A flare-up of bilateral and regional free-trade agreements (FTAs) is creating webs of complexities and confusions for international business dealings, according to trade circles.
Asia-Pacific business leaders at a recent conference pointed out such problems stemming from a boom in free-trade accords concomitant with the present-day world trade regime.
They identified a gradual reduction in the value of such agreements to the commercial sector due to overlapping and inconsistent rules and administrative requirements.
Searching for pragmatic alternatives, the business barons proposed Free Trade Area for Indian Ocean Rim businesses and large regional preferential trade agreements as best option.
Such views were expressed at the 28th conference of the Confederation of Asia-Pacific Chambers of Commerce and Industry (CACCI), held in Kuala Lumpur, Malaysia, on September 17-19.
The Malaysian International Chamber of Commerce and Industry (MICCI), with the support of the National Chamber of Commerce and Industry of Malaysia (NCCIM), hosted the meet. It was attended by some 300 delegates from 22 Asia-Pacific countries.
The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), as a CACCI member, also attended the business conclave.
The CACCI endorsed a policy paper titled 'Trade Liberalisation and Facilitation' at the conference to work out best practices in doing business in the light of propositions made in it.
The CACCI Director-General, Victor C. Y. Tseng, sent recently the policy paper to the FBCCI and requested the apex trade body of Bangladesh to review and consider implementation of the recommended actions.
He also requested the FBCCI to submit the document to pertinent government bodies and pursue a dialogue with them so that they may be able to consider adopting the recommended measures.
From Bangladesh part, Obaidur Rahman, Managing Director of Dorasco Limited, and Golam Sarwar Milon, Chairman and Chief Executive Officer (CEO) of Penta Group, obtained the honour of lifetime special member at the conference. Â
Talking to the FE, Mr Obaidur Rahman, also budget commission member of the CACCI, said it is a very viable federal body that can help Asian and ASEAN countries establish an integrated information-sharing system.
 "Trade among the Asian countries is still low. Dissemination of intra-and inter-region information is needed so that respective trade bodies of the member-states can get necessary data on economic matters of other countries," he said.
FTA or PTA (preferential trade agreement) for the low-income countries like Bangladesh limits the scope for businesses to explore competitive prices in other countries, he said, pointing out the demerits of such deals.
 "The government needs internal revenue for carrying out development activities. In my point of view, I hardly found any win-win situation in those agreements, about which the economists can differ with me," he added. Â
He, rather, preferred attracting big foreign direct investment or joint-venture investment for Bangladesh in manufacturing, service and other sectors by ensuring infrastructure, utility services, lowering the cost of doing business and a peaceful law-and-order situation.
At the CACCI conference, various commentators coined various agreements as 'Spaghetti Bowl' for Asia-Pacific and America FTAs while "the Noodle Bowl" effect for Asia's FTAs.
The ASEAN Business Advisory Committee (ASEAN BAC) along with the Asian Development Bank and a number of independent studies have indicated that despite widespread government interest in free-trade agreements, utilisation by commercial companies is low.
 "There may be a number of reasons for this but awareness of the agreement features, if often, one reason for low use. But, similarly, difficulty in accessing the benefits is also cited as a reason for low participation," the paper says.
The trade-facilitation policy paper mentions that Australia and many Asian nations are now party to two other regional free-trade agreements in the Trans-Pacific Partnership (TPP) and now the Regional Comprehensive Economic Partnership (RCEP). Both involve largely the same group of Asian trading partners.
 "We are concerned that instead of a predictable harmonised system for trade and investment, each agreement could result in differing approaches covering largely the same markets, thus impacting negatively on business costs and reducing progress towards simplification and harmonisation of customs procedures," the CACCI leaders said.
They felt the need for encouraging and supporting government efforts in trade liberalisation and facilitation.
In December 2013, WTO members reached consensus on the Trade Facilitation Agreement (TFA) at the Ministerial Conference held in Bali, Indonesia. The TFA deals almost entirely with customs-related topics.
 "Unfortunately, recent WTO sessions failed to secure the adoption of the protocol on the Trade Facilitation Agreement," the CACCI leaders lamented in the policy statement.
They noted that in the absence of progress in the WTO, the governments across the Asian region have negotiated a number of bilateral and multilateral free-trade agreements in pursuit of improved trade and investment opportunities.
All this is done in hope of benefit for the national and regional economy, national political interests and, importantly, commercial sector.
Across these agreements, however, there are a range of administrative instruments in terms of both the methods for calculation to determine origin and also the documentary requirements, the CACCI found.
"Companies need to be aware of the differences in order to take advantage of the terms of the agreement and the documentary requirements. The requirement for knowledge and the document- handling process adds real costs to business," it said.
They think streamlining or harmonising with existing business practice reduces costs for business.
Variations across each FTA (exacerbated if the one country has multiple systems in place) increase the transaction costs to the commercial sector under any given FTA.
"Similarly we would imagine that customs costs also rise with variation in schemes, as officials receiving documents need to differentiate between applicable FTA's as the goods pass through the border,"Â the paper said.
As regards preferential rules of origin, Antoine Manga, Director of Trade and Tariff Directorate of the World Customs Organization (WCO), at the programme, emphasised that the growing complexity of various sets of preferential rules of origin could have harmful effects for the international trading system.
Customs administrations and the private sector had to cope with a plethora of different rules of origin contained in various trade agreements which sometimes are even overlapping, he observed.
Currently, FTAs do not necessarily incorporate the WTO Bali package, nor the WCO tools, into this subject.
The CACCI meet called for governments to work with industry groups, including exporters and importers, to better improve the outcomes in trade negotiations.
This serves the interests of co-opting business practice and promoting harmonisation of international trade.
 "CACCI should support establishment of and involvement in local trade-facilitation committees as required within the Bali package," the paper said.
The CACCI recommendations include rapidly implementing and ratifying the Bali Agreement on Trade Facilitation, reinforcing the standstill on protectionism and winding back barriers introduced since the implementation of the standstill, especially non-tariff barriers.
It also recommended developing country-specific supply-chain strategies, ensuring preferential trade agreements realising better business outcomes.
The CACCI urges the governments of its members to urgently adopt the protocol on the Trade Facilitation Agreement in the WTO.
 "Since no global consensus could be reached on the Trade Facilitation Agreement (TFA) at the last WTO meeting, participants agreed that the implementation of TFA could nevertheless be done by countries unilaterally," the paper said.
The forum recommended pursuing an agenda for Indian Ocean Rim (IOR) region business and trade facilitation at the World Bank by formulating Business and Trade Facilitation Regional Implementation Plan.
It also proposed establishment of an intra-private sector consensus in the region in order to educate private-sector cohorts on policy positions prior to high-level negotiations.
The CACCI leaders urged carrying out a feasibility study on the business travel card across IOR region, peer-to-peer learning mechanisms on customs procedures and documentation, registration of companies, and emulating the example of the Australian Trade Links as a platform for information sharing.
doulot_akter@yahoo.com