Has ASEAN Regional Cooperation changed its concentration of trade with APEC?
Marissa Maricosa A. Paderon
Abstract
This paper examines how the concentration of merchandise trade between the
Association of Southeast Asian Nations (ASEAN) and the Asia Pacific Economic Cooperation
(APEC) has changed as the former deepens its regional integration using various trade
concentration measures such as trade entropy index, Herfindahl-Hirschman Index and
Bilateral Trade Intensity Index. Based on the empirical results, the study concludes that
ASEAN trade with APEC is less dispersed across the years of regional cooperation implying
that trading of ASEAN is restricted only to a small number of APEC economies as evidenced
by the almost constant low values of trade entropy indices for exports and imports.
Estimated bilateral trade intensity indices were greater than expected but at a declining
trend indicating that ASEAN might have traded more intensively with other countries than
APEC economies at a time of ASEAN integration and bilateral FTAs. The above findings
suggest that effects of ASEAN regional cooperation on trade concentration with APEC seem
restrictive to a few APEC economies but trade has been dispersive in sectors.
1
Draft
5 May 2015
Has ASEAN Regional Cooperation changed its concentration of trade with APEC?
Marissa Maricosa A. Paderon1
1. Introduction
The Association of Southeast Asian Nations (ASEAN) is a distinctive model for socioeconomic integration and recognized globally as a leading regional bloc in East Asia.
It was founded in 1967 to focus primarily on political and security issues affecting the
region. Using flexibility and consensus (“the ASEAN way”), it gradually led the region
to move from conflict to cooperation (ADBI, 2014). Today, it is regarded as a
stabilizing factor in Southeast Asia through its own initiatives of collaboration and
cooperation among its members, its policy of maintaining active dialogues with the
major powers and other countries in the Asia-Pacific. It has launched this 2015, the
ASEAN Economic Community (AEC), part of a broader ASEAN Community which
includes political-security and socio-cultural pillars; with China and India as the prime
movers of this initiative.
This AEC juncture is particularly significant since it
happened just at a time that the global economy is shifting towards Asia.
APEC (the Asia Pacific Economic Cooperation) was created in 1989 as an Informal
Ministerial-level dialogue group where members are referred to as “economies”
rather than countries as they engage with one another as economic entities. It is an
interregional grouping highly regarded being the only multilateral forum to bring
together the People’s Republic of China (PROC), and its two territories – Hong Kong
China and Chinese Taipei. It also includes huge economies of the United States,
China and Russia; and developed economies of Japan, Republic of Korea, Australia
and New Zealand. Note that seven out of ten members of the ASEAN are part of the
APEC. APEC is a major economic partner of the ASEAN and a key regional dialogue
partner in political and security matters.
This paper examines how the concentration of merchandise trade between the
ASEAN and APEC has changed as the former deepens its regional integration. The
analytical framework consists of different trade concentration ratios such as trade
entropy index, Herfindahl-Hirschman Index and Bilateral Trade Intensity Index. The
1
Dr. Marissa Maricosa A. Paderon is an Assistant Professor at the Department of Economics and current
Director of the European Studies Program at the Ateneo de Manila University. The author is grateful to Ryan
Dizon for his excellent research assistance provided during the conduct of study.
2
study also determines the long-run trade relations between the two regional blocs
(1995-2013) to see trade creation and trade diversion likely effects of the ASEAN
Regional Cooperation and other factors that might influence the concentration of
trade between the two regional blocs.
The paper first discusses the evolution of the ASEAN since 1967; its gradual
economic integration from preferential trading arrangements (PTA) to ASEAN Free
Trade Area (AFTA) and it pursuit to an ASEAN Community; its regional cooperation
efforts through the ASEAN Regional Forum, the ASEAN Plus Three process, and the
East Asia Summit. The next section determines the ASEAN relations with APEC; their
similarities and differences; and how APEC can be a building bloc to APEC. After
that, the paper examines the changes in trade concentration between APEC and
ASEAN as the latter deepened its economic integration. Finally, the last section
provides the conclusion of the study.
2. Overview of ASEAN and regional cooperation
As a regional bloc, the ASEAN took a slow approach from conflict towards building
regional cooperation. ASEAN’s model of regional cooperation developed from
various phases given the diverse character of its members.
The ASEAN from 1967 to 1975
ASEAN is an association of Southeast Asian states that was created on August 8,
1967 by its founding member states - Indonesia, Malaysia, Philippines, Singapore and
Thailand, referred to as the ‘ASEAN-5.’ Its main purpose is to address primarily
geopolitical and security concerns in the region caused by the Cold War; and the war
in Vietnam. The ASEAN-5 was deeply concerned of domestic Communist-led
revolutionary movements and vulnerable to major powers of the Soviet Union and
China (Frost, 2008).
There were conflicts between each other (confrontation of Indonesia and Malaysia;
Philippines’ claim over Malaysian state of Sabah) and thus there was little trust or
confidence among the five founding members in the late 1960s.
From 1967 to
1975, there was minimal activity and members simply focused on discussion and
confidence building.
ASEAN PTA in 1976
The end of Indochina wars in 1975 somehow created uncertainty in the region yet
stimulated a second phase of development. In 1976, the ASEAN Leaders set an
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economic agenda to achieve progressive trade and investment liberalization. The
ASEAN-5 took its initial step of moving to a closer economic integration by signing
the ASEAN Preferential Trading Arrangements (APTA) in 1977 where each member
country gives a preferential tariff to ASEAN partners and regular tariffs are imposed
to non-ASEAN members. Note that these member countries then have shifted their
trade policy toward an export promotion from a failed import substitution policy.
The APTA laid the foundation for the region’s vast economic transformation.
Cited from Frost (2008), the following are the key features of the ASEAN approach to
regional cooperation:
 The ‘ASEAN Way’ is characterized by informality and decisions are sought
based on consensus with cooperation and flexibility.
 ASEAN adheres to the principle of non-interference in the internal affairs
of the member states.
 The conduct of relations in Southeast Asia is indicated in the ASEAN
Treaty of Amity and Cooperation (TAC) signed by the members in
February 1976. The TAC calls for ‘non-interference in the internal affairs
of one another’, a ‘renunciation of the threat or use of force’ and the
‘settlement of disputes by peaceful means.’
 ASEAN emphasizes consultations through frequent meetings. The ASEAN
Structure consists of regular Annual Ministerial Meetings attended by
foreign and economic ministers; Post Ministerial Conference attended by
foreign ministers of ASEAN’s dialogue partners (Australia, Canada, China,
EU, India, Japan, New Zealand, Republic of Korea and the United States;
and the United Nations Development Programme has a dialogue status).
 ASEAN endorses economic cooperation as a focal point of its regionalism
while facilitating foreign direct investments (FDI) flows into the region.
 Members used ASEAN’s collective power to include major external
powers in dialogue.
 Members used the ASEAN to take a common stand on certain regional
security issues affecting them (Indochina refugee crisis in 1978-79 that
posed serious threat among the members; over the conflict in Cambodia
due to Vietnam’s invasion in December 1978).
The 1980s for the ASEAN-5 depicted liberal trade and investment regimes with
exports and foreign direct investments on an upward trend particularly after the
1985 Plaza Accord when yen appreciated compelling the multinational companies to
relocate their manufacturing to Asia. All these changes enhanced the formation of
today’s East Asian production networks and supply chains (ADBI, 2014). A salient
factor in ASEAN’s success is its increasing role in forging economic integration with
Japan, China, and the Republic of Korea. The ASEAN members pursued competitive
4
export-led strategies specifically on parts and components trade to assemble final
goods. FDI soared within and across the region and boosted the small- and mediumenterprises (SMEs).
Early 1990s and the AFTA in 1992
The third phase of its development was in the early 1990s when most of the ASEAN
economies were part of the so called ‘East Asian Miracle.’ During this period, nonASEAN countries which would later become part of the bloc started to adopt marketoriented policies. Vietnam introduced its ‘doi moi’ program in 1986 at the time that
Lao PDR began its New Economic Mechanism; while Cambodia liberalized trade on a
gradual phasing by first abolishing its state-monopoly on foreign trade (Paderon,
2012). Note also that China was challenging ASEAN to lead in the export market
while offering enormous business opportunities. Globalization expanded so rapidly
that ASEAN was compelled to reposition itself as a key player in the global trading
economy.
Fifteen years after the APTA, the ASEAN Heads of States signed the Singapore
Declaration Act in 1992 establishing the ASEAN Free Trade Area (AFTA). The AFTA is
the second level of economic integration in the region where ASEAN members
removed all tariffs and non-tariff barriers on goods traded among themselves; but
impose regular tariffs on non-ASEAN countries. The Common Effective Preferential
Tariff (CEPT) Scheme is the mechanism used to reduce the tariffs between ASEAN
members from 1993 to 2002.
Two related agreements were also adopted, namely, (1) the ASEAN Framework
Agreement on Services (AFAS) in 1995; and (2) ASEAN Investment Area in 1998 to
liberalize intra-ASEAN FDI and facilitate FDI inflows from abroad (ADBI, 2014). These
agreements were created at a time of the ASEAN enlargement with the admission of
Vietnam (1995); Lao PDR and Myanmar (1997; and Cambodia (1999), collectively
known as ‘CLMV.’
With the inclusion of CLMV, ASEAN covered most of Southeast Asia with a total
membership of ten countries. It has a total population of 698 million and market
size of 6.5% of world GDP.
The Asian Financial Crisis and ASEAN: 1997-98
ASEAN faced challenges when it entered the fourth phase, from mid-1997 to 1998.
The rapid growth of economy (measured by the gross domestic product) driven by
FDI flows and domestic investment, rising huge amounts of short-term capital
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inflows and rigid exchange rate policy created imbalances in the region. It initially
started in Thailand but the crisis eventually spread rapidly affecting most of the
ASEAN members, the Republic of Korea and other East Asian countries. Annual GDP
of the ASEAN-6 (Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore and
Thailand) declined by average of 8% in 1998. The same countries recovered only
after 6 to 7 years when its GDP grew back to about 6% (ADBI, 2014).
The aftermath of the Asian Financial Crisis brought positive results as the ASEAN
dynamics changed remarkably both internally and externally. First, at the peak of
the financial crisis in December 1997, the ASEAN Leaders adopted the ‘ASEAN Vision
2020’ seeking a commitment to regional cohesion. Second, a closer economic
cooperation (mainly macroeconomic, monetary and financial cooperation) between
ASEAN and other East Asian countries of China, Japan and Korea through ‘ASEAN+3
meetings’ was institutionalized with the Joint Statement on East Asia Cooperation at
the 1999 Manila Summit.
The cooperation agreement facilitated the regular
meetings of ASEAN+3 Finance Ministers and their Deputies, and the creation of an
Economic Review and Policy Dialogue. It also led to the legal enactment of the
ASEAN Chiang Mai Initiative in 2002 and the Asian Bond Markets Initiative in 2003.
After 2003, regular meetings of the ASEAN Finance Ministers Meetings (AFMM) were
conducted. Note that AFMM resulted from the ASEAN Ministerial Understanding of
Cooperation in Finance adopted in Phuket in March 1997. After that, the ASEAN
Surveillance Process unit, established in the ASEAN Secretariat in 1999, was
expanded into a Macroeconomic and Finance Surveillance Office in 2010. Finally, in
2003, a Roadmap for Monetary and Financial Integration (capital market
development, financial and capital account liberalization; and currency cooperation)
was created in 2003.
The Future: ASEAN Economic Community
The late 1990s can be described as the most challenging phase of the ASEAN
evolution as the members recovered from the Asian Financial Crisis; and continued
to strengthen its cooperation initiatives. In October 2003, at the ninth ASEAN
Summit in Bali, the ASEAN Leaders decided to deepen its economic integration by
transforming the ASEAN into an ASEAN Community by 2020. The Bali Concord II,
backed the ASEAN Vision 2020, and states that:
“an ASEAN Community shall be established comprising three pillars, namely, political and
security cooperation, economic cooperation, and socio-cultural cooperation that are closely
intertwined and mutually reinforcing for the purpose of ensuring durable peace, stability and
shared prosperity in the region” (ASEAN Secretariat, 2015).
6
In 2004, the ASEAN Leaders introduced the Vientiane Action Program on how to
accelerate the economic integration through reduction of tariffs, removal of nontariff barriers, improvement of the business climate, rules of origin and liberalization
of trade in services. Following the decision of the Leaders to advance its target date
from 2020 to 2015 at the Cebu Summit in January 2007, the ASEAN adopted the
ASEAN Economic Blueprint in November 2007 as the mechanism to achieve the
ASEAN Economic Community (AEC). The AEC represents the third level of economic
integration of the ASEAN.
The AEC Blueprint defines the ASEAN Community in four dimensions: “(1) creating a
single market and production base; (2) increasing competitiveness; (3) promoting
equitable economic development; and (iv) integrating the ASEAN with the global
economy” (ADBI, 2014). In 2008, the ASEAN Charter took effect and it gave ASEAN
its legal status.
The ATIGA in 2010
In February 2009, at the 14th ASEAN Summit in Chaam, Thailand, the ASEAN Trade in
Goods Agreement (ATIGA) was signed and became effective on 17 May 2010. The
ATIGA superseded the CEPT Agreement and covers areas other tariff liberalization. It
also covers such as trade facilitation, customs, sanitary and phyto-sanitary measures,
and technical barriers to trade. It consolidates into one document all provisions
pertaining to trade in goods. The ASEAN 6 (ASEAN-5 + Brunei) agreed to remove
tariffs on all their products in the CEPT Inclusion List while maintaining tariffs on
sensitive and highly sensitive products. ATIGA is particularly important because it
two other agreements, namely: (a) Cha-am Hua Hin Declaration on the Roadmap for
the ASEAN Community (2009-2015); and (b) the ASEAN Comprehensive Investment
Agreement (ACIA). By 2010, the ASEAN it finalized the Master Plan for ASEAN
connectivity and signed the framework for equitable economic development the
following year.
7
After the 2008/2009 global financial crisis and recession, ASEAN adopted the Bali
Concord III in line with its Framework for Equitable Development that seeks to
narrow the development gaps within and across its member countries. In 2012, it
adopted the Phnom Penh Agenda that focuses on climate change, adaptation and
mitigation; and sustainable management of natural resources. By 2013, ASEAN
adopted the Bandar Sri Bagman Declaration on the ASEAN Community Post-2015
Vision which includes the vision to create a truly borderless economic community by
2030. Box 1 summarizes the milestones of ASEAN Economic Cooperation.
Box 1. Milestones of ASEAN Economic Cooperation
Source: Fig.1.1, ASEAN 2030: Towards a Borderless Economic Community, Asian Development Bank Institute,
2014.
‘ASEAN centrality’ in regional economic cooperation
ASEAN’s cooperation initiatives were intended to maintain its ‘centrality’ or central
role in Asia’s economic and institutional architecture. Its unique model of
conducting regional approach to multilateralism is characterized by openness,
consensus and pragmatism among its members and external partners, the ASEAN
Way.
8
After almost fifty years, ASEAN moved actively to be at the center of Asian
regionalism by involving its members in interregional groupings in varied forms of
arrangements and with different interests. The ASEAN Regional Forum (ARF) was
established in 1994 after the end of the Cold War, together with the rise of China
and the resolution of the Cambodian conflict. The ARF provided a regional
architecture for peace and security. Its members include Australia, Brunei, Burma
(Myanmar), Cambodia, Canada, China, European Union (Presidency), India,
Indonesia, Japan, Laos, Malaysia, Mongolia, New Zealand, Pakistan, Papua New
Guinea, Philippines, Republic of Korea, Democratic People’s Republic of Korea,
Russia, Singapore, Sri Lanka, Thailand, USA and Vietnam.
In economic cooperation, the ASEAN+3 (ASEAN plus PRC, Japan and the Republic of
Korea) was formed in response to the 1997/98 financial crisis. ASEAN also entered
into bilateral agreements under the ‘ASEAN-Plus framework’ or ‘ASEAN+1 FTAs’
namely, ASEAN- China Free Trade Area (ACFTA) in 2002; ASEAN-Japan
Comprehensive Economic Partnership Agreement (AJCEPA) in 2003; ASEAN-Korea
Free Trade Area (AKFTA) in 2005; ASEAN-Australia-New Zealand Free Trade Area
(AANZFTA) and ASEAN-India Free Trade Area (AIFTA) in 2009.
The East Asia Summit was created in 2005 to expand its dialogue and partnerships
under the ASEAN+6 framework (ASEAN+3 with Australia, New Zealand and India)
and with the United States and Russia. On November 19, 2012, the ASEAN leaders
endorsed the Regional Economic Partnership Agreement (RCEP) among the member
economies of the ASEAN+6 at the 21st ASEAN Summit in Phnom Penh. The RCEP is
envisioned as a possible pathway to achieve a Free Trade Area in the Asia Pacific
(FTAAP). Its target was accelerated to 2015 instead of 2020. The vital role of ASEAN
in the region is mapped out in Box 2.1.
Box 2.1. ASEAN centrality in interregional groups
Source: Fig.5.1, ASEAN 2030: Towards a Borderless Economic Community, Asian Development Bank Institute, 2014.
9
Major trans-regional groupings also involved ASEAN members maintaining the bloc’s
crucial role of centrality in Asian regionalism. These groups include the Asia-Pacific
Economic Cooperation (APEC); the Asia-Europe Meeting (ASEM); and the Forum for
East Asia-Latin America Cooperation (FEALAC).
The APEC is an association of economies founded in 1989 with 21 members from
East Asia, North America and Latin America. These are Australia, Brunei Darussalam,
Canada, Chile, People’s Republic of China (PRC), Hong Kong, Indonesia, Japan, Korea,
Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, Philippines, Russia,
Chinese Taipei, Thailand, United States of America (USA) and Vietnam. APEC focuses
on economic initiatives such as trade and investment liberalization and facilitation.
Since 1993, its scope widened to include political and security issues in its regular
annual leaders meetings and discussions (Frost, 2008).
The ASEM was founded in 1996 in Thailand that connects East Asia and Europe. It
consists of 31 members - the ASEAN and its secretariat, European Union and its
commission, China, Japan Korea, India, Mongolia, Pakistan, Australia, New Zealand,
Russia, Bangladesh, Norway, Switzerland, and Kazakhstan. It has three so-called
pillars – political; economic; social, cultural and educational pillar.
The FEALAC was created in 1999 with members of East Asia (the ASEAN 10, China,
Japan, Korea, Australia, New Zealand, Mongolia) and Latin America (Argentina,
Bolivia, Brazil, Chile, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El
Salvador, Guatemala, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay and
Venezuela) (FEALAC, 2015). FEALAC promotes dialogue between East Asia and Latin
America on international political issues.
A number of ASEAN members are also part of sub-regional groupings like the Bay of
Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC)
that connects ASEAN with South Asian neighbors; and the Coral Triangle Initiative
(CTI) that links ASEAN with Pacific island countries such as Papua New Guinea and
Timor-Leste. (Box 2.2). ASEAN members - Myanmar and Thailand are members of
the BIMSTEC along with India, Bhutan, Bangladesh, and Sri Lanka. Indonesia,
Malaysia, and Philippines of ASEAN are part of CTI along with Papua New Guinea,
Solomon Islands, and Timor-Leste.
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Box.2.2. ASEAN centrality in trans-regional groupings
Source: Fig.5.1, ASEAN 2030: Towards a Borderless Economic Community, Asian Development Bank Institute, 2014.
3. ASEAN and APEC
Seven out of the ten members of the ASEAN are part of the APEC, referred in this
paper as the ASEAN-7 (Brunei Darussalam, Indonesia, Malaysia, Philippines,
Singapore, Thailand and Vietnam). Cambodia, Lao PDR and Myanmar are nonmembers of the APEC. ASEAN’s bilateral trade partners - China, Korea, Japan,
Australia, and New Zealand are also part of APEC.
Figure 1.Map of APEC member economies
Source: http://pixgood.com/apec-map.html
Key Statistics
Combined real gross domestic product (GDP) of the ASEAN 10 is US $1.36 billion, or
2.4% of world GDP which is much lesser than APEC with US $31.54 billion, or 55.8%
of world GDP (Table 1). The ASEAN-7 (Brunei, Indonesia, Malaysia, Philippines,
11
Singapore, Thailand and Vietnam) plus five ASEAN bilateral trading partners (China,
Japan, Korea, Australia and New Zealand), referred in this paper as ASEAN-7 (+5)
have a combined GDP of US $13.19 billion, or 23.4% of world GDP. ASEAN total
trade accounts for merely 6.5% of world trade compared to APEC that comprises
43.0% of world trade.
The level of integration of ASEAN and APEC is measured using trade indicators export
propensity and import dependence. Export propensity (X/GDP) is the percentage
share of a country’s exports its GDP while import dependence (M/GDP) refers to the
percentage of imports to the country’s GDP. ASEAN is more integrated in the global
economy than APEC as evidenced by its average export propensity of 78.6% and
import dependence of 70.4% compared to APEC’s export propensity of 57.5% and
import dependence of 53.2% (refer back to Table 1).
Similarities and differences of ASEAN and APEC
Apart from trade liberalization and facilitation, ASEAN and APEC share similar goals
and areas of cooperation such as structural reforms, connectivity, food and energy
security, disaster management and counter-terrorism and security issues. Since
majority of the ASEAN are also members of the APEC, achieving the ASEAN Economic
Community in 2015 enhances the Bogor goals where developing APEC economies
have until 2020 to liberalize trade and investment.
In the process of integration, both regional blocs focus on internal integration by
the removal of all barriers to free flow of goods, services and investments, while
taking further steps to integrate globally. Both blocs recognize that external shocks
could impede the process of integration.
Hence, a Statement on Sustained
Recovery and Development and a Joint Response to Climate Change was issued at
the 16th ASEAN Summit on 9 April 2010 (ASEAN Secretariat, 2010).
In terms of the global economic geography, APEC with its dynamic economies has
been a main driver of economic growth across the world. It has a number of
preferential trade agreements among its members as well with countries outside the
bloc. Similarly, ASEAN is also seen to grow at a faster pace of 5.1 percent in 2015
based on the economic recovery of the United States, stronger demand in advanced
economies, and stimulus policy measures in the Euro-zone and Japan (Philippine
Daily Inquirer, 2015).
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Table 1.Key Statistics of ASEAN and APEC: 2013
Cambodia
Lao PDR
Myanmar
Brunei
Indonesia
Malaysia
Philippines
Singapore
Thailand
Vietnam
15,135,169
6,769,727
53,259,018
417,784
249,865,631
29,716,965
98,393,574
5,399,200
67,010,502
89,708,900
10,728.24
5,094.62
10,103.97
452,334.82
207,949.56
155,600.34
199,219.00
230,371.47
92,276.67
Annual
GDP
Growth
Rate (%)
7.4
8.5
-1.8
5.8
4.7
7.2
3.9
1.8
5.4
Australia
Canada
Chile
China
Hong Kong
Japan
23,130,900
35,158,304
17,619,708
1,357,380,000
7,187,500
127,338,621
867,152.31
1,319,291.28
171,413.00
4,864,002.78
241,027.62
4,784,541.09
2.5
2.0
4.1
7.7
2.9
1.6
37,488.9
37,524.3
9,728.5
3,583.4
33,534.3
37,573.4
19.9
30.1
32.6
26.4
229.6
16.2
21.1
31.8
32.9
23.8
228.7
19.0
50,219,669
122,332,399
4,470,800
7,321,262
-
1,199,875.01
1,042,149.91
130,306.44
8,131.03
-
3.0
1.1
2.5
5.4
-
23,892.5
8,519.00
29,146.1
1,110.6
-
53.9
31.7
29.7
..
-
48.9
32.4
27.8
..
-
316,128,839
30,375,603
143,499,861
698,615,643
540,512,556
2,103,052,546
2,782,676,022
7,124,543,962
14,450,329.11
124,831.46
993,520.34
1,363,677.70
1,347,855.83
13,193,733.47
31,544,427.21
56,487,586.16
2.2
5.8
1.3
4.8*
3.9*
3.7*
3.5*
2.2
45,710.3
4,109.6
6,923.5
8,603.7*
10,848.34*
17,301.9*
17,739.1*
7,928.6
13.5
23.7
28.4
78.6*
79.6*
58.6*
57.5*
29.9
16.5
24.6
22.5
70.4*
68.6*
51.7*
53.2*
29.7
8.64
7.59
29.52
39.06
2.41
2.39
23.36
55.84
COUNTRY
Korea
Mexico
New Zealand
New Guinea
Chinese
Taipei
(Taiwan)
United States
Peru
Russia
ASEAN 10
ASEAN 7
ASEAN 7 (+5)
APEC
World
% of World
ASEAN 10
ASEAN 7
ASEAN 7(+5)
APEC
POPULATION
Real GDP
(at constant 2005
Million US $)
GDP per
capita (at
constant
2005 US $)
708.8
752.4
24,184.7
1,810.3
6,997.7
1,581.4
36,897.9
3,437.8
1,028.6
Trade in Goods
and Services
Exports/ Imports/
GDP
GDP
65.7
73.8
37.2
46.1
76.2
32.5
23.7
25.7
81.7
72.4
27.9
32.0
190.5
167.5
73.6
70.3
83.9
79.8
6.56
6.49
24.82
43.04
Source of basic data: World Development Indicators, 2015
Notes: - No available data; * refers to averages; ASEAN 7=Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand and
Vietnam; ASEAN 7 (+5) = ASEAN 7 + Australia, China, Korea, Japan, and New Zealand.
13
In terms of differences, APEC has remained as an informal forum for dialogue but
without legally binding commitments among its members. Member economies
simply offer to take action on a voluntary basis. In contrast, commitments among
ASEAN members are binding and all commitments are translated concretely into
regional cooperation measures including timelines which are negotiated at the
technical level prior to its implementation.
The ASEAN Leaders seem to have a stronger political will to implement its economic
integration as well as implementing regional cooperation measures. In contrast, the
APEC Leaders have given more emphasis on counter-terrorism, proliferation of
weapons of mass destruction, and other security issues rather than economic
cooperation goals. Since 2001, APEC has considered the primacy of the World Trade
Organization (WTO) regarding trade and investment liberalization, negotiated on a
multilateral level.
ASEAN and APEC Trade with the world
ASEAN and APEC total trade with the world has followed an increasing trend with
the latter at a faster rate from 1980 to 2012 (Fig. 2a). Except for 1990, ASEAN has
been running a trade surplus with the world since 2000. In contrast, APEC has had a
trade deficit with the world from 1980 to 2012. Average shares of ASEAN exports
and imports to world were low and seemed constant at 6% and 5.6%, respectively
compared to APEC at 43.7% and 45%, respectively (Fig. 2b).
Figure 2a. ASEAN and APEC Trade with the world: 1980-2012
10000000
8000000
6000000
4000000
2000000
0
-2000000
1980
1990
2000
ASEAN Export
APEC Export
ASEAN TRADE BALANCE
2005
2009
2010
2011
2012
ASEAN Imports
APEC Import
APEC TRADE BALANCE
Source of basic data: UNCTAD Statistics, 2015
14
Figure 2b. Share of ASEAN and APEC to world trade: 1980-2012
60.00
50.00
40.00
30.00
20.00
10.00
0.00
1980 1990 1995 2000 2005 2007 2008 2009 2010 2011 2012
Share of ASEAN to World Exports
Share of ASEAN to World Imports
Share of APEC to World Exports
Share of APEC to World Imports
Source of basic data: UNCTAD Statistics, 2015
Intra-regional Trade
Figure 3a shows Singapore dominated intra-ASEAN trade and accounted for an
annual average of 40% from 1995 to 2013. Other major players include Malaysia
(22.5%) and Thailand (15.6%). Notice the rise of Indonesia and Vietnam starting in
1995 until the recent years. Both, with minimal levels of trade in the mid-1990s,
accounted for 16% and 7%, respectively, of total trade in the region in 2013. The
Philippines accounted for 5.2% on the average of ASEAN intra-trade from 1995 to
2013. Intra-ASEAN exports accounted for 26% of total exports in 2013, slightly higher
from 25% in 1995; while intra-ASEAN imports contributed 23%, relative to 18% in
1995.
Figure 3a. The Share of ASEAN members in Intra-regional Trade (%): 1995-2013
50.0
40.0
30.0
20.0
10.0
0.0
1995
2000
2005
2010
2013
Source of basic data: UNCTAD Statistics, 2015
15
In APEC, the shift is from a dominant United States, which accounted for 27% of
trade in the region in 1995, to a dominant China, which came from a low 6% in 1995
to account for 22% in 2013 (Fig. 3b). In 2013, major players in the region include
Japan (8.9%), Hong Kong (7.8%), Canada (6.2%), Korea (5.7%) and Mexico (5.2%).
Intra-ASEAN imports accounted for 23.2% of total imports in 2013, higher than 18%
in 1995.
Figure3b. The Share of APEC economies in Intra-regional Trade (%)
1995
2000
2005
2010
Vietnam
1995
USA
Thailand
Taipei
Singapore
Russia
Philippines
Peru
Papua New Guinea
2010
New Zealand
Mexico
Malaysia
Australia
Brunei
Canada
Chile
China
Hong Kong
Indonesia
Japan
Korea
30.0
25.0
20.0
15.0
10.0
5.0
0.0
2013
Source of basic data: UNCTAD Statistics, 2015
4. Bilateral Trade between ASEAN and APEC; and Trade Concentration
ASEAN-APEC Bilateral Trade
The ASEAN’s share of APEC’s total trade remained almost constant at 56% from 1995
to 2013. In contrast, APEC’s share of ASEAN’s trade increased steadily to reach its
peak at 77% from 2002 to 2004 when ASEAN had its bilateral FTAs with China (in
2002) and Japan (in 2003); and slowed down minimally in the succeeding years.
Annual average APEC’s share of ASEAN’s total trade was recorded at 75% from 1995
to 2013 compared to ASEAN’s share of APEC’s trade at 56% (Fig. 4).
16
Figure 4. ASEAN's and APEC's Share of Each Other's Trade; 1995-2013
% SHARE OF APEC TO ASEAN TRADE
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
90.00
80.00
70.00
60.00
50.00
40.00
30.00
20.00
10.00
0.00
% SHARE OF ASEAN TO APEC TRADE
Note: Author’s estimation based on UNCTAD Statistics, 2015
Figures 5a and 5b indicate that APEC has been a leading trading partner of ASEAN
followed by its own ASEAN members, Japan, USA, EU and China. The share of APEC
to ASEAN’s trade followed a general upward trend from 1995 to 2013, with a dip in
2009 due to USA Financial Crisis. Note the declining share of USA to ASEAN’s trade
starting in 1999 and the rising share of China to ASEAN’s trade from 1999 until the
present. Meanwhile, intra-ASEAN trade perked up starting in 2000 at a time when
the AFTA was almost completed.
Fig. 5a. Geographical breakdown of ASEAN Exports: 1995-2013
USA
Japan
China
EU (28)
Intra-ASEAN
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
2,000,000,000.00
1,800,000,000.00
1,600,000,000.00
1,400,000,000.00
1,200,000,000.00
1,000,000,000.00
800,000,000.00
600,000,000.00
400,000,000.00
200,000,000.00
-
APEC
Source: UNCTAD Statistics, 2015
17
Figure 5b. Geographical breakdown of ASEAN Imports: 1995-2003
2,000,000,000.00
1,500,000,000.00
1,000,000,000.00
500,000,000.00
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
-
USA
Japan
China
EU (28)
ASEAN
APEC
Source: UNCTAD Statistics, 2015
From negative trade imbalances from 1995 to 1997, ASEAN-APEC trading
recorded surpluses although on a slower rate in the following years. The
declining trend could be attributed to the closer economic integration of ASEAN
with its bilateral partners in East Asia (Figure 6 and Table 2).
Figure 6. ASEAN-APEC Trade: 1995-2013
1E+09
800000000
600000000
400000000
200000000
0
-2E+08
ASEAN-APEC Balance of Trade
Asean Exports to APEC
ASEAN Imports from APEC
Source of basic data: UNCTAD Statistics, 2015
18
TABLE 2.ASEAN and APEC BILATERAL MERCHANDISE TRADE, 2001-2013
(In thousand US $)
YEAR
ASEAN
TOTAL TRADE
ASEAN Exports
to APEC
ASEAN Imports
from APEC
ASEAN-APEC
BALANCE OF
TRADE
APEC Share to ASEAN
Trade (%)
Exports
Imports
1995
676,044,069.32
244,672,846.68
268,844,755.60
(24,171,908.92)
76.17
75.8
1996
716,943,904.89
261,238,256.93
279,883,281.15
(18,645,024.22)
76.62
74.4
1997
735,332,967.71
268,855,952.67
285,222,947.47
(16,366,994.80)
75.83
74.9
1998
615,050,541.01
237,588,545.20
217,407,767.33
20,180,777.87
72.26
76.0
1999
667,693,093.97
266,354,077.46
239,521,876.71
26,832,200.74
74.41
77.3
2000
806,742,288.39
327,625,317.75
293,837,949.96
33,787,367.79
76.77
77.3
2001
732,192,717.32
292,320,832.43
262,151,338.28
30,169,494.14
75.76
75.7
2002
770,784,402.59
310,897,514.49
281,246,225.65
29,651,288.83
76.72
76.9
2003
882,432,600.47
363,960,077.65
317,897,304.66
46,062,772.99
77.19
77.4
2004
1,083,745,516.62
438,449,688.32
392,597,459.71
45,852,228.61
76.91
76.4
2005
1,257,276,427.93
502,458,000.57
458,904,774.39
43,553,226.18
76.76
76.1
2006
1,455,988,713.44
584,705,611.06
520,808,052.03
63,897,559.04
76.15
75.7
2007
1,639,849,763.63
645,650,098.87
589,221,613.64
56,428,485.23
74.98
75.7
2008
1,923,521,012.16
725,768,835.45
687,876,116.58
37,892,718.87
73.73
73.2
2009
1,540,570,947.10
593,831,278.79
543,929,721.48
49,901,557.31
73.25
74.5
2010
2,005,276,720.68
777,935,989.80
717,761,653.84
60,174,335.96
73.92
75.3
2011
2,398,418,139.49
915,965,900.39
844,294,108.40
71,671,791.98
73.61
73.2
2012
2,475,055,001.46
931,445,025.61
885,250,315.65
46,194,709.96
74.28
72.5
2013
2,515,455,786.54
944,156,455.36
906,386,503.29
37,769,952.07
74.34
72.8
Source of basic data: UNCTAD Statistics, 2015
19
Among APEC economies, top ten market destinations of ASEAN exports include
China (12.1%), Japan (9.7%), USA (9.1%), Hong Kong (6.4%), Malaysia (6.4%),
Singapore (5.3%), Indonesia (5.2%), Korea (4.2%), Thailand (3.1%), Vietnam and
Philippines (1.5%)(Fig.7a).
Figure 7a. ASEAN Regional Export to APEC economies, 2013
VIET
USA
THAI
TAIPEI
SGP
RUSSIA
PH
Peru
P NEW GUINEA
NEW Z
MEXICO
MYS
Korea
Japan
IDN
HKG
CHINA
CHILE
CAN
BRU
AUS
0%
10%
20%
30%
40%
50%
60%
70%
80%
Brunei
Cambodia
Indonesia
Lao DPR
Malaysia
Myanmar
Philippines
Singapore
Thailand
Vietnam
90%
100%
Source of basic data: UNCTAD Statistics, 2015
ASEAN imports from APEC economies include China (16.5%), Japan (9.1%), USA
(7.3%), Singapore (6.8%), Korea (6.3%), Malaysia (5.9%), Chinese Taipei (5.1%),
Thailand (4.1%), Australia (1.8%) and Vietnam (1.5%)(Fig. 7b).
20
Figure 7b. ASEAN Regional Import from APEC economies, 2013
VIET
US
THAI
Taipei
SING
RUSSIA
PH
Peru
P NEW GUINEA
NEW Z
MEXICO
MAL
Korea
Japan
INDO
HK
CHINA
CHILE
CAN
BRU
AUS
0%
20%
40%
60%
80%
Brunei
Cambodia
Indonesia
Lao DPR
Malaysia
Myanmar
Philippines
Singapore
Thailand
Vietnam
100%
Note: No available data for Lao PDR, Myanmar and Chinese Taipei and therefore were excluded form estimations.
Source of basic data: World Integrated Trade Solutions (WITS), 2015
Sectoral composition of trade
Figure 8 shows comparative sector composition of ASEAN trade with APEC. ASEAN
trade is categorized into ASEAN 10 and the ASEAN 7 to distinguish trade of ASEAN
countries part of the APEC. ASEAN is trading the same baskets of goods with APEC,
mainly capital goods, consumer and intermediate goods. In 2013, about US $ 888.37
million were exported by ASEAN to APEC, 99% of which were exports by ASEAN 7.
Top ten exports of ASEAN to APEC by product category, consist of machinery and
electronics, fuels, plastic or rubber, miscellaneous products, chemicals, metals,
transportation, textiles and clothing, vegetable and wood. In terms of imports,
about US $ 799.16 million were imported by ASEAN from APEC, 98% were imported
by ASEAN 7. Top ten imports of ASEAN include machinery and electronics, fuels,
metals, chemicals, transportation, plastic or rubber, miscellaneous products, textiles
and clothing, stone and glass, and vegetable. The supply of exports of ASEAN and
demand for its imports are mostly driven by the value chain production of
21
components and part for the vehicles and office equipment industries in the Asia
Pacific region.
Figure 7. Sectoral composition of ASEAN Trade with APEC, 2013
ASEAN 10 EXPORTS to APEC
ASEAN 7 EXPORTS to APEC
Wood
Vegetable
Transportation
Textiles and Clothing
Stone and Glass
Plastic or Rubber
Miscellaneous
Minerals
Metals
Mach and Elec
Hides and Skins
Fuels
Footwear
Food Products
Chemicals
Animal
All Products
Capital goods
Consumer goods
Intermediate goods
Raw materials
1E+09
800000000
600000000
400000000
200000000
0
ASEAN 7 IMPORTS from APEC
ASEAN 7 IMPORTS from APEC
Source: World Integrated Trade Solutions (WITS), 2015
Investments
Table 3 shows the foreign direct investment (FDI) net inflows to ASEAN from
selected partner countries/regions. From 2011 to 2013, eight APEC economies
(Japan, USA, Korea, China, Australia, Canada, Russian Federation and New Zealand)
invested US $118 billion in ASEAN, contributing 35.3 percent of US $334 billion total
FDI inflows to ASEAN. Intra-ASEAN inflows amounted to US $ 57 billion or 17
percent of total FDI inflows to ASEAN during the same period.
Trade concentration between ASEAN and APEC
This section analyzes the changes in the concentration of trade between ASEAN and
APEC from 1995 to 2012/2013 as the former enters into various stages of economic
integration and cooperation. Using an ex-post analysis approach, the integration
level and bilateral trade intensity of ASEAN trade with APEC have been estimated for
selected years: 1995, 2002, 2005, and 2009-2013.
22
Table 3.Foreign Direct Investment Net Inflows in ASEAN from selected partner countries/regions, 2011-2013.
Value (in million US $)
Share to total net inflows (%)
Partner Country/Region
2011
2012
2013 2011-2013
2011 2012
2013 2011-2013
ASEAN
15,228.4
20,657.6 21,426.1
57,312.2
15.6 18.1
17.5
17.1
Australia
1,530.2
1,831.0
2,002.3
5,363.5
1.6
1.6
1.6
1.6
Canada
767.9
923.9
851.0
2,542.8
0.8
0.8
0.7
0.8
China
7,857.7
5,376.8
8,643.5
21,878.0
8.1
4.7
7.1
6.5
EUROPEAN UNION(EU) 29,693.3
18,084.9 26,979.6
74,757.8
30.4 15.8
22.0
22.4
India
-2,230.5
2,233.4
1,317.5
1,320.4
-2.3
2.0
1.1
0.4
Japan
9,709.0
23,777.1 22,904.4
56,390.5
10.0 20.8
18.7
16.9
New Zealand
7.5
-107.6
246.5
146.3
0.0
-0.1
0.2
0.0
Pakistan
12.5
-21.4
-0.6
-9.5
0.0
0.0
0.0
0.0
Republic of Korea
1,742.1
1,708.4
3,516.2
6,966.7
1.8
1.5
2.9
2.1
Russian Federation
67.6
184.4
542.1
794.2
0.1
0.2
0.4
0.2
USA
9,129.8
11,079.5
3,757.5
23,966.9
9.4
9.7
3.1
7.2
Total Selected Partner
73,515.5
85,728.1 92,186.2
251,429.8
75.4 75.0
75.3
75.2
Countries/regions
Others
24,022.7
28,556.0 30,190.3
82,769.0
24.6 25.0
24.7
24.8
Total APEC (8)
30,811.8
44,773.5 42,463.5
118,048.9
31.8 39.2
34.7
35.3
Total FDI inflows to
97,538.1 114,284.0 122,376.5
334,198.7
100.0 100.0 100.0
100.0
ASEAN
Year-on-year change (%)
2011-2012 2012-2013
35.7
3.7
19.7
9.4
20.3
-7.9
-31.6
60.8
-39.1
49.2
-200.1
-41.0
144.9
-3.7
1,542.2
-329.1
-272.0
-97.3
-1.9
105.8
172.8
194.0
21.4
-66.1
16.6
7.5
18.9
45.3
17.2
5.7
-5.2
7.1
Notes: 1/ Figures may not add up to totals due to rounding off errors; 2/The FDI is on a net basis, and computed by the ASEAN Secretariat using the
Formula, Net FDI=Equity + Net Inter-company Loans + Reinvested Earnings. This implies that the following were deducted from the FDI gross flows: (a) reverse investment (made
by a foreign affiliate in a host country to its parent company/direct investor; (b) loans given by a foreign affiliate to its parent company; and (c) repayments of intra-company loan
(paid by a foreign affiliate to its parent company). Hence, FDI net inflows could be negative.
Source: ASEAN Secretariat, 2015
23
For lack of bilateral trade data (ASEAN as reporting region and APEC as partner
region) before 1995 to assess the changes in trade concentration after the ASEAN
PTA (1977 to 1992), the study opted for 1995 as the reference year to assess
changes after the ASEAN PTA. Recall that AFTA started in 1993 and ended in 2002,
hence 2002 represents the year after the AFTA. The ASEAN, as a bloc, also engaged
with bilateral FTAs with China, Korea and Japan between 2002 and 2005; hence,
2005 is the end year of the ASEAN+1 FTAs. The year 2009 is specifically singled out
as the ASEAN integrated with the Australia and New Zealand; and India; and the
same year when the ATIGA was signed. The year 2010 refers to the initial year of
implementation of ATIGA. From 2011 up to 2013 represent the levels of
concentration of trade when ASEAN was implementing the most recent regional
economic cooperation. What follows are the different trade concentration
measures utilized in this study.
First, the integration level of the ASEAN trade to the APEC market is analyzed using
the trade entropy indices for exports (TExi) and imports (TEmi)(Marwah, 1995)1. By
definition, trade entropy refers to the country’s relative dependency on other
countries’ markets or its integration to the global economy. The higher the index,
the more dispersed or less concentrated is the export (or import) of that country;
and therefore, it is well integrated into the world trade.
In this study, if the ASEAN trade entropy level to the APEC is high, it means that
ASEAN is trading with almost all of the APEC economies. Since APEC is a major
trading partner region of the ASEAN, trade entropy indices are relevant to know the
level changes over time. Estimated ASEAN-APEC trade entropy indices for exports
and imports reveal almost constant low values across the years indicating that trade
of ASEAN is restricted only to a small number of APEC economies throughout those
years of ASEAN regional economic cooperation (Table 4). As mentioned, ASEAN
trades more with China, USA, Japan, Korea, Hong Kong, Chinese Taipei and Australia.
Table 4.ASEAN-APEC Trade Entropy Index
YEAR
TE xi
1995
0.21
2002 (AFTA)
0.20
2005 (ASEAN +1 FTAs)
0.20
2009 (ASEAN+ ANZ/INDIA)
0.23
2010 (ATIGA)
0.22
2011
0.23
2012
0.22
2013
0.22
TE mi
0.21
0.20
0.21
0.22
0.21
0.23
0.23
0.23
Note: Author’s estimations based on UNCTAD Statistics online database.
24
Second, the bilateral concentration indices of merchandise exports and imports of
ASEAN with partner region APEC were downloaded from the UNCTAD Statistics
online database covering the period of 1995 to 2012 (Table 5). The bilateral
concentration index represents the Herfindahl-Hirschman Index2 (HHI) measure of
the degree of concentration in the export markets and import sources (UNCTAD,
2012). In this study, the bilateral concentration index shows how exports and
imports of ASEAN with APEC are concentrated on several products. The values have
been normalized to obtain values ranging from 0 to 1 (maximum concentration).
Table 5.ASEAN bilateral concentration indices with APEC: 1995-2012
Year
Normalized Herfindahl-Hirschman index
EXPORT
IMPORT
1995
0.13
0.13
1996
0.15
0.14
1997
0.16
0.14
1998
0.17
0.18
1999
0.19
0.19
2000
0.20
0.20
2001
0.18
0.18
2002
0.18
0.20
2003
0.18
0.19
2004
0.18
0.18
2005
0.17
0.17
2006
0.17
0.17
2007
0.17
0.16
2008
0.14
0.14
2009
0.15
0.14
2010
0.15
0.14
2011
0.14
0.13
2012
0.14
0.13
Source: UNCTAD Trade Statistics online database
Figure 9 plots the normalized values of Herfindahl-Hirschman indices, both at the
export and import side, for the ASEAN as reporting region and APEC, the partner
region. Note that the higher the index, the more concentrated exports or imports
are in a few sectors. Observe that the indices are higher on the export side from
1995 until 2000, the period when the AFTA was being implemented, implying that
exports of ASEAN with APEC were concentrated in a few products or sectors. Notice
the shift of the higher indices to the import side from 2001 to 2003 (when AFTA was
fully implemented); and after that, the indices tapered off at almost the same values
with those of export side. This indicates that as ASEAN integrates internally with its
members and externally with bilateral partners in East Asia (ASEAN +1 FTAs),
ASEAN’s trade with APEC was becoming less concentrated in a few sectors.
25
Figure 9. Normalized Herfindahl indices of ASEAN with APEC Trade:
1995-2012
0.25
0.20
0.15
0.10
0.05
0.00
Normalized Herfindahl (export)
Normalized Herfindahl (import)
Source: UNCTAD Trade Statistics online database
Third, bilateral trade intensity index3 is also computed to see the ASEAN bilateral
trade concentration levels with APEC during the relevant years of regional economic
cooperation. The index also determines whether the trade value between ASEAN and
APEC is greater or smaller than would be expected, based on their relative
importance in world trade. A bilateral trade intensity index of more (less) than one
means that the bilateral trade flow between ASEAN and APEC that is larger (smaller)
than expected, given the partner country’s (in this case, APEC) importance in world
trade. Similarly, if the index value is more than 1, it implies that the bilateral trade
intensity between ASEAN and APEC is higher than expected (World Bank, 2010).
Table 6 shows the bilateral trade intensity index of ASEAN with trading partner, APEC.
Estimated index values are greater than ‘1’ from 1995 to 2013 indicating that bilateral
trade is greater than would be expected between the two regional blocs. Notice
however that indices increased from 1.66 in 1995 to 1.72 in 2005, when ASEAN
established bilateral FTAs with China, Korea and Japan, all of which are also members
of APEC. After that, bilateral trade indices remained greater than ‘1’ meaning bilateral
trade intensity was greater than expected but at a declining trend. This may imply
that ASEAN might have traded more intensively with other countries than APEC
economies.
Finally, individual ASEAN country’s bilateral exports and imports share and growth
rates of trade with APEC are considered to examine and observe trading relationship
between these two blocs in a longer periods of time and compare the changes as
ASEAN moves to a closer regional cooperation. Changes in individual country
concentration and trade creation and diversion effects are examined.
26
Table 6.Bilateral Trade Intensity Index of ASEAN with APEC
YEAR
1995
2002 (AFTA)
2005 (ASEAN +1 FTAs)
2009 (ASEAN+ ANZ/INDIA)
2010 (ATIGA)
2011
2012
2013
Bilateral Trade Intensity Index
1.66
1.67
1.72
1.62
1.56
1.58
1.56
1.57
Note: Author’s estimations based on UNCTAD Statistics online database.
Figure 10a and Table 7a show the percentage changes of ASEAN exports to APEC and
share to ASEAN exports from 1995 to 2013. Two things are noteworthy of bilateral
export relations of ASEAN with APEC. One, growth of ASEAN country exports to APEC
is generally positive but at a decreasing rate which means that ASEAN members are
selling to markets other than APEC economies, a trade diversion effect. Note that
intra-ASEAN exports trade grew by 27.5% in 2000 and 32.2% in 2010 after the CEPT
fast track program and the ATIGA, respectively. This means that trade was created
among ASEAN members during its integration. Two, APEC remains a major market
destination of ASEAN exports as evidenced by the high country concentration of
exports to APEC. APEC’s share to ASEAN exports accounted for an annual average of
74.3% of total ASEAN exports from 1995 to 2013.
Figure 10a. Percentage changes of ASEAN exports to APEC: 1995-2013
250.0
200.0
150.0
100.0
50.0
0.0
1995-2002 2002-2005 2005-2009 2009-2010 2010-2011 2011-2012 2012-2013
-50.0
Brunei
Cambodia
Indonesia
Lao DPR
Malaysia
Myanmar
Philippines
Singapore
Thailand
Vietnam
Note: Author’s estimation based on UNCTAD Statistics online database, 2015
27
Table 7a. Share and percentage changes of ASEAN countries' exports to APEC (1995-2013)
19952002200520092002
2002
2005
2005
2009
2009
2010
2010
%
%
%
%
%
%
%
%
ASEAN
Change Share Change Share Change Share Change Share
Brunei
49.4
98.37
76.48
98.94
7.2
92.19
30.60
97.32
Cambodia
119.1
73.01
68.24
78.25
33.6
75.20
30.15
73.47
Indonesia
..
..
..
75.86
29.2
72.08
37.79
73.34
Lao DPR
-9.6
53.85 124.70 65.77
141.1
83.33
71.95
86.37
Malaysia
30.6
79.80
48.46
78.68
6.9
75.81
26.42
75.79
Myanmar
211.1
66.15
23.24
62.59
68.6
62.68
47.63
71.36
Philippines
102.8
79.89
18.84
81.03
-13.5
75.24
45.48
81.69
Singapore
5.2
76.83
84.53
77.28
15.7
76.12
29.26
75.45
Thailand
26.0
73.15
59.66
72.24
29.1
67.35
30.64
68.70
Vietnam
215.2
71.65 102.10 74.56
60.4
67.97
27.20
68.34
Exports to
APEC/Total
ASEAN
Exports
65.3
74.7
66.2
76.5
76.8
74.8
73.2
77.2
20102011
%
Change
35.27
9.17
29.57
25.05
12.61
16.23
-5.21
15.99
17.81
32.07
2011
%
Share
94.07
66.88
73.68
86.14
74.74
77.75
83.00
75.20
69.08
67.28
20112012
%
Change
2.63
15.46
-6.67
1.81
3.19
-3.11
10.54
1.01
-0.57
19.70
2012
%
Share
92.56
66.05
73.64
84.57
76.97
78.40
84.77
76.17
68.47
68.14
20122013
%
Change
-11.85
10.30
-5.01
-0.46
0.96
27.02
3.35
1.19
0.82
13.59
% Share
92.67
61.74
72.82
84.43
77.34
78.70
84.39
76.72
69.34
67.14
73.9
76.7
73.6
76.9
74.3
76.5
2013
Source of basic data: UNCTAD Statistics, 2015
28
Figure 10b and Table 7b indicate that import trading relation between ASEAN with APEC is
relatively more dynamic with non-APEC economies Lao PDR, Myanmar and Cambodia
having higher growth rates than expected and where APEC component accounted for more
than 90% of total imports of these countries. Imports of ASEAN to APEC were generally
rising until 2005 (AFTA fully implemented), while the share of APEC to ASEAN imports
slowed a bit in same period. After the implementation of the ATIGA in 2010, imports of
ASEAN to APEC dropped by 25% from 45% in 2009, mainly due to the US Financial Crisis. It
recovered in 2010 but slowed down onwards. However, the share of APEC’s to ASEAN’s
total imports stood at 82% indicating APEC’s exports highly depend on the changes in the
demand of imports in the ASEAN market.
Figure 9b. Percentage changes of ASEAN imports from APEC: 1995-2013
200.0
150.0
100.0
50.0
0.0
1995-2002
-50.0
2002-2005
2005-2009
2009-2010
2010-2011
2011-2012
2012-2013
Brunei
Cambodia
Indonesia
Lao DPR
Malaysia
Myanmar
Philippines
Singapore
Thailand
Vietnam
Note: Author’s estimation based on UNCTAD Statistics online database, 2015
5. Conclusion
The ASEAN regional cooperation initiatives were aimed to maintain its ‘centrality’ in
Asia’s economic and institutional architecture. The closer economic integration of
ASEAN towards establishing a single market, the ASEAN Economic Community, facilitates
APEC’s goals of trade and investment liberalization in 2020. But, has ASEAN integration
changed trade concentration with APEC?
Below are the main conclusions:

ASEAN trade with APEC is less dispersed (or more concentrated) across the years
of regional cooperation. This means that trading of ASEAN is restricted only to a
small number of APEC economies as evidenced by the almost constant low
values of trade entropy indices for exports and imports.
29




Bilateral Trade concentration ratios (Normalized Herfindahl-Hirschman Index)
reveal higher concentration level on the export side from 1995 until 2000 (when
the AFTA was being implemented) meaning exports of ASEAN with APEC were
concentrated in a few products or export sectors. The concentration level
shifted to the higher indices of the import side from 2001 to 2003 (when AFTA
was fully implemented); and tapered off onwards at almost the same values with
those of export side. This means that as ASEAN integrates internally with its
members and externally with bilateral partners in East Asia (ASEAN +1 FTAs),
ASEAN’s trade with APEC was becoming dispersive rather than less concentrated
in a few sectors.
Estimated Bilateral trade intensity index reveal that initially bilateral ASEAN-APEC
trade is intensive from 1995 to 2005, the period when ASEAN established
bilateral FTAs (ASEAN+1 FTAs). After that, bilateral trade indices remained
greater than ‘1’ meaning bilateral trade intensity was greater than expected but
at a declining trend. This may imply that ASEAN might have traded more
intensively with other countries than APEC economies.
Trends in ASEAN country exports to APEC are generally positive but at a
decreasing rate implying that ASEAN export products are destined to markets
other than APEC economies, a trade diversion effect. Intra-ASEAN exports grew
by 27% in 2000 and 32% in 2010 after the CEPT fast track program and the
ATIGA, respectively indicating trade creation effects of ASEAN integration. Yet,
APEC remains a major market destination of ASEAN exports as evidenced by the
high country concentration of exports to APEC. APEC’s share to ASEAN exports
accounted for an annual average of 74.3% of total ASEAN exports from 1995 to
2013.
Imports of ASEAN to APEC were generally rising until 2005 (AFTA fully
implemented), while the share of APEC to ASEAN imports slowed a bit in same
period. After the implementation of the ATIGA in 2010, imports of ASEAN to
APEC dropped by 25% from 45% in 2009, mainly due to the US Financial Crisis. It
recovered in 2010 but slowed down onwards. However, the share of APEC’s to
ASEAN’s total imports stood at 82% indicating APEC’s exports highly depend on
the changes in the demand of imports in the ASEAN market.
The above findings suggest that effects of ASEAN regional cooperation on
trade concentration with APEC seem restrictive to a few APEC economies but trade
has been dispersive in sectors.
30
Table 7b.Share and percentage changes of ASEAN countries' imports from APEC (1995-2013)
19952002200520092002
2002
2005
2005
2009
2009
2010
2010
%
%
%
%
%
%
%
ASEAN
Change % Share Change Share Change
Share
Change Share
Brunei
-21.9
85.71
2.09
87.80
65.0
88.38
-1.20
84.26
Cambodia
93.3
92.65
69.58
92.73
51.9
94.91
16.94
95.29
Indonesia
..
..
..
78.41
27.4
78.13
43.12
79.81
Lao DPR
-21.5
92.71
101.27 94.55
63.6
93.35
44.15
95.43
Malaysia
6.4
82.59
41.85
80.65
4.3
77.80
34.56
78.60
Myanmar
77.3
92.16
-17.08
91.92
122.7
91.84
-6.07
78.86
Philippines
54.6
82.65
17.76
80.81
-7.5
80.59
28.07
80.99
Singapore
-8.5
74.23
69.25
73.12
17.1
69.69
27.69
70.38
Thailand
-10.6
71.23
79.82
70.07
12.2
69.42
39.74
71.15
Vietnam
152.5
82.54
88.31
83.48
88.8
82.83
20.70
82.44
Imports
from
APEC/Total
ASEAN
Imports
67.6
84.0
69.4
83.3
76.1
82.7
74.5
81.7
% Change
45.66
37.95
30.02
13.71
11.12
123.92
6.21
11.96
19.71
23.75
2011
%
Share
85.84
95.99
79.34
92.99
76.63
93.19
78.96
66.95
67.99
81.07
20112012
%
Change
0.28
18.52
6.53
28.73
3.09
1.80
2.53
1.13
8.44
8.93
2012
%
Share
87.44
96.18
78.24
94.21
75.53
93.19
78.90
65.22
68.04
82.86
20122013
%
Change
1.50
18.38
-3.66
0.80
4.55
31.16
-1.71
1.14
-3.84
20.94
% Share
87.76
96.34
77.42
96.08
75.11
93.19
77.85
67.15
64.61
86.35
75.3
81.9
73.2
82.0
72.5
82.2
2010-2011
2013
Source of basic data: UNCTAD Statistics, 2015
31
Endnotes:
1/Based on Seymen, Bilici (2009), the equations used to calculate trade entropy (TE) for import and
export, are as follows:
𝑇𝐸𝑥𝑖 = ∑ 𝑎𝑖𝑗 ln⁡(1/𝑎𝑖𝑗 ) with 0 < aij < 1 and ∑ 𝑎𝑖𝑗 =1
𝑇𝐸𝑚𝑖 = ∑ 𝑏𝑖𝑗 ln⁡(1/𝑏𝑖𝑗 ) with 0 <bij < 1 and ∑ 𝑏𝑖𝑗 =1
2/Based on UNCTAD (2015), the normalized Herfindahl-Hirschman Index formula is:
Where:
Hjk = concentration index of country group j (ASEAN) exports to / imports from
partner country group k (APEC)
xijk = exports or imports of product i for reporter country j / and trading partner k
Xik = total value of exports/imports for country j to / from country k and product i
n = number of products (SITC Revision 3 at 3-digit level)
3/ Using the formula of Seymen and Bilici (2009), the study modified the formula as follows:
𝐵𝑇𝑖𝑗 =
𝑋𝑗𝑘
⁄𝑋
𝑗𝑡
𝑋𝑤𝑘
⁄𝑋
𝑤𝑡
Where: Xjk = ASEAN’s total exports to APEC
Xwk = APECs exports to the world
Xjt = total ASEAN’s exports to the world
Xwt = total world exports
32
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