michael ewing-chow-trade and investment coherence · 2016-07-12 · asean & trade • in 2010,...
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Trade and Investment Coherencein the context of the AEC 2015Dialogue on Trade and Investment Coherence:
Enabling Thai SMEs for AEC 201522 January 2013
Bangkok, Thailand
Associate Professor Michael Ewing‐ChowWTO Chair and Head, Trade/Investment Law & Policy
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3Source: ASEAN Community in Figures 2011
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Economic Divide
• The total GDP of ASEAN is about US$2 trillion compared to the EU’s US$16 trillion
• The EU: the ratio between the highest GDP per capita (PPP), Luxembourg, and that of its lowest, Bulgaria, is approximately 7:1 in 2011
• ASEAN: the ratio between the highest GDP per capita, Singapore, and the lowest GDP per capita, Myanmar, is approximately 63:1
• Integrating the Markets will be very difficult.4
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5Source: ASEAN Community in Figures 2011
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ASEAN & Trade
• In 2010, trade made up 110% ASEAN’s GDP
• ASEAN economies are very trade dependent
• However, intra‐ASEAN trade is only about 25% and is not growing significantly as compared to intra‐EC trade which comprised nearly half of members’trading activity from 1958‐1972
• AEC Blueprint: free movement of goods, services, skilled labour, and freermovement of capital
• However, intra ASEAN Market Integration is not a major driver of ASEAN Integration
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7Source: ASEAN Community in Figures 2011
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What is Traded in ASEAN?
8Source: ASEAN Community in Figures 2011
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9Source: ASEAN Community in Figures 2011
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10Source: ASEAN Community in Figures 2011
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Trade in Goods
• Mainly components and raw materials
• Electronics and auto parts
• Palm oil, petrol and rubber
• Tariffs are lowering for most items
• However, agricultural products tend to be still on the Sensitive Lists
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12Source: ASEAN Community in Figures 2011
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13Source: ASEAN Community in Figures 2011
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ASEAN FDI & Growth
• Low Capital Endowments
• Significant Poverty Rates
• FDI needed for growth and political stability
• Singapore receives about 46% of the FDI (partially can be explained as a hub economy)
• Intra‐ASEAN FDI accounts for only about 16%
• Challenge from China (and to a lesser extent, India) for extra‐ASEAN FDI
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15Source: ASEAN Community in Figures 2011
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Trade and Investment Coherence
• With the Slowdown of the Western economies, we are already experiencing a slowdown of trade and investments from the West.
• China is also slowing down.
• So what is the gain for AEC 2015?
1. Limited intra‐ASEAN trade gains.
2. Limited intra‐ASEAN investment gains
3. Productivity gains through production integration.
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Production Integration not Market Integration
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Made in the World
18Source: Meng and Miroudot, based on Xing and Detert (2010))
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ASEAN IPN for Automobiles
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Conclusion
• Laws and regulations have to be enacted with a focus on promoting this production integration.
• There should be coherence between industrial policies and trade and investment policy.
• This coherence can come about by calibration by the government as well as creating a regime that allows for private enterprise to enforce its rights.
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