An update on Asia-Pacific economies’ preferential trade agreements (ESCAP Trade Insights: Issue No. 29)

An update on Asia-Pacific economies’ preferential trade agreements (ESCAP Trade Insights: Issue No. 29)

Date: 
Thursday, October 8, 2020
Type: 
Public information and advocacy materials
Abstract

  • The Asia-Pacific region continues to be the largest contributor to the worldwide build-up of Preferential Trade Agreements (PTAs). Looking at the stock of PTAs with at least one regional party, 183 trade agreements are in force, 15 are signed and pending ratification, and 98 are still under negotiation (as of September 2020).
  • A majority of PTAs go beyond the liberalization of trade in goods, with 54% of all enforced PTAs in the region covering both goods and services.
  • Bilateral PTAs account for approximately 78% of all PTAs in force. In terms of geographical coverage, 49% of all Asia-Pacific region PTAs are with economies outside of the region, which reinforces Asia-Pacific economies’ actively participation in dialogue partners within and outside the region.
  • Between January 2018 and September 2020, 23 new PTAs were signed that had at least one Asia-Pacific region economy. Of these, 11 were signed in 2018, 10 in 2019, and 2 in 2020 (as of September 2020).
  • The number of newly signed PTAs in the Asia-Pacific region has notably declined since the start of 2020. This was mostly due to the coronavirus disease 2019 (COVID-19) pandemic, which not only disrupted international trade flows, but also compromised trade negotiations and worldwide cooperation. From the 8 outstanding PTA initiatives started since January 2019 (7 intraregional and 1 extra regional) only 2 have commenced negotiations during 2020.
  • New trade agreements tend to be more comprehensive. Most new agreements signed in the region cover issues such as investment, labour standards, intellectual property rights, and environmental standards. In fact, all 11 agreements signed from 2019 to 2020 – except the EAEU-Serbia PTA – go beyond trade of goods liberalization.
  • The United Kingdom’s efforts to roll over its preferential arrangements, previously covered by the EU-third country trade agreements, after Brexit may raise the number (if not the coverage) of Comprehensive Economic Partnership Agreements (CEPA) in the region over the next few years. As of September 2020, the United Kingdom has signed agreements replicating elements of EU-third party agreements with selected Asia-Pacific economies, including the Pacific states (Fiji and Papua New Guinea), Georgia, the Republic of Korea, and Japan. The United Kingdom government is also in discussions to roll over the European Union preferential trade arrangement with Turkey and negotiate new agreements with Australia and New Zealand.
  • Trade agreements have increasingly included digital trade issues: 7 of the 12 trade agreements signed between 2019-2020 already include specific e-commerce provisions. Moreover, the first Digital Trade Agreement (DTA) was signed in 2019 between the United States and Japan. So far, the region has successfully signed 2 more DTAs and 1 more is under negotiation.
  • The Regional Comprehensive Economic Partnership (RCEP) is scheduled to be signed in November 2020 by all RCEP dialogue partners except India. Once it is, this will become the biggest free-trade agreement, covering 28% of the world’s GDP. However, uncertainties regarding India’s participation remain, hindering the realization of RCEP’s economic potential.

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