ASIAN Trades

Presented by –Devesh Patidar

ASIAN Trades

ContentContent Major trade blockMajor trade block Patterns of tradePatterns of trade Role and impact of FTAs & Role and impact of FTAs &

RTAsRTAs Trade in goods performanceTrade in goods performance Trade in services performanceTrade in services performance Role of Foreign InvestmentRole of Foreign Investment Public-private partnershipsPublic-private partnerships ImplicationsImplications

Trade Blocks in AsiaTrade Blocks in Asia ASEANASEAN SAARCSAARC ASIA PacificASIA Pacific

ASEAN ASEAN ((8 August 1967)8 August 1967)

SAARC SAARC ((December 8, December 8, 19851985 ) )

ASIA Pacific (ASIA Pacific (19801980))

1. 1. Patterns of trade in Patterns of trade in AsiaAsia

- Over 50% of trade by countries in the - Over 50% of trade by countries in the region is region is within the region within the region- China’s role as a major exporter and - China’s role as a major exporter and importer, as importer, as well as investor looms ever larger well as investor looms ever larger- When seen in terms of sub-regions, - When seen in terms of sub-regions, however, it is however, it is clear that within South Asia, clear that within South Asia, intraregional trade is intraregional trade is much more limited (6%). India’s major much more limited (6%). India’s major markets markets are now in East Asia are now in East Asia

2. Role and impact of FTAs 2. Role and impact of FTAs and RTAsand RTAs- Various questions were raised: does - Various questions were raised: does trade trade expand more as a result of trade expand more as a result of trade agreements, or agreements, or is their impact quite marginal in is their impact quite marginal in practice? Are practice? Are they “weak and light”? they “weak and light”?

- Is there such a proliferation of the - Is there such a proliferation of the noodle bowl noodle bowl that trade becomes more complicated that trade becomes more complicated and may and may as well revert to MFN principles? as well revert to MFN principles?

- Do trade agreement pose a threat to, - Do trade agreement pose a threat to, or do they or do they reinforce WTO agreements? reinforce WTO agreements?

- Could some of them eventually be ruled as illegal - Could some of them eventually be ruled as illegal by WTO rules (which are currently couched in very by WTO rules (which are currently couched in very vague terms).vague terms).- Is the way forward to strengthen an enhanced East Asian- Is the way forward to strengthen an enhanced East Asian trade market on one hand, an enhanced SAARC on thetrade market on one hand, an enhanced SAARC on the other and build bridges between them.other and build bridges between them.- Or is the best way forward to build the East Asian summit- Or is the best way forward to build the East Asian summit (EAS) initiative encompassing 50% of the world’s (EAS) initiative encompassing 50% of the world’s population and comprising potentially the largestpopulation and comprising potentially the largest economic bloc in the world.economic bloc in the world.

3. 3. Trade in goods Trade in goods performance performance

- Degree of liberalization is critical. With - Degree of liberalization is critical. With somesome

exceptions, East & Southeast Asia is moreexceptions, East & Southeast Asia is more liberalized than South Asia. Some liberalized than South Asia. Some

slowdown, but China racing ahead .slowdown, but China racing ahead .- Huge contrast between China and India in - Huge contrast between China and India in

respect of “ease of trading across respect of “ease of trading across borders” (38th and 139th in world borders” (38th and 139th in world ranking). Do more liberal economies lead ranking). Do more liberal economies lead to greater domestic inequalities?to greater domestic inequalities?

- Other factors concern cross-border trade Other factors concern cross-border trade facilitation, which is much more inhibited within facilitation, which is much more inhibited within South Asia. Examples include transport South Asia. Examples include transport restrictions, product standards, arbitrary costs restrictions, product standards, arbitrary costs (“speed payments”)(“speed payments”)

- In South Asia, India is very dominant. In East Asia, - In South Asia, India is very dominant. In East Asia, China is very dominant. However political relations China is very dominant. However political relations in South Asia inhibit more trade cooperationin South Asia inhibit more trade cooperation

4. 4. Trade in services Trade in services performanceperformance

- Services trade is dependent on the state of Services trade is dependent on the state of economic development of countrieseconomic development of countries

- Services trade is, hither to, market driven with Services trade is, hither to, market driven with little contribution by regional or multilateral little contribution by regional or multilateral trade agreementstrade agreements

- Transparency and appropriate regulatory regimes Transparency and appropriate regulatory regimes has more impact on promoting services trade has more impact on promoting services trade than pure market access commitmentsthan pure market access commitments

- Sequencing of service liberalization, bilateral - Sequencing of service liberalization, bilateral versus multilateral liberalization are other issues versus multilateral liberalization are other issues which merit attentionwhich merit attention

5. 5. Role of Foreign Role of Foreign InvestmentInvestment

- Partly as a result of more defensive investment - Partly as a result of more defensive investment regimes and less integrated regional markets, regimes and less integrated regional markets, FDI into South Asia has been at much lower FDI into South Asia has been at much lower levels than in East and Southeast Asialevels than in East and Southeast Asia

- Outward investments - particularly in India and - Outward investments - particularly in India and Pakistan - are controlledPakistan - are controlled

- ““Without further liberalization of investment, Without further liberalization of investment, South Asia will not benefit from industrial South Asia will not benefit from industrial restructuring and more trade”restructuring and more trade”

- Patterns of investment in East and Southeast - Patterns of investment in East and Southeast Asia take a more regional perspective, helping Asia take a more regional perspective, helping to develop region wide value chains (e.g. car to develop region wide value chains (e.g. car manufacturing) manufacturing)

- A constructive relationship between A constructive relationship between Governments and private sector is Governments and private sector is indispensable for successful exportingindispensable for successful exporting

- In East and Southeast Asia the relationship - In East and Southeast Asia the relationship appears to be more constructive than in South appears to be more constructive than in South Asia, where the private sector identifies some Asia, where the private sector identifies some Government regulations as obstructive to Government regulations as obstructive to tradetrade

6. 6. Public-private Public-private partnershipspartnerships

ImplicationsImplications- More trade facilitation (standards, - More trade facilitation (standards,

documentation, rules, connectivity, etc.) and documentation, rules, connectivity, etc.) and more predictabilitymore predictability

- Joint development of infrastructure and powerJoint development of infrastructure and power

- Freer movement of people across bordersFreer movement of people across borders

- More cooperation among business chambersMore cooperation among business chambers

- Closer collaboration and better understanding Closer collaboration and better understanding between business and Government e.g. via between business and Government e.g. via trade support institutionstrade support institutions

- More liberalization and state regulation in More liberalization and state regulation in both trade and investmentboth trade and investment

- Key role for Elder Brother India to play - Key role for Elder Brother India to play constructive role, both through SAARC and constructive role, both through SAARC and regionallyregionally

Thank YouThank You