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on the trade and technology fronts, and growing investor jitters over high inflation and interest rates have created
a challenging environment for governments to navigate a path toward inclusive and resilient recovery. Meanwhile,
climate change is one of the biggest threats to achieving sustainable development. While climate goals are ambitious,
difficulties in reaching global consensus on how to achieve them only add to concerns about how to rebuild economies
on a sustainable footing.
Against this backdrop, the Asian Economic Integration Report 2023 highlights the power of regional cooperation as
a force for inclusive, resilient, and sustainable economic development. Despite continued disruption to economic
activities, regional trade and cross-border investment demonstrate strong resilience. The reopening of borders is
slowly allowing tourism to pick up speed, even as international arrivals remain well below pre-pandemic levels.
However, more can be done to strengthen international trade and investment. Regional value chains remain tilted
toward low value-added, low-tech sectors, while services trade continues to face regulatory hurdles. Broadening gains
from digital trade requires better coordination to build coherent and comprehensive regulatory regimes across borders.
These challenges underscore the need to intensify regional cooperation, including through implementing trade and
investment agreements.
The report’s theme chapter highlights the structural role of trade and investment in Asia and the Pacific in the fight
against climate change in the context of Asia’s fast-paced industrialization contributing significantly to global carbon
emissions. At the same time, the region is more vulnerable to climate risks than any other part of the world. Carbon
dioxide emissions from the region have tripled since 1995 and now account for half of global emissions. That scale of
carbon output and Asia’s position as a net exporter of emissions to the rest of the world puts the region on the frontline
of climate change. The report stresses, however, that the right mix of policies and governance systems can make trade
and investment an important part of the climate solution.
Regional and international cooperation in trade and investment are essential for tackling climate change and greening
the global economy. The Asia-Pacific Economic Cooperation-led environmental goods list, intended to shepherd tariff
reductions among members, is a good example of how regional commitments can advance global cooperation.
Policy makers can further support climate action by facilitating trade in environmental goods and services such
as solar panels, wind turbines, and wastewater management that can improve resource efficiency and technology
transfer. Efforts to support green business are also crucial for building a sustainable production and trading system,
and reinforcing environmental and climate change chapters in free trade agreements and investment treaties is
pivotal for decarbonizing trade and investment. Fostering innovative and flexible instruments to foster international
carbon markets offers unique opportunities for reducing global carbon dioxide emissions and leakages across borders,
especially when establishing and linking national emission trading systems based on concerted efforts by policy makers
and stakeholders are emerging as a feasible solution.
asian-economic-integration-report-2023.pdf
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