Implementation of Cooperation Chapters in Trade Agreements: Case Linked to the IA-CEPA.

• Author: Gray, Nathan

1. Introduction

   Considerable thought and effort have been directed to the design of modes of cooperation between economies, to be organized in ways that support development in general, and trade and investment liberalization and facilitation in particular. A significant part of this work was developed in the context of ASEAN and APEC (see, for example, Elek and Soesastro 2012), where the activity was referred to as economic and technical cooperation. More recently, the formal recognition in trade agreements of the role of cooperation has increased. While the reference to economic cooperation is increasing, and expectations are rising as a result, the mode of its delivery is less clear. The manner in which those commitments might be implemented continues to evolve. This paper offers a case study of the development and application of a methodology for doing so and draws lessons for future efforts.

   The example to which we refer here was an activity designed to demonstrate the scope for businesses and officials to benefit from the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA). The activity focused on the treatment of non-tariff barriers to trade, in particular, differences in standards and regulations in a range of food, pharmaceutical and herbal products. There is a variety of ways in which impediments of this type (1) could be identified. One is a dialogue among officials, to contrast and compare the measures in place for a particular product or related group of products. Another is for researchers to compile catalogues of policy measures that might be relevant, based on reviews of policy, regulations and other guides to their implementation. A third option is to canvas business people on the impediments that matter to them, according to their experience. All have been used. The case study reported here, however, demonstrates the value in bringing all these parties together, including those from each trading partner, into a common and joint interaction. The joint interaction of this mix of participants, as has occurred in the project to be presented here, creates more value than could otherwise be captured in separate operations of the forms just mentioned.

   The case study is also linked to more recent work on models of cooperation, and principles for participation in those models, which have been proposed, especially to deal with non-tariff measures (Hoekman 2013, 2014 and 2015). These models are called "knowledge platforms". They involve a structured dialogue among officials, businesses and members of the research community. They offer considerable opportunity for gain, especially in the context of global value chain operations (Findlay and Hoekman 2021). The design and implementation of knowledge platforms warrant further attention. The project reviewed here, though designed in the context of a bilateral relationship, also provides insights into the wider application of the knowledge platform model.

   The next section outlines elements of the concept of development (or economic and technical) cooperation in the Asia-Pacific. We then discuss how these elements have been translated into trade agreements and provide some information about their treatment in IA-CEPA that provided the framework for the case study which we then report. The paper concludes with a discussion of the lessons from this experience for the development of economic cooperation associated with trade agreements and for the future application of knowledge platforms.

2. Economic and Technical Cooperation

   Economic and technical cooperation (ecotech) has been at the heart of the organization of efforts towards economic integration among economies of the Asia-Pacific. In this section, we review its treatment in the APEC process and then turn to the more recent approaches taken to ecotech in trade agreements (both the ASEAN-Australia-New Zealand Free Trade Agreement or AANZFTA and IA-CEPA).

   2.1 APEC

   The Bogor Declaration is often referred to because of its commitment to liberalization, but they also committed to "intensifying Asia-Pacific development cooperation". (2) Elek and Soesastro (2012) explain the development of thinking about the concept of development cooperation, which became known as "ecotech", in the APEC process as well as its relationship with trade and investment liberalization and facilitation. The purpose of ecotech has been to "enhance the capacity of developing economies to take an active part in the (APEC) process, including in the liberalization agenda" (Elek and Soesastro 2012). It would not only build capacity in individual economies but also contribute to building a sense of community among the members.

   Over time, efforts were made to refine the nature of ecotech, leading up to the Manila Declaration of 1996, which was a turning point with respect to the definition of the concept and its operational framework. Elek and Soesastro (2012) stress the difference between ecotech and "foreign aid" which involves donors and "clients", who may be required to meet conditions with respect to policy regimes or other parameters. They explain that ecotech involved a cooperative approach, sharing of experiences (of which a rich deposit existed among the members), the voluntary contribution of members and engagement of the private sector. Activities within the ecotech agenda included contributions to development by work on human capital, technology transfer, infrastructure development and so on. But also, an important element of ecotech was cooperation that added to the capacity of members to reduce impediments to trade and investment. This included efforts to find more compatible or convergent approaches to the operation of commercial policy, including regulations that apply to international business transactions.

   Commentators have argued for a reorientation of the design of these forms of cooperation. For example, Macaranas (2013) surveys a number of reviews of the contribution of the ecotech activities in APEC. His conclusion is that this part of the APEC programme would be more effective, that is, produce more evident benefits in a shorter time period, if beneficiaries could have a better understanding of the consequences of the effort. He argues that this result is more likely when the connection of the ecotech activities can be linked to the operation of global value chains, (3) that is, when they are defined in terms of the logic of business production.

   Aid for trade has elements in common with ecotech, (4) and Plummer (2013) makes the case for a region-wide approach to its provision because of the importance of production networks. He observes that most of the focus, however, of aid for trade programmes had been at the national level. OECD and WTO (2013) also stress the significance of global value chains in trade and thereby the value of shifting to a regional focus in the delivery of aid for trade.

   2.2 Trade Agreements

   Many trade agreements now include references to economic and technical cooperation (Macaranas 2013). This followed from a shift in thinking about the role of technical assistance and capacity building in relation to such agreements. During the 1990s, APEC was already accumulating experience in managing development cooperation programmes, including those associated with trade and investment liberalization and facilitation. Then a shift occurred in the multilateral trading system. Following the increasing participation of developing countries in the Uruguay Round, many...