Businesses should not be put off trading with other nations by the complexities of free trade agreements (FTAs), because they bring significant competitive advantages.
This was the message given by EY partner and indirect tax leader for Asia-Pacific Adrian Ball, who was speaking to Financier Worldwide magazine about international trade and foreign investment.
He acknowledged that while the growing number of FTAs being ratified does bring complexity for business owners, it also opens up plenty of advantages.
"Key benefits are the elimination and reduction of tariffs and increased connectivity, which grant greater market access to companies," the expert said, pointing out that most ASEAN nations in particular have eliminated intra-ASEAN import duties on over 99 per cent of their tariff lines, as well as signing FTAs with other countries.
Mr Ball also explained that in an era of growing trade tensions and levies, such as those currently being applied by the US, FTAs enhance competitiveness and help businesses to get around disputes.
"FTAs bring massive advantages which companies cannot afford to ignore. Increasingly, companies that do not avail of the benefits may find themselves uncompetitive," he warned.
The tax expert did acknowledge companies need to ensure they understand the legislation and local practices in the countries in which they intend to operate if they are to successfully utilise FTAs.
He recommended first exploring whether or not rules of origin can be met and considering factors such as compliance costs and maintaining records.
However, Mr Ball insisted these necessities should not put businesses off, adding: "Many companies avoid utilising FTAs as they see them as particularly risky. However, there is nothing to worry about for companies with adequate knowledge and FTA management measures in place. The potential benefits can be a huge game changer."
There are already more than 400 ratified FTAs worldwide and companies can only leverage the competitive advantage if they are compliant with a number of complex regulations.
If you want to benefit from global trade but are concerned about the complexity of FTAs, MIC's Origin Calculation System (MIC OCS) could help. It provides the tools needed to comply with FTAs including JAFTA, ASEAN and the CETA, including efficient management of supplier declarations, compliant and eligible FTA management, optimised origin calculation and much more.
Please feel free to use the contact details here or browse the explanatory page linked above if you are interested in further information.