News
The Japan External Trade Organization （JETRO） said in its recently released global trade report that world trade hits a record high in 2011 but then rapidly decreases in 2012, while the trade structure of emerging countries changes. It also predicted high growth potential among emerging economies, in spite of the slowing world economy. The gist of the report is as follows:
-High growth potential among emerging economies, in spite of the slowing world economy
Due to the European debt crisis, the world economy in 2012 has shown clear signs of slowdown. The growth of emerging countries is also at an increased risk of a downward swing. The contribution rate of these countries to the world economy from 2010 to 2017, however, is expected to reach about 60% （based on the outlook of the International Monetary Fund） and this demonstrates that the countries will continue to lead the global economy. From the perspective of the population of productive age （15 - 64 years of age）, the emerging countries also hold an important position in the world economy. （These countries will witness peaks in ''demographic bonus'' at different times: Brazil in the 2020s, Iran and Bangladesh in the 2030s, and India and South Africa in the 2040s.） As of 2010, the total consumption expenditure of households of emerging countries was more than three-times as large as that of Japan. Their potential for economic growth is significant.
-World trade hits a record high but then rapidly decreases in 2012, while the trade structure of emerging countries changes
According to the estimation of JETRO, the value of world trade in 2011 hit a record high, increasing by 19.1% from a year earlier to 17.9688 trillion US dollars mainly due to the increased price of natural resources. China has become the world's largest export country for three consecutive years. However, its growth rate of exports （20.3%） has fallen below the average rate of emerging countries （23.3%）. Since the beginning of 2012, the growth rate of world trade has been significantly blunted. （For the first quarter of 2012, the trade amount of 22 major countries increased by 4.6%.） Meanwhile, the presence of the emerging countries as a consumer market has been further increasing. The share of trade between emerging countries to the total world trade has increased from 6.5% in 2000 to 15.9% in 2011.
-Importance of WTO's multilateral trade frameworks reaffirmed
IDE-JETRO （JETRO's Institute of Developing Economies） has conducted joint research on trade in value-added with the WTO in 2011. As this research clarified, the multilateral trade framework under the WTO has been vital in realizing the business environment necessary given the current reality of supply chains for companies pursuing globalization. Due to the stagnant Doha Round, the WTO has not been able to sufficiently fulfill its rule-making function. However, with its monitoring and surveillance function aimed to limit introduction of trade restrictions, as well as its judicial function to settle international trade disputes, the organization has still made significant contributions. There are also signs that the WTO's rule making under plurilateral trade frameworks are being vitalized. The organization, for example, has finally ended 15-year long negotiations to revise its Agreement on Government Procurement （GPA）. In addition, in May 2012, it has embarked on full-scale efforts to expand product coverage of the Information Technology Agreement （ITA） aimed to abolish tariffs on IT products. The WTO has also been seeking ways to conclude negotiations for some priority agendas of the Doha Round, including that for trade facilitation.
-Japanese SMEs engaged in exports have more room to consider using FTAs
As of the end of July 2012, the number of FTAs in effect has reached 221 in the world （an increase of 22 from a year earlier）. Conclusion of South Korea's FTAs with the EU and the U.S. have boosted the FTA coverage rate （or trade shares of FTA partner nations） of the country to 34.0% of its total trade. Meanwhile, Japan is also considering new FTA possibilities in response to the call of the ''era of FTAs between major trade powers,'' though its FTA coverage rate currently remains at 18.6%. Regarding FTAs with emerging economies*, which have significant market allure though many of them are imposing high tariffs as well as various investment restrictions, it is necessary for Japan to further examine potential economic effects of the FTAs, taking the situation surrounding FTAs already in effect into account. According to a questionnaire survey conducted by JETRO, the utilization rate of FTAs by Japanese firms has been increasing year by year. In recent years, they actively use FTAs between third countries centering on Asia. The utilization rate of small- and medium-sized enterprises （SMEs） in exports, however, remained at 24%, while the figures of large-scale companies marked 42%. Therefore, SMEs engaged in exports have room to make further use of FTAs as a way to reduce cost. Given the fact that many SMEs, about 30%, replied they were not familiar with institutions and utilization procedures of FTAs, information provision aimed to promote utilization of FTAs is essential for this to happen.
*Countries and regions which serve as Japan's major export destinations, however, have not yet been considered by Japan as possible FTA partners, e.g., Taiwan, Russia, Brazil, South Africa, Israel, Pakistan, Norway, Egypt and Bangladesh.
