Trade facilitation vital for better markets

Ramani Kangaraarachchi

A market economy system does not work properly without the option to trade with others.

Without a market economy system the dynamics of the people, their innovative strength and capabilities to realize better living conditions for all is limited, said Regional Director Friedrich Naumann Foundation Dr. Rene Klaff.

He was speaking at the seminar on "Trade Facilitation, Issues and constraints in South Asia" organized by the SAARC Chamber of Commerce and Industry Sri Lanka at the Hilton Colombo recently.

He said that any society, which accepts limitations to trading freely, also accepts malfunctioning markets and thus accepts a handicapped economy.

A market economy is the functional economic order for any democratic, free and open form of governance. Democracy and forms of planned economy do not go together.

Therefore, the conditions and frameworks of how societies organize their trade patterns have great relevance not only for the functioning of their economies but also for their wider social and political orders, he said.

He said the reasons behind the global financial crisis were not caused by greed and extravagance of individual actors. The rules of the market game specially the objective supervision and control of financial products and processes did not work properly or were deliberately ignored. As such the free markets and functioning systems of market economies need rules and frameworks that have to be accepted, implemented and controlled efficiently.

These regulations are needed to make markets work.

If they suffocate entrepreneurship, to suffocate business and trade, then they also suffocate the market economy with all the wider social and political consequences.

Therefore, countries need a proper and sound analysis of the global financial crisis to identify why the markets did not work the way they should have, and make markets work better which is specially important for South Asia, he said.

Dr. Klaff said that intra-regional trade and investment in South Asia did not achieve its potential because of the global financial crisis and that is why trade facilitation is of such great importance as trade creates wealth, economic co-operation and dialogue.