Some Conclusions Fostering Trade through Private-Public Dialogue Expert Meeting on Regional Integration in Asia New Delhi, March 2007

2. Patterns of trade Role and impact of FTAs & RTAs Trade in goods performance Trade in services performance Role of Foreign Investment Public-private partnerships Implications Next Steps

3. 1. Patterns of trade in Asia - Over 50% of trade by countries in the region is within the region - China’s role as a major exporter and importer, as well as investor looms ever larger - When seen in terms of sub-regions, however, it is clear that within South Asia, intraregional trade is much more limited (6%). India’s major markets are now in East Asia 1. Patterns of trade in Asia - Over 50% of trade by countries in the region is within the region - China’s role as a major exporter and importer, as well as investor looms ever larger - When seen in terms of sub-regions, however, it is clear that within South Asia, intraregional trade is much more limited (6%). India’s major markets are now in East Asia

4. 2. Role and impact of FTAs and RTAs - Various questions were raised: does trade expand more as a result of trade agreements, or is their impact quite marginal in practice? Are they “weak and light”? - Is there such a proliferation of the noodle bowl that trade becomes more complicated and may as well revert to MFN principles? - Do trade agreement pose a threat to, or do they reinforce WTO agreements? -Strong case for “unilateralism”: at least as powerful as “bilateralism and multilateralism” 2. Role and impact of FTAs and RTAs - Various questions were raised: does trade expand more as a result of trade agreements, or is their impact quite marginal in practice? Are they “weak and light”? - Is there such a proliferation of the noodle bowl that trade becomes more complicated and may as well revert to MFN principles? - Do trade agreement pose a threat to, or do they reinforce WTO agreements? -Strong case for “unilateralism”: at least as powerful as “bilateralism and multilateralism”

5. - Could some of them eventually be ruled as illegal by WTO rules (which are currently couched in very by WTO rules (which are currently couched in very vague terms)? vague terms)? - Is the way forward to strengthen an enhanced East Asian trade market on one hand, an enhanced SAARC on the trade market on one hand, an enhanced SAARC on the other and build bridges between them? other and build bridges between them? - Or is the best way forward to build the East Asian summit (EAS) initiative encompassing 50% of the world’s (EAS) initiative encompassing 50% of the world’s population and comprising potentially the largest population and comprising potentially the largest economic bloc in the world? economic bloc in the world?

6. 3. Trade in goods performance - Degree of liberalization is critical. With some exceptions, East & Southeast Asia is more exceptions, East & Southeast Asia is more liberalized than South Asia. Some slowdown, but China racing ahead. liberalized than South Asia. Some slowdown, but China racing ahead. - Huge contrast between China and India in respect of “ease of trading across borders” (38th and 139th in world ranking). Do more liberal economies lead to greater domestic inequalities?

7. -Other factors concern cross-border trade facilitation, which is much more inhibited within South Asia. Examples include transport restrictions, product standards, arbitrary costs (“speed payments”) - In South Asia, India is very dominant. In East Asia, China is very dominant. However political relations in South Asia inhibit more trade cooperation

8. 4. Trade in services performance -Services trade is dependent on the state of economic development of countries -Services trade is, hither to, market driven with little contribution by regional or multilateral trade agreements -Transparency and appropriate regulatory regimes has more impact on promoting services trade than pure market access commitments - Sequencing of service liberalization, bilateral versus multilateral liberalization are other issues which merit attention

9. 5. Role of Foreign Investment Partly as a result of more defensive investment regimes and less integrated regional markets, FDI into South Asia has been at much lower levels than in East and Southeast AsiaPartly as a result of more defensive investment regimes and less integrated regional markets, FDI into South Asia has been at much lower levels than in East and Southeast Asia - Outward investments - particularly in India and Pakistan - are controlled

10. -“Without further liberalization of investment, South Asia will not benefit from industrial restructuring and more trade” - Patterns of investment in East and Southeast Asia take a more regional perspective, helping to develop region wide value chains (e.g. car manufacturing)

11. -A constructive relationship between Governments and private sector is indispensable for successful exporting - In East and Southeast Asia the relationship appears to be more constructive than in South Asia, where the private sector identifies some Government regulations as obstructive to trade 6. Public-private partnerships

12. Implications - More trade facilitation (standards, documentation, rules, connectivity, etc.) and more predictability -Joint development of infrastructure and power -Freer movement of people across borders -More cooperation among business chambers

13. -Closer collaboration and better understanding between business and Government e.g. via trade support institutions -More liberalization and state regulation in both trade and investment - Key role for Elder Brother India to play constructive role, both through SAARC and regionally

14. Next steps: ITC will: Synthesize the findings of the conference into a user friendly booklet for use of business representativesSynthesize the findings of the conference into a user friendly booklet for use of business representatives -Distribute the booklet world wide through the World Trade Net established by ITC for partnership with private sector -Be ready to provide any assistance sought by private sector in promoting the public-private dialogue on international trade negotiations