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As we all know, the globaleconomic crisis broke out in 2008 marked the end of global value chainrevolution. This revolution began in the 1990s, and was characterized by tasktrade and global structural production of the manufacturing industry. Now, thedevelopment of economic globalization has entered an important transitionalstage. In this transitional stage, we will face challenges from threeperspectives. One is how to solve the problem of global economy “rebalance”broughtby over-rapid economic globalization in the past 20 years. The second is how toget out of the predicament of deficient knowledge, theory and policy basebrought by waves of globalized innovation knowledge. The third is how to choosethe direction and path to rebuild rules of global trade and investment.
No doubt, Asia as a large tradezone will play an important role in the process of solving these threechallenges. This article will analyze the customs’ data of trade in goods andthe data of added value in service trade among three major trade zones—NorthAmerica (U.S., Canada, Mexico), Europe (27 EU states),Asia (China, Japan,Korea, India, ASEAN). Through this analysis, I want to demonstrate thenecessity of enhancing economic cooperation among countries inside Asian tradezone from the perspective of global value chain.
1. Asia in the Process of Global Economy “Rebalance
As is shown in table 1, in theyear 2017, import and export volume of trade in goods among North America,Europe and Asia takes up 81.6% of global total volume. Among them, NorthAmerica and Europe take up 52%,and Asia 29.2%. The statistics above means thatthese three trade zones are places where the global value chain revolution hastaken place in the past 20 years. Moreover, North America and Europe holddominant position in global value chain until this day.
Further analysis tells us thatthere remains a serious imbalance inside trade in goods in these three areas.As you can see in table 2, in 2017, North America and the Europe’s tradedeficit with Asia reached the number of 1016.09 billion dollars. In it, NorthAmerica’s deficit with Asia was 749.9 billion, which took up 73.8%, and Europe’strade deficit to Asia was 266.1 billion, which took up 26.2%. This indicatesthat for a long period of time from now on, Asia would be the main region tobear the pressure from global economy rebalance.
Table 1. Import and export volumeof North America, Europe, and Asia’s trade in goods and the percentage theytook up in global total volume (2017)
| Region | Import and export amount of global trade (million dollars) | Percentage they took up in global total import and export volume (%) |
| North America | 5,573,124.4 | 16.8% |
| Europe | 11,708,342.4 | 35.2% |
| Asia | 9,697,967.8 | 29.2% |
| Total | 26,979,434.6 | 81.2% |
Data Source: Global Trade Atlasdatabase
Table 2. Balance of trade in goods among three major trade zones (North America, Europe, and Asia) (2017)
| Region | 2017 Trade balance（million dollars） |
| North America’s trade balance with Europe | -196,164.1 |
| North America’s trade balance with Asia | -749,989.6 |
| Europe’s trade balance with Asia | -266,096.2 |
Data Source: Global TradeAtlas database
Fromthe perspective of global value chain, this round of global economy rebalanceis not only a process to rebalance trade volume, but also to rebalance productionallocation. Therefore, this rebalance process would have a huge impact on Asiantrade, investment, and economy as a whole.
2. Asia in thetide of innovation knowledge globalization
Seeingfrom the global value chain’s perspective, the pressure Asian trade zones bearin the process of economic globalization rebalance is only a reflection of Asia’sposition as the manufacturing end of global value chain. Researches have provedthat, in the context of innovation knowledge globalization, current knowledge serviceproduct and trade are suggesting a development trend similar to that ofmanufacturing industry mentioned above—global structural production and tasktrade. As for now, there is no statistics about global trades in knowledge,services, and goods available. However, we can observe this tendency indirectlyfrom trade in services added value data. In the following part of this section,this literature studies the data of global trade in services added value, andaims to analyze the position of three major trade zones (North America, Europe,Asia) in innovation knowledge globalization and reciprocal trade balance.
Table 3. Import andexport amount of North America, Europe, and Asia and their proportion in globaltotal volume (2014)| Region | Import and Export amount in 2014 (million dollars) | Percentage they took up in global total import and export volume (%) |
| North America | 1,440,199.1 | 13.3% |
| Europe | 4,162,270.5 | 38.3% |
| Asia | 1,230,150.7 | 11.3% |
| Total | 5,725,485.3 | 62.7% |
DataSource: WIOD database
As issuggested in table 3, in the year 2014, North America, Europe and Asia took up62.7% of global trade in services. Among them, North America and Europe accountedfor 51.6%, and Asia 11.3%. If we conduct further analysis on the balance oftrade in services between these three major regions, like in table 4, we shouldsee that North America and Europe had a 63.11billion trade in services surpluswith Asia. What we should especially pay attention to is that North America hada86.89 billion trade in services surplus with Europe, about 3.18 times of itstrade surplus with Asia.
Table 4. Balance of tradein goods among three major trade zones (North America, Europe, and Asia) (2014)| Region | Trade balance in 2014 (million dollars) |
| North America’s trade balance with Europe | 86,886.4 |
| North America’s trade balance with Asia | 27,316.8 |
| Europe’s trade balance with Asia | 35,786.0 |
Data Source: WIOD database
This analysis about trade in services added value data means that theglobalization of innovation knowledge is different from the global value chainrevolution in manufacturing industry. In this globalization domain featured bytrade in knowledge, services, and goods, North America is at an absoluteleading position. The global value chain of knowledge, services, and goods productioncurrently covers Europe and North America. Asia’s position in the process ofinnovation knowledge globalization is not yet clear.
3. Asia in the Reconstruction Process of Global Trade Investment
From a foreseeable development tendency, regional super FTA, and thecoordination of trade and investment rules among regional super FTA might bethe main channels to reconstruct global multilateral trading system rules. Ifwe use the proportion sub-regional super FTA’s internal import and export tradevolume took up in this region’s total volume as the index to evaluate thisregion’s institutional economic integration level, we should see that no matterit is in the field of trade in goods or services, the institutional economicintegration level inside Asian trade zone is the lowest comparing to North Americaand Europe. In 2017, as is shown in table 5, the import and export of trade in goodsinside the EU took up 31.4% of Europe’s total trade volume; the import and exporttrade in goods inside the NAFTA took up 19.2%of North America’s total volume;while the import and export goods trade inside the ASEAN took up only 2.7%ofAsia’s total volume. Then we have table 6 showing that in 2014, the volume ofimport and export trade in services inside the EU took up 25.1% of Europe’strade in services total volume; the volume of import and export trade inservices inside NAFTA took up 6% of North America’s service total volume.However, even using the overall statistics of Asia trade zone, the import andexport volume of trade in services inside Asia accounts for only 3.4% of Asia’stotal number.
Table 5. The proportion NorthAmerica, Europe, and Asia sub-regional FTAs’ internal trade in goods amounttook up in the regions’ trade in goods total import and export volume. (2017)| Region | The amount in 2017 (million dollars) | The proportion took up in this region’s total amount |
| NAFTA sub-region in North America | 1,067,600.1 | 19.2% |
| EU sub-region in Europe | 3,675,335.0 | 31.4% |
| ASEAN sub-region in Asia | 262,546.4 | 2.7% |
Data Source: Global Trade Atlas database
Note: Among ASEAN countries, Brunei, Cambodia, Burma and Vietnam used the datain 2016 to replace data in 2017. Trade data of Laos was never acquired.
Table 6. The proportionNorth American, European, and Asian sub-regional FTAs’ internal trade inservices amount took up in the regions’ trade in services total import and exportvolume (2014)
| Region | The amount in 2014 (million dollars) | The proportion took up in this region’s total amount |
| NAFTA sub-region in North America | 86,347.6 | 6.0% |
| EU sub-region in Europe | 1,044,302.4 | 25.1% |
| Asian internal | 41,788.6 | 3.4% |
Data Source: WIOD database
Note: There is no data about ASEAN internal service data. This table usedAsian internal trade in services data.
4. Why Asia Should Fasten its Speed of Economic integration
From the above analysis, we can come to this conclusion.
1. As is argued above, the global economic rebalance cannot be achievedthrough border region trading measures. This goal can only be achieved byadjusting production allocation and the structure of supply and demand.Moreover, the key to adjust supply and demand structure is not to reduceexport, but to expand domestic market’s import demand. That is the case notonly for individual countries, but also for trade zones as well. The formeranalysis has proved that Asia as a trade zone is going to bear the pressure ofadjustment in a longtime afterwards. Therefore, how to expand Asian trade zoneinternal market’s import demand will be the key of whether we can realizedglobal economy rebalance.
2. The preliminary condition to stimulate Asia trade zone internal market’sneed is to introduce innovation knowledge globalization, and rise its positionin added value level of manufacture industry’s global value chain. If Asia, asa whole, wants to rise its position, Asian countries would need to deepen theircooperation and labor division according to their comparative advantages in thelevel of industry supply chain.
3. No matter it is to expand Asian trade zone’s internal market demand, orto improve its position in the added value level of manufacturing industryglobal value chain, we will need a regional super FTA mechanism. This mechanismshould be built on the basis of the current “ASEAN+x”, “CPTPP”, the RCEP innegotiation process, and the FTA among China, Japan and Korea. It should alsoinclude major countries inside Asian trade zone. In my opinion, building thismechanism should be Asian trade zone’s direction to enhance its internaleconomic cooperation from now on for a long period of time.
(This article is edited based on the recording and hasnot been reviewed by the speaker.)
