Reassessing The Trade–Development Nexus In International Economic Law: The Paradigm Shift In Asia-Pacific Regionalism

Northwestern Journal of International Law & Business, Sep 2017

Abstract: This article reassesses the trade–development nexus in international economic law and provides the first examination of the approach to realize the United Nations Sustainable Development Goals through regional integration. It argues that the emerging New Regional Economic Order in the multipolar system will fortify the coalition of developing countries in structuring the legalization of pro-development trade policy. For decades, the misconceived concept of special and differential treatment has ignored the reality of the North–South Grand Bargain and disconnected the World Trade Organization from its development objectives. The development crisis of the Doha Round requires a feasible “Plan B” for the Global South. By making interrelated theoretical and substantive claims, this article opens an inquiry into the assertive role of developing countries that prompted the paradigm shift in Asia–Pacific regionalism. The realist and dependency theories are utilized to decipher the geopolitical complexity of the rapidly evolving South–South free trade agreements. As a timely case study, the analysis is based on the creation of the Association of Southeast Asian Nations Economic Community and its implications for economic powers such as the United States and China. It provides an account of the bloc’s services trade-oriented development policy under the balance of power strategy. Finally, this article offers regulatory reform proposals on how to integrate development assistance and remove trade barriers. Transnational legal harmonization and human rights protection in line with international labor principles are also indispensable. Such reforms will strengthen the best practices for global regionalism and reinvigorate the trade–development connection in the multilateral trading system.

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Reassessing The Trade–Development Nexus In International Economic Law: The Paradigm Shift In Asia-Pacific Regionalism

Reassessing the Trade-Development Nexus Reassessing The Trade-Development Nexus In International Economic Law: The Paradigm Shift I n Asia-Pacific R egionalism Pasha L. Hsieh 0 1 Recommended Citation 0 Thi s Article is brought to you for free and open access by Northwestern University School of Law Scholarly Commons. It has been accepted for inclusion in Northwestern Journal of International Law & Business by an authorized editor of Northwestern University School of Law Scholarly Commons 1 Pasha L. Hsieh, Reassessing The Trade-Development Nexus In International Economic Law: The Paradigm Shift I n Asia-Pacific R egionalism , 37 Nw. J. Int'l L. & Bus. 321, 2017 - Copyright 2017 by Pasha L. Hsieh Northwestern Journal of International Law & Business Printed in the U.S.A. Vol. 37, No. 3 Reassessing The Trade–Development Nexus In International Economic Law: The Paradigm Shift In Asia–Pacific Regionalism Pasha L. Hsieh* By making interrelated theoretical and substantive claims, this article opens an inquiry into the assertive role of developing countries that prompted the paradigm shift in Asia– Pacific regionalism. The realist and dependency theories are utilized to decipher the geopolitical complexity of the rapidly evolving South–South free trade agreements. As a timely case study, the analysis is based on the creation of the Association of Southeast Asian Nations Economic Community and its implications for economic powers such as the United States and China. It provides an account of the bloc’s services trade-oriented development policy under the balance of power strategy. Finally, this article offers regulatory reform proposals on how to integrate development assistance and remove trade barriers. Transnational legal harmonization and human rights protection in line with international labor principles are also indispensable. Such reforms will strengthen the best practices for global regionalism and reinvigorate the trade–development connection in the multilateral trading system. * Associate Professor of Law, Singapore Management University School of Law. J.D., LL.M., University of Pennsylvania; LL.B., National Chengchi University, Taiwan. E-mail: . This research was supported by the Singapore Ministry of Education Academic Research Fund Tier 1 grant (C234/MSS14L002). I wish to thank Professors Meredith Kolsky Lewis, Bryan Mercurio, Julien Chaisse, Locknie Hsu, Yip Man, Bernard Hoekman, Dukgeun Ahn, Melanie Milo, and participants at the International Law Association-American Society of International Law Asia-Pacific Research Forum, the Joint Asian International Economic Law Conference, and the Singapore-World Trade Organization (WTO) Policy Dialogue on the World Trading System for their insights and comments on earlier drafts of this article. I also acknowledge the valuable assistance of Jevan Li, Nurul Ayu Fajarani and Jolene Ng. All errors are my own. Northwestern Journal of International Law & Business I. INTRODUCTION The convergence of economic liberalization and development policy has formed the cornerstone of multilateral trade negotiations and international economic law for decades. Geopolitical challenges remain when it comes to reconciling the mercantilist concept of enhancing market access with the principle of redistributive justice that demands preferential treatment.1 More fundamentally, the legalization of the trade–development nexus reflects the global North–South conflicts that underpin divergent national interests between developed and developing countries.2 Unanimously adopted by the United Nations (UN) in 2015, the 2030 Agenda for Sustainable Development seeks to transform such long-standing conflicts to cooperation.3 With the aim to eradicate poverty and reinforce inclusive economic growth, the new Sustainable Development Goals (SDGs) conceive of international trade as the essential development apparatus.4 The SDGs mandated the revitalization of development by completing the negotiations of the Doha Round of the World Trade Organization (WTO).5 Yet, states’ irreconcilable stances on liberalizing restrictions on agriculture, non-agricultural market access (NAMA), and services trade led the Doha Round talks to an unresolved standstill.6 From Seattle to Nairobi, the WTO Ministerial Conferences have generated more frustrations than achievements.7 The fate of the Doha Round hinges on whether it can achieve Northwestern Journal of International Law & Business the aspirational commitment to development in tandem with liberalizing trade under the WTO and free trade agreements (FTAs).8 To understand the role of trade politics in shaping today’s global economic governance, it is pivotal to trace back to the origin of the North– South clash in the UN and the WTO. The WTO’s predecessor, the General Agreement on Tariffs and Trade (GATT), and the Bretton Woods Institutions were established in the 1940s and provided the framework that governed postwar economic order.9 The most-favored-nation (MFN) treatment and national treatment of the GATT crystalized the guiding principles for legalism of trade rulemaking.10 Developing countries’ demands that their development needs be met by making exceptions to the West-dominated mechanism were predominantly ignored in the 1940s.11 The South decided to shift the battle to the UN. The proliferation of newly independent states in the postcolonial era bolstered developing countries’ political power to divert the GATT’s attention to “special and differential treatment” (SDT) for the South.12 The culmination of the movement was the 1974 UN declaration calling for a New International Economic Order (NIEO).13 The NIEO principles symbolize the Westphalian concept and affirmative action in international economic law.14 On the one hand, the South asked for recognition of its sovereignty over trade policy; on the other hand, it requested an increase in financial and technological assistance from the North.15 The NIEO soon failed because of the unified trans-Atlantic alliance visà-vis the erosion of the South’s political solidarity due to the disparate economic development of different nations and the debt crisis in the 1990s.16 The rising Washington Consensus, which imposed neoliberal liberalization reform as a prerequisite for aid assistance from the Bretton Woods Institutions, further weakened the NIEO’s momentum.17 Arguably, the legacy of the NIEO resulted in the subsequent codification of SDT provisions during the Tokyo and Uruguay Rounds.18 To “pay back” the developing countries for their sacrifice under the WTO’s single undertaking modality, the current Doha Development Agenda committed to making SDT “precise, effective and operational.”19 Nonetheless, the realpolitik of WTO negotiations has rendered this promise unpromising. Contrary to the South’s expectations, the 148 current SDT provisions of the WTO agreements contain predominantly “best endeavor” language and are rarely enforced as binding obligations in WTO disputes.20 The perceived failure to meet the development commitments inevitably undermines the legitimacy of the WTO and the implementation of the SDGs. To some extent, such failure is due to developing countries’ erroneous presumption that SDT provisions would eliminate or at least reduce pressure from free trade and thus benefit development policy. In essence, the policy space created under SDT arrangements hinders developing countries’ meaningful participation in multilateral trade negotiations.21 Without the “Grand Bargain” negotiations between the North and South, the developing nations’ restricted trade gains simply nullify the economic goal of pro-poor development and the human rights-oriented “right to development.”22 Facing the global development crisis of the Doha Round and Northwestern Journal of International Law & Business international economic law, this article provides the first examination of how the SDGs can be achieved through regional integration. It argues that the emerging New Regional Economic Order (NREO) in multipolar governance will strengthen the ability of the coalition of developing countries to reinforce the legalization of trade–development policy.23 The article thus shifts the conventional trade–development debate centered on the WTO’s SDT to a related but new dimension: the development role of the South in an age of global regionalism. Distinct from the NIEO, the NREO, derived from the power shifts to the Asia–Pacific, does not aspire to challenge the normative foundation of WTO principles. Rather, it opens an inquiry into how developing countries utilize an assertive balance-of-power strategy to alter the embedded hub-and-spoke architecture for development purposes.24 Geopolitical changes have propelled the paradigm shift from the NIEO and the NREO in international economic law and trade politics. First, the NREO aligns with the global movement from the United States-centric “unipolar moment” to multipolar trade governance.25 The United States’ hegemonic economic power has declined. Asia’s emerging powers, including China and the Association of Southeast Asian Nations (ASEAN), have galvanized the Obama Administration’s “Pacific Century” Agenda.26 The Trans-Pacific Partnership (TPP) formed part of the “pivot to Asia” strategy, despite the pact’s unpredictable future due to the Trump Administration’s changing stance.27 23 Some authors used the term, “New Regional Economic Order.” Nevertheless, none of them substantiate the claim or explain the nexus between development dimensions and contemporary AsiaPacific regionalism. See, e.g., Adriano R. Garcia, Toward a New Regional Economic Order in Asia and the Pacific, X J. PHIL. DEV. 45, 45–53 (1983); Greg Fry, ‘Pooled Regional Governance’ in the Island Pacific: Lessons from History, in PACIFIC ISLAND REGIONAL INTEGRATION AND GOVERNANCE 89, 92 (Satish Chand ed., 2005); KUNIKO ASHIZAWA, JAPAN, THE US, AND REGIONAL INSTITUTION-BUILDING IN THE NEW ASIA: WHEN IDENTITY MATTERS 66 (2013). 24 See Richard Baldwin, Preferential Trading Arrangements, in THE OXFORD HANDBOOK ON THE WORLD TRADE ORGANIZATION 632, 640–41 (Amrita Narlikar et al. eds., 2012) (discussing regionalism and hub-and-spoke bilateralism). 25 For the unipolar and multipolar political analyses, see generally Charles Krauthammer, see The Unipolar Moment, 70 FOREIGN AFF. 23 (1992); William W. Burke-White, Power Shifts in International Law: Structural Realignment and Substantive Pluralism, 56 HARV. INT’L L.J. 1 ( 2015 ). For recent changes to international investment law in the Asia-Pacific, see Julien Chaisse, The Shifting Tectonics of International Investment Law—Structure and Dynamics of Rules and Arbitration on Foreign Investment in the Asia-Pacific Region, 47 GEO. WASH. J. INT’L L. REV. 563 ( 2015 ). 26 Hillary Clinton, America’s Pacific Century, 189 FOREIGN POL’Y 56, 60–61 ( 2011 ). 27 Id. at 62. The 12-member Trans-Pacific Partnership (TPP) was finalized in October 2015. Jane Perlez, U.S. Allies See Trans-Pacific Partnership as a Check on China, N.Y. TIMES (Oct. 6, 2015), http://www.nytimes.com/2015/10/07/world/asia/trans-pacific-partnership-china-australia.html?_r=0; David Nakamura, Obama Turns on Personal Appeal While Trying to Bolster His Pivot to Asia, WASH. POST (Nov. 20, 2015), https://www.washingtonpost.com/politics/obama-tries-to-land-his-pivot-toasia/2015/11/20/e2222e62-8e8b-11e5-ae1f-af46b7df8483_story.html; Donald J. Trump, Presidential Memorandum Regarding Withdrawl of the United States from the Trans-Pacific Partnership Negotiations and Agreement, WHITEHOUSE.GOV (Jan. 23, 2017), https://www.whitehouse.gov/the-press Second, compared with the economic slowdown in the United States and European Union (EU), the evolution of South–South trade cooperation in Asia has ascended to a new level and strengthened the multipolar moment in the international economic order. The ASEAN Economic Community (AEC) and the Regional Comprehensive Economic Partnership (RCEP) are the most ambitious initiatives currently launched by developing countries. As innovative models for South–South FTAs, the AEC and the RCEP incorporate major Asia–Pacific powers and half of the world’s population.28 These blocs consolidate currently fragmented FTAs in Asia–Pacific regionalism. Lastly, regional developing countries, including least developed countries (LDCs), have engaged in the Grand Bargain, expediting the shift from an import substitution policy to an export-oriented growth model. Regardless of different national strategies, the NREO’s pro-development liberalization has prompted an emerging realization among the developing countries that they should transform from the North–South conflicts to North–South collaboration, in line with the SDGs. Built upon Jagdish Bhagwati’s commentary on First and Second Regionalism, this article answers the question of the trade–development paradigm in Third Regionalism with both theoretical and substantive claims.29 Theoretically, I will apply realist and dependency theories to decipher the NREO and advance the understanding of South–South FTAs, which the existing literature barely examines. While realism addresses the transition from the pessimistic political rivalry to cooperation based on mutual interests, the new dependency theory sheds light on the economic transformation of neocolonial states.30 Substantively, I will focus on the legal framework of ASEAN’s trade office/2017/01/23/presidential-memorandum-regarding-withdrawal-united-states-trans-pacific. 28 The Regional Comprehensive Economic Partnership (RCEP) expects to consolidate the existing five free trade agreements (FTAs) that Association of Southeast Asian Nations (ASEAN) concluded with China, Korea, Japan, India, Australia, and New Zealand. The ASEAN Community, including the AEAN Economic Community (AEC), was established in 2015 and the RCEP will be concluded in 2016. Shujiro Urata, Constructing and Multilateralizing the Regional Comprehensive Economic Partnership: An Asian Perspective 3–13 (ADBI Working Paper No. 449, 2013); Association of Southeast Asian Nations [ASEAN], Kuala Lumpur Declaration on the Establishment of the ASEAN Community (Nov. 22, 2015), http://www.asean.org/wp-content/uploads/2015/12/KL-Declaration-on-Establishment-of-ASEAN -Community-2015.pdf, [hereinafter Kuala Lumpur Declaration ( 2015 )]; Association of Southeast Asian Nations [ASEAN], Joint Statement on the RCEP Negotiations (Nov. 22, 2015), http://www.asean.org/wpcontent/uploads/2015/12/RCEP-Leaders-Joint-Statement_22-Nov-2015_ FINAL.pdf. 29 Bhagwati explains the first two waves of regionalism beginning in the 1960s and 1980s, respectively. Jagdish Bhagwati, Regionalism versus Multilateralism, 15 WORLD ECON. 535, 538–42 (1992). I propose that “Third Regionalism” from the 2000s to the present reflects the rapid development of Asia–Pacific regionalism, including the emergence of mega FTAs. 30 See generally Charles L. Glaser, Realists as Optimists: Cooperation as Self-Help, 19 INT’L SECURITY 50, 50–53 (1995); Theotonio Dos Santos, The Structure of Dependence, 60 AM. ECON. REV. 231, 231–33 (1970). Northwestern Journal of International Law & Business liberalization as a timely case study for the NREO. As part of the Global South, Southeast Asia has become a political hot spot due to the South China Sea disputes and Myanmar’s democratization.31 The proliferation of FTAs is also integral to this geopolitical configuration. From a development perspective, the liberalization of services trade significantly reduces poverty and helps avoid the “middle income trap.”32 However, it is politically challenging to liberalize trade in services in the WTO and FTA arenas because of behind-the-border barriers. This article demonstrates how ASEAN states have incrementally liberalized the service sector for development goals on the basis of an “interlocked mechanism” between internal and external, region-based FTAs.33 As part of the South–South approach to implement the SDGs, the ASEAN experience provides developing countries a feasible “Plan B” by which to fortify the trade– development connection amid the Doha Round impasse. This article proceeds as follows. After this introduction, Part II provides the historical and geopolitical context of North–South conflicts and trade– development debates in international economic law. It reassesses the misconception of SDT that led to the disconnect between the Doha Round negotiations and the SDGs. Based on the corollaries of realist and decency theories, it argues that the NREO, which emerged in the context of Third Regionalism, revitalizes pro-development trade liberalization for developing countries. Part III substantiates the paradigm shift by analyzing new trends among South–South FTAs in Asia–Pacific regionalism and focusing on the creation of the AEC as a key case study. It explains the evolution of ASEAN’s legal structure that galvanizes regional economic integration across diverse countries and examines the rationale for the services tradeoriented policy as a development model. Part IV details the first efforts to provide a roadmap for realizing the SDGs through the legalization of trade–development policy in regional integration and highlights regulatory reform proposals for the post-2015 agenda. To utilize the assertive balance of power strategy, ASEAN FTAs should operationalize multilateral development assistance and remove 31 The South China Sea disputes are not only between ASEAN claimant states and China but also involve conflicting national interests between the United States and China. E.g., James R. Holmes, China’s Monroe Doctrine, DIPLOMAT (June 22, 2012), http://thediplomat.com/2012/06/chinas-monroedoctrine/. Aung San Suu Kyi’s party recently won the presidential election in Myanmar. Jonah Fisher, Myanmar Election: Suu Kyi’s NLD Wins Landslide Victory, BBC (Nov. 13, 2015), http://www.bbc.com/news/world-asia-34805806. 32 ASEAN SECRETARIAT & THE WORLD BANK, ASEAN INTEGRATION MONITORING REPORT 93 (2013), http://documents.worldbank.org/curated/en/915081468234873037/pdf/839140WP0P14480Box 0382116B00PUBLIC0.pdf; ASEAN SECRETARIAT & THE WORLD BANK, ASEAN SERVICES INTEGRATION REPORT 1–2 ( 2015 ), http://documents.worldbank.org/curated/en/759841468178459585/ pdf/100637-Revised-WP-PUBLIC-Box393257B-ASEAN-Report-web.pdf. 33 In my view, the “interlocked mechanism” refers to how the liberalization effects of ASEAN’s internal and external FTAs (ASEAN+1 FTAs) are mutually reinforcing. domestic barriers to services trade. Essential actions also include the transnational legal harmonization on mutual recognition and immigration regulations and the legalization of human rights that incorporate international labor principles. Finally, the conclusion draws together these theoretical and substantive arguments and offers legal and policy advice for reinvigorating the trade–development nexus at the global stage. II. THE THEORETICAL FRAMEWORK FOR THE TRADE– DEVELOPMENT NEXUS The trade–development nexus has been acutely contested since the inception of the Bretton Woods system. This issue remains at the core of multilateral trade negotiations and implicates the fundamental differences in national interests between developed and developing countries. Before proceeding to the analysis of present challenges to global regionalism, it is vital to establish the theoretical framework for the trade–development debates in the context of North–South conflicts in international economic law. This article does so by reassessing the WTO’s SDT provisions in tandem with its alleged development goals and then explaining geopolitical dynamics under realist and dependency theories. A. Unrealistic Promises in the Multilateral Trading System The SDGs adopted in 2015 established post-2015 UN targets for development on the basis of the Millennium Development Goals (MDGs). The SDGs’ mandated the implementation of development goals through the Doha Round, which underscores the WTO’s development agenda.34 However, the meaning and implementation of development through the WTO have been controversial, as the WTO does not intend to be a development organization. As an institution created for trade liberalization, the concept of development in the WTO discourse is often confined to special and differential treatment. Politically oriented SDT measures constitute an excuse for noncompliance with WTO principles and contravene the mercantilist premise of trade liberalization. 1. The Misconceived Concept of Special and Differential Treatment The misconceived notion of SDT has led to unrealistic development promises in multilateral trade negotiations. Structuring a sustainable trade– development nexus requires a holistic understanding of development in the historical and geopolitical context. In contrast with the quantitative concept of trade, the multifaceted definition of development has been a subject of rife 34 Sustainable Development Goals ( 2015 ), supra note 4, Goal 17. Northwestern Journal of International Law & Business debate. Various postwar theorists understood development as industrialization, modernization, or economic growth.35 Since the 1980s, the human rights approach to development has been gathering momentum.36 Following the universal movement for the “right to development” and “sustainable development,” Nobel laureate Amartya Sen’s Development as Freedom laid the new groundwork for development.37 Sen’s capability approach explains development as progress for removing “unfreedoms that leave people with little choice and little opportunity of exercising their reasoned agency.”38 This perception expanded the prevailing view of development from the parochial definition of economic performance such as gross domestic product (GDP) per capita to multiple factors that influence development.39 Sen’s theoretical framework contributed to the creation of measurable development parameters in the UN Human Development Index and the MDGs.40 To eliminate what Sen called “unfreedoms,” the trade–development linkage concerns the implementation of development through international trade that maximizes economic growth and reduces poverty. From a broader perspective, the urge for development in the multilateral trading system seeks to compromise the North–South conflicts in international economic law. SDT provisions that accord developing countries proportional equality represent the political compromise on such conflicts. In the GATT era, the creation of the United Nations Conference on Trade and Development (UNCTAD) symbolized the collective power of the South in shaping trade norms dominated by developed nations.41 With the support of the developing countries known as the “Group of 77” (G77), Raúl Prebisch, the UNCTAD’s secretary general, pushed for the NIEO movement that demanded a “just and equitable” economic order.42 In essence, the South demanded absolute sovereignty and requested justified exceptions to principal trade norms, including the MFN principle. The UNCTAD did contribute to the enactment of “Part IV: Trade and Development” of the GATT in 1965.43 As a paramount SDT doctrine, the nonreciprocity principle requires developed countries not to “expect reciprocity for commitments made by them” in trade negotiations with lessdeveloped countries.44 The other landmark decision to codify SDT rights was the GATT’s adoption of the 1979 Enabling Clause that provided for preferential market access.45 This decision permanently authorized members to grant developing countries preferential treatment under the generalized system of preferences (GSP) schemes.46 Notwithstanding the UNCTAD achievements in advancing the agenda of the South, the NIEO movement waned as a result of the G77’s diverging economic interests and the Thatcher–Reagan alliance’s refusal to accede to the NIEO demands.47 The NIEO gave way to the neoliberal Washington Consensus that imposed free market reform on developing countries.48 The Uruguay Round, which established the WTO, sharply diverted from previous negotiations by adopting the “take it or leave it” modality, known as the single undertaking approach. Absent bargaining power, developing countries were compelled under multiple WTO agreements to assume daunting obligations in various areas ranging from services to intellectual property. The implementation problem, which resulted in a strong sense of betrayal, could not be overcome by additional SDT provisions that allowed technical assistance and longer transition periods.49 Northwestern Journal of International Law & Business 2. The WTO–Sustainable Development Goals Disconnect The trade–development convergence is presumed to have entered a new stage during the Doha Round. However, the SDT-focused agenda disconnected the WTO from the SDGs. Economically, the Doha Development Agenda was expected to rectify the unfairness of the Uruguay Round and facilitate the conclusion of current negotiations. Politically, after the September 11 terrorist attacks, fostering development and eliminating poverty were perceived to be effective responses for fighting extremism.50 Moreover, the UN has constantly stressed the WTO’s role in realizing the MDGs and SDGs.51 Given the proliferating SDT measures, the central question is whether Doha development targets can be achieved. The answer is in the negative. First, WTO development goals remain unachievable promises as a result of the mismatch of expectations. The nonreciprocity principle ignores political reality and ultimately undermines developing countries’ participation in multilateral trade negotiations. Without the Grand Bargain, the South only garnered limited market access to developed markets and thus their exportled growth is essentially restricted.52 Second, GSP preferences are often eroded by economic and political considerations. In theory, the Enabling Clause provides a deviation from the MFN principle.53 This fundamental issue was raised in EC-Tariff Preferences, in which India challenged the European GSP scheme.54 The Enabling Clause merely stipulates that donor countries “may” grant preferential treatment to developing countries, meaning it imposes “no legal obligation” for providing the GSP.55 Furthermore, GSP benefits may unilaterally differ in order to “respond positively” to developing countries’ development needs, and such needs are subject to the sole discretion of the developed countries.56 In practice, the U.S. and EU GSP systems have excluded eligible countries that crossed economic benchmarks under the graduation method and restricted those countries’ market access, owing to domestic protectionist demands.57 Third, Uruguay Round-created SDT measures suffer from inherent weaknesses in their design. These measures predominantly neglect the link between countries’ technical assistance needs and their capacity to implement WTO obligations.58 The transition periods under WTO agreements are also arbitrarily determined.59 Most technical assistance projects increase awareness of WTO law by offering educational courses, but fail to advise WTO members how to conduct trade reform, which requires knowledge beyond WTO rules. Finally, most SDT provisions encourage developed countries to “give every effort” or “particular attention” to the needs of developing countries.60 Such hortatory obligations are rarely enforced in WTO disputes. For example, in China-Raw Materials, China invoked the development argument in justifying its export constraints on raw materials such as bauxite and zinc.61 The legal basis on which Beijing relied was Article XXXVI:5, one of the trade and development provisions in Part IV of the GATT.62 Nevertheless, the panel rejected the argument, explaining that Article XXXVI:5 does not assist in the interpretation of Article XI and Article XX(g).63 The rare incidences in which an SDT has been recognized relate only to nonsubstantive issues. In Indonesia-Autos, the arbitrator noted the “interests of developing country Members” requirement under Article 21.2 of the Dispute Settlement Understanding.64 The “reasonable period of time” for Northwestern Journal of International Law & Business Indonesia to implement the WTO decision was therefore extended by six months.65 To the dismay of developing countries, it is impractical to transform the promises of the Doha Ministerial Declaration to operationalize SDT provisions into making them mandatory.66 The far-reaching redistributive transformation of according all SDT provisions binding authority will damage the legitimacy of the WTO dispute settlement system that underpins the rule-based trading system. B. Power Shifts in the Age of Global Regionalism The unrealistic promises of development in the Doha Round are the result of the SDT-centered approach. This flawed approach, underpinned by an erroneous assumption of developing countries that SDT provisions are enforced, is politically correct but unrealistic in multilateral trade negotiations. The Doha Round deadlock, entrenched by agriculture and NAMA issues, has crippled the chances of realizing the SDGs through the WTO. At this juncture, a “Plan B” for accomplishing development goals is becoming an urgent global matter. Against this background, I argue that the emerging NREO serves as a feasible alternative for strengthening prodevelopment trade policy. Based on realist and dependency theories, the contemporary South–South cooperation in Asia–Pacific regionalism signifies a paradigm shift in the trade–development nexus. The legal experiments, intertwined with geopolitical complexities, provide valuable lessons for the Global South such as Africa and Latin America. 1. Geopolitical Dimensions in the Doha Round This article thus shifts the traditional trade–development debate to a new dimension related to the role of developing countries in global regionalism. Traditionally, developing countries have favored multilateralism, as regionalism strengthens the power of the developed nations due to their “divide and conquer” strategy in bilateral negotiations. The NREO is changing the paradigm. Sharing the aspiration of the NIEO, the NREO fortifies the collective power of developing countries. However, distinct from the NIEO, the NREO does not challenge the normative principles of trade norms by requesting SDT exceptions. Instead, the NREO pursues development goals through deep integration in FTAs and reconstructs the neo-colonial dependency of the South on the North. Bhagwati coined the term “First Regionalism” in reference to the Arbitration under Article 21.3(c) of the DSU, WT/DS54/15, WT/DS55/14, WT/DS59/13, WT/DS64/12, Dec. 7, 1998, DSR 1998:IX, at 4029, paras. 23–24. 65 Id. at para. 25. 66 See generally Doha Ministerial Declaration, supra note 8, at para. 44. proliferation of FTAs in the 1960s and explained their collapse as a result of the nations’ having unduly placed political considerations ahead of trade liberalization.67 In “Second Regionalism” in the 1980s, Bhagwati observed the relative success of the EU’s single market and the North American Free Trade Agreement (NAFTA) because of their strong economic motivations.68 In my view, the NREO has surfaced in “Third Regionalism,” which has coincided with the Doha Round since the 2000s.69 The five-fold growth of trade pacts in the past two decades leading to 406 FTAs in 2015 demonstrates the significance of global regionalism.70 Third Regionalism encompasses distinct characteristics. Representing 75% of FTAs worldwide, the FTAs between developing countries (South–South FTAs) have substantially outpaced the agreements between developed countries and developing countries (North–South FTAs).71 In contrast with the first two waves of regionalism, almost 80% of South–South FTAs expedite liberalization through WTO-plus components in the absence of the North’s political pressure.72 Also notably, the mega FTAs that focus on the Asia–Pacific region are becoming a game changer in international economic law.73 By solving the balkanization of bilateral FTAs, the mega FTAs have established new global norms and rendered the decline of the WTO in political discourse. Structural geopolitical transitions led to the NREO, which marks the feature of Third Regionalism. Emerging Asian regionalism transformed the world to multipolar economic governance.74 Following FTAs with Singapore and Australia, the “pivot to Asia” policy reinforced the United States’ Northwestern Journal of International Law & Business rebalance towards the economic power of the Asia–Pacific by concluding its FTA with Korea and the TPP.75 The EU, which formed a trans-Atlantic alliance for global trade, also followed the trend by signing FTAs with Asian partners.76 Consequently, Washington and Brussels moved from their antagonistic stance on the NIEO to a more receptive posture of the emerging NREO.77 In the new multipolar structure, developing countries have maneuvered a balance of power policy by augmenting their collective power through a new hub-and-spoke system. South–South cooperation consolidates the bloc by cementing internal and external FTAs, mutually reinforcing their levels of trade liberalization. The notion of “ASEAN centrality” exemplifies the convergence of the inward economic integration and outward agreements with regional powers such as China, Japan, and India.78 Moreover, divergent from their pessimistic requests focusing on SDT in the WTO, selected developing countries, including LDCs, have engaged in the market accessbased Grand Bargain and benefited from South-centered regionalism. The impressive poverty reduction of Cambodia and Vietnam epitomizes the resultant trade-led growth.79 The elevation of ASEAN’s aggregated economic power, in turn, reinforces the blocs’ bargaining capacity with the North in global negotiations. 2. Realist and Dependency Theories To respond to these contemporary challenges to international economic law, I offer theoretical explanations for the trade–development nexus in the NREO. Political theorists have conventionally stressed the development dimensions of North–South trade.80 This research enriches the existing literature by examining the latest development of South–South trade.81 The realist and dependency theories will be utilized to explain the comparison between the NREO, which prompts South–South cooperation, and the NIEO, which hinges on North–South conflicts. Represented by Hans Morgenthau and Kenneth Waltz, realism is one of the oldest theories of political science.82 Realists define the international system as an anarchy that makes self-help essential for the survival of the countries.83 As rational actors, states pursue their power according to their national interests in the hegemonic world.84 Realism also influences mercantilism in international political economy by perceiving global trade as a zero-sum game that compels nations to maximize their economic benefits.85 The dependency school shares the realist angle of national interests but interprets the international system from a South-based perspective.86 According to Dos Santos and Prebisch who advocated the NIEO, the “underdevelopment” dilemma is due to the unequal neo-colonial trade relationship between dominant and subordinate economies.87 Dependency theorists contended that the ongoing external unfairness has subjected the development of developing countries to the interests of developed countries.88 International trade only aggravates such dependency and the inequality among nations by escalating the flow of the South’s economic Northwestern Journal of International Law & Business surplus to the North.89 As the significant model for North–South trade–development relations, the 1975 Lomé Convention was signed between the EU and former colonies, collectively known as the African, Caribbean and Pacific (ACP) countries.90 The Lomé Convention responded to NIEO demands by incorporating SDT that granted preferential treatment to ACP exports.91 Fundamental changes galvanized the EU’s policy shift. First, the EU lost the “banana war” in the GATT and the WTO, in which non-ACP countries challenged the legality of the EU’s preferential banana quotas for ACP countries.92 These cases mandated the revision of the WTO-inconsistent policy. Second, the fact that ACP countries could not “even maintain market share in the EU” evidences the futility of development goals of the Lomé Convention.93 Development thinking of major EU countries, including Germany and the United Kingdom, also changed from attaching ties with former European colonies to stressing the needs of the LDCs and alleviating global poverty.94 For these reasons, the EU revolutionarily replaced the non-reciprocity policy with the reciprocal Cotonou Agreement and its related Economic Partnership Agreements in the 2000s.95 From the viewpoints of realist and dependency theories, the failure of the EU scheme illustrates the structural weaknesses of development policy in North–South trade agreements. The asymmetry of the bargaining power between the EU and ACP countries allowed the former to dictate the terms of the agreements based on European national interests.96 Preferential trade relations with the EU magnified its normative power rather than addressing the development needs of the South. In essence, the Europe-centric “development-friendly” regime distorted ACP countries’ effective resource allocation and hindered industrialization. The economic flow to Europe was expedited because the value of industrial imports substantially outweighed that of agricultural exports, thus exacerbating ACP countries’ dependency on Europe. The evolution of the NREO is based on the changing nature of South– South trade. Prebisch argued for South–South trade as a means to end developing countries’ dependency on developed countries, but this position waned following the NIEO’s failure.97 The economic rationale for South– South trade includes decreasing the dependency on the North by diversifying risks and increasing self-reliance through the import substitution policy.98 Given limited domestic markets, it became essential for developing countries to expand the suitable overseas market, where they would not suffer from a weaker comparative advantage.99 Commentators have criticized the development potential in South–South trade on the ground that the validity of such arrangements is confined by economies of scale and the prevalent use of non-tariff-barriers (NTBs).100 The NREO development refutes this pessimistic contention. The NREO emerged in Third Regionalism with different geopolitical complexities. South–South trade grew from 8% to 25% of international trade, and the proliferation of Asia–Pacific FTAs in the Doha Round reflects this trend.101 The paradigm shift in a high degree of Asia–Pacific regionalism provides an impetus for the trade–development linkage. Realism posits that competition necessitated by “self-help” makes it difficult for countries to cooperate on trade liberalization.102 Nevertheless, cooperation can be a Northwestern Journal of International Law & Business provides valuable lessons for the Global South to craft pro-development services trade and migration policy. A. Integrating and Multilateralizing Services Commitments Trade in services is the essential driver of development in ASEAN countries.154 The service sector, which accounts for 60% of FDI inflows and 50% of total employment, has contributed to the bloc’s noteworthy 76% surge in the GDP growth in recent years.155 Recognizing the growing prominence of the services trade, ASEAN states commenced negotiations under the AFAS in 1995.156 The goal is to achieve “a free trade area in services” that exceeds the level of the General Agreement on Trade in Services (GATS).157 In the context of the SDGs, services trade energizes ASEAN’s implementation of poverty reduction, economic growth and elimination of the regional inequality.158 This development approach also creates employment opportunities for women and promotes gender equality.159 Moreover, to avoid the political backlash that hampers liberalization in South–South FTAs, the AFAS adopted a successive package structure. Schedules of services commitments concluded under multiple rounds of negotiations cumulatively “form an integral part of” the AFAS.160 Due to the AFAS’s non-self-executing nature, each state is required to sign the protocol that embodies specific commitments.161 Each package of commitments will not take effect until the completion of domestic ratification procedures.162 The AFAS’ incremental approach eases domestic protectionism and facilitates domestic reforms. In addition to the ten packages of services commitments (AFAS 1-10), ASEAN concluded separate packages of financial services and air transport services.163 The AFAS incorporates these general and sector-specific services commitments and thus constitutes the AEC’s foundation of a single market and production base. Modeled after the GATS, the AFAS covers four modes of the services trade: Mode 1 (cross-border supply), Mode 2 (consumption abroad), Mode 3 (commercial presence), and Mode 4 (movement of natural persons or MNP).164 WTO members’ Modes 3 and 4 commitments are subject to the most restrictions.165 ASEAN countries’ liberalization of these modes under the AFAS demonstrates the developing countries’ Grand Bargain in Southbased regionalism. Given the importance of increasing the free flow of intraregional professionals, the ASEAN MNP agreement will supersede Mode 4 commitments under the existing AFAS packages.166 The MRAs will further promote the movement of skilled labor by facilitating the recognition of qualifications for eight professions.167 More importantly, ASEAN expects to adopt the single undertaking approach to negotiate the comprehensive ASEAN Trade in Services Agreement (ATISA), which will consolidate various forms of services commitments.168 The evolution of services negotiation modalities for the AEC provides legal and policy options for the NREO approach to development. AFAS negotiations initially followed a more conservative GATS-like positive list formula, which limits liberalization to scheduled sectors.169 The request-andoffer bargain obliged ASEAN states to list the sectors and modes of supply that they wished to liberalize in binding schedules. Liberalization efforts were expedited by endorsing a common sub-sector approach, which denoted a sub-sector in which three or four ASEAN states made commitments under the GATS or previous AFAS packages.170 The concessions in the sub-sector had to be multilateralized to all ASEAN countries. In other words, those ministers, respectively. ASEAN Integration Report 2015 ( 2015 ), supra note 156, at xix, 29; ASEAN Integration in Services (2013), supra note 119, at 13–14. 164 General Agreement on Trade in Services (GATT 1994), art. I:2. 165 Mode 3, supra note 146, at 17; World Trade Organization, Council for Trade in Services of Sept. 15, 2009, S/C/W/301, Mode 4 Presence of Natural Persons [hereinafter Presence of Natural Persons (Mode 4)], at 20–25. 166 ASEAN Agreement on the Movement of Natural Persons ( 2012 ) [ASEAN MNP Agreement], art. 6:2. Northwestern Journal of International Law & Business countries that made no corresponding commitments could be free riders. To effectuate the Grand Bargain that would result in pro-development trade liberalization, ASEAN implemented the ASEAN Minus X modality in 2003.171 Two or more states could initiate negotiations and liberalize selected sectors, permitting other states to join subsequently.172 Different from the common sub-sector approach, the concessions would only be granted on a reciprocal basis so that the free rider problem could be eliminated. Thus, ASEAN integration would not be dragged down to the pace of countries that were unwilling to cooperate and the benefits of liberalization could incentivize these states to make further commitments.173 The year 2007 marked the adoption of the AEC Blueprint 2015, a revolutionary change that envisioned a single market and production base by the end of 2015.174 The Blueprint mandated salient reforms to eliminate “substantially all restrictions on trade in services.”175 The less sensitive Modes 1 and 2 were expected to be completely liberalized.176 Significantly, the AEC is not modeled after the EU due to the limited liberalization scope of Modes 3 and 4, which face strong domestic protectionism. The compromise on Mode 3 permits 70% rather than 100% of ASEAN equity participation.177 Mode 4 concerns the increase of competition from foreign nationals. The AEC framework is confined to the free flow of skilled labor to the exclusion of low-skilled and unskilled labor.178 Furthermore, the ASEAN Minus X formula continues to apply, and a 15% overall flexibility enables member states to carve out sensitive services industries from commitments.179 These designs have formed a balance between the regulatory sovereignty and the regional integration under South–South FTAs. Since 1995, successive AFAS packages of commitments have transformed from 171 Based on the Protocol to Amend the ASEAN Framework Agreement on Services (2003), Article IV bis (ASEAN Minus X modality) was added to the AFAS. This modality can be traced back to the Framework Agreement on Enhancing ASEAN Economic Cooperation ( 2012 ). SEVERINO, supra note 111, at 352. 172 Framework Agreement on Enhancing ASEAN Economic Cooperation art. I:3. 173 SEVERINO, supra note 111, at 352–53. 174 The AEC Blueprint has governed the negotiations of AFAS 7 and subsequent packages of commitments. ASEAN Integration in Services, supra note 169, at 19; Deunden Nikomborirak & Supunnavadee Jitdumrong, An Assessment of Services Sector Liberalization in ASEAN, in ASEAN ECONOMIC COMMUNITY SCORECARD: PERFORMANCE AND PERCEPTION 47, 48 (Sanchita Basu Das ed., 2013). 175 For the actions of the AEC Blueprint, refer to Roadmap for an ASEAN Community 2009-2015, 26 (Apr., 2009), http://www.asean.org/storage/images/ASEAN_RTK_2014/2_Roadmap_for_ASEAN_ Community_20092015.pdf. 176 Id. 177 Id. 178 Id. at 29–30. 179 Id. at 26, n.2. marginally to substantially GATS-plus.180 The level of services liberalization under ASEAN’s internal FTAs mutually reinforces the liberalization under the region-based external FTAs. The interlocked mechanism secures the certainty of domestic reform and energizes deeper liberalization based on the threshold of the most recently concluded or updated commitments. Critically, the implicit mechanism consolidates South–South cooperation and revitalizes North–South relations in line with development goals. The sequential approach also facilitates the extra-regionalization of ASEAN-centered regionalism that buttresses the bloc’s balance of power policy. With the exception of the single undertaking approach of the ASEAN-Australia-New Zealand FTA, other ASEAN+1 FTAs allow essential components of FTAs to be separately concluded under a framework agreement.181 The model was based on the significant South–South trade pact, the ASEAN–China FTA, which was built upon agreements on goods, services, investment, and the dispute settlement mechanism.182 This FTA, which took eight years to complete, is critical to Beijing’s “One Belt One Road” initiative and ASEAN’s development target to attract FDI inflows.183 With respect to services commitments, ASEAN FTAs with China and Korea adopted the AFAS-like package structure.184 While the first package under the ASEAN–China FTA contained rare “GATS-minus” commitments, the subsequent package remedied the situation by elevating the commitments to GATS-plus.185 ASEAN’s most recent breakthrough was the conclusion of a services agreement with India, which has been ultraconservative about service liberalization.186 The fact that the liberalization level of the AFAS surpasses that of ASEAN+1 FTAs ensures the AEC’s integration and provides an impetus for RCEP and FTAAP liberalization.187 In turn, the Northwestern Journal of International Law & Business economic growth led by services trade will revitalize developing countries’ external trade relations and reinforce the regional development objectives of the SDGs. B. Accelerating Cross-Border Labor Mobility Transnational labor mobility in services trade is a paramount development tool. Going beyond the poverty reduction effect of remittances, circular migration brings back skills and experiences that benefit the economic development of the original countries.188 Nonetheless, allowing the entry of foreign nationals is among the most sensitive issues in international economic law because it is often perceived as opening the backdoor for immigration. Not surprisingly, the WTO and FTA commitments to the temporary movement of natural persons (Mode 4) are far more restrictive than other modes of supply.189 For instance, in the face of congressional objections, the United States’ FTA policy turned conservative about Mode 4 commitments subsequent to the FTAs with Chile and Singapore.190 Similarly, the TPP provisions on the temporary entry of business persons are expected to be contested in U.S. Congress and other parliaments at the ratification stage.191 For these reasons, ASEAN’s labor mobility exemplifies an NREO approach to cement the trade–development nexus through the liberalization of Mode 4 and benefit the SDG target of “full and productive employment.”192 Distinct from the EU’s freedom of movement, the AEC confines the free flow of labor to skilled workers in order to reconcile political resistance with economic integration.193 From a regional development perspective, the Mode 4 progress eases the shortage of ERIA Discussion Paper Series (2013), at 16. 188 Simon Feeny & Mark McGillivray, The Role of ASEAN Connectivity in Reducing the Development Gap, in NARROWING THE DEVELOPMENT GAP IN ASEAN: DRIVERS AND POLICY OPTIONS 84, 113 (Mark McGillivray & David Carpenter eds., 2013); Graeme Hugo, What we Know About Circular Migration and Enhanced Mobility, MIGRATION POLICY INSTITUTE (Sept. 2013), http://www.migrationpolicy.org/research/what-we-know-about-circular-migration-and-enhancedmobility. 189 WTO Secretariat, GATS, Mode 4 and the Pattern of Commitments: Background Information, 3 (Apr. 11–12, 2002); Presence of Natural Persons (Mode 4), supra note 165, at 25. 190 Sherry Stephenson & Gary Hufbauer, Labor Mobility, in PREFERENTIAL TRADE AGREEMENT POLICIES FOR DEVELOPMENT: A HANDBOOK 275, 281–83 (Jean-Pierre Chauffour & Jean-Christophe Maur eds., 2011). 191 See generally The Trans-Pacific Partnership ( 2015 ), supra note 128, at Ch. 12. 192 United Nations Development Programme [UNDP], Sustainable Development Goals, Goal 8 ( 2015 ), http://www.undp.org/content/dam/undp/library/corporate/brochure/SDGs_Booklet_Web_ En.pdf. 193 The EU concept of freedom of movement, see the Consolidated Version of the Treaty on the Functioning of the European Union ( 2012 ), art. 45, 2012 O.J. (C 326/49). professionals in more developed ASEAN countries.194 In addition, the liberalization will narrow the bloc’s development gap by allowing skilled workers in CLMV countries to increase their income by 14–20%.195 Recognizing these pro-development benefits, ASEAN enacted treaties that underpin the AEC’s Mode 4 framework, which includes the ASEAN MNP Agreement and MRAs. Mode 3 obligations of commercial presence under the ASEAN Comprehensive Investment Agreement also complement Mode 4 liberalization. To facilitate ASEAN enterprises’ regional operation, the ACIA authorizes the entry, temporary stay, and work of “investors, executives, managers and members of the board of directors” in member states.196 Pursuant to the AEC Blueprint, the ASEAN MNP Agreement, which will supersede AFAS Mode 4 commitments, applies to skilled labor rather than all “natural persons.”197 It accelerates the movement of intra-corporate transferees, business visitors, contractual service suppliers, and other professionals as defined in states’ schedules of commitments.198 Essentially, the agreement extends only to the service sector.199 For example, an intraregional transfer of a Singapore-based sales manager of an agricultural or manufacturing plant in Myanmar falls outside the scope of the agreement, as neither agriculture nor manufacturing belongs to the service sector. Nonetheless, the Singapore manager’s entry to other ASEAN countries for business trips is guaranteed under the ACIA, which covers “services incidental to” the non-service sectors.200 Akin to the GATS, the ASEAN MNP Agreement covers services provision on a non-permanent basis, so that intra-regional labor mobility will not become a political immigration issue that impedes the development of South–South FTAs. The agreement facilitates the “temporary” entry or stay of service providers.201 Because of the ambiguity as to what length of time Northwestern Journal of International Law & Business “temporary” entails, the commitments of ASEAN states vary largely across different categories of natural persons.202 The agreement explicitly excludes the governments’ “measures affecting natural persons seeking access to the employment market” and “measures regarding citizenship, residence or employment on a permanent basis.”203 ASEAN states are therefore allowed to maintain visa requirements for public purposes, provided that the benefits under the agreement are not nullified or impaired.204 The potential for skilled worker migration within ASEAN is arguably undermined because the agreement does not authorize the permanent entry of professionals.205 In addition to the Mode 4 commitments under the ASEAN MNP Agreement, ASEAN’s MRAs facilitate the recognition of qualifications and advance intra-regional labor mobility. As MRAs require significant changes in domestic rules allowing for foreign talents, they are outside of the WTO framework and are rarely addressed in FTAs.206 ASEAN’s “à la carte” approach to profession-specific harmonization efforts signifies the implementation of regional law through a horizontal soft-law approach. Unlike what the titles may suggest, MRAs do not accord direct recognition of licenses and certifications.207 Instead, they provide a scheme of cooperation based on member states’ respective agreements that harmonize the divergence of national legislation regulating various professions.208 The effectiveness of MRAs is critical to ASEAN’s single market and its attractiveness for global professional firms. Although the AEC Blueprint 2015 mandates that MRAs for all professional services be finalized by 2015, ASEAN has so far concluded MRAs for only eight professions.209 The MRA “frameworks” on accountancy services and surveying services focus on identifying major principles and facilitating information exchanges.210 Their purpose is to build consensus for fully fledged MRAs that govern highly regulated professions in diverse jurisdictions. For the other six professions, the implementation approaches vary across MRAs. The MRAs on nursing 202 The term “temporary” is negatively defined in the Agreement, based the model of the GATS Annex on Movement of Natural Persons Supplying Services. See also Stephenson & Hufbauer, supra note 190, at 276 (discussing the GATS approach). 203 ASEAN MNP Agreement, supra note 166, at art. 2:2. 204 Id. at art 2:3. 205 ASEAN 2030, supra note 141, at 163. 206 GATS only include loose requirements for mutual recognition arrangements (MRAs) in Article VII. 207 Presence of Natural Persons (Mode 4), at 20–21. 208 AFAS, supra note 157, at art. V. 209 Ass’n of Southeast Asian Nations, Roadmap for an ASEAN Community: 2009-2015 ( 2009 ), at 26; ASEAN Integration Report 2015, supra note 156, at 33. 210 Ass’n of Southeast Asian Nations, ASEAN Mutual Recognition Arrangement Framework on Accountancy Services ( 2009 ), art. 1; Chia Siow Yue, Free Flow of Skilled Labour in ASEAN, in ASEAN ECONOMIC COMMUNITY SCORECARD: PERFORMANCE AND PERCEPTION 107, 118–19 (Sanchita Basu Das ed., 2013). services, medical practitioners, and dental practitioners require a relatively simple process. Following certification by his or her country of origin, a medical doctor with sufficient qualification and without ethics violations may register as a foreign medical practitioner in the host country.211 As “the most visible” MRAs, the agreements on engineering services and architectural services created regional bodies.212 Under the regional public–private partnership, the ASEAN-level professional institutions and national regulatory bodies have established a three-step registration process. For example, an engineer who meets the MRA’s educational and experience requirements should be first certified by the domestic regulatory body, which submits the application to the ASEAN committee.213 After approval as an “ASEAN Chartered Professional Engineer,” the engineer is eligible to apply to be a foreign engineer in another ASEAN state.214 The most recent MRA on tourism professionals (MRA-TP) has important implications for development because tourism services are closely linked with GDP and employment in developing countries.215 Unique among ASEAN MRAs, the MRA-TP governs “unregulated” professions because no international standards exist for tourism services providers.216 The ASEAN experience sheds light on the impact of the legalization of tourism professionals. The MRA-TP will advance the regional tourism industry by developing a common curriculum and competency standards for thirty-two job titles, such as baker, laundry manager, and travel consultant.217 It will 215 The revenues for the tourism sector contribute to 10% of Cambodia’s GDP and 10% of employment in the Philippines. Report by the Secretariat, Trade Policy Review, Cambodia, Revision, WT/TPR/S/253/Rev.1, Nov. 24, 2011, at 79; Report by the Secretariat, Trade Policy Review, the Philippines, Revision, WT/TPR/S/261/Rev.2, May 9, 2012, at 93. 216 Note that in some ASEAN countries, tour guides are subject to regulatory requirements and therefore they are not covered under the MRA. Yoshifumi Fukunaga, Assessing the Progress of ASEAM MRAs on Professional Services, ERIA DISCUSSION PAPER SERIES ( 2015 ), at 26. 217 A person who possesses a tourism certificate issued by a national agency in compliance with MRA requirements can be recognized as a “Foreign Tourism Professional” in another ASEAN state. Ass’n of Southeast Asian Nations [ASEAN], ASEAN Mutual Recognition Arrangement on Tourism Professionals, arts. II-III; ASEAN MUTUAL RECOGNITION ARRANGEMENT ON TOURISM PROFESSIONALS (MRA) – HANDBOOK (2013) [hereinafter MRA-TP Handbook], at 18. Northwestern Journal of International Law & Business also create a Web-based database to assist registered tourism professionals in seeking employment in the bloc.218 C. Regulatory Reform for the Post-2015 Agenda The emergence of the NREO in the context of Third Regionalism demonstrates how the rise of South–South FTAs deepens regional cooperation. Having grasped the reality that the benefits of bargained concessions outweigh those of SDT measures, developing countries in the Asia–Pacific have switched to a neo-liberal approach to international economic law. South-based regionalism provides these countries with a safe “playing ground” for trade liberalization. Moreover, the Doha Development Agenda stresses aid for trade to help LDCs.219 The Bali package offers LDCs additional waivers and preferential market access as a pro-development policy.220 Ironically, these measures rarely necessitate domestic reform that energizes development. The NREO approach provides a different path. ASEAN-based regionalism has incentivized CLMV countries to pursue market reform that resulted in noteworthy growth. As part of the bloc, these LDCs benefit from the augmented negotiating power in extra-regional FTAs. The AEC integration also prevents the negative consequence of trade diversion.221 Built on the original AEC Blueprint, the creation of the AEC in 2015 prompted the adoption of the AEC Blueprint 2025 with the goal of further transforming the bloc to a unified economy that is “highly integrated and cohesive” and focuses on “sustainable economic development.”222 In particular, services liberalization indicates ASEAN’s legalization of trade– development policy in line with the SDGs. Nevertheless, it should be cautioned that the AEC should be seen as an impetus for the evolving process. To buttress the NREO argument for the benefits of the Global South, I offer the following regulatory reform proposals in ASEAN’s post-2015 agenda. 1. Operationalizing Development Assistance Operationalizing ASEAN’s development assistance is integral to the services trade-oriented development policy and provides a model for Southcentered regionalism. The two-tiered ASEAN problem due to member states’ 218 MRA-TP Handbook at 45–46. 219 WORLD TRADE ORGANIZATION, THE WTO AT TWENTY: CHALLENGES AND ACHIEVEMENTS ( 2015 ), at 32–33. 220 Id. 221 See Cooper, supra note 75, at 11 (explaining the economic impact of the FTAs). 222 Ass’n of Southeast Asian Nations [ASEAN], ASEAN Economic Community Blueprint 2025 ( 2015 ), at 3, 19. Reassessing the Trade–Development Nexus 37:321 (2017) economic divergences has posed formidable obstacles to the AEC’s goal of realizing a single market and production base. As a form of development assistance, the IAI work plans are intertwined with narrowing the development gap and poverty reduction efforts.223 For instance, Singapore offers training on IT and tourism through its centers in CLMV countries and promotes the liberalization of these LDCs’ trade in services.224 However, the effectiveness of fragmented IAI programs has been questionable.225 To offer WTO-plus development assistance, it is imperative to consolidate multilateral harmonization and cooperation according to the Paris Declaration on Aid Effectiveness.226 Decreasing the transaction costs of IAI programs and providing need-based advisory assistance will strengthen the services trade-oriented strategy. An important approach is to incorporate the principle of ASEAN centrality by aligning development aids rendered by intra-regional and extra-regional countries. The integrated measures will in turn achieve the SDGs’ objective of revitalizing global partnership by fortifying “North-South, South-South and triangular cooperation.”227 In truth, geopolitical considerations underpin respective countries’ official development assistance (ODA) policies, which are linked to the implementation of FTAs and IAI efforts. Chinese foreign assistance enforces Xi Jinping’s diplomatic priority over the periphery countries as an approach to increase Beijing’s bargaining power to formulate the “new type of major power relations” with Washington.228 The Chinese characteristics of South– South cooperation have traditionally emphasized concessional loans for Northwestern Journal of International Law & Business infrastructure building to facilitate the export of Chinese capital and labor.229 The private equity fund created under the ASEAN-China Investment Agreement and the China-led Asian Infrastructure Investment Bank exemplify the practice.230 The training of foreign officials in China also demonstrates a new trend of “soft” development assistance to export the Chinese development model.231 Moreover, as the ASEAN–China FTA indicates, the geographic hub of Chinese aid is the Mekong River basin, which covers CLMV countries that are ideologically akin to China.232 The Chinese economic influence over Cambodia is most noteworthy, as it prompted Phnom Penh to side with Beijing in conflict with ASEAN claimant states in the South China Sea disputes.233 Similar to China’s focus on Southeast Asia, the Abe Doctrine of Japan drove the country to be the largest external donor to the IAI programs.234 Whereas the Fukuda Doctrine built the foundation of ASEAN–Japan relations in the 1970s, the Abe administration considers its ODA from the national security viewpoint.235 The purpose of Tokyo’s assertive strategy is to provide a counter balance to China and strengthen the United States–Japan alliance, as well as consolidate Japanese enterprises’ regional supply chains. The ASEAN–Japan FTA encompasses areas of economic cooperation in terms of business environment, intellectual property, and small and mediumsized enterprises (SMEs).236 Japan’s innovative development initiative includes the technical assistance of drafting Myanmar’s Securities Exchange Law, which facilitates the entrance of Japanese enterprises and law firms into emerging markets.237 Reassessing the Trade–Development Nexus 37:321 (2017) The conventional “North” also provides noteworthy development assistance. Obama’s “pivot to Asia” policy and anti-terrorism strategy form the basis of the ASEAN–United States Strategic Partnership, which strengthens U.S. aid in trade facilitation, investment, and SMEs.238 To expand ties with Asia, the EU also implements programs to enhance ASEAN’s FTA negotiation capacity and the operations of the ASEAN Secretariat.239 The United States and the EU are ASEAN’s dialogue partners, but they have yet to conclude region-based FTAs with ASEAN.240 Among ASEAN’s external FTAs, the ASEAN–Australia–New Zealand FTA has the most detailed economic cooperation mechanism that directly contributes to ASEAN’s integrated services market. Under the auspices of the FTA, the ASEAN Qualifications Referencing Framework, which harmonizes legal differences, advances the bloc’s Mode 4 liberalization and MRAs.241 Multilateral development assistance associated with the changing nature of North–South relations benefits ASEAN in the multipolar economic structure and affirms the NREO assumptions based on realism and the new dependency theory. Nevertheless, countries’ “unilateral adoption” of IAI projects, galvanized by divergent geopolitical goals, runs the risk of undermining ASEAN’s integration and the IAI’s effectiveness. In practice, leaders of projects from donor countries have conducted only informal meetings for information exchange without substantive coordination to reduce overlapping programs.242 To implement the Paris Declaration principles, ASEAN should formalize development assistance coordination under the FTA framework. Some may contend that the development chapter of the TPP will fill the gap of coordination. I disagree with this contention. Although more ASEAN countries are considering joining the TPP, Cambodia, Laos, and Myanmar are unlikely to join the pact due to its high standards.243 The danger of being “left out” for these LDC countries is counteractive to the AEC’s objective to 62. Northwestern Journal of International Law & Business narrow the development gap. Importantly, the development needs of developing countries in the TPP, such as Chile, Mexico, and Peru, are different from those of ASEAN. The TPP may have a negative “development assistance diversion” effect on the ASEAN states. Under Article 23, the TPP expects to establish a Committee of Development to implement assistance programs.244 While such an FTA design should be acknowledged, the TPP Committee lacks the institutional memory concerning ASEAN IAI projects. Also, the TPP provisions address neither a monitoring mechanism nor resource mobilization, which relates to the fundamental question of “where money comes from.” The additional ODA budget may further delay the ratification of the TPP in developed countries. The proposed NREO approach to development assistance is distinguishable from the NIEO, which demanded overall redistributive justice in international economic law without taking the North–South political reality into account. The NREO proposes to translate fragmented, geopolitical, interest-motivated development assistance projects into an integrated, law-based mechanism centered on the South. To operationalize development provisions under the mandate of the ASEAN Blueprint 2025, effective coordination of development assistance should be integrated into the implementation of ASEAN+1 FTAs and the prospective RCEP.245 It is for the ASEAN Secretariat to formalize the consultative mechanism between ASEAN states and foreign donor countries. To accurately address the needs of CLMV countries, the Secretariat is advised to enforce monitoring and evaluation of development assistance projects.246 Based on lessons learned from the WTO Enhanced Integrated Framework for Aid for Trade, a trust fund coming from the existing budget of ASEAN partners can be created.247 The fund would ensure the independence of projects and enhance the ASEAN Secretariat’s capacity to mobilize resources by aligning IAI work plans with AEC goals and the SDGs. These mechanisms would provide a new catalyst for operationalizing development assistance under the FTA architecture. 244 The Trans-Pacific Partnership, supra note 128, art. 23.7. 245 The scope of my proposal is larger than that of proposal for the Initiative for East Asian Integration. Vo Tri Thanh, Effectiveness of Initiative for ASEAN Integration, in ASEAN ECONOMIC COMMUNITY SCORECARD: PERFORMANCE AND PERCEPTION 183, 200 (Sanchita Basu Das ed. 2013); ASEAN Economic Community Blueprint 2025, at 34-25 ( 2015 ). 246 FTA provisions should transform current ASEAN guidelines that “encourage” monitoring and evaluation to a binding nature. Ass’n of Southeast Asian Nations [ASEAN] GUIDELINES FOR IAI PROJECTS: FOR ASEAN DIALOGUE PARTNERS AND EXTERNAL PARTIES, at Sec. III (2013); ASEAN Economic Community Blueprint 2025, at 37 ( 2015 ). 247 For the introduction to the WTO Enhanced Integrated Framework and its predecessor, the Integrated Framework, see WORLD TRADE ORGANIZATION, THE WTO AT TWENTY: CHALLENGES AND ACHIEVEMENTS ( 2015 ), at 74. Reassessing the Trade–Development Nexus 37:321 (2017) 2. Removing Regulatory Trade Barriers Effective development assistance will positively impact services tradeoriented development and benefit the SDGs to end poverty, promote economic growth and employment, and reduce the inequality among nations.248 Nonetheless, a prerequisite to this projection is regionalismpromoted reform that removes regulatory trade barriers in domestic law. In other words, services commitments under FTAs work for development if they are based on de jure and de facto implementation. To provide a model for South–South FTAs, ASEAN states should undergo further reform on the negotiation modality and domestic regulations. The structural improvements to ASEAN’s liberalization of trade in services need to be prioritized in its post-2015 agenda. First, the immediate priority is to enact the ATISA, which consolidates various services commitments in general AFAS packages, sector-specific packages, and the ASEAN MNP Agreement.249 The incremental liberalization approach is at the point where a single schedule of commitments would further transparency and integration. The ATISA should also strengthen its linkage with the ACIA’s Mode 3 commitments to prevent Mode 4 restrictions from obstructing the commercial presence of ASEAN enterprises.250 Second, AFAS commitments have been negotiated under the positive list modality. Switching the negotiation mode to the more aggressive negative list approach would effectively cover newly developed services and enhance transparency.251 This approach would also solidify intra-ASEAN supply chains and avoid the TPP’s potential trade diversion effect, which would undermine the AEC integration. Except for Singapore’s hybrid approach to services commitments, ASEAN countries are in favor of the positive list approach to retain their regulatory space to protect infant industries.252 However, an inventive design is embedded in the Malaysia– New Zealand FTA, which currently lists services commitments on a positive 248 See Sustainable Development Goals ( 2015 ), Goals 1, 8, & 10. 249 ASEAN Economic Community Blueprint 2025, at 6 ( 2015 ). 250 See Fukunaga & Ishido, supra note 199, at 31 (explaining the risk of disconnections between Modes 3 and 4 in ASEAN services commitments). 251 Christopher Findlay, Services Trade Liberalization in ASEAN, in ROADMAP TO AN ASEAN ECONOMIC COMMUNITY 172, 186–87 (Denis Hew 2005); Aaditya Mattoo & Pierre Sauvé, Services, in PREFERENTIAL TRADE AGREEMENT POLICIES FOR DEVELOPMENT: A HANDBOOK, 235, 251–52 (JeanPierre Chauffour & Jean-Christophe Maur eds., 2011). 252 For example, Singapore followed the positive list approach in the Singapore-China FTA, but adopted the negative list approach in the Singapore-Peru FTA. Trade Policy Review: Singapore, Report by the Secretariat, Revision, WTO Doc. WT/TPR/S/267/Rev.1 (Oct. 18, 2012), at 56. Other ASEAN states, such as Malaysia and Indonesia, scheduled their services commitments under FTAs predominantly on a positive list basis. Trade Policy Review: Malaysia, Report by the Secretariat, WTO Doc. WT/TPR/S/292 (Jan. 27, 2014) [hereinafter Trade Policy Review, Malaysia], at 104; Trade Policy Review: Indonesia, Report by the Secretariat, WTO Doc. WT/TPR/S/278 (Mar. 6, 2013), at 84, 109–10. Northwestern Journal of International Law & Business list basis.253 In the FTA, Malaysia agreed to “commence re-negotiation of the specific commitments” if it concludes an agreement on a negative list with a third country.254 This forward-looking MFN mechanism should be multilateralized to the AEC and the RCEP to trigger progressive liberalization. Third, the AEC allows the ASEAN Minus X formula and the 15% flexibility rule in services trade liberalization.255 These politically-oriented principles were designed to abate domestic protectionism and to stimulate initial liberalization under the South–South FTA. In reality, neither principle is clear. The ASEAN Minus X formula has led to fragmented commitments at different speeds. It is unclear whether a state can opt out of the commitments to which it first agreed if it is unable to meet the commitments in the implementation stage.256 Furthermore, no ASEAN agreements elaborate principles governing the 15% flexibility proviso, thus making it difficult to comprehend whether and how countries should schedule their services commitments based on the rule. To maximize the pro-development effect, it is pivotal to narrowly construe these SDT-like exceptions and base the intra-regional Grand Bargain on objective criteria. Lastly, the AEC’s single market depends on the further liberalization of Modes 3 and 4. Different from the EU’s top-down approach, ASEAN’s FTAplus path provides an optional model for the South. The salient issue for commercial presence negotiations is the AEC’s 70% ASEAN equity participation rule.257 While some member states have unilaterally increased the foreign equity threshold to 100%, Indonesia, the Philippines and Thailand have yet to meet the AEC target.258 A priority for AFAS negotiations is to minimize limitations of market access and national treatment for Mode 3, so that domestic regulation will not cripple the effectiveness of ASEAN equity commitments.259 The Mode 4 liberalization that facilitates cross-border labor mobility has great potential for development due to the effect of remittances and skill transfer. At the WTO, most Mode 4 horizontal commitments are related to 253 Trade Policy Review, Malaysia, supra note 252, at 32, 104. 254 See New Zealand – Malaysia Free Trade Agreement, N.Z.-Malay., Oct. 26, 2009, art. 8.15( 2 ) (“The re-negotiation shall proceed on a ‘negative list’ basis. The Parties shall endeavour to conclude the renegotiation on the specific commitments within 18 months from the date the negotiations commence.”). 255 Roadmap for an ASEAN Community: 2009-2015, at 26 ( 2009 ). 256 SEVERINO, supra note 111, at 352–53; Nikomborirak & Jitdumrong, supra note 174, at 59–60. 257 Roadmap for an ASEAN Community: 2009-2015 ( 2009 ), at 26. Note that the AEC Blueprint only mandates “[n]o restrictions for Modes 1 and 2.” Id. 258 SIRISENA DAHANAYAKE, IMPLICATIONS OF LIBERALIZING PROFESSIONAL SERVICES: LEGAL, ACCOUNTANCY, AND ENGINEERING SERVICES IN LAO PDR, at 12 ( 2012 ); Dionisius Narjoko, AEC Blueprint Implementation Performance and Challenges: Services Liberalization, ERIA DISCUSSION PAPER SERIES, at 14 ( 2015 ). 259 PHILIPPA DEE, DOES AFAS HAVE BITE? COMPARING COMMITMENTS WITH ACTUAL PRACTICE,, at 21 (2013). Reassessing the Trade–Development Nexus 37:321 (2017) intra-corporate transferees and business visitors, and labor mobility is thus intertwined with commercial presence.260 Delinking the Mode 4 commitments under the ASEAN MNP Agreement with Mode 3 would create more opportunities for independent professionals.261 Another required improvement lies in ASEAN states’ commitments regarding the periods of stay for natural persons under the agreement, which should be substantially GATS-plus.262 The implicit interlocked mechanism between ASEAN intra-regional and extra-regional FTAs has prompted states to use a higher threshold for negotiations, thus making these FTAs “living” documents and ensuring the AEC’s integration and its impact on Asia-Pacific regionalism.263 The ASEAN-Australia-New Zealand FTA, which contains a separate chapter on the MNP, has the strongest GATS-plus services commitments among the ASEAN+1 FTAs.264 The inclusion of the MNP annex in the recent ASEAN– India Agreement on Trade in Services also indicates the direction of the RCEP towards labor mobility.265 The enhanced liberalization of Modes 3 and 4 will strengthen ASEAN’s strategy of services trade-oriented development. 3. Transnational Legal Harmonization and Human Rights Protection Given the crisis of the Doha Round when it came to realizing the development promises, the creation of the AEC illustrates an NREO approach to South–South cooperation and offers an alternative for trade-led Northwestern Journal of International Law & Business development. In ASEAN’s post-2015 agenda, the bloc should streamline WTO-plus matters with FTA policy. To maximize the development effect, ASEAN should promote the regional legal harmonization of mutual recognition and immigration rules and the legalization of human rights based on international labor law. This approach will hence extend the implementation of the SDGs from trade-led economic benefits to the protection of labor rights and fundamental freedoms.266 ASEAN’s skilled labor-focused policy is applied through Mode 4 commitments and MRAs. Falling short of the AEC goal to finalize MRAs for all professional services by 2015, the eight current MRAs cover less than 2% of ASEAN’s workforce.267 In practice, the MRA provisions that mandate minimum years of experience have restricted the number of eligible professionals.268 Even meeting the MRA criteria does not guarantee employment due to states’ additional requirements. Consequently, there is a gap between regional harmonization and domestic law. A common obstacle is the labor market test. For instance, a Malaysian company seeking to recruit a foreign engineer bears the burden of proving the absence of local engineers for the specific project.269 Limitations on nationality, residency restrictions, and language requirements pose additional challenges.270 While Thai law accepts foreign nurses, none have been admitted because the licensing examination is conducted in Thai.271 Arguably, the implementation problem also exists in bilateral FTAs. Japan’s FTAs with Indonesia, the Philippines, and Vietnam accept ASEAN nurses.272 The statistics show that only three ASEAN nurses passed Japan’s nursing examination in 2015, which is necessary for long-term residence.273 These de Reassessing the Trade–Development Nexus 37:321 (2017) jure and de facto restrictions constrain the development potential for regional labor mobility. Mutual recognition is among the most difficult FTA issues. Even the US-led TPP simply follows the GATS model by encouraging a member state to “afford adequate opportunity to another” partner for negotiating an MRA, which should be conducted in a non-discriminatory manner.274 In contrast with the TPP’s nascent stage of development, the AEC framework has accumulated ten years of experience in implementing regional MRAs.275 ASEAN MRAs possess the potential to provide a model for South–South FTAs that energize mutual recognition schemes in Asia–Pacific FTAs such as the RCEP and the FTAAP, which cover countries at diverse stages of development. To remedy the current weaknesses, ASEAN countries should intensify the legal harmonization of domestic rules. Based on common criteria, states should narrowly apply the MRAs’ “subject to domestic laws and regulations” provisions and enlarge the right of independent practice for professionals.276 To ensure regional integration, states are obliged to increase the distinction between ASEAN and other foreign professionals by according the former more preferential treatment.277 The legal harmonization process that will prompt the paradigm shift in Asia–Pacific regionalism is expected to link immigration rules to Mode 4 commitments and MRAs. The schemes under the EU and the Trans-Tasman Travel Arrangement between Australia and New Zealand allow freedom of movement for work purposes.278 The development gap and concerns of illegal immigration make visa-free mechanisms infeasible for ASEAN. Significantly, 19 APEC members, including seven ASEAN states, participate in the APEC Business Travel Card (ABTC) scheme, which permits precleared business travelers short-term entry.279 The three-year valid ABTC also allows holders to use the express APEC lane at ports of entry, thus Japanese) (last visited Dec. 20, 2015). 274 The Trans-Pacific Partnership ( 2015 ), supra note 128, at art. 10.9; General Agreement on Trade in Services (1994), supra note 164, at art. VII. 275 The first ASEAN MRA, which governs on Engineering Services, was concluded in 2005. See also ASEAN Services Integration Report ( 2015 ), supra note 32, at 34 (“To date, there are a total of 1,252 engineers on the ASEAN Chartered Professional Engineers Register . . . .”). 276 E.g., ASEAN Mutual Recognition Arrangement on Nursing Services (2006), arts. 3.2; ASEAN MRA on Engineering Services ( 2005 ), art. 3.3. See Fukunaga, supra note 216, at 16 (stating that unlike the EU, “[t]he ASEAN MRA in principle does not give a right for independent practice. Actually, Vietnam is the only ASEAN country that allows independent practice.”). 277 See Fukunaga, supra note 216, at 21 (observing that most ASEAN states “do not distinguish ASEAN and non-ASEAN in their respective regulatory frameworks”). 278 For the introduction to the Trans-Tasman Travel Arrangement, see ASIAN DEVELOPMENT BANK INSTITUTE, LABOR MIGRATION, SKILLS & STUDENT MOBILITY IN ASIA 37 ( 2014 ). 279 Among the 21 APEC economies, only Canada and the United States are transitional members and have not yet joined the scheme. APEC Business Travel Card, http://www.apec.org/About-Us/AboutAPEC/Business-Resources/APEC-Business-Travel-Card.aspx (last visited Dec. 20, 2015). Northwestern Journal of International Law & Business cutting time spent at immigration checkpoints by 52.4%.280 While the transplantation of the APEC-like “ASEAN lane” at customs will improve labor mobility, the region can benefit more from a visa system that extends beyond a temporary stay for business visitors. The AEC’s implementation of facilitating “the issuance of visas and employment passes for ASEAN professionals” can be modeled after NAFTA and the U.S. FTA with Singapore.281 The “Trade NAFTA” visa (known as the TN visa) for Canadians and Mexicans ties U.S. employment with renewable visas.282 The United States–Singapore FTA created separate quotas for US H-1B work visas allocated to Singaporean nationals.283 Based on these models, it is recommended that ASEAN design a pan-ASEAN professional visa scheme that allocates the visa quotes subject to negotiations. The scheme would harmonize domestic immigration rules and deepen the implementation of Mode 4 commitments and MRAs. Other than the legal harmonization efforts, ASEAN’s breakthrough in Asia–Pacific FTAs lies in facilitating and managing the flow of migrant workers in the post-2015 agenda. The AEC has liberalized the movement of professionals. The legitimacy of the services trade-oriented development policy requires the expansion of “beneficiaries” of the regional integration by incorporating low-skilled labor. As in other regions, a political paradox has often arisen from the struggle between resistance to migrant workers and the shortage of labor undertaking the 3D (dirty, dangerous, and demanding) jobs necessary for economic development.284 From a legal perspective, the ASEAN Charter that legalizes the AEC does not exclude low-skilled labor from ASEAN’s single market.285 The current skilled labor-centered scheme is not sustainable because it ignores the reality that more than 87% of intra-ASEAN workers are semi-skilled or unskilled.286 More fundamentally, facilitating the temporary movement of migrant workers will yield “the greatest absolute and poverty-related gains 280 APEC’s Achievements in Trade Facilitation in 2007-2010: Final Assessment of the Second Trade Facilitation Action (TFAP II) ( 2012 ), at 1. 281 Roadmap for an ASEAN Community: 2009-2015 ( 2009 ), at 29. 282 See Stephenson & Hufbauer, supra note 190, at 281 (“When proof of a job offer is demonstrated, the TN visa permits employment for one year, with unlimited renewal.”); Philip Martin & Manolo Abella, supra note 194, at 13 (“There has never been a quota on the number of TN visas available for Canadian, but there was a 5,500 a year quota on TN visas available for Mexicans between 1994 and 2005.”). 283See USTR on Professional Workers in Chile, Singapore FTAs, July 23, 2003, http://singapore.usembassy.gov/072303a.html (stating that under the FTA, the number of Singaporean professionals in the United States is limited to 5,400). 284 See Jason Ng, Richer Asean Nations Resist Opening Doors to Migrant Workers, WALL STREET J., Apr. 3, 2013, http://www.wsj.com/articles/SB10001424127887323646604578402283145126480 (discussing the situations in Malaysia, Singapore and Thailand). 285 Charter of the Association of Southeast Asian Nations (2007), art. 1:5. 286 Sugiyarto & Agunias, supra note 267, at 4. Reassessing the Trade–Development Nexus 37:321 (2017) for developing countries” and reduce ASEAN’s development gap.287 Given the estimated increase of low-skilled occupations by 62.4% and the urgent labor shortage problem, it is timely to construct a mechanism to manage the flow of migrant workers based on the best practices of FTAs.288 Markedly, the human rights dimension of the SDGs can also be implemented through the labor rights protection under the AEC framework. As merely 17% of GATS entries encompass low-skilled workers, ASEAN’s WTO-plus mechanism will provide a new trade–development paradigm.289 Labor commitments are stressed in the IAI, the ASEAN Declaration on the Protection and Promotion of the Rights of Migrant Workers, and the ASEAN Human Rights Declaration.290 However, the economic aim and human rights aspirations are disconnected. Although the two declarations identify the obligations of states, their soft-law nature and the absence of an enforcement mechanism limit their practical value. As an effective approach to labor protection, ASEAN countries have concluded bilateral labor agreements (BLAs) or memoranda of understanding that incorporate paramount principles of International Labour Organization (ILO) conventions.291 Presumably, the BLAs that provide for the movement of low-skilled labor have circumvented the MFN effect of the GATS and led to a different type of “noodle bowl” effect.292 Some may argue that domestic labor law enforcement suffices to achieve the goal of facilitating the movement of labor. This argument neglects the practice of excluding certain categories of labor, such as domestic maids, from employment legislation and the work injury compensation scheme.293 287 Abrenica, supra note 144, at 354; Feeny & McGillivray, supra note 188, at 117. 288 Laura Brewer, LABOUR MOBILITY AND SKILLS RECOGNITION: LESSONS FOR ASEAN, PowerPoint Slides ( 2014 ), at 6; Fukunaga & Ishido, supra note 199, at 31; LABOR MIGRATION, SKILLS & STUDENT MOBILITY IN ASIA ( 2014 ), supra note 278, at 42. 289 See Arti Grover Goswami & Sebastián Sáez, How Well Have Trade Agreements Facilitated Temporary Mobility, in LET WORKERS MOVE: USING BILATERAL LABOR AGREEMENTS TO INCREASE TRADE IN SERVICES 17, 25 (Sebastián Sáez ed., 2013) (explaining the scope of Mode 4 commitments under the GATS). 290 Roadmap for an ASEAN Community: 2009-2015 ( 2009 ), at 107; ASEAN Declaration on the Protection and Promotion of the Rights of Migrant Workers (2007); ASEAN Human Rights Declaration ( 2012 ), para. 27. 291 E.g., Memorandum of Understanding between Trade Unions in Cambodia and Trade Unions in Thailand on Protection of Migrant Workers’ Rights (2013); LABOR MIGRATION, SKILLS & STUDENT MOBILITY IN ASIA ( 2014 ), supra note 278, at 43. 292 The feature of Asian noodle bowl or spaghetti bowl commonly refers to fragmented rules of origin under FTAs. For an analysis if the bilateral labor agreements’ potential violation of the most-favorednation clause of the GATS, see Arti Grover Goswami et al., When and Why Should Bilateral Labor Agreements be Used, in LET WORKERS MOVE: USING BILATERAL LABOR AGREEMENTS TO INCREASE TRADE IN SERVICES 39, 45–46 (Sebastián Sáez ed., 2013); Stephenson & Hufbauer, supra note 190, at 290. 293 For instance, “domestic workers” are excluded from Singapore’s Employment Act and the Work Injury Compensation Act. Employment Act (Ch. 91), art. 2( 1 ) (Singapore); Work Injury Compensation Act (Ch. 354), Fourth Schedule: Classes of Persons Not Covered (Singapore). Northwestern Journal of International Law & Business Despite domestic courts’ recognition of “a matter of public interest,” the vulnerable status of foreign workers has contributed to prevalent incidents of labor abuses in the region.294 While it is not unique for South–South FTAs to include labor cooperation, the challenge is to make such cooperation operative by balancing economic need and human rights protection.295 ASEAN can demonstrate the best practices for the NREO approach by incorporating labor commitments into the multilateral AEC and RCEP frameworks. Richer ASEAN countries’ resistance to labor provisions cannot stand, as they are committed to the TPP’s labor protection modeled after U.S. FTAs.296 For development purposes, the AEC should oblige states to enforce ASEAN Declarations in domestic laws. The 1998 ILO Declaration, based on eight key conventions, requires states’ compliance with fundamental labor principles.297 These principles, incorporated in ASEAN Declarations, include freedom of association, the right to collective bargaining, and the prohibition of forced labor, child labor, and discrimination in employment.298 Nonetheless, only Cambodia, Indonesia, and the Philippines ratified all of the fundamental ILO conventions.299 The transformation of regional commitments into domestic legislation will elevate human rights protection and complement the overall development of the ASEAN Community. Built on the best practices of the BLAs, multilateral labor cooperation under the AEC is advised to strengthen the public–private partnership to allocate visa quotas, streamline the recruitment process, and ensure the embassies’ assistance in labor disputes.300 The integrated capacity building 294 E.g., ADG v. Public Prosecutor & Other Appeal, [2010] 1 SLR 874, 897, para. 55; see also Maid to Order: Ending Abuses against Migrant Domestic Workers in Singapore, 17: 10(c) HUM. RTS. WATCH 1, 1 ( 2005 ) (“Between 1999 and 2005, at least 147 migrant domestic workers died from workplace accidents or suicide, most by jumping or falling from residential buildings.”); Trinna Leong, ‘Forced labor’ Rife in Malaysian Electronics Factories: Report, REUTERS, Sept. 17, 2014, http://www.reuters.com/ article/us-malaysia-labour-report-idUSKBN0HC08E20140917 (“One in five immigrants were working more than the suggested 60 hours of overtime a week . . . .”). 295 E.g. Free Trade Agreement between the People’s Republic of China and the Government of the Republic of Chile, China-Chile, Nov. 18, 2005, art. 108. 296 These countries include Brunei, Singapore and Malaysia. For labor enforcement issues, see The Trans-Pacific Partnership ( 2015 ), supra note 191, Ch. 19; MARY JANE BOLLE, OVERVIEW OF LABOR ENFORCEMENT ISSUES IN FREE TRADE AGREEMENTS, CONGRESSIONAL RESEARCH SERVICE REPORT 4–6 ( 2014 ). 297 The Declaration requires all International Labour Organization (ILO) members, “even if they have not ratified the Conventions in question,” to comply with four core labor principles. ILO, 1998 Declaration on Fundamental Principles and Rights at Work (June 1998), art. 2. 298 Id.; ASEAN Declaration on the Protection and Promotion of the Rights of Migrant Workers (2007), Obligations of Receiving States; ASEAN Human Rights Declaration ( 2012 ), paras. 3, 6, 27. 299 For ASEAN’s countries’ ratification status in the eight ILO conventions, see Martin & Abella, supra note 194, at 28. 300 See generally Chanda, supra note 149, at 482–92; LABOR MIGRATION, SKILLS & STUDENT MOBILITY IN ASIA ( 2014 ), at 43. This process also helps eliminate undocumented workers. and development assistance initiatives under FTAs that raise awareness of labor rights are also integral to ASEAN’s legalization of trade–development policy. These mechanisms not only reduce the transaction costs for regional labor utilization, but also strengthen the trade–development connection in line with the SDGs. V. CONCLUSION I. Introduction ................................................................................... 323 II. The Theoretical Framework for the Trade-Development Nexus . 329 A. Unrealistic Promises in the Multilateral Trading System . 329 1 . The Misconceived Concept of Special and Differential Treatment .................................................................. 330 2 . The WTO-Sustainable Development Goals Disconnect................................................................. 332 B. Power Shifts in the Age of Global Regionalism................ 334 1. Geopolitical Dimensions in the Doha Round ............. 334 2 . Realist and Dependency Theories............................... 337 Order ...................................................................................... 341 A. The Creation of the ASEAN Economic Community ........ 341 B. Regional and Mega FTAs in the Asia-Pacific ................... 343 C. The Services Trade-Oriented Approach to Development . 345 IV. The Legalization of Trade-Development Policy........................ 347 A. Integrating and Multilateralizing Services Commitments. 348 B. Accelerating Cross-Border Labor Mobility....................... 352 C. Regulatory Reform for the Post-2015 Agenda .................. 356 1 . Operationalizing Development Assistance ................. 357 2 . Removing Regulatory Trade Barriers......................... 361 3. Transnational Legal Harmonization and Human Rights Protection .................................................................. 364 V. Conclusion ................................................................................... 369 1 For mercantilist and distributive justice concepts in international trade , see J. Michael Finger , The INTERNATIONAL TRADE LAW : ESSAYS IN HONOR OF ROBERT E . HUDEC 301 , 303 - 05 (Daniel L. M. Kennedy & James D . Southwick eds., 2002 ); Chantal Thomas, The Death of Doha? Forensics of INTERNATIONAL ECONOMIC LAW: OPPORTUNITIES AND PROSPECTS 185 , 185 - 205 (Chios Carmody et al. eds., 2014 ). 2 See Deniz Altınbaş, South-South Cooperation: A Counter-Hegemonic Movement? , in THE RISE OF THE GLOBAL SOUTH : PHILOSOPHICAL, GEOPOLITICAL AND ECONOMIC TRENDS OF THE 21ST CENTURY 29 , 29 n.1 (Justin Dargin ed., 2013 ) (explaining the North-South divide in global politics). 3 UN Adopts New Global Goals , Charting Sustainable Development for People and Planet by 2030 , UN NEWS CENTRE (Sept. 25 , 2015 ), http://www.un.org/apps/news/story.asp?NewsID= 51968 #.VkLue 7crLrc. The Sustainable Development Goals that took effect January 1, 2016 were built upon Millennium Development Goals that governed the development agenda from 2000 to 2015 . G.A. A/69/L.85 Draft Outcome Document of the United Nations Summit for the Adoption of the Post- 2105 Development Agenda , at 3-7 ( Aug . 12, 2015 ). 4 G.A. Res . 70 /1, Transforming Our World: The 2030 Agenda for Sustainable Development (Sept. 25, 2015 ) [hereinafter Sustainable Development Goals ( 2015 )], Goals 1 & 8. 5 Id. at Goal 17 . 6 Sungjoon Cho, The Demise of Development in the Doha Round Negotiations, 45 TEX . INT'L L.J. 573 , 577 - 83 ( 2010 ) ; ICTSD Reporting, LDC Group Outlines Priorities Ahead of WTO MC10 , ICTSD (Oct. 20 , 2015 ), http://www.ictsd.org/bridges-news/bridges-africa/news/ldc-group-outlines-priorities- ahead-of-wto-mc10. 7 For the implications of the trade-development disconnect in the Doha Round , see Tomer Broude, Legitimacy of the WTO, 45 COLUM . J. TRANSNAT'L L . 221 , 246 - 61 ( 2007 ) ; Meredith Kolsky Lewis , WTO Winners and Losers: The Trade and Development Disconnect , 39 GEO. J. INT'L L . 165 , 168 - 77 ( 2008 ); Arun S , Stalemate Continues at WTO Meet in Nairobi, HINDU, ( Dec . 20, 2015 ), 8005357.ece. 8 World Trade Organization, Ministerial Declaration of 14 November 2001 , WTO Doc . WT/MIN(01)/DEC/1 , 41 ILM 746 ( 2002 ) [hereinafter Doha Ministerial Declaration] , at paras. 1-6 . 9 Bretton Woods Institutions refer to monetary institutions, including the International Monetary Fund and the World Bank. 10 General Agreement on Tariffs and Trade , (GATT 1994 ), arts. I & III. 11 See , e.g., Nicholas Lamp , The “Development” Discourse in International Trade Lawmaking, QUEEN'S UNIV. FACULTY OF L. RESEARCH PAPER SERIES NO. 2015 - 057 , 2015 , at 8-10 (indicating the US negotiators' negative perception of “development” in the 1940s). 12 Alexander Keck & Patrick Low, Special and Differential Treatment in the WTO: Why, When, and How? , in ECONOMIC DEVELOPMENT & MULTILATERAL TRADE COOPERATION 147 , 148 - 49 (Simon J. Evenett & Bernard M. Hoekman eds., 2006 ). 13 G.A. Res . S- 6 /3201, Declaration on the Establishment of a New International Economic Order (NIEO) (May 1 , 1974 ). 14 See id . art . 4 (stressing the countries' “full permanent sovereignty”); ROBERT E . HUDEC, DEVELOPING COUNTRIES IN THE GATT LEGAL SYSTEM 101-02 ( 1987 ) (explaining developing countries' request to rectify global economic inequalities and their emphasis on equality) . 15 G.A. Res . S- 6 /3201, supra note 13, art. 4 . 16 Nils Gilman , The New International Economic Order: A Reintroduction , 6 HUMANITY 1 , 8 ( 2015 ); U.N. Conference on Trade and Development , Trade and Development Report , 67 - 68 ( 2014 ), http://unctad.org/en/PublicationsLibrary/tdr2014_en. pdf. 17 SONIA E. ROLLAND, DEVELOPMENT AT THE WORLD TRADE ORGANIZATION 51 ( 2012 ); Chantal SYSTEM 1 , 9 ( Chantal Thomas & Joel P. Trachtman eds., 2009 ). 18 Keck & Low, supra note 12, at 149-52; ROLLAND, supra note 17, at 72; The GATT Years: From Havana to Marrakesh, WTO, https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact4_e.htm (last visited August 13 , 2017 ). 19 Doha Ministerial Declaration, supra note 8 , para. 44 . 20 Committee on Trade and Development Special Session, Note by Secretariat: Special and Differential Treatment Provisions in WTO Agreements and Decisions, WTO Doc . TN/CTD/W/33, at 3- 5 (June 8, 2010 ); Edwini Kessie, The Legal Status of Special and Differential Treatment Provisions under the WTO Agreements, in WTO LAW AND DEVELOPING COUNTRIES 12 , 14 - 30 (George A. Bermann & Petro C . Mavroidis eds., 2007 ). 21 Michael Trebilcock , Between Theories of Trade and Development: The Future of the World Trading System 3 (Univ . of Toronto L. Working Paper No. 2014 - 10 , 2014 ); Paul Collier, Why the WTO is Deadlocked : And What Can Be Done About It?, 29 WORLD ECON. 1423 , 1434 ( 2006 ). 22 See Sylvia Ostry , The Uruguay Round North-South Grand Bargain: Implications for Future ROBERT E. HUDEC , supra note 1, at 285-89 (illustrating the “Grand Bargain” negotiations); G. A. Res . 41 /128, annex, Declaration on the Right to Development, arts. 2-3 (Dec. 4 , 1986 ) (mandating the duty to formulate development policies) . 35 See JAN NEDERVEEN PIETERSE , DEVELOPMENT THEORY : DECONSTRUCTIONS/ RECONSTRUCTIONS 5-8 (2d ed. 2010 ) (detailing theories and meanings of development from the 1800s to 2000 ). 36 Paul J. Nelson, At the Nexus of Human Rights and Development: New Methods and Strategies of Global NGOs , 31 : 12 WORLD DEV. 2013 , 2014 - 15 ( 2003 ); ROLLAND, supra note 17, at 25- 26 . 37 See generally Declaration on the Right to Development, supra note 22; Report of the World Commission on Environment and Development: Our Common Future ( 1987 ); Human Rights Approaches to Sustainable Development , NGLS Roundup 90 ( 2002 ), at 1-2 ; AMARTYA SEN , DEVELOPMENT AS FREEDOM ( 1999 ). 38 SEN, supra note 37, at xii. 39 See Amartya Sen , Human Rights and Capabilities , 6 :2 J. HUMAN DEV . 151 , 153 - 54 ( 2005 ) System , ECON. DEV. & MULTILATERAL TRADING COOPERATION 213 , 214 ( Simon J. Evenett & Bernard M. Hoekman eds., 2016 ) (explaining Sen's definition of development). 40 UNDP, THE REAL WEALTH OF NATIONS: PATHWAYS TO HUMAN DEVELOPMENT 16- 28 ( 2010 ), http://hdr.undp.org/sites/default/files/reports/270/hdr_2010_ en_complete_reprint.pdf. 41 See A Brief History of UNCTAD, U.N. CONF. ON TRADE & DEV ., http://unctad.org/en/ Pages/About%20UNCTAD/A-Brief-History-of-UNCTAD.aspx (last visited Nov . 18 , 2015 ) (“The first United Nations Conference on Trade and Development (UNCTAD) was held in Geneva in 1964 .”). 42 Keck & Low, supra note 12, at 149; Gilman, supra note 16, at 3-5; Declaration on the Establishment of a NIEO, supra note 13, arts . 4 ( j ) & 5 . 43 Keck & Low, supra note 12, at 149; ROLLAND, supra note 17, at 70 . 44 General Agreement on Tariffs and Trade, (GATT 1994), art . XXXVI:8. 45 Differential and More Favorable Treatment of Reciprocity and Fuller Participation of Developing Countries , GATT Doc . L/4903, Nov. 28 , 1979 [hereinafter Enabling Clause]. Contracting parties of the General Agreement on Tariffs and Trade (GATT) adopted the permanent Enabling Clause after the 1971 GATT norms . Generalized System of Preferences, Decision of 25 June 1971 , L/3545, June 28, 1971 . 46 See generally Gene M. Grossman & Alan O. Sykes , A Preference for Development: The Law and Economics of GSP, 4:1 WORLD TRADE REV. 41 , 41 - 43 ( 2005 ). 47 Trade and Development Report ( 2014 ), at 67-68 ; JAMES M. CYPHER , THE PROCESS OF ECONOMIC DEVELOPMENT 238 (4th ed. 2014 ). 48 The neoliberal package of the Washington Consensus includes ten points such as the liberalization THE WASH. CONSENSUS RECONSIDERED: TOWARDS A NEW GLOBAL GOVERNANCE 14 , 16 - 17 (Narcís Serra & Joseph E. Stiglitz eds., 2008 ). 49 See Don McRae , Developing Countries and 'The Future of the WTO, 8 J. INT'L ECON . L. 603 , 603 ( 2005 ) (“The Uruguay Round is often portrayed as a betrayal .”); J. Michael Finger & Philip Schuler, Implementation of Uruguay Round Commitments: The Development Challenge , 24 :4 WORLD ECON. 511 , 514 ( 2000 ) (stating the South has “taken on bound commitments to implement in exchange for unbound commitments of assistance”); Chantal Thomas & Joel P Trachtman , supra note 17, at 8-10 (discussing the emergence of new special and differential treatment (SDT) in the Uruguay Round). 50 Raj Bhala, Resurrecting the Doha Round: Devilish Details, Grand Themes , and China Too, 45 : 1 TEX. INT'L L.J . 1 , 8 - 9 ( 2009 ); Cho, supra note 6, at 574. 51 G.A. Res . 55 /2, Millenium Declaration , at 8-9 ( Sept . 18, 2000 ) [hereinafter Millenium Development Goals ( 2000 ) ]; Sustainable Development Goals ( 2015 ), supra note 4, Goal 17 . 52 See generally Ostry, supra note 22 , at 285-89; HUDEC, supra note 14, at 179- 85 . 53 Decision on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries , para. 1, L/4903 GATT BISD (26th Supp .) at 203 ( 1980 ). 54 Panel Report , European Communities - Conditions for the Granting of Tariff Preferences to Developing Countries , WT/DS246/R, adopted Apr. 20 , 2004 , as modified by Appellate Body Report WT /DS246/AB/R, DSR 2004: III [EC - Tariff Preferences] , at 1009. 55 Id. at para. 7.38. 56 Id. at para. 165; Grossman & Sykes, supra note 46, at 51-52 . 57 For the explanations of the US and European Union (EU) GSP schemes , see Caf Dowlah, Trade Developed Countries , in LAW AND DEV. PERSPECTIVE ON INT. TRADE LAW 334 , 337 - 50 (Yong-Shik Lee et al. eds., 2011 ); Grossman & Sykes, supra note 46, at 44- 47 . 58 The only exception is Section II of the Agreement on Trade Facilitation ( 2014 ). See Azevêdo Countries , WTO (July 22 , 2014 ), https://www.wto.org/english/news_e/news14_e/fac_22jul14_e.htm the capacity of the country to do so . ”) . 59 For instance, longer transition periods were granted to developing countries under the Agreement Agreement , and the Agreement on Trade-Related Investment Measures . World Trade Report 2014 - Trade and Development: Recent Trends and the Role of the WTO ( 2014 ) [hereinafter World Trade Report ( 2014 )], at 194- 95 . 60 E.g., General Agreement on Tariffs and Trade (GATT 1994), art . XXXVII: 3(a) & the TBT Agreement ( 1995 ), art. 12 . 2. Among the 148 SDT provisions in WTO agreements, the GATT and the Agreements and Decisions, supra note 20, at 5 . 61 Panel Reports, China - Measures Related to the Exportation of Various Raw Materials, WT /DS394/R, Add.1 and Corr .1 / WT/DS395/R, Add.1 and Corr .1 / WT/DS398/R, Add.1 and Corr . 1 , adopted Feb . 22 , 2012 , as modified by Appellate Body Reports WT/DS394/AB/R / WT/DS395/AB/R / WT /DS398/AB/R, DSR 2012:VII, at 3501, para. 7 . 275 - 404 . 62 Id. 63 Id. 64 Award of the Arbitrator, Indonesia - Certain Measures Affecting the Automobile Industry - 67 Bhagwati, supra note 29 , at 538- 39 . For the elaboration on the First Regionalism, refer to Trade Regionalism , 42 HARV. INT'L L.J . 419 , 426 - 57 ( 2001 ). 68 Bhagwati, supra note 29, at 540- 42 . Other examples in the Asia-Pacific include ASEAN Free 2011 , The WTO and Preferential Trade Agreements: From Co-existence to Coherence ( 2011 ) [hereinafter World Trade Report ( 2011 )], at 52- 53 . 69 Again, what I called “Third Regionalism” refers to the development of Asia-Pacific FTAs from the 2000s to the present. 70 The number of FTAs increased from approximately 50 in the 1990s to more than 250 in 2010 . World Trade Report ( 2011 ), supra note 68, at 55; WTO Secretariat, Free Trade Agreements, Facts & Figures , Evolution of Regional Trade Agreements in the World, 1948 - 2015 , https://www.wto.org/ english/tratop_e/region_e/regfac_e. htm (last visited Nov . 19 , 2015 ). 71 South-South FTAs represented only 20% of FTAs in the 1970s and North-North FTAs currently represent barely 10%. World Trade Report ( 2011 ), supra note 68, at 55- 56 . 72 See Richard Baldwin & Masahiro Kawai , Multilateralizing Asian Regionalism 8-9 (ADBI Working Paper Series , No. 431 , 2013 ) (concluding that 77% of surveyed Asian FTAs are WTO-plus, including some or all Singapore issues). 73 In addition to Asia-Pacific focused mega FTAs, including the TPP and the RCEP, the US and the EU are currently negotiating the Transatlantic Trade and Investment Partnership. 74 For the development of Asian regionalism, see generally Asian Development Bank , Emerging Asian Regionalism : A Partnership for Shared Prosperity ( 2008 ). 75 See generally WILLIAM H. COOPER , CONG. RESEARCH SERV., RL31356 , FREE TRADE AGREEMENTS: IMPACT ON U.S. TRADE AND IMPLICATIONS FOR U.S. TRADE POLICY 1- 8 ( 2014 ); Shihoko Goto , South Korea and the U.S. Rebalance Toward Asia , Apr. 3 , 2013 , https://www.wilsoncenter.org/event/south -korea-and-the-us-pivot-to-asia (last visited Dec. 2 , 2015 ). 76 The EU concluded FTAs with South Korea, Singapore and Vietnam . European Commission, Trade for All: Towards a More Responsible Trade and Investment Policy ( 2015 ), at 31- 32 . 77 See Fact Sheet: U.S.-ASEAN Relations ( Nov . 21, 2015 ), https://www.whitehouse.gov/the-press- office/ 2015 /11/21/fact-sheet -us-asean-relations (“The United States supports ASEAN's central role in architecture.”) . 78 See Guiding Principles and Objectives for Negotiating the Regional Comprehensive Economic Partnership ( 2012 ) (“Negotiations for the RCEP will recognize ASEAN Centrality in the emerging materialize ASEAN + 3 and ASEAN+6 initiatives . Urata, supra note 28, at 1-9. 79 OECD , Southeast Asian Economic Outlook 2013 - With Perspectives on China and India: Narrowing Development Gaps ( 2013 ), at 246-48; Sok Siphana, Mainstreaming Trade for Poverty Alleviation: A Cambodian Experience, 2 DEV. OUTREACH 7 , 8 - 9 ( 2003 ). 80 Trade-development debates on North-South trade, which focuses on the relations between the EU and African, Caribbean and Pacific (ACP) countries, will be discussed below. 81 The existing literature on South-South trade is either outdated or fails to analyze the development Trade: Theory , Evidence, and Policy, 1 WORLD BANK OBSERVER 47 ( 1990 ) ; James Scott , South-South Working Paper , No. 131 , 2010 ). 82 Realism is primarily based on HANS MORGENTHAU, POLITICS AMONG NATIONS ( 1954 ) and KENNETH WALTZ'S THEORY OF INTERNATIONAL POLITICS ( 1979 ). William C. Wohlforth, Realism, in THE OXFORD HANDBOOK OF INTERNATIONAL RELATIONS 131 , 132 - 37 ( Christian Reus-Smit & Duncan Snidal eds., 2008 ). 83 Id. 84 Id.; see also Anne-Marie Slaughter & Thomas Hale, International Relations, Principal Theories, http://opil.ouplaw.com/view/10.1093/law:epil/9780199231690/law-9780199231690-e722?rskey= X2BUQa&result=1&prd=EPIL (last visited Nov . 22 , 2015 ); Robert Keohane , Theory of World Politics: Structural Realism and Beyond, in NEOREALISM AND ITS CRITICS 198-99 (Robert O. Keohane ed., 1986 ). 85 INTERNATIONAL POLITICS: POWER AND PURPOSE IN GLOBAL AFFAIRS 194 (Paul D'Anieri ed ., 2011 ). 86 See ALAN GILBERT , MUST GLOBAL POLITICS CONSTRAIN DEMOCRACY? GREAT-POWER REALISM , DEMOCRATIC PEACE , AND DEMOCRATIC INTERNATIONALISM 32-33 ( 1999 ) ; ALVIN Y . SO, 91- 98 ( 1990 ). 87 Dos Santos, supra note 30 , at 232-34; see also FERNANDO HENRIQUE CARDOSO & ENZO FALETTO , DEPENDENCY AND DEVELOPMENT IN LATIN AMERICA 16-17 (Marjory Mattingly Urquidi trans . 1979 ); JUSTICE 31 ( 2007 ). 88 SO, supra note 86, at 95-102. 89 Id . 90 See generally Ole Elgström, Lomé and Post-Lomé: Asymmetric Negotiations and the Impact of Terms , 5 EURO. FOREIGN AFF. REV . 175 , 175 - 77 ( 2000 ); Maurzio Carbone & Jan Orbie , Beyond Economic Partnership Agreements: The European Union and the Trade-Development Nexus, 1 CONTEMP. POL. 1 , 1 - 2 ( 2014 ). 91 Tony Heron, Trading in Development: Norms and Institutions in the Making/Unmaking of DEVELOPMENT NEXUS IN THE EUROPEAN: DIFFERENTIATION, COHERENCE AND NORMS 10 , 12 - 13 (Maurzio Carbone & Jan Orbie eds., 2015 ). 92 For the introduction to Banana cases , see Simi T.B. & Atul Kaushik , The Banana War at the GATT /WTO, TRADE L. BRIEF, No. 1 ( 2008 ), at 1-4; Banana War Ends after 20 Years, BBC (Nov. 8, 2012 ), http://www.bbc.com/news/business-20263308. See also Alasdair R. Young & John Peterson, 'We Care about you, but . . .': The Politics of EU Trade Policy and Development, 3 CAM. REV . INT'L AFF. 497 , 501 - 02 ( 2013 ) (detailing the impact of the 1994 GATT case on the EU's ACP policy). 93 European Commission Green Paper on Relations between the European Union and the ACP Countries on the Eve of the 21st Century: Challenges and Options for a New Partnership , at 9-21, COM (96) 570 final (Nov. 20 , 1996 ). 94 For positions of major EU countries , see Elgström, supra note 90 , at 188-89; Young & Peterson, supra note 92, at 501. 95 Committee on Trade and Development , Note by the Secretariat: Information on the Utilisation of Special and Differential Treatment Provisions, WTO Doc . WT/COMTD/W/77/Rev.1/Add.4 ( Feb . 7, 2002 ), at 12- 13 . Even the new Economic Partnership Agreements resulted in limited welfare gains in the CARIFORUM Perspective , U.N. Doc . LC/CAR/L.458 ( Dec . 16, 2014 ), at 7, 23 . 96 See Katharina Serrano , The Trade-Development Nexus in EU-Pacific Relations: Realism, Dependence or Interdependence, 1 GLOBAL CHANGE , PEACE & SECURITY 89 , 107 - 09 ( 2011 ) (analyzing the EU's bargaining power and self-interests). 97 Adekeye Adebajo, Two Prophets of Regional Integration: Prebisch and Adedeji , in INTERNATIONAL DEVELOPMENT: IDEAS, EXPERIENCE, AND PROSPECTS 323 , 328 ( Bruce Currie-Alder et al. eds., 2014 ). 98 Bhagwati, supra note 29, at 539; Greenaway & Milner, supra note 81, at 49-50; Mehdi Shafaeddin, Colombo ( 2008 ), at 5-7. 99 Greenaway & Milner, supra note 81, at 49- 50 . Cf. Shafaeddin, supra note 98, at viii, 5- 8 . 100 See, e.g., ROLLAND, supra note 17 , at 267-68; Greenaway & Milner, supra note 81, at 49- 50 . 101 See World Trade Report ( 2014 ), supra note 59, at 42 ( stating that “South-South trade . . . has grown from 8 per cent of world trade in 1990 to around 25 per cent today, and is projected to reach 30 per cent by 2030 ”); see also World Trade Report ( 2011 ), supra note 68, at 59 (indicating the increase of Asia- based FTAs) . 102 See Glaser, supra note 30 , at 50-51 (discussing the realist view of cooperation in security issues ). 154 See generally Asian Development Outlook 2015 : Financing Asia's Future Growth ( 2015 ), ASIAN DEV. BANK, at 209 - 47 . 155 ASEAN Services Integration Report ( 2015 ), THE ASEAN SECRETARIAT & THE WORLD BANK , at i-ii; A Blueprint for Growth - ASEAN Economic Community 2015: Progress and Key Achievements ( 2015 ), THE ASEAN SECRETARIAT, at 1. 156 ASEAN Integration Report 2015 ( 2015 ), THE ASEAN SECRETARIAT , at 27 . 157 ASEAN Framework Agreement on Services ( 1995 ) [AFAS], art. I(c) . 158 Sustainable Development Goals ( 2015 ), supra note 4, Goals 1, 8 and 10. 159 Id. Goal 5 ; JIM REDDEN , Introduction, TRADE AND POVERTY REDUCTION IN THE ASIA-PACIFIC REGION: CASE STUDIES AND LESSONS FROM LOW-INCOME COMMUNITIES 1 , 13 ( Andrew L. Stoler et al. eds., 2009 ). 160 Id. art. VIII. 161 E.g., ASEAN, Protocol to Implement the Ninth Package of Commitments under the ASEAN Framework Agreement on Services ( 2014 ), arts. 4-5. 162 Id. 163 As of November 2015 , nine packages of AFAS commitments have been concluded . While ASEAN liberalization of financial services and air transport services was carried out by finance and transport 167 ASEAN Integration Report 2015 , 33 - 34 (Nov. 20, 2015 ), http://asean.org/storage/2015/12/ ASEAN-Integration- Report-2015.pdf. 168 Joint Media Statement , The 46th ASEAN Economic Ministers' (AEM) Meeting, 5 (Aug . 25, 2014 ), http://asean.org/storage/2016/08/00-AEM-48 - JMS-FINAL. pdf. This approach follows the model of the 2009 ASEAN Trade in Goods Agreement (ATIGA) . STEFANO INAMA & EDMUND W. SIM , THE FOUNDATION OF THE ASEAN ECONOMIC COMMUNITY: AN INSTITUTIONAL AND LEGAL PROFILE 127 ( 2015 ); ASEAN Economic Community Blueprint 2025 , 6 ( Nov . 2, 2015 ), http://www.asean.org/storage/images/2015/November/aec-page/AEC-Blueprint -2025-FINAL.pdf. 169 This approach resulted in the first two packages of AFAS commitments (AFAS 1-2) . ASEAN Integration in Services, 10 ( Sept . 9, 2013 ), http://www.asean.org/wp-content/uploads/images/2013/ resources/publication/2013% 20 ( 9 .%20Sep)% 20 -% 20ASEAN%20Integration%20in%20Services.pdf. 170 AFAS 3 -6 followed the common sub-sector approach . Id . 180 David Chin Soon Siong, ASEAN's Journey Towards Free Trade , in ECONOMIC DIPLOMACY: ESSAYS AND REFLECTIONS BY SINGAPORE'S NEGOTIATORS 209 , 215 (C. L. Lim & Margaret Liang eds., 2010 ); ASEAN Integration Report 2015, supra note 167, at 29-30. 181 ASEAN Integration Report 2015 , supra note 167, at 95- 102 . 182 ASEAN Economic Community Factbook , 81 - 82 ( Feb . 1, 2011 ), http://www.asean.org/wp- content/uploads/images/2012/publications/ASEAN%20Economic% 20Community%20Factbook.pdf. 183 The ASEAN-China FTA began in 2002 and was finalized in 2010 . Id.; ASEAN Integration Report 2015, supra note 167, at 96; China to Align Belt and Road with ASEAN's Development Strategies , XINHUA NEWS AGENCY , Aug . 6, 2015 , http://english.gov.cn/news/international_exchanges/ 2015 /08/06/ content_281475162278714.htm . 184 Yoshifumi Fukunaga & Hikari Ishido, Assessing the Progress of Services Liberalization in the ASEAN-China Free Trade Area (ACFTA) , ERIA DISCUSSION PAPER SERIES ( 2013 ), at 14 . 185 See id . at 3 -15 (explaining the rationale for General Agreement on Trade in Services (GATS)- minus commitments and the comparison between two packages). 186 Agreement on Trade in Services under the Framework Agreement on Comprehensive Economic Cooperation between the Association of Southeast Asian Nations and the Republic of India (Nov . 13, 2014 ), http://asean.org/wp-content/uploads/images/pdf/2014_upload/reducedASEAN-India% 20Trade %20in%20Services%20Agreement % 20 - % 20Scanned% 20ASEAN%20version%20copy.pdf. 187 For the FTAs' various levels of services liberalization , see Fukunaga & Ishido, supra note 184 , at 7; Yoshifumi Fukunaga & Ikumo Isono , Taking ASEAN + 1 FTAs towards the RCEP: A Mapping Study, 194 For example, Brunei and Thailand have faced a shortage of skilled labor in certain sectors . Philip Martin & Manolo Abella , Reaping the Economic and Social Benefits of Labour Mobility: ASEAN 2015 , ILO Asia-Pacific Working Paper Series ( 2014 ), at 33; Labor Migration , Skills & Student Mobility in Asia, ASIAN DEVELOPMENT BANK INSTITUTE ( 2014 ), at 31. 195 ASEAN Community 2015 , supra note 146, at 72 . 196 ASEAN Comprehensive Investment Agreement [ACIA] art. 22 ( 2009 ), http://www.asean.org/ storage/images/2013/economic/aia/ACIA_Final_Text_ 26 %20Feb% 202009 .pdf. The preferential ASEAN MNP Agreement, supra note 166 , at art. 12:2 . 197 ASEAN MNP Agreement preamble , supra note 166. 198 Id. art. 2:1 . Intra-corporate transferees include executives, managers and specialists employed by companies. 199 The Agreement stipulates that it covers persons engaged in trade in services, goods and & art. 1(b); Yoshifumi Fukunaga & Hirari Ishido, Values and Limitations of the ASEAN Agreement on the Movement of Natural Persons, ERIA Discussion Paper Series ( 2015 ), at 5. 200 ACIA, supra note 196, at art. 3 : 3 (f). 201 ASEAN MNP Agreement, supra note 166 , at art. 3:3(f). 211 Ass'n of Southeast Asian Nations [ASEAN], ASEAN Mutual Recognition Arrangement on Medical Practitioners ( 2009 ), art. 3.1. 212 ASEAN Integration Report 2015 , supra note 156, at 34. The MRAs on engineering services and Engineering Services ( 2005 ), art. 3 .1; Ass 'n of Southeast Asian Nations , ASEAN Mutual Recognition Arrangement on Architectural Services ( 2007 ), art. 3.1. 213 ASEAN Mutual Recognition Arrangement on Engineering Services ( 2005 ), art. 3 . 214 Id.; Deunden Nikomborirak & Supunnavadee Jitdumrong , ASEAN Trade in Services, in THE ASEAN ECONOMIC COMMUNITY: A WORK IN PROGRESS 95 , 104 - 05 (Sanchita Basu Das ed., 2013 ). As of 2015, there are 1,252 engineers and 284 architects on the ASEAN Chartered Professional Engineers Register and ASEN Architect Register, respectively . ASEAN Integration Report 2015 , supra note 156, at 34. 223 ASEAN Integration Report 2015 , supra note 156, at 80-81; Roadmap for an ASEAN Community: 2009- 2015 ( 2009 ), at 96- 106 . 224 David Carpenter et al., Regional Development Cooperation and Narrowing the Development Gap in ASEAN , in NARROWING THE DEVELOPMENT GAP IN ASEAN: DRIVERS AND POLICY OPTIONS 135 , 166 (Mark McGillivray & David Carpenter eds., 2013 ); About Us, SING . COOPERATION PROGRAMME, https://www.scp.gov.sg/content/scp/about_us. html#what_we_do (last visited Aug . 13 , 2017 ). Under the Initiative for AESAN Integration (IAI), Singapore is the largest donor among ASEAN-6 countries . Id. at 164- 65 . Also note that IAI work plans focus primarily on soft infrastructure . Ass'n of Southeast Asian Nations [ASEAN], ASEAN Economic Community Factbook ( 2011 ), at 78 . 225 Helen E.S. Nesadurai , Enhancing the Institutional Framework for AEC Implementation: COMMUNITY: A WORK IN PROGRESS 411 , 421 ( Sanchita Basu Das et al. eds., 2013 ); Vo Tri Thanh, ECONOMIC COMMUNITY 105 , 116 (Denis Hew ed., 2005 ). 226 See GOLDIN & REINERT, supra note 147 , 124 (indicating the Paris Declaration principles as “ownership, harmonization, alignment, results and mutual accountability”). 227 Sustainable Development Goals ( 2015 ), Goal 17.6 . 228 Timothy Heath, China's Big Diplomacy Shift , DIPLOMAT , ( Dec . 22, 2014 ), http://thediplomat.com/ 2014 /12/chinas-big -diplomacy-shift/; Dingding Chen, Defining a “New Type of Major Power Relations ,” DIPLOMAT, ( Dec . 8, 2014 ), http://thediplomat.com/ 2014 /11/defining-a-new- type-of-major-power-relations/. 229 Information Office of the State Council of China, White Paper on China's Foreign Aid , at 2-8, (July 10 , 2014 ). 230 China's Foreign Assistance in Review: Implications for the United States , U.S.-China Economic and Security Review Commission Research Backgrounder ( 2011 ), at 13; Asian Infrastructure Investment Bank Articles of Agreement ( 2015 ), arts. 1-2. 231 Information Office of the State Council of China, White Paper on China's Foreign Aid, at 4-5, (July 10 , 2014 ). 232 ASEAN-China Framework Agreement, supra note 132, art 7:1(e). 233 Cambodia's pro-Beijing policy has impaired the common position of ASEAN on South China Sea AM. (Mar. 25 , 2015 ), http://www.voanews.com/content/cambodia-publicly -endorses-china-position-on- south-china-sea/2694301.html. 234 Carpenter, supra note 224 , at 160-64; Narushige Michishita, Shinzo Abe: Abe Doctrine to Remake Japan-Asean Relations , STRAIT TIMES (Mar. 6 , 2013 ), http://www.straitstimes.com/asia/shinzo-abe-abe- doctrine-to-remake-japan-asean-relations. 235 For the origin and core principles of the Fukuda Doctrine, see SUEO SUDO, JAPAN'S ASEAN POLICY: IN SEARCH OF PROACTIVE MULTILATERALISM 69-75 ( 2015 ). 236 Agreement on Comprehensive Economic Partnership, Ass'n of Southeast Asian Nations [ASEAN] - Japan , Apr. 18 , 2008 , art. 53 . 237 NAM PAN, JAPANESE ODA TO ASIAN COUNTRIES: “AN EMPIRICAL STUDY OF MYANMAR COMPARED WITH CAMBODIA , LAOS , AND VIETNAM,” 38 ( 2014 ). 238 See generally The White House, Office of the Press Secretary, Joint Statement on the ASEAN-U.S. Strategic Partnership (Nov. 21, 2015 ), https://www.whitehouse.gov/the-press-office/ 2015 /11/21/ Trade and Investment (ACTI ) ( 2015 ). 239 EU-ASEAN: NATURAL PARTNERS, at 7-8 (7th ed. 2013 ); Carpenter, supra note 224, at 160- 240 ASEAN's dialogue partners include non-FTA partners such as the United States, Russia and the coordinatorship/. 241 Implementing Arrangement for the ASEAN-Australia-New Zealand Free Trade Economic Co- Operation Work Programme Pursuant to Chapter 12 (Economic Co-Operation) of the Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area , ASEAN-Austl .-N.Z. , Feb . 27 , 2009 . 242 EVALUATION OF EC CO-OPERATION WITH ASEAN , vol. 2 , at 96- 97 ( 2009 ). 243 As of December 2015, Indonesia, the Philippines and Thailand indicated their intentions to join the TPP. Prashanth Parameswaran , Indonesia Wants to Join TPP: President Jokowi, DIPLOMAT (Oct. 27 , 2015 ), http://thediplomat.com/ 2015 /10/indonesia-wants -to-join-tpp- jokowi/. 260 64 . 1% of Mode 4 entries in GATS schedules are related to intra-corporate transferees and business visitors. Presence of Natural Persons (Mode 4) , supra note 165 , at 21. The Mode 4 commitments under No. 40, at 4 ( 2014 ) ; Flavia Jurie & Sandra Lavenex, ASEAN Economic Community: What Model for Labour Mobility? NCCR TRADE POLICY WORKING PAPER , No. 2015 /02, at 4 ( 2015 ). 261 In comparison, the TPP mandates that the cross-border supply of a service not be conditioned on Brunei-Can . -Chile- Malay .- Mex.-N.Z.- Peru -Sing .-Viet., Feb. 4 , 2016 , art. 10.6 . 262 Under the GATS , “while business visitors are generally allowed to stay up to 90 days, the presence of Natural Persons (Mode 4) , supra note 165, at 1 , 28 . In ASEAN , business visitors are allowed to stay in the host country from 30 to 90 days and the duration of stay for intra-corporate transferees ranges between one month and three years . Fukunaga & Ishido, supra note 199, at 8-9 . 263 This approach reflects the practice of AFAS and ASEAN+1 services negotiations. 264 Razeen Sally , ASEAN FTAs: State of Play and Outlook for ASEAN's Regional and Global Integration, in THE ASEAN ECONOMIC COMMUNITY: A WORK IN PROGRESS , 320 , 363 (Sanchita Basu Das et al. eds., 2013 ); Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area, ASEAN-Austl .-N.Z. , Feb . 27 , 2009 , Ch. 9. Note that the ASEAN-Japan FTA lacks services commitments. 265 Agreement on Trade in Services Under the Framework Agreement on Comprehensive Economic India , Nov. 13 , 2014 , Annex on Movement of Natural Persons. 266 E.g., Sustainable Development Goals ( 2015 ), supra note 4, Goals 8.5, 8.8, and 16.10. 267 Roadmap for an ASEAN Community: 2009 - 2015 ( 2009 ), at 26; Guntur Sugiyarto & Dovelyn Challenges in 2015 and Beyond, IOM-MPI Issues in Brief , No. 11 ( 2014 ), at 1. See ASEAN Economic Community Blueprint 2025 ( 2015 ), at 11 (ASEAN should “[e]xpand and deepen commitments under the ASEAN Agreement on MNP where appropriate . . . .”). 268 The required length of experience ranges from three to ten years . Sugiyarto & Agunias , supra note 267, at 3. 269 Nikomborirak & Jitdumrong, supra note 214, at 130. The Philippines also imposes the labor Community 2015 : Labor Mobility and Mutual Recognition Arrangements on Professional Services, DISCUSSION PAPER SERIES , No. 2013 - 04 ( 2013 ), at 4-5. 270 See Aldaba, supra note 269 , at 3-4 (explaining that the Philippines' Constitutional and the Foreign Investment Act requirements); Nikomborirak & Jitdumrong, supra note 214 , at 130 ( stating that a foreign architect must reside in Malaysia for 180 days in a year) . 271 Fukunaga, supra note 216, at 20-21. 272 See Ch. 3: Movement of Natural Persons 775-81 , http://www.meti.go.jp/english/report/ downloadfiles/2010WTO/3-3Movement.pdf (last visited Dec. 2 , 2015 ), (comparing Mode 4 commitments in Japan's FTAs with seven Southeast Asian countries). 273 The Results of the National Nursing Exam for EPA-based Nurse Candidates (Past Seven Years), http://www.mhlw.go.jp/file/04-Houdouhappyou-10805000 - Iseikyoku-Kangoka/0000079084.pdf (in


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Pasha L. Hsieh. Reassessing The Trade–Development Nexus In International Economic Law: The Paradigm Shift In Asia-Pacific Regionalism, Northwestern Journal of International Law & Business, 2017,