2008/SOM1/MAG/WKSP/009 Session: 3 APEC s Sustainable Economic Development & Economic Integration Through ICT/Electronics Submitted by: Matsushita Electric Industrial Co. Workshop on Information Technology / Electronics Industry Lima, Peru 20 February 2008
APEC MAG Workshop on IT/Electronics Industry February 20, 2008 APEC s Sustainable Economic Development & Economic Integration through ICT/Electronics Yukio Shohtoku ABAC Japan Member Chair, ABAC Technology and Information Working Group Corporate Associate, Matsushita Electric Industrial Co., Ltd. 1 1. APEC and the Importance of ICT/Electronics Industry within APEC 2
1-1. APEC: World's Largest Framework for Economic Cooperation Comparison of market size: APEC and other economic blocs GDP (Trillion $) Trade (Trillion $) Populat ion (Million) World 45 21 6,400 APEC 25 9.6 2,600 Share 56% 45% 41% NAFTA 14 3.6 430 Share 31% 17% 7% EU 13 7.8 460 Share 29% 37% 7% Source: World Bank group website Data & Statistics APEC Outcomes and Outlook (2005/2006) IMF Direction of Trade Statistics United Nations World Investment Report 2006 3 1-2. (1) ICT/Electronics Contribution to Expansion of World Trade ICT/Electronics products: ±15% of total world export value World exports and exports of ICT/Electronics products (Unit: US$ billion) 12000 10000 8000 6000 4000 2000 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 World exports ICT/ Electronics exports Share Ref: Share of world exports Chemical products: 10.5% Food products: 3.1% 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Source: UNCTAD Information Economy Report 2007-2008, JETRO 4
1-2. (2) ICT/Electronics Contribution to the Expansion of World Trade 250% 200% 150% ICT/Electronics exports grow at a pace exceeding the growth of global trade Changes in ICT/Electronics exports and total export value (1996 = 100%) Wor ld t ot al expor t s ICT/ Electronics exports ITA effectuated 100% 50% 0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Source: UNCTAD Information Economy Report 2007-2008, JETRO 5 1-3. Importance of ICT/Electronics Innovation by ICT/Electronics ICT/Electronics industry is extremely important to the growth of all industries and innovations Enhancing quality of life ICT/Electronics brings convenience and a rich life to consumers: information via radio, TV, mobile phones, e-mail, and Internet websites Realizing prosperity of users and industry Expansion of trade and investment leads to dissemination of ICT/Electronics products and thus the prosperity of users as well as industries 6
1-4. ICT/Electronics Contributions to Economies and Societies of APEC Members ICT/Electronics Boosts productivity by improving efficiency Creates unprecedented jobs and opportunities Helps SMEs have better access to trade finance and e-finance through improved information structures Decreases transaction costs and helps trade Brings more outsourcing and foreign investment to developing economies Develops better IT literacy and infrastructure, and makes economies more competitive 7 2. ICT/Electronics and East Asia s Economic Integration 8
2-1. ICT/Electronics is Critical to the Integration of East Asia s Economies East Asia produces a large proportion of typical ICT/Electronics products Shares of ICT/Electronics Production DSCs DVD Recorders/Players PCs Other regions Production ratio of East Asia: 100% Production ratio of East Asia: Production ratio of East Asia: 92.2% Production ratio of East Asia: 96.8% Notes: Figures are for 2006 (projected). Source: World-wide Production of Major Electronics from 2005 to 2007 (JEITA). Source: White Paper on International Economy and Trade (METI) 9 70% 60% 50% 40% 30% 20% 10% 2-2. Growing Intra-regional Trade Relationships in East Asia East Asia s Intra-regional trade surpasses NAFTA and reaches EU s level Changes in intra-regional trade of East Asia, EU25 and NAFTA 0% 1980 1985 1990 1995 2000 2005 EU25 48.4%(1980) 62.1%(2005) NAFTA 33.2%(1980) 43.0%(2005) East Asia/Chinese Taipei/Hong Kong 35.7%(1980) 55.8%(2005) Source: DOT (IMF), White Paper on International Economy and Trade (METI) 10
2-3. Intermediate Goods: a Major Part of East Asia s Intra-regional Trade Ratios of intra-regional trade by goods East Asia/Chinese Taipei /Hong Kong (Unit: US$ billion) 2500 (Unit: US$ billion) 2500 EU25 (Unit: US$ billion) 2500 NAFTA 2000 1500 1500 Finished goods Intermediate goods 2000 1500 1500 2000 1500 1500 1000 500 500 Materials 1000 500 500 1000 500 500 0 0 0 1980 1985 1990 1995 2000 2005 2005 1980 1980 1985 1985 1990 1990 1995 1995 2000 2000 2005 2005 1980 19801985 19851990 1990 1995 1995 2000 2000 2005 Finished goods: Intermediate goods Finished goods: Intermediate goods Finished goods: Intermediate goods (2005) = 1 : 1.9 (2005) = 1 : 1.3 (2005) = 1 : 1.1 Ref. East Asia does not include Vietnam and Myanmar Source. The Japanese National Research Institute of Economy and Industry's "RIETI/TID 2006" Source: White Paper on International Economy and Trade (METI) 11 2-4. ICT/Electronics Products: a Significant Portion of East Asia's Intra-regional Trade Ratio of intra-regional trade by product category East Asia/Chinese ICT/Electronics Taipei/Hong Kong EU25 NAFTA (%) (%) (%) 100 90 80 70 60 50 40 30 20 10 0 100 90 80 70 60 50 40 30 20 10 0 100 90 80 70 60 50 40 30 20 10 1980 1985 1990 1995 2000 2005 1980 1985 1990 1995 2000 2005 0 1980 1985 1990 1995 2000 2005 Commodities & toys Precision machinery Transportation machinery Consumer electric/ electronics equipment Electrical machinery ICT/Electronics General machinery Steel, non-metal, metal products and their related items Porcelain/stone products and their related items Petroleum and coal products and their related items Chemical products (including plastics) Ref. East Asia does not include Vietnam and Myanmar Source. The Japanese National Research Institute of Economy and Industry's "RIETI/TID 2006" Pulp, paper, wooden products (including rubber, leather, oil, etc.) and their related agricultural, forestry and marine products Textile products Food products and their related agricultural, forestry and marine products Source: White Paper on International Economy and Trade (METI) 12
2-5. East Asia s Economic Integration in Progress of ICT/Electronics Industry Trade in East Asia East Asia produces intermediate goods in each country, uses them on mutually complimentary supply basis to assemble final goods, and exports products outside of the region, thus operating as a workshop of the world ICT/Electronics industry in East Asia Production in East Asia is more interconnected not only at the industry level but at a more segmented process level in which the economies are integrated in a network of organically-tied and deeply-rooted relationships 13 2-6. FTA Network Expanding in East Asia 1997 Initiatives in progress for FTA within East Asia (1997 & 2007) ASEAN Japan Korea China Philippines Indoneshia Maraysia Thailand Singapore Brunei Darussalam Vietonam Lao Cambodia Myanmar India Australia New Zealand Japan Korea China Phillipines Indonesia Malaysia A Thailand S Singapore E Japan Korea China Japan Korea China Philippines Indoneshia Maraysia Thailand Singapore Brunei Darussalam Vietonam Lao Cambodia Myanmar Phillipines Indonesia Malaysia Thailand Singapore Brunei A Brunei N Vietonam N Vietonam Lao Lao Cambodia Cambodia Myammer Myammer India India Australia Australia New Zealand New Zealand : Signed and (partially) in effect : Basically agreed and concluded : Under negotiation (or agreed to start negotiations) : Joint research or discussions joined by government organizations in progress (including EPA/FTA among multiple countries) Korea is implementing joint research activities between private research institutions with Australia and New Zealand based on top-level meetings A S E A 2007 ASEAN Source: White Paper on International Economy and Trade (METI) India Australia New Zealand 14
2-7. Challenges Facing East Asia s ICT/Electronics Industry Confusion of rules due to multiple FTAs Delay in liberalization of trade in services Incomplete investment rules Undeveloped infrastructures Restriction on temporary movement of natural persons Regulations on hiring and firing Problems with protection of intellectual property rights 15 3. Proposals for ICT/Electronics Industry to Overcome Challenges to Further Contribute to APEC s Sustainable Development 16
3-1. (1) Arbitrary Erosion of ITA Product Coverage in Certain Countries/Regions Due to technological advancement and integration, tax is levied in some countries/regions on products that should be tax-free according to ITA provisions: Set-top boxes Combination printers DSCs LCD monitors Smart phones with GPS 17 3-1.(2) APEC Initiatives APEC s consistent contribution to trade promotion and industrial development through ITA: APEC played an important role in consensus-building in WTO 1997 Information Technology Agreement (ITA) APEC agreed to specify IT products for tariff elimination (multi-chip integrated circuits, digital multifunctional machines, modems) and forwarded to WTO negotiations (The Ministers Joint Statement, Nov. 2004) APEC reaffirmed the significant role of the ITA in enhancement of trade in IT products across the APEC region (The Minister s Joint Statement, Sep. 2007) APEC recognized the imminent danger that some of the technologically advanced versions of ITA products were no longer receiving duty free treatment due to an overly narrow interpretation of ITA product coverage, and concrete steps were needed to counteract such danger (The Minister s Joint Statement, Sep. 2007) 18
3-2. Delay in WTO DDA NAMA Negotiations As the world s largest regional cooperation, APEC should: Promote activities to conclude NAMA negotiations by the end of this year Encourage more APEC members to join initiatives to lift tariffs on NAMA ICT/Electronics products 19 3-3. Problems in Trade and Investment environment Trade facilitation Expansion and enhancement of ICT/Electronics industry s supply chain requires stronger rules/systems for free trade (rules of origin, customs procedures, distribution systems, standards and certification systems) Improvement of investment environment Attracting ICT/Electronics industry requires an improved investment environment: human resources, information needed for investment, tax benefits and deregulations, tariff reductions plus improved infrastructure (power/water services, roads, etc.) 20
4. Proposals for Facilitating Intra-regional Economic Integration in APEC 21 4-1.(1) Promote Sectoral Approach in ICT/Electronics in APEC Promote study for regional economic integration Studies should analyze examples of advanced global supply chains actually used by ICT/Electronics industry in Asia-Pacific region Initiatives to establish ASEAN Economic Community (AEC) should be studied as examples for APEC-wide initiatives 22
4-1.(2) Promote Sectoral Approach in ICT/Electronics in APEC Develop a roadmap for economic integration ICT/Electronics is one of 12 fields in for Economic Integration (ASEAN Twelve Priority Sector Economic Integration ) APEC could start development of a " for Economic Integration" in the ICT/Electronics industry prior to other fields for Initiatives toward the ASEAN Economic Community (AEC) ASEAN Framework Agreement for Priority Integration AFTA Agro Products Air Travel Automotives e-asean Electronics Fisheries Healthcare Logistics Rubber Products Textiles Tourism Wood Products Rules of origin Custom procedures Standards and conformance Liberalization Trade of goods Trade of services Investment Facilitation Logistics Business mobility Others Intellectual property rights Mutually complementary relations of industries Human resources development Establish AEC (Asian Economic Community) in 12 Priority Sectors by 2010 Establish AEC by 2015 Initiatives for Economic Integration in other sectors 23 5. ICT/Electronics Contributes to Reducing GHG Emissions 24
5-1.(1) Asia Pacific Partnership on Clean Development & Climate (APP) APP APP aims to promote regional cooperation in development, penetration, and transfer of clean and efficient technologies -Public-Private Partnerships - International Cooperation - Sectoral Approach Participating countries: Japan, US, Australia, Korea, China, India and Canada Cooperation focused on energy- conserving technologies Supplemental to Kyoto Protocol APP's 8 Task Forces Aluminium Buildings & Appliances Cement Cleaner Fossil Energy Coal Mining Power Generation and Transmission Renewable Energy & Distributed Generation Steel 25 5-1.(2) Sectoral Approach in APP Buildings and Appliances Task Force Penetration of energy-conserving equipment" promoted by expanding the top-runner formula Penetration/promotion of energy-conserving buildings APP Buildings and Appliances Task Force s 1 st Workshop on Market Transformation held at Panasonic Center in Tokyo (Jan. 31 Feb. 1, 2007) 26
5-2.(1) Green IT Initiatives Explosion in volume of data traffic Increased power consumption Energy-conservation of IT Energy-conservation by IT The Japanese Government started Green IT Initiatives in December 2007 to promote energy-savings in IT products and IT-led energy-conservation by establishing a good balance between environmental protection and economic growth 27 5-2.(2) Green IT Initiatives Pillars of Green IT Initiatives Enhancement of industry-government-academia partnership Breakthroughs by innovative technologies Publicity and promotion of environmental and IT management Making IT s contributions to society more visible Developing international campaigns 28
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