An overview of the trade organizations that promote free trade or support international trading operations (EFTA, NAFTA, ASEAN, AEC, ECFA, CAFTA, WTO, IMF, World Bank, G8/G20, OPEC and OIC).
EUROPE: EFTA – EUROPEAN FREE TRADE ASSOCIATION
The European Free Trade Association (EFTA) was born out of the Stockholm Convention held in 1960 and has four members: Iceland, Liechtenstein, Norway, and Switzerland. The scope of the association is to promote free trading among the member’s countries and to foster their cooperation with the western European countries. During the years, the members of the European Free Trade Association have concluded free trade agreements not only with the EU but also with a wide number of other countries and regions across the globe.
The map shows the member of the European Free Trade Association (in green) and the members of the European Union (in blue):
AMERICA: NAFTA – NORTH AMERICAN FREE TRADE AREA
The North American Free Trade Area (NAFTA) includes the United States, Canada, and Mexico and was born in 1994.
The United States commenced bilateral trade negotiations with Canada more than 30 years ago, resulting in the U.S.-Canada Free Trade Agreement, which entered into force on January 1, 1989. In 1991, bilateral talks began with Mexico, which Canada joined. The NAFTA followed, entering into force on January 1, 1994. Tariffs were eliminated progressively and all duties and quantitative restrictions, with the exception of those on a limited number of agricultural products traded with Canada, were eliminated by 2008.
NAFTA also includes chapters covering rules of origin, customs procedures, agriculture and sanitary and phytosanitary measures, government procurement, investment, trade in services, protection of intellectual property rights, and dispute settlement procedures. For the full NAFTA text, click here.
On May 18, 2017, following consultations with relevant Congressional committees, U.S. Trade Representative Robert Lighthizer informed Congress that the President intends to commence negotiations with Canada and Mexico with respect to the NAFTA. Through these negotiations, the United States seeks to support higher-paying jobs in the United States and to grow the U.S. economy by improving U.S. opportunities to trade with Canada and Mexico.
USTR recently received numerous public comments in response to a notice in the Federal Register seeking comments on negotiating objectives. To view these comments please click here. In addition, in three days of hearings from June 27-29, 2017, USTR heard directly from over 140 witnesses, who provided testimony on a wide range of sectors, from agriculture to manufacturing and digital trade, and represented industries, workers, farmers and ranchers. To review the transcripts for those hearings, please click here.
The United States, Canada, and Mexico have agreed that the information exchanged in the context of the NAFTA negotiations, such as the negotiating text, proposals of each Government, accompanying explanatory material, and emails related to the substance of the negotiations, must remain confidential. Pursuant to this agreement, USTR has classified the materials. This means that they are not available under the Freedom of Information Act.
The scope of the agreement is to:
- remove all duties and trade barriers among the member countries
- promote reciprocal investments
- define a framework to protect the intellectual property
- setup a dispute solving mechanism among companies operating in the member countries
ASIA: APEC, ASEAN, AEC, ECFA, CAFTA
APEC – ASIA PACIFIC ECONOMIC COOPERATION
APEC (Asia-Pacific Economic Cooperation) is a forum to facilitate growth, cooperation, trade and investment within the Asia-Pacific region. Membership is not limited to Asian countries only, indeed the US and Russia are two prominent members of the organization.
APEC COUNTRY MEMBERS
TheAsia-Pacific Economic Cooperation Association comprises 21 countries as of spring 2018: Australia; Brunei Darussalam; Canada; Chile; People’s Republic of China (PRC); Hong Kong, China; Indonesia; Japan; Republic of Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; The Republic of the Philippines; The Russian Federation; Singapore; Chinese Taipei; Thailand; United States of America; Vietnam. APEC members are shown in the chart below:
ABAC (“APEC Business Advisory Council”) is a consultation body within APEC, formed by senior delegates from the member countries (max. 3 per country) and established in 1995. ABAC meets four times per year to discuss socio-economic and political issues relevant to the Asian Pacific business community; besides that, ABAC drafts advice and recommendations for the top leaders of the organization. ABAC represents multiple sectors and companies of various sizes.
ABTC exists since 1997 to facilitate business travels for residents within the region covered by the Asia-Pacific Economic Cooperation Agreement. Indeed, citizens from the associated countries can request an ABTC to their national government and are allowed multiple entries within the APEC countries for a period of three years (with no need to apply for Visa). Further, cardholders benefit from faster immigration/emigration thanks to fast lanes in several airports associated with the Asia-Pacific Economic Cooperation Organization.
ASEAN AND AEC
SCOPE OF ASEAN
The Association of Southeast Asian Nations (ASEAN) was founded in 1967 with the Bangkok Declaration signed by Indonesia, Malaysia, Philippines, Singapore, and Thailand. In the following years, other countries joined – namely Brunei Darussalam in 1984, then Vietnam, Lao PDR, Myanmar, and Cambodia.
As of spring 2018, ASEAN comprises ten countries. The scope of the association is to promote economic growth, social progress, and cultural development within the south-east Asia region via collaboration and mutual support among the member countries.
The long-term goal of the members was to create and consolidate the AEC (South East Asian Economic Community), a free trading space within the region.
ASEAN MEMBER COUNTRIES
The image shows the member countries of ASEAN as of spring 2018.
- Head of State: His Majesty Sultan Haji Hassanal Bolkiah Mu’izzaddin Waddaulah
- Capital: Bandar Seri Begawan
- Language(s) : Malay, English
- Currency: B$ (Brunei Dollar)
- Ministry of Foreign Affairs & Trade of Brunei Darussalam Website: www.mfa.gov.bn
- Head of State: His Majesty King Norodom Sihamoni
- Head of Government: Prime Minister Hun Sen
- Capital: Phnom Penh
- Language: Khmer
- Currency: Riel
- Ministry of Foreign Affairs & International Cooperation of Cambodia Website: www.mfaic.gov.kh
- Head of State: President Joko Widodo
- Capital: Jakarta
- Language: Indonesian
- Currency: Rupiah
- Ministry of Foreign Affairs of Indonesia Website: www.kemlu.go.id
- Head of State: President Bounnhang Vorachith
- Head of Government: Prime Minister Thongloun Sisoulith
- Capital: Vientiane
- Language: Lao
- Currency: Kip
- Ministry of Foreign Affairs of Lao PDR Website: www.mofa.gov.la
- Head of State: His Majesty Seri Paduka Baginda Yang di-Pertuan Agong XV Sultan Muhammad V
- Head of Government: The Honourable Dato’ Sri Mohd Najib bin Tun Abdul Razak
- Capital: Kuala Lumpur
- Language(s): Malay, English, Chinese, Tamil
- Currency: Ringgit
- Ministry of Foreign Affairs of Malaysia Website: www.kln.gov.my
- ASEAN-Malaysia National Secretariat Website: www.kln.gov.my/myasean
- Head of State: President U Htin Kyaw
- Capital: Nay Pyi Taw
- Language: Myanmar
- Currency: Kyat
- Ministry of Foreign Affairs of Myanmar Website: www.mofa.gov.mm
- Head of State: President Rodrigo Roa Duterte
- Capital: Manila
- Language(s): Filipino, English, Spanish
- Currency: Peso
- Department of Foreign Affairs of the Philippines Website: www.dfa.gov.ph
- Head of State: President Halimah Yacob
- Head of Government: Prime Minister Lee Hsien Loong
- Capital: Singapore
- Language(s): English, Malay, Mandarin, Tamil
- Currency: S$ (Singapore Dollar)
- Ministry of Foreign Affairs of Singapore Website: www.mfa.gov.sg
- Head of State: His Majesty King Maha Vajiralongkorn Bodindradebayavarangkun
- Head of Government: Prime Minister General Prayut Chan-o-cha
- Capital: Bangkok
- Language: Thai
- Currency: Baht
- Ministry of Foreign Affairs of Thailand Website: www.mfa.go.th
- Head of State: President Tran Dai Quang
- Head of Government: Prime Minister Nguyen Xuan Phuc
- Capital: Ha Noi
- Language: Vietnamese
- Currency: Dong
- Ministry of Foreign Affairs of Viet Nam Website: www.mofa.gov.vn
GDP OF ASEAN COUNTRIES
ECFA – ECONOMIC COOPERATION FRAMEWORK AGREEMENT
The Economic Cooperation Framework Agreement (ECFA) is a trade agreement between Taiwan and China, operational since September 2010. Under this agreement, the two countries have committed to liberalize the trade of goods and services, by reducing or eliminating tariffs, and to open up their investment markets. ECFA aims to foster collaboration and partnership between China and Taiwan.
For more information, visit the official website of ECFA
CAFTA – CHINA AND ASEAN FREE TRADE
CAFTA (China-ASEAN Free Trade Area) is an association (and a trade agreement) that includes China and ten other countries of the ASEAN community. A first framework agreement (which covered the trading of goods, services, and reciprocal investments within the Asian region) was signed back in 2002 among the contracting countries with the final scope of establishing CAFTA by 2010. The goal of the association is to strengthen the cooperation between China and the other developing economies associated with ASEAN.
Following the establishment of this organization, the tariffs and the duties for a large number of goods (except sensitive ones) have been reduced to zero among China, Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand. The tariffs reduction between China and ASEAN countries continued in the following years and has to lead to a zero tariffs policy within the entire Asian region in the past few years.
THE WORLD TRADE ORGANIZATION (WTO)
The World Trade Organization (WTO) started its operations back in 1995 after the Uruguay Round negotiations and the signature of the Marrakech Agreement (after its inception, the organization took over the same functions of the GATT, which was created after the second world war to dismantle the barriers created by conflicts). WTO is an organization that promotes open and free trading among the member countries. As of today, WTO has more than 160 member economies. WTO has become closely associated with globalization and is a frequent target for the critics against this ongoing process.
The WTO’s main functions are to provide a forum for negotiations to reduce barriers to international commerce and to administer a system of rules governing the international trade. In the recent years, the WTO has seen the launch of one new set of global trade negotiations called the “Doha Round”; it was launched in the Qatari capital in November 2001 to further liberalize global trade, with limited progress as yet (the Doha Round has produced an agreement on “trade facilitation” which means improving customs procedures, but agreement on aspects as further reductions in tariffs and farm subsidies, has been elusive).
The organization has defined a set of rules and guidelines which provide a general framework for doing global business. The regulations are grouped in four annexes:
- Annex 1 rules the trade of goods (GATT), services (GATS) and intellectual property rights (TRIPS);
- Annex 2 rules dispute settlement,
- Annex 3 focuses on trade policy review
- Annex 4 is related to multilateral agreements.
The Ministerial Conference is the most important entity at the WTO and meets every two years in Geneva Switzerland. This entity includes all members of the WTO, that are either countries or customs unions. The Ministerial Conference has full decision power and sets any multilateral agreement among members. The ministerial conference provides a system for resolving disputes when a country alleges that another has violated some WTO rules.
The WTO’s day to day business is conducted by its secretariat, with more than 600 regular staff under a director-general, currently Roberto Azevedo, a Brazilian diplomat.
WHAT IS GPA?
GPA stands for “Agreement on Government Procurement”. The treaty has the final goal of harmonizing the way governments participating in the WTO finalize purchases. It sets guidelines, regulations and best practices to make public procurement transparent and competitive (making it possible for companies of any member state to bid on public tenders of other countries, without being discriminated vs. local providers).
THE INTERNATIONAL MONETARY FUND (IMF)
The International Monetary Fund (IMF) is a financial organization based in Washington, D.C. which includes “189 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world”.
Founded in 1945 at the Bretton Woods Conference by Harry Dexter White and John Maynard Keynes, it came into formal existence in 1945 with 29 member countries and the goal of reconstructing the international payment system. It now plays a central role in the management of balance of payments difficulties and international financial crises. Countries contribute funds to a pool through a quota system from which countries experiencing balance of payments problems can borrow money. As of 2016, the fund had approximately 700 billion USD.
Through the fund, and other activities such as the gathering of statistics and analysis, surveillance of its members’ economies and the demand for particular policies, the IMF works to improve the economies of its member countries. The organization’s objectives stated in the Articles of Agreement are to:
- promote international monetary co-operation
- international trade
- high employment
- exchange-rate stability
- sustainable economic growth
- making resources available to member countries in financial difficulty
- tracking economic statistics by country
THE WORLD BANK
The World Bank Group scope is to share economic development and prosperity and fight poverty around the world.
The bank includes five entities with complementary goals:
The International Bank for Reconstruction and Development scope is to lend money to governments that have middle to low income but creditworthiness
TheInternational Development Association lends interest-free funds or grants to governments of the poor countries
The International Finance Corporation has the mandate to help developing countries grow in a sustainable way by financing public investments, creating liquidity via the international financial markets, and advising businesses and governments on financial matters
The Multilateral Investment Guarantee Agency offers guarantees to foreign investors and lenders interested in direct investment in developing countries
International Centre for Settlement of Investment Disputes arbitrates disputes about international investments and financing
G20 AND G8
G20 and G8 are, respectively, the group of the 20 and the 8 most industrialized countries of the world (highest GDP). G20 has become more and more important after 2005, as the globalization process has created a more distributed profile of the world’ GDP. In this article, we explain what G20 and G8 are.
THE G20 (GROUP OF TWENTY)
The G20 (that stands for “Group of Twenty Finance Ministers and Central Bank Governors”) was founded in 1999 (but had its first summit in 2008) and has the finance ministers and central bank governors of the twenty most industrialized and developed countries of the world as members. The scope of G20 is to establish cooperation and mutual agreement on critical financial topics involving the global economy.
Its current members are Argentina, Australia, Brazil, Canada, China, European Union, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United Kingdom, United States.
The Group played a pivotal role in defining measures to tackle the financial crisis of 2007/2008.
THE G8 (GROUP OF EIGHT)
G8 is a forum that includes the eight world’s largest economies: United States, Japan, Germany, United Kingdom, Italy, Canada, and Russia. The group originated from G6, which become G7 in 1997 with the addition of Canada, and in 2007 by Russia (Russia left G8 officially in the course of 2017).
Even if the G8 countries still meet on a rather regular basis, the G20 forum has taken over a greater importance after 2004, as globalization created the conditions for a more widespread distribution of global wealth (and the consequent demand for political representation).
The GDP and population of the G8 countries (in 2012, the group countries contributed for approximately 50% of the global GDP):
OPEC – ORGANIZATION OF THE PETROLEUM EXPORTING COUNTRIES
According to OPEC:
The scope of the Organization of the Petroleum Exporting Countries is to coordinate and unify the petroleum policies of its Member Countries and ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry.
OPEC COUNTRIES 2018
The Organization of the Petroleum Exporting Countries (OPEC) was founded in Baghdad, Iraq, with the signing of an agreement in September 1960 by five countries namely Islamic Republic of Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. They were to become the Founder Members of the Organization.
These countries were later joined by Qatar (1961), Indonesia (1962), Libya (1962), the United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (1973), Gabon (1975), Angola (2007) and Equatorial Guinea (2017).
Ecuador suspended its membership in December 1992 but rejoined OPEC in October 2007. Indonesia suspended its membership in January 2009, reactivated it again in January 2016, but decided to suspend its membership once more at the 171st Meeting of the OPEC Conference on 30 November 2016. Gabon terminated its membership in January 1995. However, it rejoined the Organization in July 2016.
This means that, currently, the Organization has a total of 14 Member Countries.
The OPEC Statute distinguishes between the Founder Members and Full Members – those countries whose applications for membership have been accepted by the Conference.
The Statute stipulates that “any country with a substantial net export of crude petroleum, which has fundamentally similar interests to those of Member Countries, may become a Full Member of the Organization, if accepted by a majority of three-fourths of Full Members, including the concurring votes of all Founder Members.”
The Statute further provides for Associate Members which are those countries that do not qualify for full membership but are nevertheless admitted under such special conditions as may be prescribed by the Conference.
OPEC POLITICAL IMPACT IN THE OIL AND GAS MARKET
As of 2016, the 14 countries accounted for an estimated 44 percent of global oil production and 73 percent of the world’s “proven” oil reserves, giving OPEC a major influence on global oil prices that were previously determined by American-dominated multinational oil companies. Such influence is easy to understand looking at the following graph – which shows that oil prices are very sensitive to OPEC announcements of production cuts/expansions:
The OPEC Secretariat is the executive organ of the Organization of the Petroleum Exporting Countries (OPEC). Located in Vienna, it also functions as the Headquarters of the Organization, in accordance with the provisions of the OPEC Statute.
It is responsible for the implementation of all resolutions passed by the Conference and carries out all decisions made by the Board of Governors. It also conducts research, the findings of which constitute key inputs in decision-making.
The Secretariat consists of the Secretary-General, who is the Organization’s Chief Executive Officer, as well as such staff as may be required for the Organization’s operations. It further consists of the Office of the Secretary-General, the Legal Office, the Research Division and the Support Services Division.
The Research Division comprises Data Services, Petroleum Studies and Energy Studies departments. The Support Services Division includes Public Relations & Information, Finance & Human Resources and Administration & IT Services departments.
The Secretariat was originally established in 1961 in Geneva, Switzerland. In April 1965, the 8th (Extraordinary) OPEC Conference approved a Host Agreement with the Government of Austria, effectively moving the Organization’s headquarters to the city of Vienna on September 1, 1965.
OIC – ORGANIZATION OF ISLAMIC COOPERATION
The Organization of Islamic Cooperation (OIC), funded in Morocco in 1969, is composed of approximately 60 Muslim countries and is, therefore, the world’s second largest inter governative organization after the United Nations. OIC aims to represent and protect the economic and political interests of the member countries and to promote peace around the world. Several oil-producing countries are members of OIC, therefore the influence of the Organization on the petrochemical industry is remarkable.
For more information: OIC
THE OIC MEMBERS, 2018
The Organisation of Islamic Cooperation (OIC) is the second largest inter-governmental organization after the United Nations with a membership of 57 states spread over four continents. The Organization is the collective voice of the Muslim world. It endeavors to safeguard and protect the interests of the Muslim world in the spirit of promoting international peace and harmony among various people of the world.
The Organization was established upon a decision of the historical summit which took place in Rabat, the Kingdom of Morocco on 12th Rajab 1389 Hijra (25 September 1969) following the criminal arson of Al-Aqsa Mosque in occupied Jerusalem.
In 1970 the first ever meeting of Islamic Conference of Foreign Minister (ICFM) was held in Jeddah which decided to establish a permanent secretariat in Jeddah headed by the organization’s secretary general. Dr. Yousef Ahmed Al-Othaimeen is the 11th Secretary General who assumed the office in November 2016.
The first OIC Charter was adopted by the 3rd ICFM Session held in 1972. The Charter laid down the objectives and principles of the organization and fundamental purposes to strengthen the solidarity and cooperation among the Member States. Over the last 40 years, the membership has grown from its founding members of 30 to 57 states. The Charter was amended to keep pace with the developments that have unraveled across the world. The present Charter of the OIC was adopted by the Eleventh Islamic Summit held in Dakar on 13-14 March 2008 to become the pillar of the OIC future Islamic action in line with the requirements of the 21st century.
The Organization has the singular honor to galvanize the Ummah into a unified body and has actively represented the Muslims by espousing all causes close to the hearts of over 1.5 billion Muslims of the world. The Organization has consultative and cooperative relations with the UN and other inter-governmental organizations to protect the vital interests of the Muslims and to work for the settlement of conflicts and disputes involving the Member States. In safeguarding the true values of Islam and the Muslims, the organization has taken various steps to remove misperceptions and has strongly advocated the elimination of discrimination against Muslims in all forms and manifestations.
The Member States of the OIC face many challenges in the 21st century and to address those challenges, the Third Extraordinary Session of the Islamic Summit held in Makkah in December 2005, laid down the blueprint called the Ten-Year Program of Action. It successfully concluded with the close of 2015. A successor programme for the next decade (2016-2025) has since then been adopted.
The new programme OIC-2025 is anchored in the provisions of the OIC Charter and focuses on 18 priority areas with 107 goals. The priority areas include issues of Peace and Security, Palestine and Al-Quds, Poverty Alleviation, Counter-terrorism, Investment and Finance, Food Security, Science and Technology, Climate Change and Sustainability, Moderation, Culture and Interfaith Harmony, Empowerment of Women, Joint Islamic Humanitarian Action, Human Rights and Good Governance, among others.
Among the OIC’s key bodies: the Islamic Summit, the Council of Foreign Ministers (CFM), the General Secretariat, in addition to the Al-Quds Committee and three permanent committees concerned with science and technology, economy and trade, and information and culture. There are also specialized organs under the banner of the OIC including the Islamic Development Bank and the Islamic Educational, Scientific and Cultural Organization, as well as the subsidiary and affiliated organs that play a vital role in boosting cooperation in various fields among the OIC member states.