Aid For Trade in Asia and the Pacific: Leveraging Trade and Digital Agreements for Sustainable Development



Asian Development Bank

Trade agreements played a key role in maintaining economic activity during the pandemic and will continue to do so in the future. The region is home to mega-regional trade agreements—the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership—long with many bilateral and regional trade agreements. Twelve new agreements entered into force during COVID-19. Five other agreements were signed or concluded negotiations. Trade under trade agreements was more resilient than trade not under trade agreements. The potential for economic growth under trade agreements is enormous if countries are able to (i) benefit from them, (ii) negotiate access on favorable terms, and (iii) enhance regulatory convergence.

Aid for trade is needed to help identify the costs and benefits of trade agreements. Amid stalemate at the World Trade Organization (WTO), many countries now lack a benchmark from which to assess the costs and benefits of the new agreements. In many regions, regional trade agreements infamously offer a “noodle bowl” of overlapping rules and regulations. Some agreements liberalize trade rules, others less so; the difference is often in the fine print of the agreements on rules of origin, cumulation, nontariff measures, and a host of other regulatory issues.

Aid for trade can help regional trade grow and develop by using better-evidenced approaches to the design, negotiation, and implementation of trade agreements. Countries enter into trade agreements hoping to participate in the most effective trade regimes. However, new agreements do not always bring additional market access over the existing ones, resulting in low preference uptake. Regulatory convergence, a key element in attracting investment and building digital capacity, is even more opaque, and much more work is needed to determine which agreements improve convergence and coherence and which do not.

Aid for trade should help make trade agreements transparent. Trade agreements should be quantified and assessed for their contribution to growth and development, and their impact on inequality and sustainability. Governments need to have a better idea of best practices in negotiating and implementing trade agreements. Small, medium-sized, and even micro enterprises, so important to Asia and the Pacific, need user-friendly information to take advantage of regional trade agreements. Aid for trade could shift from explaining trade liberalization and trade agreements to a more rigorous, research-based approach. Engaging experts, aid for trade could support activities to (i) quantify and assess costs and benefits of existing and new agreements and their potential for economic growth, (ii) estimate preference utilization, and (iii) assess degrees of regulatory convergence.


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