Assessing trade friendliness of logistics services in ASEAN

Abstract

PurposeFree trade agreements have been employed, either unilaterally or as a bloc, as an instrument to overcome the inefficiencies in trade brought about by the prevailing barriers and regulatory measures. During the tenth summit the leaders of Association of Southeast Asian Nations (ASEAN) agreed to integrate their priority sectors with a vision to developing an ASEAN economic community whereby there would be a free flow of goods, services, investment and a freer flow of capital, equitable economic development, and reduced poverty and socio‐economic disparities. This market would have no price discrimination for commodities and against foreign goods, services, capital and labor. The purpose of this paper is to assess the current state of the cross‐border trade in logistics services among ASEAN. The extent of the ease of cross‐border trade is measured in terms of trade friendliness. The trade friendliness is a measure of the openness of ASEAN towards conducting free cross‐border trade.Design/methodology/approachThis study uses a series of semi‐structured interviews with 35 logistics and related firms operating in ASEAN.FindingsIt was found that the unwieldy customs procedures and inspections, lack of coordination, and arbitrary rulings are some barriers to freer cross‐border trade within ASEAN.Practical implicationsIn this paper, the authors have identified several barriers that influence logistics services across ASEAN. ASEAN must address these barriers before any further attempt of freer trade can be made.Originality/valueStudies have been conducted for the USA and Europe but not for the Asia‐Pacific. The Asia‐Pacific is a growing region for global trade and therefore assessing the trade openness or friendliness in the logistics sector is useful for taking further policy initiatives for developing an ASEAN economic community.