Easing trade, investment barriers:
South Asia to reap benefits
Removing barriers to trade and investment will help advance
integration efforts in South Asia and deliver sweeping benefits to the
region, a new Asian Development Bank (ADB) study shows.
The study, Intraregional Trade and Investment in South Asia, prepared
by the ADB, in partnership with the Australian Agency for International
Development (AusAID), was one of four new publications on South Asia
launched at ADB headquarters in Manila.
South Asia has taken several steps to strengthen regional economic
ties, including the establishment of a South Asian Free Trade Area (SAFTA)
in 2006. But it remains one of the least integrated regions in the
world, with intra-regional trade still hamstrung by prohibitive tariffs
and duties, cumbersome border regulations and other restrictions.
The study, which uses an updated econometric model and taps industry
and country data,notes that cutting barriers to trade will deliver a
broad range of economic and welfare benefits across the region. This
includes an expansion of South Asia's key clothing and textiles sector,
which is expected to increase women's employment and decrease the gender
wage gap.To realize these gains, countries will need to put aside
historical political grievances and take steps to remove impediments to
trade, market access and foreign direct investment.
This should include reducing tariff and especially non tariff trade
barriers, expanding the scope of SAFTA to include trade in services and
investment, and focusing on major industries, such as textiles - where
the region has a strong comparative advantage - to demonstrate the
broader benefits of reform.
"In addition to reaping benefits of removing trade and investment
barriers, South Asia must look toward the immense potential of regional
cooperation and integration in other areas, including the financial
sector," said Director General of ADB's South Asia Department, Kunio
Senga. MANILA, PHILIPPINES `