TECHNICAL DISCUSSIONS DOMINATE US-THAI FTA ROUND

The US Trade Representative's office is touting significant progress in the latest round of free trade agreement (FTA) talks with Thailand held from 26 to 30 September in Hawaii. However, the Thai negotiating team indicated more modest progress, largely in relation to technical barriers to trade, as well as an exchange of proposals on intellectual property rights.

Initiatives suggested for the simplification of technical barriers to trade included a workshop for Thai exporters to learn about US trade restrictions and the establishment of a unit to promote compatibility and mutual recognition of standards for industrial goods.

Thailand also submitted intellectual property proposals to the US including one seeking geographical indication protection for products such as Jasmine rice and Thai silk. Another called for both countries to enact measures for benefit-sharing related to the research and commercialisation of products that utilise genetic resources and/or traditional knowledge.

Negotiators could not agree on an approach to negotiations for investment liberalisation; they will likely pursue talks on a sector-by-sector basis at a later date.

Although the leaders of both countries have expressed an interest in concluding negotiations by next year, Thai civil society groups have urged their negotiating team to evaluate the potential agreement slowly and carefully. The Thai lead negotiator has not been willing to place an estimate on the likely conclusion date of the talks. Agriculture and intellectual property rights have been the most sensitive issues on both sides, and have presented the greatest negotiating hurdles to date.

"Hawaii talks leave key points out," BANGKOK POST, 3 October 2005; "United States and Thailand Conclude Fifth Round of FTA Talks," OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE, 3 October 2005.

US-SACU TALKS UNDERWAY AGAIN

After a standstill of over a year, the Southern African Customs Union (SACU) and the US restarted their free trade agreement (FTA) negotiations with meetings from 28-29 September in Gaborone, Botswana.

The talks fell apart in September 2004, when a round of meetings was cancelled because SACU countries (Botswana, Lesotho, Namibia, South Africa, and Swaziland) were unwilling to agree to US demands on investment, government procurement, services, and intellectual property rights (IPRs), arguing that their appropriateness for developing countries was questionable. South Africa in particular is wary of any limitations that rules on investment and government procurement could place on its 'black economic empowerment' programme, an affirmative action scheme that seeks to improve employment and business ownership rates for black people.

SACU and the US agreed in July to get the talks going again by focusing initially on relatively uncontroversial aspects of the negotiations. Discussions in Gaborone thus looked primarily at industrial tariffs. Negotiators did touch upon issues such as investment and IPRs, but more to identify specific areas of divergence.

A similar spat arose in SACU's FTA negotiations with the European Free Trade Association (Iceland, Liechtenstein, Norway, and Switzerland, see BRIDGES Weekly, 9 March 2005, http://www.ictsd.org/weekly/05-03-09/story3.htm). However, the two blocs appear poised to sign a deal that does not contain substantial provisions on so-called 'new-generation' issues such as investment, IPRs, and government procurement.

However, investment rules and strong IPR disciplines that go beyond WTO requirements are a central part of the US' FTA negotiating agenda, and it is unclear if the US would accept a deal without them.

ICTSD reporting; "Caution as Sacu-US talks resume," BUSINESS DAY, 3 October 2005; "US-Sacu trade talks grind to a halt," BUSINESS DAY, 22 September 2004; "Sacu-US trade talks to resume," BUSINESS DAY, 8 July 2005; "SACU/US Trade Negotiations On Tomorrow," MMEGI/THE REPORTER, 27 September 2005; "Sacu and US to kick-start trade talks," BUSINESS REPORT, 18 August 2005.

FDI TO DEVELOPING COUNTRIES SURGES IN 2004, ACCORDING TO UNCTAD REPORT

2004 saw a significant boost in foreign direct investment (FDI) flows to developing countries, a trend that will continue into 2006, according to the 2005 World Investment Report, released by the UN Conference on Trade and Development (UNCTAD) on 29 September.

Despite a 14 percent decline in FDI in the developed world, the developing world saw foreign investment spike by 40 percent to USD 233 billion. These numbers show that the developing world now receives 36 percent of global FDI inflows -- the highest level since 1997. Asia and Oceania saw the largest FDI growth in the developing world, followed by Latin America and the Caribbean. The report credited developing countries for the two percent annual growth seen in global FDI -- a number that had been in decline for three years.

One of the factors cited for increased FDI growth in the developing world was industrial expansion from the developed world to emerging economies in order to improve competitiveness. The reported also pointed to growth in outward FDI from developing countries, most notably in the services sector and towards other Southern countries.

For the first time, this year's World Investment Report included a survey of transnational corporations on current trends in research and development (R&D) investment. While lauding countries such as China and India for their ability to attract R&D, it cautioned that technologically lagging countries could be left behind, suggesting that they may need assistance from developed countries to launch a process of technological upgrading.

The UNCTAD World Investment Report is an annual publication that offers comprehensive analysis of current global trends in Foreign Direct Investment (FDI). The report has been published annually since 1991.

The "World Investment Report 2005: Transnational Corporations and the Internationalization of R&D" is available at http://www.unctad.org/Templates/webflyer.asp?docid=6087&intItemID=3489&lang=1&mode=downloads.

"World Investment Report," UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT, 29 September 2005; "World Investment Report 2005 Announced at UNCTAD," STRATEGIY.COM NEWS, 2 October 2005; "Investment In New Member States Up 70 Percent," THE DAILY JOURNAL, 4 October 2005; "Foreign investment in developing countries surges - UN," MINING WEEKLY ONLINE, 4 October 2005; " Developing countries emerge as attractive locations for R&D: UNCTAD," DOMAIN-B.COM, 3 October 2005.

US, OMAN INK COMPREHENSIVE FTA

The US and Oman concluded a comprehensive free trade agreement (FTA) on 3 October. The accord eliminates most tariffs on goods trade between the two countries. It also includes disciplines on investment and intellectual property rights, as well as rules on labour and environmental issues. The agreement will not enter into force until it is approved by both chambers of the US Congress.

The Office of the US Trade Representative notes that Oman has also substantially opened its services sector to US companies. It also praises the agreement for securing national treatment for US investors in most sectors of the Omani economy.

The pact's intellectual property rights obligations go beyond the demands of the WTO Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS). For example, the FTA establishes a five-year protection period for the clinical test data that pharmaceutical companies submit to government sanitary authorities when seeking the right to put a new drug on the market. Critics of such 'test data exclusivity' periods warn that they could delay the production and sale of cheaper generic drugs, since would-be generic manufacturers would either have to wait for five years or run clinical tests of their own.

Strong disciplines for the treatment of foreign investments and intellectual property are among the US Congress' stated objectives in the country's FTA negotiations. The new agreement is part of the US' larger plan for a Middle East Free Trade Area, announced in 2003. The US has already signed FTAs with Israel, Jordan, Morocco, and Bahrain.

ICTSD reporting; "US, Oman reach free trade agreement," KHALEEJ TIMES, 3 October 2005; "United States and OMAN Conclude Free Trade Agreement," US TRADE REPRESENTATIVE, 3 October 2005.