GLOBAL MARKETS AND MULTINATIONAL GROUPS

1. Global marketing
Global Markets and Multinational
Groups

2. Contents:
1. Introduction
2. European Union
3. Latin American Economic Corporation
4. SAARC
5. NAFTA
6. Mercosur
7. CAFTA
8. ASEAN
9. India’s trade with Asia
10.Bibliography

3. Introduction:
Multinational entities have played a role in international trade for several centuries.
Multinational operations can be traced back several centuries to the British and Dutch
trading companies. •After the above declined, the European overseas investments, mainly
in the extractive industries dominated international trade. The phenomenon as it is
known today is the result of the lead taken by U.S. based companies in the postWorld
War II period. Western European and Japanese firms followed later. By 1995 the total
number of multinationals exceeded 37,000 with 206,000 affiliates around the world. They
are engaged in activities ranging from extractive to manufacturing and they account for a
significant share of the world's output.
 European Union
The European Union, or EU, describes itself as a family of democratic European countries,
committed to working together for peace and prosperity. The European Union (EU) is an
economic and political union of 28 member states that primarily are located in Europe. The EU
operates through a system of supranational independent institutions and intergovernmental
negotiated decisions by the member states. institutions of the EU include the European
Commission, the Council of the European Union, the European Council, the Court of Justice of
the European Union, the European Central Bank, the Court of Auditors, and the European
Parliament. The European Parliament is elected every five years by EU citizens.
History
Over half a century earlier, it was the devastation caused in Europe by World War II which
underlay the imperative to build international relationships to guard against any such
catastrophe recurring.
French statesmen Jean Monnet and Robert Schuman are regarded as the architects of the
principle that the best way to start the European bonding process was by developing economic
ties.
This philosophy was the foundation for the Treaty of Paris which was signed in 1951. It
established the European Coal and Steel Community (ECSC) which was joined by France,
Germany, Italy, the Netherlands, Belgium and Luxembourg.
Under the Treaty of Rome which came into force in 1958, these six countries founded the
European Economic Community and European Atomic Energy Community to work alongside
the ECSC.
In 1967 the three communities merged to becomecollectively known as the European
Communities (EC) whose main focus was on cooperation in economic and agricultural affairs.
Denmark, Ireland and the UK became full EC members in 1973, Greece joined in 1981,
Portugal and Spain in 1986, Austria, Finland and Sweden in 1995.

4. Geography
The EU's member states cover an area of 4,423,147 square kilometres (1,707,787 sq mi). The
EU's highest peak is Mont Blanc in the Graian Alps, 4,810.45 metres (15,782 ft) above sea
level. The lowest point in the EU is Zuidplaspolder in the Netherlands, at 7 m (23 ft) below sea
level. The landscape, climate, and economy of the EU are influenced by its coastline, which is
65,993 kilometres (41,006 mi) long.
Including the overseas territories of France which are located outside of the continent of
Europe, but which are members of the union, the EU experiences most types of climate from
Arctic (North-East Europe) to tropical (French Guyana), rendering meteorological averages for
the EU as a whole meaningless. The majority of the population lives in areas with a temperate
maritime climate (North-Western Europe and Central Europe), a Mediterranean climate
(Southern Europe), or a warm summer continental or hemiboreal climate (Northern Balkans and
Central Europe).
Politics
The EU operates within those competencies conferred on it by the treaties and according to the
principle of subsidiarity (which dictates that action by the EU should only be taken where an
objective cannot be sufficiently achieved by the member states alone). Laws made by the EU
institutions are passed in a variety of forms. Generally speaking, they can be classified into two
groups: those which come into force without the necessity for national implementation
measures and those which specifically require national implementation measures.
Governance
The European Union has seven institutions: the European Parliament, the Council of the
European Union, the European Commission, the European Council, the European Central Bank,
the Court of Justice of the European Union and the European Court of Auditors. Competencies
in scrutinizing and amending legislation are divided between the European Parliament and the
Council of the European Union while executive tasks are carried out by the European
Commission and in a limited capacity by the European Council (not to be confused with the
aforementioned Council of the European Union). The monetary policy of the Eurozone is
governed by the European Central Bank. The interpretation and the application of EU law and
the treaties are ensured by the Court of Justice of the European Union. The EU budget is
scrutinized by the European Court of Auditors. There are also a number of ancillary bodies
which advise the EU or operate in a specific area.
Council
The Council of the European Union (also called the "Council" and sometimes referred to as the
"Council of Ministers") forms the other half of the EU's legislature. It consists of a government
minister from each member state and meets in different compositions depending on the policy
area being addressed. Notwithstanding its different configurations, it is considered to be one
single body. In addition to its legislative functions, the Council also exercises executive
functions in relations to the Common Foreign and Security Policy.

5. Budget of the EuropeanUnion
The 2011 EU budget (€141.9 bn. in total; commitment appropriations):
Cohesion and competitiveness for growth and employment (45%)
Citizenship, freedom, security and justice (1%)
The EU as a global partner (6%)
Rural development (11%)
Direct aids and market related expenditures (31%)
Administration (6%)
The EU had an agreed budget of €120.7 billion for the year 2007 and €864.3 billion for the
period 2007–2013, representing 1.10% and 1.05% of the EU-27's GNI forecast for the
respective periods. By comparison, the United Kingdom's expenditure for 2004 was estimated
to be €759 billion, and France was estimated to have spent €801 billion. In 1960, the budget of
the then European Economic Community was 0.03% of GDP.
In the 2010 budget of €141.5 billion, the largest single expenditure item is "cohesion&
competitiveness" with around 45% of the total budget. Next comes "agriculture" with
approximately 31% of the total "Rural development, environment and fisheries" takes up
around 11%. "Administration" accounts for around 6%. The "EU as a global partner" and
"citizenship, freedom, security and justice" bring up the rear with approximately 6% and 1%
respectively.
Acts
The main legal acts of the EU come in three forms: regulations, directives, and decisions.
Regulations become law in all member states the moment they come into force, without the
requirement for any implementing measures, and automatically override conflicting domestic
provisions. Directives require member states to achieve a certain result while leaving them
discretion as to how to achieve the result. The details of how they are to be implemented are left
to member states. When the time limit for implementing directives passes, they may, under
certain conditions, have direct effect in national law against member states.
Decisions offer an alternative to the two above modes of legislation. They are legal acts which
only apply to specified individuals, companies or a particular member state. They are most
often used in competition law, or on rulings on State Aid, but are also frequently used for
procedural or administrative matters within the institutions. Regulations, directives, and
decisions are of equal legal value and apply without any formal hierarchy.
Foreignrelations

6. The High Representative of the Union for Foreign Affairs and Security Policy, Catherine
Ashton.
Foreign policy co-operation between member states dates from the establishment of the
Community in 1957, when member states negotiated as a bloc in international trade
negotiations under the Common Commercial policy. Steps for a more wide ranging co-
ordination in foreign relations began in 1970 with the establishment of European Political
Cooperation which created an informal consultation process between member states with the
aim of forming common foreign policies. It was not, however, until 1987 when European
Political Cooperation was introduced on a formal basis by the Single European Act. EPC was
renamed as the Common Foreign and Security Policy (CFSP)by the Maastricht Treaty.
Besides the emerging international policy of the European Union, the international influence of
the EU is also felt through enlargement. The perceived benefits of becoming a member of the
EU act as an incentive for both political and economic reform in states wishing to fulfill the
EU's accessioncriteria, and are considered an important factor contributing to the reform of
European formerly Communist countries. This influence on the internal affairs of other
countries is generally referred to as "softpower", as opposed to military "hard power
Internal market
EU member states have a standardized passport design with the name of the member state, the
national arms, and the words "European Union" given in their official language.
Two of the original core objectives of the European Economic Community were the
development of a common market, subsequently renamed the single market, and a customs
union between its member states. The single market involves the free circulation of goods,
capital, people, and services within the EU, and the customs union involves the application of a
common external tariff on all goods entering the market. Once goods have been admitted into
the market they cannot be subjected to customs duties, discriminatory taxes or import quotas, as
they travel internally. The non-EU member states of Iceland, Norway, Liechtenstein and
Switzerland participate in the single market but not in the customs union. Half the trade in the
EU is covered by legislation harmonized by the EU.
 Latin American Economic Corporation
Latin American Economic corporation, Spanish Sistema Económico Latino Americano
, association formed to promote economic cooperationand development throughout the region
of Latin America. Established in 1975 through the Panama Convention, SELA succeeded the
Special Committee for Latin American Coordination (CECLA). Nearly 30 Latin American and

7. Caribbean countries are members. SELA’s principal organ, the Latin American Council, meets
annually. Headquarters are in Caracas, Venez.
The group’s activities include promoting regional economic strategies, aiding in the
development of multinational enterprises, promoting agreements on agricultural and industrial
production, and enhancing the sharing of scientific, technological, and cultural resources.
In the 1980s SELA was primarily occupied by international debt reduction. By the 1990s
policies were being developed in relation to such international bodies as the World Trade
Organization. By the beginning of the 21st century SELA had shifted its objectives toward
assisting member states in joining the world economy by encouraging global trade in the region.
Objectives
International relations scholar Sheldon Liss, in Diplomacy and Dependency: Venezuela, the
United States, and the Americas (1978) described the initial objectives of SELA:
SELA, composed oftwenty-five member states, and to which Venezuela contributes the largest
share (17 per cent) of the budget, hopes to: restructure international commerce in basic
commodities in order to raise developing states' export values, improve trade conditions,
stimulate industrial development, control foreign-based transnational corporations, create Latin
American multinational companies which will use to better advantage the human, technological,
and financial resources of the area, sponsororganizations to process and market raw materials,
improve the negotiating power of the member states, and plan joint economic strategies.
Work areas
SELA carries out consultation, coordination and cooperationactivities in the following work
areas:
Globalization
Analysis of international scenarios of change, through networks and meetings of experts and
academic centers, and follow-up of policies related to international macroeconomic
coordination.
External Economic Relations
Evaluation and follow-up of the relations of Latin America and the Caribbean with other
countries and regions - the United States of America, Canada, Japan, the European Union,
Central and Eastern Europe, the Asian Pacific region – in order to raise mutual awareness, take
advantage of business and investment opportunities, and increase international cooperation. The
Secretariat provides technical assistance to the Group of Rio, to GRULAs, and other
subregional and regional coordination bodies.
International Trade

8. Analysis of trends and negotiations in hemispheric and multilateral trade, particularly World
Trade Organization (WTO) decisions, trade in services, the link between trade and environment,
rules of origin, and the implementation of the Uruguay Round agreements.
Financing and ForeignInvestment
Studies on the situation of capital flows, regional external debt, and domestic savings, analysis
of multilateral financial institutions, and exchange of experiences and information on the
modernization of national financial systems.
RegionalIntegration
Analysis of intraregional trade and investments, follow-up of integration mechanisms -
MERCOSUR, Andean Community, Central American Common Market, CARICOM, Group of
Three, Association of Caribbean States, and ALADI - and the process ofcreating the Free Trade
Area of the Americas (FTAA), as well as the analysis of possibilities for linkage and
convergence of integration schemes.
Activities
Annually holds the meeting of the Latin American Council, at ministerial level, and convenes
regional consultation and coordination meetings with high-level officials of its 27 Member
States.
Organizes fora with the participation of government and private sectorrepresentatives, and
organizes meetings of experts on specific issues of the regional and global economic agenda.
Maintains close relations, based on cooperation, with the most important organizations, public
institutions, and private entities at regional and international levels.
Develops seminars, courses, and workshops on issues of economic interest for the Latin
American and Caribbean region, addressing the needs of government officials, businesspeople,
workers, parliamentarians, and academicians.

9.  SAARC:
The South Asian Association for Regional Cooperation (SAARC) is an economic and
geopolitical cooperation among eight member nations that are primarily located in South
Asia continent. Its secretariat is headquartered in Kathmandu, Nepal.
The idea of regional political and economic cooperation in South Asia was first coined in 1980
and the first summit held in Dhaka on 8 December in 1985 led to its official establishment by
the governments of Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. In the
intervening years, its successors have grown in size by the accession of new member
states. Afghanistan was the first to have been accessed in the physical enlargement of the
SAARC in 2007
SAARC Charter
 Desirous of promoting peace, stability, amity and progress in the region through
strict adherence to the principles of the UNITED NATIONS CHARTER and
NON-ALIGNMENT, particularly respectfor the principles of sovereign equality,
territorial integrity, national independence, non-use of force and non-interference
in the internal affairs of other States and peaceful settlement of all disputes.
 Conscious that in an increasingly interdependent world, the objectives of peace,
freedom, social justice and economic prosperity are best achieved in the SOUTH
ASIAN region by fostering mutual understanding, good neighborly relations and
meaningful co-operation among the Member States which are bound by ties of
history and culture.
 Aware of the common problems, interests and aspirations of the peoples of
SOUTH ASIA and the need for joint action and enhanced co-operation within their
respective political and economic systems and cultural traditions.
 Convinced that regional co-operation among the countries of SOUTH ASIA is
mutually beneficial, desirable and necessary for promoting the welfare and
improving the quality of life of the peoples of the region.
 Convinced further that economic, social and technical co-operation among the
countries of SOUTH ASIA would contribute significantly to national and
collective self-reliance.
 Recognizing that increased co-operation, contacts and exchanges among the
countries of the region will contribute to the promotion of friendship and
understanding among their peoples.
 Recalling the DECLARATION signed by their Foreign Ministers in NEW DELHI
on 2 August 1983 and noting the progress achieved in regional co-operation.

10.  Reaffirming their determination to promote such co-operation within an
institutional framework.
Objectives of SAARC
The objectives and the aims of the Association as defined in the Charter are:
 to promote the welfare of the people of South Asia and to improve their quality of
life;
 to accelerate economic growth, social progress and cultural development in the
region and to provide all individuals the opportunity to live in dignity and to realise
their full potential ;
 to promote and strengthen selective self-reliance among the countries of South
Asia;
 to contribute to mutual trust, understanding and appreciation of one another's
problems;
 to promote active collaboration and mutual assistance in the economic, social,
cultural, technical and scientific fields;
 to strengthen co-operation with other developing countries;
 to strengthen co-operation among themselves in international forums on matters of
common interest; and
 to co-operate with international and regional organisations with similar aims and
purposes.
 to maintain peace in the region
Principles
The principles are as follows
 Respectfor sovereignty, territorial integrity, political equality and independence of
all members states
 Non-interference in the internal matters is one of its objectives
 Cooperation for mutual benefit
 All decisions to be taken unanimously on the basis of consensus and need a
quorum of all eight members

11.  All bilateral issues to be kept aside and only multilateral(involving many countries)
issues to be discussed without being prejudiced by bilateral issues
Afghanistan was added to the regional grouping on April 2007,With the addition of
Afghanistan, the total number of member states were raised to eight (8). In April 2006, the
United States of America and South Korea made formal requests to be granted observer status.
The European Union has also indicated interest in being given observer status, and made a
formal request for the same to the SAARC Council of Ministers meeting in July 2006. On 2
August 2006 the foreign ministers of the SAARC countries agreed in principle to grant observer
status to the US, South Korea and the European Union. On 4 March 2008, Iran requested
observer status. Followed shortly by the entrance of Mauritius. Myanmar has expressed interest
in upgrading its status from an observer to a full member of SAARC while Russia is interested
in becoming an observer.
Secretariat
The SAARC Secretariat was established in Kathmandu on 16 January 1987 and was
inaugurated by Late King Birendra Bir Bikram Shah of Nepal.
It is headed by the Secretary General appointed by the Council of Ministers from Member
Countries in an alphabetical order for a three-year term. He is assisted by the Professional and
the General Service Staff, and also an appropriate number of functional units called Divisions
assigned to Directors on deputation from Member States. The Secretariat coordinates and
monitors implementation of activities, prepares for and services meetings, and serves as a
channel of communication between the Association and its Member States as well as other
regional organizations.
The Memorandum of Understanding on the establishment of the Secretariat which was signed
by Foreign Ministers of member countries on 17 November 1986 at Bangalore, India contains
various clauses concerning the role, structure and administration of the SAARC Secretariat as
well as the powers of the Secretary-General.
In several recent meetings the heads of state or government of member states of SAARC have
taken some important decisions and bold initiatives to strengthen the organization and to widen
and deepen regional co-operation.
The SAARC Secretariat and Member States observe 8 December as the SAARC Charter Day.
Nepal’s former foreign secretary Arjun Bahadur Thapa is current Secretary General of SAARC.
Council of Ministers
 Council of Ministers consisting of the Foreign Ministers of the Member States
established with the following functions:
 Formulation of the policies of the ASSOCIATION

12.  Review of the progress of co-operation under the ASSOCIATION
 Decision on new areas of co-operation
 Establishment of additional mechanism under the ASSOCIATION as deemed
necessary
 Decision on other matters of general interest to the ASSOCIATION.
The Council of Ministers meets twice a year. Extraordinary session of the Council may be held
by agreement among the Member States.
Awards
SAARC Award
The Twelfth Summit (Islamabad, January 2004) approved the institution of the SAARC Award
to honor and encourage outstanding individuals and organizations within the region. The main
objectives of the SAARC Award are:
 To encourage individuals and organizations based in South Asia to undertake
programmes and activities complementing the efforts of SAARC
 To encourage individuals and organisations in South Asia contributing to the
improvement of the conditions of women and children
 To honour outstanding contributions and achievements of individuals and
organisations within the region in the fields of peace, development, poverty
alleviation, environment protection and regional co-operation making the SAARC
Award the most prestigious Award in the region; and
 To honour any other outstanding contributions and achievements, not covered
above, of individuals and organisations in the region.
The SAARC Award comprises a gold medal, a letter of citation and cash prize of US $ 25,000.
Since institution of SAARC Award in 2004, it has been awarded only once and the Award was
posthumoulsy conferred upon Late President Ziaur Rahman of Bangladesh.
SAARC Literary Award
SAARC Literary Award is an annual award conferred by the Foundation of SAARC (South
Asian Association of Regional Cooperation) Writers and Literature (FOSWAL) since
2001which is an apex SAARC body. Shamshur Rahman, Mahasweta Devi, Jayanta
Mahapatra, Mark Tully are some of the prominent recipients of this award.

13. SAARC Youth Award
The SAARC Youth Award is awarded to outstanding individuals from the SAARC region. The
award is notable due to the recognition it gives to the Award winner in the SAARC region. The
award is based on specific themes which apply to each year. The award recognizes and
promotes the commitment and talent of the youth who give back to the world at large through
various initiatives such as Inventions, Protection of the Environment and Disaster relief. The
recipients who receive this award are ones who have dedicated their lives to their individual
causes to improve situations in their own countries as well as paving a path for the SAARC
region to follow. The Committee for the SAARC Youth Award selects the bestcandidate based
on his/her merits and their decision is final.
SAARC Anthem
SAARC does not have an official anthem yet as other regional organizations such as ASEAN.
However a poem by poet-diplomat Abhay Khas spurred search for an official SAARC Anthem.
 NAFTA:
The North American Free Trade Agreement (NAFTA; French: Accord de libre-échange nord-
américain, ALÉNA; Spanish:Tratado de Libre Comercio de América del Norte, TLCAN) is an
agreement signed by Canada, Mexico, and the United States, creating a trilateral rules-
based trade bloc in North America. The agreement came into force on January 1, 1994. It
superseded the Canada–United States Free Trade Agreement between the U.S. and Canada.
NAFTA has two supplements: the North American Agreement on Environmental
Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAALC).
In terms of combined purchasing power parity GDP of its members, as of 2007 the trade bloc is
the largest in the world and second largest by nominal GDP comparison.
Negotiationand U.S. ratification:
Back row, left to right: Mexican President Carlos, U.S. President George, and Canadian Prime
Minister Brian Mulroney, at the signing of the North American Free Trade Agreement in
October1992. In front are Mexican Secretary of Commerce and Industrial Development Jaime
Serra Puche, United States Trade Representative Carla Hills, and Canadian Minister of
International Trade Michael Wilson.
Following diplomatic negotiations dating back to 1986 among the three nations, the leaders met
in San Antonio, Texas, on December 17, 1992, to sign NAFTA. U.S. President George H. W.
Bush, Canadian Prime Minister Brian Mulroney and Mexican President Carlos Salinas, each

14. responsible for spearheading and promoting the agreement, ceremonially signed it. The signed
agreement then needed to be authorized by each nation's legislative or parliamentary branch.
Before the negotiations were finalized, Bill Clinton came into office in the U.S. and Kim
Campbell in Canada, and before the agreement became law, Jean Chrétien had taken office in
Canada.
The proposedCanada-U.S. trade agreement had been very controversial and divisive in Canada,
and the election was fought almost exclusively on that issue. In that election, more Canadians
voted for anti-free trade parties (the Liberals and the New) but the split caused more seats in
parliament to be won by the pro-free trade Progressive Conservatives (PCs). Mulroney and the
PCs had a parliamentary majority and were easily able to pass the 1987 Canada-US FTA and
NAFTA bills. However, he was replaced as Conservative leader and prime minister by Kim
Campbell. Campbell led the PC party into the 1993 election where they were decimated by the
Liberal Party under Jean Chrétien, who had campaigned on a promise to renegotiate or abrogate
NAFTA; however, Chrétien subsequently negotiated two supplemental agreements with the
new US president. In the US, Bush, who had worked to "fast track" the signing prior to the end
of his term, ran out of time and had to pass the required ratification and signing into law to
incoming president Bill. Prior to sending it to the United States Senate Clinton added two side
agreements, The North American Agreement on Labor Cooperation (NAALC) and the North
American Agreement on Environmental Cooperation (NAAEC), to protect workers and the
environment, plus allay the concerns of many House members. It also required US partners to
adhere to environmental practices and regulations similar to its own.
Provisions
The goal of NAFTA was to eliminate barriers with trading and investment between the U.S.,
Canada and Mexico. The implementation of NAFTA on January 1, 1994 brought the immediate
elimination of tariffs on more than one-half of Mexico's exports to the U.S. and more than one-
third of U.S. exports to Mexico. Within 10 years of the implementation of the agreement, all
U.S.-Mexico tariffs would be eliminated except for some U.S. agricultural exports to Mexico
that were to be phased out within 15 years. Most U.S.-Canada trade was already duty-free.
NAFTA also seeks to eliminate non-tariff trade barriers and to protectthe intellectual property
right of the products.
Intellectual Property
North American Free Trade Agreement Implementation Act made some changes to
the Copyright law of the United States, foreshadowing the Uruguay Round Agreements Act of
1994 by restoring copyright (within NAFTA) on certain motion pictures which had entered the
public domain.

15. Environment:
Securing U.S. congressional approval for NAFTA would have been impossible without
addressing public concerns about NAFTA’s environmental impact. The Clinton administration
negotiated a side agreement on the environment with Canada and Mexico, the North American
Agreement on Environmental Cooperation (NAAEC), which led to the creation of
the Commission for Environmental Cooperation (CEC) in 1994. To alleviate concerns that
NAFTA, the first regional trade agreement between a developing country and two developed
countries, would have negative environmental impacts, the CEC was given a mandate to
conductongoing ex post environmental assessment of NAFTA.
In responseto this mandate, the CEC created a framework for conducting environmental
analysis of NAFTA, one of the first ex post frameworks for the environmental assessment of
trade liberalization. The framework was designed to producea focused and systematic bodyof
evidence with respectto the initial hypotheses about NAFTA and the environment, such as the
concern that NAFTA would create a "race to the bottom" in environmental regulation among
the three countries, or the hope that NAFTA would pressure governments to increase their
environmental protection mechanisms. The CEC has held four symposia using this framework
to evaluate the environmental impacts of NAFTA and has commissioned 47 papers on this
subject. In keeping with the CEC’s overall strategy of transparency and public involvement, the
CEC commissioned these papers from leading independent experts.
Agriculture:
From the earliest negotiation, agriculture was (and still remains) a controversial topic within
NAFTA, as it has been with almost all free trade agreements that have been signed within
the WTO framework. Agriculture is the only section that was not negotiated trilaterally; instead,
three separate agreements were signed between each pair of parties. The Canada–U.S.
agreement contains significant restrictions and tariff quotas on agricultural products (mainly
sugar, dairy, and poultry products), whereas the Mexico–U.S. pact allows for a
wider liberalization within a framework of phase-out periods (it was the first North–South FTA
on agriculture to be signed).
Transportationinfrastructure:
NAFTA established the CANAMEX Corridor for road transport between Canada and Mexico,
also proposedforuse by rail, pipeline, and fiber optic telecommunications infrastructure. This
became a
High Priority Corridor under the U.S. Intermodal Surface Transportation Efficiency Act of
1991.

16. Legaldisputes:
In 1996, the gasoline additive MMT was brought into U.S. by Ethyl Corporation, an American
company. At the time, the Canadian federal government banned the importation of the additive.
The American company brought a claim under NAFTA Chapter 11 seeking US$201 million,
from the Canadian government and the Canadian provinces under the NAFTA Agreement on
Internal Trade ("AIT"). The American company argued that their additive had not been
conclusively linked to any health dangers, and that the prohibition was damaging to their
company. Following a finding that the ban was a violation of the AIT,the Canadian federal
government repealed the ban and settled with the American company for US$13
million. Studies by Health and Welfare Canada (now Health Canada) on the health effects of
MMT in fuel found no significant health effects associated with exposure to these exhaust
emissions. Other Canadian researchers and the U.S. Environmental Protection Agency disagree
with Health Canada, and cite studies that include possible nerve damage.
The United States and Canada had been arguing for years over the United States' decision to
impose a 27 percent duty on Canadian softwood lumber imports, until new Canadian Prime
Minister Stephen Harper compromised with the United States and reached a settlement on July
1, 2006. The settlement has not yet been ratified by either country, in part due to domestic
opposition in Canada.
 Mercosur
Mercosur was established in 1991 by the Treaty of Asunción, which was later amended and
updated by the 1994 Treaty of Ouro Preto.
Mercosur originated in 1985, when Presidents Raul Alfonse of Argentina and José Sarney of
Brazil signed the Argentina-Brazil Integration and Economics Cooperation
Program or PICE .The program also proposed the Gaucho as a currency for regional trade.
The founding of the Mercosur Parliament was agreed upon at the December 2004 presidential
summit. It was expected to have 18 representatives from each country by 2010, regardless of
population.
Full membership for Venezuela became effective on 31 July 2012,after the suspension of
Paraguay on 22 June 2012 for the violation of the Democratic Clause of Mercosur
(see Impeachment of Fernando Lugo). Previously, on 17 June 2006, Venezuela had signed a
membership agreement

17. MEMBER STATES:
Mercosur is composed of5 sovereign member states: Argentina; Brazil; Paraguay; Uruguay;
and Venezuela. Bolivia became an acceding member on 7 December 2012.
Following the impeachment of President Fernando Lugo by the Paraguayan Senate, this country
was suspended from Mercosur, and the admittance of Venezuela as a full member became
effective on 31 July 2012.In four years, Venezuela will have to fully adapt to the trade bloc
regulations.
Directly subordinated to the Common Market Group, the Work Subgroups draw up the minutes
of the decisions to be submitted for the consideration of the Council, and conductstudies on
specific Mercosur concerns. Currently, the Work Subgroups are the following: Commercial
Matters; Customs Matters; Technical Standards; Tax and Monetary Policies Relating to Trade;
Land Transport; Sea Transport; Industrial and Technology Policies; Agricultural Policy; Energy
Policy; Coordination of Macroeconomic Policies; and Labor, Employment and Social Security
Matters.
The meetings of the Work subgroups will be held quarterly, alternating in every member state,
in alphabetical order, or at the Common Market Group Administrative Office. Activities will be
carried out by the Work Subgroups in two stages: preparatory and conclusive. In the preparatory
stage, the members of the Work Subgroups may request the participation of representatives
from the private sectorof each member state. The decision-making stage is reserved exclusively
for official representatives of the member states. The delegations of representatives from the
private sectorin the preparatory stage of the Work Subgroup activities will have a maximum of
three representatives for each member state directly involved in any of the stages of the
production, distribution or consumption process for the products that fall within the scopeofthe
subgroup's activities.
Objectives
The Southern Common Market promotes:
 The free transit of produced goods,services and factors among the member states.
Among other things, this includes the elimination of customs rights and lifting of
nontariff restrictions on the transit of goods or any other measures with similar
effects on it
 Fixing of a common external tariff (CET) and adopting of a common trade
policy with regard to nonmember states or groups of states, and the coordination of
positions in regional and international commercial and economic meetings;
 Coordination of macroeconomic and sectorial policies of member states relating to
foreign trade, agriculture, industry, taxes, monetary system, exchange and capital,

18. services, customs, transport and communications, and any others they may agree
on, in order to ensure free competition between member states;
 The commitment by the member states to make the necessary adjustments to their
laws in pertinent areas to allow for the strengthening of
the integration process. TheAsunción Treaty is based on the doctrine of the
reciprocal rights and obligations of the member states. Mercosur initially
targeted free-trade zones, then customs unification, and finally a common market.
The common market will allow (in addition to customs unification) the free
movement of manpower and capital across the member nations, and depends the
grating of equal rights and duties to all member countries. Because member states
will implement the trade liberalization at different speeds, during the transition
period the rights and obligations of each party will initially be equivalent but not
necessarily equal. In addition to the reciprocity doctrine, the Asunción Treaty also
contains provisions for the most-favored nation concept. This conceptis that after
the common market is formed, member nations are to automatically extend to the
other members any advantage, favor, entitlement, immunity or privilege granted to
a productoriginating from or intended for countries that are not party to the Latin
American Integration Association (ALADI).
Structure
The Asunción Treaty and Ouro Preto Protocolestablished the basis for the institutional
Mercosur structure, creating the Market Council and the Common Market Group, bothof which
are to function at the outset of the transition phase. As provided for in this Treaty, before
establishing the common market the member nations must call a special meeting in order to
determine the definitive institutional structure for the public agencies managing Mercosur, as
well as define the specific functions of each agency and the decision making process.
Common MarketCouncil
The Council is the highest-level agency of Mercosur with authority to conductits policy, and
responsibility for compliance with the objects and time frames set forth in the Asuncion Treaty.
The Council is composedofthe Ministers of Foreign Affairs and the Economy (or the
equivalent) of all five countries. Member states preside over the Council in rotating alphabetical
order, for 6-month periods. Meetings: Council members shall meet whenever necessary, but at
least once a year. The presidents of the member nations shall partake of the annual Common
Market Council meeting whenever possible. Decision Making: Council decisions shall be made
by consensus, with representation of all member states.

19. Common MarketGroup
The Group is the executive bodyof Mercosur, and is coordinated by the Ministries of Foreign
Affairs of the member states. Its basic duties are to cause compliance with the Asuncion Treaty
and to take resolutions required for implementation of the decisions made by the Council.
Furthermore, it can initiate practical measures for trade opening, coordination
of macroeconomic policies, and negotiation of agreements with nonmember states and
international agencies, participating when need be in resolution of controversies under
Mercosur. It has the authority to organize, coordinate and supervise Work Subgroups and to call
special meetings to deal with issues of interest. Composition: The Common Market Group shall
be made up of four permanent members and four alternates from each member state,
representing the following public agencies: (i) the Ministry of Foreign Affairs; (ii) the Ministry
of Economy, or the equivalent (from industry, foreign affairs and/or economic coordination);
and (iii) the Central Bank. The members of the Common Market Group appointed by a given
member state will constitute the National Section of the Common Market Group for that
particular nation. Meetings: The Common Market Group will meet ordinarily at least once
every quarter in the member states, in rotating alphabetical order. Special meetings may be
freely called at any time, at any previously scheduled place. The meetings will be coordinated
by the Head of the Delegation of the host member state. Decision Making: Common Market
Group decisions shall be made by consensus, with the representation of all member states. The
official Mercosur languages will be Portuguese and Spanish, and the official version of all work
papers will be prepared in the language of the country hosting the meeting.
Administrative and socioeconomic
The Administrative Office will keep documents and issue the Mercosur official bulletin in both
Portuguese and Spanish, and will also be charged with communicating the activities of the
Common Market Group so as to allow for the maximum disclosure of decisions and the
relevant documentation. The Socioeconomic Advisory Forum is consultative by nature, and
represents the various socioeconomic sectors ofthe member nations.
Work Subgroups
Directly subordinated to the Common Market Group, the Work Subgroups draw up the minutes
of the decisions to be submitted for the consideration of the Council, and conductstudies on
specific Mercosur concerns. Currently, the Work Subgroups are the following: Commercial
Matters; Customs Matters; Technical Standards; Tax and Monetary Policies Relating to
Trade; Land Transport; Sea Transport;Industrial and Technology
Policies; Agricultural Policy; Energy Policy; Coordination of Macroeconomic Policies;
and Labor, Employment and Social Matters. Meetings. The meetings of the Work subgroups
will be held quarterly, alternating in every member state, in alphabetical order, or at the
Common Market Group Administrative Office. Activities will be carried out by the Work
Subgroups in two stages: preparatory and conclusive. In the preparatory stage, the members of

20. the Work Subgroups may request the participation of representatives from the private sectorof
each member state. The decision-making stage is reserved exclusively for official
representatives of the member states. The delegations of representatives from the private sector
in the preparatory stage of the Work Subgroup activities will have a maximum of three
representatives for each member state directly involved in any of the stages of the production,
distribution or consumption process forthe products that fall within the scopeofthe subgroup's
activities.
Joint Parliamentary Committee
The Committee will have both an advisory and decision-making nature; with powers to submit
proposals as well. It will be competent, inter alia, to: follow up on the integration process and
keep the respective Congresses informed; Take the necessary steps for the future instatement of
a Mercosur Parliament; Organize subcommittees to examine matters relating to the integration
process;Submit its recommendations to the Common Market Council and Group as to how the
integration process should be conducted and Southern Common Market formed; Make the
adjustments necessary to harmonize the laws of the different member states and submit them to
the respective Congresses;Establish relationships with private entities in each of the member
states, as well as international agencies and bureaus so as to obtain information and specialized
assistance with matters of interest: Establish relationships targeting cooperation with
Congresses of the nonmember nations and entities involved in regional integration schemes;
Subscribeto cooperationand technical assistance accords with public and/or private entities
whether domestic, supranational or international. The Committee will be composed ofa
maximum of 64 acting parliamentary members, 16 per member state, and an equal number of
alternates, appointed by the Congress to which they pertain, and with a term of office of at least
two years. The meetings shall be conducted by a directors' board consisting of four Presidents
(one for each member state). The Committee will ordinarily meet twice a year, and
extraordinarily whenever summoned by any of its five Presidents. Meetings are to be held in the
territory of each member state on a successive and alternating basis. Decision Making:
Meetings of the Joint Parliamentary Committee will only be valid when attended by
parliamentary delegations from all member states. Decisions by the Joint Parliamentary
Committee will be made by consensus vote of the majority of the members accredited by the
respective Congresses of each member state. Portuguese and Spanish are the
official languages of the Joint Parliamentary Committee.
Trade Commission
The Trade Commission will assist the Mercosur executive body, always striving to apply the
instruments of common trade policy agreed to by the member states for operation of
the customs unification. Additionally, the commission should also follow up on the
development of issues and matters related to common trade policies, the intra-Mercosur trade
and trade with other countries. The commission will have five actual members and four

21. alternates, with each member nation's indicating a member. The Trade Commission shall exert
every effort to apply common trade policy instruments such as: Trade agreements with other
countries or international entities; Administrative/commercial productlists; Final adaptation
system for Mercosur customs unification; Origin system; Free-trade zone system, special
customs areas and export processingzones; System to discourage unfair trade practices;
Elimination and harmonization of tariff restrictions; Nonmember country safeguard systems;
Customs coordination and harmonization; Consumer protection systems; and Export incentive
harmonization.
Furthermore, the trade commission should speak out regarding the issues raised by the member
states regarding application and compliance with common offshore tariffs and other common
trade policy instruments. The commission shall meet at least once a month, as well as whenever
asked to by the Mercosur executive agency or by a member state. The commission can take
decisions entailing administration and application of trade policies adopted under Southern
Common Market, and whenever necessary submit proposals to the executive bodyregarding
regulation of the areas under its authority; additionally, it can proposenew guidelines or modify
those in existence in Mercosur trade and customs matters. In this respect, the trade commission
can proposea change in the import duty on specific items under common external tariffs,
including cases referring to development of new Mercosur productionactivities. In order to
better achieve its objectives, the trade commission can create technical committees targeting
direction and supervision of the work it engages in. It can also adopt internal operating
regulations. Proposals and decisions of the trade commission will be taken by a consensus of
the representatives indicated by each member nation. Any disputes ensuing from the
application, interpretation or compliance with the acts issued by the trade commission are to be
referred to the Mercosur executive body, and should be resolved using the directives set forth in
the Dispute Resolution System adopted under Southern Common Market.
International jurisdiction overcontractualmatters
The rules on litigation jurisdiction over contractual matters will apply to disputes arising
from civil or commercial international contracts between private-law legal entities or
individuals provided that: They are domiciled or headquartered in different member states: At
least one of the parties to the contract is domiciled or headquartered in any member state and,
additionally, has made a choice of jurisdiction in favor of a court in one of the member states. In
this case, there must be a reasonable connection between the jurisdiction chosenand the
controversy. The scopeof the application of the international jurisdiction guidelines over
contractual matters excludes the following: legal relationships between
bankrupt entities/individuals and their creditors and any other analogous proceedings
(especially concordatscomposition with creditors); matters under agreements
involving family and successionlaw; social
security contracts; administrativecontracts; employment contracts; consumer sales contracts; tra
nsport contracts; insurance policies; and rights in rem.

22. Choice of jurisdiction
Courts in member nations to whose jurisdiction the contracted parties have agreed to submit the
matter in writing will have jurisdiction to settle controversies stemming from civil or
commercial international contracts.
Agreement of choice
The jurisdiction can be agreed on at the time the contract is signed, during the life of the
contract, or even when the dispute actually arises. The validity and effects of the choice of
venue will be governed by the law of the member nations that normally have jurisdiction to hear
the case, always resorting to the law most favorable to the validity of the contract. Whether or
not jurisdiction is chosen, suchjurisdiction will be prorogated in favor of the courts of the
member state where the proceedings are in fact filed, provided the respondentvoluntarily
allows this in an affirmative and unfeigned way.
Subsidiary jurisdiction
Should the contracted parties not reach an agreement regarding the courts competent to settle
disputes, the member state chosenby the plaintiff of the casein point will have jurisdiction: The
court of the place where the contractis to be performed; or The court of the domicile of the
respondent; or The court of the domicile or headquarters of the claimant when the latter can
show that it has done its part. For purposes ofitem above the place of performance of
the contract will be the member state where the obligations on which the claim is based have
been or should be performed, taking into consideration the following: For contracts involving
certain specific items, the place where they existed at the time of contract signing; Forcontracts
involving specific items according to their type, the place of domicile of the debtorat the time
of contract signing; For contracts involving fungible items, the place of domicile of
the debtor at the time of conclusion of the contract; and Forservice rendering contracts:
 If in regard to items, the place where they were at the time of contract signing;
 If effectiveness is related to any special place, the place where they were to
produceeffects;
 In all other cases, the place of domicile of the debtorat the time of contract
signing. For purposes ofapplication of second item above for determination of the
domicile of the respondentin a contractual dispute involving individuals, the
following will be taken into consideration: The habitual residence: On a subsidiary
basis, the central place of business; and In the absence of any such considerations,
the place where found, meaning the actual residence. When dealing with a legal
entity, the determination of the domicile will be based on where the administrative
headquarters have been set up. The claim plaintiff can, as an alternative, file in any
of the places where the legal entity has branches, establishments, agencies or any

23. other type of representation. entities headquartered in any member state that have
concluded contracts with any other member state can be sued in the courts of this
latter state should there be any dispute as to the construction and implementation of
the obligations regulated by contract. In the event there is a codefendant, a suit on
contractual matters can be adjudicated with the courts of jurisdiction in the
territory of the domicile of any of the parties to the litigation. Additionally, any
claims entailing personal collateral rights or intervention of nonmember states in
contractual obligations can be filed with the court hearing the main proceeding.
Educationalintegration
Based on the premise that education is a fundamental factor in the regional integration process,
educational courses at the primary or junior high level, provided that they do not entail technical
studies, will be recognized by member states as being on the same level for all member nations.
Likewise, in order to permit continuing education, certificates proving courseconclusion issued
by an official institution accredited in one of the member states will be valid in all other
member states. Nontechnical primary and junior high level studies that have not been completed
will be accredited by any member state, thereby allowing course conclusion in another member
nation. Studies will be completed using an equivalency table to determine the level achieved.
RegionalTechnicalCommission
In order to harmonize the mechanisms favoring accreditation of studies undertaken in any
member nation in any other member nation, and to resolve any situations that may not be
covered by the equivalency table, a Regional Technical Commission will be created. This
Commission will include delegations from the ministries of education of each member nation,
and will meet whenever at least two member states think it necessary to convene. The meeting
sites will be established on a rotating basis. Any disputes that arise among the member states as
a result of application, construction or noncompliance regarding the provisions related to
education will be initially resolved by direct diplomatic negotiations. Should the countries not
reach an accord or should the dispute be only partially resolved, then the procedures set forth in
the Resolution System will be resorted to. Should the member nations enter into a bilateral
convention or accord whose provisions are more favorable to their students, the member states
in question can apply whichever provisions they consider most advantageous.
Free trade zones
The member nations can have commercial free-trade zones, industrial free-trade
zones, export processing zones, and special customs areas, all of which target providing
merchandise marketed or produced in these areas with treatment different from that afforded in
their respective customs territories. Uruguay's Vice-President Danilo Astori said the issue of a

24. free trade agreement with the United States must be dealt and that "opportunities must be built."
He also said that "each Mercosur country should have a multiplicity of memberships. Mercosur
must have joint international policies, an agreement on moderate protection from third parties
and above all must have agreements with other trade blocks."
Tariffs
The member states can assess merchandise from these areas with the
common external tariff used for Mercosur merchandise, or, in the caseof certain
special products, the domestic tariff prevailing in each individual state. In this way, the products
from the free-trade zones can have the more favorable tax treatment established under Southern
Common Market, given to the merchandise produced in the normal customs zones of each
member state or, in the case of certain special products, can have the normal customs treatment
prevailing in each nation.
Safeguards:
Products produced ormarketed in the free-trade zones of each member nation will be eligible
for the safeguard system whenever this entails an increase not provided for in imports, but
capable of causing damages or threatened damages to the importer country.
Reciprocalpromotionand protection
The nations subscribing to the Asunción Treaty consider that the creation and maintenance of
conditions favorable to individual or corporate investments for the jurisdiction of one of the
member states in the territory of another state is essential to intensify the economic
cooperation targeted so as to accelerate the integration process among all four member states. In
this context, Argentina, Uruguay, Paraguay and Brazil signed on January 1, 1994 in the city
of Colonia del Sacramento, Uruguay, the Colonia Protocolfor the ReciprocalPromotion and
Protection of Mercosur Investments (Colonia Protocol). It was established in this protocolthat
investments under Mercosur by investors resident or domiciled in the territory of any member
state will be entitled to treatment no less favorable than that accorded bythe other member state
to national investors or nonmember states.
Investors
For purposes of construction of the Colonia Protocol, investors are considered to
be: Individuals that are citizens of any of the member nations or that reside there on a
permanent basis or are domiciled there, with due regard for legislation prevailing in such
territory; Legal entities organized pursuant to the legislation of one of the member nations that
are headquartered there; and Legal entities organized in the territory where the investment is
made, actually and directly or indirectly controlled by the legal entities or individuals
mentioned above.

25. Investments
The term investment includes all types of assets such as: movable or immovable property, such
as rights in rem and guarantee in rem rights; Shares, corporateholdings and any other type
of corporateparticipations; Credit instruments and rights that may have an economic value;
Intellectual property rights or materials, Including copyrights and industrial property rights such
as patents, industrial drawings, trademarks, commercial names, technical procedures, know-
how and goodwill; Economic concessions involving public law, such as research, cultivation,
extraction or natural resource exploration concessions.
Freedomto invest
Tax Issues
The member states are not however obligated to extend to investors in the other nations
signatory to the Colonia Protocolthe benefits of any treatment, preference or privilege resulting
from international accords relating fully or partially to tax matters.
Exceptions
In addition, the member nations can temporarily establish a list of exceptions where the new
treatment will not yet prevail. In this way, the various member nations decided to except the
following economic sectors:Argentina: ownership of real estate on the frontier strip, air
transportation, naval industry, nuclear plants, uranium mining, insurance and fishery; Brazil:
mineral prospecting and mining; use of hydraulic energy; health care; television and radio
broadcasting and telecommunications in general, acquisition or leasing of rural properties;
participation in the financial intermediation, insurance, social security and
capitalization systems; chartering and Cabot age as well as inland navigation; Paraguay:
ownership of real property on the frontier strip; communications, including radio and television
broadcasting; air, sea and land transportation; electricity, water and telephone services;
prospecting for hydrocarbons and strategic minerals; import and refining of petroleum
derivatives and postal services; and Uruguay: electricity; hydrocarbons;basic petrochemicals,
atomic energy; prospecting for strategic minerals; financial
intermediation; railways, telecommunications; radio broadcasting; press and audiovisual means.
Expropriation and compensation
The member nations undertook to do nothing to nationalize or expropriate investments in
their territories that pertain to investors from the signatory countries, unless such measures are
taken based on public need. In such case, nothing discriminatory can be done, but everything
must be implemented by due legal process. Compensationfor the investment holder that is
expropriated or nationalized should be both adequate and effective, and made in advance, based
on the real investment value determined at the time the decision is publicly announced by the

26. properauthorities. This payment will be updated until actual payment, and the affected investor
will receive interest.
Transfers
The original member state investors will be ensured free transfer of their investments and any
earnings thereon. These transfers can be made in freely convertible currency, using
the exchange rate prevailing on the market pursuant to the procedures established by the
member state receiving the investment. Member nations cannot adoptany exchange measures
restricting free transfer of the funds invested or from activities exercised in their respective
territories.
FTA with third parties
Recently, with the new cooperation agreement with Mercosur, the Andean Community gained
four new associate members: Argentina, Brazil, Paraguay and Uruguay. These four Mercosur
members were granted associate membership by the Andean Council of Foreign Ministers
meeting in an enlarged session with the Commission (of the Andean Community) on 7 July
2005. This move reciprocates the actions of Mercosur which granted associate membership to
all the Andean Community nations by virtue of the Economic Complementarity Agreements
(Free Trade Agreements) signed between the CAN and individual Mercosur members.
Colombian president Álvaro Uribe signed a free trade agreement between his country and
Mercosur in December 2005, giving Colombian products preferential access to a market of 230
million people. Colombian entrepreneurs will also be able to import materials and capital goods
from Mercosur at lower costs dueto reduced tariffs resulting from the agreement.
 CAFTA
The Dominican Republic – Central America Free Trade Agreement, commonly called CAFTA-
DR, is a free trade agreement (legally a treaty under international law, but not under US law).
Originally, the agreement encompassed the United States and the Central American countries of
CostaRica, El Salvador, Guatemala, Honduras, and Nicaragua, and was called CAFTA. In
2004, the Dominican Republic joined the negotiations, and the agreement was renamed
CAFTA-DR
CAFTA-DR together with the North American Free Trade Agreement (NAFTA) and active
bilateral free trade agreements, including the Canada-CostaRica Free Trade Agreement, are
seen as bloc agreements instead of a Free Trade Area of the Americas (FTAA) agreement.
Panama has completed negotiations with the US for a bilateral free trade agreement (ratification
of which is pending), and Belize is a member of the Caribbean Community (CARICOM). Haiti,

27. also a CARICOM member, was expected to be given certain additional trade preferences with
the US under the Haitian Hemispheric Opportunity through Partnership Encouragement Act
before Congress adjourned during 2006.
RATIFICATION:
The agreement is a treaty under international law, but not under the United States Constitution.
In the U.S., laws require majority approval in both houses, while treaties require two-thirds
approval in the Senate only. Under U.S. law, CAFTA-DR is a congressional-executive
agreement.
The United States Senate approved the CAFTA-DR on June 30, 2005 by a vote of 54–45, and
the United States House of Representatives approved the pact on July 28, 2005 by a vote of
217–215, with two representatives not voting. Controversy arose over this vote because it was
held open 1 hour and 45 minutes longer than the normal 15 minutes in order to get some
members to change their votes. Forprocedural reasons, the Senate took a second vote on
CAFTA on July 28 and the pactgarnered an additional vote from Sen. Joe Lieberman—who
had been absent on June 30—in favor of the agreement. The implementing legislation
became Public Law 109-053 when it was signed by President George W. Bush on August 2,
2005.
The Dominican Republic, CostaRica, El Salvador, Guatemala, Nicaragua and Honduras have
also approved the agreement. They are all the current members of CAFTA-DR.
On March 1, 2006, El Salvador led the way as CAFTAwent into effect for that country,
following completion of all necessary steps, including delivery of signed Treaty copies to
the Organization of American States (OAS), which was the final step. On April 1, 2006,
Honduras and Nicaragua joined El Salvador as countries that have fully implemented the
agreement. On May 18, 2006, Guatemala's Congress ratified CAFTA-DR and on July 1, 2006,
the treaty went into effect for that country. The Dominican Republic implemented the
agreement on March 1, 2007. In the referendum on October7, 2007, the voters of CostaRica
narrowly backed the free trade agreement, with 51.6 percent of "Yes" votes; The necessary
implementation laws have been approved and the agreement took effect January 1, 2009.
AIMS:
The goal of the agreement is the creation of a free trade area, similar to the North American
Free Trade Agreement (NAFTA) which currently encompasses the US, Canada, and Mexico.
CAFTA-DR is also seen as a stepping stone towards the FTAA, another (more ambitious) free
trade agreement that would encompass all the South American and Caribbean nations as well as
those of North and Central America except Cuba. Canada is negotiating a similar treaty called
the Canada Central American Free Trade Agreement.

28. If passed by the countries involved, tariffs on about 80 percent of US exports to the
participating countries will be eliminated immediately and the rest will be phased out over the
subsequent decade. As a result, CAFTA-DR does not require substantial reductions in US
import duties with respectto the other countries, as the vast majority of goods produced in the
participating countries already enter the US duty-free due to the US Government's Caribbean
Basin Initiative.
With the addition of the Dominican Republic, the trade group's largest economy, the region
covered by CAFTA-DR is the second-largest Latin American export market for US producers,
behind only Mexico, buying US$15 billion of goods a year. Two-way trade amounts to about
US$32 billion annually.
While not necessarily a part of Plan Puebla Panama, CAFTA is a necessary precursor to the
execution of Plan Puebla Panama by the Inter-American Development Bank. The plan includes
construction of highways linking Panama City to Mexico City, Texas, and the rest of the US.
PROVISIONS:
CAFTA-DR encompasses the following components:
 Cross-bordertrade in services: Each member country must treat service suppliers
of another member country no less favorably than its own suppliers or those of any
other member country. The Agreement requires firms to establish a local presence
as a condition for supplying a service on a cross-borderbasis.
 Financial services: CAFTA-DR imposes rules requiring member countries to treat
service suppliers of another member country no less favorably than its own
suppliers or those of any other country, prohibits certain quantitative restrictions on
market access offinancial institutions, and bars restrictions on the nationality of
senior management.
 Investment: CAFTA-DR establishes rules to protectinvestors from one member
country against unfair or discriminatory government actions when they make or
attempt to make investments in another member country's territory. Investors enjoy
six basic protections:(1) non-discriminatory treatment relative to domestic
investors as well as investors of non-Parties; (2) limits on “performance
requirements”; (3) free transfer of funds related to an investment; (4) protection
from expropriation other than in conformity with customary international law; (5) a
“minimum standard of treatment” in conformity with customary international law;
(6) and the ability to hire key managerial personnel without regard to nationality.
 Government procurement: Each member country must apply fair and transparent
procurement procedures and rules and prohibiting each government and its

29. procuring entities from discriminating in purchasing practices against goods,
services, and suppliers from the other member countries.
 Market access:Governments pledge to reduce and eventually eliminate tariffs and
other measures that protect domestic products.
 Agriculture: CAFTA-DR requires that tariffs and quotas be administered in a
manner that is transparent, nondiscriminatory, responsive to market conditions and
minimally burdensome on trade and allows importers to fully utilize import quotas.
Each member country will eliminate export subsidies on agricultural goods
destined for another CAFTA-DR country.
 Intellectual property rights: Member countries are obligated to ratify or accede to
several international agreements on intellectual property rights, like, for example,
the WIPO Copyright Treaty. Each member country must provide protection for
marks and geographical indications, including protecting preexisting trademarks
against infringement by later geographical indications. Member countries must
provide efficient and transparent procedures governing the application for
protection of marks and geographical indications. Each member country must
provide copyright protection for the life of the author plus 70 years (for works
measured by a person's life), or 70 years (for corporate works). The Agreement
also includes provisions on ant circumvention, under which member countries
commit to prohibit tampering with technology used to protectcopyrighted
works. Member countries agree to make patents available for any invention,
subject to limited exclusions, and confirm the availability of patents for new uses
or methods of using a known product. To guard against arbitrary revocation of
patents, each member country must limit the grounds for revoking a patent to the
grounds that would have justified a refusal to grant the patent.
 Antidumping and countervailing rights: Antidumping and countervailing duty
measures may not be challenged under the Agreement’s dispute settlement
procedures.
 Dispute resolution: If a dispute over an actual or proposed national rule cannot be
resolved after a 30-day consultation, the matter may be referred to a panel
comprising independent experts that the parties select. Once the procedure before
the panel is concluded, the panel will issue a report. The parties will attempt to
resolve the dispute based on the panel's report. If no amicable resolution is
possible, the complaining party may suspend trade benefits equivalent in effect to
those it considers were impaired, or may be impaired, as a result of the disputed
measure. If a dispute arises under bothCAFTA-DR and the WTO Agreement, the
complaining party may chooseeither forum.

30.  Environmental protection: CAFTA-DR contains provisions for the enforcement of
environmental laws and improvement of the environment. The CAFTA-DR
Environmental Cooperation Agreement, signed in concertwith the FTA, provides
for environmental cooperation on issues of mutual environmental concern.
 Labor standards: CAFTA-DR contains provisions for the enforcement of
the International Labour Organization's core labor standards.
 Transparency: Parties are obligated to make it a criminal offense to offer or accept
a bribe in exchange for favorable government action in matters affecting
international trade or investment.
 Test data exclusivity for pharmaceutical corporations: CAFTA-DR protects test
data that a company submits in seeking marketing approval for such products by
precluding other firms from relying on the data.
Reasonsto Oppose the Central American Free Trade Agreement
1. CAFTA Expands a Proven Disaster
CAFTA would expand the failed NAFTA model of international trade to five additional Central
American countries with plans to include the Dominican Republic already under way. But 10
years of NAFTA have shown just how devastating these agreements can be for working
families and the environment. In the United States, over 766,000 jobs have been lost due to
NAFTA. In the maquiladora zones along the US-Mexico border, wages are low, union
organizing is suppressed,and industrial pollution has dramatically increased cases of hepatitis
and birth defects among workers. NAFTA should be repealed, not expanded.
2. CAFTA Contains No Protectionfor Workers and the Environment
CAFTA contains no meaningfully enforceable standards that might prevent countries from
lowering their public health, workplace safety, and environmental laws in order to attract
investment. Our experience with NAFTA has shown how corporations use this arrangement to
pit workers in each country against one another in a “race-to-the-bottom” in wages and
environmental protections. Trade agreements are presented to the public as a vehicle for
economic development, but when these agreements fail to condition trade access on
enforcement of international labor and environmental standards, only corporateCEOs see the
benefits.

31. 3. CAFTA Promotes SweatshopLabor
CAFTA would ignore standards set by the International Labor Organization and instead require
only that countries continue to enforce existing domestic labor laws, regardless of how
inadequate these laws may be. In the context of Central America—where laws fall far below
international standards and governments are often actively hostile towards unions—this model
amounts to no less than a recipe for rampant labor violations. CAFTAwill no doubtlead to an
expansion of the region’s maquila industry, already one of the world’s most developed.
4. CAFTA Drives Family Farmers Off the Land
Thousands of small family farms in both the US and Central America will be lost becauseof
CAFTA—much like what has already happened to U.S, Mexican and Canadian farmers under
NAFTA. Meanwhile, giant corporatefarms like ADM and Cargill will be the ones benefiting
most from their downfall and the trade agreement. The threat of CAFTA is especially ominous
for farmers in Guatemala, where nearly 60% of the population supportthemselves on
agriculture. CAFTA would likely force a massive migration of erstwhile farmers to large urban
areas to work in the maquila industry, or to risk the dangerous journey to the U.S.
5. CAFTA Privatizes Public Services
CAFTA investor rules will make it impossible for governments in Central America and the US
to give preferences to public service providers. Under CAFTA, domestic regulations protecting
people’s right to food, education, health, and basic utilities could be considered “barriers to
trade” and open to challenges by multinational corporations. CAFTA would require that
governments bid out for services contracts, resulting in price increases, reduced access, and
compromised quality that would most severely impact the vulnerable in our society, such as
children, the poor, and the elderly.
6. CAFTA Expands Corporate Power
CAFTA would expand NAFTA rules that allow corporations to sue governments over any law
that might stand in the way of their ability to profit. These rules have already been used 27
times since 1994 to challenge some of our most cherished public health, workplace safety and
environmental laws. The threat of being sued forces governments to either pay large fines or to
pass only pro-business legislation.

32. 7. CAFTA Undermines Public Health
CAFTA provisions to protectand expand the patent monopolies of US pharmaceutical
companies in Central America will undermine access to affordable generic AIDS drugs and
increase the price of medicines. Meanwhile, hundreds thousands of HIV-positive Central
Americans are in immediate need of treatment or else they will die. Of the six Latin American
countries with the highest prevalence of HIV, four are Central American.
 ASEAN
ASEAN is a political and economic organization of ten countries located in Southeast Asia,
which was formed on 8 August 1967 by Indonesia, Malaysia, the
Philippines, Singapore and Thailand.[9] Since then, membership has expanded to
include Brunei, Burma (Myanmar), Cambodia, Laos, and Vietnam. Its aims include
accelerating economic growth, social progress, sociocultural evolution among its members,
protection of regional peace and stability, and opportunities for member countries to discuss
differences peacefully.
ASEAN covers a land area of 4.46 million km², which is 3% of the total land area of Earth, and
has a population of approximately 600 million people, which is 8.8% of the world's population.
The sea area of ASEAN is about three times larger than its land counterpart. In 2012, its
combined nominal GDP had grown to more than US$ 2.3 trillion. If ASEAN were a single
entity, it would rank as the eighth largest economy in the world.
Leaders of each country felt the need to further integrate the region. Beginning in 1997, the bloc
began creating organisations within its framework with the intention of achieving this
goal. ASEAN Plus Three was the first of these and was created to improve existing ties with
the People's Republic of China, Japan, and South Korea. This was followed by the even
larger East Asia Summit, which now includes these countries as well as India, Australia, New
Zealand, United States and Russia. This new grouping acted as a prerequisite for the
planned East Asia Community, which was supposedlypatterned after the now-
defunct European Community. The ASEAN Eminent Persons Group was created to study the
possible successesand failures of this policy as well as the possibility of drafting an ASEAN
Charter.
In 2006, ASEAN was given observer status at the United Nations General Assembly.As a
response, the organisation awarded the status of "dialogue partner" to the United Nations.
Free Trade

33. In 2007, ASEAN celebrated its 40th anniversary since its inception, and 30 years of diplomatic
relations with the United States. On 26 August 2007, ASEAN stated that it aims to complete all
its free trade agreements with China, Japan, South Korea, India, Australia and New Zealand by
2013, in line with the establishment of the ASEAN Economic Community by 2015. In
November 2007 the ASEAN members signed the ASEAN Charter, a constitution governing
relations among the ASEAN members and establishing ASEAN itself as an international legal
entity. During the same year, the Cebu Declaration on East Asian Energy Security was signed
in Cebuon 15 January 2007, by ASEAN and the other members of the EAS (Australia, People's
Republic of China, India, Japan, New Zealand, South Korea), which promotes energy
security by finding energy alternatives to conventional fuels.
On 27 February 2009 a Free Trade Agreement with the ASEAN regional block of 10 countries
and Australia and its close partner New Zealand was signed, it is estimated that this FTA would
boostaggregate GDP across the 12 countries by more than US$48 billion over the period 2000–
2020. ASEAN members together with the group’s six major trading partners – Australia, China,
India, Japan, New Zealand and South Korea – have begun the first round of negotiations on 26–
28 February 2013 in Bali, Indonesia, on establishment of the Regional Comprehensive
Economic Partnership.
ASEAN six majors refer to the six largest economies in the area with economies many times
larger than the remaining four ASEAN countries.
Developmentgap
When Vietnam, Laos, Myanmar, and Cambodia joined ASEAN in the late 1990s, concerns
were raised about a certain developmental divide regarding a gap in average per capita GDP
between older and the newer members. In response, the Initiative for ASEAN Integration (IAI)
was formed by ASEAN as a regional integration policy with the principal goal of bridging this
developmental divide, which, in addition to disparities in per capita GDP, is manifested by
disparities in dimensions of human development such as life expectancy andliteracy rates. Other
than the IAI, other programmes for the development of the Mekong Basin - where all four
newer ASEAN members are located - that tend to focus on infrastructure development have
been effectively enacted. In general, ASEAN does not have the financial resources to extend
substantial grants or loans to the new members. Therefore, it usually leaves the financing of
these infrastructure projects to international financial institutions and to developed countries.
Nevertheless, it has mobilized funding from these institutions and countries and from the
ASEAN-6 (Indonesia, Malaysia, Philippines, Brunei Darussalam, Singapore, and Thailand)
themselves for areas where the development gap needs to be filled through the IAI programme.
Other programmes intended for the development of the ASEAN-4 take advantage of the
geographical proximity of the CLMV countries and tend to focus on infrastructure development
in areas like transport, tourism, and power transmission.

34.  India’s trade with Asia:
AssociationofSouth EastAsian Nations (ASEAN) and India Free Trade Agreement
(FTA) negotiations.
India’s engagement with the Association of South East Asian Nations (ASEAN) started
with its "Look East Policy" in the year 1991. ASEAN has a membership of 10 countries namely
Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines,
Singapore, Thailand and Vietnam. India became a Sectoral Dialogue Partner of ASEAN in
1992 and Full Dialogue Partner in 1996. In November 2001, the ASEAN-India relationship was
upgraded to the summit level.
India- Sri Lanka Comprehensive Economic PartnershipAgreement (CEPA) negotiations
1. India-Sri Lanka Free Trade Agreement (ISLFTA), which was signed in 1998, has become
operational in 2000.
2. Sri Lanka is India’s largest trading partner country in the SAARC region. The bilateral
trade between India and Sri Lanka has grown four times in the last nine years increasing from
US $ 658 million in 2000 to US $ 2719 million in 2009.
India-Thailand Comprehensive Economic Cooperation Agreement(CECA) negotiations
In November 2001, the Prime Minister of Thailand, Dr. Thaksin Shinawatra and the Prime
Minister of India had agreed to set up a Joint Working Group (JWG) to undertake feasibility
study of a Free Trade Agreement (FTA) between India and Thailand. The JWG had observed
that the policy regimes in both the countries were conducive to more intensive bilateral
economic integration and a FTA could prove to be a building block for other sub-regional,
regional and global economic integration processesofwhich both countries are a part. Having
observed rich potential of trade expansion, the JWG has concluded that the proposedFTA
between India and Thailand is feasible, desirable and mutually beneficial. Accordingly, a Joint
Negotiating Group (JNG) was set up to draft the Framework Agreement on India – Thailand
FTA.

35. Bay of BengalInitiative for Multi-SectoralTechnicaland Economic Cooperation
(BIMSTEC)Free Trade Agreement(FTA) negotiations
The initiative to establish Bangladesh-India-Sri Lanka-Thailand Economic Cooperation
(BIST-EC) was taken by Thailand in 1994 to explore economic cooperation on a sub-regional
basis involving contiguous countries of South East & South Asia grouped around the Bay of
Bengal. Myanmar was admitted in December, 1997 and the initiative was renamed as BIMST-
EC. The initiative involves 3 members of SAARC (India, Bangladesh & Sri Lanka) and 2
members of ASEAN (Thailand, Myanmar). BIMST-EC is visualized as a ‘bridging link’
between two major regional groupings i.e. ASEAN and SAARC. BIMST-EC is an important
element in India’s “LookEast” strategy and adds a new dimension to India’s economic
cooperation with South East Asian countries.
2. The 2nd BIMSTEC Summit was hosted by India in New Delhi on 13 November 2008. It
was preceded by the 11th Ministerial Meeting and the 13th Senior Official’s Meeting on 11-12
November 2008. The 2nd Summit took place four years after the 1st BIMSTEC Summit which
was held in Thailand.
India-Gulf CooperationCouncil(GCC) Free Trade Agreement (FTA) negotations:
A Framework Agreement on Economic Cooperation between Republic of India and Gulf
Cooperation Council was signed on 25th August, 2004. The Framework Agreement provided
that both the parties shall consider ways and means for extending and liberalizing the trade
relations and also for initiating discussions on the feasibility of a FTA between them.
2. 2 rounds of negotiations have been held so far. The 1st round of negotiations was held in
Riyadh on 21st – 22nd March, 2006. During this round, GCC side has agreed to include
Services, Investment and general economic cooperation along with goods in the GCC-India
FTA. Further, the Agreement on the modalities for negotiations was finalized. The 2nd round
of negotiations was also held in Riyadh on 9-10 September, 2008. ProposedTariff
Liberalization Scheduled was discussed during this round. It was further decided that the 3rd
round of negotiations would be held in Delhi.
3. The dates for 3rd round of negotiations are being finalized in consultations with Gulf
Cooperation Council Secretariat.
India-PakistanTrading Arrangement
India and Pakistan have no formal trade agreement. India has granted Most Favoured
Nation (MFN) Status to Pakistan, whereas Pakistan maintains a List of Importable Items from
India called ‘Positive List’ which now consists of 1938 items. To see this list, please visit
Government of Pakistan website http://www.commerce.gov.pk.

36. 2. Both countries have constituted a Joint Study Group (JSG) at the level of Commerce
Secretary. Apart from the JSG, the issues pertaining to commercial and economic cooperation
are discussed at Commerce Secretary level within the framework of the Composite
Dialogue. The fourth round of dialogue was held in New Delhi on 31 July – 1 August 2007.
Asia Pacific Trade Agreement (APTA)
The Asia-Pacific Trade Agreement (APTA), previously named the Bangkok Agreement,
signed in 1975 as an initiative of ESCAP, is a preferential tariff arrangement that aims at
promoting intra-regional trade through exchange of mutually agreed concessions by member
countries. APTA has five members namely Bangladesh, China, India, Republic of Korea, Lao
People's Democratic Republic and Sri Lanka. ESCAP functions as the secretariat for the
Agreement.
2. During the Second Session of the Ministerial Council at Goa on 26 October2007 the
following important decisions were taken
(i) To launch the 4th Round of Negotiations;
(ii) To adoptmodalities for extension of negotiations in other areas such as non-tariff measures,
trade facilitation, services, and investment;
(iii) A common set of Operational Procedures for the Certificate and Verification of the Origin
of Goods forAPTA was approved and it was decided that the same would be implemented
w.e.f. 1st January, 2008; and
(iv) To explore the possibilities of expanding the membership of the Agreement.
Bibliography:
1. http://www.britannica.com/EBchecked/topic/331799/Latin-American-Economic-
System-SELA
2. http://europa.eu/index_en.htm
3. http://www.caftaintelligencecenter.com/subpages/what_is_cafta.asp
4. http://en.wikipedia.org
5. http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-
acc/nafta-alena/index.aspx?lang=eng
6. http://eeas.europa.eu/mercosur/index_en.htm
7. http://ec.europa.eu/trade/policy/countries-and-regions/regions/asean/
8. http://commerce.nic.in/trade/international_ta_current_details.asp