DUAL-TRACK FREE TRADE AGREEMENT IN
ASEAN : A STUDY OF JAPAN AND THAILAND

Suteera Sitong
18th July 2012

FREE TRADE AGREEMENTS IN ASEAN•2005
ASEAN-People’s Republic of China
Comprehensive Economic Cooperation Agreement•2007
ASEAN-Korea Comprehensive Economic
Cooperation Agreement

Free TradeAgreements

ASEAN-Japan Comprehensive Economic
Regional Trade •2008
PartnershipAgreements•2010
ASEAN-Australia and New Zealand Free Trade(RTAs)
Agreement•2010
ASEAN-India Comprehensive Economic
Cooperation Agreement

Bilateral TradeAgreements•••••••1991200420052006200820092011

Thailand - LaoSingapore - USA
Singapore - Jordan
Singapore - Panama
Malaysia - Malaysia
Singapore - Peru
Thailand - PeruFREE TRADE AGREEMENTS IN ASEAN•

Bilateral Trade
Agreements

Free Trade
Agreements•••

Brunei• Japan2008

Indonesion• Japan2008

Malaysia• Japan• Pakistan• India• New Zealand

2006
2008
2011
2010

Philippines• Japan2008

FREE TRADE AGREEMENTS IN ASEAN•

Bilateral Trade
Agreements

Free Trade
Agreements

Singapore• Japan• EU• India• Korea• NZ• China• Jordan• Panama• Peru• USA2002
2003
2005
2006
2001
2009
2005
2006
2009
2004

FREE TRADE AGREEMENTS IN ASEAN•Bilateral Trade
Agreements

Free Trade
Agreements••

Thailand• Japan• NZ• China• Peru• Laos• Australia

2007
2005
20032011
1991
2005

Vietnam• Japan2009

Lao PDR• Thailand

1991

FTA STATUS BY COUNTRY
Country

Under negotiation

Concluded

Total

Proposed

Framework
agreement
signedUndernegotiation

Signed but
not yet ineffectSigned and ineffectSingapore

51931836

Thailand

6340

1225

Malaysia

81521026

Brunei

52

10816

Laos

3010812Indonesia

6142720

Philippines

5010713

Vietnam

7111717

Cambodia30

10610Myanmar

3110611Source: ADB

EVOLUTION OF RTAS IN THE WORLD,
1948-2011

TRADE DEPENDENCY IN 2009
Country(%) Ratio Exports
to GDP(%) Ratio Imports
to GDP(%) Ratio of Total
Trade to GDP

Brunei Darussalam

66.6

22.3

88.9

Cambodia

48.1

37.7

85.8

Indonesia

21.3

17.7

39.0

Lao PDR

22.2

30.9

53.1

Malaysia

81.2

63.9

145.1

Myanmar

25.4

15.4

40.8

The Philippines

23.8

28.2

52.0

Singapore

147.7

134.5

282.2

Thailand

57.7

50.6

108.3

Viet Nam

58.9

71.9

130.7ASEAN

54.2

48.5

102.7

Source: ASEAN Trade Statistics Database (as of 15 Feb 2011)

ASEAN FREE TRADE AGREEMENTS
1 Jan 1993

• ASEAN Free Trade Area

1 July 2005

• ASEAN-People’s Republic of China Comprehensive
Economic Cooperation Agreement

1 Jun 2007

• ASEAN-Korea Comprehensive Economic Cooperation
Agreement

1 Dec 2008

• ASEAN-Japan Comprehensive Economic Partnership

1 Jan 2010

• ASEAN-Australia and New Zealand Free Trade Agreement

1 Jan 2010

• ASEAN-India Comprehensive Economic Cooperation
Agreement

Under Negotiation:May 2007
Proposed: 13 Aug 20095

• ASEAN-EU Free Trade Agreement• ASEAN-Pakistan Free Trade Agreement

ASEAN TRADE IN 2010
Export Value(US$ million)% share ofEXP

Import Value(US$ million)% share of IMP

ASEAN

267,98125.0 ASEAN

251,823

25.8

EU-27

115,036

10.7 China

119,013

12.2

China

112,99910.6 Japan

103,746

10.6

Japan

102,890

9.6 EU-27

93,5489.6

USA100,464

9.4 USA

86,2208.8

Republic ofKorea

44,9804.2 Republic ofKorea

53,6485.5

India

36,028

3.4 Hong Kong

21,292

2.2Australia

35,250

3.3 Australia

20,175

2.1Hong Kong

33,0393.1 India

19,4142.0

Taiwan16,122

1.5 Taiwan

18,9891.9Others

206,147

19.2 Others

186,917

19.2

Total

1,070,941

100.0 Total

974,789

100.0

Source: ASEAN Trade Statistics Database (as of July 2009)

2 TRACKS OF FTAS

(1) Region <–> Country
1 Dec 2008

(2) Country <-> Country

Signed and ineffectSingapore• Japan-Singapore Economic
Agreement for a New-Age
Partnership

30 Nov 2002

Malaysia•Japan-Malaysia Economic
Partnership Agreement

13 July2006

Thailand• Japan-Thailand Economic
Partnership Agreement

1 Nov 2007

• Japan-Indonesia Economic
Partnership Agreement

1 July 2008

Brunei• Japan-Brunei Free TradeAgreement

31 July 2008

Philippines•Japan-Philippines Economic
Partnership Agreement

11 Dec 2008

Vietnam• Japan-Viet Nam Economic
Partnership Agreement

1 Aug 2009Indonesia•ASEAN-Japan Comprehensive
Economic Partnership

WHY DO COUNTRIES SEEK REGIONAL TRADE
AGREEMENTS? (WHALLY, 1996)•

Country objectives underlying regional trade agreements
1. Traditional trade gains
2. Strengthening domestic policy reform
3. Increased multilateral bargaining power
4. Guarantees of access
5. Strategic linkage
6. Multilateral and regional interplay•

Author reports the previous model based results, suggesting that some objectives seem to quantitatively
dominate others for particular agreements.

ACCESSING THE IMPORTANCE OF COUNTRY OBJECTIVESFOR PARTICULAR REGIONAL AGREEMENTS•BTAS IN ASEAN• Mikic (2009) analyzed the role of BTA of ASEAN member countries
and the trade bloc Agreement of ASEAN.
• ASEAN’s lack of regional coordination in building the RTA makes
ASEAN state members have many overlapping BTAs.
• This lack of common approach towards negotiating tradeagreements resulted in a noodle bowl syndrome, which brought
RTA to the lower utilization of negotiated concessions.
• The AECB will be a step forward in consolidating these agreements
because the member states have to consider the interests ofASEAN in the BTA which is a part of external economic relations.

JTEPA• Maki (2008) analyzed the Economic Partnership Agreement(EPA) between Japan and Thai to examine the relation of two
countries by scrutinizing the features of EPA and reviewing thenegotiations to describe the building of Japan-Thailand
Economic Partnership Agreement (JTEPA).
• JTEPA is the apex of the Japan-Thai relation, and designed tobe ready for the future integration with CLMV and other ASEAN
state members. Besides, EPA contains the cooperation partwhich is the assistance for capacity-building in the host country
and is a part of Japanese’s Official Development Assistance(ODA).

HYPOTHESIS• Question : What is the reason for 2-track FTAs (RTAs and Bilateral
Agreements) in ASEAN?
• H0 : the content in AJCEP (RTA) ≠ the content in JTEPA (BTA)• Country made dual-track FTAs through Regional Trade Agreements
for the benefits, which are not included in the Bilateral Trade
Agreements.
• Compare the AJCEP and JTEPAFRAMEWORKDV• Regional TradeAgreements

IV (RTAs)• ASEAN’s Interest from the RTA• Economic tool
• Diplomatic tool
• ASEAN’s External Relation Strategy

CASE STUDY: DUAL-TRACK FTAS OF JAPANTHAILAND
Agreement

Signed and ineffect• Country <-> Country• Japan-Thailand Economic
Partnership Agreement

1 Nov 2007

• Region <–> Country• ASEAN-Japan
Comprehensive EconomicPartnership

1 Dec 2008

COMPARING BTAS TO RTASAJCEP	 
Principles	 (a) the AJCEP shall involve Japan and all ASEAN member States(b) the integrity, solidarity and integration of ASEAN shall bemaintained in the realization of the AJCEP(c) special and differential treatment is accorded to ASEAN
Member States, especially the newer ASEAN Member States, inrecognition of their different levels of economic development;
additional flexibility is accorded to the newer ASEAN MemberStates(d) recognition shall be given to the provisions of the ministerial
declarations of the World Trade Organization on measures infavour of least-developed countries(e) flexibility should also be given to address the sensitive sectors
in Japan and each ASEAN Member State and(f) technical assistance and capacity building are importantelements of economic cooperation provided under thisAgreement.	 

JTEPA	 -	 COMPARING BTAS
AJCEP	  TO RTAS
Objectives 	  Article 3
The objectives of this Agreement are to(a) progressively liberalise and facilitate trade in goods
and services among the Parties:(b) improve investment opportunities and ensure
protection for investments and investment activities inthe Parties(c) establish a framework for the enhancement ofeconomic cooperation among the Parties with a view tosupporting ASEAN economic integration, bridging thedevelopment gap among ASEAN Member States, andenhancing trade and investment among the Parties.	 

JTEPA	 Article 1(a) liberalise and facilitate trade in goods and services between theParties(b) realize and promote paperless trading between the Parties(c) facilitate the mutual recognition of the results of conformity
assessment procedures for products or processes(d) encourage and promote investment and ensure protection forinvestments and investment activities in the Parties(e) facilitate the movement of natural persons(f) ensure and enhance adequate, effective and non-discriminatory
protection of intellectual property to promote trade and investment
between the Parties(g) enhance cooperation for mutual benefit of the Parties in the fieldof government procurement(h) promote fair and free competition by proscribing anticompetitive activities and cooperate in the field thereof(j) promote transparency in the implementation of laws andregulations respecting matters coverd by this Agreement.	 

COMPARING BTAS TO RTAS

•Cooperation	

COMPARING BTAS TO RTAS
ContentCooperation

BTA (ASEAN-Japan)

RTA (AJCEP)• Economic Cooperation(a) Trade-Related Procedures;(a) agriculture, forestry and fisheries;(b) Business Environment;(b) education and human resource(c) Intellectual Property;
development;(d) Energy;(c) enhancement of business(e) Information and Communications
environment;
Technology;(d) financial services;(f) Human Resource Development;(e) information and communication(g) Small and Medium Enterprises;
technology;(h) Tourism and Hospitality;(f) science, technology, energy and(i) Transportation and Logistics;
environment;(j) Agriculture, Fisheries and Forestry;(g) small and medium enterprises;(k) Environment;(h) tourism;(i) trade and investment promotion; and (l) Competition Policy; and(m) Other fields as may be mutually110(j) other fields of cooperation as may be agreed upon amongthe Parties.
agreed upon.
Article• Cooperation

AJCEP	 JTEPA	 

Type ofCooperation	 
Basic Principles	 Economic cooperation	 

Cooperation	 

Liberalise and facilitate trade and investment
among the Parties, taking into account thedifferent levels of economic development
among ASEAN Member States. 	 

Facilitate and expand trade and investment,enhance tourism between the Parties andpromote sustainable development andenhancement of better quality of life for thepeoples of the Parties.	 

Fields ofCooperation 	 (a) trade-related procedures(b) business environment(c) intellectual property(d) energy(e) information and communications technology(f) human resource development(g) small and medium enterprises(h) tourism and hospitality(i) transportation and logistics(j) agriculture, fisheries and forestry(k) environment(l) competition policy(m) other fields as may be mutually agreed
upon among the Parties	 (a) agriculture, forestry and fisheries(b) education and human resource development(c) enhancement of business environment(d) financial services(e) information and communication technology(f) science, technology, energy and environment(g) small and medium enterprises(h) tourism(i) trade and investment promotion(j) other fields of cooperation as may be agreedupon	 Implementation ofCooperation	 

AJCEP	 JTEPA	 

Activities shall involve Japan and at
least two ASEAN Member States,
It may also involve Japan and one
ASEAN Member State providing theaim of narrowing the gaps ofeconomic development among
ASEAN Member States or promote
the well-being of the people in
ASEAN towards further integrationof ASEAN. 	 

Cooperation shall be conducted inaccordance with the laws and regulations ofeach Party. The costs of cooperation shallbe shared by the Parties. 	 

DETERMINANT OF RTAS•

Economic and Cooperation Measures• a multi-layer policy approach in building the FTAs with some ASEAN Member States, butit also design both AJCEP and JTEPA as a dual-function Agreements by acting both as
economic policy tool and diplomatic policy tool.
• AJCEP allows the Parties to utilize the benefit from regional economic integration inASEAN, which results in improving the exports of ASEAN to Japan through lower
production cost

DETERMINANT OF RTAS•

Economic and Cooperation Measures• the economic cooperation work programs, as indicated in Annex 5 of AJCEP, are limited
to the Intellectual Property, and Agriculture Fisheries and Forestry• JTEPA is therefore a more efficient way of Japanese ODA compared to AJCEP and away to prepare sensitive sector for the further liberalization.

CONCLUSIONS•In the proliferation of Free Trade Agreements, Japan and ASEAN Member
States run dual-track FTAs through forming both a Country-Regional TradeAgreement and a Bilateral Trade Agreement.

•Japan and Thailand also follow the same steps by pursuing Japan-Thailand
Economic Partnership Agreements (JTEPA) and Asian-Japan Cooperation
Economic Partnership (AJCEP).

•Through comparing AJCEP to JTEPA, it is found that AJCEP has an additional
content of (1) Cooperation in the fields of the trade-related procedures,transportation and logistics, and competition policy, and (2) the Rules of Origin,where as JTEPA has cooperation differences in the areas of education,
financial services, and science and technology, and trade and investment
promotion.

•This supports the hypothesis that RTA or AJCEP includes the different contentfrom BTA or JTEPA.

CONCLUSION• The determinant of ASEAN for regional acting in FTA is thecooperation in the Japan and ASEAN member states towards thefuture economic integration in ASEAN or Asian EconomicCommunity and the external relation strategy of ASEAN.
• The cooperation in JTEPA is viewed as a more efficient way ofproviding Official Development Aid than AJCEP, and a result offailure in negotiation as it is the sensitive area of another Party.
• AJCEP and JTEPA reflect the Japanese’s fast approach indeepening the ASEAN Member States by a diplomatic tool and atrade policy tool in one agreement.

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