By Ake-Aroon Auansakul
Bangkok Post
Trade expansion in international markets is a key strategy to boost economic growth and eradicate poverty for many countries. In line with this expectation, Thailand and its neighbours in the Greater Mekong Subregion (GMS) have attempted to establish free trade areas with others in multilateral, regional and bilateral forums such as Asean-Afta, WTO, Bimstec, and other individual bilateral FTAs. The idea is that trade-related cost reductions through the abolition and/or reduction of trade and non-trade barriers will help increase export competitiveness and intraregional trade, while allowing better access to world markets.
The GMS consists of Thailand, Cambodia, Burma, Laos, Vietnam and Yunnan province in southern China. All except China are also members of Asean. All but Burma and Laos are members of the WTO. Due to differences in levels of economic development, more developed Asean members (Thailand, Singapore, Malaysia, Brunei, Indonesia and the Philippines) have granted special tariff privileges, greater market access and other preferential trade treatment to the less developed CLMV countries (Cambodia, Laos, Myanmar [Burma], Vietnam) under the Asean Integrated System of Preferences programme.
Thailand, in particular, has extended special privileges. These include no taxes or quotas on cross-border imports of agricultural products (e.g., maize, soybeans, peanut, mungbeans, and eucalyptus logs) from the three countries that share borders with Thailand (Cambodia, Laos, Burma) under the Ayerawady-Chao Phraya-Mekong Economic Co-operation Strategy or Acmecs. Similarly, Thailand and China have a special government-to-government trade deal involving dried longan for weaponry.
What the governments of the GMS countries have been trying to do is to expand trade with members and the world outside for the benefits of individual countries' economic development and to reduce intra-country income disparities. Their past efforts may have been more or less successful.
Now that Vietnam has joined the WTO, it is worth reviewing the current status of GMS intraregional trade. The knowledge obtained could also be used as a basis for future evaluation and recommendations as Vietnam, China and Cambodia become fully integrated into the WTO system in years to come.
This paper is the first part of a series. It will present first a review of past development efforts in the subregion. The next reports will portray the status of intra-regional trade among countries in the GMS, followed by relevant recommendations to increase trade.
Past development: The favourable growth conditions in the CLMV countries and Yunnan in recent years resulted mainly from a positive effect of opening up the countries more to a market economy and liberal trade systems. The economic policies, particularly of China, Cambodia, Vietnam and Laos, have been transformed from centrally planned or command systems toward market economies. As a result, domestic production, consumption, investment, and international trade have expanded satisfactorily, as reflected in the economic growth rates of each country.
Although average per capita incomes in the GMS countries have been on the rise, they are still low in comparison to average per capita income of most non-GMS countries. There is a growing income inequality not only between the regions but also within the GMS. Burma, Laos, and Cambodia are classified as the least-developed countries where poverty and food insecurity remain significant problems to be solved, especially for isolated people and communities in highland areas and along borders.
Yet there is room for growth and development in the CLMV countries based on past performance and availability and abundance of natural forests, minerals, hydroelectric power, tourism resources and so on, that could be utilised for further development.
Opportunity for trade- and investment-induced growth expansion is also possible as a result of further implementation of market liberalisation policies.To successfully grasp this growth opportunity, however, the countries seriously need to formulate and implement policies, programmes and measures to develop and provide adequate basic infrastructures (e.g., roads, logistics, transport, telecommunications, powers, other public utilities, etc), increase and upgrade number of qualified human resources, and revise rules and regulations that facilitate trade, investment and development.
Ake-Aroon Auansakul is director of the research division at the International Institute for Trade and Development. The opinions expressed here are his own.
The GMS consists of Thailand, Cambodia, Burma, Laos, Vietnam and Yunnan province in southern China. All except China are also members of Asean. All but Burma and Laos are members of the WTO. Due to differences in levels of economic development, more developed Asean members (Thailand, Singapore, Malaysia, Brunei, Indonesia and the Philippines) have granted special tariff privileges, greater market access and other preferential trade treatment to the less developed CLMV countries (Cambodia, Laos, Myanmar [Burma], Vietnam) under the Asean Integrated System of Preferences programme.
Thailand, in particular, has extended special privileges. These include no taxes or quotas on cross-border imports of agricultural products (e.g., maize, soybeans, peanut, mungbeans, and eucalyptus logs) from the three countries that share borders with Thailand (Cambodia, Laos, Burma) under the Ayerawady-Chao Phraya-Mekong Economic Co-operation Strategy or Acmecs. Similarly, Thailand and China have a special government-to-government trade deal involving dried longan for weaponry.
What the governments of the GMS countries have been trying to do is to expand trade with members and the world outside for the benefits of individual countries' economic development and to reduce intra-country income disparities. Their past efforts may have been more or less successful.
Now that Vietnam has joined the WTO, it is worth reviewing the current status of GMS intraregional trade. The knowledge obtained could also be used as a basis for future evaluation and recommendations as Vietnam, China and Cambodia become fully integrated into the WTO system in years to come.
This paper is the first part of a series. It will present first a review of past development efforts in the subregion. The next reports will portray the status of intra-regional trade among countries in the GMS, followed by relevant recommendations to increase trade.
Past development: The favourable growth conditions in the CLMV countries and Yunnan in recent years resulted mainly from a positive effect of opening up the countries more to a market economy and liberal trade systems. The economic policies, particularly of China, Cambodia, Vietnam and Laos, have been transformed from centrally planned or command systems toward market economies. As a result, domestic production, consumption, investment, and international trade have expanded satisfactorily, as reflected in the economic growth rates of each country.
Although average per capita incomes in the GMS countries have been on the rise, they are still low in comparison to average per capita income of most non-GMS countries. There is a growing income inequality not only between the regions but also within the GMS. Burma, Laos, and Cambodia are classified as the least-developed countries where poverty and food insecurity remain significant problems to be solved, especially for isolated people and communities in highland areas and along borders.
Yet there is room for growth and development in the CLMV countries based on past performance and availability and abundance of natural forests, minerals, hydroelectric power, tourism resources and so on, that could be utilised for further development.
Opportunity for trade- and investment-induced growth expansion is also possible as a result of further implementation of market liberalisation policies.To successfully grasp this growth opportunity, however, the countries seriously need to formulate and implement policies, programmes and measures to develop and provide adequate basic infrastructures (e.g., roads, logistics, transport, telecommunications, powers, other public utilities, etc), increase and upgrade number of qualified human resources, and revise rules and regulations that facilitate trade, investment and development.
Ake-Aroon Auansakul is director of the research division at the International Institute for Trade and Development. The opinions expressed here are his own.
1 comment:
Yes yes yes, trade is music to
my ears, go go go khmer people.
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