Project Name Strengthening Knowledge and Capacities for the Design and Implementation of Free Trade Agreements Involving Central Asia Regional Economic Cooperation Countries
Project Number 54070-001
Country / Economy Regional
Afghanistan
Azerbaijan
Georgia
Kazakhstan
Kyrgyz Republic
Mongolia
Pakistan
China, People's Republic of
Tajikistan
Turkmenistan
Uzbekistan
Project Status Active
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 6558-REG: Strengthening Knowledge and Capacities for the Design and Implementation of Free Trade Agreements Involving Central Asia Regional Economic Cooperation Countries
People's Republic of China Poverty Reduction and Regional Cooperation Fund US$ 500,000.00
United Kingdom Fund for Asia Regional Trade and Connectivity under the Regional Cooperation and Integration Financing Partnership Facility US$ 700,000.00
Operational Priorities OP2: Accelerating progress in gender equality
OP6: Strengthening governance and institutional capacity
OP7: Fostering regional cooperation and integration
Sector / Subsector

Industry and trade / Industry and trade sector development

Gender Some gender elements
Description The knowledge and support technical assistance (TA) will strengthen capacities for designing, negotiating, implementing, and monitoring free trade agreements (FTAs) involving the Central Asia Regional Economic Cooperation (CAREC) countries. The CAREC Strategy 2030 stipulates that the region will assess and respond to the shifting landscape of global and regional trade paradigms and the potential of moving toward with FTAs in the region. The TA will support the implementation of the CAREC Integrated Trade Agenda 2030 (CITA 2030), which includes enhancing the evidence base for decision-making regarding trade negotiations, capacity-building, and knowledge-sharing for the new generation of FTAs. CAREC countries have expressed keen interest to pursue FTAs as effective tools to boost the region's economic growth and integration with the global economy. However, the regional cooperation and integration (RCI) index for CAREC (estimated at 0.351) is low compared with other regions in the Asia and the Pacific region which is 0.503 at average with maximum at 0.654 for Southeast Asia. In 2019, the share of intra-subregional trade for Central Asia was only 3.3%, compared with 35% in East Asia and 23% in Southeast Asia. There is ample scope for CAREC countries to expand intra- and inter-regional trade, including through taking advantage of FTAs. The coronavirus disease (COVID-19) pandemic has further highlighted the necessity of regional cooperation and importance of strengthening resilience to risks arising from cross-border movement of goods and people. Trade will continue to be a driver for achieving the sustainable development goals and CAREC countries' post-pandemic recovery. CAREC must therefore continue their efforts to keep trade open and smooth to revitalize globalization, deepen regional cooperation, and achieve sustainable growth. The TA is aligned with the following impacts: (i) global and regional trade and investment opportunities expanded, and (ii) integration of CAREC countries in the regional and global economies enhanced. The TA will have the following outcome: CAREC countries' capacities for designing, negotiating, implementing, and monitoring of FTAs improved.
Project Rationale and Linkage to Country/Regional Strategy The CAREC 2030 strategy recognizes the role that FTAs can play in creating an open and inclusive regional cooperation platform that connects people, policies, and projects in Central Asia for shared and sustainable development. CAREC Regional Trade Group (RTG), a leading consultative and coordinating body with full operational authority over CAREC work on trade, has been mandated to carry out initiatives to develop a potential CAREC-wide FTA as embodied in CITA 2030. The TA will support these initiatives and is aligned with DB's Strategy 2030 operational plan for RCI and the priorities under the CITA's Rolling Strategic Action Plan 2019-2021.
Impact

Global and regional trade and investment opportunities expanded. (Pillar 2 of ADB Strategy 2030 Operational Priority 7: Fostering Regional Cooperation and Integration)

Integration of CAREC countries in the global economy enhanced. (CAREC Integrated Trade Agenda 2030 and Rolling Strategic Action Plan 20182020)

Project Outcome
Description of Outcome

CAREC countries' capacities for designing, negotiating, implementing, and monitoring of FTAs improved

Progress Toward Outcome
Implementation Progress
Description of Project Outputs

Evidence-based policy recommendations generated and action plans developed

Technical capacity of CAREC member countries to design, negotiate, implement, and monitor FTAs improved

Roadmap for a CAREC FTA developed

Status of Implementation Progress (Outputs, Activities, and Issues)

The regional technical assistance (RETA) was approved on 31 August 2020 to strengthen capacities of designing, negotiating, implementing, and monitoring free trade agreements involving Central Asia Regional Economic Cooperation (CAREC) countries. Initial consultations with CAREC governments were made to gather interest on free trade agreement (FTA) capacity building support and affirmative responses were received. Interdepartmental project team has been set up to implement the RETA. The TA Coordinator/Program Manager (total of 5 person-months of national expertise) was engaged in late November 2020 to support the TA implementation. It was originally envisaged that a team of consultants will be recruited through a firm to conduct analytical and capacity development activities to produce a comprehensive analysis of FTA guidelines and various thematic assessments. After further review of the deliverables and the detailed terms of reference of the consultants, a minor change in TA implementation arrangements deemed to be necessary. This will realign the technical expertise required to better support and achieve the deliverables as per the TAs design and monitoring framework by (i) reducing the number of experts to be recruited under a firm and include 3 capacity building experts who will primarily focus on the capacity building component and improving the competencies of government officials involved in FTAs; and (ii) hiring the following international positions initially envisaged through a firm, now to be hired through individual consultant selection method: (a) Free Trade Agreement Expert/Trade Economist and Team Leader, (b) Free Trade Agreement Expert/Trade Economist for Thematic Assessments, (c) CAREC Regional Free Trade Agreement Expert, and (d) Global Computable General Equilibrium Model Expert Model Expert; and (iii) reallocating 2 person-months from national Free Trade Agreement Expert/Trade Economist to a national Global Computable General Equilibrium Model expert. The TA minor change in implementation arrangement will better align the consultancy inputs to the TAs outcome and activities and does not entail additional funding, substantially alter, affect, and will not result in any change in the TAs outcome, outputs, and activities. As of March 2021, the three individual international consultants are now onboard: (a) Free Trade Agreement Expert/Trade Economist and Team Leader, (b) CAREC Regional Free Trade Agreement Expert, and (d) Global Computable General Equilibrium Model Expert Model Expert, while recruitment for a company/firm for the capacity building component is ongoing.

In parallel, an initial discussion with the CAREC Institute (CI) and the Ministry of Commerce (MofCom) of the Peoples Republic of China (PRC) was initiated to seek and explore their interest in partnering with ADB. CI confirmed its great interest, readiness, and available human resources for the opportunity to collaborate in research and capacity building. PRC MofCom gave the assurance on its readiness to cooperate with ADB in the arrangements about the regional CAREC-wide FTA in doing research and in providing training and other capacity building programs.

An Inception Workshop was held virtually on 19 May 2021 and provided valuable inputs in identifying country priorities in relation to different types of integration approaches.

The Inception Report that was completed by the Research team in June 2021 and subsequently circulated to CAREC countries drew on the feedback received, and discussed approaches in designing a CAREC FTA, and methodologies for assessing impacts. It highlighted how a CAREC wide FTA must be compatible with various other bilateral, sub-regional and multilateral agreements that CAREC members have committed to.

The international consulting firm Policy and Management Consulting Group (PMCG) with the policy research experts has been engaged to assist in the implementation of the capacity building activities under the technical assistance in June 2021.

A virtual Country Consultation Meeting on CAREC Free Trade Agreements was held on 7 September 2021.

A focused Capacity Needs Assessment (CNA) with the purpose to assess the current institutional (macro-level) and the individual (micro-level) trade-policy capacities of CAREC member countries at senior- and mid-levels and the regional capacity to design, negotiate, implement and monitor the potential CAREC wide comprehensive free trade agreement was conducted in October-December 2021.

In November 2021 January 2022, Capacity Building team was also studying 3 cases which are relevant to the CITA and CBTA objectives: RCEP; China-Georgia FTA, and the Eurasian Economic Union (EAEU).

The Regional Workshop to Share FTA Lessons and Best Practices was held on 19 April 2022 with the purpose of mobilizing high-level support to the process of preparations for negotiations of a potential CAREC FTA and assist to consensus building among the CAREC DMCs.

FTA Report and its Synthesis was submitted in July 2022. There are three reports altogether: one dealing with theory, one with evidence, and a Synthesis Report that summarizes the key findings and places them in context. The first report, or Part I, deals with trade policy issues that need to be considered in moving towards a CAREC-wide FTA. The second report, or Part II, examines the economic impact of different configurations of such an agreement using a multi country, multi sector economic model. Finally, the Synthesis Report summarizes the key findings of these two reports. To provide a context for these findings, it includes an overview of existing trade agreements in CAREC and reviews the current CAREC trade landscape.

Regional Dissemination Workshop on FTA Report was conducted on 19 August 2022 virtually. The objective of the event was to share findings and recommendations of the FTA Report among government officials and experts involved in trade policy development and FTA negotiations in CAREC countries.

One of the main activities under the CB TA activities is the regional training of trainers (TOT) course, which will cover all topics identified as priorities during the capacity needs assessment. The objective is to train a limited number of experienced representatives from government, academic and research institutions from each CAREC country, thereby empowering them with technical training expertise and experience that they can integrate with their own local knowledge so to be able to disseminate it more effectively in their own domestic policy and institutional settings. The training is scheduled to take place in two stages in October-December 2022: first stage by individual self-pace schedule on CAREC Institute E-learning platform and second stage in hybrid format in one of the CAREC countries.

Geographical Location Afghanistan - Nation-wide; Azerbaijan - Nation-wide; China - Nation-wide; Georgia - Nation-wide; Kazakhstan - Nation-wide; Kyrgyz Republic - Nation-wide; Mongolia - Nation-wide; Pakistan - Nation-wide; Tajikistan - Nation-wide; Turkmenistan - Nation-wide; Uzbekistan - Nation-wide
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services The TA will require an estimated 60 person-months of international and national consultant inputs, including resource persons to be recruited to serve as presenters or facilitators at workshops. ADB will engage consultants and resource persons following the ADB Procurement Policy (2017, as amended from time to time) and its associated project administration instructions and/or staff instructions.
Responsible ADB Officer Karimova, Zulfia K.
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Regional Cooperation and Integration Unit, CWRD (CWRC)
Executing Agencies
Asian Development Bank
Timetable
Concept Clearance 13 Apr 2020
Fact Finding -
MRM -
Approval 31 Aug 2020
Last Review Mission -
Last PDS Update 29 Sep 2022

TA 6558-REG

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
31 Aug 2020 - 31 Aug 2020 31 Aug 2023 31 Aug 2025 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
0.00 1,200,000.00 0.00 0.00 0.00 0.00 1,200,000.00 05 Jan 2024 716,347.94
 
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