AANZFTA and The Prospects for Services Trade

					AANZFTA Business Seminar
“Partners in Growth: Services Trade with Southeast Asia”




               3 June 2011, Amora Hotel, Wellington
  AANZFTA and The Prospects
            for Services Trade

                                    Narongchai Akrasanee, Ph.D.
                                               MFC Asset Management

                                        Fiscal Policy Research Institute




                AANZFTA Business Event
“Partners in Growth : Services Trade with Southeast Asia”
                Wellington, New Zealand
                      3 June 2011
Outline

1. AANZFTA from ASEAN Perspectives

2. Trade and Investment between ASEAN and
  Australia – New Zealand

3. Future of ASEAN Economy and Prospects
  for AANZFTA




                     3
  1. AANZFTA from ASEAN Perspectives
   AANZFTA is one agreement among many ASEAN’s FTAs/RTAs

                      AEC in                                    APEC
                      2015                                      2020
                              2009, Toward AEC
                  2008        ATICA, AFAS & ACIA                     AANZFTA
ASEAN Charter in effect       2007                                   effective Jan 10
                  2003        CEBU Concord (ASEAN                    AKFTA
          Bali Concord        Charter) ASEAN           EAC           effective Jan 10
                              Community by 2015
   Revive ASEAN 2020                                    ?            AIFTA
       1997-98 - Asian Crisis                                        signed Aug 09
       2001     - 9/11
       2002     - FTAs’ Proliferation in ASEAN
                                                                     AJCEP
                            1998, AIA                                effective Jun 09
                  1997
   ASEAN Vision 2020                                                ACFTA
                             1996, AFAS                             effective Oct 03
          1993, AFTA                                                CMI – May 00
                            1977, PTA                               ABMI – Aug 03
   ASEAN-5                     ASEAN -10               EAS    ASEAN +3 /ASEAN + 6
    1967                        1999                   2005         1999
1993 --- APEC          1995 --- ASEM               4
1. AANZFTA from ASEAN Perspectives (Cont.)

 Factors and major events affecting ASEAN’s trade
  policies
      Regime changes (political and/or economic)

        • 1966 Suharto, President of Indonesia

              1967 ASEAN, with market economy

        • 1975 End of Vietnam War
              1976 → , ASEAN economic cooperation

        • 1979/80 Second Oil Crisis
               ASEAN export-oriented policies



                                5
1. AANZFTA from ASEAN Perspectives (Cont.)

     • 1989 End of Cold War
           1990     , GMS – From Battle Field to Market Place
                    , Expanding to ASEAN 10
           1990, China’s strong move to market economy
           1991, India started market economy

     • 1991/92 Concluding GATT’s Uruguay Round
           1993, AFTA

     • 1998 WTO’s trade liberalization process stalling
       (Seattle Riot, 1999)
     • 2001 Doha Round with difficult agenda          (Mike
       Moore as DG)
           Proliferation of FTAs, RTAs

                                6
1. AANZFTA from ASEAN Perspectives (Cont.)

 Basics about ASEAN’s trade policies
      Manufacturing
        • Began with import substitution, then changed towards export-
          oriented particularly from 1980s

      Agriculture
        • Protection, with gradual liberalization a la WTO and AFTA

      Services
        • Protection in general, with exception in some services often on
          an ad hoc basis
        • AEC 2015 will allow for gradual liberalization in services trade

        AANZFTA will open opportunities for first trade in
        manufactured goods, then agriculture, and later in services
                                      7
2. Trade and Investment between
   ASEAN and Australia – New Zealand
 ASEAN’s merchandise trade with AUS - NZ
                S h a r e o f A S E A N E x p o r t s t o (% )                                     S h a r e o f A S E A N Im p o r t s f r o m (% )
  4.5                                                                         3.0
  4.0                                                                         2.5
  3.5
  3.0                                                                         2.0
  2.5
                                                                              1.5
  2.0
  1.5                                                                         1.0
  1.0
                                                                              0.5
  0.5
  0.0                                                                         0.0
        2000 2001 2002 2003 2004 2005 2006 2007 2008 2009                           2000    2001     2002     2003      2004    2005   2006     2007   2008    2009

                         Australia        New Zealand                                                       Australia          New Zealand




                                                     ASEAN Total Trade with (Mn USD)
                     2000             2001              2002     2003     2004             2005             2006               2007           2008        2009


Australia           18,436           18,058            18,646    20,986   27,632       34,311             41,356           46,427           51,590       43,850


New Zealand           2,224            2,399             2,356    2,760    3,588           4,226            5,082              6,091          7,420           5,376



Sources: ADB and ASEAN Secretariat                                        8
 2. Trade and Investment between
    ASEAN and AUS-NZ (Cont.)

  AUS-NZ and ASEAN investment

                         Foreign direct investment net inflow to ASEAN

                                   Value (USD Mil)                 Share to total net inflow (%)

                                                         2007-                             2007-
                        2007       2008     2009                   2007    2008    2009
                                                         2009                              2009



Australia               1,491        920      701         3,112      2.0    1.9     1.8       1.9


New Zealand                  101   (165)      240           175      0.1   (0.3)    0.6       0.1


Total FDI inflow
to ASEAN               74,395      49,500   39,623       163,518   100.0   100.0   100.0    100.0

Sources: ASEAN Secretariat


                                                     9
 2. Trade and Investment between
    ASEAN and AUS-NZ (Cont.)
   Tourist arrivals in ASEAN from AUS-NZ

                   Number of tourist arrivals (Thousand)                 Share to total (%)
 Country of
   origin
                   2005       2006     2007     2008     2009p    2005   2006   2007   2008   2009p


Australia         2,034      2,063    2,435    2,905     2,824     4.0    3.6    3.9    4.4     4.3


New Zealand         245        354      301      320       264     0.5    0.6    0.5    0.5     0.4

Total tourist
arrivals in      51,288      56,914   62,285   65,605    65,438   100    100    100    100     100
ASEAN




Sources: ASEAN Secretariat


                                                    10
 3. Future of ASEAN Economy and
    Prospects for AANZFTA
       ASEAN and the World
                     Population 2009 GDP 2010        Total Merchandise
                       (Thousand)    (Bil of USD) Trade 2010 (Bil of USD)
Brunei                   406.2             13.0            12.5
Cambodia                14,957.8           11.6            12.5
Indonesia               231,369.5          706.7           289.9
Lao                      5,922.1            6.3             3.3
Malaysia                28,306.0           238.0           363.5
Myanmar                 59,534.3           43.0            13.2
Philippines             92,226.6           188.7           109.7
Singapore                4,987.6           222.7           662.7
Thailand                66,903.0           318.9           377.7
Vietnam                 87,228.4           103.6           157.0

ASEAN                  591,841.0          1,852.5         2,002.1

Share to world (%)       8.7%        11
                                          2.9%            6.5%
3. Future of ASEAN Economy (Cont.)

 Major trading partners of ASEAN
         The role of ASEAN trading partners e.g. AUS, NZ, Korea,
          India, and China are on the rise.
 30
          Share to Total ASEAN Trade (%)
 25                                                           ASEAN

                                                              Australia
 20
                                                              New Zealand

                                                              Korea
 15
                                                              India

 10                                                           Japan

                                                              China
  5                                                           USA

                                                              EU-25
  0
            2000            2006    2007        2008   2009
                                           12
Source: ASEAN Secretariat
3. Future of ASEAN Economy (Cont.)

 ASEAN Economic trend

9.0
                              8.6                                                40.0
                                                                                                                                              32.7
8.0                                               7.8                                                                                     30.5
                                                                                 30.0
7.0      6.8                                                                                                        22.3
                  6.7
         6.1                                                                     20.0      17.1
6.0                                                         5.5       5.7                      13.6       12.8
                                                                                                                 14.6                                12.9
                                                                                                                                                         15.4   13.915.4
                                                                                                      12.2
5.0                                                          5.1                 10.0
4.0                           4.2                 4.0                 4.2
                  3.9
                                                                                  0.0
3.0
                                        2.5                                      -10.0
2.0

1.0                                     1.2
                                                                                 -20.0                                        -17.2
                                                                                                                                  -21.4
0.0
                                                                                 -30.0
      2006     2007        2008      2009     2010        2011     2012
                                                                                            2006       2007       2008          2009       2010       2011       2012

                        GDP Growth            Inflation                                  Growth rate of merchandise exports        Growth rate of merchandise imports




 Source: Asian Development Outlook 2011, ADB




                                                                            13
3. Future of ASEAN Economy (Cont.)



                                          Asia
     North            Europe
                                                  North
    America
                                                 America


                  Africa



         South
        America                                             South
                                                           America
                                    Australia




From Northern Atlantic Centric         Asia/Pacific Centric
                               14
3. Future of ASEAN Economy (Cont.)

Moving towards quality growth
     Eco-friendly industrial development
     Agriculture for quality foods and fuels
     Services for better quality of life and
      productivity improvement
     Energy for security and friendly environment




                             15
3. Future of ASEAN Economy (Cont.)

Demand from Australia-New Zealand for
     Energy raw materials, machinery and
      equipments

     Products in the supply chain for automotives,
      machinery, electronics and electricals

     R&D, know how, in agriculture and foods

     Professional services in industrial R&D, health
      and wellness care, legal and accounting,
      education and training, design and product
      development, etc.
                            16
AANZFTA Business Seminar
“Partners in Growth: Services Trade with Southeast Asia”




               3 June 2011, Amora Hotel, Wellington

				
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