Regional: Strengthening Knowledge and Capacities for the Design and Implementation of Free Trade Agreements Involving Central Asia Regional Economic Cooperation Countries

Industry and trade / Industry and trade sector development

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)

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

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

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.