平和
和平
평화
ASIA
13 May 2016
Stephen Groff, Vice President, Asian Development Bank (ADB)

Reviving Asia-Europe Economic Cooperation

Liberalisation of trade will be necessary to revive the flagging links between Asia and Europe, reports John West.

According to discussions at the 2016 Asian Development Bank Annual Meeting in Frankfurt, liberalisation of trade and FDI, along with increased investment in Asian infrastructure and human capital, will be necessary to revive the flagging trade and FDI links between Asia and Europe.

In the couple of decades prior to 2010, there was a dramatic increase in trade and FDI between Europe and Asia. But trade growth has since been sluggish, while FDI has become more volatile. A panel discussion discussed the main causes, and what should be done to revive trade and FDI between these two big regions.

“A combination of cyclical and structural factors has pulled down the growth in trade and FDI” said Stephen Groff, Vice President at the Asian Development Bank. “The global financial crisis has had a big impact, together with the structural slowdown in the Chinese economy”. Mohammad Ishaq Dar, Pakistan’s Minister for Finance, Revenue, Economic Affairs, Statistics and Privatization, highlighted the impact of the generalised slowdown in world trade since the global financial crisis.

“Earlier reductions in Asian import tariffs drove much of the increased trade, but the benefits of these tariff reductions have now been exhausted”, suggested Pierre Amilhat, a Director from the European Commission’s Directorate General for International Cooperation and Development. “It is now time for a new phase of trade liberalisation, especially with ASEAN, the bloc of Southeast Asian countries, which has the potential to be a new source of growth, said Mr Amilhat. But as he explained, this will require attacking non-tariff barriers, which are more complex. The European Commission explored launching trade negotiations with ASEAN, but it proved too difficult. It is now resorting to bilateral trade negotiations with individual ASEAN countries.

Mr Groff added that “many Asian countries also need to improve their logistics, connectivity and infrastructure to support renewed growth in trade and FDI”. In this context, projects by the Asian Development Bank, and the new Asian Infrastructure Investment Bank can support the liberalisation of trade and FDI. Liqun Jin, President of the Asian Infrastructure Investment Bank, noted that “many smaller Asian countries had not even benefited from the earlier boom in Asia-Europe trade and FDI due to their poor connectivity”.
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In a separate interview, Bart Édes, the Asian Development Bank’s director for social development, governance and gender, made a number of suggestions for improving emerging Asia’s attractiveness for FDI. “It is imperative for Asia’s emerging economies to improve the education and skills of their populations, especially through technical and vocational education and training, to be competitive and receive more FDI”, said Mr Édes. “They cannot just rely on low-cost labour to increase their productivity and move up the value chain”.

Mr Édes stressed in particular “the necessity of giving more access to education and training to emerging Asia’s women, who in most cases suffer from discrimination”. He also emphasised the importance of fostering more healthy workers. “Most governments in emerging Asia spend very little on healthcare”, added Mr Édes. “Improving Asia’s weak and fragmented social protection systems could also be helpful.”

Mr Édes said that “ASEAN countries have much to gain by allowing freer cross-border movement of skilled labour in the context of the recently established ASEAN Economic Community”. He also highlighted the massive potential of greater use information and communications technology in government administration to eliminate red tape and improve the ease of doing business.

Acknowledgements

An abridged version of this article, written by John West, was first published by FDI-Intelligence magazine on 10 May, 2016.
Tags: asia, adb, trade and FDI, stephen groff

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