d - Asia Today International

➔ FROM PAGE 10
countries such as China – which has enjoyed a
steady large inflow of direct foreign investment.
Indeed, by some estimates, about 60 per cent of
China’s exports are generated by foreignowned
firms, says the ADB. Foreign firms
account for 86 per cent of exports from tiny
economies like Singapore, and for 73 per cent
for Malaysia.
Estimates of export-sales ratios of manufacturing
establishments distinguished by foreign
ownership have been made in Indonesia,
Thailand and Vietnam. Export propensities of
firms with 90 per cent or greater foreign ownership
shares exceed 50 per cent in all three countries.
In contrast, local firms tend to export an
average of less than 10 per cent of sales, and
firms with intermediate foreign ownership
shares export about 25 per cent of sales.
As many as 300 bilateral trade agreements,
including FTAs, are expected to come into force
by the end of this year. Of these, about 36
involve Asian countries.
Before 1995, only three developing Asian
countries were party to bilateral FTAs, notes the
ADB in a recent paper, Routes for Asia's trade.
By 2005, 27 agreements had been notified, with
a much bigger number of other agreements in
negotiation or under consideration.
Singapore, a free port, but with an economy
totally dependent on external trade, has been
the most proactive in negotiating such agreements.
Singapore now has a trade agreement
with 11 trading partners, including Japan,
Australia, the US and Singapore.
Most significant is the switch in Australia's
trade policy from multilateral to bilateral.
Australia has now completed four FTAs – with
Singapore, the US, Thailand and New Zealand.
Australia and New Zealand negotiated their
Closer Economic Relations (CER) agreement
more than two decades ago.
Generally, trade officials say FTAs are a useful
means of breaking into new markets.
Australian trade officials believe implementation
of the FTA with Thailand has contributed
to a boost in bilateral trade. According to statistics
from Australia’s Department of Trade and
Foreign Affairs, bilateral trade rose to AUD8.1
billion in 2004/05 from AUD6.1 billion the previous
financial year and AUD4.9 billion in 2000-
01. Australia's deficit with Thailand shrank
from AUD1.2 billion in 2003-04 to AUD302 million
last financial year. As more tariff cuts are
phased in, exporters hope to sell more to
Thailand. However, looking at raw trade figures,
Australia's FTA with Singapore has not produced
a lift in exports. If anything, Australia's
exports to Singapore have reversed. Exports
totalled AUD6 billion in 2000/01 and dropped to
AUD3.3 billion in 2004/05. Australia’s deficit
with Singapore rose from AUD2 billion to
AUD3.9 billion in the same period.
Similarly, Australia’s trade performance with
the US has not shown many gains. Australian
exports have been steady at AUD9.4 billion in
the last two financial years. Imports from the US
also remained relatively stable at AUD21 billion
last financial year. Far from being disheartened,
Australia is firmly on track with bilateral FTAs,
currently negotiating with China, Malaysia, the
United Arab Emirates and Japan. Australia and
New Zealand are negotiating with ASEAN to
link CER to the ASEAN Free Trade Agreement
(AFTA).
It should, however, be said that developed
GLOBAL TRADE
❝ Developed economies
also look to FTAs for
access to the trade partners’
services sector.
Services trade is growing
rapidly ❞
economies also look to FTAs for access to the
trade partners' services sector. Services trade is
growing rapidly, and countries like Australia
and Singapore see themselves as key providers
of financial end professional services.
Indeed, the key concern of Hong Kong in pursuing
a Closer Economic Partnership Agreement
(CEPA) with the Mainland has been to
access China’s services sector –in distribution,
retail, professional services and so on. Now
moving on to the fourth phase (CEPA IV), the
bilateral agreement is focussing on broadening
the liberalisation of more service sectors.
Japan has either a free trade agreement or a
preferential trade pact with five countries, while
South Korea has arrangements with three countries.
South Korea has recently begun negotiating
an FTA with the US. Despite its obvious
preference to stick to the multilateral arena,
Malaysia, too, has begun bilateral negotiations
with the US, New Zealand and Pakistan.
China is seeking to play a more central role in
East Asia, and was an early proponent of the
bilateral free trade agreement, in addition to the
more ambitious pan-East Asian initiative which
would also involve Japan, Korea with ASEAN,
in a forum known as ASEAN plus 3.
TRADE ON EDGE
➔ FROM PAGE 9
months in itself. Mandelson says the failure to
meet the April 30 deadline is due to differences
in the analysis of the relative value and weight,
in market access terms, of what parties are
offering.
For example, he says, the EU believes sincerely
that it is offering considerably more raw
agricultural market access than the big agricultural
exporters, notably the US and Brazil, are
prepared to acknowledge.
Similarly, he says Brazil and other G20 countries
argue that what they are offering in industrial
market access is worth more than the EU
and the US believe.
This is because, principally G20 negotiators
argue that reducing the ceilings limiting their
tariffs -- as opposed to the tariff themselves -- is
worth much more economically than the marginal
cuts in certain applied tariffs they are also
offering, he says.
"There is a real difference of opinion
between developed and developing countries
about how we should calibrate the levels of
ambitions between agricultural and industrial
market access," says Mandelson. He sums up
the differences as “conceptual, analytic and, to
a certain extent, ideological".
If Doha was to fail, it would not be the end of
world trade. But most certainly, smaller countries
which have been riding on the coat-tails
of the WTO could find themselves
increasingly marginalised.
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