ASEAN-EEC Economic Relations 9789814377089

Table of contents :
Contents
Foreword
Building Bridges and Opening Doors
I: TRADE
ASEAN-EC Trade Relations: An Overview
Trends of EC Protection and the Prospects of ASEAN Trade
Issues Relating to the EC's Imports of ASEAN Primary Products
ASEAN Manufactured Exports in the EC Markets: An Empirical Assessment of Common and National Tariff and Non-Tariff Barriers Confronting Them
A Constant-Market-Shares Analysis of ASEAN Manufactured Exports to the EC
II: INVESTMENT
EC Investment in ASEAN
EC Investment in ASEAN and the Transfer of Technology: The Malaysian Experience
ASEAN-EC Joint Ventures: A Case Study of Promoted Firms in Thailand
Appendices

Citation preview

ASEAN-EEC Economic Relations

Proceedings of a Conference on

ASEAN-EEC Economic Relations organized by the Institute of Southeast Asian Studies ASEAN Economic Research Unit 6-8 August 1981 Singapore

Edited by Narongchai Akrasanee

and Hans Christoph Rieger

ASEAN ECONOMIC RESEARCH UNIT INSTITUTE OF SOUTHEAST ASIAN STUDIES

The Institute of Southeast Asian Studies was established as an autonomous organization in May 1968. It is a regional research centre for scholars and other specialists concerned with modern Southeast Asia. The Institute's research interest is focused on the manyfaceted problems of development and modernization, and social and political change in Southeast Asia. The Institute is governed by a twenty-two-member Board of Trustees on which are represented the National University of Singapore, appointees from the government, as well as representatives from a broad range of professional and civic organizations and groups. A ten-man Executive Committee oversees day-to-day operations; its ex-officio chairman is the Director, the Institute's chief academic and administrative officer.

The responsibility forfocts and opinions expressed in this publication rests exclusively with the contributors and their interpretations do not necessarily riflect the views or the policies if the Institute or its supporters.

Published in 198:! by Institute of Southeast Asian Studies Heng Mui Kcng Terrace, Pasir Panjang Singapore 0511 ©Institute of Southeast Asian Studies ISBN 9971-902-17-8 Printed by Kim Hup Lee Printing Co. Pte. Ltd. ~ Singapore

Contents Page FOREWORD

v

BUILDING BRIDGES AND OPENING DOORS by Narciso G Reyes

1

1:

TRADE

ASEAN-EC Trade Relations: by Narongchai Akrasanee

An Overview

10

Trends of EC Protection and the Prospects of ASEAN Trade by Jean Waelbroeck

52

Issues Relating to the EC's Imports of ASEAN Primary Products by Hugh Corbet

92

ASEAN Manufactured Exports in the EC Markets: An Empirical Assessment of Common and National Tariff and Non- Tariff Barriers Confronting Them by Rolf J Langhammer

125

A Constant-Market-Shares Analysis of ASEAN Manufactured Exports to the EC by Pitou van Dijck and Harmen Verbruggen

194

II: INVESTMENT EC Investment in ASEAN by Chia Siow Yue

256

EC Investment in ASEAN and the Transfer of Technology: The Malaysian Experience by Chee Peng Lim

314

ASEAN-EC Joint Ventures: A Case Study of Promoted Firms in Thailand by John C S Tang and Wilson T Ho

346

Page

APPENDICES 1.

Text of the Co-operation Agreement Between Indonesia, Malaysia, Philippines, Singapore and Thailand -- Member Countries of the Association of Southeast Asian Nations - and the European Economic Community

370

2.

Selected Bibliography

377

3.

List of Participants

381

4.

List of Abbreviations

386

Foreword

Economic

relations

between

the

countries of the Association of Southeast

Asian Nations (ASEAN) and the countries of the European Community (EC) have Merchant adventurers, a long history as well as great future potential. colonialists, traders, and foreign investors from Europe have in the last two centuries brought about a continuous exchange of goods, interests and ideas with Southeast Asia. the

Southeast

Singapore

and

Belgium,

Asian

Luxembourg 1

countries

Thailand

Denmark,

In more recent times, mutual co-operation among the

on

France,

Netherlands,

of

one

Indonesia,

hand

and

Malaysia,

the

European countries of

Federal Republic of Germany,

and

the

U.K.

Philippines,

Ireland,

on the other _have led

Italy, to the

creation of two economic groupings, ASEAN and the EC, dedicated to the idea of mutual benefits through trade.

The EC is ASEAN's third most important

trading partner, and, although the proportion of ASEAN 's trade with the EC is declining slightly, groupings

the exchange of goods and services between the two

is still increasing

ASEAN is important for Pacific

rim.

important

The

factor

rapidly

both in

terms of volume and

value.

EC investors as the fastest growing area of the

political stability

contributing to

this

that

has

emerged

attraction

as

in

ASEAN

is an

well as an important

reason why ASEAN as a grouping can expect to achieve more at the economic bargaining table than may be commensurate with the relatively low importance of ASEAN trade for the EC. Although not

always

investment methods

of

is

likely

to

be

beneficial

develop

automatically

according

to

potential.

Lack

knowledge

about

operation

missed chances. ar.d

trade

and

of

styles

of

negotiation

for

both sides it does

comparative available are

advantage

or

opportunities,

frequent

causes

of

Dissemination of information, exchange of views and ideas

the analysis of potential opportunities are therefore important factors

for

trade

expansion

and

consequent

welfare

increases.

It

is

for

this

reason that research and academic exchange and co-operation have an important role to play. Recognizing this fact,

the ASEAN Economic Research Unit of the

Institute of Southeast Asian Studies in Singapore is undertaking a research project on ASEAN-EEC Economic Relations.

In each phase of this three-year

project a number of scholars from the ASEAN region as well as from Europe are asked to prepare studies on specific aspects of these relations and to submit them for discussion at a conference involving academics, businessmen and diplomats from a large number of countries from the two groupings.

The

first of the three conferences planned was held in Singapore from 6 to 8 August 1981, and the present book is the outcome of the research presented there. By

way

of

introduction

we

Secretary-General of ASEAN, H.E.

reproduce

Narciso G.

the

address

Reyes.

by

the

We would like to

express our gratitude for the encouragement provided by his presence at the conference. The conference papers themselves are arranged in two groups. first deals with trade and the second with investment.

The

In an overview of

ASEAN-EC trade relations, Narongchai Akrasanee presents an ASEAN point of view.

His counterpart from the EC, Jean Waelbroeck then takes a closer

look at the trends of protection in the EC and the prospects for ASEAN trade in the light of these trends. deal

with

the

potential

for

Hugh Corbet and Rolf Langhammer then

ASEAN 's

manufactured goods respectively.

exports

of

primary

products

and

Pitou van Dijck and Harmen Verbruggen in

their constant market shares analysis of ASEAN manufactured exports to the EC come

to

the

tentative

conclusion

that the competitiveness of

ASEAN

manufactured products is gaining ground in the markets of the EC. In the section on investment, Chia Siow Yue places EC investments in ASEAN

in

a

quantification,

historical a

picture

and of

global

perspective.

growing

investments

Despite of

the

difficulties EC

in

of

ASEAN

emerges, although Japanese and U.S. investors appear to be increasing their respective policies

shares.

that

are

While more

or

the

ASEAN

less

open

to

countries foreign

follow direct

industrialization investment,

this

does not necessarily mean that all the potential benefits from such investment are being reaped.

Chee Peng Lim analyses this in the case of EC in-

vestments in Malaysia while John Tang and Wilson Ho provide an analysis of Thai-European

joint-venture

undertakings

in

Thailand.

There

can,

of

course, be no question of covering these very complicated matters exhaustively within

the covers of a single book.

But the contributions on the

technology transfer effects of EC investments in Malaysia and Thailand may serve

as

indications

of

further

research

that

needs

to

be

done

in

this

field as well as in the other ASEAN countries. This

applies

to

the

book

as

a

whole.

We are

presenting here

interim results of an ongoing

research endeavour and anticipate a further

publication

two

from

each of

the

phases of the project that are yet to

follow. A rather surprising result of the 1981 ASEAN-EEC Economic Relations Conference was the fact that the expected dividing line between economists from ASEAN and from the EC did not become manifest in the course of the deliberations.

Another

dividing line appears to be

that between the economists on makers on

the

other.

the one hand

and

While economists expect

far

more

important:

the political decisionthe

reduction

of

trade

barriers and the opening of economies to investments from abroad to lead to increases of welfare both for the ASEAN countries and the countries of the EC,

the pressures on political decision-making of those who are already in

positions

of

power

appear

to

be

strengthening

protectionist

tendencies.

While the power of business and trade unions is highly organized, the power of the consumer is highly dispersed and cannot be brought to bear with the same force on those who decide on economic policies.

This fact seems to

point to a need for more political science research on the factors of economic co-operation and for more public relations efforts on the part of the economists. The making

this

editors

would

publication

like

to

possible,

thank in

all

those

particular

contributors at the August 1981 conference.

who the

participated participants

in and

We would like to extend our

gratitude to the staff of the Institute of Southeast Asian Studies who have assisted in one way or another to bring out this publication.

Bangkok, 12 June 1982

;\;arongchai Akrasanee

Singapore, 12 June 1982

Hans Christoph Rieger

1

Building Bridges and Opening Doors Narcisco G. Reyes

ASEAN (the Association of Southeast Asian Nations) and the EC (the European Community) are two groups of nations, one in Asia, the other halfway across the world in Europe, with a combined population of more than 500 million people; - both committed to full, voluntary co-operation; constituting areas of relative stability at a deeply troubled time in history; together representing a tremendous potential for good in the world. In

this

context,

the

convening of

this

Conference

is timely

and

most welcome. I feel greatly honoured to have been invited to participate in this important Conference, together with such a distinguished group of scholars and experts from Europe and Asia.

Various aspects of ASEAN-EC economic

relations will be discussed in depth during the next three days. useful

at

this

opening

exchanges

of

views,

described

as

the

session,

to

recall

ASEAN-EC

as

part

the

brief

Dialogue

of

the

context of

history

in

the

It may be

of

the

what

light

of

is the

ensuing

commonly distinctive

concerns and characteristics of the two co-operating communities. Structurally, ASEAN and the EC present a study in contrast.

The

European Economic Community was formally established by the Treaty of Rome in

1957

with

centralized

supra-national objectives.

community

institutions

and

well

defined

It has since become a model for structuring, as

well as a reference point for evaluating the performance of other regional organizations.

ASEAN,

on

the

other

hand,

began

life

as

a

loose

inter-governmental association under the Bangkok Declaration of 1967, and while

its

institutions

expanding

activities

have they

evolved

in

have

response

to

the

remained

highly

in

terms

needs

of

its

decentralized,

geographically and sector ally. With Declaration,

its

basic

ASEAN

aims

expressed

co-operation

in

general its

initial

in

stages

the

Bangkok

was

largely

2

exploratory.

Strong centralized

institutions were felt to be unnecessary,

perhaps even inimical, Organizational cautious

to the fostering of the substance of co-operation. flexibility became a hallmark of ASEAN; it followed a

approach

to

institutional

change.

It

took

nine

years

before

co-operation was deemed substantial enough to justify the setting up of a central ASEAN Secretariat, and all of ten years before an appropriately articulated committee structure was established. A fundamental distinction, of course, arises from the fact that the EC

is

an

association

of

industrialized,

economically developed

countries,

while ASEAN exemplifies the growing trend towards economic co-operation among developing countries. From this standpoint, ASEAN-EC economic relations may be regarded as an aspect of the ongoing, albeit periodically stalemated North -South Dialogue. ASEAN took a keen interest in the EC at an early stage in its own development. The possibility of forging closer co-operation with the EC was discussed by the ASEAN Foreign Ministers at their Fourth Meeting in Manila in March 1971, and soundings were subsequently made with the EC Commission. In April the following year the Ministers approved the establishment of

a

Special

institutionalized

Co-ordinating joint

ASEAN

Committee Dialogue

with

(SCCAN) the

EC.

to

conduct

an

To

facilitate

the

Committee's work, the ASEAN Brussels Committee (ABC), comprising ASEAN diplomatic representatives accredited to the EC, was also established. number

of

meetings

culminating in

the

with

the

EEC

establishment of

Commission a

formal

were

Dialogue

creation of the ASEAN-EC Joint Study Group (JSG).

related

matters, issues,

broadened

such as the

market access,

scope

of

the

in

held,

1975 with

the

The first annual meeting

of the Joint Study Group was held in July 197 5. trade

subsequently

A

While it discussed mainly

commodity price stabilization and

dialogue

in

subsequent

to include industrial and development co-operation.

meetings

was

A further

step was the initiation in 1977 of a dialogue between the ASEAN Ambassadors in Brussels and the Committee of Permanent Representatives (COREPER) of the

EC

Council

of

Ministers.

ministerial meeting.

Their

discussions

laid

the

groundwork

for

a

3

The

first

ASEAN-EC

November 1978.

Ministerial

Meeting

was

held

in

Brussels in

Besides reaffirming their support for a New International

Economic Order and agreeing to co-operate in future international meetings such as the North-South Dialogue, the Ministers agreed on the desirability of placing relations between the two groups on a firmer formal

Co-operation

Agreement.

basis through a

As an indication of its growing interest

in ASEAN, the EC established a Commission of the European Community for South

and

consultations,

Southeast ASEAN

Asia

in

Bangkok

in

designated

Thailand

as

late

1979.

To

facilitate

the country co-ordinator

for

the ASEAN-EC Dialogue. Finally, after extensive preparatory work, the ASEAN-EC Co-operation Agreement was signed at the Second ASEAN-EC Ministerial Meeting in Kuala Lumpur on 7 March 1980.

The main emphasis of the Agreement is on economic

co-operation and development. a

Joint

Declaration

The Meeting also issued two other documents:

outlining

the

modalities

of

economic

and

technical

co -operation, and a Joint Statement on political issues. The ASEAN-EC Co-operation Agreement provides for the formation of a Joint Co-operation Committee (JCC) to promote and keep under review the various

ASEAN-EC

co-operation

activities.

The

first

Joint

Co-operation

Committee Meeting was held in Manila in November 1980; the second meeting is scheduled to be held in Brussels in mid-October this year, immediately following the Third ASEAN-EC Ministerial Meeting in London.

Between Joint

Co-operation Committee Meetings, ongoing consultations are conducted by the Contact Group comprising officials from the ASEAN Brussels Committee and the European Commission.

A Joint Working Group on Trade Issues, set up

during the First Joint Co-operation Committee Meeting, is also functioning. Besides the ASEAN Brussels Committee, similar ASEAN Third -Country Committees were established in three EC capitals:

the Bonn ASEAN Committee

(BAC), the ASEAN Paris Committee (APC) and the ASEAN London Committee (ALC). Like the ASEAN Brussels Committee they are composed of the ASEAN Ambassadors in these capitals. Co-ordination is maintained among these ASEAN Committees in the EC. Since 1972, the ASEAN- EC Dialogue has acquired substance.

ASEAN

enjoys the EC' s Generalized System of Preferences which has recently been

4

extended for another ten years.

While not all of ASEAN 's requests for GSP

improvements have been met, the improved market access extended to ASEAN under the EEC Generalized System of Preferences has been a positive factor in ASEAN-EC trade relations. In the field of trade promotion, ASEAN has received EC financial and technical

assistance

information

for

seminars,

trade

missions,

buyers'

missions,

participation in trade fairs and exhibitions. Trade various

Promotion

Assistance met in

ASEAN proposals

for

export

promotion

in-store

and

market

promotion,

and

An ASEAN-EC Working Group on

Bangkok last September

EC assistance.

and

approved

ASEAN has also concluded

negotiations for the establishment of an EC-assisted ASEAN Trade Promotion Centre in Rotterdam. To promote industrial co-operation, the EC sponsored two successful ASEAN-EC Industrial Conferences, the first in Brussels in April 1977; the second in Jakarta in February 1979.

The first Joint Co-operation Committee

Meeting agreed that future conferences should be organized on a sectoral basis,

with

industries,

priorities

energy

given

industries,

to

chemical

electrical

and

industries, electronic

engineering

industries,

and

resource-based industries. The assistance,

EC

has

such as

also

extended

in -plant

to

ASEAN

various

training programmes,

forms

training in

of

technical

management

and technology transfer, and training programmes for teachers. A Working Group set up by the First Joint Co-operation Committee Meeting

agreed

non-conventional agriculture

and

on

various

energy, natural

forms

of

environment, resources.

co-operation science

In

March

and this

in

the

fields

technology, year,

a

of and

two-year

EC-assisted programme in science and technology consisting of fellowships, experts seminars and studies was approved for implementation in the Autumn, the full cost of the project having been allocated. To enhance development co-operation, the EC is prepared to assist ASEAN in projects in fields as diverse as agriculture and transport.

The

EC continues to support ASEAN projects such as the Regional Collaborative Programme on Post-Harvest Technology for Grains, the Regional Study on the

5 Commercialization of Timber Resources, and Aquaculture Development.

It has

also indicated its readiness to support such projects as the Study on Land Transportation, a Regional Survey on Transport, a Pest Control Programme, and

a

Regional

development

Fisheries

assistance

Project o

could

be

It

is

hoped

rationalized

that

and

funding

for

consolidated

such

into

a

Development Fund o ASEAN has been seeking to develop significant financial co-operation with the EC.

The EC has responded to the extent of agreeing to arrange for

a Seminar on Access to European Capital Markets. that

it

would

consider

It has also indicated

assisting in securing financing in

European capital

markets for ASEAN industrial projects. The role of private enterprise has not been overlooked o In both ASEAN and the EC, the private sector is being encouraged to set up its own framework of co-operation o

ASEAN has sought wide participation for its

private sector in ASEAN-EC Dialogue activities o on

Industrial

Co-operation

have

provided

a

The ASEAN-EC Conferences

forum

for

the

discussion

of

joint ventures between ASEAN businessmen and their counterparts in the ECo The Second Conference in 1979 was attended by 776 participants, of which 305 were from the EC, representing some of Europe's most important industries and financial institutions. This rather sketchy resume recounts what may be described as the preparatory

period

guidelines,

formulating

initiating

studies

of and

ASEAN-EC a

co-operation,

basic

training

a

agreement,

programmes,

time

setting

conducting

for

laying down

up

committees,

seminars,

holding

meetings, exchanging visits, getting to know one another. These intention They nature,

various

steps,

on both sides

include

a

hopefully

actions

to develop

lengthening suggestive

list of

and

decisions

denote

a

mutually beneficial economic of

more

projects,

mainly

impressive

of

a

developments

sincere relations.

preparatory to

follow o

Taken together, they provide a kind of framework and elements of a basis for more meaningful and substantial economic co-operation. While giving due credit to these useful preliminary steps, however, some observers consider

the

basis

being

laid

as

tenuous,

the framework

6

being

fashioned

relations

as

inadequate

marginal,

and

considering

their

the

impact

urgency

on of

ASEAN-EC ASEAN's

economic

trade

and

development needs, the complexity of the problem of giving substance to the rhetoric

of

the

Dialogue,

and

the

magnitude

of

the

economic

stakes

involved. The professed desire to expand ASEAN-EC trade is a case in point. As a percentage of ASEAN total trade, ASEAN trade with the EC accounted for an average of about 14 per cent in the three-year period from 1977 to 1979. On the other hand, trade with ASEAN accounted for only about 1.14 per cent

of the EC total trade.

Much of the EC trade is internal.

In 1980, for

instance, 58.42 per cent of EC total trade was between its own members, fostered by the advantage of a customs union and the additional inducements of

proximity

significantly, On

top

and

familiarity.

ASEAN has

of

it,

To

to cope

protectionist

increase

such

as

trade

trends,

fairs,

promote

ASEAN products

in

manifested

seminars

which

exports

to

the

EC

with this formidable built-in constraint.

barriers, compound the problem for ASEAN. projects

its

may

tariff

and

non-tariff

They tend to negate well-meaning and

have

trade

little or

missions,

intended

to

no

real prospect of

the

field

entering or successfully competing in the EC market. is

It

building

becoming

bridges

in

increasingly the

form

obvious

of

additional

increased contacts may not be enough.

in

that

studies,

of

trade,

discussions

and

It will also be necessary to open

the doors of the EC market a little wider to ASEAN exports. This

is

just

one

of

the

crucial

issues

that

challenge

the

statesmanship, the political will and the capacity of the ASEAN-EC Dialogue partners

to

realize

the

full

potential

of

their

ensuring a better future for their two communities. the

fields

of

industrial

co-operation

and

economic

relations

in

Other major issues in

co-operation

for

urgently await the same high order of attention and action.

development These issues

have been deferred or skirted rather than confronted during the preparatory period of ASEAN-EC Dialogue.

They should constitute part of the agenda for

the next stage of ASEAN-EC co-operation. I am

sure

that

your

learned discussions will help illuminate vital

7 aspects of that agenda. this

important

Conference

I congratulate you for your initiative in holding and

wish

you

success

in

your

deliberations.

PART 1

TRADE

10

ASEAN-EC Trade Relations: An Overview Narongchai Alcrasanee This essay discussion

provides on

trade

an

overview

relations

and

between

a

framework

the

within

Association

of

which detailed Southeast

Asian

Nations (ASEAN) and the European Community (EC) may be carried out.

The

emphasis will be more on ASEAN's point of view of the trade relations. The EC is ASEAN 's major trading partner after Japan and the United States.

The EC accounts for about 14 per cent of the total ASEAN trade on

both the export and the import sides.

This proportion has remained fairly

constant over the last few years, implying that ASEAN 's trade with the EC has been increasing in line with total ASEAN trade, which has been growing very rapidly by world standards.

Since trade is a very important component

of the ASEAN economies, it follows that ASEAN 's trade with the EC has significantly contributed to the development of ASEAN. On the other hand, to a very large economy like the EC,

appears insignificant.

ASEAN

The EC' s exports to and imports from ASEAN have

never exceeded two per cent of its total exports and imports.

However,

ASEAN 's exports to the EC are highly specialized and the EC relies heavily on ASEAN for such items as rubber, cattle feed.

The pattern of

of

tapioca

and

tapioca,

tin, palm oil, and

trade becomes even more specialized when bro-

ken down according to country. sellers

timber,

copra

Thailand and the Philippines are the major respectively

to

the

EC.

Indonesia

and

Malaysia are more important to the EC as importers, but they are also major suppliers of rubber, timber, tin and palm oil. tured goods and electronics to the EC.

Singapore exports manufac-

More recently ASEAN textiles have

made a breakthrough in the European market with such success that the EC has set limits on textile imports from ASEAN.

Other ASEAN manufactured

goods are also beginning to appear in the European market.

*

The author wishes to thank Mr Sophon Khanti-Akom for research assistance and the Delegation of the European Communities for South and South-East Asia in Bangkok for its co-operation.

11

While

trade

with

ASEAN

is

still

relatively

insignificant

for

the

EC, the specialized nature of the trade has. already caused some conflicts. For example, the EC has imposed a quota on Thai tapioca exports to the EC. A quota on textiles has also been set through the Multi Fibre Arrangement. However,

the EC has very well

recognized

the significant role played by

ASEAN in both economic and political areas, and has made efforts to maintain

and

promote

good

economic

relations

with

ASEAN.

This was first

carried out through a dialogue, and later culminated in a formal economic agreement signed in November, 1979,1 The following sections will first present the economies of ASEAN and the EC and then discuss their external economic relations. tions,

including

In section 3 the focus will be on ASEAN-EC trade relainstitutional

arrangements

which

trade between the two groups of countries.

are

aimed

at

promoting

The last section will discuss

the problems and prospects of ASEAN-EC trade relations.

ECONOMIES OF ASEAN AND THE EC

The member countries of ASEAN and of the EC are all considered to belong to the

Western

group

economic system.

of

economies

following

the

free-enterprise,

market-

The economies are open in the sense that foreign trade

and investment are important economic activities which are vigorously promoted.

But here the similarity ends.

In more detail it will be shown that

the two economic groups are very different.

lt witt, however, be ar'E,ued

that the differences have made the two groups complementary and that consequently trade relations are expected to continue to expand. The

ASEAN

countries

countries in the world.

are

among

the

fastest

growing

developing

The high growth rates have been sustained through

the 1970s, during the time when the world economy was faced with a series of

oil

shocks

and

international

financial

instabilities

(Table

The

1).

strength of the ASEAN economies is due to the availability of resources, land as well as minerals, in four ASEAN countries and the export-oriented strategy of all

the

five

countries,

particularly Singapore.

Later

it will

be shown, however, that the ASEAN economies are not without problems.

In

"""'

TABLE 1

~"-:)

ASEAN Economies - Some Basic Indicators, 1978

ASEAN

Indonesia

Malaysia

Phi I ippines

Singapore

AREA (' 000 sq. km.) %of ASEAN total

3,172 100.0

2,027 63.9

330 10.4

300 9. 5

-

1

514 16.2

POPULATION (million) %of ASEAN total

241.7 100.0

136.0 56.3

13.3 5.5

45.6 18.9

2.3 0.9

44.5 18.4

116.2 100.0 481

-

49.0 42.0 360 7.8

14.5 12.5 1,090 7.8

23.3 20.0 510 6.3

7.6 6. 7 3,290 a. 5

21.8 18.9 490 7.6

---

31.0 33.0 9.0 36.0

25.0 32.0 17.0 43.0

27.0 35.0 25.0 38.0

2.0 35.0 26.0 63.0

27.0 27.0 18.0 46.0

Thailand

GNP {US$ billion) ASEAN total GNP per capita (US$) GOP Real Growth 197Q-78

%of

SHARE OF GOP (%) Agriculture Industry Manufacturing Services

IMPORTS Total (US$ billion) % of ASEAN total Imports as %of GNP

37.3 100.0 32.1

6.9 18.5 14.2

5.9 15.9 40.7

5.3 14.2 22.9

13.8 36.9 179.2

5.4 14.4 24.8

EXPORTS Total (US$ billion) % of ASEAN total Exports as %of GNP

36.1 100.0 31. 1

11.5 31.8 23.7

7.4 20.5 51.0

3.4 9. 5 14.7

9.8 27.1 127.3

4.0 11. 1 18.3

Sources:

World Bank, World Develorment Reportf 1980; Chia Slow Yue, ed., ASEAN Economic CO-operal on: ~roceea n~s of the ASEAN Economic · -----~ Research Unit Workshop, (Singapore: IS As, 1981>.

13

fact,

while the economies continue to grow rapidly they have also become more vulnerable to instability which, in turn, will affect ASEAN foreign

trade strategy in the future. ture,

Among the ASEAN countries there are variations in economic strucas revealed by Table 1. With a population of about 140 million,

Indonesia is the largest ASEAN country. capita income. lation and

It, however, has the lowest per

Singapore appears at the other end, with the smallest popu-

the highest per

capita income.

Malaysia has a population of

13-14 million and is the most prosperous ASEAN country after Singapore. Thailand and

the

Philippines share

size and income levels.

much similarity in terms of population

It may be noted that none of the ASEAN countries

is considered to be a poverty country by international poverty standards. With

the exception of

Singapore,

the ASEAN economies are still

based on the primary sector, with a few primary commodities accounting for most of the major economic activities. ASEAN are rice, crude oil.

The major primary commodities of

maize,

rubber, timber, palm oil, tin, copra, sugar and all ASEAN countries have been industrializing very

However,

rapidly, with manufacturing value added within the range of 20 per cent of GDP except for Indonesia. The resource

pattern

of

ASEAN

endowment and

petroleum,

economic

can

be

constraints.

explained

With

the

largely

by

availability of

mineral and forestry resources, and with the population mostly

concentrated in Java,

Indonesia has to develop its resources for export in

order to import food to feed its development needs. concentrate Thailand

production

on

and

Singapore is an island city state, and thus must

trading,

the

its population and capital goods to satisfy

manufacturing,

Philippines

have

allow

them

to

hence

food

processing industries.

exchange

for

Malaysia

is

specialize oil

and

relatively

and

relatively

other

low

man-land

in agricultural products,

other the

most

goods

for

self-sufficient

their

is

activities.

ratios,

particularly

The surplus food

capital

service

which

food,

then exported

development

economy

among

and in

needs. ASEAN

The pattern of production in Malaysia is determined firstly by its own need, and secondly by its potential to develop certain sectors for

countries.

14

export.

Like other ASEAN countries, Malaysia needs to import capital goods

for its development needs. It is clear from the above that the common feature of the ASEAN economies is the foreign trade orientation, as may be seen from Table 1. Singapore is the most trade-oriented economy, followed by Malaysia. In the other three ASEAN countries, the ratio of foreign trade (exports plus imports) to GNP works out at about 40 per cent in 1978, with the proportion continuously rising.

As ASEAN economies continue to grow in the 1980s, it

is expected that the significance of foreign trade to the ASEAN economies will also continue to grow.

The pattern of cur rent development and future

problems and prospects will be discussed

in more detail in the concluding

section of this paper • A comparison of basic economic indicators of the EC from Table 2 with those of ASEAN from Table 1 reveals a very interesting contrast between the two groups.

In terms of population, the EC is about the same size

as ASEAN.

But the EC country with the lowest per capita income (Ireland)

still

higher

has

a

per

capita

highest per capita income

income

(Singapore).

than

the

ASEAN country

with

the

The average per capita income of

the EC in 1978 was US$6, 938, or 14 times the ASEAN average. year the total GNP of the EC was 15 times the GNP of ASEAN. a much richer group of countries than ASEAN.

In the same Thus the EC is

The only country in ASEAN

which comes close to the EC level of economic development is Singapore ,2 While the EC is much richer than ASEAN, its real growth rate in more recent times has been much lower than that of the ASEAN economy, averaging between 2 and 3.7 per cent during the period 1970-78, compared to the average of 6-8 per cent for ASEAN.

It is true that the EC economy has

a much larger base, and a comparison of its growth rate with that of ASEAN is not very meaningful.

Nevertheless, it must be admitted that the EC has

entered a period of slow growth, which will have important implications on its foreign trade with the rest of the world. As countries.

is

well

known,

the

EC

consists

entirely

of

industrialized

Thus, the share of industrial value added in GDP is very high,

ranging between 34 ·and 48 per cent, while the share of agriculture is very

TABLE 2 EC Economies- Some Basic Indicators, 1978

Belgium

Denmark

France

1,529 100.0

31 2.0

43 2.8

547 35.8

249 16.3

70 4.6

301

19.7

259.5 100.0

9.8 3.8

5.1 2.0

53.3 20.5

61.3 23.6

3.2 1.2

'· 798.5 100.0 6,938

89.1 5.0 9,090 3.3

50.6 2.8 9,920 2. 7

440.3 24.5 8,260 3.7

587.3 32.7 9,580 2.4

2.0 37.0 26.0 61.0

n.a.

n.a. n.a. n.a.

5.0 37.0 27.0 58.0

EC

Nether I ands

U.K.

3 0.2

41 2. 7

244 16.0

56.7 21.8

0.4 0.2

13.9 5.4

55.8 21.5

11.1 0.6 3,470 3.4

218.7 12.1 3,850 2.8

4.2 0.2 10,540 n.a.

116.9 6.5 8,410 3.2

280.7 15.6 5,030 2. 1

3.0 48.0 38.0 49.0

n.a. n.a. n.a. n.a.

7.0 42.0 n.a.

n.a. n.a. n.a.

51. I

n.a.

4.0 34.0 n.a. 62.0

2.0 36.0 25.0 62.0

FRG

Ireland

Italy

Luxembourg

AREA { 1 000 sq. km. > % of EC total

POPULATION {million) % of EC total GNP

(US$ billion) % of EC total GNP per capita (US$) GOP Real Growth 197D-78

-

SHARE OF GOP Agriculture Industry Manufacturing Services

--

IMPORTS Total (US$ billion) % of EC total Imports as % of GNP

460.9 100.0 25.6

48.4 10.5 54.3

14.8 3.2 29.2

81.8 17.7 18.6

120.7 26.2 20.6

7. 1 1. 5 64.0

56.4 12.2 25.8

n.a.

--

53.1 11.5 45.4

78.6 17.1 28.0

EXPOOTS Total (US$ billion) %of EC total Exports as % of GNP

459.1 100.0 25.5

44.9 9.8 50.4

11.9 2.6 23.5

76.6 16.7 17.4

142.1 31.0 24.2

5.7 1.2 51.4

56.0 12.2 25.7

n.a.

50.2 10.9 42.9

71.7 15.6 25.5

Source:

World Bank, World Development

R~~ort,

--

1980.

""""

(.Jt

16 low (see Table 2).

Apart from industry, services are the most important

economic activities in the EC. On the whole, the EC economy is very open, with exports and imports measured at 51 per cent of GNP in 1978.

Among the EC countries the ratio

of foreign trade to GNP ranges from 35 per cent for France, 44 per cent for Germany,

53

per

cent

for

the

United

Kingdom,

88

per

cent for

the

Netherlands, and 115 per cent for Ireland. FOREIGN TRADE OF ASEAN AND THE EC

Balance of Payments Foreign economic activities of

ASEAN have consistently yielded balance of

payments surpluses (see Table 3).

In most years the surplus was derived

from

in

the

capital

account.

Only

derived from the trade account.

recent years

was

the

It should be pointed out that the service

account of ASEAN was always in deficit during 1970-79. balance,

surplus also As for

trade

Indonesia and Malaysia were usually in surplus, whereas the other

three ASEAN countries had trade deficits. Of the five ASEAN countries, Indonesia, Malaysia and Singapore are in good

balance-of-payments positions and have large

reserves.

Thailand

and the Philippines tend to have more balance-of-payments problems.

This

has been due to the need to import large amounts of oil and petroleum products and the lack of large -scale resource development projects to attract capital inflow. Balance-of-payments of the EC have fluctuated very widely.

During

the 1970s the EC had seven years of surplus and three years of deficit. The

surplus in

almost

US$20

1978 was as billion.

large as

A close

the deficit of

look at

Table

balance in goods and services was in surplus for

1979,

amounting to

4 reveals that while the most years except 1974,

the size of the surplus varied from a low of $4.5 billion in 1976 to a high of $32.3 billion in 1978. in deficit and

The unrequited transfers, however, were always

have been growing steadily, reaching $20.3 billion in 1979.

Thus, whenever the surplus in goods and services falls to a low level the EC ends up with a sizeable deficit in the cur rent account.

The EC capital

TABLE 3 Balance of Payments of ASEAN (US$ millions)

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

-1,017

-1,211

-726

274

90

-2,196

-747

271

n.a.

n.a.

-397

-410

-730

-I ,246

-1,864

-1,806

-1,988

-2,453

n.a.

n.a.

242

240

319

455

489

361

226

258

n.a.

n.a.

-1,172

-1,381

-1,137

-516 -1,284

-3,642

E. Direct Investment (net)

284

389

560

707

I ,311

1,620

1,499

1,371

n.a.

n.a.

F. Long-term capital (net)

492

458

799

756

1,122

2, 779

3,518

2,702

n.a.

n.a.

G. Other capital (net)

608

1,047

983

917

1,096 -1,150

-476

-544

n.a.

n.a.

212

514

1,205

1,863

2,032

1,604

3,065*

2,819*

A. Trade Balance B. Net factor service Income from abroad

c.

Net unrequited transfers

D. Current account balance (A+B+C)

Overall Balance (A to G)

*

From UN ESCAP, Economic and Social Survey of Asia and Recent Economic Development, 1979-1980.

Source:

World Bank, World

I~btes,

Second Edition, 1980.

!b~ ~~flfLc~

2,244

-393

-2,509 -1,924 -4,476* -2,698*

1980;

,....

"

>-'

TABLE 4

00

EC Balance of Payments (net flows) (US$ millions)

1970

1971

1972

1973

1974

1975

1976

1977

A. Merchandise (f.o.b.)

4,761

8,317

8,799

6,377

-3,284

9, 776

-838

8,402

22,023 -6,318

B. Services

2,429

3,128

3,390

2,967

2,286

1,448

5,318

5,303

10,300

c.

Unrequited transfers Private transfers Official transfers

-4,235 -5,403 -6,528 -8,128 -1,745 -2,475 -2,862 -3,866 -2,490 -2,928 -3,667 -4,262

D. Current Account Balance (A+B+C)

2,956

6,042

E. Capital of non-monetary sector

4,231

5,085 -1,388

F. Capital and gold of monetary sector

-10,079 -13,700

5,660

1978

1979

12,485

-9,681 -10,266 -11,191 -12,681 -16,722 -20,305 -4,224 -4,024 -4,554 -4,264 -5,333 -6,749 6,637 -8,417 -11,389 -13,557 5,458 -6,242

1,216 -10,679

959

-6,711 5,646

8,238

4,480

5,607

-3,658

-9,658

5,219

-8,112

1,025

15,601 -14, 139

9,242 -1,097

-6,161

167 -18,931 -18,089

18,645

G. Contra-entry to net SDRs allocations

1,188

1,014

999

0

0

0

0

0

0

1,447

H. Error and Omissions

1, 704

1, 559

-1,614

204

980

1,547

898

8,664

3,585

208

Note:

196Q-1977 1978 1979

Source:

EUROSTAT, Balance of Payments 197Q-79.

EUA =US$ 1.12 EUA = US$ 1.27 1 EUA = US$ 1.35

19

account balance is relatively smaller and has not fluctuated as much as the goods

and

services

account.

It

may be concluded,

therefore,

that the

balance of payments of the EC is determined more by the performance of trade in goods and services.

Thus, it is seen that when there was an oil

shock and world recession resulting in the fall in the surplus of goods and services balance, such as in 1974 and 1979, the EC would have balance-ofpayments problems.

It should also be pointed out that the EC balance-of-

payments recovered from the oil shock of 1973 very quickly, with surpluses in 197 5, 1977 and 197 8.

It is not known, however , whether the EC balance-

of-payments could recover from the oil shock of 1979-80 just as quickly.

Composition of Trade ASEAN's foreign trade is clearly distinguished between exports and imports. In the case of exports, primary commodities have accounted for more than 70 per cent, with the proportion standing at 72 per cent in 1977-78 (see Table 5).

In contrast, manufactured imports accounted for 60 per cent of total

ASEAN imports in 1977-78 (see Table 6).

Between 1973-74 and 1977-78 the

proportion of ASEAN manufactured exports increased slightly from 23.7 per cent to

24.9 per cent,

whereas

the proportion of manufactured

imports

declined from 65.1 per cent to 60.4 per cent (see Tables 5 and 6).

This

change in the trade pattern has been due to the growing capability of ASEAN to export manufactured goods and the need to import more oil by some ASEAN countries.

Separating trade in oil and petroleum products from the trade

statistics would clearly reveal this trend. Major commodity exports of ASEAN are concentrated in only a few products.

Indonesia

petroleum and and

palm

Indonesia's. copper

exports

petroleum products,

oil.

Malaysia's

six

commodities,

forestry products,

major

export

list

is

namely,

rubber, almost

crude

coffee,

the

same

tin as

The Philippines' major exports are sugar, copra, coconut oil,

concentrates and

diversified,

basically

with

tapioca, and tin.

the

forestry

more

products.

important

ones

Thailand's exports are more being

rice,

rubber,

maize,

Singapore's exports are also very diversified, but with

TABLE 5

"0

0

Commodity Composition, Share and Growth Rate of ASEAN s Total Exports and Exports to EC by Broad Commodity Groups (Percentages) 1

1973

1977

1973

1971

/74

1977 /78

/74

/78

/74

/78

Percentage increase from 1973/74-1977/78 Total EC

Food and Live Animals

14.5

15.7

16.1

24.8

15.6

23.4

103.7

205.5

Beverages and Tobacco

0.8

0.7

2.2

1. 5

41.3

32.4

66.3

30.3

Commodit~

SITC

0

Composition

Total

1973

EC

EC 1 s Share

2

Crude Material excl. Fuels

27.1

19.9

34.7

26.0

17.9

19.4

37.1

48.5

3

Mineral Fuels etc.

25.9

30.6

5.2

4.6

2.8

2.3

120.9

77.3

4

Animal and Veg. Oils and Fats

5.0

4.9

11.0

s.s

31.0

26.6

85.4

58.9

5

Chemicals

2.2

1. 7

1. 5

0.5

9.8

4.2

45.8

-37.5

6

Basic Manufactures

11.3

9.6

15. 1

15.7

18.8

24.4

58.9

106.2

7

Machinery and Transport Equip.

6.9

9.4

7. 1

8.5

14.5

13.4

155.2

135.9

8

Misc. Manufactured Goods

3.3

4.2

5.6

7.8

23.6

27.5

136.3

175.8

9

Goods not Classified

3.0

3.3

1. 5

1.8

6.8

a. 1

104.9

146.8

Q-4 Primary Commodities

73.3

71.8

69.2

65.7

13.3

13.6

83.5

88.2

5-8 Manufactures

23.7

24.9

29.3

32.5

17.4

19.4

96.6

I 19.2

100.0

100.0

100.0

100.0

14.0

14.9

87.3

98.2

Q-9 Total Source:

UN Commodit~ Trade Statistics (various issues); Sfaf1sfical Office of fhe EC (EUROSTAT).

TABLE 6 Commodity Composition, Share and Growth Rate of ASEAN's Total Imports and Imports from EC by Broad Commodity Groups (Percentages)

Commodity Composition SITC

Total 1977 /74 /78

1973

1973 /74

EC

1977 /78

EC's Share 1973 1977

/74

/78

Percentage Increase from 1973/74-1977/78 Total EC

Food and Live Animals

10.7

9.4

5. 1

4.2

7.3

6.8

54.6

45.9

Beverages and Tobacco

o.8

0.8

1.6

1.8

33.1

35.4

81.2

93.8

2

Crude Material excl. Fuels

6.8

6. 7

1. 7

1.3

3o9

3.1

71.3

36.3

3

Mineral Fuels etc.

14.4

20.0

1.2

0.5

1.2

0.4

145. I

-23.8

4

Animal and Veg. Oils and Fats

0.9

0.9

0.3

0.2

5.5

3.7

86.4

24.7

5

Chemicals

10.4

9.1

22.3

18.1

32.6

30.5

53.3

43.5

6

Basic Manufactures

19.8

16. I

16.2

13.8

12.4

13. I

42.8

50.4

7

Machinery and Transport Equip.

30.0

30.3

42.5

51.8

21.5

26.2

71.1

116.3

8

Misc. Manufactured Goods

4.9

4.9

6.9

5.3

21.5

16.5

75.6

35.3

9

Goods not Classified

1.3

1.8

2.2

3.0

24.8

25.5

141. I

147.3

Q-4 Primary Commodities

33.6

37.8

9.9

8.0

4.5

3.3

98.2

43.7

5-8 Manufactures

65.1

60.4

87.9

89.0

20.5

22.6

63.0

79.3

100.0

100.0

100.0

100.0

15.2

15.3

75.9

77.2

0

Q-9 Total

Source:

UN Commodity Trade Statistic? {various Issues); Statistical Office of the EC (EUROSTAT).

i':) ~

22

petroleum products and rubber being the most important ones (see Appendix Table 1). On the import side, machinery is the most important group of pro-

ducts for all

ASEAN countries.

Imports of petroleum products are par-

ticularly important to Thailand and the Philippines. ASEAN countries also

import petroleum products,

While the other three this merely reflects the

intra-product trade characteristic of petroleum (see Appendix Table 1). Tables

7 and

8 show

the

commodity

imports of the EC in 1973-74 and 1977-78.

composition of exports and In contrast to the commodity

composition of ASEAN's trade, exports of the EC consist mostly of manufactured goods whereas imports have a large proportion of primary commodities. Machinery accounted

and for

transport

equipment,

basic

manufactures

and

chemicals

almost 70 per cent of total EC exports during the

1970s.

Besides these, food and live animals and mineral fuels are the other major exports of the EC.

The export of primary products was due to the intra-

regional trade pattern of the EC. explains

why

imports of chemicals,

This intra-regional trade pattern also basic manufactures and

machinery and

transport equipment accounted for about 50 per cent of the EC' s imports (see Table 8).

The proportions of imports of food and live animals, crude

materials, and mineral fuels were also very high, accounting for about 40 per cent of the total imports during the 1970s.

At the aggregate level,

the commodity composition has changed very little over the period 1973-74 to 1977-78.

Even mineral fuel imports remained at more or less the same

proportion.

Direction of Trade

Tables 9 and 10 present the direction of ASEAN exports and imports based on the

1979 trade statistics.

It is clear

that Japan is the most important

trading partner of ASEAN, accounting for 27.1 per cent and 22.1 per cent of ASEAN exports and

imports

respectively. 3

It

is followed

by the United

States, with export and import shares of 17.7 per cent and 16.1 per cent respectively.

The 'EC

is

the

third

largest

trading

partner

of

ASEAN,

TABLE 7 Commodity Composition, Share and Growth Rate of EC's Total Exports and Exports to ASEAN by Broad Commodity Groups (Percentages)

Commoditl Composition SITC

Total 1973 1977 /74 /78

1973 /74

EC

1977 /78

EC•s Share 1973 1977 /74 /78

Percentage increase from 1973/74-1977/78 Total EC

Food and Live Animals

9.0

8.8

13.5

3.9

2.4

o. 7

80.8

-64.9

Beverages and Tobacco

1. 5

1. 5

1. I

2.0

1. 9

1.4

87.9

123.8

2

Crude Material excl. Fuels

3.7

2.9

o. 7

0.6

0.3

0.2

42.3

3.9

3

Mineral Fuels etc.

4.8

5. 5

0.6

0.5

0.2

0.1

113.0

8.8

4

Animal and Veg. Oils and Fats

0.6

0.4

0.2

0.2

0.6

0.5

51.5

16.3

5

Chemicals

11.9

10.7

15.5

13.7

2. I

1.4

67.8

9.0

6

Basic Manufactures

24.3

21.6

13.5

13.0

0.9

0.6

65.0

18.3

7

Machinery and Transport Equip.

33.4

35.3

49.3

55.2

2.3

1. 7

95.8

37.8

8

Misc. Manufactured Goods

9.5

10.2

4.5

5. 5

0.7

0.6

98.1

51.5

9

Goods not Classified

1. 3

3.1

1. 1

5.4

1.4

1.8

347.6

508.3

Q-4 Primary Commodities

19.6

19. 1

16. 1

7.2

1.3

0.4

81.0

-44.8

5-8 Manufactures

79. 1

77.8

82.8

87.4

1. 7

1. 2

82.4

29.9

100.0

100.0

100.0

100.0

1. 6

1. 1

85.5

23.1

0

Q-9 Total Source:

UN Commoditl Trade Statistics (various issues); sfaf1st1cal office of the EC (EUROSTAT>.

J'..:) (.;:)

TABLE 8

1'\:) ~

Commodity Composition, Share and Growth Rates of ~EAN 1 s Total Imports and Imports from ASEAN by Broad Commodity Groups (Percentages)

Commodity Composition SITC

1973

0

Total

1971

1973

EC

1971

EC' s Share

1973

1977

Percentage Increase from 1973/74-1977/78 Total EC

/74

/78

/74

/78

Food and Live Animals

12.7

12.5

20.0

25.1

1.8

2.4

76.3

130.2

Beverages and Tobacco

1.3

1.2

1.4

2.2

1.3

2. I

74.9

186. 1

/74

/78

2

Crude Material excl. Fuels

10.4

7.9

31.9

27.7

3.5

4. I

35.2

58.9

3

Mineral Fuels etc.

16.7

17.1

1. I

2.6

o. 1

0.2

84.0

357.2

4

Animal and Veg. Oils and Fats

1.0

0.7

11.4

8.3

13.1

14.0

25.0

33.8

5

Chemicals

7.8

7.7

1. 1

o. 5

0.2

0.1

75.0

-8.6

6

Basic Manufactures

20.7

18.7

16.2

15.4

0.9

1.0

61.7

73.4

7

Machinery and Transport Equip.

19.9

22.2

11.2

9.1

o. 7

0.5

99.5

49.2

8

Misc. Manufactured Goods

8.4

9.6

5.5

8.6

0.8

1. 1

104.4

188.5

9

Goods not Classified

I. 1

2.4

0.2

0.5

0.3

0.3

276.7

263.8

Q-4 Primary Commodities

42.1

39.4

65.8

65.9

1.8

2.0

67.9

83.6

5-8 Manufactures

56.8

58.2

34.0

33.6

0.7

0.7

83.0

81.4

100.0

100.0

100.0

100.0

1.2

1.2

78.9

83.3

Q-9 Total Source:

UN Commodity Trade Statistics (various issues); Statistical Office of the EC (EUROSTAT).

TABLE 9 Direction of Exports of ASEAN Countries, 1979

(In million US$ and percentages)

USA

Japan

EC

Indonesia Value Percentage Percentage of ASEAN

3,171 20.4 35.9

7,189 46.1 53.1

1,180 7.6 16.7

338 2.1 20.1

94 0.6 7.9

398 2. 5 18.4

2,219 14.2 27.0

1,820 11.7 14.8

15,579 100.0 31.2

Malaysia Value Percentage Percentage of ASEAN

1,873 17.0 21.2

2,644 23.9 19.6

1,978 17.9 28.0

419 3.7 25.0

423 3.8 35.6

580 5.2 26.8

2,118 19.2 25.8

2,431 22.0 19.8

11,044 100.0 22.1

Ph I I I pp I nes Value Percentage Percentage of ASEAN

1,383 30.2 15.6

1,208 26.4 8.9

925 20.2 13.1

227 5.0 13.5

134 2.9 11.3

360 7.9 16.7

186 4. 1 2.3

875 19.1 7.1

4,577 100.0 9.2

Singapore Value Percentage Percentage of

AS~~N

1,846 13.7 20.9

1,392 10.4 10.3

1, 769 13.1 25.1

457 3.3 27.2

441 3.2 37.2

292 2.1 13.5

2, 739 20.4 33.4

5,710 42.4 46.4

13,456 100.0 26.9

Thailand Value Percentage Percentage of ASEAN

571 10.8 6.4

1,094 20.7 a. 1

1,201 22.7 17.1

238 4.4 14.2

95 1.8 8.0

531 10.1 24.6

949 18.0 11.5

1,470 27.8 11.9

5,285 100.0 10.6

ASEAN Value Percentage Percentage of ASEAN

8,844 17.7 100.0

13,527 27.1 100.0

7,053 14. 1 100.0

1,679 3.4 1oo.o

1,187 2.4 100.0

2,161 4.3 100.0

8,211 16.4 100.0

12,306 24.7 100.0

49,941 100.0 100.0

To

From

Source:

FRG

IMF, Qlrectlon of Trade Yearbook, (Washington, 1980).

UK

Nether- ASEAN lands

Rest of the World

Total

I'-' (.;)1

TABLE 10 Direction of Imports of ASEAN Countries, 1979

To

USA

Japan

EC

FRG

lndonesi a Value Percentage Percentage of ASEAN

1,053 14.6 14. I

2,101 29. I 20.5

1,068 14.7 16.8

453 6.2 20.1

Malaysia Value Percentage Percentage of ASEAN

I I 161 15.4 15.5

1, 775 23.5 17.3

1,339 17.7 21.0

Phi lipplnes Value Percentage Percentage of ASEAN

1,508 23.0 20.2

1,480 22.6 14.4

Singapore Value Percentage Percentage of ASEAN

2,548 14.2 34.1

Thailand Value Percentage Percentage of ASEAN

1,204 16.7 16.1

ASEAN Value Percentage Percentage of ASEAN

Cl)

UK

Total

Netherlands lands

ASEAN

202 2.7 11.5

119 1.6 21.6

838 11.6 13.6

2,166 30.0 13.4

7,226 100.0 15.6

472 6.2 20.9

493 6.5 28.1

59 0.7 10.7

1, 121 14.8 18.1

2,166 28.6 13.4

7,562 100.0 16.3

910 13.8 14.3

294 4.5 13.0

208 3.2 11.8

106 1.6 19.2

380 5.8 6.2

2,285 34.8 14.1

6,563 1oo.o 14. 1

3,006 16.8 29.3

2,011 11.2 31.6

655 3.6 29.1

621 3.4 35.3

184 1.0 33.3

3,335 18.7 53.9

6,986 39.1 43.2

17,886 100.0 38.5

1,894 26.3 18.5

1,035 14.3 16.3

381 5.3 16.9

233 3.2 13.3

84 1.2 15.2

509 7. 1 8.2

2,571 35.6 15.9

7,213 100.0 15.5

7,474 10,256 16. 1 22.1 100.0 100.0

6,363 13.7 100.0

2,255 4.9 100.0

I, 757 3.8 100.0

552 1.2 100.0

6,183 13.3 100.0

16,174 34.8 100.0

46,450 100.0 100.0

From

Source:

""

(In mill ion US$ and percentages)

IMF, Direction of Trade Yearbook, Washington, 1980.

Rest of the World

27

accounting for about 14 per cent of both ASEAN 1 S exports and imports. 4 Among ASEAN countries the pattern of trade varies.

In terms of

exports, Indonesia and Malaysia sell more to Japan than to other countries; Singapore and the Philippines sell more to the U.S., whereas Thailand now It is Indonesia 1 s exports to Japan,

sells proportionately more to the EC. mostly petroleum,

which have made Japan the most important importer of

ASEAN s goods. 1

The direction on the import side is more uniform, with Japan being the top supplier in almost all cases except the Philippines (see Table 7). Even in the case of the Philippines, imports from Japan are now very close to imports from the United States, the Philippines 1 leading trading partner for a long time.

It should be noted that Singapore is the biggest importer

among ASEAN countries, accounting for almost 40 per cent of ASEAN 1 s total imports.

This fact has contributed to Japan being ASEAN 's top supplier.

After Japan, the U.S. and the EC take turns in being the second most important supplier to ASEAN countries. Indonesia, Malaysia and Thailand buy slightly more from the EC than from the U.S. whereas the Philippines and Singapore buy much more from the U.S. than from the EC.

Tables 9 and 10 indicate that intra-ASEAN trade

accounted for only 16.4 per cent and 1.3 • .3 per cent of total ASEAN trade on the export and import sides respectively. In contrast to ASEAN, which does not have much trade within the group at present, the EC trades largely within the Community, as shown in Tables ll and 12. exports and

The intra-community trade in 1979 was 53.6 per cent for

50.4 per cent for

imports.

increased from .33-34 per cent in 1958. exports

mostly

to

other

European

Interestingly,

these proportions

OJtside the Community, the EC

OECD

(Organization

for

Cooperation and Development) countries and the United States. loping countries took between

6.8

Countries) and

per

Economic The deve-

16.6 per cent of the EC's exports in 1979, divided

cent

for

OPEC

(Organization

of

Petroleum

9.8 per cent for other developing countries.

Exporting

The ASEAN

countries, to be discussed in more detail later, took about 1 per cent of the EC 's exports.

/'..:)

00

TABLE 11 Structure of EC Exports by Country and Region 1958 and 1979 (Percentages) Exports of To

Denmark 1979 1958

Denmark

FRG 1958

1979

0.8 10.4

0.9 17.2

0.2 3.4 2.0 6.3 4.9

48.7

25.2

Ireland 1958 1979

Ital¥ 1958 ~979

Nether I ands 1958 1979

Belt unv'Lux. 195 1979 1.6 11.6 10.7 0.4 2.3 20.7

1.2 22.5 19.2 0.3 5.3 16.2

5. 7

8.1

UK

EC

1958

1979

1958

m9

2.4 4.2 2.4 3.5 2.1 3.1 1.9

2.4 9.9 7.2 6.0 3.4 7.2 5.8

2.0 7.5 4.6 1.2 3.1 5.4 4.9 5.7

1.6 13.0 10.1 1.3 6.1 7.3 7.4 6.8

o. 5 11.4 5.4 9.8 7. 7

o.1 2.2 0.8

o. 7 8.9 8. 1

0.8 14.3 5.3 0.1

0.8 18.9 14.8 0.4

0.4 o.s 0.8 78.8

2.3 5.3 5.6 46.4

2.6 19.0 4.9 0.5 2.7

1.8 30.5 10.7 o.s 5.3

2.1 2.3 6.8

4.6 3.4 6.5

15.0 11.9

15.5 8.4

28.0

52.8

83.5

77.6

31.6

49.4

56.5

72.6

52.8

72.8

19.6

41.8

34.3

53.6

20.7

11. 1

12.7

1.9

4.7

18.7

15.3

13.2

8.9

11. 1

8.8

10.3

16.4

15.5

15.5

6.6 0.7 1.3 0.6

5.9 0.8 0.3 0.4

4.9 o. 7 1.0 0.3

5.9 0.7 0.1 0.1

4.9 1.0 o.8 o. 7

9. 7 1.2 0.3 0.8

6.5 0.7 1. 1 0.6

5.6 o.8 0.4 o. 7

2.8 0.3 0.6 0.3

9.4 1. 1 0.6 0.6

3.7 0.3 0.6 0.2

8.8 5.8 0.6 7. I

9.5 1.8 1.4 2.0

7.8 2.3 0.6 2.5

6.0 0.8 1. 1 o. 7

3.0

2.2

FrBnce Ireland Italy Nether I ands Bel g I um/Luxemb. United Kingdom

20.1 3.0 0.3 5.3 2.2 1.2 25.9

17.7 4.9 0.5 5.2 3.9 1.9 14.9

7.6 0.3 s.o 8.1 6.6 4.0

12.7 0.4 7.8 10.0 8.5 6. 7

Total IntraComnun I ty trade

58.0

49.0

34.5

Other European OEI::O countrIes

17.6

28.1 4.9

FRG

France 1958 1979

USA Canada Japan AustralIa

9.3 o. 7 0.2 0.3

2.3 0.5

7.3 1.2 1.0 1.0

LOGs OPEC Others

9.7 2.3 7.3

11.3 3.9 7.4

22.3 4.8 17.5

14.3 6.1 8.2

48.4 21.3 27.1

22.4 7.8 14.7

1.6 0.3 1.3

7.8 3. 7 4.2

27.9 7.5 20.4

20.6 10.8 9.9

18.1 4.5 13.7

10.3 4.6 s. 7

18.B 3.3 15.5

10.4 4.1 6.4

33.8 7.0 26.8

21.6 8.0 13.6

28.5 7.8 20.7

16.6 6.8 9.8

Centrally planned economies

3.8

2.8

s.o

6.1

3. 7

4.6

0.2

1. 1

4.7

4.2

2.0

2.1

3.8

2.2

3.1

2.9

3.8

4.1

Rest of world and unspecified

0.5

0.3

2.6

1.4

1.3

0.6

6.2

1.4

5.-1

1. 7

2.6

2.1

1.9

1.0

10.8

2.8

4.8

1.5

World (excl. EC)

42.0

51.0

65.5

51.7

72.0

47.2

16.5

22.4

68.4

so. 7

43.5

27.4

47.2

27.3

80.4

58.2

65.7

46.4

World (incl. EC) 100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.(1

100.0

100.0

Source:

o. 7

EC, ].nnual Economic Report 198o-81, Annex Table 30.

TABLE 12 Structure of EC Imports by Country and Region, 1958 and 1979 (Percentages)

FRG

Denmark

Imports of From

1958

1979

19.8 3.4

Ireland

France

Ital~

1958

1919

1958

1979

1958

1979

1958

~979

3.4

1.6

0.6 11.6

o. 7 18.0

7.6 0.1 5.5 8.0 4.5 4.4

11.4 0.4 8.9 12.8 8.2 6.0

o. 7 4.0 1.6

o. 7 6.8 4.7

0.1 2.4 2.5 5.4 3.6

0.6 10.1 6.1 9.0 5.6

2.2 12.1 4.9 0.1

0.9 2.9 1.8 56.4

2.4 4.0 2.4 54.4

Nether I ands

1958

1979

0.9 17.2 14.1 0.2

0.7 19.5 2.8 0.1 1.8

0.9 24.2 7.3 0.5 3.6

2.6 2.0 5.5

4.2 3.6 4.0

17.9 7.4

Be I~ I urn/Lux.

19 8

1979

1958

0.5 17.2 11.6 0.1 2.2 15.7

0.5 22.0 15.7 0.4 4.1 16.6

12.2 7. 7

7.4

8.0

EC

UK

1979

1958

1979

3. I 3.6 2.7 2.9 2.0 4.2 1.6

2.2 11.8 8.0 3.4 5.1 5.9 4.4

2.0 8.3 4.3 0.9 2.6 5.3 4.5 5.1

1.2 13.0 8.8 0.9 6.0 8.9 6.5 6.0

Denmark FRG France Ireland Italy Nether I ands Belg1 um/Luxemb. United Kingdom

1. 7 7.3 3.8 22.8

19.7 4. 7 0.2 3.4 6.3 3.8 11.9

Total IntraConmunlty trade

59.0

50.0

33.4

49.3

26.2

50.1

68.3

75.4

29.3

44.2

50.0

56.4

54.7

67.3

20.1

40.8

33.0

50.4

Other European OECD countr 1es

19.5

25.7

17.6

14.9

8.6

9.8

4.4

5.1

12.5

10.5

7.8

7. 5

8.2

6.5

14.1

15.7

12.7

12.1

USA Canada Jap1m Australia

9.1 0.3 1. 5

o.o

5.2 0.5 2. I 0.2

13.6 3.1 0.6 1.2

6. 5 1.0 2.6 0.4

10.0 1.0 0.2 2.4

7.6 o. 7 1.9 o. 5

7.0 3.0 I. I 1.2

7.3 o.8 2.4 0.1

16.2 1.4 0.4 3.0

6.8 1.0 1.1 o. 7

11.3 1.4 0.8 0.2

8.4 o.8 1.9 0.2

9.9 1.4 0.6 1. 7

6.6 0.8 I. 7 0.3

9.3 8.2 0.9 5.4

11.7 2.6 3.3 1.0

11.2 3.7 0.7 2.7

7.B 1.2 2.2 0.5

LDCs .L....:........ X .+m..

lJ

lJ

I:{x .. +m .. ) j l) 1]

+

o.s

+ 76.4

Basic Chemicals

Petroleum Coal Pro-

Nc:n-1-tltalli c Mineral Pro-

ducts

ducts

- 11.6 ... 20.3

- 44.7 +100.0

- 49-4 + 39.8

+100.0

- 16.9 + 50.1

+100.0

-

+ 100.0

+ 99.1

+

+

+ 99-9 +100,0

- 51.5 - 71.1

+ 100,0

+100.0

+

97.4

+ 35.5

+100.0 +100,0

- 68.3

+ 100,0

+100,0

- 77 .o

+

99.~

+ 75.1

- 65.4 - 50.2

17.6 89,8

+ 98.6

+

3-4 - 30.1

+

95.8

+ 91.0

+

96.3

+ 45.7

- 83.1 + 84.6

+ 100,0

+ 89.6

-

+ 74.8

-

- 69.3 +100.0

+100,0

- 22.5

+ 27.3

- 17.0

+ ·n.6

- 13.3

- 11.7

+100.u

+ 99-4 +100,0

-

-

+ 62.7 + 26.3

-

+ 48.4 + 3.9

-

- 15.6 + 26,6

+100,0 +100,0

-

- 56.2 + 16.4 - 19.6 + 3.2

- 48.9 +100,0

+ 29.0

+ 97.1 +100.0

r(x .. +m .) j lJ lJ

+100.0

- 24.9

-

Sourre:

calculated fran \.hited Naticns, Cctmrunity Trad: Statisti03, Series D, various issues.

l

(x .. -m .. )

1+~

r(x .. +m.J j lJ lJ

-

+ +

- 47.6

j r ...

61.6

+ 100.0

- ~9-7

where xij denotes the exports of an EC-country i to A5EAN in the manufacturing sector j and II].j denotes the imports of an EC-co~~-i fr~ ASEI\N in the manufacturing sector j.

71.0

+ 84.7

-

I

+ 69.3

+ 100.0

-

X (xi/mi/ j

46.9

+

+100.0 + 99.3 + 64.2

96.7

+ 61.2

--.---. ritmij

-

-

+100.0

['" ., :•v·.

RCAij-

:·1adlinery and other Manufactured GJods

- 54o2 - 66.0

5.6

-

Transport El:}uiptent

+ 99·5 ... 52.1

-

0,6

Ferrous and Noo-Ferrous 1-tltals

85.5 80,0

- 40.1

I

+ 97.0 + 52.8

v·., ...,,•.,

l.f _ _ < x +m.. 1)1]

_J_ _

r (x .+m } ji]ij I

I

I

APPENDIX TABLE 6

Structure of Revealed ~ative Advantages a of EC vis-a-vis ASEAN Countries in Manufacturing Industries 1 1968 and J977

~

i

~s

Indonesia Malaysia Philippines

Thailand

Singar::ore

s

Food 1 Beverages, 'Ibba.cco

1968 1977

- 32.8 - 60.0

48.5 - 25.0

- 37 .o - 50.2

28.4 46.7

- 16.1 - 43.4

Textiles

1968 1977

-

100.0 3.9

52.9 - 48.1

83.0 12.9

14. 1 - 18.4

79.8 - 90.5

Clothing, Footwear

1968 1977

- 84.2

28.6 - 86.1

100.0 - 95.7

- 49.5 - 71.2

100.0 - 99.6

Wood, Paper, Printing

1968 1977

- 12.3 - 58.5

- 83.0 - 87.2

-

2.3 - 78.0

- 51.5 - 69.9

- 23.7 - 53.3

Rubber

1968 1977

100.0 100.0

31.5 10.9

100.0 100.0

100.0 31.0

100.0 13.2

Basic Chemicals

1968 1977

- 17.5 - 14.0

- 38.0 - 30.9

6.8 13.9

- 15.7 89.8

33.2 91.2

Petroleum,Coal 1968 Products 1977

- 81.7 100.0

16.5 100.0

100.0 100.0

- 50.7 100.0

100.0 100.0

96.1 100.0

99. 1 22.3

2.7 76.8

- 67.7 - 51.5

-

Non-M=tallic Mineral Products

1968 1977

100.0 100.0

100.0 87.6

100.0 100.0

Ferrous and Non-Ferrous M=tals

1968 1977

- 36.3 - 77.2

- 58.6 - 73.6

88.1 - 12.3

Transport Fquipnent

1968 1977

100.0 96.1

98.9 99.3

32.3 85.9

96.6 32.0

100.0 100.0

Machinery and other Manufactures a See footnote

1968 1977

99.4 96.4

99.4 55.7

96.1 63.4

84.0 2.4

99.0 76.3

Sourre:

I

I

(a) in Appendix Table 5.

See Appendix

Table 2.

-

I

I

APPENDIX TABLE 7 Trarts fran Indonesia in CSP tariff items

856 60.2

85 15.3

1 0,2

229 7.1

2960 49.9

Semi-sensitive indwtrial products (except textiles)

in lcx:o lli$ in percent of total EC i.rrp:>rts fran Indonesia in CSP tariff items

796 66.6

317 88.5

41 18.7

308 57.0

1430 94.0

-----

Nan-sensitive industrial products (except textiles)

in lCX:O US$ in percent of total EC i.rrp:>rts from Indonesia in GSP tariff items

2852 45.2

165 2,6

3128 5.2

1889 15.2

523 3.4

Sensitive textiles

in lCX:O US$ in percent of total EC i.rrp:>rts fran Indonesia in GSP tariff items

84 0.9

4 2.4

---

---

Semi-sensitive textiles

in lCX:O lli$ in percent of total EC i.rrp:>rts fran Indonesia in GSP tariff items

20 166.7

--

--

----

in lCX:O US$ in percent of total EC imports fran Indonesia in GSP tariff items

33 40.7

2 100.0

1 100.0

Sensitive agricultures (tcba= type Virginia, = a butter, carmed ananas)

in lcx:o lli$ in percent of total EC imports fran Indonesia in GSP tariff items

92 32.9

--

--

Semi-sensitive agricultures (raw tcbacro)

in lCX:O US$ in percent of total EC imports fran Indonesia in GSP tariff i terns

4499 74.2

Nan-sensitive agricultures

in lCX:O US$ in percent of total EC imports fran Indonesia in GSP tariff i terns in lCX:O US$ in percent of total EC inports fran Indonesia in GSP tariff items

b Total agricultures, semi-manufactures and manufactures

I

I

EC

---

Sensitive industrial products (except textiles)

Nan-sensitive textiles

Denrnarl'

i; 34497

54-1

a The data have been ronverted fran European Units of Ac=unt (EUA) into US$ by the rate US$1 = 0.837 EUA. b Discre;>ancies between the sum of the individual categories and the total figures are du= to rounding. --

Source:

--

- ---------------------

Microfidle data provided by the Statistical Office of the European Ccrrmunities.

-

----

------

-

I

APPENDIX TABLE 11

EC Imports from Malaysia under the CSP, by CSP Categories, 1978 Category

CSF-J:eoeiving :imports

West Gennany

Franoe

Italy

Benelux

Ireland

{](

I

Denmal:k

EC

Sensitive industrial prowets (exoept textiles)

in lCXXJ US$a in percent of total EC i.np:Jrts fran Malaysia in CSP tariff items

1461 3.8

358 2.3

59 2.1

174 4.0

15102 26.2

513 37.9

949 47-7

18619 15.2

Semi-sensitive inilistrial products (except textiles)

in lCXXJ US$ in percent of total EC i.np:Jrts fmn Malaysia in CSP tariff items

7750 58.8

1465 60.5

550 41.5

2507 57-5

7127 80.1

67 65.7

337 83.6

19804 64.1

Non-sensitive inilistrial products (except textiles)

in lCXXJ US$ in percent of total EC :imports fmn Malaysia in GSP tariff items

13202 14.5

1704 5.6

752 4-5

2578 2.2

10165 27.6

66 16.3

1711 51.1

30179 10.2

Sensitive textiles

in lCXXJ US$ in percent of total EC imp::>rts fmn Malaysia in CSP tariff items

4959 18.9

1598 15.3

27 2.7

1099 32.6

9296 12.6

in lCXXJ US$ in percent of total EC imp::>rts fran l'Blaysia in CSP tariff items

1454 290.2

329 77

-------

1614 14.9

Semi-sensitive textiles

-------

45 22.1

75 76.5

23 30.3

1925 107.9

Non-sensitive textiles

in lCXXJ US$ in percent of total EC :imports fmn l'Blaysia in G3P tariff items

2 3.6

1 100.0

----

----

Sensitive agricultUJ:es (td::>acoo type Virginia, ooooa butter, canned ananas)

in lCXXJ US$ in percent of total EC irrp:Jrts fran Malaysia in CSP tariff items

906 22.5

---

----

59 10.9

Semi-sensitive agricultUJ:es (raw td::>acco)

in lCXXJ US$ in percent of total EC :imports from Malaysia in CSP tariff items

--

---

--

--

---

Ncn-sensitive agricultUJ:es

in lCXXJ US$ in percent of total EC imp::>rts fran :r.llaysia in CSP tariff items

35567 66.1

10199 51.1

11905 60.7

55412 69.0

109387

Total agricultures,b semi-manufactures and manufactures

in lCXXJ US$ in percent of total EC :imports fran Malaysia in GSP tariff items

65302 28.7

15654 19.7

13265 24.7

60730 28.0

I

--

a 'rhe data have been cx:nverted from European Units of llcoount (EUA) into I.E$ by the rate t.E$1 = 0. 837 EUA. b Discrepancies be~ the sun of the individual categories and the total figures Souroe:

----

103 100.0

---

11225 98.7

---

245 245.0

12435 76.8

---

--

--

---

--

83.8

625 23.8

6229 90.5

229 324 73.1

154666 60.3

1476 25.9

10593 65.5

321627 37.6

'

aJ:e due

Mic:roficne data provided by the Statistical Offioe of the Eurc:pean Canrunities.

to rounding.

1

I 1DE 6.6

--

APPENDIX TABIE 12

EC Imp:lrts fran PhiliJ;pines under the CSP, by CSP Categories, 1978

Category

CSP-reaeiving lltp:lrts

i'est Cennany

France

Italy

Benelux

!

UK

j

Ireland

r:erunark I

l

EC

Sensitive Industrial products (exCEpt textiles)

in lOCO U3$a in peroant of total EC imports fran PhilifpineS in CSP tariff items

2578 14.0

1058 16.9

801 29.5

1246 11.0

4474 36.1

56 10.9

49L

Semi-sensitive industrial products (exCEpt textiles)

in lOCO US$ in peroant of total EC imports fran Philippines in CSP tariff· items

7865 76.0

1101 51.2

2544 86.8

2707 77.2

2493 69.7

60 63.8

569 68.7

17333 73-9

Nan-sensitive industrial products (exCEpt textiles)

in lOCO US$ in percent of total EC imports fran Philippines in CSP tariff items

14430 52.9

1153 4.6

503 15.5

4883 38.5

3676 12.6

13 6.3

409 24.8

25074 25.2

Sensitive textiles

in lOCO US$ in perCEnt of total EC imports fran Philippines in CSP tariff items

3134 10.8

425 12.1

--

--

---

1671 10.1

80 20.7

663 30.6

5970 10,1

Semi-sensitive textiles

in lOCO US$ in perrent of total EC imports fran Philippines in CSP tariff items

698 51.9

638 67.4

---

--

--

528 53·5

56 71.8

5 19.2

Nan-sensitive textiles

in lOCO US$ in perCEnt of total EC lltp:lrts fran Philippines in CSP tariff items

189 100.5

407 93.1

----

76 95.0

32 30.5

---

33 100.0

737 67.3

Sensitive agricultuxes (tobacco type Virginia, ==a butter, carmed ananas)

in lCXXl US$ in perCEnt of total EC :inp:>rts fran Philippines in CSP tariff i terns

6698 57.9

168 9.9

---

1549 22.4

3928 52.7

--

--

1151 70.3

1 3493 43·9

Semi-sensitive agricultures (raw tobacco)

in lOCO US$ in perCEnt of total EC imports fran Philippines in CSP tariff items

13 59.1

---

----

--

6 8,5

---

----

Non-sensitive agricultures

in lOCO US$ in perCEnt of total EC imports fran Philippines in CSP tariff items

38137 66.2

2546 47.6

7598 64.9

22254 74.6

13866 57.8

266 63.8

1540 87.8

86204 66.0

Tbtal agricultuxes, b semi -manufactures and manufactures

in lOCO US$ in peroent of total EC imports f:rcm PhiliJ;pines in CSP tariff items

73742 47o4

7497 16.5

11445 49.2

32714 45.7

30673 32.5

532 31.3

4863 55.5

161461 40.3

'

I

1 :J7')4 20.5

1926 46.4

I

'

a 'Ihe data have been =nverted fran Eurcpean lhits of !\C=unt (EUA) into US$ by the rate US$1

= 0. 837

--

EUA.

b Discrepancies between the sun of the individual categories and the total figures are d.le to rounding. SourCE:

73.5

Microfidle data provided by the Statistical OffiCE of the Euror:;ean Ccmmm.ities.

19 16. 7.

1

N'PENDIX TABlE l3 EC Imports fran Singapore tmder the a>P, by ffiP Categories, 1978

Category

GSP-reoeiving imports

west cennany

Sensitive industrial products (except textiles}

in lOCO US$a in r;eroent of total EC :Lnports fran Singapore in G>P tariff iterrs

1992 4.0

Semi-sensitive industrial products (except textiles}

in lOCO US$ in r;eroent of total EC imports fran Singapore in G>P tariff iterrs

Non-sensitive industrial products (except textiles} Sensitive textiles

Franoe

Italy

4o2

860 2.5

24205 40.4

5694 38.9

in lOCO US$ in r;eroent of total EC imports fran Singapore in G>P tariff iterrs

29126 46.7

4178 27.7

in lOCO US$ in r;eroent of total EC imports from Singapore in G>P tariff iterrs

1760 4.1

297 1.6

in lOCO US$ in r;eroent of total EC imports fran SingilfX)re in G>P tariff items

108 76.1

in lOCO lli$ in r;eroent of total EC imports fran Singapore in G>P tariff items

Sensitive agricultures (td:Jacoo tyr:e Virginia, coooa butter, canned ananas}

in lOCO lli$ in r;eroent of total EC imports fran SingilfX)re in G>P tariff items

Semi-sensitive agricultures (rav- td:Ja=l Non-sensitive agriculhlres

Semi-sensitive textiles

Non-sensitive textiles

2172

Benelux 252

UK

Irel:":l.c'

Do.Jlllla1:1P tariff iterrs

---

---

--

--

----

----

----

---

'in lOCO US$ in r;ercent of total EC imports fran Singapore in G>P tariff items

2958 89.4

3278 124.3

1295 46.0

---

26 29.9

--

164 12.8

425 30.0

--

--

--

--

--

--

--

170 6.9

--388 19.2

--

--

8144 69.8

! Total agricultures,b semi -manufactures and

manufactures

in lOCO US$ in percent of total EC imports fran Singapore in mP tariff items

60149 27.3

12676 25.6

8298 12.8

18099 15.0 '

a The data have been converted fran European !hits of Acoatmt (EllA) into lE$ by the rate U3$1 = 0.837 EUA. b Discrepancies between the sun of the individual categories and the total figures are due to rounding.

Souroe:

Mic:rofidle data p:rovidad by the Statistical Offioe of the European Ccmnunities.

49360 34.0

1673 29.0

1547 48 4491 30.8 23.1

APPENDIX TABLE 14 EC Irrp::>rts fran 'lhailand under the alP, by alP Categories, 1978 Category

alP-receiving :i.nlJOrts

Sensitive industrial products {except textiles)

a in lCXX) US$ in percent of total EC imports fran 'lhailand in alP tariff items

Semi-sensitive industrial products {except textiles)

West Cennany

France

Italy

Benelux

Ireland

Denmark

EC

1998 31.9

529 44·7

71 38.2

409 38.4

404 33.8

1 8.3

108 41 .1

3520 34.6

in lCXX) tE$ in percent of total EC imports fran 'lhailand in alP tariff items

16103 60.6

2274 63.2

2572 93·7

5778 75.8

6253 78.2

16 80.0

4065 92.2

37116 70.0

Non-sensitive industrial products {except textiles)

in lCCD US$ in percent of total EC imports fran 'lhailand in alP tariff items

7328 40.7

2002 21.5

725 17.5

2558 48.2

6575 31 .8

178 103.5

802 78.5

20180 34.4

Sensitive textiles

in lCCD US$ in percent of total EC imports fran 'lhailand in alP tariff items

5086 15.5

1337 18.6

--

--

308 4.1

1624 15.4

65 17.8

3073 34.3

11493 13.1

Semi-sensitive textiles

in lCCD US$ in percent of total EC imports fran 'Ihailand in alP tariff items

1167 50.0

75 24.4

----

---

208 45.4

2 28.6

22 31.0

1476 22.1

Non-sensitive textiles

in lCCD US$ in percent of total EC imports fran 'lhailand in alP tariff items

2212 97.9

288 57.5

96 24.1

4996 70.6

3B 94.0

--

10

32 78.0

8006 75.0

Sensitive agricultures {tcbacco type Virginia, = a butter, carmed ananas)

in lCCD US$ in percent of· total EC imports fran 'Ihailand in alP tariff items

18107 79.3

71 2,8

---

1406 6.9

2354 12.3

323 89.5

2433 78.8

24693 36.0

Semi-sensitive agricultures {raw tcbacro)

in lCCD US$ in percent of total EC imports fran 'Ihailand in GlP tariff items

---

---

----

---

---

--

Non-sensitive agricultures

in 1000 US$ in percent of total EC imports fran 'Ihailand in GlP tariff items

12166 87 .o

10891 79.6

3076 15.8

4354 71.4

4444 60.5

7 50.0

1090 87.1

36022 58.2

in lCCD US$ in percent of total EC :inp:>rts fran 'lhailand in alP tariff items

64228 51.3

17467 45.6

6538 12.8

19810 35.8

22234 32.8

601 63.1

11625 60.9

142507 39.8

b Total agricultures, semi-manufactures and : manufactures

--

--

: a 'Ihe data have been cx:nverted fran European units of Account {EUA) into tE$ by the rate tE$1 = 0.837 EUA. I

UK

b Discrepancies between the sun of the individual categories and the total figures are due to rounding. Source:

Microfiche data provided by the Statistical Office of the EuroJ?=an O:mnunities.

--

--

--

APPENDIX TABlE 15 utilizaticn Degree of G:>P Ceilings versus Dutiable EC !rnp:)rts fran ASEAN, 1978, by G:>P Categories

Category

GSP Ceilings in Percent

Underutilization (-)

DJ.tiable Irrports

of total EC !rnp:)rts

resp. Overutilization a (+) of GSP Ceilings

from

from the Beneficiaries

AS~

ASEAN-LOC Utilization Ratioc

in GSP Tariff Items in millicn in percentage of the ceilings U3$d (absolute te:rms) Sensitive industrial products (except textiles)

18.2

-

59.4

18.1

383.5

1.02

Semi-sensitive industrial products (except textiles)

31.2

-

77.7

8.3

87.0

2.01

--e

--e

311.5

1.23

23.2

10.0

8.3

0.80

67.7

1. 70

8.0

1. 77

-

Sensitive textiles

e

Semi-sensitive textiles

45.2

I

Sensitive agricultures (to-

40.9

I - 134.0

+

I

38.2

I

bacx:::o type Virginia, cocoa

butter, canned ananas) Semi-sensitive agricultures (raw tobacco)

11.9

+

10.9

162.7

a GSP-receiving imports from all beneficiaries minus the ceiling b Total imports from ASEAN in GSP tariff items minus actual preferential imports from ABEAN (GSP imports) c Defined as the ratio between the percentage share of preferential EC imports fiall ASEAN (in G:>P tariff items) and the corresponding percentage share for all GSP-beneficiaries. d

Data cx:nverted from EUA into US$

e Ceilings for sensitive textiles are only recorded in te:rms of quantities. Since the share of G:>P imports in total EC imports from GSP-beneficiaries in sensitive textiles arrounted to 7.1 percent only, the ceiling has prc:bably been fully exhausted. Source:

See Appendix Table

14.

APPENDIX TABLE 16

Doviatims between GSP-Ceilings, Actual GSP Trade, and the Total Exp::>rt Capacity of GSP Peneficiaries in Products Relevant to ASEl\Na, in 1978

Product

a:::T--Nurrber

I

!SEAN Country Affec-

ted by the Butoir

I

Total Ceiling

I

Butoir

IASEAN

Country NonD.Jtiable Exports (GSP Trade)

ASEAN

Country D.Jliable Exports

I Non-D.ltiable Exp::>rts of all Beneficiaries (GSP-Trade)

I

Dutiable Exp::>rts of all Benefician.es

in millim EUA or in tons (if indicated) Protective Gloves Basketwork, :"JickeiWork

4203 BI

Thailand

17.369

2.605

5.089

2.935

23.618

22.51 9

4603

Philippines

15.205

3.041

6.962

3.411

16.009

9.152

Woven Fabrics of Regenerated Textiles Fibres Nets and Netting madeofTwin,Cordage and Rope

5607 B

'!hail and

5905

Knitted Gloves do

6002 do

230 tons

115tons

693 toos

937 tens

2268 tons

4766 tons

Philippines

5 tens

2.5 tons

40 tms

20 tons

239 tons

90 tons

Philippines

35 tons do

17.5 tons do

112 tons

81 tons

91 tons

91 tons

606 tons do

4592 tens do

Malaysia

do

'lhailand

do

do

Urt>rellas Articles of Precious Mo!tal

6601

Singapore

9.027

1. 354

2.401

0.709

8.739

7-428

7112 A

'lhailand

5.484

2.742

5.151

2.240

13.783

12.190

Electrical Capacitors, Fixed or Variable

8518

Singapore

9.131

1 ,826

3.382

~.097

23.618

22.519

do

do

do

83 tons

51

tons

a 'Ihese products were denaninated as being relevant to ASEAN, where ASEl\N =tries were the major suppliers sition of MFN Tariffs on GSP Irrports from ASEAN Exhausted "Butoirs" (Maximum Arrount) for a Single ABEAN-country

Exhausted Ceilings for all Beneficiaries combined

Sensitive Products (Subject to InterEC Al !£cation Quota)

Semi-Sensitive Products (No Inter-EC Allocation Quota)

Sensitive Products (Subject to InterEC Al~cation Quota)

Sam-Sensitive Products (No Inter-EC Allocation Quota}

1977 In:bnesia

-

Malaysia

--

Philippines

12.6

-

Singap:>re Thailand

--

ASEAN

2.1

All G:>P bene-

--

ficiaries

'lbtal Exhausted GSP-ceilings

1978

1979

1977

1978

1979

1977

1978

1979

1977

1978

1979

1977

1978

1979

---

----

--

-

-

--

2.8

15.3

29.5

14.4

4.6

29.5

17.2

19.9

--

4.4

1.8

2.2

2.4

7.6

11.1

16.7

9.4

13.3

24.5

17.6

8.5

0.3

0.6

7.5

1.5

6.4

3.0

38.9

24.6

19.0

--

26.3

7.9

12.2

0.1

0.1

1 •1

5.6

8.3

0.5

32.0

16.3

13.8

12.0

41.0

29.4

0.1

3.5

7.1

40.4

21.0

31.4

52.5

65.5

67.9

21.4

13.8

10.9

0.6

1.2

4.0

10.0

10.4

7.9

34.1

25.4

22.8

-

--

-

2.7

4.8

3.0

7.4

6.5

4.5

10.1

11.3

7.5

--

---

-

---

9.9

i

i

I I

I

a Excluding agricultures and textiles b Called tariff-quota which are as follONs for all sensitive products: Benelux 10. 5% of the a:mnunity ooiling, Denrnal:k 5%, Franoo 19%, West Cennany 27.5%, Ireland 1%, Italy 15%, UK 22% peramt. -

·--·-

~

~~

-

-

--

-

Source: Calculated fran data provided. by the West German Ministry of Econ::>mics.

~

-

~-

-

-

---

~-----·-

APPENDIX TABlE 18 EC Ceiling Allocaticn Rule for "Sensitive" CSP Qxxis Versus the Actual Patterns of Importsa fran ASE.AN, 1978 , EC

· fV"ember State I

l

Original Allocation Rule (in percent)

Adjusted ~ocation Rule

27.5

France

19.0

33.00 15.24

Italy Benelux

15.0 10.5

12.04 8.44

United Kingdom

22.0 1.0 5.0

'Denmark

!=:en~i..tive

'lbtal

West Gennany

Irelarrl

Actual Pattern of EC Imports

36.5 13.3 11.2

from Ac:EAN 1 q7R GSP-Receiving Trade

Items

47.3 7.7

12.9

1.8 5.7

26.40

21.5

25.4

0.84 4.04

0.8 3.8

o. 7

--

--

11.4 --

100.0

100.0

I

I

~

I

'Ibtal

100.0

100.0

I a Totai EC imports of sensitive agricultures, textiles and other semi-manufacture s and manufactures fran ASE.AN, exoopt tariff item 44.15 (plywood) where-due to traditicnally strcng extnrt flews fran Singapore and Malaysia to the UK--the UK received a quota of 84.5% instead of the nonnal 22.0%. b 80% of the ccmnuni ty ceiling are allocated according to the original allocation :rule, whereas the remaining 20% (cx::mnunity reserve) are allocated according to the actual traoo pattern.

In this respect, ho.rrever, the EC has imposed another

restriction insofar as EC narber states can claim an additional quota cnly up to a limit of 40% of the original qoota. For the case of 1978 it is assured that the two rrenbers with the highest discrepancy between original qoota and actual .irrp)rt pattern (West Germany and the UK) eadl drew' 40% of their original quota en the ccrorrunity reserve and that the (negligible) remaining 0.2 percentage points have been equally diviood arrong the other five EC-states' respective groupings (Benelux). It is irrplicitly assurood that the nertler states did not reallocate their original quota

be~

eadl other in 19 78.

APPENDIX TABLE 19 a:;p Induced Fiscal Gainsa for ASEAN-Countries ("Aid Effect") in millicn US$, by GSP-categories, 1978

r

Indonesia Highest

Category

Actual ];X)~tial gain gam

Mala: sia

PhiliP2_ineS Singa};lare 'Ihaila:nd Highest Highest Highest Highest Actual ];X)tential Actual r:otential Actual ];X)tential Actual ];X)tential gain gain gain ~ain gain gain gain gain

ASFliN

Actual gain

Sensitive irrlustrial products(except textiles)

0.5

8.2

2.3

12.9

1.3

8.8

3.8

13.2

0.4

4.3

8.3

Semi-sensitive i.rrlustrial products {except textiles)

0.3

7.0

1. 8

11.0

1. 5

8.8

4.1

8.3

3.3

9.4

11.0

Non-sensitive industrial products (except textiles)

0.7

9.6

2.4

6.8

2.0

7.7

5.1

16.9

1. 6

5.9

11.8

Sensitive textiles

0

-

1.4

-

0.9

-

0.4

1.7

Semi-sensitive textiles

0

-

0.3

-

0.3

-

0

0.2

-

0.8

Non-sensitve textiles

0

-

0

0.1

0.2

-

1. 1

1.1

1.2

Sensitive agricultures (tobacco type Virginia,coroa butter,canned a:nanas)

0

-

1.5

-

1.6

5.2

0

-

3.0

6.3

6.1

Semi-sensitive agricultures (raw tobacco)

0.8

-

-

-

0

-

-

-

-

-

0.8

Non-sensitive agricultures

5.3

21.3

15.6

15.6

5.9

27.0

0.6

3.2

2.4

6.7

29.8

Total

7.6

46.1

25.3

46.3

13.6

57.7

14.0

41.6

13.7

33.7

74.2

4.4

a l\ctual GSP trade of a:n ASEAN country multiplied by the average tariff preference margin of each GSP category. b Hyp:lthetical GSP trade of a:n ASEAN country assuming a full utilization of the maxirm.nn-anount provision (butoir) multiplied by the average tariff preference margin for eadl GSP category. Source:

Eurostat-roicrofiches; Axel Bornna:nn et al., Das Allg-emeine ZOllpraferenzsystem der EG (Hamburg ~ltarchiv GtbH, 1979), Table 43, p. 135; o.vn calrulations.

APPENDIX TABLE 20 Non-Application of Community Treatmenta vis-a-vis ASEAN Suppliers in Manufactures, 1976 - 79

Start of the Protective Measure (Month/Year)

I

ASEAN-Country Affected

1 EC-Country

!

ApplyingJ Product 'the Protective · Concerned Measure

Latest Date of Expiry

l

4/1978

Belgium/Netherlands/Luxembourg (Benelux)

Women's, girl's and infant's outer garments

End 1978

Nightdresses Shirts

End 1978 End 1978 End 1978

5/1978

II

Ireland

5/1978

'I

Ireland Ireland

5/1978 Philippines

Shirts and shirt blouses

2/1979 3/1979

Ireland

Shirts

Ireland

Brassieres

4/1979

UK

Trousers

5/1979

Ireland

Dresses

End September 1979 End September 1979

8/1979

France

Gloves

~d

8/1979

Benelux

Trousers

UK

Gloves

End 1979 End 1979

France

Textile fabrics

End 1977

Benelux

Men's shirts

End 1977

Ireland

Outer garments

End 1978

France

Textile fabrics

End 1979

10/1979

7/1977

I

11/1977 7/1978

Malaysia

10/1978

10/1978

Singapore

10/1979

l

End 1979 End 19,79

September 1979

Ireland

Trousers

End 1978

Benelux

Yarns

End 1979

UK

Textile fabrics

End 1976

10/1976

France

Textile fabrics (synthetic fibres)

End 1976

5/1977

France

Fabrics made End 1977 from cotton or synthetic fibres

3/1978 6/1978

France France

ditto

End 1978

Outer garments for women,girls and infants

End 1978

France Ireland

Trousers

End 1978

7/1978

Shirts

11/1978

Benelux

Textile fabrics

Bnd 1978 End 1978

2/1979

Textile fabrics

End September 1979

5/1979

France Ireland

Shirts

End September 1979

5/1979

France

Tiles

End September 1979

7/1979

UK

Textile fabrics

End September 1979

8/1976

Thailand 6/1978

UK

Shirts

10/1979

France

Tiles

End September 1979 End 1979

10/1979

France

Textile fabrics

End 1979

8/1979

a Non-application of Community treatment according to Art. 115.1, EEC treaty means that a product originating in a third country may not be imported by the EC country claiming for the regulation via other EC countries where this product is in free circulation. The prohibition of so-called indirect imports is a supplement to individual import licencing of EC members. Source:

Official Journal of the

Eur~Communities,

current issues.

APPENDIX TABlE 21 lrrq;lort Liamcing of Individual EC-Countries vis-a-vis

ASEAN in Textiles and Clothing by Ntmber of Casesa, 1977 - 79

-~-------

\ Indcnesia

I

Malaysia

I Philippines

I SingafX)re

I 'lhailand I

Singapore 'VEst Gennany

1

1

1

I

ASEAN

11

3

France

5

3

4

4

16

Italy

1

1

1

5

8

UK

3

3

2

5

13

Netherlands/ Belgium/Luxerrbourg

1

1

6

8

4

4

1

3

26

55

I:enmai:k

2

Ireland EC

0

12

8

a Prolongations of licences allocated in the past are excluded.

Source:

Official Joumal of the Europ:;an Ccmmmities, current issues.

9

APPENDIX TABLE 22 Deviations in Per Capita Import Quota in Textiles vis-a-vis ASEAN Countries in 1977 (Indices: Highest Country Quota= 100)

ASEAN Country Affected

Product

EC Importing Country

Malaysia

Fabrics

UK

Malaysia

Outer garment

37

France

100

Under garment· France I

UK Singapore

Thailand

Singapore

Thailand

Souroo:

Under garment

Outer garment

Outer garment

Fabrics

See Appendix Table 20.

100

France

Benelux Thailand

EC Country Per Capita Import Quota

West Germany

88 100

92 100

France

38

UK

23

Denmark

100

UK

60

West Germany

50

Ireland

14

UK

100

Ireland

40

Denmark

100

Italy

29

West Germany

26

Benelux

23

Ireland

10

UK

7

France

4

194

A Constant-Market-Shares Analysis of ASEAN Manufactured Exports to the European Community Pitou 11an Dijck and Harmen Verbruggen

INTRODUCTION The

main part of world trade in manufactures is concentrated within the

group of OECD countries.

For non-OECD market economies, the markets of

high-income countries are the main outlets for their export manufactures. During the more than two and a half decades in the post-war era, up to 1973, the OECD countries experienced high rates of growth in per capita income. Growth, international specialization and international trade were stimulated by successive rounds of trade liberalization measures. Indeed, the share of imports in domestic demand and the share of exports in production increased gradually, especially in the EC member states. During this period, labelled by Herman Kahn "La Deuxieme Belle Epoque", the developing countries too experienced a steady growth in their exports of manufactures to the OECD countries, rounds

had

countries. seventies.

favoured

in spite of the fact that the trade liberalization intra-OECD

trade

over

imports

from

developing

General Schemes of Preference were not yet in force before the Although OECD imports from developing countries increased by

about 15 per cent a year during the sixties, the share of these countries in total OECD imports decreased during this period. After

1973,

the

international

cally and many a trend was reversed. loping countries,

and

especially in

some

so-called

"Newly

situation

changed

drasti-

Per capita income growth in deve-

middle-income countries,

growth performance of OECD countries. cially

economic

exceeded

the

The export growth rates of espe-

Industrializing

Countries"

(NICs)

far

sur-

passed the average growth of manufactures in world trade, and consequently the share of developing countries in world trade in manufactures increased, and so did their share in OECD imports of manufactures. Governments and

*

The authors would like to thank Jeroen Fles for his dedication in gathering and processing trade data, and Professor Hans Linnemann for his valuable comments.

195 economic agents in the OECD countries became increasingly reluctant towards further

liberalization

attempts,

especially

with

respect

to

"sensitive

industries" that faced strong competition from new competitors. Not~ithstanding

the deterioration of the economic situation in the

OECD countries since 1973 and the reversal in the trends' mentioned above, the

OECD

exports

markets

in

the

eighties.

are

still

seventies,

Analysis

of

the

and

main

will

developing

outlets

continue

countries 1

for to

developing countries' be

export

so

throughout

performance

the

clearly

shows that the number of items in which these countries have a revealed comparative decade.

advantage

has

been

increasing

substantially

during

the

past

The share of these countries in apparent consumption in the OECD

countries is low, but increasing in nearly all sectors.

Their share in the

entire market for manufactures of EC countries, Canada, the United States of America and Japan together increased from a 1.1 per cent level in 1970 to 1.3 per cent in 1972/73 and 1.7 per cent in 1974/75.

Their shares in

the EC market for the same periods are 1.4 per cent, 1.5 per cent and 1.7 per cent respectively .1 The number of developing countries aiming at enlarging their export income from the sale of manufactures in world markets has increased. has

caused

changes

in

industrialization

and

trade

policies

in

This these

countries in order to strengthen the international competitiveness of their domestic industries or sectors. the

to attract

foreign firms to invest in their export

Now that growth in demand in OECD countries is slowing down and

reluctance

to

trade

liberalization

in

sensitive

industries

is

increasing, while the number of developing countries producing manufactures for

world

markets

is

growing,

strong

international

competitiveness

and

favourable trade arrangements are of utmost importance to stimulate further growth

of

·reason

it

manufactured is

of

exports

interest

to

in

the

investigate

developing developing

countries. countries 1

formance in manufactures to developed market economies. Constant-Market-Shares 1

(henceforth

CMS)

analysis,

this

For

this

export per-

By means of a study

focuses

on

ASEAN S manufactured exports to countries in the EC during the period 1970-77.

196 ASEAN EXPORTS IN PERSPECTIVE

Firstly, we shall discuss the growth record of trade in manufactures between OECD countries and developing countries in general, and that of the ASEAN-EC trade flows in particular, for the period 1968-77. average

growth

rate

of

OECD

imports of

manufactures

The yearly

from

the

world

(including intra-OECD trade) in the period 1968-77 was 18.3 per cent in cur rent values. 2

EC imports from

the world,

including intra-EC trade,

increased by 18.9 per cent a year during this period, as a consequence of which

the

share

of

EC

imports

in

total

OECD imports of

manufactures

increased from slightly less to slightly more than 50 per cent (see Figures 1 and 3). The annual growth rate of OECD imports of manufactures from developing countries during the same period was 21.2 per cent, and 18 per cent for the EC.

Thus, while the share of developing countries in OECD imports

increased, this was not the case for the EC; the share of the EC in OECD imports from developing countries decreased somewhat (see Figures 2 and 3). In figure 2, the value of manufactured imports of the OECD countries from developing countries and from ASEAN is prese.nted.

The ASEAN share in OECD

imports from developing countries increased from

1. 3 per cent in 1968 to

3.8 per cent in 1977, and its share in EC imports from developing countries increased from 2. 9 per cent in 1968 to 10.2 per cent in 1977.

The increase

of ASEAN shares was even more pronounced when trade in non-ferrous metals (SITC 68) is excluded.

In this case, the increases were from 0,8 per cent

to 5.6 per cent and from 2.3 per cent to 28.8 per cent respectively. On the supply side of the ASEAN-EC trade link, Table 1 presents a

breakdown of ASEAN manufactured exports by destination in the OECD market. For all the ASEAN countries together, the EC became more important as an importer of manufactured exports in the period under review, while the relative importance of the USA and Japan declined.

However, as Table 1

shows, there are important differences in this respect among the individual countries.

Also, due to the sometimes low absolute amounts involved, the

percentages changed considerably from year to year. Table 2 indicates that there were major changes m the shares of

197

current US$

FIGURE 1

109

X

OECD imports of manufactured products frQID the world ------

EC imports of manufactured products from the world

400

300

200

100

1968

1969

1970

1971

1972

1973

1974

1975

1976

1977 Year

198

current US$ X 109

FIGURE 2

40 OECD imports of manufactured products from LDC's Idem, minus SITC 68 EC imports of manufactured products from LDC' Idem, minus SITC 68

30

/ 20

I

I

/\ \

/ \

I

/

/ I

\

/.

\

i

/.

\

I.

I 10

..

.,...

2

-·-·- -·-· .

,..

,...,.,·

/

/

/

i

\.

1/

\

\. ,I \1

.

/

r

.~/""

r

/----/ /

.;'

/

.,.,....-....- /

.~//

i

. //

./

/

/

----------.....······ ·························

/

/

/

········ ·····""····.... ····... ...·····.......... ........

·.··..........···················

································

··········

1.6 EC imports of manufactured products from ASEAN Idem, minus SITC 68

1968

1969

1970

1971

1972

1973

1974

1975

1976

1977 Year

199

FIGURE 3

share

.....................

EC share in OECD manufactured imports from the world EC share in OECD manufactured imports from LDC's

0.6

··················· ... ...

······ ···... ...

... ... ················· ...

0.4

··............................

···················

................... ·························

0. 2

1968

1969

1970

1971

1972

1973

1974

1975

1976

1977 Year

200 TABLE 1 ASEAN Countries' Manufactured Exports by Destination in OECD Markets in Percentages of ASEAN Countries' Manufactured Exports to the OECO

1970

'73

1

77

1

70

'73

'77

73

1 77

22.5

2~.8

31.5

27.2

38.6 47.5

31.3 26.9

17.5

1

70

1

Indonesia

57.7

43.7

45.6

20.2

Malaysia

22.6

27.7

27.4

40.5

6.0

9.0

23.0

82.5

70.1 57.1

7.5 16.1

Singapore

33.6

35.6

36.4

57.4

53. 1 1o.o

2.5

Thailand

23.8

28.5

39.7

59.3

30.8 28.9

Ph i I i pp i nes

Data source for all tables and figures: imports, Series C, various Issues.

Re s t

J a p a n

U S A

E C

19.8

1

70

73

77

3.4

100

5.5 6.8

7.6

100

9.2

4.0 4.8 10.7

100

6.3

7.8

6.5 5.0 15.8

100

14.2 35.7

21. 1

2.7 4.9 10.3

100

by commodities, market summaries:

TABLE 2 Percentage Shares of ASEAN Countries in Total ASEAN Manufactured Exports to EC Markets

:oc '70

'73

'77

Indonesia

13.7

8.5

10.5

Malaysia

46.3

27 .o

24.5

3.7

3.5

10.2

Singapore

20.6

47.4

37.5

Thailand

15.7

13.6

17.3

ASEAN

100

100

100

Philippines

1

2.2

OECD, Trade

2.3

1

Total

201 individual ASEAN member states in total ASEAN manufactured exports to the While the shares of Thailand and Indonesia were rather stable over the

Ee.

period 1970-77, Malaysia's share was virtually halved and that of Singapore a

experienced

Philippines

The

doubled.

threefold

nearly

increase

its

in

ASEAN share. Finally, we shall deal with the composition of ASEAN manufactures According to traditional trade theories, it might

exported to Ee markets.

be expected that ASEAN will have a comparative advantage in resource-based Here we

labour -intensive products.

and

goods)

Ricardo

(so-called

goods

will not focus on the factor intensities of ASEAN manufactured exports, and product the

export

fluctuations

large

in

prices

in

in

peculiarities

reveal

to

only

resource-based

some

is especially because

This

performance.

products experienced

analysed

be

will

characteristics

world

markets during

the period under investigation. Figure 4 reveals changes in the composition of manufactured exports By far the most important product group in

supplied by ASEAN to the Ee. was

exports

ASEAN

material).

The

6

SITC

of

performance

goods

(manufactured this

classified

aggregated

highly

group

product

The share of

product

be

will

analysed

in

greater

detail

in

is

This

dominated by SITC 687 (tin), which is a semi-manufactured product. resource-based

by

chiefly

section

5.

SITe 6 in manufactured exports decreased drastically within

the eight-year time span.

At the end of the sixties, SITC 6 accounted for

about 80 per cent of total ASEAN manufactured exports to EC countries; in 1977, this was only about 45 per cent. least

important of

the

four

one-digit

SITe 5 (chemicals), which is the product

groups,

also experienced a

downward trend, its share decreasing from 5 per cent to 2 per cent.

The

other two product groups, SITC 7 (machinery and transport equipment) and SITe and

8

(miscellaneous

manufactured

articles)

both

increased

their

shares

at the end of the period both constituted about one quarter of total

manufactured exports to EC countries.

We may conclude, therefore, that the

share of semi-manufactured resource-based products have decreased and that "real" manufactures are being exported from ASEAN to Ee markets. Analysis at the country level reveals that SITe 6 is of particular

202

FIGURE 4 %

ASEAN exports of SITC 5, 6, 7 and 8 in percentages of total manufactured exports of ASEAN to EC (two-year moving average)

-- --

80

....

..........

SITC 5

SITC 7

SITC 6

SITC 8

..........

''

''

60

' ''

''

' ' ' , __ '

-- -,

''

' ' ', .... .......... ,,...,.__, _,.,..

--

40

-·-·

,..,.

..,.. ..,...

,,·""·~: ...................···················

20

........ -.... . . ..··· ............:-:-:... ....··

,.---~-·

.... ·····

·"" ...······

,·".······ ,."".......... ~

·-. -·- .-·-:.::::....... ·· ...............................

1969

1970

1971

1972

1973

1974

1975

1976

1977 Year

203

importance in the exports of three ASEAN countries:

Indonesia, Malaysia

SITC 5, the least important export product

and Thailand (see Figures 5-9).

group in ASEAN, was of significance only in Indonesia 1 s exports. of SITC 8 increased

for

all

ASEAN countries,

Philippines was the most dramatic.

but

The share

the increase for

the

SITC 7 shows a pronounced increase only

in the case of Malaysia and Singapore.

Thus, there are large differences

between individual ASEAN countries with respect to their export performance in the EC market in terms of total values, composition and the change in their revealed com par ati ve advantage during the seventies. THE CONSTANT -MARKET -SHARES ANALYSIS The Model By means of a CMS analysis W...,e shall now focus on the causes of differences in market performance between the ASEAN countries and competing suppliers. The CMS analysis is a method used to examine a country 1 s or a region 1 s export

performance

Basically,

relative

to

the

performance

this model indicates whether or

succeeded in maintaining its market share.

of

its

competitors.

not a country or a region has We shall apply the CMS method

to analyse the manufactured export performance of the ASEAN countries in the markets of the EC. If it is assumed that exports from a country or a region, that is the focus exports, represented as E •• , compete with all world exports, then the standard CMS model is expressed by the identity3 E' .. - E.. = rE .. +

( 1)

r

(ri - r)

~- + T

1(rij - rj)Fij + f f (E'ij - ~j - rij Ey)

where primed variables refer to the last year and other variables refer to the first year of the investigated period, and where Ei. E.j Eij

= value of focus exports of commodity = value of focus exports to market j = value of focus exports of commodity

E •• = total value of focus exports

to market

204

FIGURE 5 %

Thailand exports to EC of SITC 5, 6, 7 and 8 in percentages of total manufactured exports from Thailand to EC

-------,

' ...... '-.--.--------, ............. ..............

.......

...... '-,

80

SITC 6 ' ' , __ __

60

40

SITC 8 20

... .................... ... ···

1968

1969

1970

1971

1972

1973

.... ...

1974

...

.· ..···.·

1975

.. ·····

.... ..··.·· ······· ··· ....

1976

1977

205

FIGURE 6 %

Malaysian exports to EC of SITC 5, 6, 7 and 8 in percentages of total manufactured exports from Malaysia to EC

-- --

_,,.,..

~_.,..,..._

___ ..... _______,

\

\

\ \ \ \ \

\

80

''

''

''

\ SITC 6 \ \ \

\

\ \

\

60

\

\ ,............ "'

............................... ......

_ ~

40

/.-:-:-:-:.·.~ .. ...._

20

;.:··..· ,~:··

.-

··:.:..········~

.,.r~.:

/'

..........

1968

....

SITC .?................ ·:·;:/'' ,.. /

·,·.~·:·················· _ ... .'.:::::::::.:-::-:-.:.:::.::::-.'................. ···· ' · , . / /

1969

1970

l97l

/

1972

. . .~:~c

/

7

SITC 5 1973

1974

1975

1976

1977

206

FIGURE 7

%

Singapore exports to EC of SITC 5, 6, 7 and 8 in percentages of total manufactured exports from Singapore to EC 80

60 \ \

\

\ \

SITC 7

\

/·-·-·-·-.......

', \

/.

/

·-·-·-./·

'

'

40

\

,,

~i'· .........

I

I

I

I ·-...../.

I..... . . _ . . ..··. ..···. . .:::········ ·········... ··. \ \ . .. .··...·. I. ·.. \ .· ..... . . . ,...... . ·. .·

··.•..

\

.I

I

20

' ...........

/./

\\

\

SITC 8

·····

···················· ············

......······

·· ...

... ...

/ >~\:.···\ \

//

\

v

'\,_

.I I

6 SITC .,...,

.........

_____ _

----~

SITC 5

1968

1969

1970

1971

1972

1973

1974

1975

1976

1977

207

FIGURE 8

%

IndoNesian exports to EC of SITC 5, 6, 7 and 8 in percentages of total manufactured exports from Indonesia to EC

\

80

\

\

/

/

/

\

/

\

/~~

\

\

//

\//

// /

............ '-,

/

' ' , ___ ___ ------

SITC 6//

60

40

20

\

\

\ ., 0

~a

\

,.·-.SITC ~

"

• ...._._

7

.

························

-·-·..-·-·-•-•

.................................:.-:::.~·--:-;..::..·: :.:..:.:.:::;.:.:.:.:=:~·:~: ~.'................................ ··~~·TC 8

1968

1969

1970

1971

1972

1973

1974

1975

1976

1977 Year

208

%

FIGURE 9 Philippine exports to EC of SITC 5, 6, 7 and 8 in percentages of total manufactured exports from the Philippines to EC

80

\ \

'

\ \ \

60

\

'

\ \ \ \

~---

1

....

\

40

\

..

.·

··········

··...

.··

I I

\

·-..

"

/

.':\.

/

' .,_

/

20

:

/

/

.,"

//

. / \/ /~.

\ \

··... ·..

: \.: _.·\ .: \

f

I

\

.:

\

......

,

',SITC 6 ....... .......

/

\

//

\

\ \

\.

\

/"'

'1-. I··..

.. ··

./SITC 8

\\

.,/

\ /

I

/I

•·· .·

--

..··

\

\

\

.........

,

/

./'.,

........... ./ '/

\..................

,:'I

.: I

.,

\

SITC 7

'-----·--·-·-·-.

I.

1968

1969

1970

1971

1972

1973

1974

1975

1976

1977

209 =

r

percentage increase in world exports from the first to the last year

=

q

percentage

increase

in world exports of commodity

from

the

first to the last year percentage increase in world exports of commodity

qj =

to market

from the first to the last year Equation ( 1) shows that the CMS model is limited in its scope in so far

as it ascribes,

in

retrospect,

a country or a region's export growth

(E' •• - E • .) to four factors, namely:

1.

a factor associated with the general growth of world exports, that is, rE •.

2.

a factor associated with the commodity composition of the focus export,

r

that is, 3.

a factor

associated with the market distribution of the focus exports,

1 J (rij

that is, 4.

(ri - r)Ei

- ri)Eij

, and finally

a factor which is composed of the sum of the unexplained residuals of the other three factors. This

attributed

residual

factor,

the so-called

to something similar

competitiveness effect,

can be

to the specific record of that country or

region in international trade.

In the CMS method of analysis, r performs

the

the norm

function of

the standard,

which

makes

it

possible to pass

relative judgment on a country's or region's export performance. The commodity composition effect and the market distribution effect need

further explanation.

modities to

these

and

relatively

effects.

A specialization in relatively h1gh-growth comfast-growing

However,

export

markets gives

positive

values

estimation of both effects starts from

the

actual commodity and market distribution of exports in the first year; the weights

applied

speaking, distribution

in

constant

equation weights

are

of expOrts change

point of fact,

( 1)

refer

inadequate during

the

to as

the

first

the

period

year.

structure

under

Strictly and

market

investigation.

In

the introduction of new export products which are not yet

exported in the first year, or a concentration on new export markets, cannot be dealt with explicitly in the CMS model described in equation ( 1).

210 The model is thus not only retrospective in character, but also static with respect to these effects. export

Equation (1)

can legitimately be rewritten by using as weights the

composition

and

market

concentration

at

period. 4 This, however, does not solve the problem.

the

end

of

the

A comparison of the

results of two analyses, one applying first year weights and one last year weights, may give an insight into a changing export structure.

As we will

show, some of this information can also be obtained by dividing the period of investigation into two or more periods. The effects

are

values

of

the

commodity

influenced

by

the

composition

sequence

and

market

of both effects

in

distribution

equation

( 1) •

There is no legitimate argument against calculating the market distribution effect first, and thereafter the commodity composition effect.

The centre

two terms at the right -hand side of equation. ( 1) become

J (rj

( la)

- r)Eij +

where

the

first

term

effect

and the second

f J(rij in

- rj)Eij ,

( la)

term,

denotes

the

the

rewritten

market

distribution

rewritten commodity composition effect.

The sum of both terms in equation (la) is by definition equal to the sum of the corresponding terms in equation (1). that

Richardson, however, has shown

the values of both effects separately may differ

substantially. 5

As

already observed, there is no substantial argument to prefer one specification to the other.

The Competitiveness Residual The CMS model "explains" the export performance from the demand side. the competitiveness residual,

Only

which comprises the unexplained share in the

export performance, includes factors on the supply side of the economy as will be elucidated

below.

Strictly speaking,

the CMS analysis should be

performed in volume terms instead of values.

This is because the use of

prices may cause distortions in all components by which trade is explained. Products

may

have

experienced

price

increases

which

may

have

caused

increases in the exported value that exceed the "normal" increase while, at

211 the same time, demand in volume terms lags behind the "normal" increase. Oil was a case in point at the end of the seventies. In the same way, the market

distribution

effect

may

be

biased

because

inflation

and

other

Differences in the overall level of protection, caused

imperfections.

trade policies and exchange rate policies, bution

of

effect.

Price

effects

within

the

problems related

to the definition and

analysis,

could

we

may influence the market districompetitiveness

residual will be

According to Richardson, who dealt comprehensively with

dealt with later. "if

by

perform

theoretical foundations of the CMS

CMS analysis on both export values and

export quantities, we should not be surprised to find cases where the commodity, market, and competitive effects were of opposite signs depending on the use of values or quantities. 6 The

fourth

petitiveness

term

residual.

of

the

formula

Strictly speaking,

a

presented

to

the

opposite.

A

country's competitiveness in the level of the

large

world

individual firm

and the scale of production.

of

and a negative term

factors

Firstly,

may

there

competitiveness non-price

between competitors

of

a

are factors at

there are macro-economic factors

Thirdly, governments may influence the producers

rates

in of

factors. quality

export orders. 7

via

Leamer and in

industrialization

strategy,

The competitiveness residual inclu-

improvements and

improvement

the terms of export financing,

Stern point to differences the development of new

the efficiency of

marketing or

in

and in the ability for prompt fulfilment of

These and other factors can also be found in Kravis' and

Lipsey's study of U.S. firms' competitiveness in world trade.8 these,

influence

the availability of primary and intermediate inputs and the

des price and in

com-

such as the level of remuneration of factors

trade policy and exchange-rate policy.

varieties,

the

(micro-economic level) such as efficiency

prices at which they are available. international

trade.

Secondly,

affecting the individual firm, of production,

number

is

positive term indicates that a

country is more competititve than rivalling suppliers, points

above

monopolization

in

distribution

and

technological

Apart from

leadership

may

reduce the role of competition in internationally traded products. The value of the competitiveness residual is not only influenced by

212 the above mentioned price and non-price factors related to competition in international trade,

but also by factors that are beyond the influence of

the exporting trade partner.

For instance, trade arrangements and regula-

tions may strongly influence a country 1 s position in importing markets vis-

a- vis

competing

trade partners.

suppliers

as

the

these

arrangements

discriminate

between

For example, the EC tends to favour ACP countries, and to

discriminate against General Scheme of such

when

the so-called Newly Industrializing Countries in its Preferences and in its bilateral trade arrangements

Multifibre

Arrangement.

Again,

so-called

voluntary

export

restraints have a negative impact on the competitiveness residual.

On the

other hand, re-exports may have a positive impact on the residual and such re-exports

may be generated

Commission

has

pointed

out

by that

trade

arrangements.

manufactures

Recently,

from

Hong

Kong

the EC and

the

Republic of Korea have entered EC markets as re-exports of ASEAN countries. Finally,

differences

in

the

relative

impact

of

changes

in

transportation

costs may also influence a country 1 s ability to compete internationally. The competitiveness residual may be interpreted as being a direct result of differences in price inflation between competing suppliers.

The

basic relation between prices and quantities can be expressed as follows:

Changes in via

the

price ratios between suppliers cause changes in

elasticity

of

substitution

in

international

trade,

market shares expressed

as

follows:

However, most CMS analyses are performed in value terms instead of volume terms,

because of lack of

reliable volume data.

Consequently, the basic

relation is one between values and prices, expressed thus: f

(~)

Pz •

213 From

this,

it

follows

international trade is increasing result

inelastic

1

1

I

competitiveness)

value terms. not




Malaysia

SITC 5

France (16%), United Kingdom* (51%>

Malaysia

SITC 6

Germany* (28%), Italy* (31%)

Ph I II pp I nes

SITC 6

Germany* (40%>, United Kingdom (35%)

Singapore

SITC 5

France (13%), United Kingdom* (62%)

Thailand

SITC 5

the Netherlands* (54%), United Kingdom* (40%>

Thai land

SITC 6

Germany* (30%), the Netherlands (40%)

An asterisk Indicates that growth of demand for Imports of the selected product group In that country was below the average growth of demand tor that group In the OECD area (the standard area). The share of the main markets In the total value ot exports ot the selected products from the selected exporting countries Is shown In brackets.

223 sists of

processed

primary products,

we shall first

analyse their

role in

ASEAN 's export performance and their impact on the overall analysis.

This

seems to be of particuldr importance here as SITC 6, which includes processed primary products, is one of the main products in the ASEAN-EC trade link; SITC 6 was also the only group with a negative commodity composition effect during the overall-period 1970-77.

ASEAN's Exports of Tin The ASEAN countries are the world's main suppliers of tin-in-concentrates and tin metal. in

Malaysia,

although

Over 50 per cent of the world production of tin is located Thailand

decreasingly,

and

Indonesia.!?

dominated

by

tin

Exports of

these

countries are,

products.

This

also

holds

for

ASEAN exports to the EC, which is the world's main tin import market (see Table 7). Two distinct methods of tin mmmg are predominant in the ASEAN countries: tively

gravel-pump mining and dredging.

labour -intensive

capital-intensive

Gravel-pump mining is a rela-

small-scale

process,

while

method.

Malaysia

and

mmmg

domestic smelting capacity to

process tin ore,

dredging Thailand

is

a

have

highly

sufficient

while Indonesia has to sell

part of its tin ore to foreign smelters. As a traded product,

tin is classified under SITC 687.1 (tin, and

alloys, unwrought) and SITC 687.2 (tin and tin alloys, worked). to

the

U.N.

International

link

between

Industrial

products,

the

International Trade

Classification, 18

manufacturing industries. tured

the

both

tin

According

Classification and items

are

assigned

the to

However, in most definitions of traded manufac-

entire

SITC

division

68

(non-ferrous

metals)

is

excluded because of its resource-based character.

This may be misleading,

as

products

the

further

outstanding

ways

industrial for

manufactured exports.

processing

developing

of

primary

countries

to

industrialize

is

one and

of

the

generate

For instance, since 197 5 Indonesia's exports of tin

has consisted largely of worked tin products, such as tin bars and wire. The typical primary-product character of tin follows from its inelastic supply, and

its

limited

market

prospects in

its substantial price fluctuations.

terms of demand increases

Therefore,

there are good reasons

224

TABLE 7

ASEAN Exports of Tin (SITC 687) to the EC as Percentage of Total ASEAN Manufactured Exports (SITC 5-8) and of ASEAN Exports of SITC 6 to the EC, 1970-77

Share in SITC 5-8

Share in SITC 6

1970

1977

1970

1977

ASEAN

56.9

21 • 1

73.7

47.2

Indonesia

72.9

73.9

97.0

89.3

Malaysia

76.9

34.9

80.4

60.4

2.1

0.2

75.3

35.7

Philippines Singapore Thailand

0.7 71.3

27.8

225 to fear that the inclusion of semi-manufactured tin products in a CMS analysis of

ASEAN

manufactured exports would

yield

misleading

results

with

respect to ASEAN 's "real" manufactured export performance. Since 1968, world tin production has remained at a fairly constant level.

World

innovations

demand

and

the

lizing actions of the

for

tin

application

stagnated of

tin

because

of

substitutes.

tin-saving Despite

International Tin Agreement since

technical

price

1956,

stabi-

international

tin prices have fluctuated considerably after World War II for a number of reasons. As illustrated in Figure 10, tin prices increased moderately from 1970 to 1973.

From 197.3 to 1977, however, the world market price for tin

increased

sharply.

The

economic

recessions

in

incidental the

price

falls

industrialized

in

1971

countries.

and

197 5 reflect

Between

1970,

the

base-year of the CMS analysis, and 1977, the last year of the analysis, tin prices increased approximately threefold. Because of the that

the

impact

of

large tin

on

changes in our

tin prices it might be expected

analysis

differs

(1970-73) from its impact in the second period

in

the

(1973-77).

first

period

It is notable

that tin, compared with the average growth rate of OECD imports of manufactures, had the lowest growth factor in the first period (0.311 compared to 0. 773) and the highest growth factor in the second period ( 1.113 compared to 0.790), which can be attributed to price increases.

However, the effect

of tin on the standard is only marginal; in 1970 the share of SITC 687 in OECD imports of SITC 6 was only 1. 5 per cent while, on the other hand, its share in ASEAN exports of SITC 6 was 73.7 per cent. The impact of tin on ASEAN 's export performance will now be studied by comparing the

results of a two-period

analysis

that

includes

tin with

those of a two-period analysis excluding tin (Tables 8 and 9). The much

more

negative commodity composition effect in pronounced

excluding tin.

in

the

analysis

that

includes

the tin

first period

is

than in the one

In the second period, tin had a strong positive impact on

the commodity composition effect.

In both periods the inclusion of tin had

a negative impact on the competitiveness effect. Now that the impact of tin on the results of the market share analysis has been investigated

in

some depth,

we shall exclude this product

FIGURE 10 Yearly average tin prices in current US$, 1950-79 30000

20000

LME

I

···············

NY MARKET

,I

I

10000 9000

!/

..

//

8000

~\

7000

~\···) "

z

6000

0 8 ...____

u H

0:: 8 w ;;s ttl(fJ

i

5000

4000

N

;:l

3000

2000

(\

1950

Source:

I

kJ

....···········

...

····.........··· ····........···

.

1000

.. .

I

1955

........·

I

1960

I

I

1965

I

1970

1975

World Bank, Commoi::lity Trade and Price Trends (1980), p. 105.

1980

TABLE 8 CMS Analysis III ASEAN (bloc), EC (bloc), SITC 1 Digit, 1970-73, 1973-77, Inclusive of SITC 687 (Tin)

1970-73 Current US$ million

1973-77

Percentage

Current US$ million

ASEAN exports

1973

562

1977

1572

ASEAN exports

1970

161 --

1973

562

Difference

1970-73

Percentage

401

100

1010

100

increase in OECD imports

124

31.0

434

43.0

commodity composition

-43

-10.8

43

4.3

18

4.6

3

0.3

302

75.3

530

52.5

Due to 1• 2. 3.

market distribution

4.

competitiveness

N N "-J

TABLE 9

N N 00

CMS Analysis IV ASEAN (bloc), EC (bloc), SITC 1 Digit, 1970-73, 1973-77, Exclusive of SITC 687 (Tin)

1970-73 Current US$ million

1973-77

Percentage

Current US$ million

ASEAN exports

1973

427

1977

1240

ASEAN exports

1970

69

1973

427

Difference

1970-73 358

100

1973-77 813

Percentage

100

Due to 1 • increase in OECD imports

54

14.0

337

41.5

2. commodity composition

-1

-0.3

-10

-1.2

4

0.9

-3

-0.3

302

78.4

488

60.1

3. market distribution 4. competitiveness

229 from our further study of the ASEAN-Ee trade link. disaggregated analysis, however,

Before embarking on a

it is necessary to add some comments on

the results of the two-period analysis just presented, that is eMS analysis IV (Table 9).

eMS Analysis IV The

difference

period

analysis

between can

be

the

results

of

summarized

the

as

first

period

follows.

and

Firstly,

the the

second general

increase in OEeD imports explains the much larger share of ASEAN 's export performance in

the second

period compared to the first.

Secondly,

the

negative commodity composition effect becomes slightly stronger during the second period.

The cause of this negative commodity composition effect was

rooted in SITe 5 and SITe 6 (excl. 68) during the first period, and in SITe 6 (excl.

88) during the second

period.

Thirdly, the market distribution

effect becomes slightly negative in the second period. (excl.

68)

Finally,

had

the

SITe 5 and SITe 6

a negative market distribution effect during both periods.

competitiveness

effect

decreases

caused by Singapore's export performance.

during

the

second

period,

In summary, ASEAN experienced a

deterioration of its export performance to Ee markets in the second period.

APPLICATION

OF

THE

CMS

MODEL

AT

A

DISAGGREGATED

LEVEL

(1970-73; 1973-77) The final part of our eMS analysis of ASEAN 's export performance in EC markets is a detailed assessment of the magnitude of all effects involved at

the

level.

two-

and

three-digit

level over

Selection of products was

the

based on

two periods at their

relative importance to

individual ASEAN member countries' exports to Ee countries. large differences in

the country Because of

the composition of exports between ASEAN countries,

the selected products have been compiled according to individual countries. Table

10 shows

the

percentage

shares

of

the

selected

products in

each

country's total manufactured exports to Ee countries. Textiles,

clothing

and

wood

products

are

the

main

manufactures

1':) (.):)

TABLE 10

0

Shares of Main Products in ASEAN Countries' Manufactured Exports to EC, 1977, in Percentages

SITC

Product

541 + 551 medical products and essential oils 63 wood and cork manufactures

Indonesia

Malaysia

Philippines

Singapore

Thailand

9.5

14.5

32.2 8.9

14.9

13.9

65 textile yarn, fabrics,

made-up art I c I es

16.2

34.8

667 pearls and (semi) precious

stones 724 telecommunications apparatus

10.7

8.9

729 other electrical machinery and apparatus

8.4

18.5

18.0

8.4

14.0

8.8

17.9

44.0

17.1

19.9

Rest

41.2

24.6

33.7

40.9

20.1

Total

100

100

100

100

100

841 clothing (except fur clothing)

Note:

Manufactured exports comprise SITC 5-8, excluding SITC 68.

231 exported to EC countries. ASEAN countries,

Wood products, an important export item for all

are processed primary products and we shall first deal

with this product group before proceeding with the detailed analysis of the four effects of the market shares analysis.

ASEAN Exports of Wood Products

It should be noted that SITC 63 (wood and cork manufactures) is not the only

SITC

category

of

processed

wood.

SITC

82

(furniture)

wood-based, but is of minor importance in ASEAN's exports. comprised 9,

68) to EC countries for

Singapore and Thailand respectively.

Indonesia,

In 1977 SITC 63

fluctuated

greatly

during

the

price of plywood increased by over was

period

under

In current U.S. dollars, the

83 per cent between 1970 and

However, it experienced a sharp fall in 1975. it

World market prices of

eight-year

investigation, as can be seen in Figure 11.

subsequent years,

Malaysia, Philippines,

Within SITC 63, SITC 6312 (Plywood)

is the main product exported to the EC countries.

1973.

also

15, 14, 9.5 and 14.5 per cent of total manufactured exports

(SITC 5-8 excl.

plywood

is

still nearly

1973.

In spite of a recovery in

13 per cent lower

in

The present CMS analysis is performed in value terms.

1977 than in Consequently,

the price increases during the first period have a positive impact on the growth factor of trade in wood manufactures, while the fall in price during the second period affects this growth factor adversely -- assuming inelastic demand. During increased

by

the 148

first per

period, cent

in

in

which

value

total EC imports of SITC 63

terms,

ASEAN's

exports

manufactures to the EC increased by more than 500 per cent. half

of

this tremendous increase is accounted

for

of

wood

Approximately

by price increases and

consequently less than half of the value of the increase can be attributed to an increase in volumes exported. From 1973 to 1977 ASEAN's exports of wood manufactures increased by only 17 per cent in value terms.

This near-stagnation of export proceeds

is not solely due to the lower price level in 1977.

The poor performance

FIGURE 11 Annual qVerage price of plywood in current US$, 1963-79

500

400

PHILIPPINES

I

I

300

200

v

100 90

\

80

\ I

I

v

v

70

60

50

I

1950

Source:

)

I 1\

1955

I

1960

I

I

1965

1970

1975

World Bank, Commodity Trade and Price Trends (1980), p. 87.

1980

233 of

the

ASEAN

countries

during

the

second

period

is

mainly

relatively low growth in the export volume of wood manufactures.

due

to

a

In volume

terms the growth factor of total Ee imports of wood manufactures exceeded that of Ee imports of wood manufactures from the ASEAN countries. exporters

were

not

able

to

compensate

for

the

ASEAN

unfavourable

price

development. Summarizing, the ASEAN countries experienced very favourable prices and vast increases in export volumes during the first period, while during the

second

period

prices

declined

and

export

volumes

increased

only

moderately.

CMS Analaysis V:

Commodity Composition Effect

The commodity composition effect compares the growth of imports of a specific product on the "world" (OEeD) market with the average growth of imports of the OEeD. all

exporting

Consequently, the sign of the effect should be the same for countries,

the country level.

except

in

the case of negative export growth at

In general the commodity composition effect is only of

minor importance in explaining a country's export performance (see Tables 11 and 12). During the period

1970-73,

the commodity compos1t10n effect was

positive in all cases except SITe 541 + 551 only by Indonesia.

(chemical products), exported

A rather high and positive composition effect was found

for SITe 63 (wood and cork manufactures) in the Philippines and Singapore and especially in Malaysia and Indonesia.

SITe 667 (pearls and [semi] pre-

cious stones) from Thailand, too, experienced a high commodity composition effect.

It was in both periods the best product but one, in terms of com-

position effects.

As shown in the preceding analysis,

position effect of wood

the commodity com-

manufactures changed dramatically;

while SITe 63

experienced the highest growth factor during the first period (1.4) and the highest commodity composition effect, it experienced the lowest growth factor

(0.4)

and

second period.

the

largest

negative

commodity

compos1t10n

effect

in

the

The composition effect of SITe 65 (textile products)

was

reversed from positive to negative in the second period; and SITe 541 + 551 (medical products and essential oils)

became

more negative in the second

TABLE 11 CMS Analysis V

t..:l

(.):>

~

ASEAN-EC, SITC 2/3 Digit, 197Q-73, 1973-77, Effects at the Country Level (exclusive of SITC 68)

-lndones ia

-

Malaysia

%

US$ million

US$ mi Ilion

Phi I ippines

%

US$ mi II ion

%

Singapore US$ mi II ion

Thailand %

US$ million

Exports in 1973

17

82

19

265

42

Exports In 1970

-6

17

6

33

7

Change in 197Q-73

11

%

100

65

100

13

100

232

100

35

100

5

47 .I

15

22.7

5

36.9

28

12.1

6

17.4

0

-1.9

6

9.5

0

3.2

6

2.6

2

6.7

3. market distribut ion

1

6.6

- 0

-0.3

1

5.0

5

2.2

- 1

-2.3

4. competitiveness

5

48.2

44

68.0

7

55.0

193

83.1

27

78.2

Due to: 1. increase In OECD Imports 2•. coomod I ty composition

-

Exports in 1977

43

251

156

589

197

Exports in 1973

17

82

19

265

42

Change in 1973-77

26

100

169

100

137

100

324

100

155

100

Due to: 1. I ncr ease In OECD imports

13

50.9

64

38.1

15

11.1

208

64.1

33

21.3

2. commodity composition

-

1

-2.9

- 19

-11.4

-

3

-2.3

- 16

-4.8

-

3

-2.2

3. market distribut ion

-

1

-3.9

- 17

-9.9

-

0

-o. 1

- 11

-3.5

-

5

-3.1

14

55.9

141

83.2

125

91.3

143

44.2

130

84.0

4. competitiveness

TABLE 12 CMS Analysis V ASEAN-EC, SITC 2/3 Digit, 197D-73, 1973-77, Effects at the Product Level (exclusive of SITC 68)

SITC

541 + 551

63

65

667

US$ mi I I ion %

US$ mII II on %

US$ mII I I on %

US$ mII II on %

729

724 US$ million

%

US$ mII I Ion %

841 US$ million

%

INDONESIA Exports In 1973

12

.3

.15

.19

Exports in 1970

4

_J_

.!...!2.

.02

Change In 197Q-73

8

100

.2

100

-.04

-100

.17

Due to 1. I ncr ease In OECD Imports

4

44.9

.1

43.3

.17

377.3

.02

9.5

2. commodity composition

-0

-3.6

•I

28.6

.05

411.4

.01

3.0

3. market dlstrlbut ion

0

3.8

11.4

.33

745.5

.oo

-1.8

4. competitiveness

4

54.9

.o .o

16.7

-.59

-1334.1

.15

89.4

Exports In 1977

14

3.8

Exports In 1973

12

2

Change In 1973-77

I

Due to 1. Increase in OECD Imports

100

3.71

3.83

~

.15 100

100

3.5

10

661.3

.2

7.1

• 12

3.2

• 15

4.2

2. commodity composition

-I

-45.5

-.1

-3.8

.02

0.4

.03

o.s

3. market distribut ion

-I

-55.4

.o

1.3

-.04

-1.0

.02

o.s

4. competitiveness

-7

-460.4

3.3

95.4

3.59

97.4

3.33

94.6

100

3.68

3.52

100

TABLE 12 (continued)

541 + 551

63

65

667

US$ million%

US$ mil I ion %

US$ million %

US$ million %

724

729

841

SITC US$ million

%

US$ million %

US$ million

~

MALAYSIA Exports in 1973

49

2

Exports In 1970

11

1

Change In 197Q-73

38

100

1

100

.9

100

6.9

Due to 1. Increase In OECD Imports

9

25.1

1

78.3

.2

17.6

.4

6.3

•1

1.2

2. commodity com-

6

16.4

.8

6.5

•1

5.2

.o

0.3

.o

0.4

-1

-3.6

.1

10.8

.2

27.6

.1

1.2

.o

0.2

4. competitiveness

23

62.1

•1

4.4

.4

49.6

6.4

92.2

6.7

98.2

Exports in 1977

38

41

21

45

45

Exports in 1973

49

2

1

7

7

1. 1

7.4

7.0

~

_J_ 100

6.9

100

position

3. market dlstrlbut ion

38

100

38

100

4.2

6

15.4

5

14.4

0

0.6

0

1.3

1

2.6

0.6

0

1.0

-0

-o.5

1

2.4

96.6

19

94.3

32

83.9

31

60.6

Change In 1973-77

-11

-100

38

100

20

Due to 1. increase In OECD Imports

38

341.2

2

5.0

1

-20

-181.9

-1

-2.1

-18

-159.3

0

-11

-100.0

37

100

2. commodity composition

3. market distribut ion

4. competitiveness

TABLE 12 (continued) 541 + 551

63

65

667

US$ million %

US$ million%

US$mllllon%

US$ mill ion %

724

729

SITC US$ million

%

841

US$ mII I Ion J

US$ million

%

PH I Ll PP INES Exports In 1973

8

1.23

1.00

Exports In 1970

1

~

~

Change In 197Q-73

7

100

1.19

Due to 1. I ncr ease In OECD imports

1

11.1

.04

3.3

.04

4.1

2. commodity composition

1

7.2

.oo

0.2

.01

1.2

3. market dlstrlbut ion

0

1.5

.01

0.7

.oo

0.4

4. competitiveness

6

80.3

1.14

95.9

.90

94.3

Exports In 1977

22

Exports In 1973

8

100

.95

13

12

100

69

100

68

100

Change In 1973-77

14

100

Due to 1. Increase in OECD Imports

6

45.7

I

8.1

1

1.2

2. commodity composition

-3

24.3

0

0.7

0

0.2

3. market dlstrlbut ion

-o

1.2

0

o.1

-0

-0.2

4. competitiveness

11

79.9

11

91.1

67

98.8

,,

TABLE 12 (continued)

SITC

541 + 551

63

65

667

US$ mI I I I on %

US$ mI I I I on %

US$ mI I I Ion %

US$ mI I I Ion %

729

724 US$ mill ion

%

841

US$ mI I I Ion %

US$ mi II ion

J

SINGAPORE Exports in 1973

60

26

54

26

Exports In 1970

8

2

9

2

100

24

7

14.3

2

2. commodity composition

5

9.3

3. market dlstribut ion

-1

4. competitiveness

40

Exports In 1977

56

109

83

101

Exports In 1973

60

26

54

26

Change in 1973-77

-4

-100

83

100

29

100

75

100

Due to 1. increase In OECD imports

47

1255.2

20

24.6

42

146.4

20

26.7

2. commodity composition

-25

-669.2

3

3.3

3

12.1

4

4.9

3. market dlstribut ion

-17

-456.7

4

5.2

-4

-13.7

3

3.7

4. competitiveness

-9

-229.2

56

67.0

-13

-44.8

49

64.7

Change in 197Q-73

51

Due to 1. increase In OECD Imports

100

45

100

23

8.5

7

16.4

2

1

2.5

0

-2.0

3

13.6

1

1.3

1

3.7

78.4

18

75.4

37

81.5

20

84.4

0.8

I

100

8.9 2.7

TABLE 12 (continued) 541 + 551

63

65

667

US$ million %

US$ million %

US$ million %

US$ mIll Ion %

724

841

729

SITC US$ mi Ilion

%

US$ million %

US$ million

%

THAILAND Exports In 1973

9.0

Exports In 1970

2

Change In 197Q-73

s.8

Due to 1. I ncr ease In OECD Imports

.2

2.1

.4

2. commodity composition

•1

1.4

3. market distribut ion

.o

4. competitiveness

8.4

Exports in 1977

29

68

21

39

Exports in 1973

9

9

16

3

100

5.3

16

--!2.

5

2.7

2

12

100

8.2

4

34.3

•1

2.0

.o

0.7

2

19.1

.o

0.6

0.2

.o

0.9

-1

-8.0

-.o

-0.1

96.3

4.4

90.2

6

54.7

2.6

97.6

4.8

Change In 1973-77

20

100

59

Due to 1. Increase In OECD Imports

7

36.0

4

2. commodity composition

-4

-19.2

3. market dlstrlbut ion

-1

4. competitiveness

17

100

100

2.7

100

5

100

36

100

7.0

13

277.0

2

5.9

-2

3.0

2

34.3

0

1.0

-4.1

0

0.5

-4

-91.5

0

0.3

87.3

57

95.6

-6

119.7

34

92.8

240 period than it was in the first. In general, we may conclude that the commodity composition effect deteriorated for all products focused in our analysis, and that there were more products with a negative composition effect in the second period than there were in the first. Finally, we will compare the growth of ASEAN 's main manufactured exports to EC markets with the average growth of OECD imports in both periods.

It should be noted that the growth of ASEAN' s exports results not

only from its commodity composition effect but from all effects (see Table

13). The observed changes are rather dramatic, more so because of the decline in the average growth

rate of "world" imports.

marginal

ASEAN

cases,

manufactures

the

and

relative

textiles,

two

major

growth

rate

ASEAN

export

decreased.

and

65

especially in Thailand and

together,

countries

in

in

1977

was

the

total

8. 9 per

Wood

products,

relatively low growth products during the second period. importance,

In all but two became

This is of major

Malaysia, as the share of SITC 63

value

of

cent

for

exported

manufactures

Indonesia,

31.1

per

to

EC

cent

for

Malaysia, 13.9 per cent for the Philippines, 9.5 per cent for Singapore and 49.3 per cent for Thailand. CMS Analysis V:

Market Distribution Effect

ASEAN exports to the EC are concentrated in the largest markets of the Community, the major importing markets of ASEAN manufactures being the Federal Republic of Germany (FRG), the United Kingdom and France.

In most

cases, over 50 per cent of an ASEAN country's exports is directed to only two EC markets. In period

most

cases,

is positive,

concentrated in

the

market

distribution

effect

during

the

first

indicating that within the EC area ASEAN exports are

relatively fast growing markets.

The EC as a whole is,

during the first period, a relatively good market compared with the OECD, but it should be noted that intra-EC trade is included in our CMS analysis at the country level. outlet

for

SITC

In the first period, the EC is a relatively stagnant

729 only.

However,

in

the

second

period

the

EC

is

TABLE 13 Growth of ASEAN Exports to EC Countries as Percentage of Average Growth of "World" Trade

SITC

SITC 541 + 551

Description

medical products and essential oils

Period 70-73

Period 73-77

92

93

SITC 63'

wood and cork manufactures

165

47

SITC 65

textile yarn, fabrics, made-up articles

108

57

SITC 667

pearls and (semi)-precious stones

156

112

SITC 724

telecommunications apparatus

130

11 3

SITC 729

other electrical machinery and apparatus

105

108

clothing (except fur clothing)

130

118

SITC 841

N)

~ ~

242

relatively lagging behind OECD imports in SITC 724, 729 and 841, but the differences in import growth factors between OECD and EC are only marginal. In table 14, we compare the growth factors of imports of selected product groups from ASEAN countries in the main EC importing countries with the growth factors of imports of these products in the Community as a whole and in the OECD. The share of the main importing markets in the total value

of

ASEAN

countries'

exports

of

the

markets is given in the second column. the

highest

growth

factor

of

selected

items

to

Community

A dot indicates that the market has

imports

of

the

selected

item

within

the

Community. On

the

relatively slow period,

but

whole, growth

with

the

Denmark,

Ireland,

markets for

the

exception

of

Italy and

selected

Italy,

the

Netherlands are

imports during

these

countries

the

are

first

of

minor

importance as outlets for ASEAN products.

The United Kingdom was a major

fast growing import market for ASEAN.

During the second period, three

important markets for ASEAN exports -- France, Italy and the United Kingdom -- had a rather poor import performance, while the FRG, another major ASEAN outlet, experienced relatively fast growth in its imports. As ASEAN exports are mainly focused on the larger EC sub-markets, it follows that during the second period under investigation (1973-77), ASEAN exports

experienced

a

decline

in

the

value

of

the

market

distribution

effect because of the poor performance of these importing countries in the period.

In

Thailand,

the

negative effect observed

became even more pronounced in the second period. Malaysia.

Singapore,

distribution second.

effect

in

Indonesia and the

first

the

period

for

first

period

This was the same for

Philippines

and

the

all

a

negative

of

the

had

a

effect

positive in

the

This also applies to ASEAN as a whole. However,

ir.

both

periods

the

impact

market

distribution

effect on the overall ASEAN trade performance in EC countries was limited. A striking feature of ASEAN 's export performance in EC markets is the rather

pronounced

change

in

the

ranking

of

markets

of

destination,

according to their market share in ASEAN exports at the product level. exports

were

rather

concentrated,

as

has

been

implies that the changes were indeed considerable.

pointed

out

above,

As this

In fact, these changes

TABLE 14 Growth Factors of Imports in Main EC Markets from ASEAN Countries

SITC 541 + 551

197Q-73

Exporting countries

Main markets

Market shares

SITC 63

Growth factors

Main markets

Market shares

SITC 65 Growth factors

Main markets

Market shares

Growth factors

TH

GE NE

27 39

1.8 I. 1

GE BL

39 16

1.0 I. I

MA

UK

90 5

1.3 1.2

UK

NE

84 7

I. I 0.6

NE

89 8

1.3 I. 1

FR IT

38 30

1.3 2.3

GE UK

37 35

1.8 1.3

IR Sl IN

UK FR

NE

72 13

0.8 0.8

PH

World World

EC OECD

0.9 o.8

EC

OECD

1.5 1.4

EC OECD

1.0 0.9

1'.:>

....

(,)0

TABLE 14 (continued)

1'-.::1 ~ ~

Growth Factors of Imports in Main EC Markets from ASEAN Countries

SITC 724

SITC 667

1970-73 Exporting countries

Main markets

TH

GE FR

Market shares 63 21

Growth factors

Main markets

Market shares

SITC 729 Growth factors

73 24

2.9 1.3

UK

IT

95 4

o.a

74 9

2.9 1.4

UK

FR

42 26

o.a

UK

96

2.9

lJ


*"'

Factors In Thailand of Concern to European Investors and Extent of Importance

Degree of Importance factors of concern

1. 2. 3. 4. 5. 6. 7.

s.

9. 10. 11. 12. 13. 14.

15. 16. 17. 18.

Political stability In the host country. Generally good labour relations. Well specified government policy on foreign Investment. Availability of low cost labour. Availability of specific types of raw materials. Favourable attitude of the local publ lc toward foreign Investment. Polley stabl llty. Steady growth of national Income. Adequacy of lnfrastructural facilities Favourable balance of payments conditions and stable-external value of the national currency. Availability of local financial capital. Availability of skilled workers. Growing market tor the products manufactured. Investment Incentives provided by the host government 14.1 Income tax exemption 14.2 Tariff protection 14.3 Exemption or reduction of duties on Imported material 14.4 Favourable conditions tor foreign exchange remittances Efficient government service to foreign Investors. Availability of auxiliary Industries and ancillary services In the host country. Existence of knowledgeable local Investment partners. Others (Please specify and ran~ degree of Importance).

19. At present, which of the above factors should be of concern to the host government. Please explain.

Very Important

Important

4

4 7 4 3 2 4 6

2 3 2 4 2 1 2 1

Not so Important 1 1

2 4 3 3 3

5

1

4

5

3 I 4

4 5 6

3 4

3 3 3 3 3 2

6

1

5 5

1

2

1

2 2 5 6

5

2

4 2

Not important at all

2

365

acceptance by the Thai public and government. through

the

authority

Board

to

of

require

reduction and

Investment,

foreign

the need

can,

investors

to

The government, of course,

but

rarely

take

on

does,

Thai

to obtain additional capital from

exercise

partners.

its Risk

local sources do

not appear to be important factors sought after by European investors when entering into obtained.

joint

ventures.

Table

10

summarizes

the

other

results

CONCLUSION This

paper

represents

an

attempt

to

current EC investment in Thailand. firms

which have

received

provide

a

better

understanding

of

The study is confined to joint-venture

promotional privileges.

The first part of the

study dealt with the nature and the characteristics of present EC investments

in Thailand.

This phase of the study

relied

almost exclusively on

secondary data provided by the Board of Investment.

A questionnaire was

also

sent

various well

as

to each of

factors that to

the selected

firms to gauge

the importance of the

motivate European investors to come to Thailand,

identify or

rank

factors

in

Thailand

that

are of concern

as to

European investors. (1) Considering the

size and the importance of the EC economies,

there exists great to Thailand. market

and

potential for

more EC investments to come

The "pulling" factors such as a growing domestic the

various

incentives

provided

by

the

Board

of

Investment seem to be effective in attracting EC investments to Thailand. (2) The majority of the promoted EC investments in Thailand are in the form

of joint ventures.

The Thai partner's acquaintance

with the local labour market as well as local market conditions and

practices

is

considered

to

be

an

important

contributing

factor for entering into such arrangements. (3) Existing

EC investments are

raw materials.

relying quite heavily on imported

This is partly due to the fact that under pre-

(.>:)

TABLE 10

0"> 0">

Reasons tor European Investors to Enter into Joint-Ventures with Thais Degree of Importance Reasons tor Joint-Venture

Very important

Important

Not so Important

Not Important at all

1.

To Increase the sales of capital goods or other intermediate Inputs to the Thai market.

4

2

2

2.

To obtain additional finance.

5

2

2

3.

To reduce risks.

2

6

4.

To match the Investment of competitors.

3

3

5.

To benefit from your Thai partner's acquaintance with the local labour market.

5

2

To benefit from your Thai partner's acquaintance with local market conditions and practices.

5

3

2

To benefit from your Thai partner's acquaintance with local governmental services.

3

2

4

To benefit from your Thai's partner's acquaintance with local financial sources.

2

2

5

6

2

6.

1. 8. 9.

To benefit from your Thai partner's acquaintance with local sources of material supplies.

10. To gain better public acceptance by the Thai people and the government • 11. Others (Please specify and rank degree of Importance). 12. Conments.

2

3

2

367

sent investment legislation t a promoted firm can obtain exemption of duties for raw material imports.

It appears that there

is considerable room for bridging the raw material gap and more detailed study of the problem should be conducted. (4) Most of the promoted EC investments are oriented towards production

for

particular to

the

the local market.

instance,

It would

appear that in this

EC investments are not contributing much

government's

efforts

to

promote

export

oriented

industries. (5) EC investors (and presumably all other investors) are concerned about

the

political

stability of

the host country.

This

is a

problem that cannot be over -emphasized, and one that is unique especially

to

Thailand.

instability

(or

the

In

appearance

the

final

thereof)

may

analysis,

political

the

Achilles'

be

heel of all the investment promotion efforts undertaken by the Thai Government.

368

NOTES

1

100 baht are approximately worth US$5.

2

United Nations, Panel on Foreign Investment in Developing Countries, Department of Economic and Social Affairs, United Nations, 1969.

REFERENCES

Ady, Peter, ed. Private Foreign Investment and the Developing World. New York: Praegers Publishers, 1971. Ho,Wilson T.

"Foreign Investment in Thailand: A Study of Promoted Joint Ventures". Master's Thesis, Asian Institute of Technology, April 1981. E~-Thailand

Investment Promotion Act, B.E. 2520. Gazette, May B.E. 2520 (A.D. 1977). United Nations, Foreign Nations, New York, 1968.

Published

in

the

Government

Investment in Developing Countries.

United

United Nations, Panel on Foreign Investment in Developing Countries. Department of Economic and Social Affairs, United Nations, 1969.

Appendices

370

APPENDIX I

Co-operation Agreement between Indonesia, Malaysia, Philippines, Singapore and Thailand -Member Countries of the Association of Southeast Asian Nations and The European Economic Community

The Governments of Indonesia, Malaysia, Philippines, Singapore, and Thailand -- Member Countries of the Association of South-East Asian Nations -- hereinafter referrred to as ASEAN, of the one part, and The Council of the European Communities, of the other part, Having regard to the friendly relations and traditional links between the member countries of ASEAN and the Member States of the Community;

Affirming their common commitment to support mutually the efforts of ASEAN and the Community to create and to strengthen regional organisations committed to economic growth, social progress and cultural development and aiming to provide an element of balance in international relations;

Inspired by their common will to consolidate, deepen and diversify their commercial and economic relations to the full extent of their growing capacity to meet each other • s requirements on the basis of comparative advantage and mutual benefit;

Affirming their willingness to contribute to the expansion of international trade in order to achieve greater economic growth and social progress;

Conscious that such co-operation will be between equal partners but will take into account the level of development of the member countries of ASEAN and the emergence of ASEAN as a viable and cohesive grouping, which has contributed to the stability and peace in Southeast Asia;

371

Persuaded that such co-operation should be realised in an evolutionary and pragmatic fashion as their policies develop; Affirming their common will to contribute to a new phase of international economic co-operation and to facilitate the development of their respective human and material resources on the basis of freedom, equality and justice;

Have decided to conclude a Co-operation Agreement and to this end have designated as their plenipotentiaries:

The Government of the Republic of Indonesia: Prof. Dr. Mochtar Kusumaatmadja, Minister of Foreign Affairs; The Government of Malaysia: Tengku Ahmad Rithaudeen, Minister of Foreign Affairs; The Government of the Republic of Singapore:

s. Rajaratnam, Minister for Foreign Affairs; The Government of the Kingdom of Thailand: Air Chief Marshal Siddhi savetsila, Minister of Foreign Affairs; The Council of the European Communities: Attilio Ruffini, President in office of the Council of the European Communities, Minister of Foreign Affairs of the Italian Republic Wilhelm Haferkamp, Vice-President of the Commission of the European Communities;

372 Who, having exchanged their full powers, found in good and due form, Have agreed as follows:

ARTICLE 1

Most-Favoured-Nation Treatment The Parties shall, in their commercial relations, accord each other most-favoured-nation treatment in accordance with the provisions of the General Agreement on Tariffs and Trade, without prejudice, however, to the provisions of the Protocol annexed to this Agreement.

ARTICLE 2

Commercial Co-operation

1. The Parties undertake to promote the development and diversification of their reciprocal commercial exchange to the highest possible level taking into account their respective economic situations.

2. The Parties agree to study ways and means of overcoming trade barriers, and in particular existing non-tariff and quasi tariff barriers, taking into account the work of international organisations.

3. The Parties shall in accordance with their legislation and in the conduct of their policies: (a) co-operate at the international level and between themselves in the solution of commercial problems of common interest including trade related to commodities; (b) use their best endeavours to grant each other the widest facilities for commercial transactions; (c)

take fully into account their respective interests and needs for improved access for manufactured, semi-manufactured and primary products as well as the further processing of resources;

(d) bring together economic operators in the two regions with the aim of creating new trade patterns;

373

(e) study and recommend trade promotion measures likely to encourage the expansion of imports and exports; (f)

seek insofar as possible the other Parties' views where measures are being considered which could have an adverse effect on trade between the two regions.

ARTICLE 3

Economic Co-operation

1. The Parties, in the light of the complementarity of their interests and of their long-term economic capabilities, shall bring about economic co-operation in all fields deemed suitable by the Parties. Among the objectives of such co-operation shall be: the encouragement of closer economic beneficial investment;

links through mutually

the encouragement of technological and scientific progress; the opening up of new sources of supply and new markets; the creation of new employment opportunities.

2. As means to such ends, the Parties shall, as appropriate, encourage and facilitate inter alia: a continuous exchange of information relevant to economic cooperation as well as the development of contacts and promotion activities between firms and organisations in both regions; the fostering, between respective firms, of technological co-operation, including mining;

industrial and

co-operation in the fields of science and technology, energy, environment, transport and communications, agriculture, fisheries and forestry.

In addition the Parties undertake to improve the existing favourable investment climate inter alia through encouraging the extension

374

by and to all Member States of the Community and by and to all countries of ASEAN, of investment promotion and protection arrangements which endeavour to apply the principle of non-discrimination, aim to ensure fair and equitable treatment and reflect the principle of reciprocity.

3. Without prejudice to the relevant provisions of the Treaties establishing the Communities, this Agreement and any action taken thereunder shall in no way affect the powers of any of the Member States of the Communi ties to undertake bilateral activities with and of the member countries of ASEAN in the field of economic co-operation and conclude, where appropriate, new economic co-operation agreements with these countries.

ARTICLE 4

Development Co-operation 1. The Community recognises that ASEAN is a developing region and will expand its co-operation with ASEAN in order to contribute to ASEAN's efforts in enhancing its self-reliance and economic resilience and social well-being of its peoples through projects to accelerate the development of the ASEAN countries and of the region as a whole.

2. The Community will take all possible measures to intensify its support, within the framework of its programmes in favour of nonassociated developing countries, for ASEAN development and regional co-operation.

3. The Community will co-operate with ASEAN to realise concrete projects and programmes, inter alia, food production and supplies, development of the rural sector, education and training facilities and others of a wider character to promote ASEAN regional economic development and co-operation.

4. The Community will seek a co-ordination of the development cooperation activities of the Community and its Member States in the ASEAN region especially in relation to ASEAN regional projects.

5. The Parties shall encourage and facilitate the promotion of cooperation between sources of finance in the two regions.

375 ARTICLE 5

Joint Co-operation Committee 1. A Joint Co-operation Committee shall be set up to promote and keep under review the various co-operation activities envisaged between the Parties in the framework of the Agreement. Consultations shall be held in the Committee at an appropriate level in order to facilitate the implementation and to further the general aims of this Agreement. The Committee will normally meet at least once a year. Special meetings of the Committee shall be held at the request of either Party.

2. The Joint Co-operation Committee Procedure and programme of work.

shall adopt its own Rules of

ARTICLE 6

Other Agreements Subject to the provisions concerning economic co-operation in Article 3(3), the provisions of this Agreement shall be substituted for provisions of Agreements concluded between Member States of the Communities and Indonesia, Malaysia, Philippines, Singapore, and Thailand to the extent to which the latter provisions are either incompatible with or identical to the former.

ARTICLE 7

Territorial Application This Agreement shall apply, on which the Treaty establishing applied and under the conditions other hand, to the territories Singapore, and Thailand.

the one hand, to the territories in the European Economic Community is laid down in that Treaty and, on the of 'Indonesia, Malaysia, Philippines,

376

ARTICLE 8 Duration

1. This Agreement shall enter into force on the first day of the month following the date on which the Parties have notified each other of the completion of the procedures necessary for this purpose, and shall remain in force for an initial period of five years and thereafter for periods of two years subject to the right of either Party to terminate it by written notice given six months before the date of expiry of any period.

2. This Agreement may be amended by mutual consent of the Parties in order to take into account new situations.

ARTICLE 9 Authentic Languages

This Agreement is drawn up in seven originals in the English, Danish, Dutch, French, German and Italian languages, each of these texts being equally authentic.

377 APPENDIX II

Selected Bibliography*

ASEAN-EEC Conference on Industrial Co-operation. Information book. Jakarta, 1979. 96 pp. "ASEAN-EEC Cooperation Agreement". no. 2 (1980): 38-40.

In ASEAN

2d, Jakarta,

Business

"ASEAN-EEC: discrimination in trade relations". Agency [Press release] 6R10/ob 104. "THE ASEAN-EEC Forum in Brussels". 14 (May 1977): 12-15. "ASEAN-EEC Joint Declaration". no. 1 (January 1979): 17-19.

Quarterly

4,

In Novas ti Press

In Indonesia•s World Star 1, no.

In Bangkok Bank.

"ASEAN-European Communi ties Ministerial Meeting, Brussels". In ASEAN Digest 1 ( 1979): 1-10. BELL, Roger. "Is ASEAN a Sou the as t Quarterly 3, no. 3 (1979): 37-38.

1979.

Asian EEC?"

Monthly Review 20

20-21 November 1978,

In ASEAN Business

"THE BRUSSELS declaration: joint declaration of the ASEAN-EC Ministerial Meeting." In Domingo, Benjamin B. , ASEAN -European community relations, pp. 138-49. Bonn: P. Wegener, 1979. CHEE, Peng Lim. "ASEAN-EEC external relations: cooperation, trade and investment." Paper presented at the Fifth Conference of Federation of ASEAN Economic Associations, Singapore, Oct. 30-Nov. 1, 1980. CHIA, Siow Yue. "ASEAN trade with the European Economic Community." Paper presented at the ARC-Times Seminar on ASEAN Trade, Singapore, June 26-27, 1980.

*

Compiled by the staff of the library, Institute of Southeast Asian Studies.

378

DELEGATION of the Commission of the European Communi ties for South and South-East Asia. Press and Information Office, ASEAN and the European Community. Bangkok, 1980. DOMINGO, Benjamin B. ASEAN-European Community relations. Wegener, 1979. 172 pp.

Bonn:

P.

DRURY, Michael. "The European Economic Community: its relations with South and South-East Asia." In Asian Affairs 10 (old series v. 66), no. 1 (1979): 9-19. "EEC and ASEAN '79." 35-80.

In Far Eastern Economic Review 103, no. 8 (1979):

FEDERATION of ASEAN Economic Associations Fifth Conference, Mimeographed. Singapore, 1980. GOH, Chok Tong. 61-63.

"ASEAN-EEC cooperation."

[Papers).

In Speeches 2 no. 9 (1979):

HAFERKAMP, Wilhem. "Towards closer industrial cooperation between AS EAN and EEC: an interview with Wilhelm Haferkamp, Vice President ( 1979}: 49-50. of EEC." In Prisma, English ed. HANSEN, John. no. 1 ( 1980) :

"ASEAN-EX:: cooperation on firm footing." 2-3.

In Europa 2,

JENKINS, Peter. "ASEAN sees the EEC as a counter-weight to Japan". In Far Eastern Economic Review 96, no. 21 (27 May 1977): 66-67. KOCH, Jurgen. EC/ASEAN: the cooperation agreement between the two communi ties. Heidelberg, 1980. LASSERRE, Philippe. "Technology transfer practices, perspective." In Europa 3, no. 1 (1981): 5-7.

a

Euro-ASEAN

LAUGHTON, David, ed. Proceedings of the ASEAN-EBIC-EEC Conference on Industrial Co-operation, Brussels, 1977. London, Birn, Shaw, 1977. 112 pp. "LESSONS for ASEAN in the EEC."

In Asiaweek 3, no. 25 (1977):

LIM, Soon Neo. "ASEAN seeks better trade deal from the ASEAN Business Quarterly 2, no. 4 (1978): 18-21. "PROSPECTS for 3-4.

ASEAN/EC industrial cooperation."

39-42.

EEC."

In Europa

In

( 1979) :

379 RAJARATNAM, s. "Closer ASEAN-EEC economic links." In Journal of economic development and social change in Asia and Pacific 2, no. ( 1977): 19-22. RAYNER, Leonard. "The future role of the European Economic Community in South East Asia': In The future of Singapore - the global city, edited by Wee Teong-Boo, pp. 78-87. Singapore: University Education Press, 1977. "REALISTIC approach."

In Europa 3, no. 1 (1981):

3-4.

SASTROMIHARDJO, Sanjoto. "Community has much to catch up on in Indonesia." In Europa 2, no. 3 (1980): 10-12. SHAWCROSS, Hartley William, Baron. "EEC and ASEAN." Paper presented at the City of London Seminar, Kuala Lumpur, 1979. Mimeographed. Pp. 92-103. SUBHAN, Malcolm. "ASEAN and the European Community: in progress." In Europa (September, 1979): 11-14. ASEAN-EEC investment handbook.

relationship in

Jakarta, 1979.

"ASEAN-EEC relations." In Southeast Asian Affairs 1977, pp. 49-63. Singapore: FEP International for Institute of Southeast Asian Studies, 1977.

agreement:

"ASEAN-European Community: 'record for a multi-lateral two days'." In Europa 2, no. 1 (1980): 4-5.

"EC-ASEAN relations: In Europa 2, no. 5 (1980): 6-7.

gearing up for first joint meeting."

"EEC/ASEAN relations need a more formal basis." Eastern Economic Review 103, no. 8 (23 February 1979): 39-41. "Little ASEAN faith in EEC as 'patron'." Economic Review 100, no. 16 (21 April 1978): 38-39. "Politics and trade in Brussels." Review (16 November 1979): 72.

In Far

In Far Eastern

In Far Eastern Economic

"Protectionism; demands; restrictions - that's EEC." Far Eastern Economic Review 100, no. 16 (21 April 1978): 38-41.

(1977):

"The regional approach works." 40-41, 43.

In

In Asian Finance 3, no. 6

380 SUBHAN, Malcolm. "Southeast Asia and the European Economic Community." In The economic future of the Far East and Southeast Asia, edited by Centre d'Etude du Sud-Est Asiatique et le l'Extreme-Orient, Bruxelles [and) Leerstoel Chinese in Japanese Taal-en Letterkunde, Gent. Bruxelles, Centre d'Etude du Sud-Est Asiatique et de !'Extreme-Orient, 1973, pp. 83-95. "Thai Ambassador Thep on EEC-ASEAN: In Europa 3, no. 2 (1981): 3-5. TASKER, Rodney. "ASEAN changes partners." Review (22 December 1978): 37-38.

positive relationship."

In Far Eastern Economic

"ASEAN: nine plus five equals anger." Economic Review (21 March 1980): 9-10.

In Far Eastern

"Once we pinned our faith on Japan - now it • s the EEC. " In Far Eastern Economic Review 103, no. 8 (23 February 1979): 37-39. WHEN ASEAN met in Europe". (Kuala Lumpur, 1977): 7-8.

Editorial in Economic Bulletin 3, no.

3

381 APPENDIX III

List of Participants Mr Aziz Mahmood Director-General ASEAN-Singapore Dr Florian Alburo School of Economics University of the Philippines Mr Francis Chan Department of Economics and Statistics National University of Singapore

Assoc Prof Paul Chan Chairman Division of Applied Economics Faculty of Economics and Administration University of Malaya Kuala Lumpur Mr Chawat Arthayukti Counsellor Royal Thai Embassy Singapore Dr Chee Peng Lim Faculty of Economics and Administration University of Malaya Kuala Lumpur

Mr Chesada Loohawenchit Lecturer Faculty of Economics Thammasat University Bangkok Dr Chia Siow Yue Department of Economics and Statistics National University of Singapore Mr Chote Soponpanich Executive Director Bangkok Bank Limited Bangkok Mr Chua Hong Wee Divisional Director Research/Public Relations Singapore Manufacturers Association

Mr Hugh Corbet Director Trade Policy Research Centre London

Drs Pitou van Dijck Economisch. en Sociaal Instituut Vrije Universiteit Amsterdam

382

Dr Dong-Se Cha Associate Researcher Institute of Southeast Asian Studies

Dr Huynh Kim Khanh Senior Research Officer Institute of Southeast Asian Studies

Dr Wolfram Dufner Ambassador Embassy of the Federal Republic of Germany Singapore

Mr Jurgen Koch South Asia Institute Heidelberg University

Mr G Facchinelli Commercial Attache Embassy of the Republic of Italy Singapore Dr Gottfried Haas First Secretary Embassy of the Federal Republic of Germany Singapore Mr Hassan Nawawi ASEAN-Malaysia Kuala Lumpur Miss Heng Hong Ngoh Assistant Vice President and Manager Economics Department Development Bank of Singapore Mr Kenneth James Associate Researcher ASEAN Economic Research Unit Institute of Southeast Asian Studies

Miss Catherine Koh Singapore Federation of Chambers of Commerce and Industry

Mr Alfred Kraft South Asia Institute Heidelberg University

Miss Janice Kwok Singapore Manufacturers Association Dr Rolf Langhammer Research Division Chief The Kiel Institute of World Economics Federal Republic of Germany

Mr Donald Lee Division of Analytical Economics Faculty of Economics and Administration University of Malaysia Kuala Lumpur Professor Lee Sheng Yi Department of Business Administration National University of Singapore

383

Dr Hank Lim Department of Economics and Statistics National university of Singapore

Professor Mohamed Ariff Faculty of Economics and Administration University of Malaya Kuala Lumpur

Mr Lim Ho Hup Director Starcrete Pte Limited Singapore

Mrs Noel Morgan Regional Director Committee for Economic Development of Australia Sydney

Dr Lim Hua Sing Research Fellow Institute of Southeast Asian Studies

Dr Linda Lim Economic Research Centre National University of Singapore

Dr Narongchai Akrasanee United Nations ESCAP Bangkok

Mr Njoman Suwidjana Research Associate ASEAN Economic Research Unit Institute of Southeast Asian studies

Dr Charles Lindsey Research Fellow ASEAN Economic Research Unit Institute of Southeast Asian Studies

Mr Nordin Yatim Department of Trade Singapore

Miss Lu Fong Choo Economic Section American Embassy Singapore

Miss Ooi Guat Tin Research Associate ASEAN Economic Research Unit Institute of Southeast Asian studies

Mr D A MacLeod Acting High Commissioner British High Commission Singapore Mr Franz Michils Charge d'Affaires Royal Embassy of Belgium Singapore

Mr Artemio Palongpalong Research Fellow Institute of Southeast Asian Studies Dr Pang Eng Fong Director Economic Research Centre National University of Singapore

384 Ms Pornpimon Santimaneerat Lecturer Faculty of Economics Thammasat University Bangkok

Dr Hans Christoph Rieger Visiting Fellow/Co-ordinator ASEAN Economic Research Unit Institute of Southeast Asian Studies

Mr Prasert Wattraseth Lecturer Faculty of Economics Thammasat University Bangkok

Dr Rustam Didong Associate Director for Research Institute for Economic and Social Research University of Indonesia

Dr Pushpathavi Thambipillai Research Officer Institute of Southeast Asian Studies Dr P B Rana Research Fellow ASEAN Economic Research Unit Institute of Southeast Asian Studies Mr Eric Rasmussen Regional Economist for Asia Chemical Bank Singapore

Mr Razak Mohd Lecturer Department of Economics and Statistics Faculty of Economics Universiti Kebangsaan Malaysia

Dr Sahathavan Meyanathan Faculty of Economics and Admini strati on University of Malaya Kuala Lumpur Mr Satavira Suvanadat Director Economic and Finance Policy Division ASEAN-Thailand Bangkok Dr Somsak Tamboonlertchai Faculty of Economics Thammasat University Bangkok Dr Manfred Steinhoff Visiting Fellow Institute of Southeast Asian Studies

Mr Bernd Reddies Representative Friedrich Ebert Stiftung Singapore

Dr Jamalludin Sulaiman Universiti Kebangsaan Malaysia

Mr Klaus Reiger Economics Department Frankfurt University

Professor K S Sandhu Director Institute of Southeast Asian Studies

385 Dr Augustine Tan MP Associate Professor Department of Economics and Statistics National University of Singapore

Mr Toh Tse Ming Executive Director Singapore Manufacturers Association

Dr Tan Loong-Hoe Research Officer Institute of Southeast Asian Studies

Mr Valentine Norman Anthony Lecturer Department of Political Science Ahmadu Bello University Nigeria

Dr John Tang Industrial Engineering and Management Division Asian Institute of Technology

Drs Harmen verbruggen Economisch en Sociaal Instituut Vrije Universiteit Amsterdam

Miss Zaleha Tamby Library Institute of Southeast Asian Studies

Professor Jean waelbroeck Universite Libre, Brussels

Dr Thee Kian Wie Research Associate LEKNAS - LIPI (National Institute of Economic and Social Research) Jakarta Mr T Thirunagaran Ministry of Foreign Affairs Singapore

Miss Tong Eng Leong Singapore Federation of Chambers of Commerce ?.nd Industry

Mr Wee Eng Lim Ministry of Foreign Affairs Singapore Professor John Wong Department of Economics and Statistics National University of Singapore Miss Aleth Yenko Research Associate ASEAN Economic Research Unit Institute of Southeast Asian Studies Miss Yang Siew Mui Assistant Director Department of Trade Singapore

386 APPENDIX IV

List of Abbreviations

AOC

ACP ~c

APC BAC BKPM CAP CCCN CCT CKD COREPER DAC DC EC ECU ECSC EEC EFTA EUA FIDA

rnG ~z

GATT GDR GNP GSP G~

I~

ISIC JCC JSG LDC LTA MFA M~

MIDA MNC

ASEAN Brussels Committee African-Carribean-Pacific (developing countries associated with the European Community ASEAN-London Committee ASEAN-Paris Committee Bonn-ASEAN Committee Badan Koordinasi Penanaman Modal (Investment Coordinating Board, Indonesia) Common Agricultural Policy Customs Co-operation Council Nomenclature Common Customs Tariff Completely knocked down Committee of Permanent Representatives of the EEC Council of Ministers Development Assistance Committee Developed Country European Community European Currency Unit European Coal and Steel Community European Economic Community European Free Trade Area European Unit of Account Federal Industrial Development Authority (Malaysia) Federal Republic of Germany (West Germany) Free Trade Zone General Agreement on Tariffs and Trade German Democratic Republic (East Germany) Gross National Product Generalised System of Preferences Gross Trade Creation International Monetary Fund International Standard Industrial Classification Joint Co-operation Committee Joint Study Group (ASEAN-EEC) Less Developed country Long-term Agreement (for cotton textiles) Multifibre Arrangement Most Favoured Nations Malaysia Industrial Development Authority Multinational Corporation

387

NEP NIC NTB ODA OECD OMA

OPEC R & D

RCA SCCAN SITC STABEX TD TNC

U.K.

u.s. UNCTAD VER VESRA

New Economic Policy Newly Industrialising (Industrialised) Country Non-Tariff Barrier Official Development Assistance Organization for Economic Co-operation and Development Orderly Marketing Agreement Organization of Petroleum Exporting Countries Research and Development Revealed Comparative Advantage Special Co-ordinating Committee (ASEAN) Standard Industrial Trade Classification Stabilization of Export Earnings Trade Diversion Transnational Corporation United Kingdom United States United Nations Conference on Trade and Development Voluntary Export Restraint Voluntary Export Self-Restraint Agreement