Organized Session 3: Protectionism and BRICS economies

Transcription

1 ASIA-PACIFIC RESEARCH AND TRAINING NETWORK ON TRADE ARTNeT CONFERENCE ARTNeT Trade Economists Conference Trade in the Asian century - delivering on the promise of economic prosperity rd September 2014 Organized Session 3: Protectionism and BRICS economies

2 LATIN AMERICA ASIA-PACIFIC Observatory Ignacio Bartesaghi Coordinator BRICS countries. Relations of Brazil, China, and India within a protectionist context September 22 23, 2014 Bangkok, Thailand "Trade in the Asian century - delivering on the promise of economic prosperity

3 Contents of this presentation 1) International context. 2) Brazil, China, and India: some indicators. 3) Main instruments of trade policy. 4) Commercial relations between Brazil, China, and India. 5) China and Brazil: business tension?

4 1) INTERNATIONAL CONTEXT

5 International Context Commercial relations between the BRICS countries - and specifically between Brazil, China, and India - could not be analyzed without mentioning the transformations undergone by international economy and trade during the past two decades. The analysis must consider the changes in production systems resulting from advances in technology, the significance of services traded, the various levels of integration (economic, commercial, financial, etc.), and the new disciplines of international trade.

6 International Agreements As trade agreements grow exponentially, commercial relations between emerging markets gain significance. Source: WTO

7 Asia in worldwide exports 40% 35% 30% 25% 20% 15% 10% 5% Asia s participation in international trade has risen, particularly in relation to goods with technology content that generated production clusters. 0% Source: UNCTAD

8 Latin America in worldwide exports 14% 12% 10% 8% 6% 4% 2% 0% As opposed to the Asian region, Latin America and The Caribbean show a constant decline in significance in international trade, with scarce participation in production clusters, and a high concentration of primary goods. Source: UNCTAD

9 Asia in relation to Foreign Direct Investment (FDI) 35% 20% of world s FDI 30% 25% 20% 15% Asia captured 20% of the world s FDI in the past 30 years. 10% 5% 0% Source: UNCTAD

10 Latin America in Foreign Direct Investment (FDI) 25% 10% of world s FDI 20% 15% 10% Latin America and The Caribbean captured 10% of the world s FDI in the past 30 years. 5% 0% Source: UNCTAD

11 Non-tariff Measures Source: WTO. As a result of the lower tariffs that followed the commercial liberalization, non-tariff measures (particularly Technical Barriers to Trade, as well as sanitary and phyto-sanitary measures) have become increasingly important.

12 2) BRAZIL, CHINA, and INDIA: SOME INDICATORS

13 Some economic indicators (1) GDP Real Growth Rate Brasil China India Brasil -0,3 7,5 2,7 1 2,5 1,3 2,0 China 9,2 10,4 9,3 7,7 7,7 7,4 7,1 India 8,5 10,3 6,6 4,7 5,0 5,4 6,4 Data World Bank projections IMF Source: World Bank GDP Real Growth Rate As China decelerates its growth and India shows an important dynamism, Brazil s position significantly below its expected growth will have an impact on the relations between the economies.

14 * CIA Factbook Some economic indicators (2) Ranking Doing Business 2014 Ranking WEF ( ) GDP PPP (2013) USD* GDP per capita (2013) USD* HDI (2013) Brazil ,416 trillion China ,39 trillion India ,99 trillion These economies evidence very significant asymmetries, proven not only by GDP indicators (as in the case of China), but also by population figures (as in China and India). As per other indicators, such as Doing Business or WEF, the levels attained indicate chances for improvement in those economies, where the best results have been achieved by China over both Brazil and India. Opposite to this, Brazil s per capita GDP is higher than China s and India s figures, in addition to its better ranking in what concerns Human Development Index, where India shows significant challenges ahead.

15 Some economic indicators (3) India China 10% 6% Brazil 57% 17% 26% Agriculture Industry Services 46% 44% Agriculture Industry Services 68% 26% Agriculture Industry Services India s agricultural sector continues to be in the lead, while China s industries are still to be further developed. CIA Factbook

16 Some economic indicators (4) (2012 est.) CHINA Labor force - by occupation: Agriculture 34% Industry 30% Services 36% (2011 est.) BRAZIL Labor force - by occupation: Agriculture 16% Industry 13% Services 71% INDIA Labor force - by occupation: Agriculture 49% Industry 20% Services 31% Agriculture in both India and China represents a main activity in relation to the magnitude of manpower implied. (2012 est.) CIA Factbook

17 Some economic indicators (5) Patent applications, residents Brazil (left axis) China (right axis) India (left Axis) China (right axis) Brazil (left axis) India (left Axis) Compared to Brazil and India, China has been applying different innovation and development policies that will make their differences even more evident. 0 Source: World Bank

18 Some economic indicators (6) 12% Imports Brazil Imports China Imports India 10% 10,4% 8% 6,8% 6% 4% 2% 3,9% 0,8% 1,6% 2,5% 0% Source: Comtrade Asymmetries are also evident in each country s share in relation to international trade, with India significantly below its own potential.

19 Some economic indicators (7) 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 13% 19% 19% Brazil China India Growth figures for the exports during the period show a less significant performance by Brazilian products, as compared to exports from India and China. Source: Comtrade

20 Some economic indicators (8) China represents a significant partner to both Brazil and India, though neither of these countries are considered significant partners of China. Source: Comtrade.

21 Some economic indicators (9) Source: Comtrade. Brazil s exports are mainly primary goods, which have been on the rise in the past few years. Due to lack of competitiveness (remaining outside the global value chains), its industrialized goods have lost participation in the international market, and also partly in the regional market (the main destination of Brazilian manufactured goods). This will only be reverted by applying incentives and defensive trade policies.

22 Some economic indicators (10) Source: Comtrade. China exports products with a high degree of processing and technology content, with an evident growth in this field during recent years. This country, which has started to relocate its production in other Asian countries, continues to be an important buyer of primary goods and fuels.

23 Some economic indicators (11) Source: Comtrade. As in the case of Brazil, India s exports are also primary goods mainly, though the exports of vehicles, medicine and chemical products, and machinery have shown a growing degree of competitiveness at the international level.

24 Some economic indicators (12) 6,0% Exports Brazil 5,0% 4,8% 4,0% Exports China Exports India 3,5% 3,0% 2,1% 2,0% 1,1% 1,0% 0,6% 0,9% 0,0% Source: Comtrade. 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Period % 12% 9% 18% World Brazil China India China s has less participation in exports of services than in goods exported, as it is the case with its growth rate also. India shows greater dynamism and has attained higher levels of specialization than China and Brazil. Brazil has fallen behind in its worldwide sales of services, so, as opposed to China and India, its participation has grown only slightly.

25 3) MAIN INSTRUMENTS OF TRADE POLICY

26 Brazilian Tariffs Brazil s non-weighed average tariffs are higher than the Latin American average. Mercosur represents the regional process with the highest tariffs. Source: Latin America Asia-Pacific Observatory Tariff levels have remained stable in recent years, as a result of Mercosur s not subscribing significant agreements. 13.5% non-weighed (Agricultural: 10.1%, Nonagricultural: 14.1%)

27 Chinese Tariffs China s average tariffs are lower than those of Mercosur, though still higher than average tariffs in Asia-Pacific. Nevertheless, the country s participation in international negotiations continues to be significantly active. Source: Latin America Asia-Pacific Observatory 9.6% non-weighed (Agricultural: 15.8%, Nonagricultural: 9.1%)

28 Indian Tariffs India s average tariffs are higher than Brazilian and Chinese tariffs. India is a highly-protectionist, closed economy, subject to few trade agreements. Source: Latin America Asia-Pacific Observatory 13.7% non-weighed (Agricultural: 33.5%, Nonagricultural: 10.4%)

29 Trade defense measures: Brazil Source: WTO In accordance with non-tariff measures approved and applicable for the period, Brazil has sanitary and phyto-sanitary measures in place that have shown certain decrease lately, while technical barriers to trade and anti-dumping measures have been on the rise for the last few years.

30 Trade defense measures: China Source: WTO China has fewer anti-dumping measures in force, but also applies sanitary and phyto-sanitary measures, as well as technical barriers to trade, and countervailing measures.

31 Trade defense measures: India Source: WTO In the case of India, while anti-dumping measures and quantitative restrictions stand out, the application of sanitary and phyto-sanitary measures has gone down significantly in recent years.

32 4) COMMERCIAL RELATIONS BETWEEN BRAZIL, CHINA, and INDIA

33 Brazil Exports Brazil to China Imports Brazil from China Trade Balance Exports Brazil to India Imports Brazil from India Trade Balance Source: Comtrade. The trade of goods between Brazil and China is close to nine times greater than trade between Brazil and India. Bi-lateral trade with China during the period grew in excess of 10% as compared with trade with India. While positive in the case of China, Brazil s trade balance is negative in relation to India.

34 China Exports China to India Imports China from India Trade Balance Exports China to Brazil Imports China from Brazil Trade Balance Source: Comtrade. China s exports to Brazil are similar to its exports to India, indicating the potential of trade relations between India and China. Exports by China to these two countries during the period grew alike, despite the greater increase (almost 10% more) of imports from Brazil than imports from India, which also explains the significantly different trade balances.

35 India Exports India to Brazil Imports India from Brazil Trade balance Exports India to China Imports India from China Balance Source: Comtrade. Bi-lateral trade between India and China is much greater than between India and Brazil. India s trade balance, while favorable and growing in what concerns Brazil, is extremely and increasingly negative in relation to China. India s trade with Brazil rose to 28% in the period, as its trade with China stands at 30%.

36 5) CHINA and BRAZIL: BUSINESS TENSION?

37 Effects of the relation between Brazil and China (1) China gained ground, in recent years, in relation to the supply of goods with a high technology content. With a lesser preponderance of its primary goods and products from the agroindustrial sector or with low technology content, China has specialized in more industrialized goods. 70% 60% 50% 40% 30% 20% 10% 0% 15% 11% Primary and manufacturing agriculture products % 26% Low technological content Source: Comtrade. 52% 63% Medium and high technological content For Mercosur, this is evidenced by recorded statistics.

38 Effects of the relation between Brazil and China (2) 100% 90% 80% 70% 79% Primary and manufacturing agriculture products 90% 60% 50% 40% With technological content 30% 20% 10% 0% 13% % Source: Comtrade. By contrast, China imports products from Mercosur with less technology, leading to the primarization of the region s exports.

39 Millions, US$ Effects of the relation between Brazil and China (3) % 8% 7% 6% 5% 4% 3% 2% 1% 0% 1% 8% Source: Comtrade. Vehicle and spare-parts imports from China to Mercosur rose from USD 98 million in 2001 to USD billion in 2012, representing an increase from 1% to 8% of all imports by Mercosur.

40 Anti-dumping measures imposed on China by Brazil Member imposing Partner affected Period Requirements Phase Measures Brazil All Anti dumping In force 86 Brazil All Anti dumping Initiation 200 Brazil All Anti dumping Withdrawn 96 Total 382 Period Member imposing Partner affected Requirements Phase Number Brazil China Antidumping Initiation 55 Brazil China Antidumping In force 27 Brazil China Antidumping Withdrawn 17 Source: WTO. Total 99 Brazil s enforcement of a large number of anti-dumping measures against China explains totals to a large extent and confirms the defensive policy imposed on China s exports.

41 Trade Agreements? (1) Mercosur has not subscribed any agreements with Asia-Pacific, except for a nonsubstantial agreement signed with India relative to fixed preferences. Source: Latin America Asia-Pacific Observatory

42 Trade agreements? (2) Mercosur is not currently negotiating any agreements with Asia Pacific either. However, other countries from the region are holding their own negotiations in this sense. Source: Latin America Asia-Pacific Observatory

43 LATIN AMERICA ASIA-PACIFIC Observatory Ignacio Bartesaghi Coordinator BRICS countries. Relations of Brazil, China, and India within a protectionist context September 22-23, 2014 Bangkok, Thailand "Trade in the Asian century - delivering on the promise of economic prosperity