MANILA Asia's mushrooming Preferential Trade Arrangements (PTAs) are causing distortions and should be subordinated to the main objective of freeing trade through multilateral mechanisms, the Asian Development Bank (ADB) said Tuesday.

The Manila-based lender said the region needs to address the shortcomings of these arrangements as it pursues a growing patchwork of agreements, some of them bilateral and others involving a sub-region like ASEAN or the larger Asia-Pacific Economic Cooperation forum, toward economic integration.

For the most part, these arrangements "remain preferential trade agreements with only incremental progress toward becoming free trade areas," the bank said in a statement.

"Furthermore, the exclusion of sectors from PTAs substantially reduces their potential welfare benefits, as it allows sectors in need of reform to continue inefficient production."

Without citing specific countries or products, the ADB said all such Asian ptas "have relatively complex rules of origin," making it "profitable to alter production patterns simply to fulfill the rules for market access rather than to reduce costs and improve efficiency."

Many of these PTAs "resolve disputes via bilateral negotiations and have no real provisions for sanctioning members that violate the provisions of the PTAs."

The PTAs include regional bodies such as the Association of Southeast Asian Nations (ASEAN) Free Trade Area (AFTA), as well as bilateral deals including Australia's Closer Economic Relations Trade Agreement (CER) with New Zealand.

The ADB described ptas as "a suboptimal route to free trade" and stressed that "the future economic growth of Asia and the pacific region is clearly linked to the health of the multilateral trading system."

It urged PTAs to focus their agenda further on discussing regional priorities and preparing for negotiations in larger forums such as the World Trade Organization (WTO), and to use the PTAs on enhancing commitment to policy reforms among member countries, AFP reported.

"Clearly, there is a need to reform the regulations governing the relations between PTAs and WTO, and to improve the institutional architecture guiding the interaction between PTAs and WTO."