AUSTRALIA AND INDONESIA SIGN COMPREHENSIVE ECONOMIC PARTNERSHIP AGREEMENT

On 4 March 2019, Australia and Indonesia signed the Australia-Indonesia Comprehensive Economic Partnership Agreement (“CEPA“). In this post, we briefly consider some of the noteworthy features of the CEPA chapter on investment and in particular its provisions regarding investor-State dispute settlement (“ISDS“).

Indonesia and Australia signed a bilateral investment treaty (“BIT“) containing ISDS provisions in 1992. Both States are also party to the ASEAN-Australia- New Zealand Free Trade Agreement (“AANZFTA”), signed by Australia in 2009 and Indonesia in 2012, which contains an investment chapter.

As we reported in a previous post, Indonesia announced in 2015 that it would seek to renegotiate and replace its older investment treaties with more modern agreements. The Australia-Indonesia BIT, however, will remain in force even after CEPA enters into force. This is in contrast to the Hong Kong-Australia Free Trade Agreement signed this week (see our post here) pursuant to which Australia and Hong Kong have agreed to terminate the Hong Kong-Australia BIT, which was signed in 1993 and became infamous in Australia after Philip Morris used the treaty to commence arbitration against Australia challenging the Tobacco Plain Packaging Act 2011.

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Korea Bilateral Comprehensive Economic Partnership Agreement: the most recent example of intra-Asian trade agreements

A growing number of Asian economies are looking to each other for trade and investment. This note takes a look at such a strategic trade partnership pact – the Comprehensive Economic Cooperation Agreement (the “CEPA“) entered into between India and South Korea. Signed in August 2009, the CEPA came into force officially on 1 January 2010.

The CEPA is an agreement adopted to facilitate comprehensive economic relations including merchandise and service trade, investment and economic cooperation. It is a de facto free trade agreement. The pact is expected to increase existing trade between India and Korea (USD 15.6 billion as of 2008) by as much as USD 3.3 billion annually. It aims to grow bilateral trade primarily by decreasing tariffs, encouraging investment and promoting the exchange of skills between the two countries. Ultimately the CEPA calls for barriers to fall in the investment field, improving the investment environment between India and South Korea and offering opportunities to expand trade and investment ties.

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