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Analyzing the Economic Benefits of Joining the Asia-Pacific Trade Agreement (APTA): Indonesia, Mongolia, and the

Philippines, and GTAP Simulation Results for ASEAN Member States

Information Background Paper

Study Commissioned by the United Nations Economic and Social Commission for Asia and the Pacific

(UNESCAP)

By

HanSung Kim Research Fellow

Center for Regional Economic Studies Korea Institute for International Economic Policy, Korea

[email protected]

BakHoon Song Assistant Professor

Department of Economics Sungshin Women’s University

[email protected] mailto:[email protected]

March 31, 2009

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I. Introduction

The Asia-Pacific Trade Agreement (APTA, formerly known as Bangkok Agreement) is one of the major regional trade agreements in the Asia-Pacific region. It aims to liberalize and expand trade progressively in the Economic and Social Commission for Asia and the Pacific (ESCAP) region through mutual relaxation of tariff and non-tariff measures. One of the outstanding characters of the APTA is its member composition; six APTA member countries, Bangladesh, China, India, Korea, Laos, and Sri Lanka, comprise of countries in East, Southeast and Southwest Asia. It also includes least developed countries such as Laos and Bangladesh, fast growing economies like China and India, and the OECD Member country, Korea. Cultural as well as economic diversification makes it hard to find any clue that bonds these countries together; however, the increasing volume of regional trade and widespread of regional production network support its concreteness.

Originally signed in 1975 with five signatory members, it has shown slow but continuous progress. In its 34 years history since its original signatory, it has experienced two important turning points, and the first turning point could be the accession of China to the World Trade Organization (WTO) in 2001. China has dominated other countries in terms of the size of trade volume, total GDP and annual growth rates. The total trade volume of other members with China has expanded rapidly at the same time. The accession of China enhanced the effectiveness and attractiveness of the agreement.

The second one was the Amendment of the Bangkok Agreement in 2005. On November 2, 2005, the revised text of the agreement was adopted and renamed to the Asia-Pacific Trade Agreement. The agreement mentioned about the implementation of Third Round that was put into effect from July 1, 2006 upon completion of internal procedures of all participating states.1 The Third Round expanded the total number of products covered under the APTA to 4,270 products and additional recession for 587 products was given to the least developed countries (LDCs). The number of products on the concession lists was more than double the total amount offered by the end of the Second Round (1,721 products) and five times for those offered exclusively to LCDs (112 products).2 Table I-1 shows each country’s number of products under the APTA before and after the Third Round. China offers the widest product concession (1,697 products) and is followed by Korea (1,367 products), India (570 products), Sri Lanka (427 products), and Bangladesh (209 products).

The margin of preference (MOP)3 has increased marginally from 21.6% before the Third Round to 26.8%; relatively large increase in the MOP is observable for China, improving from 15.4% to 26.7% after the Third Round. The MOPs are marginally increased for Bangladesh and Korea by 0.1% and 5.1%, respectively; however, the MOP for Sri Lanka declines from 17.8% before the Third Round to 14.0% after the Third Round, and that for India plunges from 52.6% to 23.9% as the Third Round results enter into force. On the other hand, the MOP offered as special concession on products from LDCs almost doubled from 32.2% to 58.8%.

1 It has entered into force on September 1, 2006. 2 LCD includes Bangladesh and Laos. 3 MOP means the percentage difference between the Most-Favored-Nation (MFN) rate of duty and the preferential rate of duty for like products, not the absolute difference between those rates. Thus, MOP = [(MFN duty – tariff rate conceded under the agreement)/ MFN duty] x 100

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Table I-1. Results of the Conclusion of the Third Round of the Bangkok Agreement

(Number of products on which concessions have been made and average MOP) Before Third Round After Third Round (Consolidated) Concession

Offering Country No. of Products MOP (%) No. of Productsa MOP (%)

Bangladesh 129 14.0 209 14.1 Chinab 902 (18) 15.4 (55.1) 1,697 (161) 26.7 (77.9) India 188 (33) 52.6 (32.2) 570 (48) 23.9 (39.7) Rep of Korea 214 (29) 30.3 (38.2) 1,367 (306) 35.4 (64.6) Sri Lanka 288 (32) 17.8 (14.0) 427 (72) 14.0 (12.0)

Total 1,721 (112) 21.6 (32.2) 4,270 (587) 26.8 (58.8) Note: Figures in parentheses relate to special concessions to LDCs. MOP: Margin of preference estimated as a simple average of all items.

a: In accordance with the consolidated concession lists which are part and parcel of the official revised text of the Agreement signed and ratified by the Participating States.

b: The number for China is the result of consolidation of its accession schedules and Third Round concessions.

Source: ESCAP Secretariat.

Declaration was made directing the committee to make suitable recommendations for the timing of the Fourth Round. As soon as the Third Round has been enforced, discussion regarding the Fourth Round negotiation has resumed. What it aims is to expand its coverage and depth of the agreement. Also, it tries to expand its membership to other neighboring countries around the region. Member expansion is the main focus of this report. We look at the economic impact of joining the APTA for Indonesia, Mongolia, and the Philippines. By comparing industry by industry competitiveness between new members and existing member states bilaterally as well as multilaterally, it can briefly show how things would likely move if a country (countries) joins (join) the APTA.

Chapter 2 shows the overview of each country’s economic situations and external relation with APTA member states. Industrial and trade structural cross-comparison is analyzed in Chapter 3, in which quantified indices such as revealed comparative advantage index and trade specialization index are introduced. Chapter 4 shows simulation results of joining the APTA using GTAP model. Chapter 5 concludes the report.

II. Overview of the Economic Situations and External Relation with APTA Member States; Indonesia, Mongolia, and the Philippines

Indonesia, Mongolia, and the Philippines are developing countries, which are

frequently referred as countries of great economic potential. Economic potential for these countries could be contributed to abundant natural resources and/or labor forces. All have experienced several economic ups and downs since the early 1990s, but they have recently shown stable conditions economically as well as politically.

Indonesia and the Philippines are member states of the Association of Southeast Asian Nations (ASEAN). By committing through the Common Effective preferential Tariff (CEPT) Scheme for the ASEAN Free Trade Area (AFTA), they could significantly lower the tariff barriers among the member states. Also, they actively participate in the world trade system and trade liberalization process as an ASEAN member country in many bilateral free

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trade agreements (FTAs) in which ASEAN is involved. At the time, each country has concluded or is trying to have bilateral trade agreements with countries outside the region.

Considering external relation of Indonesia and the Philippines with APTA member states, there are two FTAs that already entered into force and one FTA under negotiation; two effectuated FTAs are ASEAN-China FTA (ACFTA) and ASEAN-Korea FTA (AKFTA), and the FTA under negotiation is the FTA between ASEAN and India.

ACFTA and AKFTA, each entered into force in 2005 and 2007 respectively, agreeing on eliminating tariffs for at least 90% of products by 2010 (for some products, by 2012) and gradually lower tariffs for the other products by 2016 (for some products, by 2018). Also, each agreement includes a scheme for liberalizing trade in service. ACFTA and AKFTA are considered as high quality FTAs in terms of their coverage and speed of liberalization. ASEAN-India Framework Agreement on Comprehensive Economic Cooperation entered into force in 2004. It includes an Early Harvest Program in which tariffs are gradually reduced by 2007. ASEAN-India Free Trade Agreement in Trade in Goods has been recently announced to be completed; official signing of the agreement is expected by the end of 2008.

There are other trade related agreements in which Indonesia and/or the Philippines participate; as ASEAN member states, FTAs with the EU and the US are under negotiation and a bilateral FTA between ASEAN and CER (Australia and New Zealand) is concluded with an official signature expected on December, 2008. Indonesia and the Philippines have the Economic Partnership Agreement (EPA) separately with Japan. The contents of EPA are not much different from other FTAs, covering tariff elimination in most of products and liberalization on trade in services and investment. Indonesia-Japan EPA already entered into force in 2008, while that between the Philippines and Japan is now under ratification process. There is no trade agreement in which Mongolia participates.

In the following sub-section, we briefly look at each economy’s current economic situation and trade relations with APTA member states. 2.1. Indonesia

Located in Southeast Asia, Indonesia is a country with high population and economic potential. With 235 million people, Indonesia is the fourth most populous country in the world after China, India, and the US. Consisting of more than 40% of the ASEAN population, Indonesia is one of the leading countries in the region. Backboned by its abundant natural resources, it has sustained stable economic growth since the 1997-98 Asian Financial Crisis. Political stability and implementation of new foreign investment laws in 2007, in addition to sound labor force, attracted foreign investors’ attention and enhanced its economic potential. 2.1.1 Current Economic Situation Recovering from the Asian Financial Crisis in 1997-98 and world economic downturn in 2001, it reached pre-crisis level of economic growth, recording 5% or higher of real GDP growth for 4 consecutive years since 2004. After having 5.0% GDP growth in 2004, it has been elevated to 6.3% in 2007. Growth in private consumption has been a major driving force behind its continuing growth, while the Indonesian government could successfully reduce its government debt to GDP ratio since the crisis and maintaining its external debt.

Inflation has been rather unstable several times and experienced higher than 10% inflation in 2005, 2006, and most recently during 2008. Such increase in inflation could be

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contributed to soaring up of oil price (2005), food price increase (2006), and reduction in government subsidy in gasoline due to the increase in oil price (2008). Exchange rate had been stable after its peak in 2005 with 9,704.7 rp/USD in 2005. However, due to the turmoil of world financial market in 2008, it passed over 10,000 rp/USD in 2008.

Indonesia has had a large surplus on the merchandise trade since 1997-98 crisis. Its surplus increased from USD 25.9 billion in 2002 to USD 39.7 billion in 2006. After 2006, the volume of trade surplus reduced slightly, recording USD 33.1 billion in 2007 and an estimated surplus of USD 25.7 billion in 2008. Oil and gas products are Indonesia’s major exporting goods; however, non-oil and gas export has increased. Textiles, garments, and wood products are major non-oil and gas exports for Indonesia. On the other hand, intermediate goods comprise of most of the imports, which are followed by capital goods and consumer goods.

Table II-1. Main Composition of Trade (Unit: Million USD)

2002 2003 2004 2005 2006 Export Crude petroleum & product 6,535 7,175 7,896 9,308 10,906 Liquefied natural gas 5,578 6,477 7,750 8,734 9,953 Textiles & garments 6,963 7,103 7,707 8,360 9,377 Wood & products 3,252 3,162 3,248 3,225 3,281 Total Exports incl others 57,158 61,059 71,585 85,661 100,576 Imports Intermediate goods 24,228 25,496 36,204 44,132 47,000 Capital goods 4,411 4,192 6,534 8,288 9,300 Consumer goods 2,651 2,863 3,787 4,621 4,519 Total imports incl others 31,289 32,551 46,524 57,701 60,819 Source: Statistics Indonesia (BPS), recited from Economic Intelligence Unit (EIU), ‘Country Profile 2008’ Japan has been Indonesia’s largest export market; during 2002~06 period, the share of exports to Japan in Indonesia’s total export ranged from 21.1~22.3%. In 2006, Japan, Singapore, the US, and Korea became the four main markets and their total exports account for 57.1% of merchandise export. Recent years have seen the emergence of China as a major trading partner. China became a major export destination for Indonesian products, and it rose by over 31% in 2007.4 Singapore was the largest importing country in 2007. Its share in total imports soared up from 16.4% in 2005 to 45% in 2006. Also, as shown in Table II-2, the share of imports from China has been increased rapidly; its share increased from 7.8% to 17.1% in 5 years.

Table II-2. Main Trading Partner (Unit: % of Total Trade)

2002 2003 2004 2005 2006 Exports to: Japan 21.1 22.3 22.3 21.1 21.9 Singapore 9.4 8.8 10.1 9.1 13.3 US 13.2 12.1 12.3 11.5 13.0

4 EIU, ‘Country Profile 2008.’

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Korea 7.2 7.1 6.7 8.3 8.9 Imports from: Singapore 13.1 12.8 13.1 16.4 45.0 China 7.8 9.1 8.8 10.1 17.1 Japan 14.1 13.0 13.1 12.0 13.3 Malaysia 3.3 3.5 3.6 3.7 7.4

Source: Statistics Indonesia (BPS), recited from Economic Intelligence Unit (EIU), ‘Country Profile 2008.’ According to EIU forecast, Indonesia’s real GDP growth in 2008 will be about 6.1%. It is slightly lower than that in 2007; however, it is enough to show Indonesia’s healthy economic condition. Due to the financial turmoil around the world, the overall economic growth is expected to plunge down to 3.5% and 3.6% in the following two years.5 EIU also forecasts that industrial production growth will fall from 5.1% in 2007 to 0.5% in 2009 and unemployment rate will rise up to 9% by 2010. Since its balanced economic structure, the possibility of getting into crisis situation like in 1997~98 would be slim, but current difficulties in financial sectors would have a negative impact on the Indonesian economy. 2.1.2. Trade with APTA Member States Indonesia’s exports and imports with APTA member states are shown in Table II-1. The overall export to APTA member states has been rapidly increased by more than double during 2004~07 period. Indonesia’s exports are mostly headed to China, Korea, and India, and the shares for these three countries are relatively stable. Exports to Bangladesh and Sri Lanka are limited, each consisting of less than 3% of the total export. Export to Laos is negligible, even though Laos is the only ASEAN member state in the APTA. In imports, the total imports from APTA countries have been almost doubled during the same period; it has been increased from USD 7.2 billion in 2004 to USD 13.4 billion in 2007. China has been the largest importing country among the APTA member states and its dominance exceeds that in Indonesia’s exports to APTA member states. Letting alone its fast increasing volume of imports from China, the share of imports from China in total imports from APTA member states has shown an upward tendency, from 57.3% in 2004 to 63.7% in 2007. South Korea is the second largest importing source among the APTA members, though its share in the total APTA imports has declined during 2004~07. Imports from India consists of 12.0~15.4% of the total imports from APTA members. Imports from the other APTA member countries are very limited.

Table II-3. Indonesia's Export/Import Shares to/from APTA Members: 2004-2007 Year Bangladesh China India Laos South

Korea Sri Lanka APTA

Exports (Million USD) 2004 281.7 4,604.7 2,170.5 1.6 3,419.5 238.3 10,716.3

2.6% 43.0% 20.3% 0.0% 31.9% 2.2% 100.0% 2005 353.3 6,662.4 2,878.3 1.8 7,085.6 337.9 17,319.3

2.0% 38.5% 16.6% 0.0% 40.9% 2.0% 100.0% 2006 428.4 8,343.6 3,390.8 4.3 7,693.5 424.4 20,285.0

2.1% 41.1% 16.7% 0.0% 37.9% 2.1% 100.0% 2007 633.6 9,675.5 4,943.9 3.7 7,582.7 414.6 23,254.0

5 EIU, ‘Country Report’, November 2008.

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2.7% 41.6% 21.3% 0.0% 32.6% 1.8% 100.0% Imports (Million USD)

2004 7.0 4,101.3 1,102.4 0.0 1,942.5 5.9 7,159.1 0.1% 57.3% 15.4% 0.0% 27.1% 0.1% 100.0%

2005 18.9 5,842.9 1,052.2 0.1 2,869.1 23.0 9,806.1 0.2% 59.6% 10.7% 0.0% 29.3% 0.2% 100.0%

2006 18.7 6,636.9 1,407.4 0.2 2,875.9 47.0 10,986.0 0.2% 60.4% 12.8% 0.0% 26.2% 0.4% 100.0%

2007 20.5 8,557.9 1,609.6 2.9 3,196.7 42.0 13,429.6 0.2% 63.7% 12.0% 0.0% 23.8% 0.3% 100.0%

Source: Author’s calculation using UN ComTrade data. The major exporting products to APTA member states include mineral fuel and oil (HS 27), animal or vegetable fats and oils (HS 15), ores, slag and ash (HS 26), rubber products (HS 40), and organic chemicals (HS 29). Except rubber products, each product exporting to APTA member states consists of more than 30% of Indonesia’s total exports. Exports of organic chemicals (HS 29) to China and animal or vegetable fats and oils (HS 15) to India exceed 20% of Indonesia’s total exports of each product. Also, exports of mineral fuels and oils products (HS 27) to China and Korea, ores, slag and ash (HS 26) to China, Korea, and India, miscellaneous chemical products (HS 38) to India, and wood products to Korea are among the Indonesia’s exports whose share of industry exports to each of these countries exceeds 10%. On the other hand, the major importing products from APTA member states include mineral fuel and oil (HS 27), general machinery (HS 84), electrical machinery (HS 85), iron and steel (HS 72), and organic chemicals (HS 29). Mineral fuel and oil (HS 27) and organic chemicals (HS 29) are major importing as well as exporting products to/from APTA member states. The share of industry imports in Indonesia’s total imports exceeds 30% for general machinery (HS 84) and electrical machinery (HS 85), meaning that APTA member states are major import sources for these products. Also, the share was 24.4% for organic chemicals (HS 29) and 19.2% for animal and vegetable fats and oils (HS 15), still consisting of significant portion of its total imports. In addition, the Indonesian imports of residues and waste from the food industries (HS 23) depend in large part on imports from India and imports of plastic products (HS 39) on imports from Korea. Country by country analysis about Indonesia’s top 5 export/import commodities to/from APTA member states in 2007 is shown in Table II-4.

Table II-4. Indonesia’s Top 5 Export/Import Commodities to/from APTA Member Countries in 2007 (HS-2 Digits)

Exports Imports

HS Code Volume Share of Industry Exports

HS Code Volume Share of Industry Imports

(2-digit) (USD Million) (%) (2-digit) (USD Million) (%) Bangladesh

15 400.8 3.92 63 9.2 35.09 55 35.7 2.25 53 4.0 29.59 52 30.3 4.34 41 1.8 2.03 39 28.6 1.50 84 1.2 0.01 48 21.2 0.64 56 0.9 1.32

China 27 3,500.3 11.98 84 1,506.2 15.82

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15 1,520.6 14.87 85 1,255.3 27.04 40 762.1 12.20 72 858.2 20.56 26 613.1 12.01 27 617.7 2.81 29 549.9 21.44 29 371.6 9.57

India 15 2,289.7 22.39 29 373.9 9.63 27 864.0 2.96 72 212.5 5.09 26 537.6 10.53 23 174.2 15.18 38 124.8 13.44 85 86.6 1.87 40 108.6 1.74 17 80.9 7.25

Laos 84 2.4087 0.05 09 2.8818 2.72 55 0.3165 0.02 84 0.0335 0.00 73 0.2632 0.02 13 0.0135 0.04 52 0.2303 0.03 61 0.0039 0.01 21 0.0917 0.06 25 0.0027 0.00

South Korea 27 4,854.8 16.62 27 1,205.2 5.47 26 621.3 12.17 72 283.6 6.79 40 198.6 3.18 39 269.4 12.27 44 189.2 6.05 84 249.7 2.62 47 187.6 17.57 29 201.0 5.18

Sri Lanka 15 177.2 1.73 11 38.6 11.97 48 39.9 1.20 61 0.7 1.65 25 28.5 9.77 09 0.6 0.54 52 26.2 3.76 40 0.5 0.06 54 12.0 0.96 62 0.4 0.64

Total of APTA 27 9,223.7 31.58 27 1,828.3 8.30 15 4,428.6 43.30 84 1,824.0 19.16 26 1,772.0 34.72 85 1,530.9 32.98 40 1,079.5 17.28 72 1,354.3 32.44 29 810.5 31.60 29 946.4 24.38

Source: Author’s calculation using UN ComTrade data. 2.2. Mongolia Mongolia had maintained central planned economic system from 1948 to 1990 and agriculture was a major source of GDP. As the Cold War was demolished in the late 1980s, Mongolia adopted market oriented economic system in 1990. A rapid transition was achieved through three main mechanisms-privatization, currency reform, and price and wage liberalization.6 It was since then that Mongolia began showing its willingness to participate in the world economic system. Mongolia joined the World Bank, International Monetary Fund (IMF), and Asian Development Bank (ADB) in 1991 and built up the links with countries such as the US, Japan, the EU, and Korea. For the last two decades, Mongolia has struggled politically and economically. 2.2.1 Current Economic Situation

6 EIU, ‘Country Profile 2008.’

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In moving toward a market-oriented economic system, high economic dependency on the former Soviet Union and poor infrastructure were factors that deterred smooth transition. With only 2.6 million of population, it was hard to grasp foreign investors’ attention, resulting in slow and unsuccessful development of the industrial sector. It was Mongolia’s rich minerals that boosted the economy; Mongolia has abundant natural resources, such as copper and gold. Along with the surging demand for natural resources, Mongolia’s exports recorded rapid expansion. Real GDP growth for Mongolia in 2007 reached 9.9%. This is lower than the real GDP growth in 2004 of 10.4%, but higher than the two previous years. Also, comparing other fast growing developing countries, it was higher than India (8.7%) and Russia (8.1%), however, lower than China (11.4%) in 2007. Such rapid economic growth can be contributed to the boom in the mining sector. Mining and quarrying is the largest industrial sector and it accounts for 30% of GDP, while the total contribution of the industrial sector to GDP is 40.4% in 2006.

Table II-5. Major Economic Indicator (Unit: Million USD, %)

2004 2005 2006 2007 2008* GDP 1,815.7 2,306.1 3,187.7 3,891.6 N/A Real GDP Growth (%) 10.7 7.3 8.6 9.9 9.0 Consumer Price inflation 11.0 9.5 6.0 15.1 29.0** Exports 872.1 1,068.6 1,545.2 1,889.0 1,968.6 Imports 901.0 1,097.4 1,356.7 2,117.3 2,724.9 Trade Balance -28.9 -28.8 188.5 -228.3 -756.3 *Exports/Import in 2008 is data from Jan~Sep. **EIU Estimates. Source: EIU, ‘Country Report, Mongolia’ (2008). During 2004~2008, Mongolia has had trade deficits except in 2006. Having about USD 29 million trade deficit in 2004 and 2005, it recorded trade surplus of USD 188.5 million in 2006; however, its surplus disappeared and it again turned to trade deficit in the following years. In 2007, the deficit reached USD 228.3 million and it has been more than tripled only from January to September in 2008. In Mongolian exports, China has been the biggest customer for Mongolian merchandise. Its exports to China exceeded USD 1 billion for the first time in 2006. Chinese dominance as a Mongolian exports market continued in 2007, accounting 74.8% of the Mongolian total exports. Canada, the US, Korea, and Russia are other main trading partners for Mongolia. On the other hand, Mongolian imports in large part depend on Russia and China, the traditional trading partners since the central-planned economic system period. Each country’s exports to Mongolia are USD 534.0 million and USD 521.7 million, respectively. Japan and Korea are also major importing partners for Mongolia; in 2007, the shares of imports from Japan and Korea in total imports consisted of 6.6% and 5.6%, respectively, while those from Russia and China were 35.2% and 31.8% of Mongolian total imports.

Table II-6. Main Trading Partner (Unit: Million USD)

2002 2003 2004 2005 2006

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Exports to: China 217.3 284.2 407.1 507.1 1,040.9Canada 0.6 0.7 14.7 122.1 164.7US 165.7 142.9 152.9 150.0 106.1Korea 22.5 7.5 7.8 65.1 74.5Russia 48.0 41.2 18.1 26.0 33.4

Imports from: Russia 237.6 264.4 336.6 400.0 534.0China 139.5 172.4 238.2 317.9 521.7Japan 42.8 63.4 74.5 82.2 200.8Germany 30.4 38.0 33.5 33.4 51.4Korea 86.3 67.7 60.9 61.2 45.5

Source: Cited from Economic Intelligence Unit (EIU), ‘Country Profile 2008. 2.2.2. Trade with APTA Member States Mongolia’s trade with APTA member states shows rapid expansion during 2004~07 period. Exports increased from USD 417.5 million in 2004 to USD 1,442.0 million in 2007, expanding more than triple, and imports from APTA member states increased from USD 287.0 million to USD 785.2 million during the same period. Mongolia’s trade relation with APTA member states heavily depends on the trade with China. Its exports to China cover 97.1% of Mongolia’s total exports to APTA member states in 2007. In imports, it also shows closer relation with China, but not as strong dependency as in its exports to China. Imports from China account for 83.8% of Mongolia’s total imports from APTA member states in 2007. Imports from Korea increased from USD 61.2 million in 2004 to 118.3% in 2007, covering 15.1% of total imports from APTA countries. The share of imports from India is quite low; however, it has shown an increase to 1.0% of total imports from APTA member countries.

Table II-7. Mongolia's Export/Import Shares to/from APTA Members: 2004-2007 Year Bangladesh China India Laos South

Korea Sri Lanka APTA

Exports (Million USD) 2004 0.0 407.2 0.6 0.0 9.7 0.0 417.5

0.0% 97.5% 0.2% 0.0% 2.3% 0.0% 100.0% 2005 0.0 512.4 0.1 0.0 65.1 0.0 577.5

0.0% 88.7% 0.0% 0.0% 11.3% 0.0% 100.0% 2006 0.0 1,046.1 1.5 0.0 21.4 0.0 1,069.0

0.0% 97.9% 0.1% 0.0% 2.0% 0.0% 100.0% 2007 0.0 1,399.8 1.5 0.0 40.6 0.0 1,442.0

0.0% 97.1% 0.1% 0.0% 2.8% 0.0% 100.0% Imports (Million USD)

2004 0.0 225.0 0.6 0.0 61.2 0.2 287.0 0.0% 78.4% 0.2% 0.0% 21.3% 0.1% 100.0%

2005 0.4 295.0 1.5 0.0 63.7 1.1 361.8 0.1% 81.6% 0.4% 0.0% 17.6% 0.3% 100.0%

2006 0.4 403.8 2.4 0.0 82.5 0.4 489.5 0.1% 82.5% 0.5% 0.0% 16.9% 0.1% 100.0%

2007 0.5 658.2 7.7 0.0 118.3 0.5 785.2 0.1% 83.8% 1.0% 0.0% 15.1% 0.1% 100.0%

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Source: Author’s calculation using UN ComTrade data. Mongolia’s top 5 export/import commodities to/from APTA member states are shown in Table II-8. In 2007, Mongolia’s major export products include ores, slag and ash (HS 26), mineral fuels and oils (HS 27), silk (HS 51), leather (HS 41), and copper and its products (HS 74). Ore, slag and ash (HS 26) are Mongolia’s most important exporting goods to APTA member countries and their share of exports to APTA member states consists of 97.1% of the total Mongolian exports of that product. It is indeed the case that, except for silk (HS 51), APTA member states are important export destinations of those products.7 On the other hand, the major imports from APTA member states are paper products (HS 49), general machinery (HS 84), electrical machinery (HS 85), transport equipment (HS 87), and iron and steel products (HS 73). APTA countries are major suppliers of paper products, consisting of 90.9% of Mongolia’s total imports of that product. China and Korea are major sources of importing transport equipment; about 32.9% of the total transport equipment imports for Mongolia come from these two countries. The share of beverages, spirits, and vinegar (HS 22) imports from Korea covers 39.1% of Mongolia’s total imports, even though the volume is not much, and coffee, tea, mate, and spices (HS 9) are major importing merchandise from Sri Lanka.

Table II-8. Mongolia’s Top 5 Export/Import Commodities to/from APTA Member Countries in 2007 (HS-2 Digits)

Exports Imports



(2-digit) (USD Million) (%) (2-digit) (USD Million) (%) Bangladesh

- - - 53 0.2270 26.08 - - - 62 0.1629 5.07 - - - 61 0.0752 1.99 - - - 63 0.0008 0.01 - - - 30 0.0004 0.00

China 26 1,024.2 94.32 49 107.5 90.86 27 168.8 99.24 85 71.0 45.41 51 123.4 63.94 84 70.9 26.96 41 37.0 87.88 73 61.6 63.87 74 19.6 88.62 87 36.7 19.08

India 26 0.9365 0.09 87 4.9152 2.55 51 0.5364 0.28 30 1.4472 7.59 25 0.0681 0.15 90 0.4265 1.43 84 0.0050 0.10 73 0.1262 0.13 82 0.0010 0.57 53 0.0998 11.47

Laos - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

7 It is China whom Mongolia heavily depend on the exports of those products.

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South Korea 26 29.2 2.69 87 26.5 13.77 71 8.4 3.58 84 17.4 6.62 25 0.8 1.68 85 8.8 5.65 51 0.5 0.26 27 8.6 1.51 61 0.4 2.45 22 7.6 39.06

Sri Lanka - - - 09 0.4928 13.84 - - - 21 0.0123 0.06 - - - 49 0.0005 0.00 - - - 61 0.0004 0.01 - - - 70 0.0004 0.00

Total of APTA 26 1,054.4 97.10 49 107.7 90.98 27 168.9 99.31 84 88.4 33.61 51 124.5 64.47 85 79.9 51.13 41 37.0 87.88 87 68.1 35.41 74 19.8 89.77 73 65.7 68.20

Source: Author’s calculation using UN ComTrade data. 2.3. The Philippines The Philippines had achieved impressive economic growth recently. The average real GDP growth rate during 2003~07 was 5.8%; however, it is expected to drop to 4.4% in 2008, after suffering from the soaring up of international rice price in early 2008. Trade deficit has expanded to USD 8.2 billion in 2007 and estimated to get to USD 12.4 billion in 2008. Due to inflows of private remittance from Filipinos living overseas, the Philippines could have maintained the current account surplus. The Philippines is one of 10 ASEAN member countries, joining ASEAN in 1992 along with 4 other original signatory members; it has the lowest per capita income with USD 1,582 in 2007 among ASEAN 6. Like other ASEAN member countries, its ratio of intra-regional trade under AFTA has increased; however, the rate of increase in the Philippines’ total exports is outperformed by most of other member countries. Trade, especially exports, is expected to do a critical role for the Philippines to achieve its sustainable economic growth in the future. 2.3.1 Current Economic Situation After successful economic growth during 2003~07, economy is expected to curve down its upward trend; real GDP growth is estimated to go down to 4.4% from the high grow of 7.2% in 2007. According to EIU forecast, it can be further decreased to 2.3% in 2009, then rebound to 3.6% in 2010. Such deterioration in real GDP growth is mostly due to the recent escalation of the global financial crisis, which the Philippines is forced to take as given. Rising global price for food and energy had pushed consumer price inflation upward; however, the pressure has been lessened as global food and energy market cooled down. Like other developing countries in the region, exports and imports are important for sustaining a sound economic condition. During the 2002~06 period, the Philippines’ exports increased by 34.2%, exporting USD 47.1 billion to the world. Imports increased faster than exports, increasing 48.4% for the same period. Major exporting product is electronic products, consisting of 62.8% of the total exports in 2006, and is followed by garments (5.6%) and

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coconut oil (1.2%). On the other hand, major importing products include capital goods, mineral fuels, manufacturing goods, and chemical products.

Table II-9. Main Composition of Trade (Unit: Million USD)

2002 2003 2004 2005 2006 Export Electronic products 24,322 24,168 26,644 27,304 29,590 Garments 2,391 2,265 2,171 2,150 2,626 Coconut oil 353 505 578 657 579 Petroleum products 353 536 380 586 846 Total Exports incl others 35,133 36,036 39,598 40,957 47,134 Imports Capital goods 13,529 15,014 15,372 15,829 16,866 Mineral fuels 3,273 3,761 4,715 6,276 8,121 Manufactured goods 3,118 3,241 3,490 3,757 3,916 Chemicals 2,555 2,878 3,182 3,277 3,631 Total imports incl others 36,211 39,502 42,345 46,964 53,750 Source: Cited from EIU, ‘Country Profile 2008.’ The Philippines’ four major trading partners are China, the US, Japan, and Singapore. The US was the Philippines’ biggest export market, exporting 17.7% of its total exports to the US market in 2006. Japan was the biggest importing country for the Philippines with 17.1% of total imports to the Philippines. These two countries, the US and Japan, have been the major trading partners for years, but fast increase in trade volume with China and Singapore is noticeable; in 4 years between 2002 and 2006, the share of exports to China in its total exports increased from 6.0% to 11.4%. With Singapore, the figure expanded from 6.7% to 10.5%. On the other hand, the share of exports to the two traditional trading partners declined from 20.2% to 17.7% with the US, and 16.0% to 15.6% with Japan. Similar patterns have been observed in the importing market; surging of imports from China and Singapore was impressive.

Table II-10. Main Trading Partner (Unit: Million USD)

2002 2003 2004 2005 2006 Exports to:

China 6.0 6.7 10.0 9.8 11.4 US 20.2 18.2 18.1 18.3 17.7 Japan 16.0 20.2 17.6 16.4 15.6 Singapore 6.7 6.6 6.6 7.3 10.5

Imports from: Japan 19.3 18.1 17.2 13.0 17.1 US 18.8 19.5 19.4 15.6 14.7 China 4.6 6.3 6.3 6.8 13.5 Singapore 6.4 8.1 7.9 8.1 11.7

Source: Cited from EIU, ‘Country Profile 2008. 2.3.2. Trade with APTA Member States

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The Philippines’ trade with APTA member states in 2007 is presented in Table II-11. As was just mentioned, China has appeared as a major trading partner for the Philippines; the Philippines’ total exports to China increased from USD 2.7 billion to USD 5.7 billion between 2004 and 2007. Its share in the total exports to APTA member states also increased from 68.5% to 73.6%. Exports going to Korea consist of 22.8% of the total exports to APTA member states. The total amount of exports to Korea rose from USD 1.1 billion to 1.8 billion during 2004~07, it was not as impressive, in terms of increase, as in the case of China. Exports to India illustrated continuous growth since 2005 in terms of volume and share; its share increased to 3.1% in 2007, rising from 2.3% in 2004 or 1.5% in 2005. In imports, the share has been rather spread to three countries, China, Korea, and India; the shares of imports from China and Korea in the Philippines’ total imports from APTA member states were 51.9% and 41.7% in 2007, respectively. The total volume of imports from Korea exceeded that from China in 2004, but increase in imports from China outperformed that from Korea. Imports from India consist of 5~6% of the total imports from APTA member states, and imports from other APTA members are about 0.1% or less for each. Table II-11. The Philippines’ Export/Import Shares to/from APTA Members: 2004-2007

Year Bangladesh China India Laos South Korea Sri Lanka APTA

Exports (Millions USD) 2004 6.6 2,653.0 89.4 0.2 1,113.0 8.1 3,870.4

0.2% 68.5% 2.3% 0.0% 28.8% 0.2% 100.0% 2005 19.1 4,077.0 86.1 0.7 1,391.3 12.0 5,586.3

0.3% 73.0% 1.5% 0.0% 24.9% 0.2% 100.0% 2006 31.4 4,627.7 120.1 0.5 1,422.8 10.3 6,212.7

0.5% 74.5% 1.9% 0.0% 22.9% 0.2% 100.0% 2007 22.8 5,749.9 244.0 0.4 1,783.7 8.0 7,808.9

0.3% 73.6% 3.1% 0.0% 22.8% 0.1% 100.0% Imports (Millions USD)

2004 3.6 2,816.8 304.3 0.0 2,852.8 7.0 5,984.5 0.1% 47.1% 5.1% 0.0% 47.7% 0.1% 100.0%

2005 4.6 3,134.1 370.6 0.0 2,386.1 9.9 5,905.3 0.1% 53.1% 6.3% 0.0% 40.4% 0.2% 100.0%

2006 18.5 3,869.4 425.0 0.0 3,332.3 11.0 7,656.2 0.2% 50.5% 5.6% 0.0% 43.5% 0.1% 100.0%

2007 5.7 4,232.9 514.5 0.0 3,403.9 6.1 8,163.1 0.1% 51.9% 6.3% 0.0% 41.7% 0.1% 100.0%

Source: Author’s calculation using UN ComTrade data. Table II-12 summarizes the Philippines’ major exporting and importing commodities to/from APTA member states in 2007.8 First, major exports include ores, slag and ash (HS 26), copper products (HS 74), and general and electrical machinery (HS 84 and 85). The share of exports to APTA member states in its total exports to the world is not as much dependent as in the case of Mongolia, APTA member states were major exporting countries for ores, slag and ash (HS 26), copper products (HS 74) with its share being higher than 40%. The major imports are general and electrical machinery (HS 84 and 85), mineral

8 It is observed that in both major exporting and importing products, they contain unclassified products (HS 99). It seems to be a matter of product classification, rather than being caused by trading really rare goods. Given no further information about this, we simply take it as given.

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fuels and oils (HS 27), and iron and steel products (HS 72). Except iron and steel products (HS 72), the share of imports from APTA member states is relatively small compared to other countries under investigation. General and electrical machinery (HS 84 and 85) appeared as major importing as well as exporting products, showing intra-industry trade between the Philippines and APTA member states. This might have been caused by the structure of production chain in the region; Korea and China supply intermediate goods for general and electrical machinery to the Philippines, which are assembled in the Philippines, then re-exported to APTA member countries. Table II-12. The Philippines’ Top 5 Export/Import Commodities to/from APTA Member

Countries in 2007 (HS-2 Digits) Exports Imports



(2-digit) (Million USD) (%) (2-digit) (USD Million) (%) Bangladesh

72 10.6 2.77 72 2.7 0.23 39 3.4 1.03 53 0.7 7.16 48 2.6 1.86 99 0.6 0.00 54 1.7 10.05 76 0.3 0.14 80 0.9 5.24 30 0.3 0.05

China 99 3,806.3 21.74 85 749.1 7.83 84 639.6 10.33 99 672.6 4.69 74 407.6 27.96 84 513.9 8.64 26 304.8 43.76 72 297.7 25.59 85 167.0 1.45 27 139.4 1.41

India 99 106.9 0.61 02 81.0 37.81 72 38.5 10.04 85 65.6 0.69 87 29.8 1.65 87 46.4 2.53 85 13.0 0.11 72 32.9 2.83 48 12.9 9.18 23 31.7 5.64

Laos 48 0.2780 0.20 84 0.0052 0.00 84 0.0744 0.00 73 0.0031 0.00 58 0.0344 0.11 99 0.0008 0.00 30 0.0298 0.09 - - - 60 0.0173 0.17 - - -

South Korea 85 514.9 4.46 99 844.0 5.89 99 465.3 2.66 85 765.3 8.00 74 298.8 20.50 27 478.2 4.82 84 160.7 2.60 84 320.6 5.39 08 73.0 10.89 39 137.4 10.95

Sri Lanka 39 0.7 0.22 85 3.0 0.03 99 0.7 0.00 58 0.6 1.07 27 0.6 0.05 39 0.5 0.04 58 0.6 1.76 23 0.5 0.08 40 0.5 0.16 40 0.4 0.16

Total of APTA

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99 4,379.8 25.01 85 1,583.0 16.55 84 806.0 13.02 99 1,523.2 10.63 74 706.5 48.46 84 850.2 14.29 85 695.4 6.03 27 625.5 6.31 26 310.6 44.59 72 446.7 38.39

Source: Author’s calculation using UN ComTrade data.

III. Cross-Comparison of Industrial and Trade Structures; Indonesia, Mongolia, and the Philippines

In this section, we provide a competitiveness analysis by using the revealed

comparative advantage index (RCA), trade specialization index (TSI), and trade intensity index (TII). These indexes capture the country specific trade patterns and reveals each economy’s strength and weakness in its bilateral or multilateral trade. Unlike TSI and TII, RCA is not able to directly compare two countries. For instance, Korea’s competitiveness analysis to Indonesia can be analyzed by TSI and TII, but it is unable to do so with RCA. Therefore, in the case of RCA, each country’s competitiveness to the world will be analyzed separately. Also, to compare among three countries under investigation and APTA member states, we report RCAs for APTA member states, as well as Indonesia, Mongolia, and the Philippines.

In the case of TSI and TII, we analyze the bilateral relation between the three countries and APTA member states. It is noteworthy that for some bilateral relations between two small countries such as between Mongolia and Bangladesh, the index may be biased because of its small scale of trade volume between the two countries, resulting in the index varying a lot from one year to another. To overcome such possible biasness, we provide the dynamics of TSI and TII at the end of this report, showing the change in these indexes over certain periods. 3.1. Revealed Comparative Advantage Index (RCA)

The index is defined as the share of each commodity group in an economy’s total exports divided by that commodity group’s share of world exports. The more this index is above (below) unity, the stronger is an economy’s comparative advantage (disadvantage) in that commodity group, at least to the extent that the sectoral commodity composition of exports is revealed in trade patterns and has not been distorted by government policies.

The RCA index is defined as:wi

kw

ki

XXXX

//

,

where X denotes exports, k denotes the commodity group classification of exports, i denotes the particular country in question, and w refers to the world. Table III-1 shows the RCA indexes for APTA member states.9 Bangladesh shows a strong comparative advantage in textile and clothes sector. Its index ranges from 12.7 to 14.0 9 In this section, our analysis is based on UN ComTrade data. Since it misses data for some countries and does not provide recently updated data, the availability of indexes and/or covering data differs from one country to another.

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from 2001~04 period and shows an increasing trend. Leather product is another sector in which Bangladesh reveals a strong comparative advantage; however, its value declines during the investigation period. On the other hand, its competitiveness to the world in other sectors is generally weak; in processed mineral, metal, general machinery, electrical machinery, and precision machinery product, RCA indexes hardly reach to 0.1. China shows its comparative advantage over the world in leather, textile and clothes, general machinery, electrical machinery, precision machinery, and other manufacturing products. It shows a consistent decline in the RCA value for leather product for 2004~07 period, whereas, that for precision machinery has been rapidly increased. It is noteworthy that China gains its competitiveness in transportation related products; RCA for transportation equipment has been increased from 0.21 in 2004 to 0.48 in 2007 and RCA for other transport equipment products, it has risen from 0.66 to 1.98 in 4 years. Also, Chemical and rubber product is another industry in which China builds its competitiveness. Its RCA value surges from 0.49 to 0.83. Overall, Chinese RCA values show relatively fast ups and downs in many industries, reflecting its fast growing economy. The sector in which India sustains its own RCA value higher than 1 over 2004~07 period includes primary product, leather, metal, nonmetallic mineral product, and textile and clothes. Among these industries, the RCA value for primary products, leather products, and nonmetallic mineral products have decreased consistently over the investigation period. On the other hand, chemical and rubber products and other transport equipments are sectors in which India starts to have a comparative advantage. India turns out to be less competitive in industries like machineries, wood and paper products, and other manufacturing products. As was expected, Korea shows its strong comparative disadvantage in primary and processed primary products. In addition, Korea is not competitive in producing other manufacturing and wood and paper products. Its strength lies in transportation and other transport equipment products and some machinery products. It starts to gain its comparative advantage in chemical and rubber products, whereas, decline in RCA value for textile and clothes products is obvious. Lastly, Sri Lanka shows a strong comparative advantage in primary products and textile and clothes. It has maintained very high RCA values over 2002~05 period. It also has a comparative advantage in nonmetallic mineral products with RCA value from 1.8 to 2.5. Processed primary product seems to gain its competitiveness over the world; on the other hand, the RCA value for leather products has decreased over the period.

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Table III-1. RCA of APTA Member States by Industry

Primary Product

Processed Primary

Product

Processed Mineral

Leather Product

Chem

ical and Rubber

Product

Metal Product

Other T

ransport E

quipment

Other M

anufacturing

Nonm

etallic Mineral

Product

Transport E

quipment

Textile and C

lothes

General M

achinery

Electrical M

achinery

Precision Machinery

Wood and Paper

Product

Total

2001 1.56 0.04 0.05 5.21 0.08 0.01 0.01 0.04 0.08 0.01 12.94 0.05 0.01 0.07 0.07 1.00 2002 1.87 0.04 0.04 4.27 0.08 0.02 0.08 0.05 0.06 0.01 12.74 0.03 0.02 0.06 0.09 1.00 2003 1.54 0.05 0.06 3.56 0.10 0.05 0.11 0.06 0.08 0.02 13.26 0.01 0.03 0.07 0.10 1.00

Bangladesh

2004 1.76 0.12 0.08 3.74 0.11 0.08 0.06 0.05 0.13 0.11 14.00 0.02 0.01 0.06 0.06 1.00 2004 0.55 0.50 0.32 3.02 0.49 1.02 0.66 1.16 0.88 0.21 2.71 1.43 1.60 0.90 0.51 1.00 2005 0.51 0.49 0.26 2.88 0.51 1.02 0.70 1.22 0.89 0.24 2.79 1.44 1.69 1.07 0.56 1.00 2006 0.46 0.48 0.20 2.39 0.51 1.09 0.70 1.12 0.89 0.27 2.92 1.45 1.75 1.08 0.62 1.00

China

2007 0.32 0.26 0.12 2.10 0.83 1.02 1.98 1.22 0.62 0.48 2.16 2.37 1.64 2.15 0.74 1.00 2004 2.04 0.86 1.34 2.67 0.98 1.44 0.19 0.40 6.16 0.31 2.69 0.28 0.18 0.23 0.20 1.00 2005 1.83 0.94 1.26 2.54 1.03 1.28 0.45 0.40 5.52 0.35 3.02 0.30 0.20 0.22 0.22 1.00 2006 1.75 1.04 1.41 2.34 1.03 1.42 0.40 0.40 4.51 0.35 2.85 0.30 0.24 0.21 0.24 1.00

India

2007 1.41 0.64 0.94 2.31 1.60 1.17 1.25 0.43 3.09 0.52 2.10 0.50 0.23 0.41 0.26 1.00 2004 0.14 0.21 0.41 0.60 0.84 1.06 2.68 0.13 0.69 1.33 0.93 1.12 2.12 0.68 0.31 1.00 2005 0.12 0.21 0.43 0.50 0.91 1.13 2.83 0.13 0.29 1.45 0.83 1.00 2.11 1.25 0.30 1.00 2006 0.10 0.20 0.47 0.45 0.92 1.11 2.91 0.13 0.33 1.52 0.72 0.98 1.96 1.74 0.27 1.00

Rep. of Korea

2007 0.08 0.11 0.31 0.42 1.50 0.99 7.79 0.12 0.19 2.45 0.51 1.58 1.76 4.36 0.32 1.00 2002 4.99 0.61 0.05 1.62 0.48 0.33 0.76 0.45 2.49 0.01 7.19 0.11 0.10 0.08 0.23 1.00 2003 5.11 0.68 0.03 0.93 0.57 0.48 0.75 0.20 1.86 0.02 7.51 0.10 0.13 0.05 0.30 1.00 2004 5.20 0.79 0.05 0.70 0.63 0.46 1.03 0.22 1.80 0.03 7.88 0.10 0.16 0.04 0.31 1.00

Sri Lanka

2005 5.33 1.38 0.04 0.68 0.74 0.53 0.52 0.61 2.08 0.06 7.81 0.08 0.13 0.06 0.37 1.00 * See Appendix 1 for Industrial Classification by HS 2 digits. Source: Author’s calculation using UN ComTrade data.

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Table III-2 summaries the change in RCA distribution by industry during 2004~07 period. Based on HS 1996, there are 1,242 products in terms of HS 4 digits.10 Table III-2 reports the number of products which has RCA>1 and RCA<1 in each industry. Comparing China, India, and Korea, China is the only country whose number of RCA>1 exceeds the number of RCA<1 as of 2007; China has 649 products with RCA>1 and 593 products with RCA<1. All three countries show significant increase in the number of products in which it has a comparative advantage. It is observed that such significant increase occurred when it moves from year 2006 to 2007. There were additional 140 products whose RCA turns from less than 1 to greater than 1 for China. For India and Korea, the number reaches to 176 and 155 products, respectively. These three countries show similarity in the sense that all have experienced the significant increase in the number of products with RCA>1 in chemical and rubber, metal, and general machinery industry. Bangladesh also shows the increase in the number of products with RCA>1, from 75 products in 2001 to 96 products in 2004. Out of 96 products, 58 products comes from textile and clothes industry; however, the RCA values are less than 1 for most products. Sri Lanka maintained RCA>1 in 166 products in 2005, and RCA<1 in the rest of 1,076 products. Its number has increased from 166 to 180 products during 2002~04; however, the number drops back to 166 products in 2005. Comparing 2002 to 2005, Sri Lanka lost the comparative advantage in 9 textile and clothes products, but gained competitiveness in chemical and rubber products (additional 4 products), processed mineral (additional 3 products), and wood and paper products (additional 2 products).

10 Officially, the number of products in HS 4-digit is 1,241. The analysis includes one more of HS 4-digit, which includes products that are non-classified (categorized into HS 9999).

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Table III-2. Distribution of RCA by Industry: APTA Member States China India Rep. of Korea

Industry 2004 2005 2006 2007 2004 2005 2006 2007 2004 2005 2006 2007 RCA>1 25 26 23 22 30 29 32 39 3 3 3 5 Primary Product RCA<1 69 68 71 72 64 65 62 55 91 91 91 89 RCA>1 24 23 21 28 26 27 28 29 4 5 6 8 Processed Primary Product RCA<1 82 83 85 78 80 79 78 77 102 101 100 98 RCA>1 41 45 44 44 44 46 47 50 14 12 15 20 Processed Mineral RCA<1 77 73 74 74 74 72 71 68 104 106 103 98 RCA>1 9 9 9 8 9 10 12 10 3 4 3 3 Leather Product RCA<1 12 12 12 13 12 11 9 11 18 17 18 18 RCA>1 43 47 48 89 50 54 54 100 29 32 33 72 Chemical and Rubber

Product RCA<1 126 122 121 80 119 115 115 69 140 137 136 97 RCA>1 69 73 74 90 54 57 58 79 45 44 47 65 Metal Product RCA<1 88 84 83 67 103 100 99 78 112 113 110 92 RCA>1 5 4 6 8 3 4 4 9 4 3 5 6 Other Transportation

Equipment RCA<1 17 18 16 14 19 18 18 13 18 19 17 16 RCA>1 33 34 36 36 6 6 8 13 13 11 9 15 Other Manufacturing RCA<1 22 21 19 19 49 49 47 42 42 44 46 40 RCA>1 27 27 28 39 19 21 19 28 11 9 10 16 Nonmetallic Mineral

Product RCA<1 40 40 39 28 48 46 48 39 56 58 57 51 RCA>1 5 6 6 9 6 5 5 5 2 3 3 5 Transport Equipment RCA<1 11 10 10 7 10 11 11 11 14 13 13 11 RCA>1 119 121 128 126 97 94 86 110 45 38 35 48 Textile and Clothes RCA<1 50 48 41 43 72 75 83 59 124 131 134 121 RCA>1 16 18 23 65 12 11 12 51 22 21 20 58 General Machinery RCA<1 69 67 62 20 73 74 73 34 63 64 65 27 RCA>1 29 30 30 32 5 5 7 9 18 17 17 24 Electrical Machinery RCA<1 19 18 18 16 43 43 41 39 30 31 31 24 RCA>1 23 22 19 30 2 3 2 14 4 3 2 14 Precision Machinery RCA<1 24 25 28 17 45 44 45 33 43 44 45 33 RCA>1 17 16 14 23 1 2 3 7 4 5 5 9 Wood and Paper Product RCA<1 51 52 54 45 67 66 65 61 64 63 63 59 RCA>1 485 501 509 649 364 374 377 553 221 210 213 368 RCA<1 757 741 733 593 878 868 865 689 1,021 1,032 1,029 874 Total

Total 1,242 1,242 1,242 1,242 1,242 1,242 1,242 1,242 1,242 1,242 1,242 1,242 Source: Author’s calculation using UN ComTrade data.

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Table III-2. Distribution of RCA by Industry: APTA Member States (Cont.) Bangladesh Sri Lanka

Industry 2001 2002 2003 2004 2002 2003 2004 2005 RCA>1 7 8 7 10 20 20 21 21 Primary Product RCA<1 87 86 87 84 74 74 73 73 RCA>1 1 1 1 2 14 17 20 16 Processed Primary

Product RCA<1 105 105 105 104 92 89 86 90 RCA>1 1 1 1 1 6 6 9 9 Processed Mineral RCA<1 117 117 117 117 112 112 109 109 RCA>1 3 3 4 4 2 2 2 3 Leather Product RCA<1 18 18 17 17 19 19 19 18 RCA>1 3 1 1 3 16 17 18 20 Chemical and Rubber

Product RCA<1 166 168 168 166 153 152 151 149 RCA>1 0 1 1 4 8 9 12 10 Metal Product RCA<1 157 156 156 153 149 148 145 147 RCA>1 1 2 1 1 3 2 2 2 Other Transportation

Equipment RCA<1 21 20 21 21 19 20 20 20 RCA>1 3 2 4 4 9 8 7 7 Other Manufacturing RCA<1 52 53 51 51 46 47 48 48 RCA>1 1 2 2 3 9 11 10 9 Nonmetallic Mineral

Product RCA<1 66 65 65 64 58 56 57 58 RCA>1 1 1 1 2 1 1 1 1 Transport Equipment RCA<1 15 15 15 14 15 15 15 15 RCA>1 50 45 49 58 68 59 63 57 Textile and Clothes RCA<1 119 124 120 111 101 110 106 112 RCA>1 1 0 1 1 1 0 0 0 General Machinery RCA<1 84 85 84 84 84 85 85 85 RCA>1 0 1 0 0 1 2 4 1 Electrical Machinery RCA<1 48 47 48 48 47 46 44 47 RCA>1 1 1 1 1 0 0 0 0 Precision Machinery RCA<1 46 46 46 46 47 47 47 47 RCA>1 2 3 4 2 8 10 11 10 Wood and Paper

Product RCA<1 66 65 64 66 60 58 57 58 RCA>1 75 72 78 96 166 164 180 166 RCA<1 1,167 1,170 1,164 1,146 1,076 1,078 1,062 1,076 Total

Total 1,242 1,242 1,242 1,242 1,242 1,242 1,242 1,242 Source: Author’s calculation using UN ComTrade data. 3.1.1. Indonesia Table III-3 shows the RCA of Indonesia by industry. The industry in which Indonesia reveals the strongest RCA is the wood and paper product. Its RCA has sustained 2.5~3.0 range during 2004~07 period. It has also had a comparative advantage in processed primary products and textile and clothes products; however, its value has declined over time. On the

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other hand, RCA for transport equipments and other transport equipments have shown an upward movement.

Table III-3. RCA of Indonesia by Industry Industry 2004 2005 2006 2007

Primary Product 1.08 0.96 0.94 0.71 Processed Primary Product 2.60 2.34 2.48 1.90 Processed Mineral 1.89 2.32 2.24 1.33 Leather Product 0.49 0.43 0.47 0.57 Chemical and Rubber Product 0.91 0.78 0.90 1.51 Metal Product 0.84 0.83 0.89 0.90 Other Transport Equipment 0.09 0.20 0.32 0.81 Other Manufacturing 0.67 0.58 0.49 0.51 Nonmetallic Mineral Product 0.56 0.43 0.48 0.34 Transport Equipment 0.15 0.17 0.19 0.34 Textile and Clothes 2.34 2.14 2.12 1.41 General Machinery 0.43 0.39 0.32 0.48 Electrical Machinery 0.74 0.63 0.53 0.47 Precision Machinery 0.13 0.11 0.14 0.30 Wood and Paper Product 2.94 2.50 2.60 2.96

Total 1.00 1.00 1.00 1.00 Source: Author’s calculation using UN ComTrade data. During 2004~07, the total number of products with RCA>1 slightly increased from 303 to 321. Processed primary products, textile and clothes, processed mineral and leather products show decline in the number of product with RCA>1. Especially, textile and clothes industry shows continued decrease in competitive industry. It is consistent with the result in Table III-3 of rapid decline in RCA value in textile and clothes industry. On the other hand, chemical and rubber and general machinery products recorded an increased number of products with competitiveness. In HS 4 digits, there are 14 and 12 products whose RCA value turned from less than to greater than the unity in chemical and rubber products and general machinery, respectively. Other transportation equipment industries of Indonesia also show improvement in its competitiveness. The number of related industry in HS 4 digit has increased slightly from 1 to 6 in 2007; however, considering that the total number in that industry is only 22, it could be counted as a meaningful change. Also, slight improvement in wood and paper industry is observed.

Table III-4. Distribution of RCA by Industry: Indonesia Industry 2004 2005 2006 2007

RCA>1 23 22 20 22 Primary Product RCA<1 71 72 74 72 RCA>1 35 34 34 29 Processed Primary Product RCA<1 71 72 72 77 RCA>1 20 16 19 17 Processed Mineral RCA<1 98 102 99 101

Leather Product RCA>1 5 1 2 3

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RCA<1 16 20 19 18 RCA>1 34 28 28 48 Chemical and Rubber Product RCA<1 135 141 141 121 RCA>1 26 20 23 31 Metal Product RCA<1 131 137 134 126 RCA>1 1 1 2 6 Other Transportation

Equipment RCA<1 21 21 20 16 RCA>1 15 14 15 17 Other Manufacturing RCA<1 40 41 40 38 RCA>1 14 13 16 18 Nonmetallic Mineral Product RCA<1 53 54 51 49 RCA>1 2 2 2 4 Transport Equipment RCA<1 14 14 14 12 RCA>1 79 70 66 62 Textile and Clothes RCA<1 90 99 103 107 RCA>1 4 2 4 16 General Machinery RCA<1 81 83 81 69 RCA>1 17 14 13 12 Electrical Machinery RCA<1 31 34 35 36 RCA>1 1 1 3 5 Precision Machinery RCA<1 46 46 44 42 RCA>1 27 26 26 31 Wood and Paper Product RCA<1 41 42 42 37 RCA>1 303 264 273 321 RCA<1 939 978 969 921 Total

Total 1,242 1,242 1,242 1,242 Source: Author’s calculation using UN ComTrade data. 3.1.2. Mongolia The RCA of Mongolia shows its country specific character; depending on its abundant natural resources, it has strong RCA in nonmetallic mineral products, processed mineral, leather products, and textile & clothes. Its RCA for nonmetallic mineral products once reached to 16.1 in 2005, which sharply decreased to 4.5 in 2007. On the other hand, its exports of machinery products, such as general, electrical and/or precision machineries, display very small RCA. The RCA for primary products show a significant decrease over the investigation period, form 0.81 to 0.34, while that for processed primary products increased slightly from 0.02 to 0.10 in 2007. As summarized in Table III-5, Mongolian exports heavily depend on some industries, reflecting its industrial structure.

Table III-5. RCA of Mongolia by Industry Industry 2004 2005 2006 2007

Primary Product 0.81 0.56 0.64 0.34 Processed Primary Product 0.02 0.06 0.09 0.10 Processed Mineral 3.59 2.99 3.82 2.94

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Leather Product 3.55 3.98 4.44 3.54 Chemical and Rubber Product 0.01 0.01 0.01 0.01 Metal Product 0.33 0.24 0.22 0.16 Other Transport Equipment 0.05 0.10 0.05 0.34 Other Manufacturing 0.01 0.02 0.02 0.02 Nonmetallic Mineral Product 13.38 16.10 8.59 4.52 Transport Equipment 0.01 0.04 0.05 0.04 Textile and Clothes 3.43 2.95 2.78 1.55 General Machinery 0.01 0.02 0.03 0.03 Electrical Machinery 0.00 0.00 0.01 0.01 Precision Machinery 0.00 0.00 0.02 0.02 Wood and Paper Product 0.07 0.15 0.07 0.07 Total 1.00 1.00 1.00 1.00

Source: Author’s calculation using UN ComTrade data. Looking at industry by industry, the total number of industry with RCA>1 in HS 4 digits is only 57, out of 1,242 industries. The total number has been decreased from 63 in 2004; however, there is no notable change across the whole industry except for textile & clothes, with which the number of industries with RCA>1 decreased from 26 to 11 in 4 years. Even though it shows very high RCA in nonmetallic mineral products, there is only one industry whose RCA>1 in that industry. In processed mineral products, another industry in which Mongolia sustains a strong comparative advantage, it has 10 industries in HS 4 digits with RCA>1. Considering that processed mineral industry composes of 118 industries in terms of HS 4 digits, this implies that Mongolian exports heavily depend on limited number of their natural resource products. A comparative advantage in manufacturing sectors is hard to find, except in some textile & clothes, and processed primary products.

Table III-6. Distribution of RCA by Industry: Mongolia Industry 2004 2005 2006 2007

RCA>1 9 8 9 11 Primary Product RCA<1 85 86 85 83 RCA>1 1 3 2 3 Processed Primary Product RCA<1 105 103 104 103 RCA>1 9 10 9 10 Processed Mineral RCA<1 109 108 109 108 RCA>1 7 9 6 8 Leather Product RCA<1 14 12 15 13 RCA>1 1 2 1 1 Chemical and Rubber Product RCA<1 168 167 168 168 RCA>1 6 5 3 4 Metal Product RCA<1 151 152 154 153 RCA>1 0 0 1 1 Other Transportation

Equipment RCA<1 22 22 21 21 RCA>1 0 2 1 1 Other Manufacturing RCA<1 55 53 54 54

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RCA>1 1 2 1 1 Nonmetallic Mineral Product RCA<1 66 65 66 66 RCA>1 0 0 1 0 Transport Equipment RCA<1 16 16 15 16 RCA>1 26 22 19 11 Textile and Clothes RCA<1 143 147 150 158 RCA>1 0 1 1 3 General Machinery RCA<1 85 84 84 82 RCA>1 0 0 0 1 Electrical Machinery RCA<1 48 48 48 47 RCA>1 1 0 0 0 Precision Machinery RCA<1 46 47 47 47 RCA>1 2 2 2 2 Wood and Paper Product RCA<1 66 66 66 66 RCA>1 63 66 56 57 RCA<1 1,179 1,176 1,186 1,185 Total

Total 1,242 1,242 1,242 1,242 Source: Author’s calculation using UN ComTrade data. 3.1.3. The Philippines Over 2004~07 period, the Philippines’ major product that has a revealed comparative advantage is electrical machinery. The RCA on this sector recorded a sharp drop in 2007, but it is still the Philippines’ major exporting products and maintains the RCA>1. In 2007, the Philippines experienced sudden increase in other manufacturing products, raising the RCA for this sector explodes from 0.29 to 7.30 in one year. While all three countries, Indonesia, Mongolia, and the Philippines, display a comparative advantage in textile & clothes industry with RCA>1, general machinery and electric machinery are industries in which only the Philippines has a comparative advantage among the three countries. Also, the continued RCA increase in wood & paper products is noticeable, even though it does not turn out to have a comparative advantage yet.

Table III-7. RCA of the Philippines by Industry Industry 2004 2005 2006 2007

Primary Product 0.65 0.68 0.68 0.54 Processed Primary Product 1.00 1.09 0.99 0.62 Processed Mineral 0.17 0.20 0.27 0.20 Leather Product 0.53 0.52 0.56 0.48 Chemical and Rubber Product 0.14 0.16 0.17 0.30 Metal Product 0.33 0.30 0.54 0.51 Other Transport Equipment 0.33 0.54 0.30 0.10 Other Manufacturing 0.23 0.24 0.29 7.30 Nonmetallic Mineral Product 0.26 0.42 0.75 0.27 Transport Equipment 0.38 0.43 0.38 0.66 Textile and Clothes 1.03 1.14 1.18 0.48

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General Machinery 1.45 1.46 1.37 1.44 Electrical Machinery 3.69 3.58 3.43 1.62 Precision Machinery 0.69 0.72 0.71 0.61 Wood and Paper Product 0.29 0.36 0.74 0.94

Total 1.00 1.00 1.00 1.00 Source: Author’s calculation using UN ComTrade data. The total number of products with RCA>1 in HS 4 digits has increased from 137 in 2004 to 156 in 2007. Such increase is not led by one or two products; rather it is due to the increase in all industries. In textile & clothes, like the other two countries, the number of products with RCA>1 declined from 34 to 25, while those for other manufacturing and general machinery increased.

Table III-8. Distribution of RCA by Industry: the Philippines Industry 2004 2005 2006 2007

RCA>1 12 9 9 12 Primary Product RCA<1 82 85 85 82 RCA>1 14 17 17 16 Processed Primary Product RCA<1 92 89 89 90 RCA>1 9 8 13 12 Processed Mineral RCA<1 109 110 105 106 RCA>1 1 2 2 2 Leather Product RCA<1 20 19 19 19 RCA>1 7 7 7 9 Chemical and Rubber Product RCA<1 162 162 162 160 RCA>1 9 7 7 13 Metal Product RCA<1 148 150 150 144 RCA>1 2 1 1 1 Other Transportation Equipment RCA<1 20 21 21 21 RCA>1 7 6 8 13 Other Manufacturing RCA<1 48 49 47 42 RCA>1 9 8 11 10 Nonmetallic Mineral Product RCA<1 58 59 56 57 RCA>1 3 3 2 3 Transport Equipment RCA<1 13 13 14 13 RCA>1 34 34 35 25 Textile and Clothes RCA<1 135 135 134 144 RCA>1 3 4 4 8 General Machinery RCA<1 82 81 81 77 RCA>1 10 10 11 10 Electrical Machinery RCA<1 38 38 37 38 RCA>1 9 9 10 13 Precision Machinery RCA<1 38 38 37 34

Wood and Paper Product RCA>1 8 9 9 9

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RCA<1 60 59 59 59 RCA>1 137 134 146 156 RCA<1 1,105 1,108 1,096 1,086 Total

Total 1,242 1,242 1,242 1,242 Source: Author’s calculation using UN ComTrade data.

3.2. Trade Specialization Index (TSI)

The previous section revealed the characteristics of relative importance in trading relationships. To understand the competitiveness in the world market, RCA index gives a brief overview of the structure of competitiveness that countries exhibit in a world context.

To analyze bilateral competitiveness, the trade specialization index (TSI) is the most widely used measure and we employ it here. The index uses the following formula:

kij

kij

kij

kij

ij MXMX

TSI+

−= ,

where X and M refer to a country’s exports and imports of goods contained in industry k in one particular year. i and j denote export and import country, respectively.

This measure takes values between -1 and 1. The closer this index is to minus one (plus one), the stronger is the economy’s import (export) specialization in that industry. Using TSI, many researchers have uncovered dynamic characteristics of competitiveness between developing as well as developed countries. In this section, we analyze TSI of the three countries under investigation with respect to APTA member states. The analysis based on bilateral trade relations and each country’s TSI index with five APTA member states is derived from its own trade data reported to UN ComTrade.11

3.2.1. Indonesia

Indonesian TSI against APTA member states is summarized in Table III-9. In 2007, the TSI for Indonesia against APTA member states ranges from -0.59 to 0.94 for all industries. Indonesia displays strong export specialization over Bangladesh, Sri Lanka, and India, with the TSI greater than 0.5. It also maintains export specialization against Korea (0.41) and Laos (0.12). The only country against which Indonesia shows an import specialized trade pattern is China, scoring -0.59 of TSI value.

According to Indonesia’s TSI, Indonesia shows export specialized trade structure with Bangladesh almost perfectly. It records perfect export specialization in primary products, processed primary products, processed minerals, other transport equipments, nonmetallic mineral products, transport equipments, and wood and paper products. It also shows close to perfect specialization in other industries, except leather (0.24), general machinery (0.17) and

11 That is, TSI of Indonesia with Korea, for instance, is calculated using Indonesian trade data obtained from UN ComTrade statistics and that for Korea is computed using Korean trade data. It is noticeable that in some cases, the calculated TSI reveals that both countries turn out to be specialized in export (or import), due to the inconsistency in trade data.

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textile and clothes (0.66) industries. There is no industry in which Indonesia specialized in import with Bangladesh. One country export specialized in all industries could be considered as a rather extreme result; however, it could be due to limited volume of trade between the two countries and the result may be vulnerable to small changes in bilateral trade. To see the change in TSI between the two countries, Table B-1 in Appendix B shows the TSI of Indonesia against APTA member states over 2004~07 period. As is shown in Table B-1, there has been no dramatic change in TSI of Indonesia against Bangladesh; however, continuing decrease in Indonesian TSI in textile & clothes and general machinery products are noticeable. A similar trade pattern is observed in Indonesia’s trade with Sri Lanka. Indonesia scores positive TSI in all industries and shows perfect specialization in leather, metal, other manufacturing, nonmetallic mineral, and electrical machinery products. The only industry whose TSI index is lower than 0.5 is precision machinery product (0.39), but it is still export specialized over Sri Lanka. Such export specialized trade pattern has not changed a lot over 2004~07 period. Indonesia has shown strong export specialized trade patterns with Sri Lanka, but its TSI has declined in processed food products, while transport equipment industry’s export specialization has gotten stronger.12 In trade with Laos, Indonesia is perfectly specialized in export in all industry, except for primary products and processed mineral products, in which Indonesia is perfectly specialized in import. According to Table B-1, it shows in several cases that TSI changes from 1 to -1 over a year. India is another country with which Indonesia maintains strong export specialized trade patterns with overall TSI of 0.51. Indonesia scores TSI>0.5 in primary, processed primary, processed mineral, other transport equipment, other manufacturing, and wood & paper products. On the other hand, Indonesia is specialized in import in metal, transport equipment, and electrical machinery products. Looking at the change in TSI over time, it shows that TSI for precision machinery and textile & clothes declines and in the case of textile & clothes products, Indonesia becomes from export to import specialized in 2007.13 On the other hand, in chemical and rubber products, Indonesian TSI shows the change from negative to positive value, scoring weak export specialization in 2007. Indonesia also reveals the continuing increase of TSI in processed mineral and metal products, even though it is still import specialized in metal products. In the bilateral trade between Indonesia and Korea, it keeps export specialization over 2004~07 period. Indonesia shows strong export specialization in processed and nonmetallic mineral, primary and processed primary products, wood and paper products, other manufacturing, and textile and clothes products. On the other hand, Indonesia specializes in import over transport equipment, general machinery and precision machinery products in the trade with Korea. In these products, it shows steady TSI value over 2004~07 periods; however, Indonesia strengthens its strong export position in other manufacturing products. It also shows a movement toward export specialization in leather, chemical and rubber and metal products. China is the country with which Indonesian TSI reveals strong import specialization. TSI analysis reveals that Indonesia is import specialized in all industry categories which we define in this paper, and such trade pattern has lasted for 2004~07 period. General and precision machinery, other transport equipment and other manufacturing are sectors which Indonesia heavily depends on imports in the trade with China. No noticeable change in TSI is observed during 2004~07 period; the TSI values show limited volatility, implying that the

12 See Table B-1 in Appendix B. 13 See Table B-1 in Appendix B.

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two countries have a consistent trade pattern.

Table III-9. TSI of Indonesia against APTA Member States (2007)

Partner Country Bangladesh China India Laos Korea Sri Lanka

Primary Product 1.00 -0.30 0.52 -1.00 0.95 0.91

Processed Primary Product 1.00 -0.37 0.76 0.77 0.42 0.65

Processed Mineral 1.00 -0.45 0.94 -1.00 0.63 0.98

Leather Product 0.24 -0.35 0.05 -0.30 1.00

Chemical & Rubber Prod. 0.95 -0.61 0.02 1.00 -0.19 0.96

Metal Product 0.94 -0.70 -0.48 1.00 -0.26 1.00

Other Transport Equipment 1.00 -0.80 0.97 1.00 -0.22 0.87

Other Manufacturing 0.95 -0.77 0.54 1.00 0.68 1.00

Nonmetallic Mineral Product 1.00 -0.71 0.12 1.00 0.61 1.00

Transport Equipment 1.00 -0.71 -0.63 1.00 -0.92 0.99

Textile and Clothes 0.66 -0.55 -0.14 0.99 0.50 0.97

General Machinery 0.17 -0.90 0.12 0.97 -0.68 0.97

Electrical Machinery 0.98 -0.60 -0.50 1.00 -0.08 1.00

Precision Machinery 0.98 -0.85 0.24 1.00 -0.93 0.39

Wood and Paper Product 1.00 -0.33 0.84 1.00 0.85 0.99

Total 0.94 -0.59 0.51 0.12 0.41 0.82 * Empty cells mean no trade in that sector at the given year. Source: Author’s calculation using UN ComTrade data. As was mentioned earlier, positive TSI means a country is export specialized, while negative TSI implies it is import specialized in bilateral trade. The number of products of Indonesia import (or export) specialized is summarized in Table III-10. In HS 4 digits, it shows the number of products with which TSI>0 or TSI<0. The total number of products at the last column shows the number of products that is bilaterally traded in HS 4 digits. For Indonesia, the number of products with TSI>1 exceeds those with TSI<0 in the trade with Bangladesh, Laos, and Sri Lanka; however, its total number of products is quite limited. Out of 1,224 products defined in HS 4 digits, there are only 349 products traded with Bangladesh, 426 products with Sri Lanka, and only 82 products with Laos. As was expected from Table III-9, Indonesia maintains TSI>0 in most products. On the other hand, the number of products traded exceeds 1,000 with China and Korea, and close to 900 with India. Indonesia’s trade with these countries covers a wide range of products. The number of products with TSI<0 exceeds those with TSI>0. It is expectable in the case of trade with China with which Indonesia is import specialized. There are more products with TSI<0 than TSI>0 in the trade with Korea and India, even though the overall TSI turns out to be positive. This reflects the Indonesian trade pattern with these countries, which depends heavily on several important export products such as natural resources.14

14 For example, Indonesia’s TSI index of processed mineral products is 0.94 with India, showing strong export specialization. But in that category, the number of Indonesian products with TSI>0 is 25, while there are 46

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Distribution of Indonesia’s TSI against APTA member states over the period of 2004~07 is summarized in Table B-4 in Appendix B. There is no serious change observed over time; increase or decrease in the number of products seems to be due to the increased volume of trade over time.

Table III-10. Distribution of Indonesia’s TSI against APTA Member States (2007) Partner Country Bangladesh China India Laos Korea Sri Lanka

TSI>0 7 28 21 0 46 15 Primary Product TSI<0 0 48 22 1 15 0

TSI>0 16 27 35 3 43 24 Processed Primary Product TSI<0 1 63 32 1 36 3

TSI>0 23 29 25 0 24 13 Processed Mineral TSI<0 1 77 46 1 65 3

TSI>0 3 6 5 9 6 Leather Product TSI<0 0 11 7 5 0

TSI>0 67 25 54 14 34 77 Chemical & Rubber Prod. TSI<0 5 141 97 0 120 5

TSI>0 23 18 40 12 27 38 Metal Product

TSI<0 12 133 75 0 112 2 TSI>0 3 1 3 1 4 3 Other Transp.

Equipment TSI<0 1 14 1 0 8 1 TSI>0 13 3 20 3 23 16

Other Manuf. TSI<0 1 44 18 0 21 2 TSI>0 14 7 31 3 31 25 Nonmetallic

Mineral Prod. TSI<0 2 53 18 0 22 1 TSI>0 4 3 3 1 1 5 Transport

Equipment TSI<0 0 13 7 0 12 0 TSI>0 44 31 64 13 69 74 Textile and

Clothes TSI<0 33 123 60 2 66 9 TSI>0 17 1 25 13 12 36 General

Machinery TSI<0 10 84 52 1 73 2 TSI>0 20 5 18 7 17 23 Electrical

Machinery TSI<0 3 43 27 0 30 0 TSI>0 3 3 8 3 3 8 Precision

Machinery TSI<0 2 44 28 0 39 1 TSI>0 21 21 33 3 32 32 Wood &

Paper Prod. TSI<0 0 44 16 0 25 2

products with TSI<0.

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TSI>0 278 208 385 76 375 395 TSI<0 71 935 506 6 649 31 Total

Total 349 1,143 891 82 1,024 426 * Empty cells mean no trade in that sector at the given year. Source: Author’s calculation using UN ComTrade data.

3.2.2. Mongolia

TSI of Mongolia against APTA member states in 2007 is on Table III-11. First of all, the size of Mongolia’s bilateral trade with Bangladesh, Laos, and Sri Lanka is quite limited and there are only few sectors in which actual trade happened. For these countries, Mongolia’s TSIs are all -1, meaning that Mongolia is perfectly import specialized. It does not necessarily mean that, however, Mongolia experiences serious trade deficit or is used only as an export market for these countries. As shown in Table III-12, there are only 12 and 16 products, in HS 4 digits, which are traded with Bangladesh and Sri Lanka, respectively, in 2007. With Laos, the number of products traded is only 3 products in 2006. It rather implies that the bilateral trade is simply at the burgeoning stage with these countries and it has much possibility of expanding it.

In the trade with China, India, and Korea, Mongolia turns out to be import specialized, also. Its TSI indexes for all industry with respect to these countries are -0.85, -0.67, and -0.49, respectively, in 2007. Mongolia is weakly specialized in export only in the leather products with TSI index of 0.14 in the bilateral trade with China. Mongolia shows strong import specialization in processed mineral products (0.96) and textile and clothes products (0.51) with India. Mongolia’s import specialization in leather product is also observed in the trade with Korea (0.55). Also, nonmetallic mineral product is another sector for Mongolia to maintain import specialization. In all other sectors, Mongolia shows strong import specialization, if not perfect import specialization.

Table III-11. TSI of Mongolia against APTA Member States (2007)

Partner Country Bangladesh China India Laos* Korea Sri Lanka

Primary Product -0.58 -1.00 -0.54 -1.00

Processed Primary Product -0.76 -1.00 -1.00 -0.97 -1.00

Processed Mineral -0.65 0.96 0.55

Leather Product 0.14 -1.00 -1.00

Chemical & Rubber Prod. -1.00 -0.97 -1.00 -1.00 -1.00

Metal Product -0.89 -0.99 -0.95 -1.00

Other Transport Equipment -0.97 -0.73

Other Manufacturing -0.94 -1.00 -0.94 Nonmetallic Mineral Product -0.96 -1.00 0.72 -1.00

Transport Equipment -0.99 -1.00 -1.00

Textile and Clothes -1.00 -0.87 0.51 -1.00 -0.70 -1.00

General Machinery -0.96 -0.87 -0.98

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Electrical Machinery -0.96 -1.00 -1.00

Precision Machinery -0.95 -1.00 -0.99

Wood and Paper Product -1.00 -0.83 -0.99 -0.91 -1.00

Total -1.00 -0.85 -0.67 -1.00 -0.49 -1.00 * Mongolian TSI against Laos is based on 2006 trade data. ** Empty cells mean no trade in that sector at the given year. Source: Author’s calculation using UN ComTrade data. Table III-12 illustrates in how many products Mongolia shows export specialization with respect to APTA member states. As was mentioned, the bilateral trade between Mongolia and APTA member states has been focused on a limited number of products, except for the trade with China. The total number is only 184 products with India and 653 products with Korea. The number of products with export specialization is even more limited; there are none in the trade with Bangladesh, Laos, and Sri Lanka. There are some products in which Mongolia shows export specialization; 70 products over China, 39 products over Korea, and 11 products over India. There has been no serious change in the number of products for Mongolian TSI>0 since 2004.15

Table III-12. Distribution of Mongolia’s TSI against APTA Member States (2007) Partner Country Bangladesh China India Laos Korea Sri Lanka

TSI>0 14 0 4 0 Primary Product TSI<0 51 4 35 1

TSI>0 9 0 0 5 0 Processed Primary Product TSI<0 66 7 1 49 1

TSI>0 14 3 11 Processed Mineral TSI<0 69 7 18

TSI>0 8 1 0 Leather Product TSI<0 6 4 5

TSI>0 0 2 0 1 0 Chemical & Rubber Prod. TSI<0 2 135 24 86 2

TSI>0 6 1 3 0 Metal Product

TSI<0 107 23 82 2 TSI>0 0 0 Other Transp.

Equipment TSI<0 8 5 TSI>0 1 0 5

Other Manuf. TSI<0 36 8 30 TSI>0 1 0 1 0 Nonmetallic

Mineral Prod. TSI<0 46 11 33 1 Transport TSI>0 0 0 1

15 See Table B-5 in Appendix B.

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Equipment TSI<0 15 3 13 TSI>0 0 8 5 0 5 0 Textile and

Clothes TSI<0 8 120 22 2 86 4 TSI>0 1 0 0 General

Machinery TSI<0 77 11 61 TSI>0 1 0 0 Electrical

Machinery TSI<0 43 18 41 TSI>0 0 0 0 Precision

Machinery TSI<0 36 19 31 TSI>0 0 5 1 3 0 Wood &

Paper Prod. TSI<0 2 50 12 39 5 TSI>0 0 70 11 0 39 0 TSI<0 12 865 173 3 614 16 Total

Total 12 935 184 3 653 16 * Mongolian TSI distribution against Laos is based on 2006 trade data. ** Empty cells mean no trade in that sector at the given year. Source: Author’s calculation using UN ComTrade data.

3.2.3. The Philippines

The Philippines’ TSI against APTA member states shows strong export specialization over Laos and Bangladesh, and weak export specialization in the trade with Sri Lanka. Its TSI index covering all industries with Laos is 0.96 in 2006, which is close to perfect specialization in exports. TSI with Bangladesh is lower that with Laos; however, it still shows strong export specialization in the trade, scoring 0.60 TSI index. The Philippines seems to maintain a relatively weak export specialization position; its TSI is positive, but only reaches 0.14. The Philippines shows export specialization in all industries except for metal product in the trade with Laos, and nonmetallic mineral products with Bangladesh. It is also observed that the Philippines has a strong import specialization position in primary products, transportation equipments, and electrical machinery in its trade with Sri Lanka. On the other hand, the Philippines is import specialized in the trade with the other three countries. Its TSI indexes against Korea and India are -0.31 and -0.36, respectively, and that against China is -0.76 in 2007. Industry-wise, the Philippines turns out to be import specialized in all industry categories used in this paper, and in the trade with India and Korea, it maintains an export specialization position in a few sectors, such as other manufacturing, primary products, and processed primary products.

Table III-13. TSI of the Philippines against APTA Member States (2007)

Partner Country Bangladesh China India Laos Korea Sri Lanka

Primary Product 1.00 -0.56 -1.00 0.80 -1.00

Processed Primary Product 0.17 -0.70 -0.96 0.71 0.05

Processed Mineral -0.64 -0.31 -0.92 1.00

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Leather Product 0.24 -0.47 -0.52 -0.53

Chemical &Rubber Product 0.88 -0.83 -0.72 1.00 -0.78 0.44

Metal Product 0.56 -0.79 -0.17 -1.00 0.04 0.99

Other Transport Equipment -0.95 -0.21 0.02

Other Manufacturing 0.07 -0.84 0.88 0.81 -0.29 0.63

Nonmetallic Mineral Product -1.00 -0.88 -0.24 -0.52 0.90

Transport Equipment -0.89 -0.22 1.00 -0.96 -1.00

Textile and Clothes 0.48 -0.80 -0.88 1.00 -0.80 0.44

General Machinery 0.91 -0.79 -0.51 0.87 -0.33 -0.16

Electrical Machinery 1.00 -0.66 -0.67 -0.20 -0.77

Precision Machinery -0.68 -0.16 -0.60 1.00

Wood and Paper Product 1.00 -0.71 0.47 1.00 -0.26 0.50

Total 0.60 -0.76 -0.36 0.96 -0.31 0.14 * Empty cells mean no trade in that sector at the given year. Source: Author’s calculation using UN ComTrade data. Table III-14 summarizes the distribution of the Philippines’ TSI in HS 4 digits against APTA member states in 2007. As we can expect from TSI index in Table III-13, the Philippines dominates in terms of the number of products with TSI>0 against Bangladesh, Laos, and Sri Lanka; however, the number of products bilaterally traded is quite limited. In the bilateral trade with the other three countries, trade occurs in varieties of products, but the Philippines has more products specialized in imports than those specialized in exports. Such trade pattern has been observed during 2004~07 period in export specialized against Bangladesh, Laos, and Sri Lanka and import specialized against China, India, and Korea. The change in TSI index and the distribution of the Philippines’ TSI over time are summarized in Table B-3 and B-6, respectively, in Appendix B.

Table III-14. Distribution of the Philippines’ TSI against APTA Member States (2007) Partner Country Bangladesh China India Laos Korea Sri Lanka

TSI>0 1 12 1 22 0 Primary Product TSI<0 0 45 38 21 2

TSI>0 10 10 8 35 13 Processed Primary Product TSI<0 1 67 41 33 5

TSI>0 18 5 12 2 Processed Mineral TSI<0 78 44 51 0

TSI>0 1 4 2 2 Leather Product TSI<0 1 12 8 8

TSI>0 17 10 23 1 20 24 Chemical & Rubber Prod. TSI<0 1 153 116 0 117 5 Metal Product TSI>0 4 11 23 0 14 7

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TSI<0 4 124 77 1 116 1 TSI>0 0 0 1 Other Transp.

Equipment TSI<0 12 1 10 TSI>0 3 3 13 1 5 5

Other Manuf. TSI<0 2 43 12 0 33 2 TSI>0 0 3 11 14 6 Nonmetallic

Mineral Prod. TSI<0 1 55 26 33 1 TSI>0 1 1 1 0 0 Transport

Equipment TSI<0 14 8 0 14 1 TSI>0 9 10 21 2 33 15 Textile and

Clothes TSI<0 13 139 71 0 92 12 TSI>0 8 7 11 4 3 6 General

Machinery TSI<0 2 77 54 1 76 6 TSI>0 4 7 7 10 3 Electrical

Machinery TSI<0 0 41 35 38 5 TSI>0 7 7 5 1 Precision

Machinery TSI<0 38 23 31 0 TSI>0 5 9 13 2 16 6 Wood &

Paper Prod. TSI<0 0 53 24 0 36 4 TSI>0 62 112 146 11 192 88 TSI<0 25 951 578 2 709 44 Total Total 87 1,063 724 13 901 132

* Empty cells mean no trade in that sector at the given year. Source: Author’s calculation using UN ComTrade data.

3.3. Country’s Competitiveness over APTA Member States

RCA and TSI index provide country’s comparative advantage and competitiveness in the world and bilateral trades. The analysis covered in Section 3.1 and 3.2 gives us an idea of what trade patterns we can expect as economic relations between APTA member states and the three countries under investigation deepens. What is possible, however, is that it could be vulnerable to bilateral trades with significant volume, which is more likely in the case of TSI index. It is especially the case when it is an analysis between two countries with small volume of trade; if one country exports goods, which have not been traded for times, to the other country, it could end with a soaring corresponding TSI index for a given year.

Out of 6 APTA member states, Bangladesh, Laos, and Sri Lanka do not have significant amounts of volume of trade with the three countries under investigation. As a result, it could be premature to conclude that we determine in how many products each country can expect to have competitiveness over a partner country, simply based on the TSI investigation. To deepen the investigation on the bilateral pattern of trade, one way to get around such possible problem is to consider RCA and TSI simultaneously. It is considered that a country has a comparative advantage if its RCA is greater than the unity, and is

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competitive over the partner country if TSI>0. Considering these two together, we will look at the number of products that satisfies the condition of RCA>1 and TSI>0 and how many products fit in the condition that RCA<1 and TSI<0. If an industry of a country has property that RCA>1 and TSI>0, it implies such sector has a comparative advantage to the world market and such comparative advantage provides the base of its competitiveness over the partner country in the bilateral trade. The opposite case can be interpreted as the other way round.

Following such categorization, RCA and TSI analysis of Indonesia against APTA member states is summarized in Table III-15. Changes in Indonesian competitiveness against APTA members vary among APTA member states. It adds more products in which Indonesia does not have a comparative advantage and competitiveness against all APTA member states except Korea, comparing 2004 to 2007; however, it consists of a rather minor increase and no serious increase is observed. On the other hand, the number of products in which Indonesia builds the competitiveness for its own product in the bilateral trade is increased in the trade with India and Laos. With other countries, including China, Korea, and Sri Lanka, the number declines.

Table III-15. RCA and TSI analysis of Indonesia against APTA Member States Partner Country Category 2004 2005 2006 2007

RCA<1 & TSI<0 7 22 26 42 RCA>1 & TSI>0 124 107 103 124 Bangladesh

Total 131 129 129 166 RCA<1 & TSI<0 732 785 782 745 RCA>1 & TSI>0 139 116 126 119 China

Total 871 901 908 864 RCA<1 & TSI<0 394 442 441 405 RCA>1 & TSI>0 164 158 159 171 India

Total 558 600 600 576 RCA<1 & TSI<0 1 0 8 3 RCA>1 & TSI>0 17 12 7 23 Laos

Total 18 12 15 26 RCA<1 & TSI<0 543 593 566 528 RCA>1 & TSI>0 181 161 186 175 Korea

Total 724 754 752 703 RCA<1 & TSI<0 7 13 21 18 RCA>1 & TSI>0 174 141 149 152 Sri Lanka

Total 181 154 170 170 Source: Author’s calculation using UN ComTrade data.

RCA and TSI analysis for Mongolia against APTA member states is provided in Table III-16. With Bangladesh, the number of products of losing its competitiveness in the bilateral trade has increased from 1 to 11 products during 2004~07 period. In the case with China, there has been a serious increase in the number of products with RCA<1 & TSI<0; 84 new products in HS 4 digits are included in RCA<1 & TSI<0 category, while there is no significant change observed in RCA>1 & TSI<0 category. Similar patterns happened in the

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trade with other APTA member states, namely India, Korea, and Sri Lanka. With these countries, Mongolia shows its loss in comparative advantage and competitiveness in many products, while there are not many products which Mongolia gains competitiveness against the partner countries.

Table III-16. RCA and TSI analysis of Mongolia against APTA Member States Partner Country Category 2004 2005 2006 2007



Total 801 852 857 886 RCA<1 & TSI<0 97 114 119 170 RCA>1 & TSI>0 3 2 4 8 India

Total 100 116 123 178 RCA<1 & TSI<0 N/A N/A 1 N/A RCA>1 & TSI>0 N/A N/A 0 N/A Laos

Total N/A N/A 1 N/A RCA<1 & TSI<0 521 545 543 604 RCA>1 & TSI>0 16 17 18 15 Korea



In the case of the Philippines, the bilateral trades with Bangladesh and India have moved in favor of the Philippines, reducing the number of products with RCA<1 & TSI>0 and increasing products with RCA>1 & TSI>0. The opposite holds for the trade with China; however, the change in the number of products is minor and it shows up and downs from one year to another. On the other hand, the Philippines shows decrease in both the number of products in which the Philippines gains and/or loses its competitiveness in Korea and Sri Lanka’s market over 2004~07 period.

Table III-17. RCA and TSI Analysis of the Philippines against APTA Member States Partner Country Category 2004 2005 2006 2007



Total 886 906 910 903

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RCA<1 & TSI<0 549 506 528 529 RCA>1 & TSI>0 51 62 60 59 India

Total 600 568 588 588 RCA<1 & TSI<0 0 0 0 2 RCA>1 & TSI>0 2 2 7 6 Laos

Total 2 2 7 8 RCA<1 & TSI<0 651 673 663 648 RCA>1 & TSI>0 91 87 87 77 Korea



The analysis we carry in this paper looks at a relatively short time horizon. It could be hard to find out a long term trend in the bilateral trade. By showing RCA and TSI index, however, during 2004~07 period, we can see the current situation and it makes it possible to expect what could happen as the bilateral trade expands. In order to complement and capture the country-specific characters in the bilateral trade, we can look at other methods, such as the trade intensity index (TII). TII index determines whether the value of trade between the two countries is greater or smaller than would be expected on the basis of their importance in world trade. It is defined as the share of one country’s exports going to a partner divided by the share of world exports going to the partner. It is calculated as following:

wwkwj

iwkij

XXXX

TII//

= ,

where kijX and k

wjX are the value of country i ’s exports and of world exports to country j .

iwX and wwX are country i ’s total exports and the total world exports, respectively. An index of more (less) than one indicates a bilateral trade flow that is larger (smaller) than expected, given the partner country’s importance in world trade. TII indexes over time for the countries under investigation against APTA member states are provided in Table D-1~D-3 in Appendix D.

IV. Economic Benefits of Joining the APTA: GTAP Simulation Results for ASEAN Member States

4.1. Analysis of Macro Economic Effects 4.1.1. Potential Gains from the Expansion of APTA

The economic literature shows that there are substantial benefits accrued from trade

liberalization. Traditional trade theory suggests that the formation of a Regional Trade Agreement (RTA) will lead to an increase in GDP via the increased efficiency of resource

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allocation. That is, trade liberalization induces resources to move from industries with comparative disadvantages to industries with comparative advantages. New trade theory based on economies of scale addresses the pro-competitive effects that result from the interactions between imperfect competition and trade liberalization. An RTA leads to weakening of domestic firms’ dominant positions in their home markets so that price cost mark-ups declines. In addition, the expansion of the market through integration provides an opportunity to increase sales in export market. Economic literature indicates that these two channels – the diminution of market power and the redistribution of sales between home and export market – mean an increase in firm scale. Based on neoclassical growth theory, Baldwin (1989, 1992) indicates that the static efficiency gain will be multiplied into a medium-run growth bonus, which induces higher savings and investment. New growth theory suggests that an RTA will give a positive effect on economic growth if it spurs accumulation of human or knowledge capital. 4.1.2. CGE Model

In order to get some insight into implications of the expansion of APTA, we evaluate its potential economic effects. The difficulty of evaluation arises from the need to disentangle the effect of the APTA expansion from other exogenous changes in the economy. There are two economic approaches to evaluate the effect of the policy change on some set of endogenous variables such as welfare, GDP, export, and so on: econometric models and computable general equilibrium (CGE) models. While econometric evaluations typically focus on only a few endogenous variables, CGE models capture the complicated interplay of effects that may be induced from policy changes by establishing very complex models.

In order to provide quantitative assessment on the effects of the continuous expansion of APTA, we adopt a CGE model. In particular, we employ the widely used Global Trade Analysis Project (GTAP) model as our basic model. This is a standard applied general equilibrium model that has been extensively used in literatures to examine a wide variety of trade policy issues. The GTAP model is based on assumptions such as constant returns to scale, perfect competition and a global bank designed to mediate between world savings and investment. The Constant Difference of Elasticities (CDE) consumer demand system is designed to capture differential price and income responsiveness across countries.16

As the second CGE model, we modify the standard GTAP model in order to capture a medium-run growth effect of trade liberalization. Consider a Cobb-Douglas production function showing an aggregate production in a country.

αα −= 1LAKY , 10 <<α , (1)

where A is an overall productivity parameter, and α and 1-α are elasticities of output with respect to capital and labor, respectively. For a given flow of investment, the capital stock evolves over time according to

ksydtdk

⋅−= δ , (2)

LKk = ,

LYy ≡ ,

16 See Hertel (1997) about the structure of the GTAP model.

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where δ is the fraction of the capital stock that depreciates each year.

In order to distribute income between saving and consumption, it is assumed that consumers save a fixed share of income.

)()()( tItsYtS == (3)

where )(tS indicates total saving in time t and s is the fixed saving rate.

In the absence of technical progress, this process cannot be sustained because of the diminishing returns with respect to capital per worker. In the long run, growth in per capita income will stop at the point where savings is just enough to replace depreciated capital. Using equation (1), (2), and (3), the capital stock and output in the steady-state are given by:

LAsK )1/(1)1/(1

αα

δ−

−

⎟⎠⎞

⎜⎝⎛= (4)

LAsY )1/(1)1/(

ααα

δ−

−

⎟⎠⎞

⎜⎝⎛= (5)

Baldwin (1989, 1992) suggests that the static efficiency gains induce higher savings

and investment, which in turn yield more output. That is, an increase of the overall productivity A , resulted from enhanced efficiency of resource allocation, leads to an increase of capital stock in (4) and output in (5). Francois et al. (1999a) present a useful approach capturing the capital accumulation effects of trade liberalization in the context of the neoclassical growth model. Following Francois et al. (1999a) it is assumed that countries are initially in a steady state even though it is not realistic. Under this assumption, we can obtain magnitudes of changes in the capital stock and output by comparing them in two steady states. The capital stock and output in the pre-trade liberalization are given in (4) and (5). Equation (3) and (4) allows us to express the relationship between capital stock and investment as following:

δIK = (6)

Following Francois et al. (1999a), we incorporate the equation (6) into the CGE model to describe the relation between capital stock and investment, and control closure according to the following equation for the changes in capital stock and investment converge.

We will work with 18 sectors, eleven CGE models of the world economy. They are described in Table IV-1. Social accounting data are based on the GTAP database (version 6). Initial protection data are representative of the world as of 2001.

Table IV-1. Model Aggregations Countries Sectors

Rice Crop

Vegetable and Fruit Meat

Korea China India

Bangladesh Sri Lanka Food

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Other agricultural products Forest Fish

Extraction(including fishery) Textile and Cloth

Chemicals Metal

Automobile Other Transportation Electrical products

Machinery Other Manufacturing products

Indonesia The Philippines

Thailand Vietnam Malaysia

Rest of World

Service

4.2. Policy Experiments

We estimate the potential effects of the formation and expansion of APTA by using

capital accumulation CGE models, which captures the long-run effects arising from higher savings and investment induced by the static gains.

4.2.1. Scenarios

We conduct a forecast for increase in benefits according to the tariff concessions which is expected to be drawn from the 4th round of negotiation. We conduct two different tariff concession scenarios. First scenario is the minimum liberalization scenario that individual APTA participating country’s tariff concession shall provide Margin of Preference (MoP) on average of 50%. Second tariff concession is to increase MoP on average 100%.

To conduct these two different scenarios, we set up three different groups of countries that will become APTA members. The first one is the existing APTA members which are Bangladesh, China, India, Korea, and Sri Lanka (Group 1). The second group consists of seven countries which are Group 1 plus Indonesia and the Philippines (Group 2). The last group of countries are 10 countries added by Malaysia, Thailand, and Vietnam to the second group of counties (Group 3). The scenarios that would be conducted in this paper are summarized in Table IV-2.

Table IV-2. Simulation Scenarios

Group 1 Group 2 Group 3 Countries Bangladesh, China, India,

Korea, Sri Lanka Group 1 + Indonesia, the Philippines

Group 2 + Malaysia, Thailand, Vietnam

MoP 50% Scenario 1-1 Scenario 2-1 Scenario 3-1 MoP 100% Scenario 1-2 Scenario 2-2 Scenario 3-2

4.2.2. Results

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Since we use the static CGE model based on the traditional trade theory, the effects of trade liberalization on GDP and welfare of countries arise from a mixture of terms-of-trade (ToT) effects17 and efficiency gains from resource allocation. Hence, it is expected that the participants in APTA will gain from joining as APTA members, as resources are reallocated to those sectors in each country where there is a comparative advantage.

Table IV-3 shows the effects of APTA formation with current members that are estimated with a CGE model. All members of APTA enjoy the growth of GDP and welfare measured by an equivalent variant. Korea will be the biggest beneficiary among members. Bangladesh and Sri Lanka are the next beneficiaries, which gain 0.36~0.70% and 0.20~0.42% of GDP, respectively. In terms of welfare measured by an equivalent variant, the increase of welfare of all members reaches to 0.23~0.50%, which are USD 4,856~10,719 million. Among members, Korea will gain USD 3,233~7,597 million. On the contrary, the non-members’ GDP and welfare will decrease by the formation of APTA because of the effect of trade diversion. All of the non-members’ GDP will decrease by 0.02~0.16%. The welfare of non-members also will be dropped by USD 30~140 million.

Table IV-3. The Effects of Current APTA Membership (Unit: %, Million USD)

Scenario 1-1 Scenario 1-2 GDP Welfare GDP Welfare

Bangladesh 0.36 94 0.70 153China 0.09 878 0.17 1,648India 0.16 628 0.34 1,273Korea 0.75 3,233 1.81 7,597Sri Lanka 0.20 23 0.42 48Indonesia -0.03 -54 -0.07 -124The Philippines -0.05 -36 -0.10 -80Malaysia -0.04 -63 -0.09 -140Thailand -0.07 -30 -0.16 -69Vietnam -0.02 -37 -0.05 -83Source: GTAP simulation result.

Now, let’s take the first expansion of APTA into account. Table IV-4 shows the results of expansion of APTA by adding Indonesia and the Philippines as new members of APTA. The expansion of APTA will have beneficial effects on both existing members and new members. First, the existing members’ welfare will be slightly increased by the entry of new members. Bangladesh and Sri Lanka’s GDPs who enjoy the benefit less among the members will increase by USD 5~10 million, and USD 8~16 million. China, India, and Korea’s GDP will increase about USD 153~277 million, USD 177~288 million, and USD 81~113 million, respectively. China and India are the two of the biggest beneficiaries among the existing members. Second, the new members, Indonesia and the Philippines, have now become beneficiaries from indirect victims of formation of APTA. Indonesia and the Philippines’ GDPs will increase about 0.39~0.85% and 0.41~0.66%, respectively. The magnitudes of welfare growths of Indonesia and the Philippines will be about USD 638~1407 million and UDS 245~430 million, respectively. This implies that there should be strong positive incentives for them to join the APTA.

17. Terms of trade are defined as the ratio of export prices relative to import prices.

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Table IV-4. The Effects of Expansion of APTA by Adding Indonesia and the Philippines (Unit: %, Million USD)


Bangladesh 0.39 99 0.75 163China 0.11 1,031 0.21 1,925India 0.21 805 0.44 1,561Korea 0.78 3,314 1.85 7,710Sri Lanka 0.26 31 0.54 64Indonesia 0.39 638 0.85 1,407The Philippines 0.41 245 0.66 430Malaysia -0.04 -65 -0.10 -145Thailand -0.05 -82 -0.12 -180Vietnam -0.07 -30 -0.16 -68Source: GTAP simulation result.

Next, we add Malaysia, Thailand, and Vietnam to APTA membership and take a look at the economic effects of further expansion on existing members and new members. It is expected that all members participating in the APTA would have benefits from the expansion of APTA. All new three members enjoy economic growth and welfare gains. When they are excluded from the APTA, they face negative effects on GDP and welfare because of trade diversion effect. However, when they decide to join the APTA, they gains positive economic growths. Especially GDP growth of Thailand and Vietnam among new members would dominate that of current member’s benefit. Vietnam, the biggest beneficiary in terms of GDP growth, would gain 1.77~3.69% of additional GDP growth by joining the APTA. It is expected that its welfare would increase USD 441~904 million depending on the levels of tariff concession. The additional change would be bigger than those effects. That is, for example, Vietnam’s GDP growth reaches about 3.85% under 100% MoP assumption, calculating from the difference between results of scenario 3-2 and scenario 2-2. Indonesia and the Philippines also gain additional economic growth and welfare improvement by welcoming three new members in APTA. Indonesia and the Philippines’ additional GDP growth would be about 0.1~0.2% and 0.21~0.65% (see the difference of results of scenario 2 and 3)

Table IV-5. The Effects of Expansion of APTA by Adding 5 ASEAN Members (Unit: %, Million USD)


Bangladesh 0.45 117 0.89 200China 0.18 1,671 0.36 3,241India 0.30 1,129 0.63 2,198Korea 0.85 3,600 2.00 8,315Sri Lanka 0.31 35 0.63 72Indonesia 0.49 775 1.05 1,676The Philippines 0.62 369 1.31 784Malaysia 0.78 807 1.71 1,756Thailand 1.29 1,255 2.79 2,718Vietnam 1.77 441 3.69 904Source: GTAP simulation result.

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Traditional trade theory tells us that the best way to exploit the gains from trade liberalization is for all the countries of the world to adopt free trade. The establishment of APTA forms so-called trade creation, trade diversion, and trade expansion effects. In the CGE analysis, it is not easy to decompose the impacts of APTA on trade into these three effects, because we do not know who were the efficient producers or the inefficient producers. However, it is clear that trade among the participating countries in APTA would increase, as the tariffs are reduced.

Now turn to the impacts of the expansion of APTA on the each country’s production. An important contribution of the multi-country multi-sector CGE model is that it identifies the sectors that will expand or contract as a result of the various combinations of trade liberalization. Given the assumption that total employment is maintained, there will be industries that expand and contract. Table IV-6~Table IV-8 shows the changes in the total production in each country.

First, the production of APTA members will increase around 0.12~0.92% under scenario 1-1 and 0.24~2.04 under scenario 1-2. However, the production of non-members will decrease by 0.1% under scenario 1-1 and 0.2% under scenario 1-2. There must be negative effect of production to counties that are excluded from the APTA.

Table IV-6. The Production Effects of Current APTA Membership

(Unit: %, Million USD) Scenario 1-1 Scenario 1-2 Million USD % Million USD %

Bangladesh 110 0.12 223 0.24 China 4,078 0.13 9,026 0.29 India 1,142 0.13 2,140 0.25 Korea 8,907 0.92 19,743 2.04 Sri Lanka 60 0.27 132 0.59 Indonesia -227 -0.08 -508 -0.18 The Philippines -141 -0.09 -315 -0.21 Malaysia -127 -0.06 -281 -0.13 Thailand -212 -0.08 -473 -0.19 Vietnam -67 -0.10 -154 -0.23 Source: GTAP simulation result. Adding two more counties, Indonesia and the Philippines, to the APTA will give additional production increase to existing members and positive effect on new members. The production of China, Korea, and Sri Lanka will slightly increase by absorbing new members in the APTA, while that of Bangladesh and India will slightly decrease. On the contrary, production of Indonesia will increase by 0.74~1.67%, which is the largest increase due to the expansion of APTA. It shows positive effect on production of the Philippines as well. The production of the Philippines will increase by 0.57~1.03%. If we consider the opportunity cost of not participating in the APTA, the magnitude of production increase would be larger. That is, the amount of increase in production of Indonesia reaches USD 2,380~5,334 million when we compare scenario 1 and 2.

Table IV-7. The Production Effects of Expansion of APTA by Aadding Indonesia and the Philippines

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Bangladesh 91 0.10 181 0.19 China 4,736 0.15 10,247 0.33 India 996 0.11 1,456 0.17 Korea 9,315 0.96 20,359 2.10 Sri Lanka 68 0.31 150 0.67 Indonesia 2,153 0.74 4,831 1.67 The Philippines 861 0.57 1,566 1.03 Malaysia -208 -0.09 -459 -0.21 Thailand -273 -0.11 -593 -0.23 Vietnam -66 -0.10 -150 -0.23 Source: GTAP simulation result. Finally, we include Malaysia, Thailand, and Vietnam in an analytical object. Except Bangladesh, and India, all of the existing members’ production would increase. The result shows that there must be a big incentive for new members to join the APTA to boost their countries’ production. Malaysia’s production would increase by 1.02~2.30%, Thailand’s production would increase by 1.61~3.57%, and Vietnam’s production would increase by 1.83~4.15% which is the largest increase among new entrants. In terms of value of production, the increase of Thailand’ production would be the biggest, which is larger than the sum of production increases of Malaysia and Vietnam.

Table IV-8. The Production Effects of Expansion of APTA by Adding Malaysia and Thailand, in Addition to Vietnam


Bangladesh 88 0.09 182 0.20 China 7,296 0.23 15,770 0.50 India 980 0.11 1,311 0.15 Korea 10,255 1.06 22,428 2.31 Sri Lanka 80 0.36 173 0.77 Indonesia 2,617 0.90 5,729 1.98 The Philippines 1,628 0.81 2,644 1.74 Malaysia 2,254 1.02 5,063 2.30 Thailand 4,091 1.61 9,103 3.57 Vietnam 1,211 1.83 2,749 4.15 Source: GTAP simulation result.

Table IV-9 ~ Table IV-11 demonstrate changes in exports of each country through the expansion of various APTA scenarios. The outstanding feature of simulation results is that non-members of APTA will suffer from the formation or expansion of APTA in terms of export volume.

Formation of APTA with five countries creates trade among members. The export volume of Korea and China would increase by USD 6,106~13,660 million and USD 3,676~8,816 million with member countries. These countries’ export volumes toward member countries exceed those of non-member countries. For example, the increase of Korea

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(China)’s export under scenario 1-1 is USD 3,060 (3,202) million. However, the increase of its intra-export within APTA members is USD 6,106 (3,676) million. This implies that even though Korea (China) reduces its export to non-member countries, the facilitation of trade among members will be boosted.

Non-members’ export will be reduced due to trade creation and trade diversion effects among the members.

Table IV-9. The Export Effects of Current APTA membership

(Unit: %, Million USD) Scenario 1-1 Scenario 1-2 Intra-export Total export Intra-export Total export

Bangladesh 17 294 38 701China 3,676 3,202 8,816 7,415India 603 665 1,316 1,657Korea 6,106 3,060 13,660 7,133Sri Lanka 36 36 87 81Indonesia -107 - -158 -The Philippines -29 - -77 -Malaysia -95 - -210 -Thailand -80 - -175 -Vietnam -14 - -31 -Source: GTAP simulation result.

When Indonesia and the Philippines become members of APTA, the negative effects on their export side turns positive. For example, under scenario 2-1, the increase of Indonesia (the Philippines)’s export is USD 1,714 (323) million. When we compare the result of scenario 1-1, its net increase reaches USD 1,821 (352) million. On the contrary, non-members still suffer from losing export, and the magnitude of export lose is larger than before.

Table IV-10. The Export Effects of Expansion of APTA by Adding Indonesia and the

Philippines (Unit: %, Million USD)

Scenario 2-1 Scenario 2-2 Intra-export Total export Intra-export Total export

Bangladesh 16 322 37 761China 3,604 3,649 8,598 8,316India 607 893 1,335 2,246Korea 5,974 3,218 13,333 7,398Sri Lanka 35 37 82 83Indonesia 1,714 783 3,914 1,748The Philippines 323 329 703 520Malaysia -146 - -321 -Thailand -103 - -222 -Vietnam -15 - -32 -Source: GTAP simulation result.

Finally, now, we consider the whole expansion of APTA with nine members. As we expected, all members will enjoy the benefit of trade liberalization through the APTA.

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Among new members, Malaysia will be most benefited from joining the APTA. The increases of Malaysia’s export reach USD 2,223 million to USD 4,844 million.

Table IV-11. The Export Effects of Expansion of APTA by Adding Malaysia and

Thailand, in Addition to Vietnam (Unit: %, Million USD)

Scenario 3-1 Scenario 3-2 Intra-export Total export Intra-export Total export

Bangladesh 16 322 37 850China 3,605 3,649 8,328 11,017India 607 893 1,319 3,054Korea 5,974 3,218 12,299 8,011Sri Lanka 35 37 78 101Indonesia 1,714 783 3,419 2,161The Philippines 323 329 656 1,161Malaysia 2,223 1,493 4,844 3,305Thailand 1,491 2,045 3,475 4,624Vietnam 181 471 46 1,127Source: GTAP simulation result.

V. Conclusion We have looked at the competitiveness of the three possible APTA member countries and its economic impact of joining the APTA. Quantitative analysis shows that there exist mutual gains of joining the APTA. It enhances bilateral trade between newly entering countries and the incumbent APTA members, as well as the increase in countries’ GDP. Such results would not be surprising because it is widely understood in economics that bilaterally lowering tariff barriers should be mutually beneficial for participating countries. Indonesia, the Philippines and Mongolia are expected to enjoy such gains by joining the APTA. One may question, however, if it is still possible for Indonesia and the Philippines to attract expected extra gains of joining the APTA as a member of ASEAN, given that it has already enforced bilateral FTAs with China and Korea. They also have signed the free trade agreement with India. In ACFTA and AKFTA, both Indonesia and the Philippines have wider and deeper concession lists in terms of market access to China and Korea. Both ACFTA and AKFTA agree on eliminating tariff for about 90% of the total tariff lines by 2010 for China and Korea, and by 2012 for Indonesia and the Philippines. Considering the coverage and degree of the APTA, which targets to cover 50% of goods and to reduce tariff by 50%, Indonesia and the Philippines seem to fail to extract additional gains due to their already existing high quality FTAs with the two (or three in the case of including India whose coverage and dept has not yet released) major APTA member states. To answer this question, we can think of two things: first, even though ACFTA and AKFTA contain high quality of contents in terms of its coverage and depth, it still includes the so-called sensitive list, which takes charge of about 10% of the total tariff lines. Products included in the sensitive list are not subject to tariff elimination; some are subject to tariff reduction and some remain unchanged.18 If countries connected through ACFTA or AKFTA can make a concession list focusing on such sensitive products as they join and expand the 18 AKFTA has products that are excluded from tariff reduction/elimination.

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APTA concession list, it would bring an extra positive impact of joining the APTA. Since China and Korea made its sensitive list considering all ASEAN member states as a whole, it could be possible to unbracket some of them when the matter falls within the two of the ten ASEAN countries. Also, APTA’s gradual tariff reduction, not for immediate elimination, lessens the involving countries sensitivity on its construction of concession list centered on the sensitive products in ACFTA and AKFTA. It can work as a stepping stone for further liberalization in the future.

Secondly, it is noteworthy that joining the APTA would make it possible for Indonesia and the Philippines to achieve more efficient production with respect to trade with the APTA member states. Under the separate ACFTA and AKFTA in which only bilateral cumulation19 provision applies, it is hard to fully utilize an existing production network. For example, if Indonesia makes garments using textile imported from China and exports them to Korea, Indonesia may be refused to tariff free access to the Korean market because it cannot meet the rules of origin under AKFTA due to imported textiles from China. It would reduce Indonesian exporting companies’ competitiveness in the Korean market, nullifying the effect of AKFTA. It does not make sense given that both Korea and China have FTAs with Indonesia and Korea and China are connected with the APTA. A similar situation may apply for the Philippines, too. As the share of inter-regional trade expands and intra-regional production network deepens, more of this type of tangling would be expected to occur.

If Indonesia and/or the Philippines join the APTA, it can effectively eliminate such problem, since it creates a single production market by applying single rules of origin. The reason that Indonesia imports textile from China, in the example above, would be that it is the most efficient way of producing garments. Without the APTA, Indonesia has to change its textile resourcing from China to other ASEAN member countries or to Korea to receive preferential tariff rates under AKFTA. It would result in the increase in production costs as it moves away from the most efficient way of production. Joining the APTA would resolve such problems, making it possible to achieve or maintain the efficient way of production.

Facing severe economic turmoil around the world today, more attention casts on the regional cooperation. The APTA is the oldest and only trade agreement which covers developing countries in Asia-Pacific region. Even though it combines developing countries in the region, the level of development varies among the APTA member countries and the countries investigated in this paper. Along with lowering tariff, economic cooperation that enhances not only its own but also its partner countries’ standard of living should be accompanied. It could give higher incentives for non-member countries to join the APTA. Further research is needed for this regard.

19 ACFTA mentions it adopts full cumulation among ASEAN member countries and China. Bilateral cumulation we refer here means that cumulaton is only allowed between ASEAN-China and ASEAN-Korea under the ACFTA and AKFTA.

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Appendix A. Industrial Classification by HS 2 digits

Industry HS

codeCommodity name

01 Live animals 02 Meat and edible meat offal 03 Fish and crustaceans, mollusks and other aquatic invertebrates

04 Dairy produce; birds’ eggs; natural honey; edible products of animal origin, not elsewhere specified or included

05 Products of animal origin, not elsewhere specified or included

06 Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage

07 Edible vegetables and certain roots and tubers 08 Edible fruit and nuts; peel of citrus fruit or melons 09 Coffee, tea, mate and spices

Primary product

10 Cereals 11 Products of the milling industry; malt; starches; inulin; wheat gluten

12 Oil seeds and oleaginous fruits; miscellaneous grains, seeds and fruit; industrial or medicinal plants; straw and fodder

13 Lac; gums, resins and other vegetable saps and extracts

14 Vegetable plaiting materials; vegetable products not elsewhere specified or included

15 Animal or vegetable fats and oils and their cleavage products; prepared edible fats; animal or vegetable waxes

16 Preparations of meat, of fish or of crustaceans, mollusks or other aquatic invertebrates

17 Sugars and sugar confectionery 18 Cocoa and cocoa preparations 19 Preparations of cereals, flour, starch or milk; pastrycooks’ products 20 Preparations of vegetables, fruit, nuts or other parts of plants 21 Miscellaneous edible preparations 22 Beverages, spirits and vinegar 23 Residues and waste from the food industries; prepared animal fodder

Processed primary product

24 Tobacco and manufactured tobacco substitutes 25 Salt; sulphur; earths and stone; plastering materials, lime and cement 26 Ores, slag and ash

27 Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes

Processed mineral product

28 Inorganic chemicals; organic or inorganic compounds of precious metal, of rare-earth metals, of radioactive elements or of isotopes

29 Organic chemicals 30 Pharmaceutical products

Chemical and rubber product

31 Fertilisers

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32 Tanning or dyeing extracts; tannins and their derivatives; dyes, pigments and other colouring matter; paints and varnishes; putty and other mastics; inks

33 Essential oils and resinoids; perfumery, cosmetic or toilet preparations

34

Soap, organic surface-active agents, washing preparations, lubricating preparations, artificial waxes, prepared waxes, polishing or scouring preparations, candles and similar articles, modeling pastes, “dental waxes” and dental preparation with a basis of plaster

35 Albuminoidal substances; modified starches; glues; enzymes

36 Explosives; pyrotechnic products; matches; pyrophoric alloys; certain combustible preparations

37 Photographic or cinematographic goods 38 Miscellaneous chemical products 39 Plastics and articles thereof 40 Rubber and articles thereof 41 Raw hider and skins(other than furskins) and leather

42 Articles of leather; saddlery and harness; travel goods, handbags and similar containers; articles of animal gut(other than silk-worm gut)

Leather product

43 Furskins and artificial fur; manufactures thereof 44 Wood and articles of wood; wood charcoal 45 Cork and articles of cork

46 Manufactures of straw, of esparto or of other plaiting materials; basketware and wickerwork

47 Pulp of wood or of other fibrous cellulosic materials; recovered(waste and scrap) paper or paperboard

48 Paper and paperboard; articles of paper pulp, of paper or of paperboard

Wood and paper product

49 Printed books, newspapers, pictures and other products of the printing industry; manuscripts, typerscripts and plans

50 Silk 51 Wool, fine or coarse animal hair; horsehair yarn and woven fabric 52 Cotton

53 Other vegetable textile fibres; paper yarn and woven fabrics of paper yarn

54 Man-made filaments 55 Man-made staple fibres

56 Wadding, felt and nonwovens; special yarns; twine, cordage, ropes and cables and articles thereof

57 Carpets and other textile floor coverings

58 Special woven fabrics; tufted textile fabrics; lace; tapestries; trimmings; embroidery

59 Impregnated, coated, covered or laminated textile fabrics; textile articles of a kind suitable for industrial use

60 Knitted or crocheted fabrics

Textile and clothes

61 Articles of apparel and clothing accessories, knitted or crocheted

[51]

62 Articles of apparel and clothing accessories, not knitted or crocheted

63 Other made up textile articles; sets; worn clothing and worn textile articles; rags

64 Footwear, gaiters and the like; parts of such articles 65 Headgear and parts thereof

66 Umbrellas, sun umbrellas, walking sticks, seat-sticks, whips, riding-crops and parts thereof

67 Prepared feathers and down and articles made of feathers or of down; artificial flowers; articles of human hair

68 Articles of stone, plaster, cement, asbestos, mica or similar materials 69 Ceramic products 70 Glass and glassware

Nonmetallic mineral product

71 Natural or cultured pearls, precious or semiprecious stones, precious metals, metals clad with precious metal, and articles thereof; imitation jewellery; coin

72 Iron and steel 73 Articles of iron or steel 74 Copper and articles thereof 75 Nickel and articles thereof 76 Aluminium and articles thereof 78 Lead and articles thereof 79 Zinc and articles thereof 80 Tin and articles thereof 81 Other base metals; cermets; articles thereof

82 Tools, implements, cutlery, spoons and forks, of base metal; parts thereof of base metal

Metal product

83 Miscellaneous articles of base metal General

machinery 84

Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof

Electrical machinery

85 Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles

Other transport

equipment 86

Railway or tramway locomotives, rolling-stock and parts thereof; railway or tramway track fixtures and fittings and parts thereof; mechanical(including electro-mechanical) traffic signaling equipment of all kinds

Transport equipment

87 Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof

88 Aircraft, spacecraft, and parts thereof Other transport

equipment 89 Ships, boats and floating structures

Precision machinery

90 Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof

[52]

91 Clocks and watches and parts thereof 92 Musical instruments; parts and accessories of such articles 93 Arms and ammunition; parts and accessories thereof

94

Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; lamps and lighting fittings, not elsewhere specified or included; illuminated signs illuminated name-plates and the like; prefabricated buildings

95 Toy, games and sports requisites; parts and accessories thereof 96 Miscellaneous manufactured articles

Other manufacturing

97 Works of art, collectors’ pieces and antiques Not specified 99 Commodities not specified according to kind

[53]

Appendix B. Change in TSI over Time

Table B-1. TSI of Indonesia against APTA Member States Partner Country Bangladesh China India

2004 2005 2006 2007 2004 2005 2006 2007 2004 2005 2006 2007

Primary Product 1.00 0.99 1.00 1.00 -0.44 -0.25 -0.28 -0.30 -0.19 0.71 0.69 0.52

Processed Primary Product 1.00 1.00 1.00 1.00 -0.30 -0.35 -0.39 -0.37 0.64 0.72 0.63 0.76

Processed Mineral 1.00 0.71 0.93 1.00 -0.56 -0.65 -0.53 -0.45 0.65 0.84 0.83 0.94

Leather Product 0.64 0.98 0.99 0.24 -0.52 -0.41 -0.49 -0.35 -0.22 0.08 0.36 0.05

Chemical & Rubber Prod. 0.91 0.93 0.94 0.95 -0.56 -0.57 -0.59 -0.61 -0.40 -0.33 -0.22 0.02

Metal Product 1.00 -0.13 0.90 0.94 -0.69 -0.71 -0.68 -0.70 -0.71 -0.58 -0.44 -0.48

Other Transport Equipment 1.00 1.00 0.84 1.00 -0.40 -0.63 -0.58 -0.80 0.88 -0.49 -0.34 0.97

Other Manufacturing 0.96 0.98 0.99 0.95 -0.62 -0.75 -0.75 -0.77 0.57 0.46 0.76 0.54

Nonmetallic Mineral Product 1.00 1.00 1.00 1.00 -0.69 -0.66 -0.66 -0.71 0.47 0.46 0.51 0.12

Transport Equipment 1.00 0.88 1.00 1.00 -0.60 -0.71 -0.82 -0.71 -0.20 -0.03 -0.40 -0.63

Textile and Clothes 0.87 0.84 0.71 0.66 -0.33 -0.52 -0.53 -0.55 0.27 0.54 0.09 -0.14

General Machinery 0.98 0.79 0.71 0.17 -0.82 -0.89 -0.89 -0.90 -0.16 0.11 0.14 0.12

Electrical Machinery 1.00 0.99 1.00 0.98 -0.48 -0.56 -0.57 -0.60 0.16 -0.03 0.06 -0.50

Precision Machinery 1.00 1.00 0.97 0.98 -0.95 -0.86 -0.89 -0.85 0.77 0.71 0.31 0.24

Wood and Paper Product 1.00 1.00 1.00 1.00 -0.17 -0.29 -0.18 -0.33 0.86 0.84 0.87 0.84

Total 0.95 0.90 0.92 0.94 -0.54 -0.58 -0.58 -0.59 0.33 0.46 0.41 0.51

[54]

Table B-1. TSI of Indonesia against APTA Member States (Cont.)

Partner Country Laos Rep. of Korea Sri Lanka

2004 2005 2006 2007 2004 2005 2006 2007 2004 2005 2006 2007

Primary Product 1.00 -1.00 -1.00 0.94 0.94 0.89 0.95 0.91 0.90 0.88 0.91

Processed Primary Product 1.00 1.00 0.77 0.29 0.26 0.19 0.42 0.79 0.74 0.63 0.65

Processed Mineral 1.00 1.00 -1.00 -1.00 0.91 0.64 0.65 0.63 1.00 0.97 1.00 0.98

Leather Product -0.74 -0.55 -0.48 -0.30 1.00 1.00 1.00 1.00

Chemical & Rubber Prod. 1.00 1.00 1.00 1.00 -0.41 -0.36 -0.20 -0.19 0.97 0.97 0.96 0.96

Metal Product 1.00 0.11 1.00 -0.65 -0.61 -0.19 -0.26 1.00 0.99 0.95 1.00

Other Transport Equipment 1.00 -0.64 0.01 -0.97 -0.22 0.23 1.00 0.87

Other Manufacturing 1.00 1.00 1.00 1.00 0.38 0.58 0.77 0.68 1.00 1.00 0.99 1.00

Nonmetallic Mineral Product 1.00 1.00 1.00 1.00 0.58 0.54 0.52 0.61 1.00 1.00 1.00 1.00

Transport Equipment 1.00 1.00 -0.98 -0.97 -0.89 -0.92 0.72 0.85 0.96 0.99

Textile and Clothes 1.00 0.99 0.95 0.99 0.17 0.36 0.46 0.50 0.99 0.98 0.97 0.97

General Machinery 0.73 1.00 1.00 0.97 -0.81 -0.75 -0.48 -0.68 0.83 0.91 0.97 0.97

Electrical Machinery 1.00 -1.00 1.00 -0.31 0.06 0.28 -0.08 0.99 1.00 1.00 1.00

Precision Machinery 1.00 1.00 -0.92 -0.86 -0.66 -0.93 1.00 1.00 0.89 0.39

Wood and Paper Product 1.00 1.00 1.00 1.00 0.79 0.87 0.88 0.85 0.99 0.99 0.99 0.99

Total 0.99 0.93 0.93 0.12 0.28 0.42 0.46 0.41 0.95 0.87 0.80 0.82

[55]

Table B-2. TSI of Mongolia against APTA Member States Partner Country Bangladesh China India

2004 2005 2006 2007 2004 2005 2006 2007 2004 2005 2006 2007

Primary Product -0.72 -0.62 -0.70 -0.58 -1.00 -1.00 -1.00 -1.00

Processed Primary Product -0.95 -0.82 -0.89 -0.76 -1.00 -1.00 -1.00 -1.00

Processed Mineral -0.61 -0.65 -0.64 -0.65 1.00 -1.00 1.00 0.96

Leather Product 0.26 0.14 0.25 0.14 -1.00 -1.00 -1.00 -1.00

Chemical & Rubber Prod. -1.00 -1.00 -0.96 -0.94 -0.94 -0.97 -1.00 -1.00 -1.00 -1.00

Metal Product -1.00 -0.80 -0.78 -0.84 -0.89 -0.99 -1.00 -1.00 -0.99

Other Transport Equipment -0.80 -0.71 -0.59 -0.97

Other Manufacturing -0.95 -0.95 -0.88 -0.94 -1.00 -1.00 -1.00 -1.00

Nonmetallic Mineral Product -0.86 -0.96 -0.83 -0.96 -1.00 -1.00 -1.00 -1.00

Transport Equipment -0.83 -0.85 -0.85 -0.99 -1.00 -1.00 -1.00

Textile and Clothes -1.00 -1.00 -1.00 -1.00 -0.86 -0.84 -0.76 -0.87 0.08 0.26 -0.64 0.51

General Machinery -1.00 -0.93 -0.92 -0.88 -0.96 -1.00 -1.00 -1.00 -0.87

Electrical Machinery -0.90 -0.96 -0.83 -0.96 -1.00 -1.00 -1.00 -1.00

Precision Machinery -1.00 -0.99 -0.89 -0.95 -0.97 -1.00 -1.00 -1.00

Wood and Paper Product -1.00 -0.79 -0.79 -0.70 -0.83 -1.00 -1.00 -1.00 -0.99

Total -1.00 -1.00 -1.00 -1.00 -0.84 -0.83 -0.81 -0.85 0.01 -0.93 -0.22 -0.67

[56]

Table B-2. TSI of Mongolia against APTA Member States (Cont.) Partner Country Laos Rep. of Korea Sri Lanka

2006 2004 2005 2006 2007 2004 2005 2006 2007

Primary Product -0.44 -0.61 -0.84 -0.54 -1.00 -1.00 -1.00 -1.00

Processed Primary Product -1.00 -0.96 -0.91 -0.97 -0.97 -1.00 -1.00 -1.00 -1.00

Processed Mineral -0.18 -0.13 0.03 0.55

Leather Product -0.89 -1.00 0.27 -1.00 -1.00 -1.00

Chemical & Rubber Prod. -0.99 -1.00 -0.99 -1.00 -1.00 -1.00 -1.00 -1.00

Metal Product 0.66 0.72 0.59 -0.95 -1.00 -1.00 -1.00 -1.00

Other Transport Equipment -0.61 0.49 -0.12 -0.73

Other Manufacturing -0.93 -0.84 -0.65 -0.94 -1.00

Nonmetallic Mineral Product -0.22 0.99 -0.47 0.72 -1.00 -1.00 -1.00

Transport Equipment -1.00 -1.00 -0.98 -1.00

Textile and Clothes -1.00 -0.72 -0.83 -0.82 -0.70 -1.00 -1.00 -1.00 -1.00

General Machinery -0.97 -1.00 -0.99 -0.98

Electrical Machinery -1.00 -1.00 -0.91 -1.00

Precision Machinery -1.00 -0.99 -0.70 -0.99 -1.00

Wood and Paper Product -0.96 -0.89 -0.88 -0.91 -1.00 -1.00 -1.00 -1.00

Total -1.00 -0.73 0.01 -0.59 -0.49 -1.00 -1.00 -1.00 -1.00

[57]

Table B-3. TSI of the Philippines against APTA Member States Partner Country Bangladesh China India

2004 2005 2006 2007 2004 2005 2006 2007 2004 2005 2006 2007

Primary Product 1.00 0.99 1.00 1.00 -0.63 -0.62 -0.60 -0.56 -0.99 -0.99 -1.00 -1.00

Processed Primary Product 0.48 -0.73 -0.44 0.17 -0.68 -0.69 -0.70 -0.70 -0.81 -0.91 -0.84 -0.96

Processed Mineral 0.91 1.00 1.00 -0.67 -0.71 -0.59 -0.64 -0.96 -0.97 -0.95 -0.31

Leather Product -1.00 -1.00 -0.99 0.24 -0.45 -0.45 -0.54 -0.47 -0.66 -0.40 -0.34 -0.52

Chemical & Rubber Prod. -0.41 0.48 -0.64 0.88 -0.74 -0.79 -0.81 -0.83 -0.79 -0.76 -0.72 -0.72

Metal Product -0.02 0.44 -0.01 0.56 -0.80 -0.75 -0.79 -0.79 -0.65 -0.71 -0.46 -0.17

Other Transport Equipment -1.00 1.00 1.00 -0.64 -0.62 -0.67 -0.95 0.65 0.61 0.11 -0.21

Other Manufacturing 1.00 1.00 1.00 0.07 -0.88 -0.83 -0.85 -0.84 -0.41 -0.04 -0.42 0.88

Nonmetallic Mineral Product -0.13 -0.61 -1.00 -1.00 -0.81 -0.81 -0.74 -0.88 0.40 0.21 -0.85 -0.24

Transport Equipment -0.75 -0.83 -0.79 -0.89 -0.05 -0.18 -0.13 -0.22

Textile and Clothes 0.88 0.96 0.88 0.48 -0.77 -0.80 -0.78 -0.80 -0.72 -0.82 -0.88 -0.88

General Machinery 0.88 0.96 0.44 0.91 -0.70 -0.79 -0.71 -0.79 0.40 -0.26 -0.21 -0.51

Electrical Machinery 0.32 -0.63 0.67 1.00 -0.69 -0.71 -0.63 -0.66 0.12 -0.21 -0.27 -0.67

Precision Machinery 0.67 1.00 1.00 -0.56 -0.66 -0.58 -0.68 -0.11 0.03 0.19 -0.16

Wood and Paper Product -0.72 1.00 1.00 1.00 -0.63 -0.62 -0.63 -0.71 0.49 0.54 0.58 0.47

Total 0.30 0.61 0.26 0.60 -0.72 -0.74 -0.72 -0.76 -0.55 -0.62 -0.56 -0.36

[58]

Table B-3. TSI of the Philippines against APTA Member States (Cont.) Partner Country Laos Rep. of Korea Sri Lanka

2004 2005 2006 2007 2004 2005 2006 2007 2004 2005 2006 2007

Primary Product 0.87 0.89 0.90 0.80 -0.91 -1.00 -0.24 -1.00

Processed Primary Product 1.00 1.00 0.78 0.78 0.67 0.71 -0.03 -0.49 0.58 0.05

Processed Mineral -0.82 -0.95 -0.87 -0.92 0.84 0.95 0.98 1.00

Leather Product -0.74 -0.74 -0.50 -0.53 -0.86 -0.91 -1.00

Chemical & Rubber Prod. 1.00 1.00 1.00 1.00 -0.82 -0.76 -0.82 -0.78 0.42 0.39 0.34 0.44

Metal Product -1.00 -0.18 -0.40 -0.04 0.04 0.96 0.11 0.91 0.99

Other Transport Equipment 1.00 -0.43 0.97 0.12 0.02 1.00 -0.77 -0.87

Other Manufacturing 1.00 1.00 0.81 -0.76 -0.73 -0.57 -0.29 0.76 0.95 0.92 0.63

Nonmetallic Mineral Product -0.27 -0.27 -0.57 -0.52 0.90 0.86 0.91 0.90

Transport Equipment 1.00 1.00 -0.87 -0.68 -0.81 -0.96 -0.99 -1.00 -0.90 -1.00

Textile and Clothes 1.00 1.00 1.00 -0.88 -0.91 -0.90 -0.80 0.84 0.74 0.27 0.44

General Machinery 1.00 1.00 0.87 -0.10 0.00 0.10 -0.33 0.02 0.58 -0.27 -0.16

Electrical Machinery 1.00 -0.46 -0.13 -0.47 -0.20 -0.93 -0.99 -1.00 -0.77

Precision Machinery 1.00 -0.16 0.27 -0.28 -0.60 0.82 0.62 1.00 1.00

Wood and Paper Product 1.00 1.00 1.00 1.00 -0.69 -0.42 -0.44 -0.26 0.87 0.86 0.95 0.50

Total 1.00 1.00 1.00 0.96 -0.44 -0.26 -0.40 -0.31 0.08 0.10 -0.03 0.14

[60]

Table B-4. Distribution of Indonesia’ TSI against APTA Member States Partner Country Bangladesh China India

04 05 06 07 04 05 06 07 04 05 06 07 TSI>0 15 12 5 7 22 29 27 28 22 24 27 21 Primary

Product TSI<0 1 1 0 0 50 43 45 48 23 24 23 22 TSI>0 23 23 22 16 29 27 27 27 35 41 37 35 Processed

Primary Product TSI<0 0 1 1 1 60 61 60 63 23 31 36 32

TSI>0 20 18 20 23 21 16 24 29 19 15 21 25 Processed Mineral TSI<0 0 1 2 1 83 88 84 77 49 61 53 46

TSI>0 3 2 3 3 4 6 5 6 7 6 5 5 Leather Product TSI<0 1 1 1 0 13 12 14 11 6 7 5 7

TSI>0 77 74 71 67 33 29 27 25 48 53 55 54 Chemical & Rubber Prod. TSI<0 2 2 4 5 132 137 134 141 94 98 94 97

TSI>0 15 22 23 23 17 19 19 18 24 32 34 40 Metal Product TSI<0 0 3 5 12 128 130 129 133 81 80 78 75

TSI>0 1 2 3 3 3 2 3 1 3 2 4 3 Other Transp. Equipment TSI<0 0 0 1 1 6 11 12 14 3 4 2 1

TSI>0 12 11 12 13 7 4 4 3 16 16 20 20 Other Manuf. TSI<0 1 1 3 1 42 46 45 44 9 15 17 18

TSI>0 20 17 15 14 7 8 8 7 24 23 24 31 Nonmetallic Mineral Prod. TSI<0 0 1 4 2 49 52 54 53 18 23 26 18

TSI>0 3 4 4 4 4 2 1 3 5 2 4 3 Transport Equipment TSI<0 0 1 0 0 11 12 14 13 4 8 8 7

TSI>0 53 45 46 44 50 34 31 31 68 71 64 64 Textile and Clothes TSI<0 8 18 24 33 101 122 122 123 43 48 56 60

TSI>0 24 28 28 17 4 2 1 1 15 21 28 25 General Machinery TSI<0 2 4 1 10 81 82 84 84 61 56 48 52

TSI>0 13 15 16 20 12 8 7 5 16 18 18 18 Electrical Machinery TSI<0 0 2 0 3 36 40 41 43 27 27 27 27

TSI>0 5 4 2 3 1 2 3 3 6 8 3 8 Precision Machinery TSI<0 0 0 1 2 46 45 44 44 18 20 26 28

TSI>0 19 24 23 21 25 22 26 21 29 36 30 33 Wood & Paper Prod. TSI<0 0 1 3 0 39 43 39 44 15 12 19 16

TSI>0 303 301 293 278 239 210 213 208 337 368 374 385 Total

TSI<0 15 37 50 71 877 924 921 935 474 514 518 506

[61]

Table B-4. Distribution of Indonesia’ TSI against APTA Member States (Cont.) Partner Country Laos Rep. of Korea Sri Lanka

04 05 06 07 04 05 06 07 04 05 06 07 TSI>0 1 0 0 42 42 45 46 11 13 11 15 Primary

Product TSI<0 0 1 1 10 22 19 15 1 1 4 0 TSI>0 2 1 3 41 47 46 43 35 24 28 24 Processed

Primary Product TSI<0 0 0 1 34 29 33 36 2 1 1 3

TSI>0 1 2 0 0 21 18 19 24 20 19 18 13 Processed Mineral TSI<0 0 0 1 1 61 69 66 65 0 1 3 3

TSI>0 5 8 7 9 4 4 4 6 Leather Product TSI<0 11 10 6 5 0 0 1 0


TSI>0 2 1 12 23 23 28 27 40 40 34 38 Metal Product TSI<0 0 1 0 112 109 105 112 0 3 6 2

TSI>0 1 2 2 2 4 1 2 3 Other Transp. Equipment TSI<0 0 7 7 6 8 0 0 1

TSI>0 1 2 1 3 15 20 23 23 20 19 18 16 Other Manuf. TSI<0 0 0 0 0 28 30 21 21 0 2 4 2

TSI>0 1 2 1 3 23 28 31 31 24 26 29 25 Nonmetallic Mineral Prod. TSI<0 0 0 0 0 24 24 24 22 0 1 2 1

TSI>0 1 1 0 1 1 1 4 6 6 5 Transport Equipment TSI<0 0 0 15 14 12 12 0 0 0 0

TSI>0 10 7 5 13 72 69 74 69 96 86 77 74 Textile and Clothes TSI<0 0 1 2 2 58 69 57 66 0 5 8 9

TSI>0 2 3 8 13 6 7 7 12 29 33 40 36 General Machinery TSI<0 1 0 2 1 75 77 76 73 3 3 3 2

TSI>0 1 0 7 14 15 21 17 23 25 27 23 Electrical Machinery TSI<0 0 5 0 34 33 26 30 0 0 0 0

TSI>0 1 3 8 4 3 3 7 9 8 8 Precision Machinery TSI<0 0 0 31 36 37 39 0 0 2 1

TSI>0 3 4 3 3 34 26 34 32 27 29 31 32 Wood & Paper Prod. TSI<0 0 0 0 0 25 33 27 25 2 2 1 2

TSI>0 24 32 24 76 347 350 380 375 413 408 415 395 Total

TSI<0 1 2 11 6 635 671 631 649 9 21 37 31

[62]

Table B-5. Distribution of Mongolia’s TSI against APTA Member States

Partner Country Bangladesh China India

04 05 06 07 04 05 06 07 04 05 06 07 TSI>0 8 13 9 14 0 0 0 0 Primary

Product TSI<0 49 50 54 51 10 8 3 4 TSI>0 2 6 3 9 0 0 0 0 Processed

Primary Product TSI<0 60 65 65 66 16 13 5 7

TSI>0 14 13 14 14 2 0 2 3 Processed Mineral TSI<0 62 64 68 69 1 1 1 7

TSI>0 7 8 6 8 0 0 0 1 Leather Product TSI<0 4 6 4 6 3 4 4 4

TSI>0 0 0 2 4 3 2 0 0 0 0 Chemical & Rubber Prod. TSI<0 1 2 115 125 131 135 17 24 22 24

TSI>0 0 10 11 9 6 0 0 0 1 Metal Product

TSI<0 1 98 100 104 107 3 16 19 23 TSI>0 1 1 1 0 Other Transp.

Equipment TSI<0 6 6 4 8 TSI>0 1 1 2 1 0 0 0 0

Other Manuf. TSI<0 41 42 40 36 7 7 9 8 TSI>0 3 1 4 1 0 0 0 0 Nonmetallic

Mineral Prod. TSI<0 46 44 44 46 5 4 6 11 TSI>0 1 1 0 0 0 0 0 Transport

Equipment TSI<0 11 13 14 15 2 1 3 TSI>0 0 0 0 0 9 9 14 8 2 2 2 5 Textile and

Clothes TSI<0 3 6 11 8 112 114 108 120 16 17 21 22 TSI>0 0 2 2 4 1 0 0 0 0 General

Machinery TSI<0 1 68 74 74 77 6 4 15 11 TSI>0 2 1 3 1 0 0 0 0 Electrical

Machinery TSI<0 42 46 42 43 8 3 7 18 TSI>0 0 0 1 0 0 0 0 0 Precision

Machinery TSI<0 33 37 36 36 6 9 7 19 TSI>0 0 5 6 9 5 0 0 0 1 Wood &

Paper Prod. TSI<0 2 43 50 47 50 7 9 6 12 TSI>0 0 0 0 0 67 77 82 70 4 2 4 11

Total TSI<0 3 8 12 12 790 836 835 865 105 121 126 173

[63]

Table B-5. Distribution of Mongolia’s TSI against APTA Member States (Cont.)


2006 2004 2005 2006 2007 2004 2005 2006 2007 TSI>0 8 6 4 4 0 0 0 0

Primary Product TSI<0 30 29 29 35 1 1 1 1 TSI>0 0 4 3 2 5 0 0 0 0 Processed

Primary Product TSI<0 1 36 35 42 49 1 1 1 1 TSI>0 4 9 9 11 Processed

Mineral TSI<0 16 19 11 18 TSI>0 1 1 6 0 0 0

Leather Product TSI<0 6 6 1 5 1 1 TSI>0 2 0 1 1 0 0 0 0 Chemical and

Rubber Product TSI<0 80 84 85 86 2 2 2 2 TSI>0 3 2 3 3 0 0 0 0

Metal Product TSI<0 59 70 76 82 1 1 2 2 TSI>0 1 1 2 0 Other

Transportation Equipment TSI<0 4 2 3 5

TSI>0 2 2 7 5 0 Other Manufacturing TSI<0 34 33 28 30 1

TSI>0 4 4 1 1 0 0 0 Nonmetallic Mineral Product TSI<0 26 27 28 33 1 1 1

TSI>0 0 0 0 1 Transport Equipment TSI<0 14 15 14 13

TSI>0 0 12 8 10 5 0 0 0 0 Textile and Clothes TSI<0 2 75 84 79 86 2 12 11 4

TSI>0 1 0 0 0 General Machinery TSI<0 55 58 61 61

TSI>0 0 0 2 0 Electrical Machinery TSI<0 39 43 39 41

TSI>0 0 0 2 0 0 Precision Machinery TSI<0 27 25 30 31 1

TSI>0 3 4 9 3 0 0 0 0 Wood and Paper Product TSI<0 38 34 29 39 2 4 2 5

TSI>0 0 45 40 58 39 0 0 0 0 Total

TSI<0 3 539 564 555 614 11 23 21 16

[64]

Table B-6. Distribution of the Philippines’ TSI against APTA Member States

Partner Country Bangladesh China India

04 05 06 07 04 05 06 07 04 05 06 07 TSI>0 3 6 2 1 10 11 11 12 5 5 5 1 Primary

Product TSI<0 0 1 0 0 45 48 50 45 30 36 34 38 TSI>0 3 5 7 10 11 11 12 10 11 10 8 8 Processed

Primary Product TSI<0 2 2 1 1 71 67 71 67 44 43 40 41

TSI>0 2 2 2 13 14 19 18 6 4 5 5 Processed Mineral TSI<0 1 0 0 70 75 71 78 43 37 53 44

TSI>0 0 0 2 1 5 5 4 4 2 2 3 2 Leather Product TSI<0 2 1 1 1 12 12 14 12 9 8 10 8


TSI>0 3 11 3 4 12 16 12 11 17 26 24 23 Metal Product

TSI<0 5 3 4 4 118 120 127 124 79 65 76 77 TSI>0 0 1 1 1 2 2 0 2 2 1 0 Other Transp.

Equipment TSI<0 1 0 0 6 8 9 12 1 0 1 1 TSI>0 7 3 3 3 2 3 3 3 11 9 11 13

Other Manuf. TSI<0 0 0 0 2 43 40 46 43 14 18 15 12 TSI>0 3 2 0 0 5 5 8 3 4 6 7 11 Nonmetallic

Mineral Prod. TSI<0 2 1 2 1 48 52 50 55 26 28 28 26 TSI>0 2 1 1 1 2 2 2 1 Transport

Equipment TSI<0 13 13 13 14 5 4 6 8 TSI>0 10 12 9 9 15 11 16 10 16 24 19 21 Textile and

Clothes TSI<0 9 12 16 13 133 139 131 139 84 63 69 71 TSI>0 11 13 9 8 10 4 9 7 9 14 14 11 General

Machinery TSI<0 1 4 1 2 72 79 73 77 51 47 54 54 TSI>0 3 2 4 4 5 3 8 7 14 15 14 7 Electrical

Machinery TSI<0 3 5 1 0 43 45 40 41 26 29 25 35 TSI>0 1 1 1 9 5 8 7 7 6 7 7 Precision

Machinery TSI<0 1 0 0 35 37 34 38 22 25 20 23 TSI>0 1 6 6 5 11 8 11 9 8 9 9 13 Wood &

Paper Prod. TSI<0 1 0 0 0 47 46 47 53 30 29 23 24 TSI>0 61 76 64 62 132 113 133 112 129 153 146 146

Total TSI<0 31 33 29 25 895 929 927 951 593 546 572 578

[65]

Table B-6. Distribution of the Philippines’ TSI against APTA Member States (Cont.)


04 05 06 07 04 05 06 07 04 05 06 07 TSI>0 25 21 23 22 1 0 3 0 Primary

Product TSI<0 24 20 24 21 1 2 2 2 TSI>0 1 1 33 29 33 35 11 13 12 13 Processed

Primary Product TSI<0 0 0 33 37 34 33 4 4 1 5

TSI>0 10 9 9 12 2 3 1 2 Processed Mineral TSI<0 46 54 47 51 3 1 3 0

TSI>0 3 3 2 2 0 1 0 Leather Product TSI<0 8 9 10 8 2 2 1


TSI>0 0 17 18 15 14 11 10 10 7 Metal Product

TSI<0 1 102 101 109 116 4 3 2 1 TSI>0 1 2 3 2 1 1 0 0 Other Transp.

Equipment TSI<0 0 9 5 10 10 0 1 1 TSI>0 1 2 1 7 5 11 5 12 9 9 5

Other Manuf. TSI<0 0 0 0 31 30 26 33 1 1 1 2 TSI>0 15 17 14 14 8 6 7 6 Nonmetallic

Mineral Prod. TSI<0 33 32 32 33 1 2 1 1 TSI>0 1 1 1 3 1 0 1 0 1 0 Transport

Equipment TSI<0 0 0 13 11 13 14 3 4 1 1 TSI>0 1 2 2 39 31 33 33 21 21 17 15 Textile and

Clothes TSI<0 0 0 0 89 107 96 92 13 16 11 12 TSI>0 2 3 4 8 4 6 3 10 10 11 6 General

Machinery TSI<0 0 0 1 69 76 74 76 9 5 6 6 TSI>0 1 8 5 10 10 6 2 4 3 Electrical

Machinery TSI<0 0 38 43 38 38 7 6 5 5 TSI>0 1 14 9 11 5 4 3 2 1 Precision

Machinery TSI<0 0 24 27 30 31 1 2 0 0 TSI>0 3 3 3 2 13 13 13 16 9 11 10 6 Wood & Paper

Prod. TSI<0 0 0 0 0 35 32 37 36 2 3 1 4 TSI>0 11 11 14 11 205 187 199 192 123 113 112 88

Total TSI<0 0 0 0 2 683 708 706 709 63 63 44 44

[67]

Appendix C. RCA and TSI Analysis against APTA Member States

Table C-1. RCA and TSI Analysis of Indonesian Competitiveness over Bangladesh Industry Category 2004 2005 2006 2007

RCA<1 & TSI<0 0 0 0 0 Primary Product

RCA>1 & TSI>0 8 5 4 5 RCA<1 & TSI<0 0 1 0 1 Processed Primary

Product RCA>1 & TSI>0 12 12 12 8 RCA<1 & TSI<0 0 0 1 1

Processed Mineral RCA>1 & TSI>0 5 2 3 5 RCA<1 & TSI<0 0 0 0 0

Leather Product RCA>1 & TSI>0 0 0 0 0 RCA<1 & TSI<0 2 2 4 5 Chemical and

Rubber Product RCA>1 & TSI>0 26 22 18 33 RCA<1 & TSI<0 0 3 5 7

Metal Product RCA>1 & TSI>0 3 4 8 8 RCA<1 & TSI<0 0 0 1 0 Other Transportation

Equipment RCA>1 & TSI>0 0 0 0 1 RCA<1 & TSI<0 0 0 2 1 Other

Manufacturing RCA>1 & TSI>0 4 4 4 5 RCA<1 & TSI<0 0 1 3 1 Nonmetallic Mineral

Product RCA>1 & TSI>0 9 8 6 6 RCA<1 & TSI<0 0 1 0 0 Transport

Equipment RCA>1 & TSI>0 1 1 1 1 RCA<1 & TSI<0 3 7 6 15

Textile and Clothes RCA>1 & TSI>0 36 31 24 26 RCA<1 & TSI<0 2 4 1 7

General Machinery RCA>1 & TSI>0 2 0 1 4 RCA<1 & TSI<0 0 2 0 3

Electrical Machinery RCA>1 & TSI>0 7 5 6 7 RCA<1 & TSI<0 0 0 1 1

Precision Machinery RCA>1 & TSI>0 0 0 1 1 RCA<1 & TSI<0 0 1 2 0 Wood and Paper

Product RCA>1 & TSI>0 11 13 15 14 RCA<1 & TSI<0 7 22 26 42 RCA>1 & TSI>0 124 107 103 124 Total

Total 131 129 129 166

[68]

Table C-2. RCA and TSI Analysis of Indonesian Competitiveness over China

Industry Category 2004 2005 2006 2007 RCA<1 & TSI<0 43 39 43 46

Primary Product RCA>1 & TSI>0 13 14 17 16 RCA<1 & TSI<0 50 48 49 52 Processed Primary







Other Manufacturing RCA>1 & TSI>0 5 3 3 2 RCA<1 & TSI<0 38 42 44 40 Nonmetallic Mineral


Transport Equipment RCA>1 & TSI>0 0 0 0 0 RCA<1 & TSI<0 66 78 82 83






Total 871 901 908 864

[69]

Table C-3. RCA and TSI Analysis of Indonesian Competitiveness over India

















Total 558 600 600 576

[70]

Table C-4. RCA and TSI Analysis of Indonesian Competitiveness over Laos Industry Category 2004 2005 2006 2007

















Total 18 12 15 26

[71]

Table C-5. RCA and TSI Analysis of Indonesian Competitiveness over Korea

















Total 724 754 752 703

[72]

Table C-6. RCA and TSI Analysis of Indonesian Competitiveness over Sri Lanka

















Total 181 154 170 170

[73]

Table C-7. RCA and TSI Analysis of Mongolia’s Competitiveness over Bangladesh

















Total 1 4 7 11

[74]

Table C-8. RCA and TSI Analysis of Mongolia’s Competitiveness over China

















Total 801 852 857 886

[75]

Table C-9. RCA and TSI Analysis of Mongolia’s Competitiveness over India

















Total 100 116 123 178

[76]

Table C-10. RCA and TSI Analysis of Mongolia’s Competitiveness over Laos Industry Category 2006

RCA<1 & TSI<0 0 Primary Product

RCA>1 & TSI>0 0 RCA<1 & TSI<0 1 Processed Primary

Product RCA>1 & TSI>0 0 RCA<1 & TSI<0 0

Processed Mineral RCA>1 & TSI>0 0 RCA<1 & TSI<0 0

Leather Product RCA>1 & TSI>0 0 RCA<1 & TSI<0 0 Chemical and

Rubber Product RCA>1 & TSI>0 0 RCA<1 & TSI<0 0

Metal Product RCA>1 & TSI>0 0 RCA<1 & TSI<0 0 Other Transportation

Equipment RCA>1 & TSI>0 0 RCA<1 & TSI<0 0

Other Manufacturing RCA>1 & TSI>0 0 RCA<1 & TSI<0 0 Nonmetallic Mineral

Product RCA>1 & TSI>0 0 RCA<1 & TSI<0 0

Transport Equipment RCA>1 & TSI>0 0 RCA<1 & TSI<0 0

Textile and Clothes RCA>1 & TSI>0 0 RCA<1 & TSI<0 0

General Machinery RCA>1 & TSI>0 0 RCA<1 & TSI<0 0

Electrical Machinery RCA>1 & TSI>0 0 RCA<1 & TSI<0 0

Precision Machinery RCA>1 & TSI>0 0 RCA<1 & TSI<0 0 Wood and Paper

Product RCA>1 & TSI>0 0 RCA<1 & TSI<0 1 RCA>1 & TSI>0 0 Total

Total 1

[77]

Table C-11. RCA and TSI Analysis of Mongolia’s Competitiveness over Korea

















Total 537 562 561 619

[78]

Table C-12. RCA and TSI Analysis of Mongolia’s Competitiveness over Sri Lanka

















Total 10 15 15 16

[79]

Table C-13. RCA and TSI Analysis of the Philippines’ Competitiveness over Bangladesh

















Total 42 51 37 45

[80]

Table C-14. RCA and TSI Analysis of the Philippines’ Competitiveness over China Industry Category 2004 2005 2006 2007

















Total 886 906 910 903

[81]

Table C-15. RCA and TSI Analysis of the Philippines’ Competitiveness over India Industry Category 2004 2005 2006 2007

















Total 600 568 588 588

[82]

Table C-16. RCA and TSI Analysis of the Philippines’ Competitiveness over Laos Industry Category 2004 2005 2006 2007

















Total 2 2 7 8

[83]

Table C-17. RCA and TSI Analysis of the Philippines’ Competitiveness over Korea Industry Category 2004 2005 2006 2007

















Total 742 760 750 725

[84]

Table C-18. RCA and TSI Analysis of the Philippines’ Competitiveness over Sri Lanka Industry Category 2004 2005 2006 2007

















Total 91 78 69 70

[85]

Appendix D. Change in TII over Time

Table D-1. Change in TII of Indonesia

Partner Country Bangladesh China India Korea Sri Lanka

Industry 04 04 05 06 07 04 05 06 07 04 05 06 07 04 05

Primary Product 412.9 11.7 799.8 56.8 0.3 20.8 12.0 7.9 3.9 6.5 4.5 3.9 0.3 64.5 15.3 Processed Primary Product 117.3 16.6 8.1 15.1 0.7 805.8 2230.8 50.4 1.9 5.8 42.2 2.7 0.4 168.4 26.9

Processed Mineral 14.1 40.3 3.7 4.2 0.3 2.0 1.9 74.9 0.4 1.7 4.1 3775.1 12.6 18.2 14.3

Leather Product 21.7 0.2 0.2 0.3 0.1 4.5 1.2 1.2 0.1 2.3 2.2 2.3 0.2 10.4 19.5 Chemical and Rubber Product 21.9 1.2 5.3 2.3 0.2 4.5 3.6 4.6 0.5 2.9 2.2 1.6 0.1 7.5 6.7

Metal Product 7122.8 265.2 40174.4 0.9 0.1 1.5 2.2 1.5 0.7 4.0 1.4 5.7 0.2 52.4 6.6 Other Transport Equipment 8.2 0.1 0.1 2.6 0.1 4.9 0.3 0.7 0.1 0.1 0.3 0.1 0.0 0.0

Other Manufacturing 5.5 4.9 3.1 5.1 0.3 888.6 1.6 3.3 0.3 4.1 2.5 3.3 0.2 6.5 4.8 Nonmetallic Mineral Product 21.2 7.4 5.9 10.3 5.4 4.7 2.0 2.0 0.2 2.6 1.8 1.7 0.2 60.6 12.3

Transport Equipment 1.5 0.2 0.2 0.2 0.0 8.2 0.6 0.6 0.0 0.1 0.1 0.2 0.0 1.8 0.3

Textile and Clothes 17.0 2.6 2.0 2.3 0.2 12.9 7.0 4.5 0.5 4.8 4.1 5.1 0.4 219.6 54.2

General Machinery 1.3 0.1 0.1 0.1 0.0 0.4 0.6 0.8 0.0 0.2 0.3 0.2 0.0 3.7 2.9

Electrical Machinery 3.5 0.7 0.3 0.7 0.0 0.7 0.6 0.7 0.0 1.8 1.5 1.4 0.1 9.8 5.5

Precision Machinery 1.9 0.0 0.0 0.0 0.0 1.5 1.3 0.9 0.1 0.1 0.1 0.4 0.0 3.2 3.5 Wood and Paper Product 41.7 36.3 29.4 45.0 2.2 8.2 5.8 10.2 0.9 22.7 18.0 15.8 0.9 22.6 16.9

Total 381.7 43.7 5316.9 9.3 0.6 88.5 178.0 13.0 0.7 4.4 6.2 323.0 1.3 79.8 19.2

[86]

Table D-2. Change in TII of Mongolia

Partner Country Bangladesh China India Korea Sri Lanka

Industry 04 04 05 06 07 04 05 06 07 04 05 06 07 04 05

Primary Product 697.1 332.1 263.6 7.6 0.0 0.0 0.0 0.0 2.0 1.1 3.2 0.1 0.0 0.0 Processed Primary Product 0.2 13.6 8.5 2.4 0.0 0.0 0.0 0.0 2.1 4.3 0.4 0.0 0.0 0.0

Processed Mineral 71.0 68.6 68.8 5.3 133.0 0.0 108.7 0.4 62.9 23.6 25.8 2.4

Leather Product 57.4 87.2 135.0 21.1 0.0 0.0 0.0 0.0 1.5 0.0 1.7 0.0 0.0 Chemical and Rubber Product 0.1 0.9 0.1 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.1 0.0 0.0 0.0

Metal Product 12975.7 2038.1 6717.8 0.6 0.0 0.0 0.0 0.0 0.7 0.7 1.2 0.0 0.0 0.0 Other Transport Equipment 0.5 633.6 2.5 0.0 0.0 0.3 6.8 0.0

Other Manufacturing 0.0 0.5 0.9 0.0 0.0 0.0 0.0 0.0 0.2 0.4 2.1 0.0 0.0 Nonmetallic Mineral Product 0.3 9.9 0.1 0.0 0.0 0.0 0.0 0.0 0.1 20.0 0.1 0.1 0.0

Transport Equipment 6.6 2.5 7.3 0.1 0.0 0.0 0.0 0.0 0.0 0.1 0.0


General Machinery 0.3 0.2 0.4 0.0 0.0 0.0 0.0 0.0 0.7 0.2 0.0 0.0

Electrical Machinery 0.1 0.5 0.5 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0

Precision Machinery 0.0 0.0 0.2 0.0 0.1 0.0 0.0 0.0 0.0 0.0 1.3 0.0 0.0 Wood and Paper Product 42.0 31.1 25.4 0.9 0.0 0.0 0.0 0.0 0.8 1.4 1.1 0.1 0.0 0.0

Total 0.0 1712.9 302.0 891.5 4.4 3.7 0.1 2.7 0.5 2.8 2.9 1.7 0.1 0.0 0.0

[87]

Table D-3. Change in TII of the Philippines Partner Country Bangladesh China India Rep. of Korea Sri Lanka

Industry 2004 2004 2005 2006 2007 2004 2005 2006 2007 2004 2005 2006 2007 2004 2005

Primary Product 113.8 3.2 2.7 2.6 0.4 1.1 1.4 4.7 0.0 17.2 11.2 13.5 1.0 0.0 0.0

Processed Primary Product 8.8 4.2 1.6 2.4 0.1 2.0 0.9 0.9 0.1 5.6 13.8 11.3 0.5 2.4 24.5

Processed Mineral 0.4 0.5 0.5 1.5 0.2 1.4 0.2 0.1 0.0 5.6 2.3 1.4 0.4 1.1 5.6

Leather Product 0.0 0.4 0.1 0.2 0.0 0.2 0.7 1.2 0.0 0.2 0.6 0.2 0.0 0.4 2.0

Chemical and Rubber Product 5.3 0.2 279.0 0.2 0.1 1.2 0.6 0.4 0.0 0.4 0.5 0.4 0.0 4.5 4.5

Metal Product 1188.7 18.1 870.4 106.9 0.0 1.0 7.9 1.1 0.2 2.3 1.8 1.1 0.3 1264.6 14.9

Other Transport Equipment 0.0 0.4 0.2 1.4 0.0 0.9 1.2 0.0 0.0 0.0 0.8 0.0 0.0 6.4 1.1

Other Manufacturing 1.1 13.0 3.4 3.0 0.9 1.6 3.9 1.0 0.3 1.8 2.6 4.2 14.3 108.7 63.8

Nonmetallic Mineral Product 1.9 0.5 0.8 2.5 0.0 1.7 1.1 0.4 0.8 2.1 2.2 2.4 0.1 4.5 4.3

Transport Equipment 0.3 0.2 0.3 0.0 2.3 1.4 1.3 0.1 0.2 0.2 0.3 0.0 0.0 0.0


General Machinery 0.7 0.3 0.4 0.3 0.0 0.2 0.1 0.1 0.0 0.4 0.3 0.4 0.0 1.6 1.4

Electrical Machinery 0.1 0.4 1.9 4.2 0.0 0.3 0.2 0.3 0.1 0.7 2.0 1.7 0.2 3.6 0.1

Precision Machinery 0.5 0.4 0.2 0.4 0.0 2.3 1.8 1.6 0.0 0.3 0.8 0.3 0.0 0.2 14.2

Wood and Paper Product 0.0 2.2 2.1 1.8 0.1 3.1 2.7 1.5 0.2 1.0 2.2 1.3 0.1 38.5 10.3

Total 97.2 3.7 158.5 15.4 0.1 1.8 1.9 0.9 0.1 2.7 2.7 2.7 0.8 114.7 10.4

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