International trade - Statistical Yearbook for Asia and the Pacific 2011

Statistical Yearbook for Asia and the Pacific 2011

Economy

International trade

Data source: World Trade Organization (WTO), WTO statistics database International Monetary Fund (IMF), World Economic Outlook Database United Nations Statistics Division, United Nations Service Trade and United Nations Comtrade Databases.

Asia and the Pacific was the only region in the world in 2010 that returned to its pre-crisis, 2008 levels of exports and imports. Despite a mild slowing in its average growth rates of exports and imports from 2000-2005 to 2005- 2010, Asian and Pacific trade grew faster than the world average for 2005-2010.

Merchandise trade

World merchandise trade recovery has been faster than expected, yet uneven, across the world’s regions. While Asia and the Pacific as a whole has recovered in terms of both imports and exports, the other traditionally strong trading regions of Europe and North America have yet to reach their 2008 import and export levels. Furthermore, strong export recovery of the Asia-Pacific region has almost closed the gap with Europe, which has traditionally been the largest exporter globally. Asia and the Pacific accounted for 36% of global exports and 34% of global imports, with Europe still ranking first with approximately 37% shares of both and with North America a distant third at 11% of exports and 16% of imports in 2010. Trade patterns have also been different across income groups. Growth in merchandise exports and imports in low income countries continued to expand in 2005- 2010 compared with 2000-2005 (15% change per annum versus 11% change per annum for exports and 15% versus 10% for imports). The Asia-Pacific has consistently from 1990 to 2010 exported more (in value terms) than it has imported.

Figure III.14 – Merchandise exports, regions of the world, 1990 to 2010

Figure III.15 – Merchandise imports, regions of the world, 1990 to 2010

Not all the Asian and Pacific subregions shared in the fast recovery of trade. While the region has in 2010 reached the pre-crisis (2008) levels of merchandise export values, at subregional level, East and North-East Asia, South-East Asia and the Pacific have attained, and surpassed, their pre-crisis export levels. In 2010, the export trade values for South and South-West Asia and North and Central Asia were below the 2008 values. The Asia-Pacific region has not yet attained pre-crisis import values; while East and North-East Asia and South-East Asia have surpassed the pre-crisis levels, South and South-West Asia, North and Central Asia and the Pacific were below the 2008 values.

Figure III.16 – Merchandise exports, Asia-Pacific subregions, 1990 to 2010

Figure III.17 – Merchandise imports, Asia-Pacific subregions, 1990 to 2010

East and North-East Asia played its part in the regional recovery as a powerhouse in global trade of merchandise – in 2010 it accounted for 21% of world exports and 19% of world imports. The other subregions jointly contributed 15% of exports and 14% of imports. While strengthening its position as a global trading force, East and North-East Asia stayed relatively constant in the share of total Asian and Pacific exports and imports from 2005 to 2010 – its share of regional exports decreased marginally from 59% in 2005 to 58% in 2010 and imports stayed at 58% for both periods. The increase in the East and North-East Asia share of the world trade corresponds with decreases in the world share of Europe and North America.

In 2010, China (including Hong Kong and Macao) contributed over 60% of East and North-East Asia exports and imports, with Japan and the Republic of Korea representing more than 99% of East and North-East Asia trade. Such intense concentration with a few drivers of trade was found in other subregions as well. The extreme cases are North and Central Asia, and the Pacific where more than 75% of trade activity is associated with a single economy, the Russian Federation in the former case and Australia in the latter. In South and South-West Asia, together India and Turkey contributed more than two thirds of subregional trade, while the Islamic Republic of Iran provided 21% of exports. South-East Asia showed the least concentrated pattern, as four economies conducted most of the collective trade: Singapore about one third and Indonesia, Malaysia and Thailand jointly about half.

Asian traders have consolidated their status among the world’s leading merchandise exporters and importers over the past decade. In 2009, six countries in the region ranked among the top ten: (a) in export performance, China was number 2; Japan, 4; Republic of Korea, 5; Hong Kong, China, 6; Russian Federation, 8; and Singapore, 9; and (b) in import performance, China was number 3; Japan, 4; Hong Kong, China, 5; Republic of Korea, 7; India, 8; and Singapore, 9.¹

The trade orientation of Asian and Pacific countries has not weakened from the most recent financial crisis or earlier episodes; since 1990 the region has almost doubled dependence on trade, as measured by the ratio of merchandise exports to GDP (14% in 1990 to 24% in 2009). The world average rose from 15% to 21% during that period (a 40% rise). Additionally, the Asia-Pacific region has seen a 65% increase in the import-to-GDP ratio. However, during 2009, the Asia- Pacific region, as well as the rest of the world, experienced a decline in both import-to-GDP and export-to-GDP as compared to the previous three years when the global economy experienced high trade growth. In 2009, export-to-GDP ratios fell from 2008 levels in all Asian and Pacific countries.

Trade in services

In contrast with its merchandise trade performance, Asia and the Pacific has historically run a deficit in trade in services. Similar to merchandise trade, however, exports and imports of services decelerated in 2009. Additionally, the global financial crisis worsened the decline by causing a slightly greater fall in exports than in imports in 2009, thereby widening the deficit.

Figure III.18 – Trade in services, Asia and the Pacific, 2000 to 2010

The services sector is growing in importance in trade in Asia and the Pacific, although unevenly so among the heterogeneous subregions. East and North-East Asia supplied a little more than half of the services trade of the whole region in 2010; South-East Asia, 22%; South and South-West Asia, 15%; North and Central Asia, 7%; and the Pacific, 5.9%.² South and South-West Asia and North and Central Asia registered the largest increases in regional share of services trade at 34% and 54%, respectively, over 2000, mostly due to increased trade by India and the Russian Federation.

Figure III.19 – Trade in services, Asia-Pacific, subregional shares, 2000 and 2010

At individual country level, India and the Russian Federation more than doubled their share of regional services trade from 2000 to 2010, and China almost doubled its contribution during the same period. The Japanese share, conversely, fell by more than one third of its 2000 level and Japan lost its rank as the country with the highest share of services trade in the Asia-Pacific to China.

China and India saw large increases in service exports which also resulted in several-fold increases in their share of world service exports during the decade. China captured 4.8% and India 3.1% of world service exports, earning them fourth and tenth place among the world’s leading exporters in 2010. Australia, Japan, Republic of Korea and Thailand all contributed smaller shares to regional service exports than in 2000.

Between 2000 and 2009, no dramatic shifts occurred in the shares of trade by sector for the region.³ Computer and information services and construction services increased their share of trade, and the share of insurance increased to a small degree, while all other sectors had a decreased share of regional trade. The following are noteworthy:

1.	Imports of transportation services decreased their share from 31% to 28%, while the decline was mild on the export side.
2.	Imports of travel services declined by 7.6%, driving down the total trade share of travel services.
3.	Both exports and imports of construction services increased in similar scale.
4.	Exports of computer and information services registered the highest increase of all service sectors: over sevenfold, capturing a 7.5% share in 2009. Imports remained at less than 2%.

Figure III.20 – Trade in services, by sector, Asia and the Pacific, 2000 and 2009

Intraregional trade agreements

One way of promoting intraregional trade is through preferential trade agreements. A preferential trade agreement is a commitment from the countries participating in the agreement to reduce tariffs on products from participating countries – thus the trade block effectively gives preferential access to certain products from the other participating countries. A free trade agreement is a form of a preferential trade agreement which requires that countries eliminate tariffs on products from participating countries (absolute reduction). While the extent to which such agreements generate trade is difficult to measure due to the multitude of factors involved in trade patterns, the object of these agreements is to expand trade among a select group of countries. With the elimination of tariffs, the expansion of intraregional trade is related to (a) the demand side, the level of economic activity and the extent of barriers to cross-border trade; and (b) on the supply side, the capacity to produce and deliver to markets. Regulatory and administrative barriers include imposed product standards (for example, product testing, labelling and packaging); limitations on trade (for example, licensing and quotas); customs and administrative entry procedures; and other barriers that restrict imports in some way.

According to the ESCAP Asia-Pacific Trade and Investment Agreements Database,⁴ as of May 2011, WTO had been notified of about 103 preferential trade agreements under implementation by countries in the region (almost half the total number of agreements worldwide). Within the Asia-Pacific, there exist three multilateral free trade agreements: the ASEAN Free Trade Area (AFTA) established in 1992; the Asia-Pacific Trade Agreement (APTA), previously known as the Bangkok Agreement, was established in 1975; and the Agreement on South Asian Free Trade Area (SAFTA) was established in 2004. The ASEAN+3 is a forum for the ASEAN member countries and China, Japan, and the Republic of Korea. ASEAN has developed bilateral trade agreements with all three “plus” members of the ASEAN+3; ASEAN also signed free trade agreements with India; and Australia and New Zealand. According to Asia-Pacific Trade and Investment Report 2010,⁵ only 35% of total exports of Asian and Pacific countries are destined for partners under the agreements, leaving two thirds of the trade being implemented under Most- Favoured Nation rules.

Trade agreements under implementation and notified to WTO, among Asian and Pacific countries and other, 1994 to 2011

AFTA represents the most advanced of regional trade agreements, in which the members of the trade agreement have an intraregional agreement, but have also been able to negotiate bilateral trade agreements between the ASEAN and individual countries. Intra-ASEAN merchandise trade is around a quarter of all ASEAN trade, this represents an increase of 4.8 percentage points in intra-ASEAN exports and an increase of 8.7 percentage points for imports between 1990 (two-years prior to the establishment of AFTA) and 2009. The ASEAN bilateral agreements with the other ASEAN+3 members were established in 2010, so the future effects of these agreements cannot be discerned. In the last two decades, the share of exports to ASEAN+3 countries has declined (primarily due to China’s position as a key exporter to the rest of the world), while the share of imports from ASEAN+3 has increased.

The Asia-Pacific Trade Agreement (APTA) is the most populous formal trading bloc in the world. It includes both China and India. In the last two decades, intra-APTA trade has skyrocketed, particularly in terms of imports; in 2009 the intra-APTA share of members’ exports reached 11.7% and of imports 19%.

SAFTA has only been a trade bloc since 2004; and both the intraregional share of imports and exports declined between 2005 and 2009.

Imports and exports among members of major regional trade agreements in Asia and the Pacific, proportion of total imports and exports, 2002, 2008 and 2009

¹ International Trade Statistics 2010. Available from http://www.wto.org/english/res_e/statis_e/its2010_e/its2010_e.pdf. Note: For ranking see page 14 (Table I.9: Leading exporters and importers in world merchandise trade (excluding intra-EU (27) trade), 2009).

² The share of services trade is calculated as exports plus imports for the group divided by the total of exports and imports for the Asia-Pacific.

³ The share of services trade by sector is calculated as exports plus imports for the sector divided by the total of exports and imports for all sectors from the WTO database.

⁴ ESCAP Asia-Pacific Trade and Investment Agreements Database (APTIAD). Available from http://www.unescap.org/tid/aptiad.

⁵ Asia-Pacific Trade and Investment Report 2010. Available from http://www.unescap.org/tid/publication/Asia-Pacific-trade-and-investment-report-2010.pdf.