Surakiart urges bigger role for law in free-trade deals
International law should play a bigger role to help reduce the “spaghetti bowl effect” of conflicting legal obligations arising from economic groupings, a high profile lawyer says.
Asian Society of International Law president Surakiart Sathirathai at an international law conference yesterday was referring to complications arising from international economic policy clashing with the application of domestic rules of origin in free trade agreements across nations.
The phenomenon can lead to discriminatory trade policy as the same commodity is subject to different tariffs, he said.
Mr Surakiart, a former foreign minister and finance minister, spoke at the fifth Asian Society of International Law Biennial conference under the title “International Law and the Changing Economic and Political landscape in Asia’’.
He said the Asian way of doing business is far less rule-based and less legalistic than the Western tradition.
In the past when trade was more confined to domestic transactions, this nonrule based pattern of doing business may not have posed such a serious problem.
However, a spread of free-trade agreements in an age of closer economic integration has resulted in a more rule-based approach. Disputes can arise from trade crossing the border, and the parties concerned might need recourse to the law to solve them. International law might have a role in creating frameworks for settling such business disputes, Mr Surakiart said.
He was referring to the number of freetrade agreements (FTA), bilateral and multilateral, between Asian countries and those outside the region such as the TPP (Trans-Pacific Partnership) and the RCEP (Regional Comprehensive Economic Partnership).
He said these international groupings are on an upward trend. “Legal entanglements as a result of redrafting the law on imports and exports are a case in point,’’ he said.
“Take a company that exports goods from Malaysia to Japan. It may get a tariff benefit from the Asean-Japan FTA as well as the RCEP and TPP, depending on the category of products to be exported.
“Certain products may not receive a tariff benefit if they do not qualify under rule of origin requirements under one free-trade agreement. But the same product may receive a tariff reduction if it qualifies under a different FTA agreement.
“This could become complicated for importers and exporters where several overlapping FTAs are involved and if the law has not been amended to provide clarifications.”
He said intellectual property protection law is another area which needs to be balanced by an adequate legal mechanism.
If it is too strictly enforced, many people in Asia could lose their livelihoods. The region might want to consider ways to ensure consistent treatment, he said.