National and regional action required to realise integration
National and regional action required to realise integration
Governments in Asia must undertake national as well as regional actions to reap the full benefits of integration initiatives like the Asean Economic Community (AEC) according to a recent Asian Development Bank publication.
For its part, Laos still needs to do more in numerous areas although progress has been made. A 2012 Diagnostic Trade integration study found that trade facilitation is particularly important in Laos, being a landlocked country.
Scope for improvements to trade and logistics is considerable; and any initiative that will reduce the costs of international trade operations will significantly enhance national competitiveness and increase the country's reputation as a destination for foreign investment.
Region wide, there is a need to address other impediments to trade including fees, excessive paperwork at customs, and trade finance. Tackling these issues are where the main trade benefits lie. Every 1 percent saving in trade-related transaction costs is estimated to yield a worldwide benefit of US$43 billion. National actions combined with a multilateral agreement on trade facilitation - expected to be signed at the World Trade Organisation's ninth Ministerial Conference in Indonesia from December 3-6 are key to realising these gains.
The ADB report highlights that there has been mixed progress towards integration initiatives throughout Asean, and more action is needed so that member countries are in a strong position to face global economic volatility going forward.
“Strengthening regional integration will help developing Asia become more productive and efficient at a time when the global economy is still in flux,” said Iwan J. Azis, Head of the Office of Regional Economic Integration which produced the report.
“To do that and to avoid falling prey to domestic protectionist pressures, governments must act now to ratify, implement, and enforce regional agreements.”
The Asian Economic Integration Monitor (AEIM), a semi-annual report from the ADB, notes that Asia has seen mixed progress in regional cooperation and integration against the backdrop of a shifting economic and financial landscape.
Cross-border trade and equity flows have slowed modestly despite improvements in cross-border foreign direct investment, bond purchases, bank credit, and tourism flows.
Progress towards the AEC has been steady but slow. The region needs to work harder on tackling barriers to trade in economically sensitive sectors such as agriculture, steel, and motor vehicles as well as reducing the non-tariff barriers that are increasingly replacing tariffs as constraints to international trade.
Liberalising trade in services and enacting competition policy and intellectual property rights protection – all difficult areas of reform – require national rather than regional actions. As such, 2015 will be a milestone rather than an end-point in fully achieving the AEC goals laid out by the Asean.
Work needs to continue beyond 2015, the report says, particularly to increase labour mobility so that unskilled as well as skilled workers can move across borders more easily. Greater labour mobility will allow the region to reap the full benefits of all its other reforms.
vientiane times
