FTAs IN ASIA

1. FTAs IN ASIA Razeen Sally European Centre for International Political Economy/ London School of Economics

2. FTAs IN ASIA Papers: -- FTAs and the prospects for regional integration in Asia, ECIPE Working Paper, 2006 -- Trade policy in Asia, ECIPE Policy Brief, 2007 Available at www.ecipe.org

3. FTAs IN ASIA • New wave of global economic integration, but … • Asian trade policies: from non-discrimination (unilateralism and GATT/WTO) to discrimination (FTAs) • Focus: east and south Asia (“globalising Asia”)

4. FTAs IN ASIA • Trade and FDI trends: -- China; India; ASEAN; Japan; Korea; Taiwan -- Implications for comparative advantage and the emerging Asian/global division of labour

5. Asian countries: economic and trade indicators 2005 *Whole of Taiwan. Source: World Bank. WTO statistical database. UNCTAD WIR 2006 and ADB

6. FTAs IN ASIA Global/Asian policy trends • Slowdown of liberalisation in developing countries; no new liberalisation in OECD • China the major exception: unilateral opening and WTO accession; ASEAN slowdown; India behind • Sceptics and the Washington Consensus: arguments against liberalisation; worse climate for future liberalisation • Case for further market reforms and global integration?

7. FTAs IN ASIA • Trade policy in Asia -- Trends in countries and regions -- WTO -- FTAs -- China and unilateral liberalisation -- From non-discriminatory liberalisation (unilateral and GATT/WTO) to discrimination

8. Applied Tariff rates in Asia *Malaysia 1996 *Vietnam 1997. All tariff rates are based on unweighted averages for all goods in ad valorem rates, or applied rates, or MFN rates whichever data is available in a longer period. Source: World Bank

9. Bound and applied MFN tariffs in Asia The figures are simple unweighted averages of the tariff rates in percent from the year of 2003 and 2004. Source: World Bank

10. Table x: Coverage Ratio of Non-tariff Barriers in Import Trade* (Unweighted, percent) Notes: … Not available * Calculated as percentage of import value of HS6 tariff lines affected by NTBs in total imports. NTBs include quantitative restrictions in the form of all types of licenses and import authorization, quotas, import prohibitions, advanced import deposits, foreign exchange restrictions, fixed customs valuations, and state trading monopolies. Figures reported under a given sub-period relates a single year within that sub-period. Source: Hoekman et al (2002, Table A-4 and WTO, Trade Policy Review – Country Report (various)

11. FTAs IN ASIA • FTAs -- Proliferation in Asia; catch up with other regions -- Motives: foreign policy; WTO stalled -- Building blocks? WTO-plus FTAs dependent on economic strategy -- But exceptions, not the rule -- Trade-lite FTAs (except with USA and EU?) -- Future of Asian FTAs?

12. FTAs IN ASIA • China and FTAs -- 9 FTAs; 30 under discussion/negotiation -- China-ASEAN: increasing complementary trade but competing sectors -- Encouraging results on tariffs and rules of origin; WTO-compatible but not WTO-plus; services and investment? -- WTO-plus FTAs with HK and Macau -- Negotiations with Aus and NZ -- PTAs with SACU, India and others? -- Overall: pragmatic, eclectic approach -- Danger of politics-driven trade-light FTAs (unlike China in WTO); but stronger FTAs in east Asia

13. Table 14: Recently Established or Proposed RTAs/CEPAs in ASEAN, China and India, 2000-2007 (cont’d)

14. Table 15 Trade among recently established or Proposed RTAs/CEPAs partners involving ASEAN, China and India, 2003 (cont’d)

15. FTAs IN ASIA • Southeast Asia and FTAs -- Singapore’s FTAs: misleading indicator for region -- Thailand a better indicator: all politics, no economic strategy; trade-light -- Bilateral FTAs take priority over ASEAN-plus FTAs (ROO complications) -- ASEAN FTAs: weak and partial?

16. Table 14: Recently Established or Proposed RTAs/CEPAs in ASEAN, China and India, 2000-2007 (cont’d)

17. Table 15 Trade among recently established or Proposed RTAs/CEPAs partners involving ASEAN, China and India, 2003

18. Table 14: Recently Established or Proposed RTAs/CEPAs in ASEAN, China and India, 2000-2007 (cont’d)

19. Table 15 Trade among recently established or Proposed RTAs/CEPAs partners involving ASEAN, China and India, 2003 (cont’d)

20. Table 14: Recently Established or Proposed RTAs/CEPAs in ASEAN, China and India, 2000-2007 (cont’d)

21. Table 15 Trade among recently established or Proposed RTAs/CEPAs partners involving ASEAN, China and India, 2003 (cont’d)

22. Table 15 Trade among recently established or Proposed RTAs/CEPAs partners involving ASEAN, China and India, 2003 (cont’d)

23. Table 14: Recently Established or Proposed RTAs/CEPAs in ASEAN, China and India, 2000-2007 (cont’d)

24. Table 14: Recently Established or Proposed RTAs/CEPAs in ASEAN, China and India, 2000-2007 (cont’d)

25. FTAs IN ASIA • India and FTAs -- Problems with SAFTA -- Outside south Asia: trade light; foreign policy not economic policy -- Part of overall trade-policy profile (fitful unilateral liberalisation and WTO defensiveness)

26. Table 14: Recently Established or Proposed RTAs/CEPAs in ASEAN, China and India, 2000-2007 (cont’d)

27. Table 15 Trade among recently established or Proposed RTAs/CEPAs partners involving ASEAN, China and India, 2003 (cont’d)

28. Table 15 Trade among recently established or Proposed RTAs/CEPAs partners involving ASEAN, China and India, 2003 (cont’d)

29. FTAs IN ASIA • Japan and FTAs -- Japan-ASEAN: bilaterals take priority; agriculture carve outs; unambitious on other market access; ROO restrictiveness -- Trade light and reactive compared with China

30. Table 14: Recently Established or Proposed RTAs/CEPAs in ASEAN, China and India, 2000-2007 (cont’d)

31. FTAs IN ASIA • South Korea and FTAs -- Defensive on agriculture, but more serious than other Asian players -- US-Korean FTA negotiations

32. Table 14: Recently Established or Proposed RTAs/CEPAs in ASEAN, China and India, 2000-2007 (cont’d)

33. FTAs IN ASIA • USA, EU and FTAs in Asia -- US negotiations in Asia: Thailand, Malaysia, Korea -- Changes in US trade policy: greater defensiveness; more difficult to negotiate agreements -- EU’s new Asian FTA policy -- EU negotiations: India, Korea, ASEAN -- EU-China

34. FTAs IN ASIA • Regional economic integration -- APEC: a better yesterday -- ASEAN: Visions galore, but where’s the beef? CEPT progress but little else -- APT, EAEC, AEC etc.: Any common denominators? Empty talk? -- FTAs unlikely to contribute much to regional economic integration; disintegration dangers (ROO etc)

35. The map shows FTAs signed or under negotiation in January 2006. East Asia is defined here as the 10 ASEANs, China, Japan and Korea. Source Richard Baldwin 2006

36. Noodle bowl syndrome in Africa Source: World Bank

37. Noodle bowl syndrome in America Source: Inter-American Development Bank.

38. FTAs IN ASIA • Asia in the WTO -- India: defensive, but slightly more flexible than before -- China: pragmatic, flexible but low key -- ASEAN: mixed; distracted with FTAs -- Japan/Korea: defensive, passive, punching below weight -- Asia needs effective WTO; but distracted with FTAs

39. ASIA, GLOBALISATION, TRADE POLICY Unilateral liberalisation – role of China • WTO, FTAs and diminishing returns to trade negotiations • Rely more on unilateral reforms and competitive emulation; the Chinese engine • But leaves gaps, e.g. agriculture and rules

40. Source: World Bank http://siteresources.worldbank.org/INTGEP2005/Resources/GEP107053_Ch02.pdf

41. Unilateral tariff cutting in Phase II. The diagram shows tariff revenue divided by total imports. Source: Richard Baldwin 2006; Ando and Kimura (2005).

42. Formal unilateralism; reductions in applied MFN tariffs on Source: Richard Baldwin 2006: Kimura, Takahashi, and Hayakawa (2005)

43. ASIA, GLOBALISATION, TRADE POLICY • Three Post-Doha priorities -- WTO --FTAs -- China-led unilateral liberalisation