2 November 2015 – The regional trade and investment flows in Asia and the Pacific is decelerating as the economies in the region adjust to cyclical and structural changes resulting from the global economic downturn and the expected reduction in China’s growth rate, says a new United Nations report launched today.

However, the Asia-Pacific Trade and Investment Report 2015, compiled by the UN Economic and Social Commission for Asia and the Pacific (ESCAP), said that the Asia-Pacific remains the most dynamic region of the global economy and will continue to hold its position as the largest trading region in the world.

According to the report’s analysis of the latest regional trade and investment outlook in the region, total exports and imports from the region grew by only 1.6 per cent in 2014. When China is excluded from the regional total, exports from the Asia-Pacific region registered a decline of 0.4 per cent.

The report further states that any possibilities of a merchandise trade recovery could suffer if the sluggish pace of trade and investment growth in the region continues.

Despite the slow pace, the report says the Asia-Pacific region stands out for its significant and sustained achievements in leveraging trade and investment flows for development.

The report, launched in Bangkok by ESCAP Executive Secretary Shamshad Akhtar, underscores the importance of reviving trade and investment to implement and meet the recently adopted Sustainable Development Goals (SDGs).

“The data and analysis in the 2015 Asia-Pacific Trade and Investment Report will help to mainstream trade considerations, as we work towards achieving the new Sustainable Development Goals,” said Ms. Akhtar.

She added that the production fragmentation across the world as part of Global Value Chains (GVCs) has opened new opportunities for developing countries to integrate in global trade.

“In order to prosper in this globalized environment, countries will need to boost competitiveness and productivity to attract inward investment and technology, and find areas where they can successfully integrate in these value chains,” said Ms. Akhtar.

According to the report, Asia and the Pacific accounted for nearly 40 per cent of global exports and imports in 2014, while intra-regional imports remained at a little over 50 per cent of the total in 2014, with intra-regional exports at 54 per cent.

Further, the report indicated that the outlook for regional services trade was better than for merchandise trade as exports of services in the region increased at 5.1 per cent in 2014, compared to 4 per cent in 2013.

The report evaluated that exports of travel and other commercial services were especially strong, supported by growing demand for travel by China.

Additionally, the report shows that trade facilitation measures, including implementation of the WTO Trade Facilitation Agreement, can help reduce trade costs as many countries in the Asia-Pacific region are getting on with implementing trade facilitation measures ahead of the Agreement’s ratification.

The report assesses that such changes when incorporated will help reduce regional trade costs but stressed that much more still needs to be done, especially in landlocked countries and it suggests that a regional agreement on paperless trade would mark a substantial breakthrough in this regard.

Further, the report reinforces the importance of countries maintaining open trade regimes, and avoiding implementation of trade-restrictive measures.

It highlights that increasing use of trade-restrictive measures such as non-tariff measures have detrimental consequences for the region’s least developed countries, presenting particular obstacles to small- and medium-sized exporters.

The report also contained analysis on the challenges and opportunities posed by the rise of GVCs as a major trading factor as recent years have seen increased fragmentation of production across national boundaries with all its attendant benefit, supported by improving logistics, communication technologies and lower barriers to trade.

However, the report finds that despite the region being central to the development of GVCs, which is now at the heart of many global and regional supply chains, most countries in the region have not fully benefitted from the expanded flows of trade and investments associated with them.

These countries remain excluded from their potential benefits, particularly low-income countries, as 90 per cent of GVC-related trade is found to occur in just ten regional economies, the report stated.

Photo:Trade in Cambodia’s ports: products from Viet Nam arrive at the Phnom Penh Autonomous port in Kandal province.