Doha Round deemed ‘debt-free’ way to stimulate global economy

CEBU, Philippines - Describing bilateral and regional trade agreements (BRTAs) as only the second option, Asian industry leaders considered the completion of the Doha Development Round as a “debt-free” approach of stimulating the global economy.

The failure to conclude the comprehensive World Trade Organization (WTO) Doha Round is reported to pave the way for the proliferation of bilateral and plurilateral free trade agreements (FTAs) worldwide.

Australian Chamber of Commerce and Industry (ACCI) Trade and International Affairs director Bryan Clark said billions of dollars of economic stimulus would arise while modern challenges would be raised during business talks once the Doha round could be finalized.

“WTO is the main game. FTAs have a place, but they are a second best option or at least worst and they have plenty of detractors,” he said.

He added that it could also lead to advance talks through a trade facilitation agreement and tackle on new areas of interest like services which are currently shut out of the talks and are part of a side agreement.

As the WTO Doha Round has been delayed, he cited that there are now over 400 BRTAs among countries around the world.

While they may improve trade between parties, Clark described FTAs as hardly “free” and “preferential” since they specifically-designed to exclude other parties using “rules of origin”.

These rules of origin, he said, add cost to business if the rules and their administrative procedures are not harmonized.

He further noted that FTAs which are WTO-compliant provide an opportunity to improve the trading relationship for the countries involved but could not solve all issues at hand.

“ACCI is increasingly concerned about the Asia – Pacific “noodle bowl”. Overlapping FTAs create complexity for business in compliance,” he said.

ACCI serves as Australia’s largest and most representative business advocate with 28 national industry associations and more than 350,000 businesses that operate in all industry sectors throughout metropolitan and regional Australia.

Clark then advised that FTAs should seek to improve the movement of people and their ability to work in the partner economies which are particularly relevant for service industries and multinational business development.

He added that BRTAs, given the right design, could be useful in advancing free trade.

He also said that talks between Europe and United States could be a signal of  a new opportunity to conclude Doha while the rules of origin should be harmonized.

Meanwhile, Asian Development Bank (ADB) Trade and Regional Cooperation lead economist Jayant Menon cited the impacts of bilateral agreements on regional trade and investments.

These include overall limited trade impact, very low FTA utilization, production networks that are driven by foreign direct investments, and more impact on repressed regime, he said.

He suggested consolidation and multilateralization as the two remedies to “noodle bowl” effect or the overlapping of regional trade agreements.

Based on the January 2013 data of Asia Regional Integration Center of the ADB, proposed FTAs accounted  for 19.4 percent of the share in the region; 29.2 percent were under negotiation; nine percent were signed but not yet in effect; and 42.4 percent of the FTAs in Asia were signed and are already effective.

The ASEAN countries plus People’s Republic of China, Japan, and the Republic of Korea have 104 bilateral FTAs while the ASEAN countries plus Australia, the People’s Republic of China, India, Japan, the Republic of Korea, and New Zealand have 130.

As of January 2013, Philippines has six proposed FTAs, two of which are under negotiation and seven are signed and in effect. — (FREEMAN)