MANILA, Philippines – Moody’s Investors Service said yesterday the tariff liberalization among members of the Association of Southeast Asian Nations (Asean) is “credit positive” as this would increase trade activities and boost economic growth.
“Greater intra-regional trade is credit positive for the region given that growth in other key export markets, such as China, is slowing,” Rahul Ghosh, vice president and senior research analyst at Moody’s said in a report.
“The virtual elimination of cross-border tariffs has helped drive intra-regional trade to record highs… the relative strength of intra-Asean trade, which accounts for roughly 24.2 percent of the region’s total, will reduce the vulnerability of member states to external shocks,” he added.
Ghosh said Asean has earlier concluded a number of free trade agreement and other related arrangements since 2007. These include separate agreements signed under the Asean-Korea Free Trade Area, the Asean-Japan Comprehensive Economic Partnership, the Asean-Australia-New Zealand Free Trade Area, and an investment pact under the Asean-China Free Trade Area and the Asean-India Trade in Goods Agreement.
Aside from increase in trade, these arrangements also contributed to the increase in foreign direct investments to the region, the economist said.
“However, members of Asean have made little headway on a number of important elements of the AEC (ASEAN Economic Community) blueprint, including eliminating non-tariff barriers, and increasing regional labor mobility and financial liberalization,” Ghosh said.
Moody’s rater said there has been an increase in non-tariff barriers in Asia and even in other economies since the global financial crisis of 2008, bringing more impediments to trade activities.
Labor mobility, meanwhile, remains a stumbling block to the region’s integration as more members impose stricter immigration requirements, the report said.
“Furthermore, while economic integration will create employment opportunities for Asean workers, the International Labor Organization and Asian Development Bank note that they will not fully benefit unless they have appropriate skills and other necessary conditions are in place,” Ghosh said. –Kathleen Martin (The Philippine Star)
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