Upload
dangque
View
220
Download
2
Embed Size (px)
Citation preview
Japan’s FTA Strategy
August 7, 2014
Shujiro URATAWaseda University
1
Contents
I. Japan’s Economic Situation
II. High Economic Growth and RegionalEconomic Integration in Asia-Pacific
III. Japan’s New Trade Policy in Asia-Pacific
IV. Japan-EU EPA/FTA
V. Concluding Remarks
2
1. Japan’s Economic Situation
Current situation
Low economic growth
Deflation
Shortage of demand
Sign of recovery (Favorable impacts of Abenomics)
Structural Problems
Declining and aging population
Declining savings rate
Increasing government debt
Regulated sectors (agriculture, medical services, etc)
Closed economy3
Challenge for achieving economic growth
Increase productivity
Increase economic interaction with growing Asia-Pacific countries and the EU
Increasing importance of East Asia for theJapanese economy (trade and FDI)
Solutions
Implement structural (policy) reforms
New Trade Policy in Asia-Pacific and with theEU
4
GDP Growth Rates (%)
5
GDP Growth Rates (%)
6
Inflation/Deflation(% change in consumer prices)
7
Inflation/Deflation(% change in consumer prices)
8
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
1,000Japan’s Declining Population
65-
15-64
0-14
9
Gross Savings-GDP Ratio (%)
10
0
50
100
150
200
250
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
%Government Debt-GDP Ratios (%)
Japan
US
UK
Germany
France
Italy
Canada
11
Trade-GDP Ratios (%)
12
FDI Inflows (net) -GDP Ratios (%)
13
Japan’s Trade by Regions
Export Destinations(%)) Import Sources (%)
14
Japanese Firms’ Overseas ActivitiesRegional Shares in Japan’sFDI Stock
Regional Shares in JapaneseFirms’ Overseas Sales
15
II. High Economic Growth and Regional EconomicIntegration in Asia-Pacific
Market-driven Regional Economic Integration High economic growth achieved by rapid
expansion of foreign trade and foreign directinvestment (FDI)
Advances in regional economic integration Expansion of trade and FDI in machinery sector
(electronic machinery, transportation machinery) Increase in parts and components trade Fragmentation strategy by multinational
corporations: formation of regional productionnetworks (Supply-chains)
Liberalization of trade and FDI policies 16
Intra-regional Trade Ratio (%)
17
Shares of East Asia’s Trade with Selected Regions (%)
18
Share of Parts and Components inIntra-regional Trade (%)
19
Trade Liberalization: Declining Tariff Rates (%)
20
Non- Non-Primary Primary Total Primary Primary Totalproducts products products products products products
China 1992 35.1 40.6 40.4 Thailand 1989 30 39 38.52010 15.6 8.7 9.6 2010 22.8 8 9.9
Indonesia 1989 18.2 19.2 19.2 Australia 1991 9.5 14.2 13.12010 8.4 6.6 6.8 2010 1.3 3 2.8
Japan 1988 8.3 3.5 4.2 US 1989 3.8 5.9 5.62010 17.3 2.5 4.4 2010 4.9 3.3 3.5
Korea 1988 19.3 18.6 18.6 Canada 1989 6.1 9.2 8.62010 48.5 6.6 12.1 2010 11.3 2.6 3.7
Malaysia 1988 10.9 14.9 14.5 Mexico 1991 12 13.4 13.42009 10.9 7.6 8 2010 21.5 7.1 9
Philippines 1988 29.9 27.9 28.3 Chile 1992 11 11 112010 9.8 5.7 6.3 2010 4.38 4.91 4.85
Singapore 1989 0.2 0.4 0.4 Colombia 1992 11.8 12 122010 0.2 0 0 2011 7.49 6.73 6.8
Emergence of institution-driven regional economic integration
Rapid expansion of free trade agreements (FTAs) in EastAsia in the 21st century
FTA (free trade agreement): free trade (elimination,reduction of tariff and non-tariff barriers among FTAmembers)
In East Asia ASEAN has become a hub of FTAs:
5 ASEAN+1 FTAs have been implemented
Long term goal: Free Trade Area of Asia-Pacific (FTAAP)APEC-wide FTA
2 major initiatives have been negotiated: Trans-PacificPartnership (TPP), RCEP (ASEAN+6)
21
Viet Nam
Singapore
Brunei
New ZealandChile
USA
TPPPeru
Australia
Vietnam
Malaysia
RussiaChina
CH. TaipeiCH.
HongKong
Australia
New Zealand
Canada
US
Mexico
Peru
Chile
BruneiThailand
Malaysia
Philippines
Vietnam
Korea Japan
Singapore
Indonesia PNGAustralia
& NZ
India
ChinaKorea
Japan
ASEAN+1 FTA
FTAAP (APEC)
Region-wide FTAs in East Asia:RCEPP, TPP, China-Japan-Korea (CJK) FTA
TPPRCEP(ASEAN+6)
(ASEAN+CH, JP, KR, IND, AUS, NZ)
China-Japan-Korea
Mexico
CanadaJapan
Mega-FTAs in Asia-Pacific: TPP and RCEP
Current Status of Negotiations
TPP negotiations began in March 2010 and now in thefinal stage.
RCEP negotiations began in May 2013 and finished 5th
round in June 2014, aiming to conclude by the end of2015.
7 countries (Australia, Brunei, Japan, Malaysia, NewZealand, Singapore, Vietnam) participate in both FTAs.The US in TPP but not in RCEP, China in RCEP but notin TPP
Competition in negotiations23
Positions in FTAAP FTAAP: Long-term goal of regional economic
integration in Asia-Pacific TPP and RCEP are both pathways to FTAAP TPP and RCEP should be complementaryIssue Coverage TPP: comprehensive coverage not only market access,
services, and investment but also labor, environment, andcross-cutting “horizontal issues” such as regulatorycoherence, competitiveness and business facilitation,development and Small and Medium Enterprises (SMEs)
RCEP: limited coverage, trade in goods, trade inservices, investment, economic and technicalcooperation, intellectual property, competition, disputesettlement, other areas
24
Objectives
TPP: To establish a high standard, regionalagreement that addresses new and emergingissues, incorporates new elements reflecting ourvalues and priorities, and responds to the 21stcentury challenges our citizens face. (USTRwebsite)
RCEP: To support and to contribute to economicintegration, equitable economic development, andstrengthening economic cooperation among theparticipating countries (Guiding Principles andObjectives)
25
Some Comparisons
Level of trade and FDI liberalization:
TPP: high
RCEP: ?
Mode of Agreement
TPP: Single undertaking
RCEP: Stepwise, gradual (?)
Developing and Least-developed countries
TPP: Capacity building, staging of commitments
RCEP: Flexibility, special and differentialtreatment
26
Expected Impacts of FTAs
Trade and FDI expansion between andamong FTA members
Economic growth
27
III. Japan’s New Trade Policy in Asia-Pacific
Comprehensive Economic PartnershipAgreement (EPA) including trade and FDIliberalization, facilitation, economic cooperation
Export infrastructure such as transportationsystem and water supply system including hardand soft infrastructure
Export agricultural products
Attracting foreign direct investment inflows andhigh skilled personnel
Attracting foreign tourists
etc.28
Abenomics: Abe Economics
Three Arrows Strategy 1) Aggressive monetary policy: radical
quantity easing, inflation targeting 2) Flexible fiscal spending: large scale public
works 3) Growth strategy (Japan Revitalization
Strategy, Revised June 24, 2014): Strategy ofglobal outreach :FTAs (TPP, RCEP, Japan-Australia, Japan-EU), Double Inward FDIstock by 2020, Increase exports ofinfrastructure system, etc
29
Current Status of Japan’s FTAs
Enacted relatively a large number of FTAs, but
Low country coverage in terms of trade: FTAcoverage ratio
Low tariff elimination: lower than 90% interms of tariff lines, whereas for the US, higherthan 95%
Japan’s FTAs
Motives
Expand export market for Japanese firms
Improve investment environment forJapanese firms
Obtain energy and natural resources
Promote structural reform in Japan
Improve and establish good relationship
Provide economic assistance to developingcountries
32
FTA Coverage Ratios:Proportion of trade with FTA partners in total trade (%),
FTA (July, 2012), Trade data (2011) Source: JETRO
FTA Trade Liberalization Ratio (%)
34
Japan-Philippines FTA Australia-US FTA
Japan 88.4 Australia 100
Japan-Malaysia FTA US 99
Japan 86.8 US-Peru FTA
Japan-Indonesia FTA Peru 99
Japan 86.6 US 98
Japan-Chile FTA Korea-US FTA
Japan 86.5 US 99
Japan-Switzerland FTA Korea 98
Japan 85.6
Japan’s Import Items Excludedfrom Tariff Elimination under FTAs
35
Rice (58)
Wheat (109)
Sugar (131)
Dairy products (188)
Beef (51) and pork (49)
Fishery (91)
Beans (16)
Konyaku (3)
Prepared food (30)
Plywood (34)
Manufactured products (95)
Products that have been subject to tariff elimination
(8089 tariff lines, 89.7%)
Total number of Japanese imports (9018 tariff lines)
Source: Masahiro Kawai
Five key
items (586
tariff lines,
6.5%)
Agricultural,
forestry and
fishery products
(248)
Other items
(343 tariff
lines, 3.8%)
Products
that have
never been
subject to
tariff
elimination
(929 tariff
lines,
10.3%)
Impacts of TPP on Japanese Economy (GDP)
Japan’s Cabinet Office:
0.66% (TPP 12 countries)
Petri, Plummer and Zhai (2012):
2.0% (TPP 12 members)
1.8% (RCEP)
4.3% (FTAAP)
The Trans-Pacific Partnership and Asia-Pacific
Integration: A Quantitative Assessment,
Petersons Institute of International Economics
Economic Obstacles to FTAs, TPP
Opposition from the agriculture sector
Decline in already low self-sufficiency in foodsupply
Negative impacts on environment
Negative impacts on regional economy
Opposition from the service sectors includingmedical service sector and insurance servicesector
Negative impacts on vested interest groups37
High Tariff Agricultural Products (%)
0 200 400 600 800 1000 1200 1400 1600 1800
Konnyaku potato
Rice
Peanuts
Starch
Corn
Pork
Sugar
Barley
Wheat
Dairy products
Beef
38
IV. Japan-EU EPA/FTADevelopments
Negotiations began in April 2013 after completing ascoping exercise
Japan’s participation in the TPP contributed to EU’sagreeing to start the negotiations (competitiveregionalism)
6th round of negotiations was conducted in July 2014
The European Commission reviewed the progress ofthe negotiations in spring 2014 and it decided tocontinue negotiations.
Japan’s interests
To overcome disadvantageous position in the EUmarkets vis-à-vis Korean firms: EU tariffs, cars(10%), flat screen TVs (14%), microwave ovens (5%)etc.
EU’s interests
Dismantle non-tariff barriers in the Japanese market
Expand an access to the government procurementmarkets
Expected benefits
Expand exports and FDI not only bilaterally butwith other countries through liberalization andstructural reforms Economic growth
Impacts on GDP:
EU estimates: EU, 0.34-1.88%, Japan, 0.27-0.67%( EU Commission)
Japan estimates: EU, 0.27%, Japan, 0.12%(Kawasaki)
TPP: EU, -0.14%, Japan, 0.54%
Contribute to the rule-making in the globaleconomic system 41
V. Concluding Remarks
Faced with many difficult challenges, Japan has to open upits economy and carry out structural reforms, in order toachieve economic growth or to maintain high livingstandard, to contribute to economic growth in Asia-Pacificand in the world.
WTO liberalization being stalled, free trade agreements(FTAs) are second-best solution for promotion of trade andFDI
Japan can gain a lot from FTAs not only in East Asia butalso with countries in other parts of the world such as theUS, the EU, and Latin American countries
42
Japan should play active roles in establishing region-wide mega FTAs: TPP, RCEP, Japan-EU FTA byliberalizing its market
Then expand these FTAs by merging with otherFTAs, leading to global trade liberalization
FTAs (particularly TPP) face opposition from theagriculture sector
Various measures including gradual phase-inliberalization, and temporary assistance (safety net)to negatively affected workers can moderate thenegative impacts during the process of transition
Need strong political leadership to promote FTAs,particularly TPP
43