Openness crucial to speeding up Asia-Pacific recovery from pandemic via free trade

An open Asia-Pacific economy with broader free trade will be crucial for the region's economic recovery from COVID-19 and its future prosperity, say international leaders, organizations and experts.

The 28th Asia-Pacific Economic Cooperation Economic Leaders' Meeting, held on Nov 12, had emphasized the critical role played by trade and investment in addressing the impact of the COVID-19 pandemic and ensuring stronger recovery of Asia-Pacific economies.

"Trade should be a pillar for the development and future prosperity of all our people," said the leaders' declaration, issued on Nov 12.

Chinese President Xi Jinping, addressing the APEC meeting via video link, called for fostering an open Asia-Pacific economy, saying openness is the lifeline of regional cooperation.

And in a report published on Nov 16, World Trade Organization said multilateral and regional trade cooperation is critical to the global response to future crises.

The WTO report forecasts global economic output to recover by 5.3 percent in 2021. "This has been, in part, thanks to the robust recovery in merchandise trade, which is set to rise by 8 percent in 2021," the WTO said.

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The report also found that GDP recovered faster in countries with strong pre-existing trade linkages to countries with few COVID-19 cases, underscoring the mutual supportiveness of trade, economic growth and risk management.

Trade facilitation initiatives in the Asia-Pacific region will help ease the negative impact of the pandemic and maintain cross-border flow of goods, according to a report released in October by the United Nations Economic and Social Commission for Asia and the Pacific.

Noting the importance of prompt global and regional support and cooperation – highlighted by the pandemic – to ensure continuous supplies of critical goods, the UNESCAP report said about two-thirds of the APEC member economies implemented new trade facilitation measures to mitigate supply chain disruptions.

Many countries in the region also accelerated measures related to transparency and institutional coordination, simplified customs procedures and expedited clearance, the report said.

Many regional countries are small countries, so they cannot achieve (a high level of) efficiency in production and resource allocation.

Wisarn Pupphavesa, senior advisor of international economic relations at Thailand Development Research Institute

Noting the Asia-Pacific's large collective population and expansive range of resources, Wisarn Pupphavesa, senior advisor of international economic relations at Thailand Development Research Institute, said openness in the region will mean better allocation of its resources and more efficient production.

"Many regional countries are small countries, so they cannot achieve (a high level of) efficiency in production and resource allocation," Wisarn said, adding that individual countries, especially the smaller ones, will benefit from opening-up, even unilaterally.

"A lot of countries will probably need a lot more free and open trade moving forward, given that we have got quite a lot of setbacks (during the pandemic)," said Siah Hwee Ang, a professor of international business and strategy and chair in Business in Asia at Victoria University of Wellington.

"You really have to start trading with each other so that as a whole system, the region will become stronger," Ang said, noting the Asia-Pacific region is likely to be the only region that will record positive growth in the next two to three years, while the rest of the world will rely on the region's growth.

Wisarn said countries in the Asia-Pacific region should not stop their efforts for openness and should work to achieve broader free trade of the entire region.

Manu Bhaskaran, CEO of Centennial Asia Advisors, an economic consultancy in Singapore, said it is important that the momentum for free trade be maintained as much as possible at a time of growing protectionism and more inward policies by bigger economies.

"The economic record shows clearly how trade has been such a powerful engine of growth for the region," Bhaskaran said, adding China's application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership – an extensive trade pact spanning intellectual property protection, cross-border data flows and e-commerce – will contribute greatly to promoting free and open trade.

Meanwhile, the Regional Comprehensive Economic Partnership, signed by the Association of Southeast Asian Nations and its five major trading partners including China, is set to take effect on Jan 1, 2022. The world's biggest free trade pact to date, it covers about 30 percent of the world's population and accounts for one-third of global GDP.

Dipinder Singh Randhawa, adjunct senior fellow at the S. Rajaratnam School of International Studies at Nanyang Technological University in Singapore, said RCEP sends a strong signal to the rest of the world that at a time when multilateralism is in retreat, the Asia-Pacific region is open and willing to commit itself to free trade.

Yet Randhawa said the pandemic "clearly bared open the fault lines underlying the multilateral trading system".

"Any kind of restrictions on trade that are agreed upon at the WTO can be overridden on account of 'national security' considerations," Randhawa said.

While rich countries have been averse to sharing their vaccines, the World Health Organization also failed to persuade major economies to collaborate for the sake of common interests, making endeavors such as the COVAX facility fall far short of expectations, he said.

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Noting discussions over so-called vaccine diplomacy, which implies that some countries are trying to win hearts by helping others with vaccines, Ang from Victoria University said people are being overly political about the issue.

"If some countries are being accused of helping others … are we saying that maybe they shouldn't help?" Ang said, adding vaccine cooperation is chiefly about public health and the survival of mankind.

Such cooperation is badly needed by the world, Ang said, as about half the global population will remain unvaccinated by the end of this year. The distribution of COVID-19 vaccines and related medical products should be of greater focus and conducted in a cheaper and more accessible way, he said.

According to WHO records, more than 6.4 billion vaccine doses have now been administered globally, and almost one-third of the world's population is fully vaccinated against COVID-19.