It’s Time For SMEs To Take Advantage Of Trade Deals
Small businesses are missing out on big opportunities. There’s a critical knowledge gap around how SMEs capitalize on the latest trade deals in Asia Pacific – it’s time to fill it.
Across Asia, entrepreneurial innovators are leading with passion and counting on connectivity to expand their businesses across borders, seize niche opportunities and shape our global economic future. Never before have Asian small businesses and start-ups been so connected – in digital tools, technology, access and ideas.
Many SMEs are unaware of potential benefits
According to Nikkei Asia, the RCEP is arguably one of the most important trade deals in recent years – facilitating trade of 30% of the world’s population and creating the world’s largest trade bloc in history.
The agreement, which was signed by 15 countries across the APAC region in November 2020, will eliminate about 90% of tariffs on imports between its signatories within 20 years of coming into force. Having already encompassed major regional powerhouse economies such as China, Australia and Japan, the RCEP is an ambitious initiative that will greatly impact the region’s trade in the coming years.
Before this, the CPTPP agreement, which went into effect in December 2018, created a trade community accounting for an extraordinary 14% of the global economy. That figure is projected to rise to 18% as more countries queue up to join the bloc – already comprising some of Asia’s most dynamic economies including Vietnam, New Zealand, Japan and Singapore.
Then there’s the Japan-EU EPA – another new deal that’s expected to spark more than a 30% rise in the volume of trade and went into force in February 2019.
Many SMEs and entrepreneurs don’t know about these deals – let alone how to translate their potential into business success. At FedEx, we’ve become accustomed to helping guide our SME customers in how to use trade agreements to their benefit.
The knowledge gap
Many SMEs tell us that agreements remain too tough to interpret or navigate, especially for those inexperienced in international trade.
A simple explainer
But the challenge is also more specific. SMEs often lack the resources and expertise to navigate complex trade rules. To reap the benefits of trade agreements, manuals or “explainers” are needed to guide them through specific benefits within the labyrinth of information that exists on any one deal.
When it comes to the Japan-EU EPA – the largest trade community in history – the vast majority of the 1 billion euros in duties paid annually by EU companies exporting to Japan have now gone. This has opened up a market of 127 million consumers – with benefits for businesses from both sides.
So where to from here?
It’s also counsel and technology tools that are critical. For instance, we help SMEs with knowledge and resources to help them clear customs confidently and quickly. We advocate automating as many shipping processes as possible, so cross-border shipments clear customs easily. Here, tools like FedEx Global Trade Manager – which helps SMEs estimate duties and taxes, or helps find the necessary documents are seeing strong uptake.
No matter what, the goal is clear – ensure innovation flows from all deals to all kinds of businesses. If SMES can put the benefits into practice, the possibilities are endless.
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