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Utilisation of Existing ASEAN FTAs by Micro-, Small and Medium-Sized Enterprises

ASEAN

This policy brief examines the extent to which micro-, small-, and medium-sized enterprises (MSMEs) have benefited from the conclusion of trade agreements involving ASEAN member states. Key findings:

  • ASEAN Member States (AMS) are active participants in a growing number of free trade agreements (FTAs). As of 2013, AMS were involved in over 80 FTAs.
  • However, MSMEs may not be reaping the full benefits from these trade agreements because of: (i) the lack of information on FTAs amongst ASEAN - based firms; (ii) low margins of preference; and (iii) delays and administrative costs associated with documenting and complying with the agreements’ Rules of Origin (RoO).
  • Data suggests that the utilisation rates of most FTAs involving ASEAN countries are low and are frequently well below 50%. Utilisation of ASEAN - wide FTAs , appears to be less than for bilateral FTAs initiated by individual AMS, as market access concessions made by trading partners are more limited in ASEAN - wide FTAs.
  • To enhance the utilisation of FTAs, it is important that more information be provided to MSMEs. Moreover, improvements in access to finance for MSMEs would also increase their ability to benefit from FTAs. Simplification of Certificate s of Origin (CoO) and associated RoO would also encourage MSMEs to take part in trade using preferential agreements .
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