Expert says trade liberalization must consider needs of business community

BORACAY ISLAND, Aklan, May 23 (PNA) — Asia Pacific Economic Cooperation (APEC) economies negotiating for the Free Trade Area in the Asia Pacific (FTAAP) must get the design right for regional businesses to use the new liberalization regime, an expert said on Friday.

In a press briefing, Eduardo Pedrosa, Secretary General of the Pacific Economic Cooperation Council (PECC), shared a survey conducted among businesses, policy makers and members of the academe about the current trade and business growth in the Asia Pacific.

Pedrosa said those discussing the design of the FTAAP must take into account how global value chains operate.

“In short, the way I interpret it, you need to get the FTAAP right. There’s no point in having yet another trade agreement that doesn’t address the concerns of the business communities in our region,” Pedrosa said.

The other thing that’s very important in the Asia Pacific is capacity building considering that there is a mixture of advanced economies as well as developing economies in the region.

Pedrosa highlighted the views of respondents from Southeast Asia who thought that building capacity for developing economy is the most important thing that APEC has to consider with regards to the FTAAP completion.

Having a closer look at the existing trade agreements, Pedrosa said the economic literature shows low utilization of the existing FTAs. The estimate ranges from as low as 10, 15 percent to as high as around 40 percent, he said.

“So by no means all businesses are using these trade agreements and what they tell us is that the compliant cost of using the agreements is extremely high because of the rules of origin,” he explained.

And the costs impact on small and medium and micro enterprises. So even though e-commerce may allow the SMEs to enter into another market, with the preferential rate, if they can’t comply with the rules of origin there’s no point talking about it, he said.

“So were emphasizing the importance of getting the design of the FTAAP right,” he stressed.

Asia-Pacific leaders who met in China last year agreed to move towards a new free trade zone strongly backed by Beijing. They agreed to launch a study into the FTAAP. (PNA)