ASEAN

The Association of Southeast Asian Nations, commonly abbreviated ASEAN is a geo-political and economic organization
of 10 countries located in Southeast Asia, which was formed on 8 August 1967 by Indonesia, Malaysia, the Philippines,
Singapore and Thailand. Since then, membership has expanded to include Brunei, Burma (Myanmar), Cambodia, Laos,
and Vietnam. Its aims include the acceleration of economic growth, social progress, cultural development among its
members, the protection of the peace and stability of the region, and to provide opportunities for member countries to
discuss differences peacefully.

ASEAN spans over an area of 4.46 million km 2, 3% of the total land area of Earth, with a population of approximately 580
million people, 8.7% of the world population. In 2009, its combined nominal GDP had grown to more than USD $1.5
trillion. If ASEAN was a single country, it would rank as the 9th and the 3rd largest economy in the world and Asia in
terms of nominal GDP, respectively.

History

ASEAN was preceded by an organisation called the Association of Southeast Asia, commonly called ASA, an alliance
consisting of the Philippines, Malaysia and Thailand that was formed in 1961. The bloc itself, however, was established on
8 August 1967, when foreign ministers of five countries– Indonesia, Malaysia, the Philippines, Singapore, and Thailand–
met at the Thai Department of Foreign Affairs building in Bangkok and signed the ASEAN Declaration, more commonly
known as the Bangkok Declaration. The five foreign ministers– Adam Malik of Indonesia, Narciso Ramos of the
Philippines, Abdul Razak of Malaysia, S. Rajaratnam of Singapore, and Thanat Khoman of Thailand– are considered as
the organisation's Founding Fathers.

The motivations for the birth of ASEAN were so that its members’ governing elite could concentrate on nation building, the
common fear of communism, reduced faith in or mistrust of external powers in the 1960s, as well as a desire for economic
development; not to mention Indonesia’s ambition to become a regional hegemon through regional cooperation and the
hope on the part of Malaysia and Singapore to constrain Indonesia and bring it into a more cooperative framework.

In 1976, the Melanesian state of Papua New Guinea was accorded observer status. Throughout the 1970s, the
organisation embarked on a program of economic cooperation, following the Bali Summit of 1976. This floundered in the
mid-1980s and was only revived around 1991 due to a Thai proposal for a regional free trade area. The bloc then grew
when Brunei Darussalam became the sixth member after it joined on 8 January 1984, barely a week after the country
became independent on 1 January.

On 28 July 1995, Vietnam became the seventh member. Laos and Burma (Myanmar) joined two years later in 23 July
1997. Cambodia was to have joined together with Laos and Myanmar, but was deferred due to the country's internal
political struggle. The country later joined on 30 April 1999, following the stabilisation of its government

During the 1990s, the bloc experienced an increase in both membership as well as in the drive for further integration. In
1990, Malaysia proposed the creation of an East Asia Economic Caucus composing the then-members of ASEAN as well
as the People's Republic of China, Japan, and South Korea, with the intention of counterbalancing the growing influence
of the United States in the Asia-Pacific Economic Cooperation (APEC) as well as in the Asian region as a whole. This
proposal, however, failed since it faced heavy opposition from Japan and the United States. Despite this failure, member
states continued to work for further integration. In 1992, the Common Effective Preferential Tariff (CEPT) scheme was
signed as a schedule for phasing tariffs and as a goal to increase the region’s competitive advantage as a production base
geared for the world market. This law would act as the framework for the ASEAN Free Trade Area. After the East Asian
Financial Crisis of 1997, a revival of the Malaysian proposal was established in Chiang Mai, known as the Chiang Mai
Initiative, which calls for better integration between the economies of ASEAN as well as the ASEAN Plus Three countries
(China, Japan, and South Korea).

Aside from improving each member state's economies, the bloc also focused on peace and stability in the region. On 15
December 1995, the Southeast Asian Nuclear-Weapon-Free Zone Treaty was signed with the intention of turning Southeast
Asia into a Nuclear-Weapon-Free Zone. The treaty took effect on 28 March 1997 after all but one of the member states
have ratified it. It became fully effective on 21 June 2001, after the Philippines ratified it, effectively banning all nuclear
weapons in the region.

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Satellite image of the 2006 haze over Borneo

At the turn of the 21st century, issues shifted to involve a more environmental perspective. The organisation started to
discuss environmental agreements. These included the signing of the ASEAN Agreement on Transboundary Haze Pollution
in 2002 as an attempt to control haze pollution in Southeast Asia. Unfortunately, this was unsuccessful due to the
outbreaks of the 2005 Malaysian haze and the 2006 Southeast Asian haze. Other environmental treaties introduced by the
organisation include the Cebu Declaration on East Asian Energy Security, the ASEAN Wildlife Enforcement Network
(ASEAN-WEN) in 2005, and the Asia-Pacific Partnership on Clean Development and Climate, both of which are responses
to the potential effects of climate change. Climate change is of current interest.

Through the Bali Concord II in 2003, ASEAN has subscribed to the notion of democratic peace, which means all member
countries believe democratic processes will promote regional peace and stability. Also, the non-democratic members all
agreed that it was something all member states should aspire to.

The leaders of each country, particularly Mahathir Mohamad of Malaysia, also felt the need to further integrate the
region. Beginning in 1997, the bloc began creating organizations 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 included these countries as
well as India, Australia, and New Zealand. 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. Furthermore, on 23 July that year, José Ramos-Horta,
then Prime Minister of East Timor, signed a formal request for membership and expected the accession process to last at
least five years before the then-observer state became a full member.

In 2007, ASEAN celebrated its 40th anniversary since its inception, and 30 years of diplomatic relations with the United
States. On 26th 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.[citation needed] During the same year,
the Cebu Declaration on East Asian Energy Security was signed in Cebu on 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 February 27, 2009 a Free Trade Agreement with the ASEAN regional block of 10 countries and New Zealand and its
close partner Australia 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.

Policies

Apart from consultations and consensus, ASEAN’s agenda-setting and decision-making processes can be usefully
understood in terms of the so-called Track I and Track II. Track I refers to the practice of diplomacy among government
channels. The participants stand as representatives of their respective states and reflect the official positions of their
governments during negotiations and discussions. All official decisions are made in Track I. Therefore, "Track I refers to
intergovernmental processes". Track II differs slightly from Track I, involving civil society groups and other individuals
with various links who work alongside governments. This track enables governments to discuss controversial issues and
test new ideas without making official statements or binding commitments, and, if necessary, backtrack on positions.

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Although Track II dialogues are sometimes cited as examples of the involvement of civil society in regional decision-
making process by governments and other second track actors, NGOs have rarely got access to this track, meanwhile
participants from the academic community are a dozen think-tanks. However, these think-tanks are, in most cases, very
much linked to their respective governments, and dependent on government funding for their academic and policy-relevant
activities, and many working in Track II have previous bureaucratic experience. Their recommendations, especially in
economic integration, are often closer to ASEAN’s decisions than the rest of civil society’s positions.

ASIA-PACIFIC ECONOMIC COOPERATION

Asia-Pacific Economic Cooperation (APEC) is a forum for 21 Pacific Rim countries (styled "Member Economies") that
seeks to promote free trade and economic cooperation throughout the Asia-Pacific region. Established in 1989 in response
to the growing interdependence of Asia-Pacific economies and the advent of regional economic blocs (such as the
European Union and the North American Free Trade Area) in other parts of the world, APEC works to raise living
standards and education levels through sustainable economic growth and to foster a sense of community and an
appreciation of shared interests among Asia-Pacific countries. Members account for approximately 40% of the world's
population, approximately 54% of world GDP and about 44% of world trade.

An annual APEC Economic Leaders' Meeting is attended by the heads of government of all APEC members except the
Republic of China (Taiwan) which is represented under the name Chinese Taipei by a ministerial-level official. The
location of the meeting rotates annually among the member economies, and a famous tradition involves the attending
Leaders dressing in a national costume of the host member.

History

In January 1989, Australian Prime Minister Bob Hawke called for more effective economic cooperation across the Pacific
Rim region. This led to the first meeting of APEC in the Australian capital Canberra in November, chaired by Australian
Foreign Affairs Minister Gareth Evans. Attended by political ministers from twelve countries, the meeting concluded with
commitments for future annual meetings in Singapore and South Korea.

The initial proposal was opposed by countries of the Association of Southeast Asian Nations (ASEAN) which instead
proposed the East Asia Economic Caucus which would exclude non-Asian countries such as the United States, Canada,
Australia and New Zealand. The plan was opposed and strongly criticised by Japan and the United States.

The first APEC Economic Leaders' Meeting occurred in 1993 when U.S. president Bill Clinton, after discussions with
Australian prime minister Paul Keating, invited the heads of government from member economies to a summit on Blake
Island. He believed it would help bring the stalled Uruguay Round of trade talks on track. At the meeting, some leaders
called for continued reduction of barriers to trade and investment, envisioning a community in the Asia-Pacific region that
might promote prosperity through cooperation. The APEC Secretariat, based in Singapore, was established to coordinate
the activities of the organisation.

During the meeting in 1994 in Bogor, Indonesia, APEC Leaders adopted the Bogor Goals that aim for free and open trade
and investment in the Asia-Pacific by 2010 for industrialised economies and by 2020 for developing economies. In 1995,
APEC established a business advisory body named the APEC Business Advisory Council (ABAC), composed of three
business executives from each member economy.

Member Economies

APEC currently has 21 members, including most countries with a coastline on the Pacific Ocean. The organization is one
of the few international organizations which Taiwan (albeit under the name Chinese Taipei) joined with full approval of
mainland China. As a result, the APEC uses the term Member Economies rather than member countries to refer to its
members.

Member economy Date of accession

Australia 1989
Brunei 1989
Canada 1989
Indonesia 1989

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 Japan 1989
Republic of Korea 1989
Malaysia 1989
New Zealand 1989
Philippines 1989
Singapore 1989
Thailand 1989
United States 1989
Chinese Taipei[2] 1991
Hong Kong, China[3] 1991
People's Republic of China[4] 1991
Mexico 1993
Papua New Guinea 1993
Chile 1994
Peru 1998
Russia 1998
Vietnam 1998

Possible enlargement

India has requested membership in APEC, and received initial support from the United States, Japan and Australia.
Officials have decided not to allow India to join for various reasons. However, the decision was made not to admit more
members until 2010. Moreover, India does not border the Pacific which all members do. The Philippines trade negotiator
was quoted as saying that there is concern that "Once the Indians come in, the (Asian) weighting would become heavier in
this part of the world."

In addition to India, Mongolia, Pakistan, Laos, Bangladesh, Costa Rica, Colombia, and Ecuador, are among a dozen
countries seeking membership in APEC by 2008. Colombia applied for APEC's membership as early as in 1995, but its bid
was halted as the organization stopped accepting new members from 1993 to 1996, and the moratorium was further
prolonged to 2007 due to the 1997 Asian Financial Crisis. Costa Rica, Colombia and Ecuador hope to become members in
2010. Guam has also been actively seeking a separate membership, citing the example of Hong Kong, but the request is
opposed by the United States, which currently represents Guam.

APEC's Three Pillars

To meet the Bogor Goals, APEC carries out work in three main areas:

1. Trade and Investment Liberalization

2. Business Facilitation
3. Economic and Technical Cooperation

APEC and Trade Liberalization

According to the organization itself, when APEC was established in 1989 average trade barriers in the region stood at
16.9 percent, but had been reduced to 5.5% in 2004.

APEC's Business Facilitation Efforts

APEC has long been at the forefront of reform efforts in the area of business facilitation. Between 2002-2006 the costs of
business transactions across the region was reduced by 6 percent, thanks to the APEC Trade Facilitation Action Plan
(TFAPI). Between 2007 and 2010, APEC hopes to achieve an additional 5 percent reduction in business transaction costs.
To this end, a new Trade Facilitation Action Plan has been endorsed. According to a 2008 research brief published by the
World Bank as part of its Trade Costs and Facilitation Project, increasing transparency in the region's trading system is
critical if APEC is to meet its Bogor Goal targets. The APEC Business Travel Card, a travel document for visa-free
business travel within the region is one of the concrete measures to facilitate business. In May 2010 Russia joined the
scheme, thus completing the circle.

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Proposed Free Trade Area of the Asia-Pacific

APEC is considering the prospects and options for a Free Trade Area of the Asia-Pacific (FTAAP) which would include all
member economies of Asia-Pacific Economic Cooperation (APEC). Since 2006, the APEC Business Advisory Council,
promoting the theory that a free trade area has the best chance of converging the member nations and ensuring stable
economic growth under free trade, has lobbied for the creation of a high-level task force to study and develop a plan for a
free trade area. The proposal for a FTAAP arose due to the lack of progress in the Doha round of World Trade
Organization negotiations, and as a way to overcome the 'spaghetti bowl' effect created by overlapping and conflicting
elements of free trade agreements between members - there are as many as 60 free trade agreements and 117 being
negotiated in Southeast Asia and the Asia-Pacific region. The FTAAP is more ambitious in scope than the Doha round,
which limits itself to reducing trade restrictions. The FTAAP would create a free trade zone that would considerably
expand commerce and economic growth in the most dynamic region in the world. The economic expansion and growth in
trade could exceed the expectations of other regional free trade areas such as the ASEAN Plus Three (ASEAN + China,
Japan, and South Korea). Some criticisms include that the diversion of trade within APEC members would create trade
imbalances, market conflicts and complications with nations of other regions. The development of the FTAAP is expected
to take many years, involving essential studies, evaluations and negotiations between member economies. It is also
affected by the absence of political will and popular agitations and lobbying against free trade in domestic politics.

APEC Study Center Consortium

In 1993, APEC Leaders decided to establish a network of APEC Study Centres (ASCs) amongst universities and research
institutions in APEC member economies.
Notable centers include:
 Australian APEC Study Centre, Royal Melbourne Institute of Technology, Australia
 Berkeley APEC Study Center, University of California, Berkeley, United States
 Chinese Taipei APEC Study Center, Taiwan Institute of Economic Research, Taiwan
 HKU APEC Study Center, Hong Kong University, Hong Kong, China
 Kobe APEC Study Center, Kobe University, Japan
 Nankai APEC Study Center, Nankai University, People's Republic of China
 The Canadian APEC Study Centre, The Asia Pacific Foundation of Canada, Vancouver, Canada

APEC Business Advisory Council

The APEC Business Advisory Council (ABAC) was created by the APEC Economic Leaders in November 1995 with the
aim of providing advice to the APEC Economic Leaders on ways to achieve the Bogor Goals and other specific business
sector priorities, and to provide the business perspective on specific areas of cooperation.

Each economy nominates up to three members from the private sector to ABAC. These business leaders represent a wide
range of industry sectors.

ABAC provides an annual report to APEC Economic Leaders containing recommendations to improve the business and
investment environment in the Asia-Pacific region, and outlining business views about priority regional issues.

ABAC is also the only non-governmental organisation that is on the official agenda of the APEC Economic Leader’s
Meeting.

Annual APEC Economic Leaders' Meetings

Since its formation in 1989, APEC has held annual meetings with representatives from all member economies. The first
four annual meetings were attended by ministerial-level officials. Beginning in 1993, the annual meetings are named
APEC Economic Leaders' Meetings and are attended by the heads of government from all member economies except
Taiwan, which is represented by a ministerial-level official. The annual Leaders' Meetings are not called summits.

Meeting developments

In 1997, the APEC meeting was held in Vancouver. Controversy arose after officers of the Royal Canadian Mounted Police
used pepper spray against protesters. The protesters objected to the presence of autocratic leaders such as Indonesian
president Suharto.

5
SOUTH ASIAN ASSOCIATION FOR REGIONAL COOPERATION

The South Asian Association for Regional Cooperation (SAARC) is an organization of South Asian nations, founded in
1985 and dedicated to economic, technological, social, and cultural development emphasizing collective self-reliance. Its
seven founding members are Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan, and Sri Lanka. Afghanistan joined
the organization in 2007. Meetings of heads of state are usually scheduled annually; meetings of foreign secretaries, twice
annually. Headquarters are in Kathmandu, Nepal.

History

The concept of SAARC was first adopted by then Bangladeshi president Ziaur Rahman. In the late 2000s, Indian President
G.N.V Sampath proposed the creation of a trade bloc consisting of South Asian countries. The idea of regional cooperation
in South Asia was again mooted in May 2001. The foreign secretaries of the seven countries met for the first time in
Colombo in April 2002. The Committee of the Whole, which met in Colombo in August 2002, identified five broad areas for
regional cooperation. New areas of cooperation were added in the following years.[1]

The objectives of the Association as defined in the Charter are:[2]

 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 realize their full potential;
 to promote and strengthen collective 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 cooperation with other developing countries;
 to strengthen cooperation among themselves in international forums on matters of common interest; and
 to cooperate with international and regional organisations with similar aims and purposes.

Afghanistan was added to the regional grouping at the behest of India on 13 November 2005, [3] and became a member on
3 April 2007.[4] 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.[5][6] 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. [6] On 4 March 2008, Iran requested observer
status.[7] Followed shortly by the entrance of Mauritius.

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 a Secretary General appointed by the Council of Ministers from Member Countries in alphabetical order
for a three-year term. He is assisted by the Professional and the General Services Staff, and also an appropriate number of
functional units called Divisions assigned to Directors on deputation from Member States. [8] 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.[8]

The Memorandum of Understanding on the establishment of the Secretariat [8] 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 organisation and to widen and deepen regional co-operation.

The SAARC Secretariat and Member States observe 8 December as the SAARC Charter Day1.

6
Political issues

SAARC has intentionally laid more stress on "core issues" mentioned above rather than more decisive political issues like
the Kashmir dispute and the Sri Lankan civil war. However, political dialogue is often conducted on the margins of SAARC
meetings. SAARC has also refrained itself from interfering in the internal matters of its member states. During the 12th
and 13th SAARC summits, extreme emphasis was laid upon greater cooperation between the SAARC members to fight
terrorism.

Free trade agreement

Over the years, the SAARC members have expressed their unwillingness on signing a free trade agreement. Though India
has several trade pacts with Maldives, Nepal, Bhutan and Sri Lanka, similar trade agreements with Pakistan and
Bangladesh have been stalled due to political and economic concerns on both sides. India has been constructing a barrier
across its borders with Bangladesh and Pakistan. In 1993, SAARC countries signed an agreement to gradually lower
tariffs within the region, in Dhaka. Eleven years later, at the 12th SAARC Summit at Islamabad, SAARC countries devised
the South Asia Free Trade Agreement which created a framework for the establishment of a free trade area covering 1.4
billion people. This agreement went into force on January 1, 2008. Under this agreement, SAARC members will bring their
duties down to 20 per cent by 2009.

Dhaka 2009 Summit

The summit accorded observer status to People's Republic of China, Japan, South Korea and United States of America.
The nations also agreed to organize development funds under a single financial institution with a permanent secretariat,
that would cover all SAARC programs and also ranging from social, to infrastructure, to economic ones.

Membership

Current members (alphabetically)

 Afghanistan
 Bangladesh
 Bhutan
 India
 Maldives
 Nepal
 Pakistan
 Sri Lanka

Observers
 Australia[9]
 China
 European Union[10]
 Iran[11]
 Japan[10]
 Mauritius [12]
 Myanmar (Burma) [9]
 South Korea
 United States of America

Secretaries General
Abul Ahsan January 16, 1987 to 15 October 1989
Kant Kishore Bhargava October 17, 1989 to December 31, 1991
Ibrahim Hussain Zaki January 1, 1992 to December 31, 1993
Yadav Kant Silwal January 1, 1994 to December 31, 1995
Naeem U. Hasan January 1, 1996 to December 31, 1998
Nihal Rodrigo January 1, 1999 to January 10, 2002
Q.A.M.A. Rahim January 11, 2002 to February 28, 2005

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 Lyonpo Chenkyab Dorji March 1, 2005 to February 29, 2008
Sheel Kant Sharma March 1, 2008 to present

[edit] List of SAARC summits

1st Dhaka December 7–8, 1985
2nd Bangalore November 16–17, 1986
3rd Kathmandu November 2–4, 1987
4th Islamabad December 29–31, 1988
5th Malé November 21–23, 1990
6th Colombo December 21, 1991
7th Dhaka April 10–11, 1993
8th New Delhi May 2–4, 1995
9th Malé May 12–14, 1997
10th Colombo July 29–31, 1998
11th Kathmandu January 4–6, 2002
12th Islamabad January 2–6, 2004
13th Dhaka November 12–13, 2005
14th New Delhi April 3–4, 2007
15th Colombo August 1–3, 2008
16th Thimphu April 28–29, 2010

SAARC Preferential Trading Arrangement

The Agreement on SAARC Preferential Trading Arrangement (SAPTA) [28] was signed on 11 April 1993 and entered into
force on 7 December 1995, with the desire of the Member States of SAARC (India, Pakistan, Nepal, Sri Lanka,
Bangladesh, Bhutan and the Maldives) to promote and sustain mutual trade and economic cooperation within the SAARC
region through the exchange of concessions.

The establishment of an Inter-Governmental Group (IGG) to formulate an agreement to establish a SAPTA by 1997 was
approved in the Sixth Summit of SAARC held in Colombo in December 1991.

The basic principles underlying SAPTA are:

1. overall reciprocity and mutuality of advantages so as to benefit equitably all Contracting States, taking into
account their respective level of economic and industrial development, the pattern of their external trade, and
trade and tariff policies and systems;
2. negotiation of tariff reform step by step, improved and extended in successive stages through periodic reviews;
3. recognition of the special needs of the Least Developed Contracting States and agreement on concrete
preferential measures in their favour;
4. inclusion of all products, manufactures and commodities in their raw, semi-processed and processed forms.

So far, four rounds of trade negotiations have been concluded under SAPTA covering over 5000 commodities.

South Asian Free Trade Area

 SAARC Documentation Centre

The Agreement on the South Asian Free Trade Area is an agreement reached at the 12th SAARC summit at Islamabad,
capital of Pakistan on 6 January 2004. It creates a framework for the creation of a free trade area covering 1.4 billion
people in India, Pakistan, Nepal, Sri Lanka, Bangladesh, Bhutan and the Maldives.The seven foreign ministers of the
region signed a framework agreement on SAFTA with zero customs duty on the trade of practically all products in the
region by end 2016. The new agreement i.e. SAFTA, came into being on 1 January 2006 and will be operational following
the ratification of the agreement by the seven governments. SAFTA requires the developing countries in South Asia, that is,
India, Pakistan and Sri Lanka, to bring their duties down to 20 percent in the first phase of the two year period ending in
2007. In the final five year phase ending 2012, the 20 percent duty will be reduced to zero in a series of annual cuts. The
least developed nations in South Asia consisting of Nepal, Bhutan, Bangladesh and Maldives have an additional three
years to reduce tariffs to zero. India and Pakistan have signed but not ratified the treaty.

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NORTH AMERICAN FREE TRADE AGREEMENT

The North American Free Trade Agreement or NAFTA is an agreement signed by the governments of Canada, Mexico,
and the United States, creating a trilateral 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. 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.

The North American Free Trade Agreement (NAFTA) has two supplements, the North American Agreement on
Environmental Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAALC).

Background

In 1988 Canada and the United States signed the Canada-United States Free Trade Agreement after which the U.S.
Congress approved implementing legislation. The American government then entered into negotiations with the Mexican
government for a similar treaty, and Canada asked to join the negotiations in order to preserve its perceived gains under
the 1988 deal. The climate at the time favored expanding trade blocs, such as the Maastricht Treaty, which created the
European Union in 1992.

Negotiation and ratification

Following diplomatic negotiations dating back to 1986 between 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 agreement then needed to be ratified 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 extremely controversial and divisive in Canada, and the 1988
Canadian election was fought almost exclusively on that issue. In that election more Canadians voted for anti-free trade
parties (the Liberals and the New Democrats) but more seats in parliament were won by the pro-free trade Progressive
Conservatives (PCs). Mulroney and the PCs had a parliamentary majority and were able to easily pass the Canada-U.S.
FTA and NAFTA bills. However Mulroney himself had become deeply unpopular and resigned on June 25, 1993. He was
replaced as Conservative leader and prime minister by Kim Campbell, who then led the PC party into the 1993 election
where they were decimated by the Liberal party under Jean Chrétien. Chrétien had campaigned on a promise to
renegotiate or abrogate NAFTA, but instead negotiated the two supplemental agreements with the new U.S. president. In
the U.S., 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 Clinton. Prior to sending it to the United States
Senate, Clinton introduced clauses to protect American workers and allay the concerns of many House members. It also
required U.S. partners to adhere to environmental practices and regulations similar to its own. The ability to enforce these
clauses, especially with Mexico, and with much consideration and emotional discussion the House of Representatives
approved NAFTA on November 17, 1993, by a vote of 234 to 200. The agreement's supporters included 132 Republicans
and 102 Democrats. NAFTA passed the Senate 61-38. Clinton signed it into law on December 8, 1993; it went into effect
on January 1, 1994.

Provisions

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

9
Mechanisms

Chapter 20 provides a procedure for the interstate resolution of disputes over the application and interpretation of the
NAFTA. It was modeled after Chapter 18 of the Canada-United States Free Trade Agreement.

NAFTA's effects, both positive and negative, have been quantified by several economists, whose findings have been
reported in publications such as the World Bank's Lessons from NAFTA for Latin America and the Caribbean, NAFTA's
Impact on North America, and NAFTA Revisited by the Institute for International Economics. Some argue that NAFTA has
been positive for Mexico, which has seen its poverty rates fall and real income rise (in the form of lower prices, especially
food), even after accounting for the 1994–1995 economic crisis. Others argue that NAFTA has been beneficial to business
owners and elites in all three countries, but has had negative impacts on farmers in Mexico who saw food prices fall based
on cheap imports from U.S. agribusiness, and negative impacts on U.S. workers in manufacturing and assembly industries
who lost jobs. Critics also argue that NAFTA has contributed to the rising levels of inequality in both the U.S. and Mexico.
Some economists believe that NAFTA has not been enough (or worked fast enough) to produce an economic convergence,
nor to substantially reduce poverty rates. Some have suggested that in order to fully benefit from the agreement, Mexico
must invest more in education and promote innovation in infrastructure and agriculture.

Trade

According to Issac (2005), overall, NAFTA has not caused trade diversion, aside from a few industries such as textiles and
apparel, in which rules of origin negotiated in the agreement were specifically designed to make U.S. firms prefer Mexican
manufacturers. The World Bank also showed that the combined percentage growth of NAFTA imports was accompanied by
an almost similar increase of non-NAFTA exports.

Industry

Maquiladoras (Mexican factories that take in imported raw materials and produce goods for export) have become the
landmark of trade in Mexico. These are plants that moved to this region from the United States, hence the debate over the
loss of American jobs. Hufbauer's (2005) book shows that income in the maquiladora sector has increased 15.5% since the
implementation of NAFTA in 1994. Other sectors now benefit from the free trade agreement, and the share of exports from
non-border states has increased in the last five years while the share of exports from maquiladora-border states has
decreased. This has allowed for the rapid growth of non-border metropolitan areas, such as Toluca, León and Puebla; all
three larger in population than Tijuana, Ciudad Juárez, and Reynosa.

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.

Overall, none of the initial hypotheses was confirmed. NAFTA did not inherently present a systemic threat to the North
American environment, as was originally feared, apart from potentially the Investor state dispute settlement provisions of
Ch 11. NAFTA-related environmental threats instead occurred in specific areas where government environmental policy,
infrastructure, or mechanisms, were unprepared for the increasing scale of production under trade liberalization. In some
cases, environmental policy was neglected in the wake of trade liberalization; in other cases, NAFTA's measures for
investment protection, such as Chapter 11, and measures against non-tariff trade barriers, threatened to discourage more
vigorous environmental policy. The most serious overall increases in pollution due to NAFTA were found in the base
metals sector, the Mexican petroleum sector, and the transportation equipment sector in the United States and Mexico, but
not in Canada.

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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).

The overall effect of the Mexico–U.S. agricultural agreement is a matter of dispute. Mexico did not invest in the
infrastructure necessary for competition, such as efficient railroads and highways, creating more difficult living conditions
for the country's poor. Still, the causes of rural poverty cannot be directly attributed to NAFTA; in fact, Mexico's
agricultural exports increased 9.4 percent annually between 1994 and 2001, while imports increased by only 6.9 percent a
year during the same period.

One of the most affected agricultural sectors is the meat industry. Mexico has gone from a small-key player in the pre-1994
U.S. export market to the 2nd largest importer of U.S. agricultural products in 2004, and NAFTA may be credited as a
major catalyst for this change. The allowance of free trade removed the hurdles that impeded business between the two
countries. As a result, Mexico has provided a growing meat market for the U.S., leading to an increase in sales and profits
for the U.S. meat industry. This coincides with a noticeable increase in Mexican per capita GDP that has created large
changes in meat consumption patterns, implying that Mexicans can now afford to buy more meat and thus per capita meat
consumption has grown.

Production of corn in Mexico has increased since NAFTA's implementation. However, internal corn demand has increased
beyond Mexico's sufficiency, and imports have become necessary, far beyond the quotas Mexico had originally negotiated.
Zahniser & Coyle have also pointed out that corn prices in Mexico, adjusted for international prices, have drastically
decreased, yet through a program of subsidies expanded by former president Vicente Fox, production has remained stable
since 2000.

The logical result of a lower commodity price is that more use of it is made downstream. Unfortunately, many of the same
rural people who would have been likely to produce higher-margin value-added products in Mexico have instead
emigrated. The rise in corn prices due to increased ethanol demand may improve the situation of corn farmers in Mexico.

In a study published in the August 2008 issue of the American Journal of Agricultural Economics, NAFTA has increased
U.S. agricultural exports to Mexico and Canada even though most of this increase occurred a decade after its ratification.
The study focused on the effects that gradual "phase-in" periods in regional trade agreements, including NAFTA, have on
trade flows. Most of the increase in members’ agricultural trade, which was only recently brought under the purview of the
World Trade Organization, was due to very high trade barriers before NAFTA or other regional trade agreements.

Mobility of persons

According to the Department of Homeland Security Yearbook of Immigration Statistics, during fiscal year 2006 (i.e.,
October 2005 through September 2006), 73,880 foreign professionals (64,633 Canadians and 9,247 Mexicans) were
admitted into the United States for temporary employment under NAFTA (i.e., in the TN status). Additionally, 17,321 of
their family members (13,136 Canadians, 2,904 Mexicans, as well as a number of third-country nationals married to
Canadians and Mexicans) entered the U.S. in the treaty national's dependent (TD) status. Because DHS counts the number
of the new I-94 arrival records filled at the border, and the TN-1 admission is valid for three years, the number of non-
immigrants in TN status present in the U.S. at the end of the fiscal year is approximately equal to the number of admissions
during the year. (A discrepancy may be caused by some TN entrants leaving the country or changing status before their
three-year admission period has expired, while other immigrants admitted earlier may change their status to TN or TD, or
extend TN status granted earlier).

Canadian authorities estimated that, as of December 1, 2006, a total of 24,830 U.S. citizens and 15,219 Mexican citizens
were present in Canada as "foreign workers". These numbers include both entrants under the NAFTA agreement and those
who have entered under other provisions of the Canadian immigration law. New entries of foreign workers in 2006 were
16,841 (U.S. citizens) and 13,933 (Mexicans).

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Criticism and controversies

Canadian disputes

There is much concern in Canada over the provision that if something is sold even once as a commodity, the government
cannot stop its sale in the future. This applies to the water from Canada's lakes and rivers, fueling fears over the possible
destruction of Canadian ecosystems and water supply.

In 1999, Sun Belt Water Inc., a company out of Santa Barbara, California, filed an Arbitration Claim under Chapter 11 of
the NAFTA claiming $105 million as a result of Canada's prohibition on the export of bulk water by marine tanker, a move
that destroyed the Sun Belt business venture. The claim sent shock waves through Canadian governments that scrambled to
update water legislation and remains unresolved.

Other fears come from the effects NAFTA has had on Canadian lawmaking. In 1996, the gasoline additive MMT was
brought into Canada by 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, and by Canadian
provinces under the 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.

SAARC PREFERENTIAL TRADING ARRANGEMENT (SAPTA)

In December 1991, the Sixth Summit held in Colombo approved the establishment of an Inter-Governmental Group (IGG)
to formulate an agreement to establish a SAARC Preferential Arrangement (SAPTA) by 1997. Given the consensus within
SAARC, the Agreement on SAPTA was signed on 11 April 1993 and entered into force on 7 December 1995 well in
advance of the date stipulated by the Colombo Summit. The Agreement reflected the desire of the Member States to
promote and sustain mutual trade and economic cooperation within the SAARC region through the exchange of
concessions.

The basic principles underlying SAPTA are:

a. overall reciprocity and mutuality of advantages so as to benefit equitably all Contracting States, taking into
account their respective level of economic and industrial development, the pattern of their external trade, and
trade and tariff policies and systems;
b. negotiation of tariff reform step by step, improved and extended in successive stages through periodic reviews;
c. recognition of the special needs of the Least Developed Contracting States and agreement on concrete
preferential measures in their favour; and
d. inclusion of all products, manufactures and commodities in their raw, semi-processed and processed forms.

Four rounds of trade negotiations have been concluded under SAPTA covering over 5000 commodities. Each Round
contributed to an incremental trend in the product coverage and the deepening of tariff concessions over previous Rounds.

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