Topology of ASEAN FTAs, with Special Reference to IP-Related Provisions
2003
2005
2007
2009
2011
Australia
Exports to
Imports from
11.96 (2.6)
7.23 (1.9)
19.65 (3.0)
11.59 (2.0)
27.43 (3.2)
14.54 (1.9)
29.04 (3.6)
14.81(2.0)
37.25 (3.0)
22.22 (1.9)
China
Exports to
Imports from
20.06 (6.4)
30.58 (8.2)
52.26 (8.1)
61.14 (10.6)
77.93 (9.0)
93.29 (12.4)
81.59 (10.1)
96.60 (13.4)
127.91 (10.3)
152.50 (13.3)
EU-15/27
Exports to
Imports from
58.17 (12.9)
40.15 (10.8)
78.24 (12.1)
58.22 (10.8)
102.58 (11.9)
76.58 (10.2)
92.99 (11.5)
78.75 (10.8)
126.59 (10.2)
108.18 (9.4)
India
Exports to
Imports from
8.45 (1.9)
4.06 (1.1)
15.05 (2.3)
7.95 (1.4)
24.66 (2.9)
12.42 (1.6)
26.52 (3.3)
12.60 (1.7)
42.75 (3.4)
25.67 (2.3)
Japan
Exports to
Imports from
53.20 (11.8)
60.20 (16.2)
72.76 (11.2)
81.08 (14.1)
85.04 (9.9)
88.01 (11.7)
78.09 (9.6)
82.81 (11.4)
145.20 (11.7)
128.15 (11.2)
New Zealand
Exports to
Imports from
1.47 (0.3)
1.15 (0.3)
2.63 (0.4)
1.45 (0.3)
3.55 (0.4)
2.24 (0.3)
3.14 (0.4)
2.24 (0.3)
4.57 (0.4)
3.67 (0.3)
Rep. of Korea
Exports to
Imports from
16.94 (3.7)
16.61 (4.5)
24.36 (3.8)
23.61 (4.1)
29.48 (3.4)
31.77 (4.2)
34.30 (4.2)
40.45 (5.6)
54.47 (4.4)
70.00 (6.1)
USA
Exports to
Imports from
69.67 (15.4)
48.21 (13.0)
92.94 (14.3)
60.98 (10.6)
105.52 (12.2)
72.39 (9.6)
82.20 (10.1)
67.38 (9.3)
106.31 (8.6)
92.48 (8.1)
Intra ASEAN
Exports to
Imports from
115.60 (25.5)
91.13 (24.5)
163.86 (25.3)
141.03 (24.5)
219.52 (25.5)
184.74 (24.5)
199.55 (24.6)
176.63 (24.3)
327.53 (26.3)
270.71 (23.6)
Others
Exports to
Imports from
88.02 (19.5)
72.65 (19.5)
126.40 (19.5)
129.69 (22.5)
186.33 (21.6)
178.03 (23.6)
183.05 (22.6)
154.14 (21.2)
269.71 (21.7)
272.73 (23.8)
Total
Exports
Imports
452.56 (100)
371.98 (100)
648.15 (100)
576.74 (100)
862.05 (100)
754 01 (100)
810.47 (100)
726.41 (100)
1,242.3 (100)
1,146.3 (100)
2.1.3.3 Huge Import Demand
China’s WTO membership from December 2001 means more intensified export competition as well as the reduction and/or removal of tariffs and non-tariff barriers on imports. In preparing for WTO accession, import tariffs had been slashed so that the average rate fell from 42.9 % in 1992 to 23.6 % in 1996 and again to 17.5 % in 1999.16 China had then accounted for only 1.5 % of global imports in 1990 but the share expanded to 5.7 % (or USD 412.8 billion) in 2003 and further to average 6.7 % (or USD 873.7 billion) a year during 2006–2007. Equally important, import demand was expected to increase substantially along with China’s dynamic income and export growth, accelerated urbanization, and sustained structural transformation.17
In the process, China has become the world’s third largest importer (behind the US and the EU-15) of products from developing countries—including final consumer goods, and raw materials and intermediate inputs for export processing. All these are of significant export interest to ASEAN, and the potential for increased trade with China became and has remained huge. China’s initially low share as a market for ASEAN exports, USD 6.2 billion (or 2 % of ASEAN exports) in 1995, increased rapidly to USD 29.1 billion (or 6.4 %) in 2003 and further to USD 77.9 billion (or 9 %) in 2007.
2.2 Strategic Economic Responses and Initiatives
‘Factory Asia’ has greatly widened and deepened East and Southeast Asian interdependence over the past two decades, especially in intra-regional trade and investment relating to microelectronics and automotive products.18 Given this growing interdependence, good trade relations and sustained regional stability have become even more crucial for all stakeholders in accommodating the new dynamics of intra-regional trade and investment, and in dealing more effectively and in a timely manner with natural or man-made shocks and problems requiring collective attention in a strategic part of the world.
Rather than retreating inward into increased protectionism induced by the 1997/1998 crisis, ASEAN instead took additional steps to ensure that external markets and resources (especially finance, technologies and expertise) remain accessible to the region, and vice versa. In fact, ASEAN had already been ready to engage not only the existing dialogue partners but also new regional and global stakeholders so as to foster and enhance collective prosperity and political stability and security in ASEAN and East Asia.19 ASEAN FTA negotiations on a bilateral or plurilateral basis are pertinent in all those regards.
2.2.1 Accelerating Regional Integration and Liberalization
The milestone in the region’s recent history is the ‘ASEAN Vision 2020’ adopted at the December 1997 Summit as a collective response to, and right in the midst of, the crisis itself. This vision foreshadowed the formation of ‘a stable, prosperous and highly competitive ASEAN economic region’ which would be defined and built up as the ASEAN Economic Community (AEC) from October 2003. The AEC, together with the ASEAN Political-Security Community and the ASEAN Socio-Cultural Community, constitutes the three-pillar ASEAN Community.
When established in 2015, the AEC will transform ten separate economies into a single and seamless market and production base which is fully integrated into the global economy. This underlines AMSs’ recognition that the region has to come together as a cohesive group to remain more resilient in crisis and to gain better leverage in external diplomacy (whether commercial or otherwise). Meanwhile, ASEAN must also improve its own competitive edge in order to benefit more from external opportunities (especially those opened up through FTA-based trade liberalization) in a rapidly expanding and diversifying as well as increasingly competitive and knowledge-driven world economy.
2.2.2 Building on Current Strengths and New Complementarities
But external trade is no longer simply a one-way flow based solely on differences in resource endowments. Indeed, value creation and comparative advantage are increasingly maximized through sophisticated, criss-crossing connections interlinked on-line for sourcing, production, assembly, re-processing and distribution.20 Closer integration and upgraded capabilities are a prerequisite for the AEC to participate as a reliable, meaningful, competitive and innovative player in Southeast and East Asia and elsewhere.21
Among the follow-on initiatives are the measures, benchmarks and timetables specified for regional implementation, firstly, in the ‘Roadmap for the Integration of ASEAN’ approved at the ASEAN Summit in November 2002 and, secondly, in the ‘Framework Agreement for the Integration of Priority Sectors’ signed at the November 2004 Summit.22 Also approved for implementation at the 2004 Summit was the ‘ASEAN IPR Action Plan 2004–2010’ (IPR Action Plan) as an integral part of the Vientiane Action Program which is designed to promote regional development, capacity building and integration on a comprehensive basis in ASEAN.
The IPR Action Plan introduces several development (or supply-side) dimensions to ASEAN cooperation for greater productivity, local value added and external competitiveness.23 The objectives are to build up AMSs’ capabilities and services in support of intellectual and technological creativity and innovation, including the development and commercialization of non-traditional IPRs.24 Delivery is partly made though large, multi-year programs in economic and technical cooperation programs with dialogue partners, including those provided under ASEAN FTAs.
3 ASEAN FTAs with Dialogue Partners
The six dialogue partner economies and economic groupings which have concluded FTAs with ASEAN are the Closer Economic Relations Trade Agreement grouping (CER) of Australia and New Zealand (ANZ), China, India, Japan, and the Republic of Korea. Notably, FTA negotiations between ASEAN and the EU, which started in May 2007, had proceeded slowly and the two parties agreed to a temporary pause in negotiations in March 2009. The possibility of an FTA between ASEAN and the US remains open, notwithstanding a regional Trade and Investment Framework Agreement (TIFA) signed by the two sides in August 2006. Most recently, negotiations on a Regional Comprehensive Economic Partnership between ASEAN and its six FTA partners were initiated in May 2013. The aim is to achieve by the end of 2015 a modern, comprehensive, high-quality and mutually beneficial agreement which serves to broaden and deepen ASEAN’s engagement, including in open trade and investment, with its six FTA partners.
3.1 Overview of Trade and Investment Relationships
Table 1 provides an indication of the relative importance in terms of trade relations between ASEAN and the six FTA partners, plus the EU and the US. Japan, the EU and the US were the largest trading partners of ASEAN in the early and mid-2000s. However, their relative importance has declined almost steadily from the later part of the last decade. The CER group and India are much smaller trading partners of ASEAN but with relatively stable trade shares with the region during 2003–2011.
In particular, Japan, the EU-15 and the US have become smaller sources of demand, with a combined share of ASEAN exports falling from 37 to 33 % between 2003 and 2011. Likewise, ASEAN has also imported less from those three dialogue partners who accounted for 38 % of ASEAN imports in 2003 and 31 % in 2011.
In comparison, China’s share of ASEAN’s trade increased significantly from less than 15 % in 2003 to almost 24 % in 2011. Indeed, the country became ASEAN’s largest trading partner from 2009. Specifically, China has been both an expanding export market for ASEAN products and a more important supplier of ASEAN imports. Overall, however, the region is in a deficit position in trade with China. These trends are evidence of the shifted patterns and the new dynamics in global and regional trade, with China serving by and large as an intra-regional import and processing platform for export to the West.
As regards the available data on FDI hosted by ASEAN, the EU has remained the largest source of investment, accounting generally for almost one-half of the FDI inflow to ASEAN during 2003–2011 (Table 2). Such investment amounted to USD 28 billion in 2011. Japan and the US are other major direct investors in ASEAN, with respectively USD 16 billion (or 27 % of the eight-partner total) and USD 7 billion (or 11 %) in 2011. Notably, however, the FDI flows from those three FTA partners have been rather unstable, a contrast to the relatively steady rise of FDI in ASEAN from smaller and non-traditional sources such as Australia, China and the Republic of Korea. In fact, China has invested more heavily in ASEAN from the late 2000s and overtook the US in terms of FDI in ASEAN in 2011.
Table 2
FDI in ASEAN from major partner countries 2003–2011 (value in billion USD and percentage of total in brackets)
2003 | 2005 | 2007 | 2009 | 2011 | |
|---|---|---|---|---|---|
Australia | 0.16 (1.2) | 0.27 (0.67) | 1.01 (3.0) | 0.98 (4.1) | 1.11 (1.8) |
China | 0.17 (1.3) | 0.53 (1.4) | 1.03 (3.1) | 1.97 (8.3) | 7.34 (12.1) |
EU-15/27 | 6.68 (50.8) | 10.57 (27.0) | 14.24 (42.3) | 8.21 (34.8) | 28.24 (46.4) |
India | 0.10 (0.8) | 0.39 (1.00) | 0.64 (1.9) | 0.57 (2.4) | (−1.70) (−2.8) |
Japan | 3.91 (29.7) | 6.16 (15.8) | 8.90 (26.4) | 3.97 (16.8) | 16.43 (27.0) |
New Zealand | 0.09 (0.7) | 0.45 (1.2) | 0.04 (0.0) | 0.11 (0.5) | 0.06 (0.1) |
Rep. of Korea | 0.55 (4.2) | 0.54 (1.4) | 2.72 (8.1) | 1.79 (7.58) | 2.41 (4.0) |
USA | 1.49 (11.3) | 4.82 (12.3) | 5.11 (15.2) | 6.02 (25.5) | 6.98 (11.5) |
Total | 13.15 (100.0) | 23.73 (100.0) | 33.69 (100.0) | 23.62 (100.0) | 60.87 (100.0) |
Singapore and, to a lesser extent, Indonesia, Malaysia and Thailand are generally the most important destinations of external FDI. Among the AMSs, Viet Nam receives the largest share of FDI from the Republic of Korea and has become an important host of FDI from the US, Japan and China. China and, to a lesser extent, the Republic of Korea, are the main investors in Cambodia. It is also well known that China has invested significantly overseas via Hong Kong SAR but there is little information on such FDI flow to ASEAN.
3.2 The Engagement Process
3.2.1 East and South Asian countries
The financial and economic crisis of 1997/1998 and its contagion provided opportunities for Summit-level dialogues as well as meetings of Ministers and senior officials between ASEAN and the APT countries of China, Japan and the Republic of Korea.25 In fact, Leaders of the APT countries and ASEAN first met bilaterally in December 1997 in Kuala Lumpur, and the APT consultation process was institutionalized annually from 1999. Notably, the ASEAN–China FTA (ACFTA) was first proposed and endorsed at the ASEAN–China Summit in November 2001.26
The ‘Framework Agreement on Comprehensive Economic Co-operation between the Association of Southeast Asian Nations and the People’s Republic of China’ (ACFA) was then signed by the Leaders of both sides at their November 2002 Summit in Phnom Penh.27 Importantly, it was the first time that an FTA was being pursued by either ASEAN or China outside the multilateral framework.28 This development caught the other ASEAN dialogue partners off-guard and subsequently triggered a new wave of FTAs between ASEAN and other regional countries.29
Indeed, October 2003 witnessed the Summit-level signing in Bali of the ‘Framework Agreement on Comprehensive Economic Co-operation between the Association of South-east Asian Nations and the Republic of India’ (AIFA),30 and the ‘Framework for Comprehensive Economic Partnership between the Association of Southeast Asian Nations and Japan’ (AJFP). The ‘Framework Agreement on Comprehensive Economic Co-operation among the Governments of the Member Countries of ASEAN and the Republic of Korea’ (AKFA) was signed by the Leaders of both sides at their Summit meeting in Kuala Lumpur in December 2005.31
3.2.2 The US, and the EU and CER Groupings
As regards the US, a dialogue partner of ASEAN since 1977, the Enterprise for ASEAN Initiative (EAI) was announced by the US President in October 2002. This initiative aims to strengthen the already deep and diversified trade and investment relationships between the two sides, including by means of bilateral and plurilateral FTAs as the circumstances arise. AMSs will be assisted in the preparations of such FTAs through the (prior) development of bilateral TIFAs, the precursors of, or stepping stones to, FTAs with the US.32
Also under EAI auspices, the ‘Joint Vision Statement on the ASEAN-US Enhanced Partnership’ (AUSEP), issued by the Leaders of both sides in November 2005, sets out in some detail the directions to move forward mutual relations and development cooperation (political, security, economic and social). This is to be carried out in a series of AUSEP Plans of Action (PoA); IPRs were one of the many areas for joint action under the first PoA for 2006–2011. Additionally, in further support of EAI objectives on a plurilateral basis was the regional TIFA signed by the US Trade Representative and the ASEAN Economic Ministers (AEM) in August 2006.33
As noted previously, however, an ASEAN–US FTA remains an open possibility at this stage. Meanwhile, the concluded FTA between ASEAN and the CER and the planned ASEAN FTA with the EU also had their origins in a series of mutually agreed initiatives and arrangements for development cooperation. These will be discussed further next.
3.3 Differentiated Architectural Frameworks
Among other things, there are clear differences in the approaches to the framing of FTAs between ASEAN and the APT countries and India on the one side, and between ASEAN and the CER and EU economic groupings on the other side. These differences include both the breadth of coverage and the depth of FTAs themselves.
3.3.1 Institutional Arrangements
The Framework instruments between ASEAN and its dialogue partners in East and South Asia, noted earlier, provide an over-arching umbrella and contain mechanisms and parameters for negotiation on, and the operationalization of, mutual cooperation in economic and other fields between the two sides, including by means of FTAs. As such, the various and separate instruments signed by both sides on mutual cooperation on specific areas and aspects (for example, trade in goods and in services, investment or dispute settlement) are an integral part of, or are subsumed under, those respective Frameworks.
In comparison, the origins and instrumental underpinnings are slightly different in the case of the concluded FTA between ASEAN and the CER countries and the planned FTA between ASEAN and the EU. The establishment of an ASEAN–CER FTA had earlier been recommended as both feasible and desirable by a high-level task force of ASEAN–CER experts in December 2000.34 ASEAN–CER relationships were then guided by the ‘Framework for the AFTA–CER Closer Economic Partnership’ endorsed at the ministerial level in 2001. This Framework was formalized and given a sharper focus in the ‘Ministerial Declaration on the Framework for the AFTA-CER Closer Economic Partnership’ (FCEP) made in September 2002.
Likewise, ‘A New Partnership with South East Asia’ had been launched by the EC in July 2003. This initiative and its key component, the ‘Trans-Regional EU-ASEAN Trade Initiative’ (TREATI), have since guided ASEAN–EU multi-sectoral relationships.35 The proposed AEUFTA originated from a recommendation of the Vision Group on ASEAN–EU Economic Partnership constituted under TREATI auspices. Notably, both of the concluded AANZFTA and the proposed AEUFTA cover areas and aspects which extend beyond the boundaries of mutual development cooperation contained in the FCEP and TREATI respectively. Those two FTAs are also not part of the FCEP and TREATI.
3.3.2 ‘Brick by Brick’ Implementation
The components of the agreed Frameworks between ASEAN and its East and South Asian dialogue partners are to be constructed sequentially and achieved ‘building block’ by ‘building block’. For instance, negotiations on an FTA on goods, on services and on investment had been concluded (as part of ACFA) and the agreement on trade in goods was signed by ASEAN and China in November 2004 and came into force in July 2005. The agreements on trade in services and on investment were signed by both parties in January 2007 and August 2009 and came into force in July 2007 and February 2010, respectively.36 Under AKFA, likewise, are the (successively) completed agreements on trade in goods, trade in services and investment between ASEAN and the Republic of Korea. These agreements were signed respectively in December 2005, November 2007 and June 2009 and came into force in June 2007, May 2009 and September 2009.37
The AJCEP (under the AJFP Framework), which was signed between ASEAN and Japan in April 2008, came into force in December of the same year.38 It is more comprehensive than those agreements ASEAN had concluded with the other two East Asian dialogue partners (China and the Republic of Korea). In particular, the AJCEP includes provisions of mutual commitments for liberalization (plus the related rules and regulations) in trade in goods and services, and in investment; and for implementing economic cooperation. However, most of the provisions in the AJCEP concern trade in goods and they constitute the large bulk of this agreement.39
Preparations for negotiations between ASEAN and India on an FTA on goods under the AIFA had commenced in January 2004, and the agreement was signed in August 2009 for entry into force in January 2010. FTA negotiations on trade in services and on investment between ASEAN and India, which commenced in 2008, were concluded in December 2012.40
Compared to the foregoing, FTA negotiations with the CER and EU groupings are significantly more comprehensive in scope and the FTAs are also to be concluded as a ‘single undertaking’ (and not sequentially ‘building brick by building brick’) as those FTAs under various agreed Frameworks between ASEAN and its East and South Asian dialogue partners. Architecturally, therefore, ASEAN’s concluded FTA with the CER countries and planned FTA with the EU are integrated in nature and cover in considerable detail more than just the areas and aspects contained in those Framework agreements, plus the associated FTAs, between ASEAN and its East and South Asian dialogue partners.
The proposed AANZFTA was launched in December 2004 and the first round of negotiations started in March of the following year. Negotiations were completed in August 2008 and this agreement was signed in February of the following year and came into force in February 2010. The AANZFTA is Australia’s first plurilateral trade agreement. It is also a highly credible achievement by ASEAN as it is the most comprehensive FTA that the region has negotiated and concluded collectively, despite the highly diverse levels of development among AMSs.
Meanwhile, the Vision Group on ASEAN–EU Economic Partnership had been established as part of TREATI activities by the AEM and the EU Trade Commissioner in April 2005. Its report, including a recommendation on the establishment of an FTA between the two regions, was submitted to the 7th AEM–EU Consultation in May 2006. The ECom was authorized to negotiate the FTA as a single undertaking with ASEAN in April 2007 and AEUFTA negotiations at the level of working officials were launched a month later.41 The proposed AEUFTA was expected to be the most challenging tasks for management by ASEAN to date. Indeed, negotiations were progressing slowly and were in a temporary pause from March 2009.42
3.3.3 Differentiated Approaches Towards IP
Equally important, ASEAN and its East and South Asian dialogue partners have incorporated IPRs, along with a large number of other areas, in a separate chapter or section on mutual development (economic and technical) cooperation in the agreed Frameworks. There are also no TRIPS-plus provisions and obligations in those Frameworks.43 Such an approach and coverage towards IP and IPRs is apparently neither shared by the CER countries nor, most likely, by the EU.
4 IP in ASEAN FTAs
In less than three decades, ASEAN enterprises and industries have become established as a global player in a large number of world markets.44 As a result, several regional economies are known world-wide as the first or second generation of newly industrialising economies or Asian economic tigers (for example, Indonesia, Malaysia, Singapore, Thailand and Viet Nam). Nevertheless, intellectual creativity and technological innovation has remained an Achilles heel of ASEAN.
4.1 Overview of Development Needs
To begin with, regional manufactures are exported mostly under non-regional brands and marks. Few ASEAN manufacturers, moreover, have leveraged their know-how and know-why into formal industrial IP assets.45 Even fewer are the owners of IPRs of any global significance in terms of technological and commercial break-throughs, appealing design and/or brand-name recognition. More generally, ASEAN and China are where global electronics goods are made but not where much of the commercial value is added locally.46
Using ideas, instead of creating ideas, has been instrumental in generating fast-paced export industrialization and creating mass (although low-skilled) employment. But this is not a ‘free ride’ and, without progressive creativity and upgraded capabilities, the process can be costly in the short term, and also in the long run, in terms of the incubation and development of a culture of quality, innovation and excellence among domestic stakeholders.47 These range from industries, enterprises, entrepreneurs and workers to the artistic, scientific and professional segments of the workforce as well.
In the context outlined above, the rich experiences in IP asset development and commercialization from its dialogue partners (especially those in East Asia) contain many relevant and replicable lessons for ASEAN’s consideration. Enterprises and industries in the Republic of Korea (and Chinese Taipei) were largely technological followers and imitators in the 1960s and 1970s. However, concerted efforts at forming external alliances in R&D for technological and design creativity and innovation, supplemented by cumulative capacity building and leveraged through substantial amounts of risk-taking investment, have borne significant fruit.
Many of those firms and industries have evolved from subcontractors to leading players and pioneers in their own right in several fields of consumer and office electronics, particularly since the mid-1990s.48 A large number of them are now occupying the pole position commercially, enjoying strong pricing powers on high-margin, high-value ICT products. Most of these are innovative and ‘top of the line’ in their own product classes and categories, and are marketed under established global names and the firms’ own brands as well.49
4.2 IP-Related Provisions in ASEAN FTAs
Against that backdrop, IP and IPRs plus a wide range of other development prerequisites have long been reserved for economic and technical cooperation and facilitation between ASEAN and the external community. Such an approach to development cooperation has been perceived among AMSs not just as an essential catalyst to maximizing and sustaining the longer term benefits of enhanced partnership. Development cooperation is indispensable in creating further opportunities for broader and deeper integration, including through the formation of FTAs and more comprehensive FTAs.
4.2.1 IP-Related Collaboration
4.2.1.1 Cooperation Approaches and Arrangements
The general approach remains unchanged under the four Frameworks that ASEAN has concluded thus far with East and South Asian countries. IPRs are among the major or priority sectors for obligated cooperation and facilitation which is normally carried out by means of specific projects to be jointly identified, designed and implemented. Nevertheless, the scope, form and modalities of such economic and technical partnership are not always the same or equally demanding across the Frameworks under consideration.
In particular, the AIFA foreshadows a better exchange of information on IPR rules and regulations and closer relationships among ASEAN and Indian IP Offices. Generally, however, there are few details in both the AIFA, and also in the ACFA, on the available resources, the focal areas and mechanisms for IP-related cooperation and facilitation, and the associated arrangements for resource mobilization and allocation, and for monitoring and evaluation of joint implementation. Those matters will have to be specified in other supplementary instruments and arrangements to be concluded by both sides at a later stage.
The AJCEP and AKFA, meanwhile, contain more specific details which are broadly similar concerning the focal areas and aspects in IP-related development cooperation and facilitation. Notably, there is an explicit supply-side emphasis regarding the creation and commercialization of IP assets, in addition to those on joint enforcement and protection of IPRs. Besides, the commitments and obligations are TRIPS compliant—and not TRIPS-plus—in nature.
In particular, IP constitutes Part 1 of Annex 5 which is allocated to the Work Programs for Economic Cooperation in the AJCEP. Joint endeavours will be made to promote (a) the creation and commercialization of IP; (b) information exchange and sharing of best practices on transparent and simplified procedures concerning IP and on effective IP protection and enforcement; and (c) public awareness of IP and IPR issues. Notably, the dispute settlement procedures provided in Chapter 9 of the AJCEP shall not apply to Chapter 8 on ‘Economic Cooperation’.50
Details on IP-related cooperation, provided in the AKFA Annex, include similar goals and focal areas designed to foster IP asset development, utilization and protection, and to raise public awareness of IPRs. Other objectives and activities concern the strengthening of IP-related human resources and institutional infrastructure. The pertinent provisions specify the conduct of training for IP personnel and the enhancement and modernization of IP databanks, such as those on patents and trademarks, in AMSs.51
4.2.1.2 Moving Cooperation Forwards
Generally, there are currently few details as regards the allocated resources, initial focus of joint intervention, and implementation timelines relating to FTA-driven development cooperation programs with dialogue partners, including those in East and South Asia. However, the promise of such programs is very significant against the backdrop of ASEAN’s wide-ranging needs in capacity building and upgrading on both the supply and demand sides, noted earlier. Many of these needs are also long term in nature.
A few parameters for consideration can be noted in support of FTA-driven programs in the ideal scenario. Firstly, sustained two-way coordination in programming and timetable setting would certainly maximize beneficiaries’ ownership in ASEAN as well as the great potential and strong synergies between various cooperation programs funded by different FTA partners. Secondly, the priority areas for intervention differ among these partners. Thus, the sequential and coordinated design of integrated project clusters to address those areas cumulatively would certainly boost significantly the overall relevance and impact of the intended intervention.
Thirdly, compared to several dialogue partners of ASEAN, IP and IPRs have a far more recent history in ASEAN. A compounding factor is that the domains of human creativity and innovation have diversified significantly, and most of these domains have become very complicated and highly technical subjects in themselves. Fourthly, a further complication is that IPRs are ‘private rights’, as emphasized in the preamble to TRIPS. But all forms of IPRs, in varying degrees, restrict open trade, business competition, and public access. Lastly, the regulation of IP assets has complex synergies and interplays on numerous factors and forces of critical importance to local development and welfare.52
As such, on one level, a principled case for IPR development and for enhanced IPR protection and enforcement will have to be articulated extensively and on an on-going basis. This exercise should include the related presentation of estimates and details on the local value added and comparative costs-benefits of concern to stakeholders and constituencies in different sectors and industries. Indeed, many of the issues involved have bridged the customary divide between developed and developing countries.53 They are also coloured by the increasingly fierce competition among interdependent countries for external markets, supply sources, and strategic alliances.
On another level, FTA-driven cooperation programs are very useful in bridging the gaps in knowledge, infrastructure and capabilities. But the possibilities of information overloads on the one hand and the current limits on local absorptive capacity on the other hand are real and imminent, even in the large middle-income AMSs. All these have to be taken into account in the design and delivery of large-scale, multi-year development cooperation programs to ensure and enhance their effectiveness and sustainability in the longer term.
4.2.2 Comparative Overview of IP-Related Obligations
The (CER-based) High-Level Task Force report in December 2000 had underlined the need for IPR cooperation and facilitation between the CER group and ASEAN. This was reflected in Annex I of the FCEP of 2002 which provides for CER–ASEAN development cooperation and facilitation in, among other fields, ‘new economy issues’. Such cooperation and facilitation would encourage the development of IP regimes to better protect IPRs and support innovation and economic growth. Notably, however, IP-related matters themselves are not recommended or specified as a subject for negotiation.
For a comparative perspective, reference can be made to Australia’s FTAs with Singapore (SAFTA, signed in February 2003 and in force in July of the same year) and Thailand (TAFTA, signed in July 2004 and in force in January 2005).54 IPRs have their own chapter in those bilateral FTAs. However, the IP chapters in both TAFTA and SAFTA are relatively short and the provisions are mostly concerned with mutual cooperation and facilitation in IP protection and enforcement, and in IP asset development. Additionally, the IPR-related obligations are not over and above those in TRIPS for all practical purposes.
Moreover, there is no commitment of accession to additional IP treaties in TAFTA. However, accession to the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT), both concluded in December 1966 and coming into force in 2002, is required within 4 years from the date of entry in force of SAFTA (article 2.2 and 2.3).55 This is the only TRIPS-plus obligation in SAFTA, subsequently fulfilled by both sides.56
IPRs are also a subject of development cooperation between ASEAN and the EU under TREATI. The TREATI-based Vision Group has also reiterated the importance of enhanced cooperation and facilitation, including in IPRs, with ASEAN. The AEUFTA is currently under a temporary pause in negotiation. Notably for a comparative perspective, there are separate IP-related chapters, or less often sections, in many EU Economic Partnership Agreements (EPAs) and EU Association Agreements (AAs). Besides, these chapters or sections are quite homogeneous, varying only in minor details.57
The typical template contains relatively extensive provisions on IP and IPRs with many being TRIPS-plus in nature. Generally, the standards and obligations involved are simpler for developing economies and more stringent for higher-income developing economies (for example, Mexico, Chile and South Africa) or for current and prospective candidates for EU accession. Notably, the IP section in the CARIFORUM EPA, which was a subject of considerable negotiation, may be a relevant input for ASEAN’s consideration in several aspects concerning approach and coverage in AEUFTA preparations for initial negotiation or for resumed negotiation.58
Another issue for attention is that dialogue partners of ASEAN do not always have similar regulatory systems on various IPRs. Trademarks (TMs) and GIs, for example, are subject to sharply different regulatory systems. The CER group of Australia and New Zealand (and also US and Canada) protect GIs as an integral part of their TM regimes, including by means of collective marks or certification marks.59 These regimes are supplemented by laws and regulations on unfair competition and consumer protection.60
The other FTA partners of ASEAN, such as the EU and India, have enacted a specialised system for GI protection. The bilateral and plurilateral FTAs concluded by the EU typically have detailed GI-related provisions, including the establishment of a registration system, the extension of enhanced protection for wines and spirits to all products, and the co-existing relationships between GIs and TMs.61 Many of those provisions are TRIPS-plus but these higher standards of protection and obligations are, nevertheless, consistent with the EC positions in the current multilateral negotiations on the DDA.62
Such regulatory diversity has given rise to novel and uncharted legal and substantive issues in FTA negotiations at various geographical levels and also in regulation and implementation itself. In fact, there have been many adjudicated disputes, and appeals of adjudication, concerning GIs and their coexistence with TMs at the WTO and especially in the EU.63 Some of the issues and implications concerning the delicate and overlapping relationships between these two domains of IP assets and their economic spills-over in the context of ASEAN are discussed further elsewhere by the author.64
4.2.3 IP-Related Obligations in the AANZFTA
4.2.3.1 Major IP Provisions
IP occupies chapter 13 which comprises 12 Articles on pages 184–193 of the 245-page AANZFTA text (excluding annexes).65 The substantive provisions on IPRs, comprising both treaty-level (hard) obligations and best-endeavour (soft) commitments, are confined to copyright and neighbouring rights (Article 5); government use of software (Article 6); trademarks and geographical indications (Article 7); and genetic resources, traditional knowledge and folklore (Article 8).
Several of those provisions merely repeat their counterparts in TRIPS and the TRIPS-plus provisions, which are few in number, are also not particularly onerous in their implications and required follow-up actions. Generally, therefore, the IP chapter is far from comparable to many other bilateral and plurilateral FTAs. These tend to include significantly more comprehensive chapters or sections on IP. The AANZFTA represents thus an intermediate approach, or the ‘middle way’ or ‘third way’, in the crafting of FTAs which have been pursued by ASEAN and its six FTA partners thus far.
Concerning copyright and neighbouring rights, firstly, each party shall provide to authors of works (including cinematographic films) ‘the exclusive right to authorize any communication to the public of their works by wire or wireless means’ [Article 5.1(a)]. This provision is supplemented by a best-endeavour requirement on FTA partners in providing to authors of sound recordings ‘the exclusive right to authorize any communication to the public’ of their sound recordings by wire or wireless means’ [Article 5.2(a)]. These two TRIPS-plus provisions incorporate part of the first phrase of WCT Article 8 on ‘Right of Communication to the Public’.66 A notable difference, however, is that this WCT Article covers authors of literary and artistic works (that is all kinds of works), as opposed to just ‘authors’ in the AANZFTA Article 5.1(a) or authors of sound recordings in the soft-obligation Article 5.2(a).
Secondly, parties are required to make the best efforts to provide ‘adequate legal protection and effective legal remedies against the circumvention of effective technological measures that are used by copyright owners in connection with the exercise of their copyright and that restrict acts, in respect of their works, which are not authorized by the copyright owners concerned or permitted by law’ (Article 5.2(b) with footnote number four omitted). This Article reproduces almost verbatim Article 11 of the WCT; a near identical provision can also be seen in Article 18 of the WPPT with respect to performers and producers of phonograms. An important difference is that both of these stipulations are a treaty obligation in WCT and WPPT while AANZFTA Article 5.2(b), although TRIPS-plus in nature, is a soft commitment.67
Thirdly, each party ‘shall foster the establishment of appropriate bodies for the collective management of copyright’. These bodies shall be encouraged ‘to operate in a manner that is efficient, publicly transparent and accountable to their members’ (Article 5.1(c)). This specific procedural requirement for the protection and enforcement of IPRs is not stipulated in TRIPS, in the two WIPO internet treaties of WCT and WPPT or, for that matter, in the Berne and Rome Conventions.
Fourthly, parties ‘shall provide criminal procedures and penalties at least in cases where a person wilfully infringes copyright for commercial advantage or financial gain’ [Article 5.1(b)]. However, they are required to endeavour to provide criminal procedures and penalties at least in cases ‘where a person wilfully commits a significant infringement of copyright’ [Article 5.2(c)]. Such an infringement may not be carried out for commercial advantage or financial gain and is not otherwise permitted by law but it, nevertheless, ‘has a substantial prejudicial impact on the owner of the copyright’.
On government use of software, each party confirms its compliance to maintain appropriate laws, regulations or policies that make provision for its central government agencies to continue to use only legitimate computer software in a manner authorized by law and consistent with the IP provisions in chapter 13 of the AANZFTA. The second commitment is to encourage the respective regional and local governments of the respective parties to maintain or adopt similar measures.
Generally in terms of TRIPS intent and implications, Article 6 is not necessarily TRIPS-plus although there are currently no specific provisions to that effect in TRIPS and in the various statutes on copyright and related rights in AMSs. As such, appropriate laws, regulations, administrative procedures or executive decrees and/or appropriate amendments regarding public-sector usage of only legitimate software products may have to be issued and and/or enacted in AMSs.
As regards TMs and GIs covered in Article 7 of chapter 13 of the AANZFTA, firstly, the hard and soft obligations involved are considerably less complex than those of copyright and neighbouring rights (provided in Article 5), reviewed previously. Parties shall maintain a TM classification system that is consistent with the ‘Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks’ (Article 7.1). In addition, parties shall also provide ‘high quality TM rights through the conduct of examination as to substance and formalities and through opposition and cancellation procedures’ (Article 7.2).68
The above two treaty obligations are TRIPS plus although for all practical purposes, they do not necessarily set higher standards of protection for TMs and GIs among the AANZFTA parties.69 Generally, they may have been intended to provide clarifying operational details to those in TRIPS and, in many cases, may serve the interests of these FTA parties in cases of dispute. In TRIPS Article 15.5 on TMs, for example, WTO members are obliged ‘to afford a reasonable opportunity for petitions to cancel the registration’ but they just ‘may afford an opportunity for the registration of a trademark to be opposed’.
However, additional details on the commitments and procedures concerning the implementation of TRIPS Article 15.5 are to be found further down in other provisions in this agreement. These include Articles 41 (on general obligations in IPR enforcement) and Article 62 (on procedures relating to IPR acquisition and maintenance).70 AANZFTA Article 7.2 may involve, nevertheless, the establishment and operation of post- and possibly pre-grant TM opposition proceedings with implications on scarce infrastructure and resources at disposal in several AMSs.71
Secondly, each AANZFTA party ‘shall protect TMs where they predate, in its jurisdiction, geographical indications in accordance with its domestic law and the TRIPS Agreement’ (Article 7.3). Each party also ‘recognizes that geographical indications may be protected through a trademark system’ (Article 7.4). These two provisions are TRIPS compliant. Article 7.3 reflects the ordinary or traditional principle of priority for IPR protection and dispute resolution, namely ‘first in time, first in right’. Thus, a mark or sign (which may contain a GI) cannot be registered if it is deemed identical or similar to a registered TM for the same or similar kind or class of goods or services.72