““Global Value Chain” in Global Value Chain” in East AsiaEast Asia

Michitaka NakatomiPresidentJapan External Trade Organization(JETRO)

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ImplicationsImplications ofof WTO/IDEWTO/IDE studystudy

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 barriersA new trade regime is needed, as

firms go beyond national boundaries

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TheThe regimeregime shouldshould include:include:

Wider regional coverageUniversalityElimination of trade barriers

◦Freer movement of goods, services, capital, people and technologies

Contribution to global business activities

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ImportanceImportance ofof WTOWTO

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.

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ComplementaryComplementary regimes for regimes for WTOWTOFTAs

◦Bilateral◦Regional

Plurilateral Agreements (such as ITA)

Other bilateral or regional cooperation

⇒ Consistency with WTO rules is required

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Japan'sJapan's actionaction andand globalglobal valuevalue chainschains inin EastEast AsiaAsia

Supply chains in East Asia◦Deepening of intra-regional trade◦The widespread system of supply

chainsJapan's support for WTO regime

◦Only 17% of Japan's trade is with FTA partners

◦A multilateral-based trade rule is the best solution

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Major Flow of Intermediate Goods and Major Flow of Intermediate Goods and Finished Goods in Asia (Electrical/Electronic)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 (36.7← 11.6)

US/Europ

e5.9times(124.4← 21.1)

1.6times(8

.7←5.4

)

1.8times(8.2← 4.7)

1.3times (19.1← 15.1)

1.6times (23.3← 14.4)

9.8times (43.8← 4.5)

10.9times

(29.4←2.7

)

4.9times (21.9←4.5)

1.1times (27.4← 24.2)

6.5times

(25.1← 4.6)

2.1times (35.1← 16.8

)

Flow of finished goods

Flow of intermediate goods2008← 1998 2008← 1998

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

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（%）

1980 1990 1995 2000 2005 2007 2008 2009

Asia ASEAN+6 33.2 33.0 40.3 40.6 43.0 42.2 42.5 43.0ASEAN+3 28.9 28.6 36.9 37.4 39.1 37.8 37.4 37.8ASEAN 15.9 17.0 21.0 22.7 24.9 25.0 25.0 26.1

Americas NAFTA 33.2 37.2 42.0 46.8 43.0 41.1 40.0 39.5Europe EU27 57.5 65.4 65.4 65.1 65.0 66.0 64.8 65.1(Notes) (1) ASEAN+6 comprises the ASEAN countries plus Japan, China, South Korea, Australia, New Zealand and India. (2) ASEAN+3 comprises the ASEAN countries plus Japan, China and South Korea. (3) The share of intra-regional trade (Export+Import) was calculated as follows: (Intra-regional exports + Intra-regional imports) / (Exports to the world + Imports from the world) *100.(Sources) DOT (IMF) .

Japan’s support towards the multinationalization of business

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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

Japan’s Outward FDI by Country/Region Japan’s Outward FDI by Country/Region (International Investment Position, End of (International Investment Position, End of

2009)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.

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Master Plan on ASEAN ConnectivityMaster Plan on ASEAN ConnectivityTo 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.

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: ERIA11

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

Japan’s support fostering:

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