ASEAN: Regional Trends in Economic Integration, Export ... - USITC

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suppliers must be able to meet QCD standard manufacturing processes developed by Japan Automotive Standards Organization (JASO) or other national standard-making bodies in the United States or Europe. 26 Elements used to measure progress under a QCD program may include product return rate, employee productivity, stock turnover, meeting delivery schedules, equipment effectiveness, value added per person, and floor space utilization, for example. 27 ISO certification Motor vehicle parts suppliers must meet certain manufacturing and quality standards or certification requirements that are specified by their automaker customers. These may include International Organization for Standardization (ISO) standards such as ISO 9001 for quality management systems. 28 OEM suppliers are subject to first-party audits (selfassessments) and/or inspections by OEM personnel or independent auditors to verify compliance with OEM customer standards requirements (e.g., statistical process control). R&D and design capability Automakers have increasingly turned to their component suppliers for R&D and design capability to help reduce automaker costs and resource requirements, as well as improve vehicle quality and innovation. Tier One suppliers are encouraged to support cutting-edge product development and introduce new manufacturing techniques and technologies to maintain a long-term working relationship with the automakers. 29 This capability requires financial and resource commitments that are generally available only from large global suppliers. Regional competitiveness As previously noted, Thailand is generally considered to be the most competitive of the ASEAN countries producing motor vehicle parts. Because of its relatively open investment environment and large vehicle production base, the local industry has attracted numerous global component manufacturers. The presence of these producers in Thailand has helped to raise the overall performance level of the local industry, as has working with transplant automakers that require high manufacturing and product standards of their suppliers. One global automaker supported this assessment, noting that auto parts makers are most competitive in Thailand, having progressed from supplying the domestic market to now supplying parts internationally. Because of its large auto assembly base, Thailand offers the level of scale economies and market size necessary to attract auto parts manufacturers and contribute to lower costs. 30 Another source indicated that Thailand is the “winner” in ASEAN, in part because it is the region’s largest auto market. Automakers’ main procurement activities also reportedly occur in Thailand, so it is important for component 26 USAID/SENADA, “Automotive Component Value Chain Overview,” August 2007, 18. 27 Auto Industry, “Quality Cost Delivery,” Auto Industry [UK] Web site (accessed June 1, 2010). 28 The ISO/TS 16949:2009 standard, for example, is specific to the automotive industry and notes the particular requirements for the application of ISO 9001:2008 for automotive production and relevant service part organizations. ISO, “New Edition of ISO/TS 16949 Quality Specification for Automotive Industry Supply Chain,” July 2, 2009. 29 Ford, for example, requires a commitment from its suppliers to bring leading-edge technological innovations. Ford Motor Company, “Ford, Key Suppliers Roll Out Innovative Business Model,” n.d. 30 Industry official, interview by USITC staff, Bangkok, March 15, 2010. 7-6
manufacturers to locate there to be in direct contact with their customers. According to this same industry source, Thailand is the future of the regional auto parts industry, as more products will be made there. 31 Despite being the only ASEAN country to establish its own automakers and support a supply base, Malaysia’s industry reportedly manufactures automotive components to the “Proton level” 32 rather than to the rigorous specifications (e.g., standards and quality) of global automakers, keeping many of its parts producers out of the global market. In fact, to enhance their export competitiveness, some Malaysian auto parts makers reportedly moved to Thailand so that they could compete globally. 33 Many of the other regional domestic auto parts makers are believed to be smaller firms that largely lack the necessary skills and capabilities to be internationally competitive. Many have limited R&D and design capabilities and offer a narrow range of products and limited technological added value, all of which are important to supplying global automakers. Many of these parts producers are second- and third-tier suppliers, which by their nature are typically not active worldwide. A Toyota representative noted that the regional auto parts industry may have limitations on the availability of capable secondand third-tier suppliers. 34 Moreover, many of the region’s small-scale parts producers are believed to supply the aftermarket, where product and manufacturing standards are not as strict. 35 Regional Integration The existing regional integration of the auto parts sector has been achieved in part through the efforts of Japanese and foreign automakers and their suppliers within the framework of the AICO system to establish a manufacturing model that rationalizes production, thereby creating economies of scale and improved production efficiencies (box 7.2). ASEAN’s success at eliminating duties and liberalizing investment in this sector has furthered this effort. With the elimination of duties on ASEAN components, further integration will likely be expected as auto parts producers will no longer be bound by the government approval process and reciprocal trading required of the AICO system. According to one U.S. trade group, the full implementation of the AFTA will result in scales of production that provide cost efficiencies, without having to establish a plant in each country. 36 As a result, some industry sources acknowledge that industry integration will produce winners and losers in the auto parts industry. 37 One source indicated that although rationalization was part of the “grand plan” of the industry Roadmap, redistribution of plants and manufacturing would be difficult to accomplish. Obtaining agreement from the many industry players would likely pose a problem, particularly as the different levels of industrial development among the ASEAN countries make it hard to create a common integration plan. 38 31 Industry official, interview by USITC staff, Bangkok, March 16, 2010. 32 Industry official, interview by USITC staff, Kuala Lumpur, March 11, 2010. 33 Ibid. 34 The Nation, “Major firms see ASEAN as second investment base,” October 27, 2009. 35 Industry official, interview by USITC staff, Singapore, March 9, 2010. 36 U.S. Chamber of Commerce, written submission to the USITC, March 12, 2010, 2. 37 Industry official, interview by USITC staff, Singapore, March 9, 2010. 38 Ibid. 7-7
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United States International Trade C
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U.S. International Trade Commission
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Abstract This report describes tren
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CONTENTS―Continued Chapter 5 Wood
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CONTENTS―Continued Tables—Conti
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Acronyms 3PL ACCSQ ACDD ACE ACIA AD
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LPI MDF MFN MOU MRA MTCC NAFTA NAP
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Executive Summary The Association o
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Infrastructure and the legal framew
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Despite tariff reductions, the regi
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CHAPTER 1 Introduction Purpose, Sco
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Participating countries also gain a
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TABLE 1.2 Export Competitiveness Fa
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transactions, reinvested earnings,
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Bibliography Acoca, Brigitte. Empow
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CHAPTER 2 ASEAN and Selected Region
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BOX 2.1 Timeline of important miles
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BOX 2.2 AEC Blueprint: Goals and me
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BOX 2.3 ASEAN-wide free trade agree
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progress has been only achieved in
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BOX 2.4 What is ATIGA? ATIGA builds
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TABLE 2.2 Intra-ASEAN imports and e
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TABLE 2.4 Total imports, exports, a
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China is often viewed as a major co
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cases of dispute, but does not prov
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TABLE 2.6 Minimum permitted equity
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TABLE 2.8 Ease of trading across bo
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it maximally useful, such as the ab
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TABLE 2.9 ASEAN in the World Bank
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foreign ownership of express delive
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population that regularly uses the
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Bibliography Acoca, Brigitte. Empow
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ASEAN Economic Ministers. “Joint
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Malaysian Institute of Economic Res
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CHAPTER 3 Electronics: Computer Com
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competition between ASEAN countries
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Regional Integration, Export Compet
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Supporting industries Another impor
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The AEF is unique within the region
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TABLE 3.3 Computer components: ASEA
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joint R&D. 71 These advantages of l
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order to compete for investment (bo
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efficient service to tenants. Despi
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Bibliography Asian Productivity Org
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World Trade Organization (WTO). Inf
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Project to stimulate intra-ASEAN pr
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TABLE 4.2 Certain cotton woven fabr
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includes the production of cotton y
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BOX 4.1 Cotton woven apparel: Profi
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national government source stated t
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strengthen supplier relationships.
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Indonesia has limited potential as
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investment, 67 with much of the inv
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Bibliography Association of Southea
Page 113 and 114: CHAPTER 5 Wood-based Products: Hard
Page 115 and 116: some cases, on the export of sawnwo
Page 117 and 118: TABLE 5.1 Hardwood plywood and floo
Page 119 and 120: industry are limited, particularly
Page 121 and 122: important factors continue to hampe
Page 123 and 124: TABLE 5.3 Major intergovernmental p
Page 125 and 126: Export Competitiveness In 2008, ASE
Page 127 and 128: TABLE 5.6 Hardwood plywood and floo
Page 129 and 130: FDI in hardwood plywood and floorin
Page 131 and 132: Trade across land routes has been a
Page 133 and 134: Azarcon, Chulia J. “Comparative T
Page 135 and 136: Malaysia Timber Industry Board (MTI
Page 137 and 138: CHAPTER 6 Healthcare: Healthcare Se
Page 139 and 140: In recent years, the traditional in
Page 141 and 142: services industry by developing the
Page 143 and 144: Only a few countries export large v
Page 145 and 146: growing populations, and increasing
Page 147 and 148: has a healthcare MOU with Cambodia.
Page 149 and 150: BOX 6.1 Healthcare services: Profil
Page 151 and 152: competition for foreign patients in
Page 153 and 154: Singaporean provider provides train
Page 155 and 156: Giusti, Daniele, Bart Criel, and Xa
Page 157: Socio-economic and Environmental Re
Page 160 and 161: Within the broad priority sector, t
Page 162 and 163: Japanese automakers. Their supplier
Page 166 and 167: BOX 7.2 Automotive: Profile of ASEA
Page 168 and 169: Thailand is considered to be the mo
Page 170 and 171: Despite the continued implementatio
Page 172 and 173: TABLE 7.2 Certain motor vehicle par
Page 174 and 175: Inbound Investment The investment e
Page 176 and 177: Trade Facilitation The timely movem
Page 178 and 179: Bibliography Aldaba, Rafaelita M.
Page 180 and 181: Thailand in the 2000’s. “Indust
Page 182 and 183: (2) the development of ASEAN cooper
Page 184 and 185: productive in climates further from
Page 186 and 187: ASEAN members Thailand and the Phil
Page 188 and 189: Tariff, import tariffs on palm oil
Page 190 and 191: BOX 8.1 Palm oil: Profile of ASEAN
Page 192 and 193: chain, from plantations to retailer
Page 194 and 195: TABLE 8.6 Palm oil: Intra-ASEAN inv
Page 196 and 197: Brunei Burma Cambodia Indonesia Lao
Page 198 and 199: Hickman, Martin. “Online Protest
Page 201: APPENDIX A USTR Request Letter
Page 204 and 205: A-4
Page 207 and 208: E Federal Register /Vol. 74, No. 23
Page 209: APPENDIX C Calendar of Hearing Part
Page 213: APPENDIX D Positions of Interested
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Mr. Aquino noted that the Philippin
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FTA (AANZFTA), Australian and New Z
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cumbersome rules of origin, customs
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APPENDIX E Country Profiles
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BURMA ECONOMIC PROFILE Economic Ind
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INDONESIA ECONOMIC PROFILE Economic
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MALAYSIA ECONOMIC PROFILE Economic
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SINGAPORE ECONOMIC PROFILE Economic
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VIETNAM ECONOMIC PROFILE Economic I
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TABLE F.1 Agro-based products: Prio
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TABLE F.3 Electronics: Priority sec
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TABLE F.4 Healthcare: Priority sect
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TABLE F.5 Textiles and apparel: Pri
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