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Slide 1
Sara Hsu
Slide 2
Trade creates jobs and lifts people out of poverty. And when
that happens, societies stabilize and grow. And there is nothing
like a stable society to fight terrorism and strengthen democracy,
freedom and rule of law. -- Dennis Hastert Free trade should not
mean free labor. -- Stephen F. Lynch
Slide 3
Manufacturing is the production of goods for use or sale using
labor and machines, tools, chemical and biological processing, or
formulation. The term may refer to a range of human activity, from
handicraft to high tech, but is most commonly applied to industrial
production, in which raw materials are transformed into finished
goods on a large scale.
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In Asia, manufacturing is carried out for export production as
well as for domestic production. Opening up manufacturing trade in
Asia provides MNCs with opportunities to gain access to markets.
Asian companies/ MNCs are becoming increasingly competitive in
manufacturing. Between 1992/3 and 2006/7, there has been a sharp
increase in the share of parts and components in network trade
across all countries in the region
Slide 6
By 2006/7, manufacturing accounted for 92% of total exports
from Asia, up from 78% 4 decades earlier. Manufacturing, machinery,
and transport equipment especially information and communication
technology (ICT) products and electrical goodshave played a pivotal
role in this structural shift. The share of Asia in world machinery
and transport equipment exports increased from 14.5% in 1994/95 to
42.4% in 2006/7.
Slide 7
Processing trade provides a shortcut for developing countries
to join the international division of labor and utilize their
abundant labor forces. Processing trade involves importing parts
and components from abroad as intermediate inputs, processing and
assembling these intermediate inputs into finished products, and
eventually re-exporting the processed products to the global market
via international distribution and retail networks of MNCs.
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At least four factors seem to have underpinned East Asias
continued attractiveness as a center of global production sharing.
First, Asia exhibits great diversity in labor supply conditions and
wages. Second, the relative factor cost advantage has been
supplemented by more favorable trade and investment policy regimes,
and better port and communication systems Third, as first-comers in
this area of international specialization, countries in Southeast
Asia seem to offer considerable agglomeration advantages for
companies already located in the region. Fourth, for over 3 decades
there has been rapid economic expansion in several countries which
has brought about market thickness, or diversification of the
composition of the traded goods of a country
Slide 11
The Association of Southeast Asian Nations, or ASEAN, was
established on 8 August 1967 in Bangkok, Thailand. Asean Free Trade
Area (AFTA) is a trade bloc agreement by the Association of
Southeast Asian Nations supporting local manufacturing in all ASEAN
countries. The AFTA agreement was signed on 28 January 1992 in
Singapore. The primary goals of AFTA seek to: Increase ASEAN's
competitive edge as a production base in the world market through
the elimination, within ASEAN, of tariffs and non-tariff barriers;
and Attract more foreign direct investment to ASEAN.
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On the history of ASEAN: http://www.youtube.com/watch?v=4v2Ko
Nwjv90
Slide 14
Multinational corporations (MNCs) are the primary players today
in the world's most dynamic industries and the driving force behind
the global economy. Foreign direct investment (FDI) contributes to
the structural and geographical diversification of multinational
enterprises. Its principal aims are to slice up the production
process and seize the comparative advantages particular to each
participant in the supply chain (efficiency- seeking FDI), but also
to gain access to foreign markets and sell directly to clients
(marketseeking FDI).
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Countries engage in international trade for two basic reasons,
each of which contributes to their gain from trade. First,
countries trade because they are different from each other.
Nations, like individuals, can benefit from their differences by
reaching an arrangement in which each does the things it does
relatively well. Second, countries trade to achieve economies of
scale in production. That is, if each country produces only a
limited range of goods, it can produce each of these goods at a
larger scale and hence more efficiently than if it tried to produce
everything. In the real world, patterns of international trade
reflect the interaction of both these motives.
Slide 20
In economics, the law of comparative advantage refers to the
ability of a person or a country to produce a particular good or
service at a lower marginal and opportunity cost over another. Even
if one country is more efficient in the production of all goods
(absolute advantage in all goods) than the other, both countries
will still gain by trading with each other, as long as they have
different relative efficiencies.
Slide 21
Asia Pacific has a strong manufacturing market due to the
availability of cheap labor. This translates into manufacturing
huge amounts of textiles, electronics, automotive products, heavy
equipment, consumer durable goods, and more. China, Japan and South
Korea are major exporters of automobiles, industrial equipment and
heavy machinery. Singapore, China, Japan, South Korea, Taiwan, and
Malaysia are major exporters of semiconductors and electronic
products. China and Indonesia are leaders in oil and textile
exports.
Slide 22
Asian trade includes exports and imports. Some goods are
imported for processing (adding parts or packaging) and re-export.
Asia exports a variety of goods and imports oil and raw materials
from Middle East and Latin America. Also, luxury items, cars and
electronics are imported from Europe and the USA. Major import
commodities include food, energy products, defense equipment,
aviation equipment, heavy vehicles and raw materials.
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A ' ('SEZ) is a geographical region that has economic and other
laws that are more free- market-oriented than a country's typical
or national laws. "Nationwide" laws may be suspended inside a
special economic zone. Usually the goal of a structure is to
increase foreign direct investment by foreign investors, typically
an international business or a multinational corporation (MNC),
development of infrastructure and to increase the employment.
Slide 25
Currently, a considerable part of the exports of many
developing economies in Asia originate in EPZs or SEZs. For
example, Chinas customs trade figures show that in 2009 nearly half
of its exports originated from SEZs and other processing zones
while one-third of its imports were bound to such zones. Around
two-thirds of Chinas processing trade was undertaken by foreign
owned enterprises. China became the worlds leading exporter of
manufactured products in 2008, and the leader in total merchandise
exports in 2009.
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The World Trade Organization is an organization for trade
opening. It is a forum for governments to negotiate trade
agreements. It is a place for them to settle trade disputes. It
operates a system of trade rules. Essentially, the WTO is a place
where member governments try to sort out the trade problems they
face with each other. The WTO was born out of negotiations, and
everything the WTO does is the result of negotiations.
Slide 28
WTOs opponents, whose efforts were most conspicuously evident
in Seattle, consist of a diverse set of activists in both developed
and less-developed countries. In the developed countries (the
so-called North), the opponents include labor unions, childrens
rights advocates, environmentalists, and French farmers. Opposition
to WTO in the South comprises both recent and long-standing infant
industries in automotive and other manufactures, whose low
productivity and high costs would make them vulnerable to
competition from the North if WTO were to insist on removing the
various forms of tariff and non-tariff protection they presently
enjoy