1 - Ifri

AEC and Regional Economic
Integration in East Asia
February 2015
Shujiro URATA
ERIA and Waseda University
1
Contents
I. Rapid Economic Growth in East Asia
II. Market-driven Regional Economic
Integration
III. Institution-driven Regional Economic
Integration
IV. AEC, RCEP, TPP
V. Concluding Remarks
2
I. Rapid Economic Growth in East Asia
•Rapid expansion of foreign direct investment
(FDI) and foreign trade
•Liberalization of trade and FDI policies
•Structural policy reform: deregulation,
privatization, etc
•Improved infrastructure
3
Rapid Economic Growth in East Asia
4
Merchandise Exports (1990=100)
5
Trade Liberalization: Declining Tariff Rates (%)
China
Indonesia
Japan
Korea
Malaysia
Philippines
Singapore
1992
2010
1989
2010
1988
2010
1988
2010
1988
2009
1988
2010
1989
2010
NonPrimary Primary Total
products products products
40.4 Thailand
40.6
35.1
9.6
8.7
15.6
19.2 Australia
19.2
18.2
6.8
6.6
8.4
4.2 US
3.5
8.3
4.4
2.5
17.3
18.6 Canada
18.6
19.3
12.1
6.6
48.5
14.5 Mexico
14.9
10.9
8
7.6
10.9
28.3 Chile
27.9
29.9
6.3
5.7
9.8
0.4 Colombia
0.4
0.2
0
0
0.2
Primary
products
1989
2010
1991
2010
1989
2010
1989
2010
1991
2010
1992
2010
1992
2011
30
22.8
9.5
1.3
3.8
4.9
6.1
11.3
12
21.5
11
4.38
11.8
7.49
NonPrimary
products
Total
products
38.5
39
9.9
8
13.1
14.2
2.8
3
5.6
5.9
3.5
3.3
8.6
9.2
3.7
2.6
13.4
13.4
9
7.1
11
11
4.85
4.91
12
12
6.8
6.73
6
II. Market-driven Regional
Economic Integration
•Formation of production networks by
multinational corporations (MNCs)
•Active intra-regional trade in parts and
components
•Taking advantage of wide differences in wages
and levels of skills of workers
•Improved connectivity inside East Asia by
building infrastructure
7
Intra-regional Trade Ratios (%)
8
Share of Parts and Components in
Intra-regional Trade (%)
9
Production Networks: Supply Chains
Thailand
Source: “ASEAN Connectivity and East Asia”, Economic Research Institute for ASEAN and
3
East Asia (ERIA)
Procurement of Parts by a Hard Disc Drive
Producer (Production Network)
USA
SPNDLE MOTOR:
NIDEC, NMB
BASE: WEARNS
CARRIAGE:
FUJIKURA, SANEI
FLEX CABLE: NOK
PIVOT: NMB
SEAL: KOKOKU
VCM: SMT,TDK
TOP COVER: NOK, NHK
PCBA: SSCI
HGA:UTC
HAS:UTC
Mexico
DISK: HGST
HEAD: HGST
SUSPENSION:HTI
China
Japan
PCBA:GBM,SSCI
CARRIAGE:TDK
HGA: HSPC
BASE: BPI
HEAD: HGST
SUSPENSION:NHK
Thailand
Malaysia
BASE: KENSEISHA
PIVOT: NSK
SPACER:KENSEISHA
VCM:SHINETSU
BASE:ASAHI
CARD:SCI, CELESTICA
TOP CLAMP: SCL,
CELESTICA, SOODE
DISK: KOMAG
COVER: KURODA,
CHEUNGWOH
SCREW:TIORMAC,
SPURWAY
PIVOT: NSK
PC ADP: JST
DISC: HOYA
Taiwan
TOP CLAMP: GML
Hong Kong
FILTER CAP: GML
Singapore
HEAD: GDL
COVER: NHK
DISK:HOYA
SCREW: KATAYAMA
SEAL: KOKOKU, TOKAI
RAMP: DAICHI
TOP CLAMP: BPI, SOODE
LATCH: NOK
PLATECASE: BRIDGESTONE
LABEL: SANSAI
FILTER: SSRETEK
PCBA: SSCI
SUSPENSION: NHK
Philippines
DAMPING PLATE: IMEAS
COIL SUPPORT: TOTOKU
PCBA: IONIX
Indonesia
W.SUSPENSION: SUMITOMO
VCM: SHINETSU
PCBA: SOLECTION
Per Capita GDP in $US: 2013
12
III. Institution-Driven Regional
Economic Integration
• ASEAN Free Trade Area (AFTA, 1992)->ASEAN
Economic Community (2015)
• Rapid expansion of free trade agreements (FTAs) in East
Asia in the 21st century
• ASEAN has become a hub of FTAs in East Asia:
5 ASEAN+1 FTAs have been implemented
• 2 major initiatives have been negotiated: Trans-Pacific
Partnership (TPP), RCEP (ASEAN+6)
• Long term goal: Free Trade Area of Asia-Pacific
(FTAAP) APEC-wide FTA
• China proposed “collective strategic study” on the issues
related to realization of FTAAP
13
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1989
1983
1982
1981
1980
1976
1975
FTAs in Asia (cumulative number)
120
100
80
60
40
20
0
14
Region-wide FTAs in East Asia:
RCEPP, TPP, China-Japan-Korea (CJK) FTA
TPP
RCEP(ASEAN+6)
（ASEAN+CH, JP, KR, IND, AUS, NZ）
Vietnam
Canada
Japan
Viet Nam
Malaysia
Singapore
USA
Brunei
Mexico
Peru
TPP
Australia New Zealand
ASEAN+1 FTA
Korea
China
India
FTAAP (APEC)
China-Japan-Korea
Japan
Russia
China
Korea Japan
CH.
CH. Taipei
HongKong
Thailand Brunei
Malaysia
Singapore
Australia
& NZ
Vietnam
Philippines
Canada
US
Mexico
Peru
Indonesia PNG
Australia
New Zealand
Chile
Chile
IV. AEC, RCEP, TPP
Membership
Status
Target year
Contents
AEC
RCEP
ASEAN
In progress
2015
Deep integration,
cooperation,
inclusiveness
ASEAN+6
Negotiation
2015
Shallow
integration,
cooperation
TPP
12 APEC
Economies
Negotiation
2015(?)
Trade and FDI
Liberalization,
Rule setting
16
Economic Benefits of RCEP for ASEAN
16.0
13.4
14.0
12.0
9.5
10.0
8.3
8.0
5.8
6.0
4.0
2.3
5.0
3.0
2.0
0.0
ASEAN
Coexistence of Five ASEAN+1 FTAs
Coexistence of Five ASEAN+1 FTAs and CJK FTAs
ASEAN+6 FTA
Source: Computed by Itakura for MTR
Project
3.3
2.9
V. Concluding Remarks
• ASEAN can gain benefits from integrating with
the rest of Asia including Asia-Pacific and
Europe
• ASEAN is preoccupied with the completion of
AEC. ASEAN needs to establish AEC as soon as
possible.
• ASEAN should take an initiative in reaching an
agreement in RCEP negotiation and establishing
an FTA with the EU.
• In addition to contributing to the establishment
of regional frameworks, ASEAN should play an
active role in promoting the WTO talks.
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