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

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Presentation on theme: "Global Value Chain in East Asia Michitaka Nakatomi President Japan External Trade Organization(JETRO) 1."— Presentation transcript:

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

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 2

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 3

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. 4

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

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 6

7 Major Flow of Intermediate Goods and Finished Goods in Asia (Electrical/Electronic) Source: RIETI-TID(2009), White Paper on International Economy and Trade 2010 (METI) Japan South Korea China/ Hong Kong Taiwan ASEAN * Electric/electronic machinery export value (billion USD) 3.2times ( ) US/ Europe 5.9times( ) 1.6times( ) 1.8times( ) 1.3times ( ) 1.6times ( ) 9.8times ( ) 10.9times ( ) 4.9times ( ) 1.1times ( ) 6.5times ( ) 2.1times ( ) Flow of finished goodsFlow of intermediate goods

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

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

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. 10

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 17 th ASEAN Summit in 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 17 th ASEAN Summit in Source: ERIA 11

12 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,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 Japans support fostering: 12


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