Trade in services is a rapidly growing area of international trade. Cross-border trade in services represents about 20 per cent of total world exports and in the past 10 years, has been growing at around 7 per cent in United States dollar terms, slightly faster than merchandised trade (WTO, 2007). However, significant restrictions exist that limit flows of world and Asia-Pacific Economic Cooperation (APEC) services trade.

The formation of international production networks is widely recognized as one of the most important growth drivers in East Asia and South-East Asia. A global value chain (GVC) and associated production networks are emerging as the organizing framework for production, investment and trade in an expanding range of product groups such as garments, agro-industry, furniture, automobiles and automotive parts, consumer electronics, telecommunications, and information and communications technology (ICT) as well as various services.

Free trade agreements (FTAs) have gained increasing global popularity. Although East Asia has lagged behind other regions in concluding FTAs, the 1990s saw a marked change in considering formal regional cooperation treaties in East Asia.1 One of the leading factors that led to the emergence of such heightened interest is the rapid growth of intraregional trade. In turn, an important new development that has contributed to the expansion of intra-East Asian trade is the international exchange of intermediate goods, which includes parts and components rather than final goods.

The past quarter of a century has witnessed among many countries across the development spectrum an unprecedented level of activity in the process of trade liberalization. In many respects, this most recent phase of global integration among economies stands out in comparison to all other phases that have occurred in the past few centuries.1 Most notably, for the first time more than 180 States have engaged in the process of integrating their economies with those of their partners.

One of the most striking features of global economic development over the past few decades has been the rise to prominence of Asia in international trade. Between 1975 and 2005, the ratio of world trade to world gross domestic product (GDP) increased from 0.33 to 0.54, while for East Asia in the same period the figures climbed from 0.21 to as much as 0.86.1 The figures reflect the fact that an increasing share of what is produced in a country is exported, while at the same time a rising share of what is being processed or consumed is imported.

The trade facilitation negotiations have been one of the more active topics in the Doha negotiations. At the same time, extensive reforms have been put in place among WTO members, including by a number of developing Members. Some developing country reforms have received assistance from developed Members and from development agencies, many have enjoyed solid support from commercial interests within the countries and have been financed from own resources.

Since the launch of the major liberalisation programme in the early Nineties, the Indian government has continued to exhibit a general commitment towards regulatory reforms while working toward market openness. This becomes particularly interesting given that during the 1980s India was one of the most protected economies in the world. The level of protection declined substantially with the on set of economic reforms in the 1990s.

There is now increasing recognition of the critical importance of trade facilitation to further international commerce, accelerate growth, and enhance welfare if not alleviate poverty among trading nations. But there is also increasing appreciation that it is not just attention to the barriers and bottlenecks behind-the-border that are involved in trade facilitation (TF), it also calls for coherence between policies and regulations at the border and inside the border.

The special needs and difficulties of landlocked countries as they seek to achieve integration into the global economy have been increasingly recognized by the international community as requiring particular attention. Correspondingly, the proper mix of domestic policies and trade policy reforms for landlocked countries present a complicated agenda due to the inevitable requirements of economic structural adjustment and improved market access required for effective global integration.

In recent years, South Asia has received growing attention as a region that is integrating successfully into the world economy. South Asia has successfully converted preferential trading agreement (SAPTA) into a free trade agreement (SAFTA) in July 2006. However, intra-subregional transit trade volume is still miniscule in eastern South Asia (Bangladesh, Bhutan, India and Nepal), compared to its extra-subregional transit trade. About 2 percent of transit trade of eastern South Asia is conducted within the subregion, whereas the rest 98 percent is extra- subregional.