Catalog

	Table of Contents
p. 59 of 81 BACK | NEXT I. Developing Asia and the World II. Economic Trends and Prospects in Developing Asia III. Preferential Trade Agreements in Asia and the Pacific Overview Trends in Trade and the Expansion of PTAs: Trends in World and Asian Trade Flows Diversity in of PTAs The Economic and Broader Effects of PTAS: Theoretical Arguments Effects of PTAs on Trade in Asia and the Pacific: Some Evidence Conclusions References

Asian Development Outlook 2002 : III. Preferential Trade Agreements in Asia and the Pacific

---

Trends in Trade and the Expansion of PTAs

Trends in World and Asian Trade Flows

Overall Trade. World trade has grown faster than gross domestic product (GDP) in the last 50 years as the world economy has become more open (Figure 3.1). The average annual growth of exports was 6.5%. This was nearly 3 percentage points higher than the GDP growth rate of 3.8% (Table 3.2).

Growth in the exports of manufactured products has consistently surpassed growth in exports of agricultural and mining products as manufacturing goods’ share in total merchandise exports increased. The share of manufactured exports in total merchandise exports rose from 70% to 75% in the 1990s, while the share of agricultural and mining exports fell from around 26% to 22% (Table 3.3). Exports of telecommunications and office equipment surpassed those of automotive products in the decade, growing from a little less than 9% of total exports to 15%, while automotive sector exports remained relatively constant at just over 9%. Exports of garments and textiles slowed in the 1990s, with textiles in particular growing at a slower rate than total merchandise exports.

This variation in the rate of growth of exports across categories of goods is due, in part, to differences in trade regimes. Rapidly growing telecommunications and office equipment exports that were critical components of the information and communications technology revolution of the 1990s have been subject to low or zero duties and taxes, while slower-growing trade in garments and textiles, on the other hand, is managed under the MFA, which operates under a quota system. Other manufactured exports, such as iron and steel, machinery and transport equipment, chemicals, other semimanufactures, and consumer goods are governed by a variety of trade rules, including PTAs. The growth of trade in most of these goods, while still substantial, has been slightly below the growth rate of overall merchandise exports.

Geographic Concentration of Trade. North America, Western Europe, and Japan have consistently been the top three trading regions or countries. Together they accounted for 64.3% of world exports and 68.6% of imports in 2000, up from, respectively, 59.2% and 61.2% in 1948 (Table 3.4). In the 1990s, the share of the PRC in total world trade rose. Like the PRC, the share of the grouping comprising Central and Eastern Europe, the Baltic States, and the Commonwealth of Independent States (CIS) expanded in the 1990s.

Developing Asia, defined as the DMCs of ADB, nearly doubled its share of world merchandise exports over the past 50 years, while its share of world imports increased by about 50%, making the continent a net exporter of goods. Seven economies (PRC; Hong Kong, China; Korea; Malaysia; Singapore; Taipei,China; and Thailand) in 2000 accounted for 84% of developing Asia’s exports as well as 84% of its imports. This is a sharp rise from the 64% and 61% shares they accounted for in 1960.² There were also important changes in the direction of exports of the DMCs from 1980 to 2000.

Increase in world trade and number of PTAs. As exports and imports have increased in importance in the world economy, greater attention has been given to the PTAs in the Asia and Pacific region (Figure 3.2). As more and more countries enter into negotiations to join WTO, the same countries have often simultaneously turned their attention to creating even closer trading ties with their neighbors. At present, about 97% of total global trade involves countries that are members of at least one PTA, compared with 72% in 1990.³

Generally, international trade is more important to smaller economies than to larger ones (Figure 3.3). Yet a few large industrial countries and regions dominate world trade. This asymmetry may help explain why some smaller economies have looked to PTAs to represent their interests in a broader international trading system.

The number of PTAs is expanding as well as the number of members of existing PTAs. Looking at the expansion of members of several of the PTAs in the Asia and Pacific region, one notes that APEC membership has grown rapidly. When founded in 1989, membership consisted of the ASEAN member states, as well as Australia, Canada, Japan, Korea, New Zealand, and the United States (US). The PRC joined in 1991, and Viet Nam in 1997, as their commitment to market opening and international integration became more certain. Hong Kong, China and Taipei,China joined in 1991. Chile, Mexico, Papua New Guinea, Peru, and the Russian Federation joined subsequently.

ASEAN’s expansion to Viet Nam, Cambodia, and Myanmar was alternately interpreted as a move toward “natural trading partners,” an effort to bring transition economies into the market system, and an effort to secure preferential access by existing members to the new members’ rich natural resources.

PTAs in East Asia and Southeast Asia have generally been less active in carrying out effective trade liberalization than PTAs in other regions. As a result, although PTAs have existed for some time in these two subregions, the economies have remained highly export oriented and include many economies where exports represent a large share of GDP. The rapid growth of PTAs demonstrates the attractiveness of the larger regional markets, created by the PTAs, which can be accessed by joining an existing PTA. It may also reflect the sense of insecurity felt by smaller nations dependent on export earnings.

Back Chapter Overview	Next Diversity in of PTAs