What does an ECA cover?
The signing of an ECA is primarily for the promotion of liberalization at a degree higher than that of the WTO. The liberalization of a higher degree refers to further liberalization of market access and trade systems as covered by the WTO framework (or simply as “deepening”), and to inclusion of issues not covered by the WTO (or simply as “broadening”). Hence, the content of an ECA can be explained in the aspects of “deepening” and “broadening” as follows:
A. With respect to “deepening”:
1. Trade in goods: on the basis of the MFN treatment of the WTO, members will further reduce tariffs therebetween and establish rule of origin (ROO) via ECAs to prevent a third country from acquiring favorable tariff treatments between contracting members via simple processing and transshipment.
2. Trade in services: similar to the liberalization of trade in goods, ECA members will, on the basis of WTO liberalizations, liberalize increased number of service sectors or reduce market access restrictions.
3. Technical barriers to trade: the WTO requires members to adopt standards established by international organizations when establishing product standards, and encourages members to cooperate on conformity assessment procedures for relevant standards. With respect to agreeable product sectors, signatories of an ECA may conduct regulatory harmonization for product standards and mutual recognition for conformity assessment procedures, thus preventing unnecessary repetitive inspection and testing procedures.
4. Intellectual property right: the WTO Agreement on Trade-related aspects of Intellectual Property Rights (TRIPS) covers copyright and related rights, trademark, geographical indications, industrial design, patents, integrated circuit layout, and trade secrets. Contracting members of an ECA can further expand the period and scope of protection on the basis of the TRIPS.
5. Trade remedy measures: members may increase a trade remedy measure activation threshold and establish early warning or consultation mechanism, or mutual exemption from trade remedy measure applicability.
B. In terms of “broadening” (i.e. issues not covered by WTO multilateral agreements):
1. Customs and trade facilitation: including simplification of customs procedures and reduction of time costs of customs clearing procedures for promotion of mutual trade facilitation, relevant fields include authentication and verification of ROO certificates, harmonization of pre-approval and risk management systems.
2. Investment: granting of identical national treatments to investors of each other, establishment of investment dispute settlement mechanisms, and provision of the rights to make claims to investors when loss thereof is incurred by compulsory expropriation of a host country government.
3. Government procurement: mutual liberalization of government procurement markets in goods, services, and projects, as well as regulation of procurement procedures, transparency, and grievance procedures.
4. Labor: safeguarding of labor rights of both sides via the agreement, such as: safeguarding the rights of laborers to form unions and to collective negotiation, and prohibition of employment of prison workers and child labor.
5. Environmental protection: to encourage contracting members to conform with international environment protection accords, and to ensure a mutual supportive relation between trade liberalization and environmental protection.