, limitations
1. Introduction
According to Wilson et altrade openness or friendliness addresses
“the logistics of moving goods through ports or more efficiently moving customs
documentation associated with cross-border trade”We will use the terms openness and
friendliness interchangeably given the current climate to move and measure trade
between nations in as liberal and as simplified as possible. In a broader sense, trade
friendliness includes the transparency and professionalism of the customs and
regulatory environments, as well as the harmonization of trade standards, and the
conformance to international or regional regulations. In other words, trade friendliness
is a measure of free trade between two or more nations. Trade friendliness is inhibited
when nations attempt to protect their markets by imposing quotas and tariffs. Trade
friendliness is also inhibited when nations implement policies that discriminate between
indigenous and foreign firms. Other factors that inhibit trade friendliness include the
higher transportation costs and increased administrative costs associated with,
for example, product and distribution approval in offshore markets. However, a number
of countries are realizing the inefficiencies (particularly in terms of the cost and time
incurred) that are brought about by the lack of trade friendliness. In the context of
logistics processes of multimodal transport, governments and countries are keen to
improve the firm’ productivity and Therefore,
a number of countries have committed to multi-lateral or bilateral trade agreements to
remove the barriers to free trade.Acase in point is that of the European Union where the
member nations have come together to collectively develop a free trade zone. In short,
trade friendliness is akin to the commercial characteristic of being open and willing to
accommodate where trade flows are concerned.
The formation of a free trade zone entails the removal of tariff and non-tariff barriers
as well as several measures adopted at the country level that lends to inefficiencies in free
trade between two countries These barriers may exist in
different sectors both manufacturing (e.g. electronics, apparel) and services (e.g. logistics,
banking). To improve trade friendliness, these sectors need to be individually addressed.
In the case of logistics services, free trade is inhibited mainly due to the regulatory and
non-regulatory barriers that exist across the nations at the borders and not so much due
to tariff and non-tariff barriers (Centre for International Economic Studies
Following the example of the European Union, Association of Southeast Asian
Nations (ASEAN) is also attempting to form such a free trade zone
The decision to develop a free trade zone in ASEAN was taken unanimously by the
leaders of member nations during the tenth ASEAN summit. The logistics sector was
added later in the 37th ASEAN economic ministers meeting in Vientiane, Lao PDR in
September 2005. The objective of free trade among ASEAN is to develop an ASEAN
economic community by 2015 whereby there is a free flow of goods, services, investment
and a freer flow of capital, equitable economic development, and reduced poverty and
socio-economic disparities
Studies on cross-border trade have been conducted for the USA and Europe.
However, no such study has been conducted for ASEAN. As such, this study is
conducted to identify the factors that inhibit free trade and underpin some of the major
causes of the lack of trade friendliness in logistics services among ASEAN member
countries. Through the semi-structured interviews of 35 senior managers of the leading
logistics service providers and associated firms, this study identifies the major
inhibitors to free trade in ASEAN. The results of this study carry practical significance
for ASEAN. The critical inhibitors to free trade as identified in this report is useful for
ASEAN for adopting and fine-tuning suitable policy measures towards implementing
free trade across ASEAN.
The rest of the paper is organized as follows. Section 2 provides the relevant literature
on the body of work conducted in this domain. Section 3 mentions the research method
used in thispaper,while Section 4 discusses thefindings pertinent to the lack of friendliness
or trade friction in ASEAN. Section 5 concludes with managerial implications