Intra-Asean, open trade vital to region’s post-Covid-19 recovery: Expert

PETALING JAYA: In the wake of the Covid-19 pandemic, Asean may be able to draw some lessons from the European Union (EU) for its economic recovery.

CIMB Asean Research Institute (Cari) senior fellow and partner at FratiniVergano - European lawyers Paolo R Vergano said Asean cannot depend as much on external exports post-Covid-19.

He argued that for the open economies of Asean, a significant drop in global trade may provide the impetus for policymakers to re-evaluate the bloc’s current overreliance on external export markets.

He stressed there is much room for improvement with intra-Asean merchandise trade constituting 23% of total trade in the region in 2018, and pointed out that intra-regional trade could provide a hedge against future external trade shocks.

Cari chairman Tan Sri Dr Munir Majid said the real lessons to heed from Covid-19, especially for middle-powers like Asean and the EU, should be the continuing relevance of global openness and free trade which will be particularly pertinent as countries struggle to return to pre-Covid-19 growth numbers while having to respond to increasing public skepticism over the benefits of globalisation.

“Covid-19 should ultimately serve as a wake-up call for Asean that greater regional integration is not some faraway luxury to consider, but increasingly a strategic necessity for a region that wants to preserve its economic vitality and geostrategic independence,” he said when hosting a Cari webinar, titled “How Can Asean Bounce Back: An EU Perspective”.

Another lesson to draw from would be regulatory transparency. Vergano said there are certain EU practices that are in line with those that Asean has already committed such as trade policies and preferential trade agreements.

“Regulatory transparency, for example, will be one of the key factors in facilitating greater regional economic integration, just as it has been for the EU. Traders wishing to engage in cross-border trade must first be aware of the existing rules and opportunities, and understand their rights,“ said Vergano.

There are also existing mechanisms that require greater utilisation to boost intra-Asean trade. For instance, as part of their efforts to foster greater intra-regional trade through regulatory transparency, Vergano noted that Asean states have promoted the Asean Solutions for Investments, Services and Trade (Assist).

In addition, free and open trade remains vital for both Asean and EU economies. While public lockdowns and travel restrictions have inevitably caused downward pressures on international trade, maintaining free and open trade has been vital for both Asean and EU economies to remain afloat and ensure continued access to vital goods.

He observed that for both blocs, preserving supply chain connectivity (particularly internally) has been identified by both Asean and the EU as key goals in their larger response to Covid-19.

source https://www.thesundaily.my/business/intra-asean-open-trade-vital-to-region-s-post-covid-19-recovery-expert-JM2619658