East Asia Integrates: A Trade Policy Agenda for Shared Growth (World Bank Trade and Development Series)

249 Pages·2004·3.71 MB·English

by  Kathie Krumm

EAST ASIA
T R A D E A N D D E V E L O P M E N T S E R I E S
Emerging East Asian economies have seen their share of world exports more than
Integrates
triple during the past quarter-century, and intraregional trade has driven this
growth. Broad measures of development in East Asia have improved at the same
headlong pace. Why push further integration now? Two economic events of historic
proportions provide the context: strategic rethinking of development in the region following
the East Asian financial crisis of 1997–98 and the accession of China to the World Trade
Organization. Policymakers interested in a stable, prosperous region are concerned by A T P A S G
RADE OLICY GENDA FOR HARED ROWTH
mildly rising inequality within countries and a widening income gap between richer
economies and the poorest economies. Increasingly, the development agenda in the
region—with its focus on growth, jobs, and social stability—and the trade policy agen-
da—with its focus on market access and competitiveness—have become intertwined.
Editors
East Asian policymakers seek to develop a coherent set of economic policies that can Kathie Krumm and Homi Kharas
deliver stability, growth, and regional integration. Without attempting to be compre-
hensive, East Asia Integrates offers fundamental strategies that promote cross-border A

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flows of trade, globally and regionally, along with domestic policies on logistics, trade r
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facilitation, standards, and institutions to maximize the impact of these flows on devel- d
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opment and to distribute the gains from trade widely. P
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As the authors demonstrate, multilateral and regional trade initiatives must provide a
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compelling vision of how integration can deliver broadly shared growth and prosperity
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if they are to succeed. In addition, they must use the momentum offered by trade d
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agreements to address the links between trade on the one hand, and social stability, f
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poverty reduction, and growth on the other. r

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THE WORLD BANK
ISBN 0-8213-5514-7

east Asia integrates
A Trade Policy Agenda for Shared Growth

east Asia integrates
A Trade Policy Agenda for Shared Growth
Kathie Krumm and Homi Kharas, Editors
Acopublication ofthe World Bank and Oxford University Press
© 2004 The International Bank for Reconstruction and Development / The World Bank
1818 H Street,NW
Washington,DC 20433
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A co-publication ofthe World Bank and Oxford University Press.
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C
ONTENTS
Foreword xi
Acknowledgments xiii
Overview xv
Kathie Krumm
Homi Kharas
PART I WIDENINGOPPORTUNITIES IN
TRADE ARRANGEMENTS 1
1. China’s Accession to the WTO:Impacts on China 3
William J.Martin
Deepak Bhattasali
Shantong Li
2. Regional Impact ofChina’s Accession to the WTO 21
Elena Ianchovichina
Sethaput Suthiwart-Narueput
Min Zhao
vi East Asia Integrates
3. New Regionalism:Options for East Asia 39
Mari Pangestu
Sudarshan Gooptu
4. Market Access Barriers and Poverty in Developing East Asia 59
Bijit Bora
with additional material by
Paul Brenton and Takako Ikezuki
PART II DEVELOPMENT ORIENTATION FOR
A BEHIND-THE-BORDER AGENDA 75
5. Trade and Logistics:An East Asian Perspective 77
Robin Carruthers
Jitendra N.Bajpai
David Hummels
6. Protecting Industrial Inventions,Authors’Rights,and Traditional Knowledge:
Relevance,Lessons,and Unresolved Issues 95
Manjula Luthria
Keith E.Maskus
7. Trade and Competitiveness Aspects ofEnvironmental and Labor Standards
in East Asia 115
Keith E.Maskus
PART III REINFORCING SOCIAL STABILITY THROUGH
BROAD SHARING OF BENEFITS 135
8. Household Welfare Impacts ofChina’s Accession to the WTO 137
Shaohua Chen
Martin Ravallion
9. Trade in Sectors Important to the Poor:Rice in Cambodia and Vietnam
and Cashmere in Mongolia 149
Jehan Arulpragasam
Francesco Goletti
Tamar Manuelyan Atinc
Vera Songwe
10. Trade and Labor Market Vulnerability in Indonesia,
Republic ofKorea,and Thailand 171
François Bourguignon
Chor-ching Goh
Authors and Their Affiliations 189
Index 191
Contents vii
FIGURES
Figure 1 Trends in Regional Trade xviii
Figure 2 Intraregional Trade xix
Figure 3 China’s Trade in Third-Country Markets xx
Figure 4 Reduced Agricultural Protection in China xxi
Figure 5 Chinese Imports,1995 and 2005 xxii
Figure 6 Regional Trade Arrangements xxvi
Figure 7 Inland Transport Costs for Remote Regions xxix
Figure 8 Expanded Exports to APEC from Improvements in Trade Facilitation xxx
Figure 9 Costs ofProducer Services xxx
Figure 10 Regulatory and Competitive Reforms,Selected Countries xxxii
Figure 11 Geographic Distribution ofBilateral Trade Treaties xxxiii
Figure 12 Environmental and Labor Standards,East Asia xxxiv
Figure 13 Poverty and Inequality xxxvi
Figure 14 Effects ofChina’s Accession to WTO on Household Incomes xxxvii
Figure 15 Trade and Stability in Labor Markets,Republic ofKorea xxxix
Figure 2.1 Exports to China from East Asia Compared with Exports to
Other Partners 22
Figure 2.2 China’s Imports,1995 and 2005 23
Figure 2.3 China’s Growing Role in Production Networks 24
Figure 2.4 Impact ofChina’s WTOAccession on Japan and East Asia’s NIEs,2001–10 26
Figure 2.5 Impact ofChina’s WTOAccession on Developing Economies of
East Asia,2001–10 27
Figure 4.1 Real Income Gains in Developing East Asia from Agricultural Liberalization 60
Figure 5.1 Potential Contribution ofTransport to Economic Growth in East Asia 79
Figure 5.2 Poverty and Accessibility in Lao PDR 82
Figure 6.1 Comparison ofPatenting Trends,Republic ofKorea and Major
Developing Countries,1978–99 97
Figure 6.2 Comparison ofKorean Semiconductor Patents with Worldwide
Semiconductor Patents,1976–99 98
Figure 6.3 Comparison ofKorean Semiconductor Patents with Semiconductor
Patents ofMajor Advanced Countries,1976–99 98
Figure 6.4 Citations ofKorean Patents as a Proportion ofTotal Patent Citations,
by Types ofPatent Applicants,1986–99 101
Figure 6.5 Self-Citation Rates ofKorean Private Corporations,1980–99 102
Figure 6.6 Korean Patents Granted in the United States,Selected Industries,1981–99 102
Figure 8.1 Poverty Incidence Curves:Rural 141
Figure 8.2 Poverty Incidence Curves:Urban 142
Figure 8.3 Mean Gains by Provinces:Absolute Gains in Yuan Per Capita 143
Figure 8.4 Mean Gains by Provinces:Proportionate Gains in Percent 143
Figure 8.5 Mean Gains by Provinces:Percentage ofGainers 144
Figure 8.6 Mean Gains in Yuan,by Income Percentile 144
Figure 8.7 Mean Percentage Gain,by Income Percentile 145
Figure 8.8 Percentage ofGainers,by Income Percentile 145
Figure 9.1 Profit Shares for Rice Value Chain,Cambodia and Vietnam 155
Figure 9.2 Profit Structure ofRice Value Chain,Cambodia and Vietnam 161
Figure 9.3 Share ofCashmere Products in Mongolia’s Total Cashmere Exports,
1993–2001 166
viii East Asia Integrates
Figure 10.1 Decade Averages ofImport Tariffs for Manufacturing Industries:
Indonesia,Republic ofKorea,and Thailand,1980s and 1990s 174
Figure 10.2 Average Log ofReal Wages ofMales by Broad Sectors (Manufacturing,
Services and Construction,and Others) and by Trade Exposure
(Low,Medium,and High):Republic ofKorea,1976–2000 177
Figure 10.3 Average Log ofReal Wages ofMales by Broad Sectors (Manufacturing
and Services) and by Trade Exposure (Low,Medium,and High):
Thailand,1991–2000 178
Figure 10.4 Average Log ofReal Wages ofMales by Broad Sectors (Manufacturing
and Services):Indonesia,1986–1999 178
Figure 10.5 Standard Deviation ofLog ofReal Wages ofa Male Cohort in Low,
Medium,and High Trade Exposure Industries:Republic ofKorea,
1976–2000 179
Figure 10.7 Average Monthly Hours Worked ofa Male Cohort in Manufacturing
and Services:Thailand,1991–2000 180
Figure 10.6 Distribution ofEmployment Status and Employment Sectors of
a Male Cohort:Republic ofKorea,1985–2000 180
Figure 10.8 Estimated ρby Birth Year Cohort:Republic ofKorea,1929–69 183
Figure 10.9 Vulnerability by Sectors and Trade Exposure Groups:Republic ofKorea,
1976–2000 184
Figure 10.10 Vulnerability by Gender and Educational Attainment:Thailand,1991–2000 185
TABLES
Table 1 Effects on Economic Welfare ofVarious Regional Trade Proposals xxiv
Table 2 Structure ofManufactured Exports by Country,1985 and 1996 xxix
Table 1.1 Some Measures ofImport Protection in China’s Agriculture 8
Table 1.2 Protection ofIndustrial Sectors in China 10
Table 1.3 Impacts ofReduction in Protection Required by WTO Accession from
2001 TariffLevels,China 14
Table 2.1 Weighted Average Tariffs Facing Exports to China:Indonesia and
Thailand,2001–08 28
Table 2.2 Shares ofExports to China Affected by Lifting ofQuantitative
Restrictions (QRs):Indonesia and Thailand 28
Table 2.3 Market-by-Market and Product-by-Product Analysis ofIndonesian Exports:
China’s Market Share and Closeness ofUnit Value (UV) as Proxies
for Potential Risk 29
Table 2.4 Market-by-Market and Product-by-Product Analysis ofThai Exports:
China’s Market Share and Closeness ofUnit Value (UV) as Proxies
for Potential Risk 30
Table 2.5 Share ofExports to China Affected by Lifting ofQuantitative
Restrictions (QRs):Cambodia and Lao PDR 33
Table 2.6 Market-by-Market and Product-by-Product Analysis of
Cambodian Exports:China Market Share and Closeness ofUnit
Value (UV) as Proxies for Potential Risk 34
Table 2.7 Market-by-Market and Product-by-Product Analysis ofLao PDR’s
Exports:China Market Share and Closeness ofUnit Value (UV) as
Proxies for Potential Risk 35
Table 3.1 Proposed and Actual Regional Trading Arrangements Involving
East Asian Countries 42