International Production Networks And Changing Trade Patterns In East Asia The Case Of The Electronics Industry

The purpose of this paper is to analyze how the spread of different international production networks in East Asia has affected the trade links of the region with the U.S. and Japan. We concentrate on one particular aspect, i.e. changes in the product composition of U.S. and Japanese electronics exports and imports to and from the East Asia region. We find that compared to the U.S. , Japan’s trade links with East Asia display a far greater diversity of the product groups involved. Of equal importance is a second finding: the trade balances of both countries with the region are radically different. A consistently high and growing trade deficit characterizes U.S. trade links with East Asia in the electronic industry. This is true even for computers and components, the two sectors where the U.S. has re-established itself during the last few years as an uncontested leader. This is in stark contrast to the situation in Japan, where a large and rapidly growing surplus characterizes its trade links with East Asia. Although this is now slowly changing as East Asia has become the most important source of Japanese electronics imports, there is reason to doubt whether this positive development is strong enough to reduce any time soon the asymmetric nature of Japan’s trade links with East Asia. These differences can only be partially attributed to traditional macroeconomic factors that are the focus of standard trade theory. In the paper, we show how the observed differences can be better explained by some peculiar features of the international production networks that American and Japanese firms have established in East Asia. The chain of causation appears to work both ways. Changes in the organization of international production have led to changes in the composition of bilateral trade flows. Such changes in international trade patterns, in turn, lead to further changes in the organization of international production.international trade; international investment; economic development; business strategies; networks; Japan; USA; Asia; electronics industry

The EU-South Korea Free Trade Agreement and Its Implications for the United States

[Excerpt] On October 6,2010, the 27 member European Union (EU) and South Korea signed a bilateral free trade agreement (FTA). The agreement is expected to go into effect on July 1, 2011, pending approval by the European Parliament and the South Korean National Assembly. If enacted, the South Korea-EU FTA (KOREU FTA) would be the largest FTA in terms of market size that South Korea has entered into. The KOREU FTA reflects the EU and South Korean trade strategies to use FTAs to strengthen economic ties outside their home regions. It also builds upon the surge in trade and investment flows between South Korea and the EU over the past decade. This agreement has possible implications for U.S. trade with South Korea and congressional action on the proposed U.S.-South Korea FTA (KORUS FTA). The proposed KOREU FTA is very comprehensive. It would reduce and eliminate tariffs and other trade barriers in manufactured goods, agricultural products and services and would also cover such trade-related activities as government procurement, intellectual property rights, labor rights and environmental issues. Most studies done on the potential impact of the KOREU FTA estimate that the agreement will have a small but positive effect on the economies of the EU and South Korea as a whole and that the larger relative impact would be on the South Korean economy. The greatest economic impact of the KOREU FTA would be on specific sectors in each economy. EU services providers would be expected to experience gains from the agreement, especially in the areas of retail and wholesale trade, transportation services, financial services, and business services. In terms of trade in goods, EU exporters of pharmaceuticals, auto parts, industrial machinery, electronics parts, and some agricultural goods and processed foods would be expected to gain from the KOREU FTA\u27s implementation. At the same time, South Korean manufacturers of cars, ships, wireless telecommunications devices, chemical products, and imaging equipment would be expected to increase their exports to the EU market. The KOREU FTA is similar to the proposed KORUS FTA in many respects. Both agreements are comprehensive and both would eliminate tariffs on most trade in goods soon after they enter into force. However, they differ in other respects. Phase-out periods for tariffs on some manufactured goods differ. In addition, the KOREU FTA does not cover foreign direct investment. Unlike the KORUS FTA, the KOREU FTA would not allow trade sanctions to be applied where violations of the workers\u27 rights, and environment provisions have been deemed to occur. In addition, the KORUS FTA would cover a broader range of trade in services than would the KOREU FTA. It is not clear whether these differences in the structures of the FTAs would result in appreciable differences in outcomes in terms of economic gains and losses. U.S. and European firms are close competitors in a number of sectors and industries, particularly autos. Some business representatives argue that enactment of the KOREU FTA before enactment of the KORUS FTA would give European competitors commercial first mover advantages, since EU firms, such as those in the auto industry or the services sector, could gain greater market opportunities in South Korea not afforded to US. firms. On the other hand, other factors could also mitigate such advantages. For example, U.S. multinational firms operating in the EU could benefit from the KOREU FTA. Nevertheless, the content and fate of the KOREU FTA could influence the pace and tone of any debate in the United States on the KORUS FTA in the 112th Congress

Does the growth of mobile markets cause the demise of fixed networks? Evidence from the European Union

The increasing usage of mobile communication and the declining demand for fixed line telephony in Europe make the analysis of substitutional effects between fixed and mobile networks a key aspect for future telecommunication regulation. Using a unique dataset which contains information on all 27 European Union members from 2003 to 2009, we analyze substitutability between fixed and mobile telecommunications services in Europe by applying dynamic panel data techniques. We find strong empirical evidence for substitution from fixed to cellular networks throughout Europe. In addition, the article reveals resulting policy implications. --dynamic panel model,fixed-mobile substitution,telecommunication markets