Asia is benefiting hugely from the many free trade agreements reached over the last decade but the region needs now to consolidate those agreements, says a new book from the Asian Development Bank Institute (ADBI) and Asian Development Bank (ADB).
The book, Asia's Free Trade Agreements: How is Business Responding? surveyed 841 firms in the People's Republic of China (PRC), Japan, Republic of Korea, the Philippines, Thailand, and Singapore and found that 53% either use or plan to use free trade agreements.
Asia has seen a rapid increase in free trade agreements since 2000 with about 50 in place in East Asia alone as of January 2011 and another 80 or so currently being prepared. East Asian economies like the PRC, Republic of Korea, Thailand, and Singapore have been the leading players in the spread of the agreements, while others such as the Philippines have become increasingly active through the Association of Southeast Asian Nations (ASEAN). The agreements have all boosted trade within the region.
However, some of the agreements are complicated because they apply to different sectors and have different requirements, raising the cost for companies that trade with many countries. Small and medium-sized businesses, in particular, struggle to make use of free trade agreements. Consolidating the "noodle bowl" of agreements would help individual companies and economies, says the book.
"A region-wide free trade agreement would have clear economic benefits. It would, of course, increase market access to goods, services, skills, and technology. It would also increase market size, permitting specialization and greater economies of scale," says ADB President Haruhiko Kuroda. It would also "help buffer against protectionist sentiments which pose a risk to Asia's trade and economic recovery," he adds.
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