1. Increasing Relevance &
Encouraging Utilisation
of FTAs
by SMEs
9 June 2011
Agenda
Free Trade Agreement and Relevance to Business
Current Utilisation of FTAs in Philippines
Challenges to Optimising Usage of FTAs
Key Benefits Accrued FTA Usage
Optimising FTA for SMEs
barterfli : Increasing Relevance and Usage of FTAs

2. FTA and Relevance to Business
What is Free Trade Agreement?
An agreement signed bilaterally or multilaterally in which
signatory countries agree to:
• bring down trade barriers
• reduce tax for products moving between affected countries
• encourage trade, business cooperation and investment
A system of certifying the origin of the products flowing
between the signatory countries, is central in how FTAs, bring
down import/export tax.
Rules of Origin (ROO)

3. 1. Global Expansion of FTAs
!"#$% &'#()*+ ,-.- /(+%0 1+20* 342+* 5"0*+ 617
899*'#$:* 617; ,<< =(+* #42" >-?
Source: WTO
(Source: WTO)
FTAs in Asia (Source: ADB)
FTAs in ASIA
Concluded: 7 7(1991)
• Concluded: (1991) 45 (2000)
45 (2000) (2010.07) (2010)
115 115
• Negotiations in process: 63
Another 63 in negotiation
Source: ADB
Over 280 FTAs signed internationally
Billion dollars of potential tariff savings
Encourages trading activities and use of trade services such as
logistics
Helps SMEs to become more competitive
2. Major Countries’ FTAs
FTAs Signed by the World
2. Major Countries’ FTAs
No. FTAs Signed
No. Signatory Partners
!

4. Current Utilisation of FTA by Philippines
FTAs Signed by Philippines
Status Regional Bilateral
ASEAN (1993)
ASEAN-PRC (2005)
In effect ASEAN-Korea (2006)
Japan-Philippine EPA (2008)
ASEAN-Japan CEPA (2008)
Source ADB, January 2010
"

5. FTAs Signed by Philippines
Status Regional Bilateral
ASEAN (1993)
ASEAN-PRC (2005)
In effect ASEAN-Korea (2006)
Japan-Philippine EPA (2008)
ASEAN-Japan CEPA (2008)
ASEAN-Australia-New Zealand CER (2009)
Signed ASEAN-India FTA (2009)
Source ADB, January 2010
"
FTAs Signed by Philippines
Status Regional Bilateral
ASEAN (1993)
ASEAN-PRC (2005)
In effect ASEAN-Korea (2006)
Japan-Philippine EPA (2008)
ASEAN-Japan CEPA (2008)
ASEAN-Australia-New Zealand CER (2009)
Signed ASEAN-India FTA (2009)
ASEAN-EU FTA
Proposed ASEAN+3 FTA (Japan, PRC & Korea)
ASEAN + 6 FTA (Japan, PRC, Korea, India,
US-Philippines FTA (TIFA
Australia and New Zealand)
Source ADB, January 2010
"

6. Pattern of FTA Usage
Current
Country Factors
Utilisation
Japan 29% •global operations
•dense network of private sector
Thailand 25% •growth of manufacturing sector especially automotive
• strong emphasis on FTAs as a trade policy tool
Korea 21% •relative late in the FTA circuit
Philippines 20% •predominantly reliant on AFTA
• export activities slow down since last financial crisis
Singapore 17% •relatively low tax
•usage of other business incentives
Usage of AFTA
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0.3
0.2
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&&#"%
0.1
Transport
Food 0
Electronics
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7. Impact of FTA on Cost
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Export from Philippine to Malaysia
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Impact of FTA on Cost
Product: • ;"#$;#&'I480&J+/41101?&&
Export from Philippine to Thailand
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8. Philippines Export Performance
ASEAN
FTA
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Challenges to Optimising Usage of FTAs

9. Challenges to Optimising FTAs
Varying and Confusing FTA Modalities
Spaghetti bowl syndrome
Cost of FTA Compliance & Registration
Lack of Information and Understanding of FTA’s Business Impact
Business Disincentive
Challenges to Optimising FTAs
Varying and Confusing FTA Modalities

10. Challenges to Optimising FTAs
Spaghetti bowl syndrome
• Too many FTAs that are not rationalised
• 1 product can come under different tariff rates and
Rules of Origins depending on the FTAs
• Consideration on whether there is product specific
treatment, quota imposition, exclusion list......
Challenges to Optimising FTAs
Cost of FTA Compliance & Registration
• Compliance to FTA through Regional Value Calculation
(RVC), exposes company to fluctuation of production cost,
materials and forex exchange movements
• Compliance typically involved hired 3rd party services
• Registration can be costly in terms of time, money, resource
• Human resource intensive to register, manage, monitor and
maintain
• Manually tedious

11. Challenges to Optimising FTAs
Lack of Information and Understanding of FTA’s
Business Impact
• Especially smaller companies are not aware of what
and how to use FTA
• Few documented case-studies to show real business
impact of FTA on top/bottom lines
• Limited access to advisory support to guide use of
FTAs
Challenges to Optimising FTAs
Business Disincentive
• Cost of registering for FTA does not justify the profit
margin/advantage created
• Other attractive investment/business incentives
• No perceived linkage to real business leads/
opportunities
• Concerns over releasing confidential business and

12. Challenges to Optimising FTAs
Text
Source: Masahiro Kawai and Ganeshan Wignaraja, ADBI Working Paper Series, The Asian “Noodle Bowl”: Is It Serious for Business?, No. 136, April 2009
Key Benefits Accrued to FTA
Usage

13. Key Benefits Accrued to FTA Usage
Market Access
Lower production cost
New Business Opportunities
Encourage Foreign Direct Investment
Key Benefits Accrued to FTA Usage
Market Access
Lower production cost
New Business Opportunities
Encourage Foreign Direct Investment
Benefits Still Outweigh the Impediments

14. Expected Pattern of Usage
Current
Country Factors
Utilisation
Japan 29% •global operations
•dense network of private sector
Thailand 25% •growth of manufacturing sector especially automotive
• strong emphasis on FTAs as a trade policy tool
Korea 21% •relative late in the FTA circuit
Philippines 20% •predominantly reliant on AFTA
• export activities slow down since last financial crisis
Singapore 17% •relatively low tax
•usage of other business incentives
Expected Pattern of Usage
Planned
Current
Country Future
Utilisation
Utilisation
Japan 29% 47%
Thailand 25% 46%
Korea 21% 54%
Philippines 20% 41%
Singapore 17% 28%

15. Optimising FTAs for SMEs
Optimising FTA for SMEs
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16. Optimising FTA for SMEs
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17. Optimising FTA for SMEs
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18. Optimising FTA for SMEs
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barterfli:
Increasing Relevance and Usage of FTAs

19. A Comprehensive E-Trading Ecosystem
Platform that provides holistic and practical e-
commerce solutions that:
Lower Increase Grow
barterfli Addressing the E-Commerce Gaps
Value
Centred SME Trade
Online Fraud Around Challenges
Concerns Listing Remain
opportunities Unaddressed
Restricted
Global Trade Services to
Resources Support
Underutilised Strategic
Procurement
Planning

20. barterfli Addressing the E-Commerce Gaps
Value
Centred SME Trade
Online Fraud Empowering Providing
Challenges
Business Around
Concerns SMEs Holistic
Remain
Community Listing E-
Through Business
Unaddressed
Authentication opportunities
Marketing Support
Restricted
Global Trade Providing
Services to
Unlocking Buyers with
Support
Resources Strategic
Power of
Underutilised Strategic
Procurement
Procurement
Global FTAs Tools e.g Tariff
Planning
Database
Complete
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Business Cycle
E-hunt for viable
business leads
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Active E-
FTA Marketing
Optimisation
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21. E-hunt for viable !"#$%&'&()* !"#$%&##'
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business leads !"#$%&'($") +,-&./0&%*
alerts you on whether your product is covered by FTA
identifies the tariff savings that you can benefit from
guides you on how to meet Rules of Origin (ROO)
timely alerts on any new development on relevant FTAs
timely alerts on any new development on relevant FTAs
Active E- !"#$%&'&()* !"#$%&##'
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Companies with relevant Preferential Certificate of Origin
(PCO) will be profiled to potential buyers online
Companies with PCO will participate in selected business
matching activities organised jointly by barterfli and
PhilExport

22. 1. World’s First Tariff & FTA Database
Providing
Buyers with Allows buyers to access 10-Year Tariff and FTA Schedule to support
Strategic cost-effective production and raw material procurement planning
Procurement
Tools e.g Tariff
Database
Allows companies to assess most attractive export market destinations
Allows companies to identify FTA compliant suppliers that can bring down
cost
For more information on
email: info@barterfli.com