Trade in North-East Asia: State of Play Andrea Goldstein ESCAP Sub-regional Office for North-East Asia Incheon, ROK
Outline North-East Asia economies are open by global and Asian standards Trade growth has resumed after 2009 but remains below the pre-crisis levels Trade continues to make a major (albeit declining) contribution to GDP growth Intra-regional trade keeps raising but at a slow pace and remains below potential 2
Merchandise exports as share of GDP 70.0 Exports of merchandise (% of GDP) 60.0 50.0 40.0 30.0 20.0 10.0 East and North-East Asia DPR Korea Mongolia Asia and the Pacific 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Year 3
Merchandise imports as share of GDP 100.0 Imports of merchandise (% of GDP) 80.0 60.0 40.0 20.0 East and North-East Asia DPR Korea Macao, Mongolia Asia and the Pacific 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Year 4
Merchandise exports growth 60.0 Exports of merchandise (% change per annum) 40.0 20.0 0.0-20.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 East and North-East Asia DPR Korea Hong Kong, Macao, Mongolia -40.0 Asia and the Pacific -60.0 Year 5
Merchandise imports growth 100.0 80.0 60.0 East and North-East Asia Imports of merchandise (% change per annum) 40.0 20.0 0.0-20.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 DPR Korea Hong Kong, Macao, Mongolia Asia and the Pacific -40.0-60.0 Year 6
Trade balance Merchandise trade balance (Million US dollars) 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 East and North-East Asia Hong Kong, Asia and the Pacific 0-50,000 2000-2003 2004-2007 2008 2009 2010 2011-100,000 Year 7
Trade balance as a share of GDP 10 Merchandise trade balance (% of GDP) 5 0-5 -10-15 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 East and North-East Asia DPR Korea Hong Kong, Mongolia Asia and the Pacific -20-25 Year 8
Sectoral composition of exports (2009-11 average) East and North-East Asia 60.0 50.0 40.0 Hong Kong, 30.0 Percentage 20.0 10.0 0.0 3.0 2.0 1.0 0.0 SITC 0 Food & live animals SITC 1 Beverages and tobacco SITC 2 Crude mater.ex food/fuel SITC 3 Mineral fuel/ lubricants SITC 5 Chemicals/ products nes SITC 6 Manufactured goods SITC 7 Machinery/ transport equipment SITC 8 Misc. manufarts SITC 9 Commodities nes Sectoral composition 9
Sectoral composition of imports (2009-11 average ) 60.0 50.0 40.0 East and North-East Asia Hong Kong, Macao, 30.0 P ercen tag e 20.0 10.0 0.0 5.0 4.0 3.0 2.0 1.0 0.0 SITC 0 Food & live animals SITC 1 Beverages and tobacco SITC 2 Crude mater.ex food/fuel SITC 3 Mineral fuel/ lubricants SITC 4 Animal veg oil/fat SITC 5 Chemicals/ products nes SITC 6 Manufactured goods SITC 7 Machinery/ transport equipment SITC 8 Misc. manufarts SITC 9 Commodities nes Sectoral composition 10
Intraregional trade share 90.0 Intraregional trade share (%) 80.0 70.0 60.0 50.0 40.0 East and North-East Asia Hong Kong, Macao, Mongolia Asia and the Pacific 30.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Year 11
Intraregional trade growth 50.0 Intraregional trade growth (% change per annum) 40.0 30.0 20.0 10.0 0.0-10.0-20.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 East and North-East Asia Hong Kong, Macao, Mongolia Asia and the Pacific -30.0 Year 12
Intraregional export share 100.0 Intraregional export share (%) 80.0 60.0 40.0 20.0 East and North-East Asia Hong Kong, Macao, Mongolia Asia and the Pacific 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Year 13
Intraregional import share 100.0 Intraregional import share (%) 90.0 80.0 70.0 60.0 50.0 East and North- East Asia Hong Kong, Macao, Mongolia Asia and the Pacific 40.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Year 14
Intraregional export growth 80.0 Intraregional export growth (% change per annum) 60.0 40.0 20.0 0.0-20.0-40.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 East and North-East Asia Hong Kong, Macao, Mongolia Asia and the Pacific -60.0 Year 15
Intraregional import growth 50.0 Intraregional import share (ESCAP) (% change per annum) 40.0 30.0 20.0 10.0 0.0-10.0-20.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 East and North-East Asia Hong Kong, Macao, Mongolia Asia and the Pacific -30.0 Year 16
Towards an Integrated regional market tariffs and non-tariff barriers intraregional trade is expensive Barriers to trade in services and investments also remain Approaches to liberalization limited to subregional and bilateral arrangements Asian Noodle Bowl Do not provide an integrated broader market Poor facilitation of trade between subregions Coverage also varies most agreements liberalizing trade in goods coverage gradually extending to trade in services and investment. Some provisions for migration covered in a few agreements Need to complement the subregional groupings by a broader arrangement to lead to a pan-asia- Pacific regional trade agreement Broader, comprehensive, deeper Liberalization, facilitation and cooperation Can be evolved in a progressive manner Economic cooperation should cover assistance for lagging regions and vulnerable sections, Source: ESCAP (2012), Pursuing Growth and Shared Prosperity through Economic Integration 17
1. Create an Asian Economic Area (AEA) through merger of sub-regional groupings create an umbrella agreement AEA, negotiated under the auspices of ESCAP to provide a framework for subregional groupings to exchange tariff preferences on a reciprocal basis and share experiences + Potential for substantial welfare gains - May be complicated by different stages of evolution of the subregional groupings - Leaves out some major economies e.g.,, RoK Creating a Consultative Group of the Subregional Groupings on Economic Cooperation to facilitate sharing of best practices between them Source: ESCAP (2012), Pursuing Growth and Shared Prosperity through Economic Integration 18
1. Create an Asian Economic Area (AEA) through merger of sub-regional groupings create an umbrella agreement AEA, negotiated under the auspices of ESCAP to provide a framework for subregional groupings to exchange tariff preferences on a reciprocal basis and share experiences + Potential for substantial welfare gains - May be complicated by different stages of evolution of the subregional groupings - Leaves out some major economies e.g.,, RoK Creating a Consultative Group of the Subregional Groupings on Economic Cooperation to facilitate sharing of best practices between them Source: ESCAP (2012), Pursuing Growth and Shared Prosperity through Economic Integration 19
2. Build on ASEAN plus approach Comprehensive Economic Partnership in East Asia (CEPEA = ASEAN+6) as a nucleus of an incipient Asia-Pacific-wide FTA to which other Asia-Pacific countries could accede to in future CEPEA Study process completed; four ASEAN+ study groups have been set up to develop it further ASEAN+1 FTAs concluded with all the six dialogue partners that can be multilateralized with common rules of origin Already based on Liberalization, Facilitation and Economic Cooperation Opening it up for accession for other Asia- Pacific countries Potential for substantial welfare gains Bali Summit of ASEAN in 2011 adopted framework for regional comprehensive economic partnership of East Asia Need to expedite the process Source: ESCAP (2012), Pursuing Growth and Shared Prosperity through Economic Integration 20
3. A new Asia-Pacific Trade and Economic Cooperation Agreement A new agreement under the auspices of ESCAP open to all member states Based on substantially all trade (negative list basis) conforming to Article XXIV of GATT Comprehensive coverage: goods, services and investments, facilitation Special and differential treatment for poor countries and economic cooperation covering support to lagging regions and vulnerable sections Potential to raise welfare by more than one percent of the whole region with poorer countries benefiting more. The three options are not mutually exclusive Source: ESCAP (2012), Pursuing Growth and Shared Prosperity through Economic Integration 21
Summary of welfare gains in simulations (percentage of GDP) Among FTAs Among and between FTAs With trade facilitation CEPEA (ASEAN + 6) w/o TF TF Pan-Asian FTA w/o TF TF LDCs 0.58 0.72 0.01 0.98 0.30 0.95 LLDCs 1.10 1.09 0.53 1.18 SIDs 1.28 2.05 0.82 2.02 Others 0.66 1.32 0.54 0.77 0.78 1.05 Source: ESCAP (2012), Pursuing Growth and Shared Prosperity through Economic Integration 22
35 30 25 20 15 10 5 0 23 Afghanistan Armenia Australia Azerbaijan Bangladesh Bhutan Brunei Cambodia Cook Island Fiji Georgia Hong Kong, India Indonesia Iran, Islamic Rep. Kazakhstan Korea, Rep. of Kiribati Kyrgyzstan Lao PDR Macao, Malaysia Maldives Marshall Islands Micronesia Mongolia Myanmar Nauru Nepal New Zealand Niue Pakistan Palau Papua New Guinea Philippines Russian Federation Samoa Singapore Solomon Islands Sri Lanka Tajikistan Thailand Tonga Turkey Turkmenistan Tuvalu Uzbekistan Vanuatu Viet Nam Agreements in force Agreements under negotiation Pending country ratification
Thank you 24