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“Global Value Chain” in East Asia

“Global Value Chain” in East Asia. Michitaka Nakatomi President Japan External Trade Organization(JETRO). Implications of WTO/IDE study. Issues of "global value chains" and "vertical specialization" highlighted

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“Global Value Chain” in East Asia

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  1. “Global Value Chain” in East Asia MichitakaNakatomi President Japan External Trade Organization(JETRO)

  2. ImplicationsofWTO/IDEstudy • Issuesof"globalvaluechains"and"verticalspecialization"highlighted • Diversityandcomplementaritiesofproductionnetworkscause"fragmentedvaluechains" • The concept of "country of origin" isbecoming increasingly difficult to apply • Importanceofloweringtradebarriers • Anewtraderegimeis needed,asfirms go beyond national boundaries

  3. Theregimeshouldinclude: • Wider regionalcoverage • Universality • Eliminationoftradebarriers • Freermovementofgoods,services,capital,peopleandtechnologies • Contributiontoglobalbusinessactivities

  4. ImportanceofWTO • WTOasauniversalregime • WTOasaregimeforensuringcompanies'productionsandactivitiesglobally • SwiftconclusionofDohaRoundnecessary • Aregimethatprovidessolutionstobusinesschallengesisneeded • Notonlytariffs,butalsoanti-dumpingrules,tradefacilitation,tradeandinvestment,competitionpolicyandintellectualpropertyrights,etc.cf.ChapterIV of the study:necessitytodealwithNTMs • Speed : Business requires a regime which responds quickly to its needs.

  5. Complementaryregimes for WTO • FTAs • Bilateral • Regional • PlurilateralAgreements(suchasITA) • Otherbilateralorregionalcooperation ⇒ Consistency with WTO rules is required

  6. Japan'sactionandglobalvaluechainsinEastAsia • SupplychainsinEastAsia • Deepeningofintra-regionaltrade • Thewidespreadsystemofsupplychains • Japan'ssupportforWTOregime • Only17%ofJapan'stradeiswithFTApartners • A multilateral-basedtraderuleisthebestsolution

  7. Major Flow of Intermediate Goods and Finished Goods in Asia (Electrical/Electronic) 1.6times (23.3←14.4) US/ Europe 5.9times(124.4←21.1) 6.5times (25.1←4.6) South Korea 1.1times (27.4←24.2) 10.9times (29.4←2.7) 1.8times(8.2←4.7) Japan China/ Hong Kong 3.2times (36.7←11.6) 1.6times(8.7←5.4) 4.9times (21.9←4.5) 9.8times (43.8←4.5) Taiwan ASEAN 1.3times (19.1←15.1) Flow of finished goods Flow of intermediate goods 2.1times (35.1←16.8) 2008←1998 2008←1998 * Electric/electronic machinery export value (billion USD) Source: RIETI-TID(2009), White Paper on International Economy and Trade 2010 (METI)

  8. Intra-regional trade percentage in major regions of the world

  9. Japan’s supporttowards the multinationalization of business Vertical/horizontal integration across borders 1. Promotion of FDI inward /outward FDI See next page 2. Trade liberalization 3. Contribution to international trade rules (ITA, ACTA etc.)

  10. Japan’s Outward FDI by Country/Region (International Investment Position, End of 2009) Total: 740 billion USD Sources: Prepared by JETRO from Ministry of Finance and Bank of Japan balance of payment and cross-border investment statistics, and Bank of Japan foreign exchange rates.

  11. Master Plan on ASEAN Connectivity • To build the ASEAN Community by 2015, ASEAN designed a plan focused on Physical Connectivity (transportation, energy, ICT etc.), Institutional Connectivity (trade facilitation, MRAs etc.) and People-to-People Connectivity (tourism, education, culture etc.). • ERIA, ADB, UNESCAP and other International Organizations helped the ASEAN Secretariat in drafting the work. • The Master Plan was presented at the 17th ASEAN Summit in 2010. Source: ERIA

  12. Japan’s support fostering: 1. Connectivityin soft infrastructure 1) FTAs E.g. (Completedwith): Singapore, Malaysia, Thailand, Indonesia, Brunei, Philippines, Vietnam, ASEAN, India (Under negotiation with): Korea, Australia (Under study with): China and Korea, Mongolia,ASEAN+3, ASEAN+6 2) Trade facilitation 3) IPR protection, etc. 2. Connectivity in hard infrastructure Infrastructure development 3. People-to-people connectivity Human resource development (HRD) Creating connectivity in ASEAN and with the surrounding region

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