“Improving Global Trade Specialization with Free Trade Agreements: The Role Played by Logistics Network Integration in the Global Value Chains”

The application of logistics networks within the agreement of a free market of trade is the necessary element to strengthen specialization in world trade and participation in the value chain. To undertake the study, a Systematic Literature Review approach has been adopted to explore the impact of logistics performance to a specialization in trade based on various Free Trade Agreements. In the present study, besides literature review, 13 key readings are identified with the PRISMA Flowchart. Moreover, effect of FTA being forced to influence globalization of the value-chain, calculation of the enablers of the logistics-drives, those challenges that could impact the movement of specialization of respective countries in doubt is examined here. The findings revealed that logistic infrastructure is regarded as among the tools that will be used to amplify the returns of FTA beyond the tariff’s reduction introduced in the past, thus facilitating further integration along the value chain and degradation of non-tariff barriers. The discussion has indicated that preferential trade deals enhance domestic value-added intermediary to provide policy and where there is strategic collaboration, such as, Singapore and Oman, constitute multi-sectoral broad impact. However, experience in the regional areas differ as Indonesia has achieved specialization in natural and manufactured goods while having to deal with competitive pressure from regional partners like Vietnam and China. Weak logistics performance is demonstrated in Latin America in comparison to the EU, which demonstrates deficiency in infrastructure, acting a major issue. It can be concluded that for making trade specialization successful, there is a need for coordinated policy approaches which integrate infrastructure development, regulatory harmonization and institutional reforms. It is recommended to redefine coordinated policy approaches, along with, integrating digital connectivity with the facilities around transportation, and enhance the capabilities of the workforce by making use of opportunities associated with the Free Trade Agreement.