Economic Reporter :
Regional integration impacts on trade facilitation in several ways as it helps inclusive growth and poverty reduction, reallocate capital and labour towards sectors holding comparative advantage, according to the editorial of the current News Bulletin of International Chamber of Commerce-Bangladesh (ICCB) released on Tuesday.
Regional integration is a process in which neighbouring states enter into an agreement in order to enhance cooperation through common institutions and rules, it said.
The ICCB said trade facilitation and regional integration are two important factors for achieving the United Nations Sustainable Development Goals (SDGs).
The beneficial links between trade and investment catalyses economic transformation, job creation, and skill development — which support SDG 8 (promoting decent work and economic growth), SDG 9 (building resilient infrastructure, promoting inclusive and sustainable industrialisation and fostering innovation), SDG 10 (reducing inequality within and among countries), and SDG 17 (revitalised and enhanced global partnership).
Strengthening regional integration for trade facilitation is particularly crucial for three reasons: it can foster economic diversification and transformation, increase resilience to global economic shocks, and generate significant economies of scale through the widening of markets, said the ICCB.
Trade facilitation has a direct impact on trade costs and an indirect impact on the price of traded goods; it increases trade flows and ultimately leads to higher growth.
Trade facilitation eases the cross-border movement of goods by cutting costs and simplifying trade procedures, it said.
Negotiations on the Trade Facilitation Agreement (TFA) were finalised during the WTO Ministerial Conference held in Bali in December 2013.
However, it took almost three years for TFA to become effective on February 22 last after two-thirds of the WTO members ratified the agreement.
Implementation of the TFA is supposed to promote Customs improvements, cross-border cooperation through technical assistance and capacity building by determining implementation schedules and the type of assistance needed to meet them.
One has to wait and see how long it will take to make the TFA operational, Bangladesh chapter of the global body said.
According to experts, furthering the case for regional approaches, cooperation on many aspects of trade facilitation makes sense from an economic point of view.
According to World Bank study, South Asia is one of the most dynamic regions in the world, with a population of 1.67 billion and economic growth of 7.1 percent over the last decade. But despite recent shifts, historical political tensions, trust deficit, cross-border conflicts and security concerns contribute to a low-level equilibrium.
At present, South Asia is one of the least integrated regions. Intra-regional trade accounts for only 5 percent of South Asia’s total trade, compared to 25 percent in Asean. Intra-regional investment is smaller than 1 percent of overall investment.
The main reasons behind less integration in South Asia, according to the World Bank, are high trade costs and investment restrictions, insufficient policy-relevant analytical work on gains of both trade and investment.
