Economic Relations of 9 Asian countries with Japan, United States and EU

(III-1) Economic Relations of 9 Asiancountries
with Japan, United States and EU

(

Unit : 100 million U.S. dollar)

	Japan		United States		EU 15				World ( 100%)
	Japan		United States				Euro 11
		Share		Share		Share		Share
Trade (1997)	3,045	16%	3,347	17%	2,664	14%	2,016	10%	19,481
Direct Inward Investment (1997)	163	14%	162	14%	240	20%	n.a.	n.a.	1,185
Outstanding Claims (End-Jun.1998)	1,825	30%	292	5%	3,046	50%	2,239	37%	6,071
Bilateral Aid (1996)	47	69%	1	2%	16	24%	14	21%	68

(Note 1)	"9 Asian counties" refer to ASEAN4?Thailand, Malaysia, Indonesia ,and Philippines), NIES and China.
(Note 2)	"Direct Inward Investment" excludes the direct inward investment into Hong Kong SAR. In case of direct inward investment into Thailand by several countries,those countries are double-counted. "EU 15" in Direct Inward Investment into Taiwan and Thailand refers to the following respectively: Taiwan: United Kingdom, Germany, France, and Netherlands Thailand: United Kingdom, Germany, France, Belgium, Italy, and Netherlands
(Note 3)	"Outstanding Claims" refer to the outstandinfg claims of the world (or respective countries and regions) on 9 Asian countries. "Bilateral Aid" refers to the aid to 9 Asian Countries from the world (or respective countries and regions).
(Note 4)	Neither EU 15 nor Euro 11 in "Outstanding Claims" includes Denmark, Ireland, Sweden, Portugal, and Greece.
(Note 5)	"World" in "Bilateral Aid" refers to all DAC countries.
(Sources)	International Monetary Fund, "Direction of Trade Statistics", Bank for International Settlements, "International Banking and Financial Market Developments November 1998", Organization for Economic Co-operation, "Geogra,phical Distribution of Financial Flow to Aid Recipients", etc.

(III-1-(1)) Share of Intra-ASEANTrade

Exports

(million U.S. dollar)

	1967 (ASEAN5)	1982 (ASEAN6)	1992 (ASEAN6)	1997 (ASEAN9)	Intra-EU Exports ('97)	Intra-NAFTA Exports ('97)
Total	3,477 (100.0%)	70,900 (100.0%)	182,948 (100.0%)	356,561 (100.0%)	2,094,100 (100.0%)	1,010,660 (100.0%)
Intra-ASEAN	239 (6.9%)	16,989 (24.0%)	40,985 (22.4%)	84,727 (23.8%)	1,179,700 (56.3%)	496,423 (49.1%)
To Korea and Hong Kong	166 (4.8%)	4,430 (6.2%)	15,135 (8.3%)	34,342 (9.6%)
To China	47 (1.3%)	776 (1.1%)	3,786 (2.1%)	10,683 (3.0%)
To Japan	936 (26.9%)	20,568 (29.0%)	29,651 (16.2%)	47,925 (13.4%)
To East Asia	1,388 (39.9%)	42,762 (60.3%)	89,557 (49.0%)	177,677 (49.8%)

Imports

(million U.S. dollar)

	1967 (ASEAN5)	1982 (ASEAN6)	1992 (ASEAN6)	1997 (ASEAN9)	Intra-EU Imports ('97)	Intra-NAFTA Imports ('97)
Total	4,190 (100.0%)	72,111 (100.0%)	179,992 (100.0%)	360,960 (100.0%)	1,873,340 (100.0%)	1,154,750 (100.0%)
Intra-ASEAN	239 (5.7%)	16,989 (23.6%)	40,985 (22.8%)	84,727 (23.5%)	1,179,700 (63.0%)	496,423 (43.0%)
From Korea and Hong Kong	259 (6.2%)	3,868 (5.4%)	15,473 (8.6%)	32,653 (9.0%)
From China	70 (1.7%)	1,284 (1.8%)	4,260 (2.4%)	11,492 (3.2%)
From Japan	1,107 (26.4%)	14,950 (20.7%)	40,754 (22.6%)	68,647 (19.0%)
To East Asia	1,366 (32.6%)	37,091 (51.4%)	101,472 (56.4%)	197,519 (54.7%)

(Note 1)	Calculated from export data for each country (or region).
(Note 2)	Members of ASEAN are as follows.
	1967 Thailand, Indonesia, Malaysia, Philippines and Singapore. 1982 The above-mentioned 5 countries plus Brunei. 1992 The above-mentioned 6 countries. 1997 The above-mentioned 6 countries plus Vietnam, Rao PDR, and Myanmar.
(Note 3)	Figures in parentheses are shares in "Total".
(Source)	International Monetary Fund, "Direction of Trade Statistics"

(III-1-(2)) Relative Economic Size :Asia, the Americas and Europe

			Share of world nominal GDP	Share of world trade	Share of world population	Current Account Balance (1997)		Outstanding of Net External Assets	Outstanding of Public Bonds	Market Capitalisation in Equity Market
			1997 (world=100)	1997 (wold=100)	Estimate for 1996(world=100)	Ratio to GDP (%)	(billion U.S. dollar9	End-1996 (billion U.S. dollar)	End-Sep. 1998 (billion U.S. dollar)	End-1997 (billion U.S. dollar)
Asia (Japan + 9 Aisian countries)			22	24	31	1.9	127	-	-	-
	Japan		14	7	2	2.2	94	891	3,118	2,217
	9 Aisian countries		8	18	29	1.3	32	-	-	-
The Americas			35	24	13	- 2.1	- 230	-	-	-
	United States		26	14	5	- 1.9	- 155	- 744	7,550	11,309
	Canada		2	4	1	- 1.5	- 9	- 242	398	568
	Central and South America		7	6	8	- 3.3	- 65	-	-	-
Europe			28	39	9	1.2	105	-	-	-
	EU 15		27	36	7	1.5	123	- 466	4,623	5,236
		Euro 11	21	29	5	1.8	112	- 316	3,814	2,874
	Central and Eastern Europe		1	2	2	- 5.0	- 18	-	-	-

(Note 1)	"9 Asian countries" refer to ASEAN4 ( Tahiland, Indoneisia, Malaysia, and Philippines), NIES, and China.
(Note 2)	For "Outstanding of External Net Assets", EU 15 and Euro 11exclude Ireland and Greece.
(Note 3)	For "Market Capitalisation in Equity Market", EU 15 and Euro 11 exclude Portugal, Greece, and Luxembourg.
(Sources)	International Monetary Fund,	"Direction of Trade of Statistics", "International Financial Statistics", "Interim World Economic Outlook December 1998",
	Bank for International Settlements,	"Central Bank Survey of Foreign Exchange and Derivatives Market Activity in April 1998", "International Banking and Financial Market Development",
	United Nations, "Demographic Year Book", Data provided by Economic Planing Agency, etc.

(III-1-(3)) Real GDP Growth ofSelected Countries and Regions

(Unit : %)

	1980-1989 Average	1990-1995 Average	1996	1997	1998P	1999P
Japan	3.8	2.0	5.0	1.4	- 2.8	- 0.5
NIES	7.8	7.0	6.3	6.0	- 2.6	0.5
Asia	7.0	8.3	8.2	6.6	2.6	4.3
United States	2.7	1.8	3.4	3.9	3.6	1.8
Canada	2.9	1.5	1.2	3.8	2.8	2.2
Central and South America	2.2	3.1	3.5	5.1	2.5	1.5
EU 15	2.3	1.8	1.8	2.7	2.8	2.2
Euro 11	2.3	1.9	1.6	2.5	2.8	2.4
Central and Eastern Europe	-	- 1.6	3.7	3.2	2.9	3.2

(Note 1)	"Asia" includes South Asia and excludes Japan and NIES.
(Note 2)	For "1990-1995 Average" of Central and Eastern Europe, 1991-1995 Average is provided.
(Note 3)	"1998P" and "1999P" are estimates.
(Source)	International Monetary Fund, "Interim World Economic Outlook, 1998 December"

(III-2) Japan's Transactions withAsia, the United States, and the EU

(

Unit: Billion yen)

	ASEAN4+NIEs+China						United States		EU				World (100%)
			ASEAN4+NIEs								Euro 11
					ASEAN4						Euro 11
		Share		Share		Share		Share		Share		Share
Trade (1998)	29,588	34%	22,123	25%	8,143	9%	24,248	28%	14,419	17%	10,865	12%	87,299
Foreign Direct Investment (FY1997)	1,361	21%	1,118	17%	699	11%	2,549	38%	1,345	20%	839	13%	6,623
Outstanding Medium- and Long-Term External Bank Loans (End 1997)	73	26%	63	22%	24	9%	100	35%	50	18%	22	8%	283

(Note) "ASEAN4" refers to Thailand, Indonesia, Malaysia, and the Philippines.
(Sources) Data provided by the Japanese Ministry of Finance and others.

(III-3) Strengthening RegionalEconomic Ties in ASEAN

Introduction

While one of ASEAN's objectives at its inception (1967) was to promote regionaleconomic cooperation, it remained primarily focused on political and diplomatic mattersthrough the 1980s. This began to change in the 1990s as the Cold War came to end andregional economic blocs gained momentum with the unification of the European market andthe creation of NAFTA. Thus, at the 4th Summit held in January 1992, the "FrameworkAgreement on Enhancing Economic Cooperation" was signed, and serious steps were takentoward developing closer economic ties in the region.

The first initiative undertaken was the establishment of the ASEAN Free Trade Area(AFTA) which was to be developed through the Common Effective Preferential Tariff (CEPT).This was followed by various ongoing initiatives launched by the ASEAN Economic MinistersMeeting (AEM), the Finance Ministers Meeting, and other bodies. These initiatives areoutlined below. It should be noted that full information on the progress and the impact ofthese initiatives is not always available.

Note	: Principal abbreviations appearing in the table are as follows.
	AEM	: ASEAN Economic Ministers Meeting
	AFTA	: ASEAN Free Trade Area
	AIA	: ASEAN Investment Area
	AICO	: ASEAN Industrial Cooperation
	CEPT	: Common Effective Preferential Tariff
	SEOM	: Senior Economic Officials Meeting

Area of Action		Objective	Principal Decisions and Chronology
A F T A	C E P T	·To maximize liberalization of intraregional trade. (Achieve 0% of tariff rate) Note: Common Effective Preferential Tariff (CEPT): Preferential tariffs for ASEAN members applicable to products originating from ASEAN member states (minimum 40% local content) which comply with schemes under the CEPT Agreement.	·Tariffs on intra-regional trade to be reduced to 0-5%. (List of exceptions exists, but the number of exceptions is also to be reduced.) a. Maximize items in 0-5% tariff range by 2000 (2003 for Vietnam and 2005 for Laos and Myanmar). b. Maximize 0% tariff items by 2003 (2006 for Vietnam and 2008 for Laos and Myanmar). c. Expand the range of tariff reduction items by reducing the number of items on temporary exclusion list, sensitive list, and general exception list. [Ratio of the number of items which are to be liberalized under the CEPT Scheme as of 1998: 82.8%] Chronology Jan. 1992: Formal agreement of AFTA; AFTA Council established; CEPT Agreement goes into force. Jan. 1993: CEPT reductions begin. Sept. 1994: Reduction period shortened to 2003 (shortened by 5 years). Dec. 1998: Reduction period shortened to 2002 (shortened by 1 year). Applicable only to original CEPT signatories (6 countries).
	Customs Procedures	·To simplify and streamline regional customs procedures as much as possible.	·ASEAN member countries are considering, and ASEAN is negotiating on following matters: expanding the range of green-lane customs points reserved for CEPT cargo to cover all ASEAN products, and the implementation of the ASEAN Harmonized Tariff Nomenclature by 2000. Chronology Jan. 1992: CEPT Agreement calls for standardization of tariff classification, procedures, and evaluation. Dec. 1998: "Hanoi Plan of Action" calls for enhancing customs harmonization.
	Standards and Conformance	·To establish general principles on product standards agreeable to all member countries; to eliminate technical obstacles.	·Product standards are to be harmonized by 2000 for priority liberalization items, and by 2005 for regulated products. Chronology Jan. 1992: CEPT Agreement calls for securing standards and conformance, and transparency. Dec. 1998: ASEAN Framework Agreement on Mutual Recognition Arrangements.
	A I C O	·To strengthen regional industrial cooperation and promote horizontal specialization among member countries.	·0-5% tariff applicable to trade between companies which satisfy such conditions as minimum 30% ASEAN equity participation. Intended to accelerate the implementation of AFTA/CEPT. ·Temporary exemptions for local equity participation requirement (minimum 30%) are in place from 1999 through 2000. ·Japanese automobile-related subsidiaries are beginning to apply for the scheme, but little progress made due partly to complexity of procedures. Chronology Apr. 1996: Signing of AICO Basic Agreement (in force in November); BBC and other existing projects partially integrated. Dec. 1998: Temporary exemptions for the 30% local equity requirement agreed at the 6th Summit Meeting.

Area of Action		Objective	Principal Decisions and Chronology
A I A		·To maximize liberalization of investment from both inside and outside ASEAN.	·Liberalize investment from both inside and outside ASEAN, granting firms equal national treatment. (List of exceptions exists, but will be reduced.) a. Liberalization of investment from inside ASEAN by 2003. b. Liberalization of investment from outside ASEAN by 2020. c. Member countries are currently considering list of exceptions (to be submitted by April 7, 1999). Chronology Dec. 1995: AIA proposed at the 5th ASEAN Summit Meeting. Oct. 1998: Signing of the AIA "Framework Agreement"; AIA Council established.
Macroeconomic Policies		·To maintain sound macroeconomic policies; to share information and exchange frank opinions to prevent crisis.	·Surveillance secretariat placed at ADB; to be transferred to the ASEAN Secretariat in the future. Chronology Mar. 1997: Ministerial Understanding on ASEAN Cooperation in Finance. Nov. 1997: ASEAN Central Bank Forum established. Feb. 1998: 2nd Finance Ministers Meeting; agreement on the establishment of the ASEAN Surveillance Mechanism. Dec. 1998: 6th Summit Meeting; proposal for strengthening the ASEAN Surveillance Mechanism.
Currency	Settlements	·To maximize the use of regional currencies for intra-regional trade and settlements	·To begin on voluntary basis; mutual arrangement will be considered later. Chronology Feb. 1998: Support for bilateral settlement agreements for the use of regional currencies in intraregional settlements (2nd Finance Ministers Meeting).
	Supply of Liquidity	·To create a mutual assistance system to counter short-term liquidity shortages.	·Exchange of US dollars against the domestic currency of a requesting member state. Chronology Feb. 1977: Memorandum of Understanding on the ASEAN Swap Arrangements (in force in Aug. 1977) Sept. 1978: First supplementary agreement to the 1977 MOU (5th agreement in Sept. 1992). Dec. 1997: Decision on extension (was scheduled to expire In Aug. 1997).
	Currency System		·Planning stage. Chronology Dec. 1998: Decision to study the feasibility of establishing an ASEAN Currency and Exchange RateSystem ("Hanoi Plan of Action").
Dispute Settlement			·Four stages of consultation for dispute settlement (290 days maximum): Bilateral discussion --> Third-party mediation and arbitration (e.g. international organizations) --> SEOM --> AEM. Chronology Jan. 1992: Framework Agreement on Enhancing Economic Cooperation. Nov. 1996: Protocol on Dispute Settlement Mechanism.

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