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DECTI Trade Seminar: Asian Free Trade Agreements: Trends, Challenges and Prospects

Sponsor: Development Economics and Chief Economist (DEC)


Abstract: This seminar deals with the topical issue of the economic effects of Asia's free trade agreements, drawing on a recent research paper. Although a latecomer, economically important Asia has emerged at the forefront of global free trade agreement (FTA) activity. This has sparked concerns about the negative effects of Asian FTAs, including the “noodle bowl” problem. Amid slow progress in the World Trade Organization’s (WTO) Doha negotiations and the global financial crisis, however, Asian regionalism seems to be here to stay. The focus for policy-makers may be how best to minimize the costs of FTAs while maximizing their benefits. Adopting a pragmatic perspective, the presentation examines key trends and challenges in Asian FTAs. It provides new evidence from firm surveys, analysis of specific agreements, and computable general equilibrium estimates. It provides the following set of recommendations: strengthen the support system for using FTAs; rationalize rules of origin and upgrade their administration; ensure better coverage of agricultural trade; forge comprehensive “WTO-plus” agreements; and encourage a region-wide FTA. Political economy considerations suggest that a likely scenario is for FTA consolidation in Asia - by creating a People’s Republic of China-Japan-Korea FTA, combining it with ASEAN+1 FTAs, and involving Australia, India, and New Zealand - to be followed by connections with North America and Europe. Trans-Pacific Partnership agreements can play an important role in facilitating the connection of Asian economies with the Americas, and the role of US trade policy is critical in the Trans-Pacific connection. In conclusion, the analysis suggests a bottom-up approach to a Doha Round Agreement should be adopted

For Information: Yasmin D Souza

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