Title: GSTP Trade Current Trends and Implications of IntraGSTP Tariff Reductions
1GSTP TradeCurrent Trends and Implications of
Intra-GSTP Tariff Reductions
- UNCTAD/DITC
- Trade Analysis Branch
2Outline of this presentation
- Trends in trade of GSTP countries
- Patterns of protection
- Simulation of impacts of intra-GSTP tariff cuts
- Summary findings
3Total exports from GSTP US 1.8 trillion (2005)
Trends in GSTP trade
- Total GSTP exports to the world (2005)
- 17.5 of total world exports
- or 48.7 of total DC exports to the world.
- Total GSTP imports from the world
- US 1.6 trillion
- 16 of total world imports
- or 50 of total imports of DCs from the
world. -
4Total intra-GSTP trade US 813 billion (2005)
Trends in GSTP trade
- Intra-GSTP exports US 405.4 billion
- 22 of GSTP exports to the world.
- Intra-GSTP imports US 407.6 billion
- 25 of GSTP imports from the world.
- Regional breakdown
-
5Sectoral breakdown
Trends in GSTP trade
- Over 90 of intra-GSTP exports are in non-agri
sector. - Agricultural exports accounts for 8 of total
intra-GSTP exports. - Share of agriculture higher in Latin America
(15) than in Africa (6.6) and Asia (4.8) - In terms of the destination, non-agricultural
exports tend to remain within the region than
agricultural exports. - For GSTP-Asia and GSTP-Latin America, around 90
of non-agriculture exports are destined to GSTP
countries in the same region. - For GSTP-Africa, exports to other GSTP regions
are significant.
6Intra-GSTP exports By regional destination
Trends in GSTP trade
(US billion)
7Trends in GSTP exports (Regional breakdown of
flows)
51
26
32
17
11
15
Agriculture
84
34
24
25
7
NAMA
8There is a strong upward trend in intra-GSTP
exports.
Trends in GSTP trade
- Intra-GSTP exports are growing faster than GSTP
countries exports to the rest of the world. - Between 2000-2005, intra-GSTP exports increased
by 50, while exports by GSTP to the rest of the
world increased by 39. - GSTP-Asia and Latin America showed particularly
high growth. - The growth for GSTP-Africa exports picked up
during 2003-2005.
9There is an increasing level of export
complementarity among GSTP countries.
Trends in GSTP trade
- Both Asia and Latin America GSTP countries are
increasing exports in transport machinery and
manufactured goods two sectors that are more
horizontally differentiated than others. - Each region has its own specialized sector
vis-à-vis other GSTP regions, for example - Asia in textile and clothing, Latin America in
food and live animals, and Africa in minerals.
10Trends in GSTP trade
Sectoral breakdown of GSTP exports (by region) to
the world
(US million)
11Trends in GSTP trade
Sectoral breakdown of GSTP exports (by region) to
the world
( of total exports)
122. Patterns of tariff protection
- The sectors most protected by GSTP countries are
those in agricultural sectors (e.g. food and
beverages). - But the averages tariffs are relatively high
(14-18) in other traded sectors (e.g.
manufactured goods and textile and clothing). - Current applied tariff rates in GSTP countries
are significantly lower than the WTO bound rates.
- They also show that tariff peaks are not
pronounced in the applied rates compared to the
bound rates. - Tariff escalation is also mitigated to a
considerable extent in the applied rates.
13Patterns of tariff protection
Tariff protection across sectors (SITC
Rev.3)GSTP Average
()
14Patterns of tariff protection
Tariff protection across sectors
(SITC.Rev3)Regional Average
()
15Comparison of applied and bound MFN tariffs
16Comparison of applied and bound MFN tariffs
17Comparison of applied and bound MFN tariffs
183. Impact of intra-GSTP tariff cuts
- We estimated impacts of intra-GSTP tariff cuts,
using SMART (static, partial equilibrium)
simulation model. - The scenario studied here is a linear cut across
all products, by 20, 30 and 50. - All GSTP members (excl. Romania) are included in
the simulation, plus eight countries which
applied to the GSTP Membership. - This simulation is static, therefore does not
take into account the dynamic impact of tariff
liberalization, including that flowing from
increased FDI, transfer of technology, better
terms of trade, etc..
19Increase in intra-GSTP exports can be as much as
US 20 billion (50 cuts in intra-GSTP tariffs).
Intra-GSTP tariff cuts - Simulation
- Cuts in intra-GSTP tariffs by 20 (30) will
generate export gains by US 7.7 billion (11.7
billion). - Intra-GSTP export increase can occur from
- Trade creation a genuine increase in exports
(i.e. replacing domestic goods), and - Trade diversion by replacing exports from
non-GSTP countries. - Around 55 of export increase is due to trade
diversion effect.
20Increase in intra-GSTP exports
Intra-GSTP tariff cuts - Simulation
21Intra-GSTP tariff cuts will enhance
inter-regional GSTP trade as well as
intra-regional one.
Intra-GSTP tariff cuts - Simulation
- At this stage, many countries within the same
regions do not have a bilateral or regional trade
arrangement. - Looking only at the trade creation effect, the
simulation suggests that there will be a high
rate of increase in trade within the same region,
in addition to an increase in trade with GSTP
countries in other regions.
22Increase in intra-GSTP exportsTrade Creation
Effect
Intra-GSTP tariff cuts - Simulation
(US million)
23Increase in intra-GSTP exportsTrade Creation -
Destination breakdown
Intra-GSTP tariff cuts SMART Simulation
244. Summary Findings
- There has been a massive growth of intra-GSTP
trade in the last 5 years (2000-2005). - This reflects, inter alia, increased
complementarity in trade among GSTP members. - Intra-GSTP tariff cuts will enhance exports among
GSTP members within each region, as well as
inter-regionally. - The actual increase is likely to exceed the
simulated results, as the simulation model does
not take into account the dynamic factors. - Time is ripe for stimulus through liberalization
because of buoyant upward trend in intra-GSTP
exports. - Whilst gains from optimum liberalization can be
significant, adjustment costs to GSTP countries
would be minimal particularly if some sensitive
products are set aside. - Since bulk of gains come from shifting demand to
GSTP products from non-GSTP products, all GSTP
countries will be net gainers in exports. - The comparative advantage of GSTP liberalization
arises from immediate cuts in applied rates, thus
leading to immediate creation of trade flows.