat and Member States observe 8 December as the SAARC Charter Day. Nepal’s former foreign secretary Arjun Bahadur Thapa is current Secretary General of SAARC.

Council of Ministers

Council of Ministers consisting of the Foreign Ministers of the Member States established with the following functions:

Formulation of the policies of the ASSOCIATION

Review of the progress of co-operation under the ASSOCIATION

Decision on new areas of co-operation

Establishment of additional mechanism under the ASSOCIATION as deemed necessary

Decision on other matters of general interest to the ASSOCIATION.

The Council of Ministers meets twice a year. Extraordinary session of the Council may be held by agreement among the Member States.

Awards

SAARC Award

The Twelfth Summit (Islamabad, January 2004) approved the institution of the SAARC Award to honor and encourage outstanding individuals and organizations within the region. The main objectives of the SAARC Award are:

To encourage individuals and organizations based in South Asia to undertake programmes and activities complementing the efforts of SAARC

To encourage individuals and organisations in South Asia contributing to the improvement of the conditions of women and children

To honour outstanding contributions and achievements of individuals and organisations within the region in the fields of peace, development, poverty alleviation, environment protection and regional co-operation making the SAARC Award the most prestigious Award in the region; and

To honour any other outstanding contributions and achievements, not covered above, of individuals and organisations in the region.

The SAARC Award comprises a gold medal, a letter of citation and cash prize of US $ 25,000. Since institution of SAARC Award in 2004, it has been awarded only once and the Award was posthumoulsy conferred upon Late President Ziaur Rahman of Bangladesh.

SAARC Literary Award

SAARC Literary Award is an annual award conferred by the Foundation of SAARC (South Asian Association of Regional Cooperation) Writers and Literature (FOSWAL) since

2001which is an apex SAARC body. Shamshur Rahman, Mahasweta Devi, Jayanta Mahapatra, Mark Tully are some of the prominent recipients of this award.

SAARC Youth Award

The SAARC Youth Award is awarded to outstanding individuals from the SAARC region. The award is notable due to the recognition it gives to the Award winner in the SAARC region. The award is based on specific themes which apply to each year. The award recognizes and promotes the commitment and talent of the youth who give back to the world at large through various initiatives such as Inventions, Protection of the Environment and Disaster relief. The recipients who receive this award are ones who have dedicated their lives to their individual causes to improve situations in their own countries as well as paving a path for the SAARC region to follow. The Committee for the SAARC Youth Award selects the best candidate based on his/her merits and their decision is final.

SAARC Anthem

SAARC does not have an official anthem yet as other regional organizations such as ASEAN. However a poem by poet-diplomat Abhay Khas spurred search for an official SAARC Anthem.

NAFTA:

The North American Free Trade Agreement (NAFTA; French: Accord de libre-échange nord-américain, ALÉNA; Spanish:Tratado de Libre Comercio de América del Norte, TLCAN) is an agreement signed by Canada, Mexico, and the United States, creating a trilateral rules-based trade bloc in North America. The agreement came into force on January 1, 1994. It superseded the Canada–United States Free Trade Agreement between the U.S. and Canada.

NAFTA has two supplements: the North American Agreement on Environmental Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAALC).

In terms of combined purchasing power parity GDP of its members, as of 2007 the trade bloc is the largest in the world and second largest by nominal GDP comparison.

Negotiation and U.S. ratification:

Back row, left to right: Mexican President Carlos, U.S. President George, and Canadian Prime Minister Brian Mulroney, at the signing of the North American Free Trade Agreement in October 1992. In front are Mexican Secretary of Commerce and Industrial Development Jaime

Serra Puche, United States Trade Representative Carla Hills, and Canadian Minister of International Trade Michael Wilson.

Following diplomatic negotiations dating back to 1986 among the three nations, the leaders met in San Antonio, Texas, on December 17, 1992, to sign NAFTA. U.S. President George H. W. Bush, Canadian Prime Minister Brian Mulroney and Mexican President Carlos Salinas, each responsible for spearheading and promoting the agreement, ceremonially signed it. The signed agreement then needed to be authorized by each nation's legislative or parliamentary branch.

Before the negotiations were finalized, Bill Clinton came into office in the U.S. and Kim Campbell in Canada, and before the agreement became law, Jean Chrétien had taken office in Canada.

The proposed Canada-U.S. trade agreement had been very controversial and divisive in Canada, and the election was fought almost exclusively on that issue. In that election, more Canadians voted for anti-free trade parties (the Liberals and the New) but the split caused more seats in parliament to be won by the pro-free trade Progressive Conservatives (PCs). Mulroney and the PCs had a parliamentary majority and were easily able to pass the 1987 Canada-US FTA and NAFTA bills. However, he was replaced as Conservative leader and prime minister by Kim Campbell. Campbell led the PC party into the 1993 election where they were decimated by the Liberal Party under Jean Chrétien, who had campaigned on a promise to renegotiate or abrogate NAFTA; however, Chrétien subsequently negotiated two supplemental agreements with the new US president. In the US, Bush, who had worked to "fast track" the signing prior to the end of his term, ran out of time and had to pass the required ratification and signing into law to incoming president Bill. Prior to sending it to the United States Senate Clinton added two side agreements, The North American Agreement on Labor Cooperation (NAALC) and the North American Agreement on Environmental Cooperation (NAAEC), to protect workers and the environment, plus allay the concerns of many House members. It also required US partners to adhere to environmental practices and regulations similar to its own.

Provisions

The goal of NAFTA was to eliminate barriers with trading and investment between the U.S., Canada and Mexico. The implementation of NAFTA on January 1, 1994 brought the immediate elimination of tariffs on more than one-half of Mexico's exports to the U.S. and more than one-third of U.S. exports to Mexico. Within 10 years of the implementation of the agreement, all U.S.-Mexico tariffs would be eliminated except for some U.S. agricultural exports to Mexico that were to be phased out within 15 years. Most U.S.-Canada trade was already duty-free. NAFTA also seeks to eliminate non-tariff trade barriers and to protect the intellectual property right of the products.

Intellectual Property

North American Free Trade Agreement Implementation Act made some changes to the Copyright law of the United States, foreshadowing the Uruguay Round Agreements Act of 1994 by restoring copyright (within NAFTA) on certain motion pictures which had entered the public domain.

Environment:

Securing U.S. congressional approval for NAFTA would have been impossible without addressing public concerns about NAFTA’s environmental impact. The Clinton administration negotiated a side agreement on the environment with Canada and Mexico, the North American Agreement on Environmental Cooperation (NAAEC), which led to the creation of the Commission for Environmental Cooperation (CEC) in 1994. To alleviate concerns that NAFTA, the first regional trade agreement between a developing country and two developed countries, would have negative environmental impacts, the CEC was given a mandate to conduct ongoing ex post environmental assessment of NAFTA.

In response to this mandate, the CEC created a framework for conducting environmental analysis of NAFTA, one of the first ex post frameworks for the environmental assessment of trade liberalization. The framework was designed to produce a focused and systematic body of evidence with respect to the initial hypotheses about NAFTA and the environment, such as the concern that NAFTA would create a "race to the bottom" in environmental regulation among the three countries, or the hope that NAFTA would pressure governments to increase their environmental protection mechanisms. The CEC has held four symposia using this framework to evaluate the environmental impacts of NAFTA and has commissioned 47 papers on this subject. In keeping with the CEC’s overall strategy of transparency and public involvement, the CEC commissioned these papers from leading independent experts.

Agriculture:

From the earliest negotiation, agriculture was (and still remains) a controversial topic within NAFTA, as it has been with almost all free trade agreements that have been signed within the WTO framework. Agriculture is the only section that was not negotiated trilaterally; instead, three separate agreements were signed between each pair of parties. The Canada–U.S. agreement contains significant restrictions and tariff quotas on agricultural products (mainly sugar, dairy, and poultry products), whereas the Mexico–U.S. pact allows for a wider liberalization within a framework of phase-out periods (it was the first North–South FTA on agriculture to be signed).

Transportation infrastructure:

NAFTA established the CANAMEX Corridor for road transport between Canada and Mexico, also proposed for use by rail, pipeline, and fiber optic telecommunications infrastructure. This became a

High Priority Corridor under the U.S. Intermodal Surface Transportation Efficiency Act of 1991.

Legal disputes:

In 1996, the gasoline additive MMT was brought into U.S. by Ethyl Corporation, an American company. At the time, the Canadian federal government banned the importation of the additive. The American company brought a claim under NAFTA Chapter 11 seeking US$201 million, from the Canadian government and the Canadian provinces under the NAFTA Agreement on Internal Trade ("AIT"). The American company argued that their additive had not been conclusively linked to any health dangers, and that the prohibition was damaging to their company. Following a finding that the ban was a violation of the AIT,the Canadian federal government repealed the ban and settled with the American company for US$13 million. Studies by Health and Welfare Canada (now Health Canada) on the health effects of MMT in fuel found no significant health effects associated with exposure to these exhaust emissions. Other Canadian researchers and the U.S. Environmental Protection Agency disagree with Health Canada, and cite studies that include possible nerve damage.

The United States and Canada had been arguing for years over the United States' decision to impose a 27 percent duty on Canadian softwood lumber imports, until new Canadian Prime Minister Stephen Harper compromised with the United States and reached a settlement on July 1, 2006. The settlement has not yet been ratified by either country, in part due to domestic opposition in Canada.

Mercosur

Mercosur was established in 1991 by the Treaty of Asunción, which was later amended and updated by the 1994 Treaty of Ouro Preto.

Mercosur originated in 1985, when Presidents Raul Alfonse of Argentina and José Sarney of Brazil signed the Argentina-Brazil Integration and Economics Cooperation Program or PICE .The program also proposed the Gaucho as a currency for regional trade.

The founding of the Mercosur Parliament was agreed upon at the December 2004 presidential summit. It was expected to have 18 representatives from each country by 2010, regardless of population.

Full membership for Venezuela became effective on 31 July 2012,after the suspension of Paraguay on 22 June 2012 for the violation of the Democratic Clause of Mercosur (see Impeachment of Fernando Lugo). Previously, on 17 June 2006, Venezuela had signed a membership agreement

MEMBER STATES:

Mercosur is composed of 5 sovereign member states: Argentina; Brazil; Paraguay; Uruguay; and Venezuela. Bolivia became an acceding member on 7 December 2012.

Following the impeachment of President Fernando Lugo by the Paraguayan Senate, this country was suspended from Mercosur, and the admittance of Venezuela as a full member became effective on 31 July 2012.In four years, Venezuela will have to fully adapt to the trade bloc regulations.

Directly subordinated to the Common Market Group, the Work Subgroups draw up the minutes of the decisions to be submitted for the consideration of the Council, and conduct studies on specific Mercosur concerns. Currently, the Work Subgroups are the following: Commercial Matters; Customs Matters; Technical Standards; Tax and Monetary Policies Relating to Trade; Land Transport; Sea Transport; Industrial and Technology Policies; Agricultural Policy; Energy Policy; Coordination of Macroeconomic Policies; and Labor, Employment and Social Security Matters.

The meetings of the Work subgroups will be held quarterly, alternating in every member state, in alphabetical order, or at the Common Market Group Administrative Office. Activities will be carried out by the Work Subgroups in two stages: preparatory and conclusive. In the preparatory stage, the members of the Work Subgroups may request the participation of representatives from the private sector of each member state. The decision-making stage is reserved exclusively for official representatives of the member states. The delegations of representatives from the private sector in the preparatory stage of the Work Subgroup activities will have a maximum of three representatives for each member state directly involved in any of the stages of the production, distribution or consumption process for the products that fall within the scope of the subgroup's activities.

Objectives

The Southern Common Market promotes:

The free transit of produced goods, services and factors among the member states. Among other things, this includes the elimination of customs rights and lifting of nontariff restrictions on the transit of goods or any other measures with similar effects on it

Fixing of a common external tariff (CET) and adopting of a common trade policy with regard to nonmember states or groups of states, and the coordination of positions in regional and international commercial and economic meetings;

Coordination of macroeconomic and sectorial policies of member states relating to foreign trade, agriculture, industry, taxes, monetary system, exchange and capital, services, customs, transport and communications, and any others they may agree on, in order to ensure free competition between member states;

The commitment by the member states to make the necessary adjustments to their laws in pertinent areas to allow for the strengthening of the integration process. The Asunción Treaty is based on the doctrine of the reciprocal rights and obligations of the member states. Mercosur initially targeted free-trade zones, then customs unification, and finally a common market. The common market will allow (in addition to customs unification) the free movement of manpower and capital across the member nations, and depends the grating of equal rights and duties to all member countries. Because member states will implement the trade liberalization at different speeds, during the transition period the rights and obligations of each party will initially be equivalent but not necessarily equal. In addition to the reciprocity doctrine, the Asunción Treaty also contains provisions for the most-favored nation concept. This concept is that after the common market is formed, member nations are to automatically extend to the other members any advantage, favor, entitlement, immunity or privilege granted to a product originating from or intended for countries that are not party to the Latin American Integration Association (ALADI).

Structure

The Asunción Treaty and Ouro Preto Protocol established the basis for the institutional Mercosur structure, creating the Market Council and the Common Market Group, both of which are to function at the outset of the transition phase. As provided for in this Treaty, before establishing the common market the member nations must call a special meeting in order to determine the definitive institutional structure for the public agencies managing Mercosur, as well as define the specific functions of each agency and the decision making process.

Common Market Council

The Council is the highest-level agency of Mercosur with authority to conduct its policy, and responsibility for compliance with the objects and time frames set forth in the Asuncion Treaty. The Council is composed of the Ministers of Foreign Affairs and the Economy (or the equivalent) of all five countries. Member states preside over the Council in rotating alphabetical order, for 6-month periods. Meetings: Council members shall meet whenever necessary, but at least once a year. The presidents of the member nations shall partake of the annual Common Market Council meeting whenever possible. Decision Making: Council decisions shall be made by consensus, with representation of all member states.

Common Market Group

The Group is the executive body of Mercosur, and is coordinated by the Ministries of Foreign Affairs of the member states. Its basic duties are to cause compliance with the Asuncion Treaty and to take resolutions required for implementation of the decisions made by the Council. Furthermore, it can initiate practical measures for trade opening, coordination of macroeconomic policies, and negotiation of agreements with nonmember states and international agencies, participating when need be in resolution of controversies under Mercosur. It has the authority to organize, coordinate and supervise Work Subgroups and to call special meetings to deal with issues of interest. Composition: The Common Market Group shall be made up of four permanent members and four alternates from each member state, representing the following public agencies: (i) the Ministry of Foreign Affairs; (ii) the Ministry of Economy, or the equivalent (from industry, foreign affairs and/or economic coordination); and (iii) the Central Bank. The members of the Common Market Group appointed by a given member state will constitute the National Section of the Common Market Group for that particular nation. Meetings: The Common Market Group will meet ordinarily at least once every quarter in the member states, in rotating alphabetical order. Special meetings may be freely called at any time, at any previously scheduled place. The meetings will be coordinated by the Head of the Delegation of the host member state. Decision Making: Common Market Group decisions shall be made by consensus, with the representation of all member states. The official Mercosur languages will be Portuguese and Spanish, and the official version of all work papers will be prepared in the language of the country hosting the meeting.

Administrative and socioeconomic

The Administrative Office will keep documents and issue the Mercosur official bulletin in both Portuguese and Spanish, and will also be charged with communicating the activities of the Common Market Group so as to allow for the maximum disclosure of decisions and the relevant documentation. The Socioeconomic Advisory Forum is consultative by nature, and represents the various socioeconomic sectors of the member nations.

Work Subgroups

Directly subordinated to the Common Market Group, the Work Subgroups draw up the minutes of the decisions to be submitted for the consideration of the Council, and conduct studies on specific Mercosur concerns. Currently, the Work Subgroups are the following: Commercial Matters; Customs Matters; Technical Standards; Tax and Monetary Policies Relating to Trade; Land Transport; Sea Transport; Industrial and Technology Policies; Agricultural Policy; Energy Policy; Coordination of Macroeconomic Policies; and Labor, Employment and Social Matters. Meetings. The meetings of the Work subgroups will be held quarterly, alternating in every member state, in alphabetical order, or at the Common Market Group Administrative Office. Activities will be carried out by the Work Subgroups in two stages: preparatory and conclusive. In the preparatory stage, the members of the Work Subgroups may request the participation of representatives from the private sector of each member state. The decision-making stage is reserved exclusively for official representatives of the member states. The delegations of representatives from the private sector in the preparatory stage of the Work Subgroup activities will have a maximum of three representatives for each member state directly involved in any of the stages of the production, distribution or consumption process for the products that fall within the scope of the subgroup's activities.

Joint Parliamentary Committee

The Committee will have both an advisory and decision-making nature; with powers to submit proposals as well. It will be competent, inter alia, to: follow up on the integration process and keep the respective Congresses informed; Take the necessary steps for the future instatement of a Mercosur Parliament; Organize subcommittees to examine matters relating to the integration process; Submit its recommendations to the Common Market Council and Group as to how the integration process should be conducted and Southern Common Market formed; Make the adjustments necessary to harmonize the laws of the different member states and submit them to the respective Congresses; Establish relationships with private entities in each of the member states, as well as international agencies and bureaus so as to obtain information and specialized assistance with matters of interest: Establish relationships targeting cooperation with Congresses of the nonmember nations and entities involved in regional integration schemes; Subscribe to cooperation and technical assistance accords with public and/or private entities whether domestic, supranational or international. The Committee will be composed of a maximum of 64 acting parliamentary members, 16 per member state, and an equal number of alternates, appointed by the Congress to which they pertain, and with a term of office of at least two years. The meetings shall be conducted by a directors' board consisting of four Presidents (one for each member state). The Committee will ordinarily meet twice a year, and extraordinarily whenever summoned by any of its five Presidents. Meetings are to be held in the territory of each member state on a successive and alternating basis. Decision Making: Meetings of the Joint Parliamentary Committee will only be valid when attended by

parliamentary delegations from all member states. Decisions by the Joint Parliamentary Committee will be made by consensus vote of the majority of the members accredited by the respective Congresses of each member state. Portuguese and Spanish are the official languages of the Joint Parliamentary Committee.

Trade Commission

The Trade Commission will assist the Mercosur executive body, always striving to apply the instruments of common trade policy agreed to by the member states for operation of the customs unification. Additionally, the commission should also follow up on the development of issues and matters related to common trade policies, the intra-Mercosur trade and trade with other countries. The commission will have five actual members and four alternates, with each member nation's indicating a member. The Trade Commission shall exert every effort to apply common trade policy instruments such as: Trade agreements with other countries or international entities; Administrative/commercial product lists; Final adaptation system for Mercosur customs unification; Origin system; Free-trade zone system, special customs areas and export processing zones; System to discourage unfair trade practices; Elimination and harmonization of tariff restrictions; Nonmember country safeguard systems; Customs coordination and harmonization; Consumer protection systems; and Export incentive harmonization.

Furthermore, the trade commission should speak out regarding the issues raised by the member states regarding application and compliance with common offshore tariffs and other common trade policy instruments. The commission shall meet at least once a month, as well as whenever asked to by the Mercosur executive agency or by a member state. The commission can take decisions entailing administration and application of trade policies adopted under Southern Common Market, and whenever necessary submit proposals to the executive body regarding regulation of the areas under its authority; additionally, it can propose new guidelines or modify those in existence in Mercosur trade and customs matters. In this respect, the trade commission can propose a change in the import duty on specific items under common external tariffs, including cases referring to development of new Mercosur production activities. In order to better achieve its objectives, the trade commission can create technical committees targeting direction and supervision of the work it engages in. It can also adopt internal operating regulations. Proposals and decisions of the trade commission will be taken by a consensus of the representatives indicated by each member nation. Any disputes ensuing from the application, interpretation or compliance with the acts issued by the trade commission are to be referred to the Mercosur executive body, and should be resolved using the directives set forth in the Dispute Resolution System adopted under Southern Common Market.

International jurisdiction over contractual matters

The rules on litigation jurisdiction over contractual matters will apply to disputes arising from civil or commercial international contracts between private-law legal entities or

individuals provided that: They are domiciled or headquartered in different member states: At least one of the parties to the contract is domiciled or headquartered in any member state and, additionally, has made a choice of jurisdiction in favor of a court in one of the member states. In this case, there must be a reasonable connection between the jurisdiction chosen and the controversy. The scope of the application of the international jurisdiction guidelines over contractual matters excludes the following: legal relationships between bankrupt entities/individuals and their creditors and any other analogous proceedings (especially concordats composition with creditors); matters under agreements involving family and succession law; social security contracts; administrativecontracts; employment contracts; consumer sales contracts; transport contracts; insurance policies; and rights in rem.

Choice of jurisdiction

Courts in member nations to whose jurisdiction the contracted parties have agreed to submit the matter in writing will have jurisdiction to settle controversies stemming from civil or commercial international contracts.

Agreement of choice

The jurisdiction can be agreed on at the time the contract is signed, during the life of the contract, or even when the dispute actually arises. The validity and effects of the choice of venue will be governed by the law of the member nations that normally have jurisdiction to hear the case, always resorting to the law most favorable to the validity of the contract. Whether or not jurisdiction is chosen, such jurisdiction will be prorogated in favor of the courts of the member state where the proceedings are in fact filed, provided the respondent voluntarily allows this in an affirmative and unfeigned way.

Subsidiary jurisdiction

Should the contracted parties not reach an agreement regarding the courts competent to settle disputes, the member state chosen by the plaintiff of the case in point will have jurisdiction: The court of the place where the contract is to be performed; or The court of the domicile of the respondent; or The court of the domicile or headquarters of the claimant when the latter can show that it has done its part. For purposes of item above the place of performance of the contract will be the member state where the obligations on which the claim is based have been or should be performed, taking into consideration the following: For contracts involving certain specific items, the place where they existed at the time of contract signing; For contracts involving specific items according to their type, the place of domicile of the debtor at the time of contract signing; For contracts involving fungible items, the place of domicile of the debtor at the time of conclusion of the contract; and For service rendering contracts:

If in regard to items, the place where they were at the time of contract signing;

If effectiveness is related to any special place, the place where they were to produce effects;

In all other cases, the place of domicile of the debtor at the time of contract signing. For purposes of application of second item above for determination of the domicile of the respondent in a contractual dispute involving individuals, the following will be taken into consideration: The habitual residence: On a subsidiary basis, the central place of business; and In the absence of any such considerations, the place where found, meaning the actual residence. When dealing with a legal entity, the determination of the domicile will be based on where the administrative headquarters have been set up. The claim plaintiff can, as an alternative, file in any of the places where the legal entity has branches, establishments, agencies or any other type of representation. entities headquartered in any member state that have concluded contracts with any other member state can be sued in the courts of this latter state should there be any dispute as to the construction and implementation of the obligations regulated by contract. In the event there is a codefendant, a suit on contractual matters can be adjudicated with the courts of jurisdiction in the territory of the domicile of any of the parties to the litigation. Additionally, any claims entailing personal collateral rights or intervention of nonmember states in contractual obligations can be filed with the court hearing the main proceeding.

Educational integration

Based on the premise that education is a fundamental factor in the regional integration process, educational courses at the primary or junior high level, provided that they do not entail technical studies, will be recognized by member states as being on the same level for all member nations. Likewise, in order to permit continuing education, certificates proving course conclusion issued by an official institution accredited in one of the member states will be valid in all other member states. Nontechnical primary and junior high level studies that have not been completed will be accredited by any member state, thereby allowing course conclusion in another member nation. Studies will be completed using an equivalency table to determine the level achieved.

Regional Technical Commission

In order to harmonize the mechanisms favoring accreditation of studies undertaken in any member nation in any other member nation, and to resolve any situations that may not be covered by the equivalency table, a Regional Technical Commission will be created. This Commission will include delegations from the ministries of education of each member nation, and will meet whenever at least two member states think it necessary to convene. The meeting sites will be established on a rotating basis. Any disputes that arise among the member states as a result of application, construction or noncompliance regarding the provisions related to

education will be initially resolved by direct diplomatic negotiations. Should the countries not reach an accord or should the dispute be only partially resolved, then the procedures set forth in the Resolution System will be resorted to. Should the member nations enter into a bilateral convention or accord whose provisions are more favorable to their students, the member states in question can apply whichever provisions they consider most advantageous.

Free trade zones

The member nations can have commercial free-trade zones, industrial free-trade zones, export processing zones, and special customs areas, all of which target providing merchandise marketed or produced in these areas with treatment different from that afforded in their respective customs territories. Uruguay's Vice-President Danilo Astori said the issue of a free trade agreement with the United States must be dealt and that "opportunities must be built." He also said that "each Mercosur country should have a multiplicity of memberships. Mercosur must have joint international policies, an agreement on moderate protection from third parties and above all must have agreements with other trade blocks."

Tariffs

The member states can assess merchandise from these areas with the common external tariff used for Mercosur merchandise, or, in the case of certain special products, the domestic tariff prevailing in each individual state. In this way, the products from the free-trade zones can have the more favorable tax treatment established under Southern Common Market, given to the merchandise produced in the normal customs zones of each member state or, in the case of certain special products, can have the normal customs treatment prevailing in each nation.

Safeguards:

Products produced or marketed in the free-trade zones of each member nation will be eligible for the safeguard system whenever this entails an increase not provided for in imports, but capable of causing damages or threatened damages to the importer country.

Reciprocal promotion and protection

The nations subscribing to the Asunción Treaty consider that the creation and maintenance of conditions favorable to individual or corporate investments for the jurisdiction of one of the member states in the territory of another state is essential to intensify the economic cooperation targeted so as to accelerate the integration process among all four member states. In this context, Argentina, Uruguay, Paraguay and Brazil signed on January 1, 1994 in the city of Colonia del Sacramento, Uruguay, the Colonia Protocol for the Reciprocal Promotion and Protection of Mercosur Investments (Colonia Protocol). It was established in this protocol that investments under Mercosur by investors resident or domiciled in the territory of any member

state will be entitled to treatment no less favorable than that accorded by the other member state to national investors or nonmember states.

Investors

For purposes of construction of the Colonia Protocol, investors are considered to be: Individuals that are citizens of any of the member nations or that reside there on a permanent basis or are domiciled there, with due regard for legislation prevailing in such territory; Legal entities organized pursuant to the legislation of one of the member nations that are headquartered there; and Legal entities organized in the territory where the investment is made, actually and directly or indirectly controlled by the legal entities or individuals mentioned above.

Investments

The term investment includes all types of assets such as: movable or immovable property, such as rights in rem and guarantee in rem rights; Shares, corporate holdings and any other type of corporate participations; Credit instruments and rights that may have an economic value; Intellectual property rights or materials, Including copyrights and industrial property rights such as patents, industrial drawings, trademarks, commercial names, technical procedures, know-how and goodwill; Economic concessions involving public law, such as research, cultivation, extraction or natural resource exploration concessions.

Freedom to invest

Tax Issues

The member states are not however obligated to extend to investors in the other nations signatory to the Colonia Protocol the benefits of any treatment, preference or privilege resulting from international accords relating fully or partially to tax matters.

Exceptions

In addition, the member nations can temporarily establish a list of exceptions where the new treatment will not yet prevail. In this way, the various member nations decided to except the following economic sectors: Argentina: ownership of real estate on the frontier strip, air transportation, naval industry, nuclear plants, uranium mining, insurance and fishery; Brazil: mineral prospecting and mining; use of hydraulic energy; health care; television and radio broadcasting and telecommunications in general, acquisition or leasing of rural properties; participation in the financial intermediation, insurance, social security and capitalization systems; chartering and Cabot age as well as inland navigation; Paraguay: ownership of real property on the frontier strip; communications, including radio and television broadcasting; air, sea and land transportation; electricity, water and telephone services; prospecting for hydrocarbons and strategic minerals; import and refining of petroleum

derivatives and postal services; and Uruguay: electricity; hydrocarbons; basic petrochemicals, atomic energy; prospecting for strategic minerals; financial intermediation; railways, telecommunications; radio broadcasting; press and audiovisual means.

Expropriation and compensation

The member nations undertook to do nothing to nationalize or expropriate investments in their territories that pertain to investors from the signatory countries, unless such measures are taken based on public need. In such case, nothing discriminatory can be done, but everything must be implemented by due legal process. Compensation for the investment holder that is expropriated or nationalized should be both adequate and effective, and made in advance, based on the real investment value determined at the time the decision is publicly announced by the proper authorities. This payment will be updated until actual payment, and the affected investor will receive interest.

Transfers

The original member state investors will be ensured free transfer of their investments and any earnings thereon. These transfers can be made in freely convertible currency, using the exchange rate prevailing on the market pursuant to the procedures established by the member state receiving the investment. Member nations cannot adopt any exchange measures restricting free transfer of the funds invested or from activities exercised in their respective territories.

FTA with third parties

Recently, with the new cooperation agreement with Mercosur, the Andean Community gained four new associate members: Argentina, Brazil, Paraguay and Uruguay. These four Mercosur members were granted associate membership by the Andean Council of Foreign Ministers meeting in an enlarged session with the Commission (of the Andean Community) on 7 July 2005. This move reciprocates the actions of Mercosur which granted associate membership to all the Andean Community nations by virtue of the Economic Complementarity Agreements (Free Trade Agreements) signed between the CAN and individual Mercosur members.

Colombian president Álvaro Uribe signed a free trade agreement between his country and Mercosur in December 2005, giving Colombian products preferential access to a market of 230 million people. Colombian entrepreneurs will also be able to import materials and capital goods from Mercosur at lower costs due to reduced tariffs resulting from the agreement.

CAFTA

The Dominican Republic – Central America Free Trade Agreement, commonly called CAFTA-DR, is a free trade agreement (legally a treaty under international law, but not under US law). Originally, the agreement encompassed the United States and the Central American countries of Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua, and was called CAFTA. In 2004, the Dominican Republic joined the negotiations, and the agreement was renamed CAFTA-DR

CAFTA-DR together with the North American Free Trade Agreement (NAFTA) and active bilateral free trade agreements, including the Canada-Costa Rica Free Trade Agreement, are seen as bloc agreements instead of a Free Trade Area of the Americas (FTAA) agreement. Panama has completed negotiations with the US for a bilateral free trade agreement (ratification of which is pending), and Belize is a member of the Caribbean Community (CARICOM). Haiti, also a CARICOM member, was expected to be given certain additional trade preferences with the US under the Haitian Hemispheric Opportunity through Partnership Encouragement Act before Congress adjourned during 2006.

RATIFICATION:

The agreement is a treaty under international law, but not under the United States Constitution. In the U.S., laws require majority approval in both houses, while treaties require two-thirds approval in the Senate only. Under U.S. law, CAFTA-DR is a congressional-executive agreement.

The United States Senate approved the CAFTA-DR on June 30, 2005 by a vote of 54–45, and the United States House of Representatives approved the pact on July 28, 2005 by a vote of 217–215, with two representatives not voting. Controversy arose over this vote because it was held open 1 hour and 45 minutes longer than the normal 15 minutes in order to get some members to change their votes. For procedural reasons, the Senate took a second vote on CAFTA on July 28 and the pact garnered an additional vote from Sen. Joe Lieberman—who had been absent on June 30—in favor of the agreement. The implementing legislation became Public Law 109-053 when it was signed by President George W. Bush on August 2, 2005.

The Dominican Republic, Costa Rica, El Salvador, Guatemala, Nicaragua and Honduras have also approved the agreement. They are all the current members of CAFTA-DR.

On March 1, 2006, El Salvador led the way as CAFTA went into effect for that country, following completion of all necessary steps, including delivery of signed Treaty copies to the Organization of American States (OAS), which was the final step. On April 1, 2006, Honduras and Nicaragua joined El Salvador as countries that have fully implemented the agreement. On May 18, 2006, Guatemala's Congress ratified CAFTA-DR and on July 1, 2006, the treaty went into effect for that country. The Dominican Republic implemented the agreement on March 1, 2007. In the referendum on October 7, 2007, the voters of Costa Rica

narrowly backed the free trade agreement, with 51.6 percent of "Yes" votes; The necessary implementation laws have been approved and the agreement took effect January 1, 2009.

AIMS:

The goal of the agreement is the creation of a free trade area, similar to the North American Free Trade Agreement (NAFTA) which currently encompasses the US, Canada, and Mexico. CAFTA-DR is also seen as a stepping stone towards the FTAA, another (more ambitious) free trade agreement that would encompass all the South American and Caribbean nations as well as those of North and Central America except Cuba. Canada is negotiating a similar treaty called the Canada Central American Free Trade Agreement.

If passed by the countries involved, tariffs on about 80 percent of US exports to the participating countries will be eliminated immediately and the rest will be phased out over the subsequent decade. As a result, CAFTA-DR does not require substantial reductions in US import duties with respect to the other countries, as the vast majority of goods produced in the participating countries already enter the US duty-free due to the US Government's Caribbean Basin Initiative.

With the addition of the Dominican Republic, the trade group's largest economy, the region covered by CAFTA-DR is the second-largest Latin American export market for US producers, behind only Mexico, buying US$15 billion of goods a year. Two-way trade amounts to about US$32 billion annually.

While not necessarily a part of Plan Puebla Panama, CAFTA is a necessary precursor to the execution of Plan Puebla Panama by the Inter-American Development Bank. The plan includes construction of highways linking Panama City to Mexico City, Texas, and the rest of the US.

PROVISIONS:

CAFTA-DR encompasses the following components:

Cross-border trade in services: Each member country must treat service suppliers of another member country no less favorably than its own suppliers or those of any other member country. The Agreement requires firms to establish a local presence as a condition for supplying a service on a cross-border basis.

Financial services: CAFTA-DR imposes rules requiring member countries to treat service suppliers of another member country no less favorably than its own suppliers or those of any other country, prohibits certain quantitative restrictions on market access of financial institutions, and bars restrictions on the nationality of senior management.

Investment: CAFTA-DR establishes rules to protect investors from one member country against unfair or discriminatory government actions when they make or

attempt to make investments in another member country's territory. Investors enjoy six basic protections: (1) non-discriminatory treatment relative to domestic investors as well as investors of non-Parties; (2) limits on “performance requirements”; (3) free transfer of funds related to an investment; (4) protection from expropriation other than in conformity with customary international law; (5) a “minimum standard of treatment” in conformity with customary international law; (6) and the ability to hire key managerial personnel without regard to nationality.

Government procurement: Each member country must apply fair and transparent procurement procedures and rules and prohibiting each government and its procuring entities from discriminating in purchasing practices against goods, services, and suppliers from the other member countries.

Market access: Governments pledge to reduce and eventually eliminate tariffs and other measures that protect domestic products.

Agriculture: CAFTA-DR requires that tariffs and quotas be administered in a manner that is transparent, nondiscriminatory, responsive to market conditions and minimally burdensome on trade and allows importers to fully utilize import quotas. Each member country will eliminate export subsidies on agricultural goods destined for another CAFTA-DR country.

Intellectual property rights: Member countries are obligated to ratify or accede to several international agreements on intellectual property rights, like, for example, the WIPO Copyright Treaty. Each member country must provide protection for marks and geographical indications, including protecting preexisting trademarks against infringement by later geographical indications. Member countries must provide efficient and transparent procedures governing the application for protection of marks and geographical indications. Each member country must provide copyright protection for the life of the author plus 70 years (for works measured by a person's life), or 70 years (for corporate works). The Agreement also includes provisions on ant circumvention, under which member countries commit to prohibit tampering with technology used to protect copyrighted works. Member countries agree to make patents available for any invention, subject to limited exclusions, and confirm the availability of patents for new uses or methods of using a known product. To guard against arbitrary revocation of patents, each member country must limit the grounds for revoking a patent to the grounds that would have justified a refusal to grant the patent.

Antidumping and countervailing rights: Antidumping and countervailing duty measures may not be challenged under the Agreement’s dispute settlement procedures.

Dispute resolution: If a dispute over an actual or proposed national rule cannot be resolved after a 30-day consultation, the matter may be referred to a panel comprising independent experts that the parties select. Once the procedure before the panel is concluded, the panel will issue a report. The parties will attempt to resolve the dispute based on the panel's report. If no amicable resolution is possible, the complaining party may suspend trade benefits equivalent in effect to those it considers were impaired, or may be impaired, as a result of the disputed measure. If a dispute arises under both CAFTA-DR and the WTO Agreement, the complaining party may choose either forum.

Environmental protection: CAFTA-DR contains provisions for the enforcement of environmental laws and improvement of the environment. The CAFTA-DR Environmental Cooperation Agreement, signed in concert with the FTA, provides for environmental cooperation on issues of mutual environmental concern.

Labor standards: CAFTA-DR contains provisions for the enforcement of the International Labour Organization's core labor standards.

Transparency: Parties are obligated to make it a criminal offense to offer or accept a bribe in exchange for favorable government action in matters affecting international trade or investment.

Test data exclusivity for pharmaceutical corporations: CAFTA-DR protects test data that a company submits in seeking marketing approval for such products by precluding other firms from relying on the data.

Reasons to Oppose the Central American Free Trade Agreement

1. CAFTA Expands a Proven DisasterCAFTA would expand the failed NAFTA model of international trade to five additional Central

American countries with plans to include the Dominican Republic already under way. But 10 years of NAFTA have shown just how devastating these agreements can be for working families and the environment. In the United States, over 766,000 jobs have been lost due to NAFTA. In the maquiladora zones along the US-Mexico border, wages are low, union organizing is suppressed, and industrial pollution has dramatically increased cases of hepatitis and birth defects among workers. NAFTA should be repealed, not expanded.

2. CAFTA Contains No Protection for Workers and the Environment

CAFTA contains no meaningfully enforceable standards that might prevent countries from lowering their public health, workplace safety, and environmental laws in order to attract investment. Our experience with NAFTA has shown how corporations use this arrangement to pit workers in each country against one another in a “race-to-the-bottom” in wages and environmental protections. Trade agreements are presented to the public as a vehicle for economic development, but when these agreements fail to condition trade access on enforcement of international labor and environmental standards, only corporate CEOs see the benefits. 

3. CAFTA Promotes Sweatshop Labor

CAFTA would ignore standards set by the International Labor Organization and instead require only that countries continue to enforce existing domestic labor laws, regardless of how inadequate these laws may be. In the context of Central America—where laws fall far below international standards and governments are often actively hostile towards unions—this model amounts to no less than a recipe for rampant labor violations. CAFTA will no doubt lead to an expansion of the region’s maquila industry, already one of the world’s most developed.

4. CAFTA Drives Family Farmers Off the Land

Thousands of small family farms in both the US and Central America will be lost because of CAFTA—much like what has already happened to U.S, Mexican and Canadian farmers under NAFTA. Meanwhile, giant corporate farms like ADM and Cargill will be the ones benefiting most from their downfall and the trade agreement. The threat of CAFTA is especially ominous for farmers in Guatemala, where nearly 60% of the population support themselves on agriculture. CAFTA would likely force a massive migration of erstwhile farmers to large urban areas to work in the maquila industry, or to risk the dangerous journey to the U.S.

5. CAFTA Privatizes Public Services

CAFTA investor rules will make it impossible for governments in Central America and the US to give preferences to public service providers. Under CAFTA, domestic regulations protecting people’s right to food, education, health, and basic utilities could be considered “barriers to trade” and open to challenges by multinational corporations. CAFTA would require that governments bid out for services contracts, resulting in price increases, reduced access, and

compromised quality that would most severely impact the vulnerable in our society, such as children, the poor, and the elderly.

6. CAFTA Expands Corporate Power

CAFTA would expand NAFTA rules that allow corporations to sue governments over any law that might stand in the way of their ability to profit. These rules have already been used 27 times since 1994 to challenge some of our most cherished public health, workplace safety and environmental laws. The threat of being sued forces governments to either pay large fines or to pass only pro-business legislation.

7. CAFTA Undermines Public Health

CAFTA provisions to protect and expand the patent monopolies of US pharmaceutical companies in Central America will undermine access to affordable generic AIDS drugs and increase the price of medicines. Meanwhile, hundreds thousands of HIV-positive Central Americans are in immediate need of treatment or else they will die. Of the six Latin American countries with the highest prevalence of HIV, four are Central American.

ASEAN

ASEAN is a political and economic organization of ten countries located in Southeast Asia, which was formed on 8 August 1967 by Indonesia, Malaysia, the Philippines, Singapore and Thailand.[9] Since then, membership has expanded to include Brunei, Burma (Myanmar), Cambodia, Laos, and Vietnam. Its aims include accelerating economic growth, social progress, sociocultural evolution among its members, protection of regional peace and stability, and opportunities for member countries to discuss differences peacefully.

ASEAN covers a land area of 4.46 million km², which is 3% of the total land area of Earth, and has a population of approximately 600 million people, which is 8.8% of the world's population. The sea area of ASEAN is about three times larger than its land counterpart. In 2012, its combined nominal GDP had grown to more than US$ 2.3 trillion. If ASEAN were a single entity, it would rank as the eighth largest economy in the world.

Leaders of each country felt the need to further integrate the region. Beginning in 1997, the bloc began creating organisations within its framework with the intention of achieving this goal. ASEAN Plus Three was the first of these and was created to improve existing ties with the People's Republic of China, Japan, and South Korea. This was followed by the even

larger East Asia Summit, which now includes these countries as well as India, Australia, New Zealand, United States and Russia. This new grouping acted as a prerequisite for the planned East Asia Community, which was supposedly patterned after the now-defunct European Community. The ASEAN Eminent Persons Group was created to study the possible successes and failures of this policy as well as the possibility of drafting an ASEAN Charter.

In 2006, ASEAN was given observer status at the United Nations General Assembly.As a response, the organisation awarded the status of "dialogue partner" to the United Nations.

Free Trade

In 2007, ASEAN celebrated its 40th anniversary since its inception, and 30 years of diplomatic relations with the United States. On 26 August 2007, ASEAN stated that it aims to complete all its free trade agreements with China, Japan, South Korea, India, Australia and New Zealand by 2013, in line with the establishment of the ASEAN Economic Community by 2015. In November 2007 the ASEAN members signed the ASEAN Charter, a constitution governing relations among the ASEAN members and establishing ASEAN itself as an international legal entity. During the same year, the Cebu Declaration on East Asian Energy Security was signed in Cebuon 15 January 2007, by ASEAN and the other members of the EAS (Australia, People's Republic of China, India, Japan, New Zealand, South Korea), which promotes energy security by finding energy alternatives to conventional fuels.

On 27 February 2009 a Free Trade Agreement with the ASEAN regional block of 10 countries and Australia and its close partner New Zealand was signed, it is estimated that this FTA would boost aggregate GDP across the 12 countries by more than US$48 billion over the period 2000–2020. ASEAN members together with the group’s six major trading partners – Australia, China, India, Japan, New Zealand and South Korea – have begun the first round of negotiations on 26–28 February 2013 in Bali, Indonesia, on establishment of the Regional Comprehensive Economic Partnership.

ASEAN six majors refer to the six largest economies in the area with economies many times larger than the remaining four ASEAN countries.

Development gap

When Vietnam, Laos, Myanmar, and Cambodia joined ASEAN in the late 1990s, concerns were raised about a certain developmental divide regarding a gap in average per capita GDP between older and the newer members. In response, the Initiative for ASEAN Integration (IAI) was formed by ASEAN as a regional integration policy with the principal goal of bridging this developmental divide, which, in addition to disparities in per capita GDP, is manifested by disparities in dimensions of human development such as life expectancy andliteracy rates. Other than the IAI, other programmes for the development of the Mekong Basin - where all four

newer ASEAN members are located - that tend to focus on infrastructure development have been effectively enacted. In general, ASEAN does not have the financial resources to extend substantial grants or loans to the new members. Therefore, it usually leaves the financing of these infrastructure projects to international financial institutions and to developed countries. Nevertheless, it has mobilized funding from these institutions and countries and from the ASEAN-6 (Indonesia, Malaysia, Philippines, Brunei Darussalam, Singapore, and Thailand) themselves for areas where the development gap needs to be filled through the IAI programme. Other programmes intended for the development of the ASEAN-4 take advantage of the geographical proximity of the CLMV countries and tend to focus on infrastructure development in areas like transport, tourism, and power transmission.

India’s trade with Asia:

Association of South East Asian Nations (ASEAN) and India Free Trade Agreement (FTA) negotiations.

             India’s engagement with the Association of South East Asian Nations (ASEAN) started with its "Look East Policy" in the year 1991. ASEAN has a membership of 10 countries namely Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. India became a Sectoral Dialogue Partner of ASEAN in 1992 and Full Dialogue Partner in 1996. In November 2001, the ASEAN-India relationship was upgraded to the summit level.

India- Sri Lanka Comprehensive Economic Partnership Agreement (CEPA) negotiations

1. India-Sri Lanka Free Trade Agreement (ISLFTA), which was signed in 1998, has become operational in 2000.  

2.      Sri Lanka is India’s largest trading partner country in the SAARC region.   The bilateral trade between India and Sri Lanka has grown four times in the last nine years increasing from US $   658 million in 2000 to US $ 2719 million in 2009. 

India-Thailand Comprehensive Economic Cooperation Agreement (CECA) negotiations 

        In November 2001, the Prime Minister of Thailand, Dr. Thaksin Shinawatra and the Prime Minister of India had agreed to set up a Joint Working Group (JWG) to undertake feasibility study of a Free Trade Agreement (FTA) between India and Thailand. The JWG had observed that the policy regimes in both the countries were conducive to more intensive bilateral economic integration and a FTA could prove to be a building block for other sub-regional, regional and global economic integration processes of which both countries are a part. Having observed rich potential of trade expansion, the JWG has concluded that the proposed FTA between India and Thailand is feasible, desirable and mutually beneficial. Accordingly, a Joint Negotiating Group (JNG) was set up to draft the Framework Agreement on India – Thailand FTA. 

Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) Free Trade Agreement (FTA) negotiations

     The initiative to establish Bangladesh-India-Sri Lanka-Thailand Economic Cooperation (BIST-EC) was taken by Thailand in 1994 to explore economic cooperation on a sub-regional basis involving contiguous countries of South East & South Asia grouped around the Bay of Bengal.  Myanmar was admitted in December, 1997 and the initiative was renamed as BIMST-EC.   The initiative involves 3 members of SAARC (India, Bangladesh & Sri Lanka) and 2 members of ASEAN (Thailand, Myanmar).  BIMST-EC is visualized as a ‘bridging link’ between two major regional groupings i.e.  ASEAN and SAARC. BIMST-EC is an important element in India’s “Look East” strategy and adds a new dimension to India’s economic cooperation with South East Asian countries.   

2.     The 2nd BIMSTEC Summit was hosted by India in New Delhi on 13 November 2008.  It was preceded by the 11th Ministerial Meeting and the 13th Senior Official’s Meeting on 11-12 November 2008. The 2nd Summit took place four years after the 1st BIMSTEC Summit which was held in Thailand.   

India-Gulf Cooperation Council (GCC) Free Trade Agreement (FTA) negotations:

     A Framework Agreement on Economic Cooperation between Republic of India and Gulf Cooperation Council was signed on 25th August, 2004.   The Framework Agreement provided that both the parties shall consider ways and means for extending and liberalizing the trade relations and also for initiating discussions on the feasibility of a FTA between them. 

 2.       2 rounds of negotiations have been held so far.  The 1st round of negotiations was held in Riyadh on 21st – 22nd March, 2006.  During this round, GCC side has agreed to include Services, Investment and general economic cooperation along with goods in the GCC-India FTA.   Further, the Agreement on the modalities for negotiations was finalized.  The 2nd round of negotiations was also held in Riyadh on 9-10 September, 2008.   Proposed Tariff

Liberalization Scheduled was discussed during this round. It was further decided that the 3rd round of negotiations would be held in Delhi.

 3.      The dates for 3rd round of negotiations are being finalized in consultations with Gulf Cooperation Council Secretariat.

India-Pakistan Trading Arrangement

            India and Pakistan have no formal trade agreement.  India has granted Most Favoured Nation (MFN) Status to Pakistan, whereas Pakistan maintains a List of Importable Items from India called ‘Positive List’ which now consists of 1938 items.  To see this list, please visit Government of Pakistan website  http://www.commerce.gov.pk.   

 2.      Both countries have constituted a Joint Study Group (JSG) at the level of Commerce Secretary.  Apart from the JSG, the issues pertaining to commercial and economic cooperation are discussed at Commerce Secretary level within the framework of the Composite Dialogue.  The fourth round of dialogue was held in New Delhi on 31 July – 1 August 2007.

Asia Pacific Trade Agreement (APTA)

            The Asia-Pacific Trade Agreement (APTA), previously named the Bangkok Agreement, signed in 1975 as an initiative of ESCAP, is a preferential tariff arrangement that aims at promoting intra-regional trade through exchange of mutually agreed concessions by member countries. APTA has five members namely Bangladesh, China, India, Republic of Korea, Lao People's Democratic Republic and Sri Lanka. ESCAP functions as the secretariat for the Agreement.  

2.    During the Second Session of the Ministerial Council at Goa on 26 October 2007 the following important decisions were taken

(i)  To launch the 4th Round of Negotiations;

(ii) To adopt modalities for extension of negotiations in other areas such as non-tariff measures, trade facilitation, services, and investment;   

(iii) A common set of Operational Procedures for the Certificate and Verification of the Origin of Goods for APTA was approved and it was decided that the same would be implemented w.e.f. 1st January, 2008; and  

(iv) To explore the possibilities of expanding the membership of the Agreement. 

Bibliography:

1. http://www.britannica.com/EBchecked/topic/331799/Latin-American-Economic-System-SELA

2. http://europa.eu/index_en.htm3. http://www.caftaintelligencecenter.com/subpages/what_is_cafta.asp4. http://en.wikipedia.org5. http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/

nafta-alena/index.aspx?lang=eng6. http://eeas.europa.eu/mercosur/index_en.htm7. http://ec.europa.eu/trade/policy/countries-and-regions/regions/asean/8. http://commerce.nic.in/trade/international_ta_current_details.asp