Free-trade agreements cannot be credited for the increase in intra-Asian trade, as they are often restrictive in scope and difficult to implement, the Asian Development Bank (ADB) said yesterday.
Even though there were 190 FTAs involving at least one Asian country at the last count in January, only a small percentage of the region’s exporters and importers are using the agreements, the ADB said.
“There is a misperception about FTAs,” Iwan Azis, head of the the ADB’s Office of Regional Economic Integration, told reporters in Singapore.
“Is this increased trend of intra-Asian trade because of the growing number of FTAs in the region? My short answer is definitely no,” he said at the launch of the bank’s latest report, Asian Economic Integration Monitor.
Azis said the ADB had carried out a survey of how many importers and exporters in Asia were using the FTAs and the percentages were “very small.”
About 55 percent of Asia’s total trade was done within the region last year, up from 45 percent 10 years ago, he said, adding that the increase was mainly due to “unilateral liberalization” by economies.
It was driven by market conditions as Asian countries traded more with each other as the eurozone debt crisis and feeble US economic recovery curbed demand for the region’s exports.
However, Azis said that FTAs could in the future help boost intra-Asian trade if their conflicting provisions were harmonized and implemented.
“Yes, the number of FTAs has been growing [but] it’s becoming a noodle bowl,” he said.