Business views on trade agreements in Asia

World Trade Organization (WTO), which supervises and liberalizes international trades, has been working on renewing trade negotiations, Doha Development Round, for a while without much success. In the meantime, there have been many bilateral and regional free trade agreements by many governments especially in Asia. In general, free trade agreements, which are designed to reduce the barriers to trade, are believed to increase international trades. And, many believe that firms in export-oriented economies in Asia should be able to take advantage of it.

The Economist Intelligence Unit recently published very interesting survey results (For a full report, please visit this link) about views on free trade agreements among corporate executives in 8 Asia Pacific countries, and we would like to share key findings from the report. The findings are based on a survey conducted in Q1 2014 of senior executives from 800 companies in Australia, China, Hong Kong, India, Indonesia, Malaysia, Singapore, and Vietnam. More than 80% of respondents’ companies are small and medium sized companies with annual revenue of less than US$150M.

1. FTA usage rates are low. On average, the usage rate of the more than 50 FAs signed by these 8 countries is just 26%.JW Brief_20040815_Figure1

2. The complexity of FTAs, which comprise hundreds of pages of legal text, is the most common reason for not usingJW Brief_20040815_Figure2

3. FTAs do help increase exports for firms that use them. More than 85% of respondents report that their exports have increased as a result of FTAs that they use.JW Brief_20040815_Figure3

At JW Global Insight, we believe companies in any size should be able to take advantage of these free trade agreements to expand their markets. We also understand that many companies, especially small and medium enterprise, face many roadblocks that prevent them from capitalizing export/import opportunities. We are committed to deliver measurable business results to our clients by simplifying complexities in expanding business overseas. To find out more, please contact us at info@jwglobalinsight.com.