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New Chapter Asia-Pacific Trade Agreement : A Future Roadmap for the Decade
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New Chapter Asia-Pacific Trade Agreement : A Future Roadmap for the Decade

The Asia-Pacific Trade Agreement (APTA), formerly known as the Bangkok Agreement (1975-2005), is a regional preferential trade agreement (PTA) among developing countries in Asia and the Pacific region. The Agreement aims to promote its members' economic development through the adoption of mutually beneficial trade liberalization measures that contribute to regional trade expansion and economic cooperation. Over time it expanded its coverage from the initial negotiation of tariff concessions on trade in goods to at present negotiating liberalization in investment, services trade, and trade facilitation. The current members of APTA are Bangladesh, China, India, the Lao People's Democratic Republic, Mongolia, the Republic of Korea, and Sri Lanka.

Evolution of APTA

The initiation of APTA as a regional trade agreement (RTA) is rooted in the 1st Meeting of the Council of Ministers on Asia Economic Cooperation in 1963, convened by the United Nations Economic Commission for Asia and the Far East (ECAFE). The meeting aimed to initiate and promote regional cooperation through trade liberalization and expansion.

Accordingly, ESCAP recommended forming a Trade Negotiation Committee (TNC) to realize the Kabul Declaration, which convened for the first time in February 1972. After several TNC sessions, in July 1975, seven countries, namely Bangladesh, India, Lao People's Democratic Republic, the Republic of Korea, Sri Lanka, the Philippines, and Thailand, met in Bangkok and agreed to a list of products for reciprocal tariff reduction.
This resulted in the signing of the First Agreement on Trade Negotiations Among Developing Member Countries of ESCAP, known as the Bangkok Agreement. The Agreement was ratified by five of the seven countries, excluding the Philippines and Thailand. This Agreement has gained new momentum due to China's joining in 2001. In November 2005, the first session of the Ministerial Council of the Bangkok Agreement adopted the Agreement's revised text and renamed it "Asia-Pacific Trade Agreement."

Framework Agreements under APTA

  • The 'Framework Agreement on Trade Facilitation in APTA Participating States' was signed on December 15, 2009, to improve the efficiency of the processes associated with trade in goods across national borders by simplifying and harmonizing trade procedures and practices. It prescribes increasing transparency, consistency, simplicity, efficiency, harmonization, standardization, and enhanced cooperation among the Participating States. It broadly applies to all goods traded within the Participating States following their domestic laws, regulations, and administrative rules.
  • The 'Framework Agreement on the Promotion, Protection, and Liberalisation of Investment in APTA Participating States' was signed on December 15, 2009. The objectives of the Framework Agreement are to (a) increase the flow of investment among the Participating States; (b) promote them as attractive investment destinations and increase their competitiveness; (c) reduce all obstacles to investment flows, and the operation of investment projects; (d) strive towards a harmonized investment regime; and (e) promote free investment flows and transfer of technology.
  • The 'Framework Agreement on the Promotion and Liberalization of Trade in Services among APTA Participating States' was signed on August 24, 2011. This framework agreement aims to enhance economic cooperation in service sectors amongst Participating States to improve efficiency, strengthen competitiveness, diversify their production capacity, and supply and distribution services by their suppliers within and outside. It proposes substantially reducing restrictions to facilitate and liberalize trade in services among the Participating States.

Trade development, warehouse worker using technologies to manage international cargo.

Benefits of Joining APTA for Potential New Members

Preferential trade integrations have always been a driving feature of the world trading system; however, they experienced unprecedented growth over the last quarter century not only in terms of the number of RTAs but also the 'widened' and 'deepened' nature of such trade integration (WTO, 2011 and Claudia et al., 2017). Signed in 1975, APTA is the oldest preferential trade agreement among developing countries in the Asia-Pacific region and aspires to evolve as a Pan-Asian economic integration platform. The current members of APTA are Bangladesh, China, India, the Lao People's Democratic Republic, Mongolia, the Republic of Korea, and Sri Lanka; however, all developing member countries of ESCAP are eligible to accede to the Agreement. To realize the potential of being a Pan-Asia-Pacific agreement, APTA intends to expand its membership. This was mandated by the Second APTA Ministerial Council Declaration in 2007 and reaffirmed by its subsequent Ministerial Council Declarations. Members of APTA take benefits from:

  • Macroeconomic Performance
  • Structure and Direction of Trade
  • Trade Policies and Trade Agreements

Future Direction of APTA

The world has witnessed continuous growth in regional trade agreements (RTAs) and comprehensive economic cooperation agreements (CPAs). What used to be bilateral and intraregional economic engagements are now moving increasingly towards mega-trade blocks across continents and oceans. In this context, the future of economic and cooperation integration needs to be analyzed for the Asia-Pacific region, which has also been re-endorsed by the Ministerial Council of the Asia-Pacific Trade Agreement (APTA). Signed in 1975, APTA is the oldest preferential trade agreement among developing countries in the Asia-Pacific region, yet to realize its true potential. Is there a future perspective on the new chapter of the Asia-Pacific Trade Agreement (APTA)?

Potential for Goods Trade among APTA Participating States

Being one of the oldest regional economic groups and despite its high potential, APTA did not progress fast enough in terms of deepening and widening preferential trade among its Participating States as envisioned. This is mainly due to limited coverage of items in tariff concessions and the long period taken to conclude the rounds and accession of new members. It is essential to analyze the existing trade among APTA countries and the coverage of the current preferential tariff regime under APTA to realize its full potential.

Potential for Cooperation in Trade Facilitation

Trade facilitation – reducing and eliminating regulatory, procedural, and administrative barriers to trade and upgrading infrastructural and technical capacity – is increasingly regarded as a key factor for enhancing countries' and regions' competitiveness and economic development. Trade facilitation can further strengthen economic ties among APTA Participating States and augment their integration into the regional and global value chain.

Potential for Services Trade for the Participating States of APTA

The Least Developed Participating States of APTA have been provided greater flexibility regarding special and differential treatment for their specific commitments on market access, programs, and action plans under the Agreement. The Agreement also states that the Participating States will consider granting special concessions to these economies in their Schedules, Programmes, and Action Plans. Special consideration is also to be given to the LDPSs when they request technical assistance and cooperation arrangements designed to assist them in expanding their trade with other Participating States.

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