Asia-Pacific Trade and Investment Report 2016 Annual flagship - - PDF document

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ASIA-PACIFIC TRADE AND INVESTMENT REPORT 2016 Recent Trends and Developments

Launch UNCC,29 November 2016

Presented by Susan F. Stone, Director, TIID

Asia-Pacific Trade and Investment Report 2016

• Annual flagship publication of

ESCAP’s Trade, Investment and Innovation Division.

• Comprehensive assessment
• f recent trends and

developments in regional trade; FDI; trade policy; trade facilitation; trade agreements; digital trade.

• Country and subregional

briefs. Available free online: www.unescap.org

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APTIR 2016: Merchandise Trade

• Trade growth is yet to return to its pre-crisis levels. Total exports and imports from the region

fell by 10% and 15%, respectively in 2015, but were still double the 2005 value (amounting to

• ver $12.5 trillion)
• However, trade/GDP, which shows dependency on trade, has fallen from a pre-crisis level of

56.7% to 42.7% in 2015 [and for goods and services, from 67.5% to 52.9%]

• The region is the largest trading region, contributing 40% of world exports and 37.5% of

world imports FIFTH YEAR OF WEAK GROWTH IN REGIONAL TRADE BUT THE REGIONS MAINTAINS ITS DOMINANT POSITION

• 53% of exports were

intraregional, intraregional import share rising fast and reached 59%.

• ENEA still contributing more than

60% of Asia-Pacific trade.

• NCA growth and share rapidly

falling in recent years.

• SSWA also relatively

disengaged from the region in terms of exports.

• China accounted for nearly 20%
• f total exports by the rest of the

region.

APTIR 2016: Merchandise Trade

21.7 22.1 5.9 8.1 24.5 12.9 12.6 5.5 10.2 28.8 12.4 24.4 5.5 1.9 9.9 4.8 5.3 9.0 8.1 4.5 1.8 0.5 2.7 7.9 0.3 2.1 3.8 1.0 0.1 7.4 44.3 31.3 70.4 63.7 24.6 10 20 30 40 50 60 70 80 90 100

East and North-East Asia (ENEA) South-East Asia (SEA) South and South-West Asia (SSWA) North and Central Asia (NCA) The Pacific

Total Export (%) Rest of the world The Pacific NCA SSWA SEA China ENEA Excl China

INTRAREGIONAL TRADE IS DOMINATED BY TRADE WITH EAST AND NORTH-EAST ASIA

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APTIR 2016: Services Trade

• Drop in merchandise trade and economic and political uncertainty triggered a strong contraction in

commercial services trade.

• Asia-Pacific exports fell by 4.5% and imports by 4.9% in 2015.
• The region still a net importer of services accounting for 33% of world imports, and contributing 28%

to world exports.

• China accounts for more than a quarter of the region’s total imports while China, India, Japan and

Singapore account for about a half of the region’s total exports. SERVICES TRADE RESILIENCE WEAKENING

APTIR 2016: Services Trade

CHANGING COMPOSITION OF COMMERCIAL SERVICE TRADE

Commercial services trade of the Asia-Pacific, by sector, 2005 and 2015

• Overall region’s services trade

increased more than twice in the last decade.

• Travel and OCS were the

fastest growing service sector with OCS still the largest in terms of share and value.

• Weak performance in 2015 and

2016 across all services except for travel which benefits from still strong intraregional demand.

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APTIR 2016: Foreign Direct Investment

• The Asia-Pacific region attracted $559

billion of FDI in 2015; a rise of 5.6%, but share of global inflows dropped to 32%.

• FDI outflows also dropped to $435 billion,

marking 22% decrease on 2014 levels.

• Greenfield FDI inflows to the region were

$352 billion; a 26% growth (compared to global rise of 6%), 40% of global inflows

• Greenfield FDI outflows from the region

increased by 15% and reached $263 billion.

• Greenfield FDI to primary sector showed

the strongest growth (coal, oil and natural gas - almost 3 times as much as in 2014).

• But there are flows into technology and

infrastructure sectors too.

FDI MAKES A MODEST COME BACK AND A SHARP RISE IN GREENFIELD FDI INFLOWS

APTIR 2016: Foreign Direct Investment

• Subregions remain very diverse.
• ENEA recorded high increase due to

jump of FDI to Hong Kong, China of 53%.

• With no change in SEA total, there was

reallocation within the subregion, with Indonesia registering fall, and other economies rise in FDI inflows.

• NCA continued to contract, as well as

the Pacific, while the growth to SSWA is mostly due to India attracting most

• f FDI.
• ENEA accounts for 78% of the AP
• utflows.
• Region’s overall policies Were

dominantly liberalizing (43 measures

• ut of 46).

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• Trade facilitation and reduction
• f trade costs remain urgent

priorities for the region.

• Trade costs remain

heterogeneous across subregions.

• Trade costs in NCA excessively

high, but NCA also made relatively good progress in reducing trade costs.

• Pacific small island developing

states exhibit high costs limiting

• pportunities from intraregional

trade

APTIR 2016: Trade Facilitation

PROGRESS IN TRADE COSTS REDUCTION

APTIR 2016: Trade Facilitation

• Ratification of WTO TFA – 96 globally, 26 of those from ESCAP

(12 WTO members from the region still to ratify).

• The new Framework Agreement on Facilitation of Cross

Border Paperless Trade in Asia and the Pacific can provide a useful mechanism to support members towards more efficient and less costly cross-border trade.

• Framework Agreement opened for signature on 1 Oct 2016 (more

information https://goo.gl/9ujweN )

CROSS-BORDER PAPERLESS TRADE MAY INCREASE EXPORTS BY $36 - $257 BILLION ANNUALY

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• Changes in trade policies tend to mirror the overall tone and tenor of globalization.
• Importance of countries remaining open to imports, and not resorting to

unnecessarily trade-restrictive measures.

• Worrying trend of increasingly restrictive measures across the region, dominated by

behind-the-border non-tariff measures Increase in new trade restrictive measures

APTIR 2016: Trade Policy

REGIONAL TRADE POLICY CONTINUES IN RESTRICTIVE DIRECTION

Increase in new trade liberalizing measures

Mid-October 2014 to mid- May 2016 Mid-October 2015 to mid- May 2016 Type of measure World Asia-Pacific region World Asia-Pacific region Imports 252 94 116 39

• f which, tariffs

154 49 66 18 Exports 55 18 24 9 Other 25 13 14 6 Total 332 125 154 54 Measures per month 17.5 6.6 22.0 7.7 Mid-October 2014 to mid- May 2016 Mid-October 2015 to mid- May 2016 Type of measure World Asia-Pacific region World Asia-Pacific region Import 295 57 103 21

• f which, tariffs

234 41 74 14 Export 52 14 26 6 Other 7 14 3 4 Total 354 85 132 31 Measures per month 18.6 4.5 18.9 4.4

APTIR 2016: Trade Policy

• G20 not coming true with commitments.
• Increase in targeted protectionism partly as a consequence of accumulated

trade distorting measures and excess capacity (steel).

• Good news from services sector as no increase in protectionism there (need for

better data).

• New protectionism might arise from areas related to digital trade (e.g.

localization requirements).

NON-TARIFF MEASURES ON THE RISE

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• 63% of all trade agreements

in force globally involve Asia- Pacific economies.

• Recent agreements

increasingly include WTO+ (and WTO++) areas, such as competition, government procurement and investment.

• Mega-regionals should be

used as an opportunity to review of benefits of existing PTAs and to consolidate them.

• More efforts in assisting

businesses to utilize PTAs/ still improve RoO negotiations.

APTIR 2016: Trade Agreements

REGION IN NEED OF MORE CONSOLIDATION OF TRADE AGREEMENTS

• Political economy more

complex.

• China growth moderation still

affecting demand for commodities.

• India economic growth strong

but it needs to increase its share in intraregional imports.

• Facing new trade growth normal

with lower trade elasticity.

• Value of merchandise exports

by developing Asia-Pacific economies expected to continue falling in 2016, but are expected to bounce back in 2017.

UNCERTAINTIES WEIGH ON THE GROWTH OUTLOOK

APTIR 2016:Trade growth prospects

Value Volume Value Volume Value Volume Value Volume Australia

• 0.98

2.93 11.58 1.16

• 2.24

0.99 9.56 5.14 China

• 6.13

0.29 3.34 2.52

• 8.80
• 0.32

5.51 2.04 India

• 0.29

3.54 8.38 2.63

• 1.67
• 1.08

9.14 17.73 Indonesia

• 6.43
• 0.67

3.00 0.68

• 8.13
• 0.90

3.85 1.92 Japan 4.84 1.20 2.56

• 4.42

0.43 1.75 1.86 3.83 Kazakhstan

• 23.16
• 5.60

18.38 1.18

• 25.72
• 23.19

7.19 2.97 Pakistan

• 7.81
• 6.50

5.44 3.48

• 2.65

5.70 5.97 1.70

• Rep. of Korea
• 7.25
• 0.59

1.44 0.83

• 5.47

3.65 7.57 3.53 Russian Fed.

• 23.69
• 2.54

11.61 1.65

• 13.91
• 11.61

5.59 4.65 Singapore

• 6.45

1.68 3.22

• 0.56
• 6.84
• 0.25

4.67 0.35 Thailand

• 10.43
• 1.03

3.81 1.18

• 3.38
• 2.20

8.95 0.60 Turkey

• 0.21

3.62 5.05 4.22 0.24 7.21 8.99 6.23 Viet Nam 4.45 7.91 18.68 7.69 4.58 9.74 19.78 11.42 Asia-Pacificb

• 5.21

0.68 4.53 1.49

• 4.90

0.13 6.09 3.83 Developed Asia-Pacificb 3.07 1.54 4.56

• 2.78
• 0.36

1.55 3.88 4.10 Developing Asia-Pacificb

• 6.46

0.53 4.52 2.22

• 5.73
• 0.17

6.51 3.78

Export Import 2016 2017 2016 2017

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Asia-Pacific Trade and Investment Report 2016: Summing Up

• Asia remains the most dynamic

region within the global economy.

• And challenges remain,

particularly from rising protectionism, ongoing structural changes, inequalities, political uncertainties

• Further efforts needed to

maintain open trade and investment policies, boost trade facilitation and reduce trade cost including by using paperless trade and e-commerce.

Thank you

Full report and country briefs available www.unescap.org