Drewry: Container shipping benefits from free trade agreements

It was only after 2009 that Chinese exports to ASEAN countries really began to grow faster than with other countries, according to the maritime consultants, which suggests it takes a few years for benefits of FTAs to “really kick-in.”    In an article discussing the Trans-Pacific Partnership, the maritime consultants Drewry contends liberalization of trade and free trade agreements (FTAs) are “a growing trend and one that will benefit container shipping companies in the long-run. In the mid-term, investment in shipping and port infrastructure within countries that have expanded their FTA scope is probably prudent.”
   “Drewry has found evidence that supports the argument that free trade deals do encourage heightened trade growth, specifically in the container shipping arena,” the consultants said in the most recent edition of Container Insight Weekly.
   “One of the most significant FTAs in recent years was the pact between the 10 member states of the Association of Southeast Asian Nations (ASEAN) with China in 2005. In the 10 years before the deal the annual growth rate for China’s merchandise exports to ASEAN was broadly in line with the rest of the world at 17 percent. Following the deal the 10-year compound annual growth rate increased to 19 percent. Not such a significant gain you might think, but consider that the annual rate to the rest of the world had dipped in that period to 13 percent.”
   Drewry noted, however, that it was only after 2009 that Chinese exports to ASEAN countries really began to grow faster than with other countries, “which suggests it takes a few years after implementation for the trade benefits to really kick-in.”
   The U.S. has increasingly embraced free trade agreements. Following a deal with Israel in 1985, and the North American Free Trade Agreement with Canada and Mexico in 1985, the U.S. has entered into 17 trade deals since 2001.
   “The impact on trade, measured in U.S. dollar value, has been less immediate than seen with China-ASEAN,” said Drewry. “Since 2005, U.S. trade with non-FTA partners, such as with its second-largest trading partner China, has grown faster than it has with its FTA partners.”