Strengthening Economic Partnership : Potentials and Opportunities

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Strengthening Economic Partnership Potentials
and Opportunities

• Narongchai Akrasanee, Ph.D.

The 1st Meeting of the Asia Middle East
Dialogue Bangkok 3-4 July 2006
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Outline

• Historical Perspective
• Current Relations between Asia and Middle East
• Potentials and Opportunities

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I. Historical Perspective

• 1950 1980 -- Trade and investment were mainly
  among East Asia (except China) SEA
• -- ME trade was largely crude oil
• 1980s -- China, socialist countries in SEA,
  entered into trade investment
• -- Oil price increases ME construction boom
  employment and imports from SA SEA
• 1990 -- Most ME Asian countries adopted open
  trade and investment policy and practices

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I. Historical Perspective (cont.)

• 1990s -- India, South Asia and West/Central
  Asia entered into trade investment
• -- ME countries became actively engaged in
  trade investment with Asia
• 2000 China became dominant economic player
  (world factories world market)
• 2001 International terrorism became a
• (9/11) trade factor
• 2004 India has been gaining economic prominence

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II. Current relations between Asia and Middle East

• Asia in 2004
• 55.7 share in world population
• 24 share in world GDP
• 26 share in world exports
• Average export growth of 10 during 1995-2004
• 22.8 share in world FDI

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II. Current relations (cont.)

• Middle East in 2004
• 7 share in world population
• 4.9 share in world GDP
• 5.4 share in world exports
• Average export growth of 13 during 1995-2004
• 1.7 share in world FDI

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II. Current relations (cont.)

• Asia and Middle East
• 50 countries in AMED, accounting for 62.7 of
  world population, 29 of world GDP and 31.4 of
  world exports
• 5 of top ten oil exporters are in AMED
• Growing interdependence among ME and Asia
• ME is a major fuel supplier to Asia
• Asia supplies food and other manufacturing
  products to ME

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II. Current relations (cont.)

• Merchandise exports in 2003 (Bn of USD)

Source WTO
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II. Current relations (cont.)

• Major Trading Products in 2003

• Most exports of ME to Asia are fuels.
• Major exports of Asia to ME are food (8.8),
  automotive products (18), other machinery
  transport equip.(14.6), and textiles (10.0).

Source WTO
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II. Current relations (cont.)

• FDI
• AMED receives 25 of world FDI in 2004.
• Middle East receives only 2.

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III. Potentials and Opportunities

• Different degree of trade policy openness
• Most open
• -- East Asia
• -- Central Asia
• Increasingly open
• -- Southeast Asia
• -- Southwest Asia
• Least open
• -- South Asia
• -- Islamic Africa

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III. Potentials and Opportunities

• Tariff vs. non-tariff barriers in AMED regions

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III. Potentials and Opportunities

• Investment policy is most liberal in East Asia,
  followed by
• Islamic Africa
• Southwest Asia
• South Asia
• Southwest Asia, and
• Central Asia

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III. Potentials and Opportunities

• Investment barriers in AMED regions/countries

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III. Potentials and Opportunities

• Degree of business-related bureaucracy is
  generally liberal but varies among countries,
  with no regional pattern

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III. Potentials and Opportunities

• Development of closer economic partnership
• 1967 -- ASEAN Association of SEA Nations
• -- From 5 to 10 members
• -- AFTA since 1993
• -- AFAS since 1995
• -- ASEAN Community in 2020
• 1992 -- GMS
• 1997 -- ASEAN 3, i.e. Japan, China, S.Korea,
  with Treaty of Amity
• 2005, Summit of East Asia

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III. Potentials and Opportunities (cont.)

• 1975 -- Bangkok Agreement A preferential
  trading agreement among developing member
  countries of the ESCAP Bangladesh, India,
  Korea, Lao, Sri Lanka and China (joined in
  2001)
• 1985 -- SAARC (South Asian Association for
  Regional Cooperation) - Bangladesh, Bhutan,
  India, Maldives, Nepal, Pakistan and Sri Lanka

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III. Potentials and Opportunities (cont.)

• 1993 -- APEC East and Southeast Asia,
  Australia and North America
• 1995 -- ASEM East Asia and EU
• 1997 -- BIMSTEC Bangladesh India - Myanmar
  - Sri Lanka Thailand Economic Cooperation
• 2002 -- ACD (Asia Cooperation Dialogue)
• 2002 Many FTAs among countries in AMED

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III. Potentials and Opportunities (cont.)

• Future cooperation
• MEAEC Middle East and Asian Economic
  Cooperation ?
• Getting to know each other
• Identifying trade impediment issues for
  consideration
• Organizing trade and investment promotion
  activities
• Arranging financing for trade and investment --
  from Asian Bond to AME Bond ?
• Networking among production units
• Etc., etc., ..