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Global Value Chain in East Asia Michitaka Nakatomi President Japan External Trade Organization(JETRO) * Implications of WTO/IDE study Issues of – PowerPoint PPT presentation

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1
Global Value Chain in East Asia
  • Michitaka Nakatomi
  • President
  • Japan External Trade Organization(JETRO)

2
Implications of WTO/IDE study
  • Issues of "global value chains" and "vertical
    specialization" highlighted
  • Diversity and complementarities of production
    networks cause "fragmented value chains"
  • The concept of "country of origin" is becoming
    increasingly difficult to apply
  • Importance of lowering trade barriers
  • A new trade regime is needed, as firms go beyond
    national boundaries

3
The regime should include
  • Wider regional coverage
  • Universality
  • Elimination of trade barriers
  • Freer movement of goods, services, capital,
    people and technologies
  • Contribution to global business activities

4
Importance of WTO
  • WTO as a universal regime
  • WTO as a regime for ensuring companies'
    productions and activities globally
  • Swift conclusion of Doha Round necessary
  • A regime that provides solutions to business
    challenges is needed
  • Not only tariffs, but also anti-dumping rules,
    trade facilitation, trade and investment,
    competition policy and intellectual property
    rights, etc.cf. Chapter IV of the study
    necessity to deal with NTMs
  • Speed Business requires a regime which responds
    quickly to its needs.

5
Complementary regimes for WTO
  • FTAs
  • Bilateral
  • Regional
  • Plurilateral Agreements (such as ITA)
  • Other bilateral or regional cooperation
  • ? Consistency with WTO rules is required

6
Japan's action and global value chains in East
Asia
  • Supply chains in East Asia
  • Deepening of intra-regional trade
  • The widespread system of supply chains
  • Japan's support for WTO regime
  • Only 17 of Japan's trade is with FTA partners
  • A multilateral-based trade rule is the best
    solution

7
Major Flow of Intermediate Goods and Finished
Goods in Asia (Electrical/Electronic)
US/ Europe
1.6times (23.3?14.4)
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
Japans support towards 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
Japans 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
Japans support fostering
  • 1. Connectivity in soft infrastructure
  • 1) FTAs
  • E.g. (Completed with)
  • Singapore, Malaysia,
    Thailand, Indonesia, Brunei,
  • Philippines, Vietnam, ASEAN,
    India
  • (Under negotiation with) Korea,
    Australia
  • (Under study with) China and
    Korea, Mongolia,ASEAN3,

  • ASEAN6
  • 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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