Central Asian integration to get strong boost if all countries join WTO

Business Materials 4 May 2011 13:43 (UTC +04:00)

Azerbaijan, Baku, May 4 / Trend N. Ismayilova /

Establishing the cooperation on a wide range of potentially useful areas will contribute to doubling the Central Asian GDP, ADB's "Asia 2050" Draft Report said.While this has been true in the past, Central Asia now has huge opportunities due to its proximity to the buoyant markets of Asia and its location at the hub of a rapidly integrating Eurasian super-continental economic space. On top of this, Central Asian economies can benefit from greater integration among themselves. To take advantage of this triple opportunity, Central Asian countries can build on a relatively well developed infrastructure and still strong human capital, and on the fact that they have relatively open trade regimes, the report said.

However, they also need to overcome some severe handicaps, imposed mostly by their own weak policy regimes and failure to effectively cooperate with each other to date. Their infrastructure is deteriorating rapidly in the absence of effective management and maintenance, their borders with each other and many of their neighbors have become serious obstacles to cross-border and transit trade, their behind-the-border business conditions are stifling private investment and trade, and failure to cooperate in the management of regional water and energy resources creates severe economic, social and environmental losses as well as risks of serious inter-state conflicts, the report said.

These obstacles need to be overcome by much more aggressive improvements in the domestic business climate, in regional infrastructure investments and in border management. Central Asian integration would also get a strong boost, if all countries were to promptly join the WTO. Estimates show that the cost of trade could be halved through appropriate trade facilitation measures. With cooperation across a wide range of potentially beneficial areas, Central Asian GDP could double.

Overall, the key to benefitting from the triple opportunity will be to build stronger economic links to East and South Asia, complementing Central Asia's existing strong ties with the former Soviet Union economies, the report said.

Central Asia has a regional economic forum, CAREC, which over the first ten years of its
existence has contributed to improved trust, investments in regional transport and energy
infrastructure and the facilitation of regional trade. With a membership of ten countries, including Afghanistan, Mongolia, Pakistan and PRC, and with support from six multilateral institutions, led by ADB, the capacity of CAREC to intensify its efforts to support regional integration within the region and beyond is very significant. However, it does require the active engagement of all member countries at the highest level and a willingness of all participants to overcome what are still high barriers to integration and risks of conflict.