Freedom to Trade in South and East Asia
The freedom to sell one’s extra output and services, and
the freedom to buy other people’s goods and services, is part of human nature.
Humanity’s economic, social and cultural advancement from the primitive to
modern times was made possible only with their freedom to trade and freedom of
entrepreneurship and innovation.
There are various measurements of freedom to trade of
countries today. One of which is Fraser Institute’s Economic Freedom of the World
(EFW) annual reports.
The EFW is composed of five areas: (1) Size of government, (2)
Legal system and property rights, (3) Sound money, (4) Freedom to trade
internationally, and (5) Regulation. And
area 4 is composed of four sub-areas, shown in the tables below.
The EFW employs a scoring system of 0 to 10, where zero is totally
unfree and 10 means there is full economic freedom. Thus, high revenues from trade taxes, high
tariff, wide variations and deviation of tariff rates mean low score. And more
regulatory barriers, more NTBs also mean low score, low degrees of economic
freedom for entrepreneurs.
In South Asia, Nepal and Bangladesh
have scored better than India, Sri Lanka and Pakistan. Nepal in particular
scored 122nd out of 157 countries. It ranked high in sub-areas (a),
and average or mean tariff rate with just 12.2 percent, but it scored low in
sub-areas (b) regulatory trade barriers and in (d) controls of
movement of capital and people.
India ranked high in revenues from trade
taxes and mean tariff rate, but was pulled down by big standard deviation of
tariff rates, and controls of movement of goods and people.
Source: Fraser Institute, EFW 2015 Report,
To serve as comparison, four ASEAN countries are also studied. The
10 countries in the ASEAN generally have low tariff rates, with scores of 8 to
almost 10 (Singapore and Brunei). This is a reflection of the accelerated trade
liberalization in goods in the region.
There
are problems of course, like having wide variations and high standard
deviations in tariff rates, like Singapore, Malaysia, Thailand and Vietnam;
they scored below 6.
The
9 countries above except Singapore and Malaysia scored below 6, rather low, in
NTBs. EFW used data from the WEF’s Global Competitiveness Report, survey on
NTBs.
ASEAN
countries generally have low tariff rates, with scores of 8 to almost 10
(Singapore and Brunei). This is a reflection of the accelerated trade
liberalization in goods in the region.
But
there are problems too, like having wide variations and high standard
deviations in tariff rates, like Singapore, Malaysia, Thailand and Vietnam;
they scored below 6. EFW used data from the WEF’s Global Competitiveness
Report, survey on NTBs.
Possible lesson for Asian economies, continue reducing
import tariff rates….
-----------
See also:
Business 360-26, Nepal earthquake and lessons from it, July 12, 2015
Business 360-27, Public health in Asia, July 18, 2015
Business 360-27, Public health in Asia, July 18, 2015
Business 360-28, FDIs in South and East Asia, August 22, 2015
Business 360-29, Low oil prices and energy development in South Asia, October 25, 2015
Free Trade 54, Eco-protectionism at APEC 2015 meeting, September 28, 2015
Free Trade 55, TPP Agreement, finally, October 06, 2015
No comments:
Post a Comment