Agriculture Reference
In-Depth Information
import prices of finished and semi-finished products of electronics from
ASEAN. Imported semi-finished electronic products account for a significant
share of the total production cost of electronics. As a result, the prices of
electroncs n Chna fall.
In China, the ACFTA will promote the production and increase the
output of rice, vegetables and fruits, processed foods and fish in the
agricultural sector and metal and machinery, transportation and electronics
in the industrial sector (Table 13.11). In order to distinguish between the
effects of trade liberalisation on output in agriculture and industry, we
further decompose the total mpacts on output nto three sources: the
contrbuton of tarff reductons on agrcultural commodtes lsted n the
EHP for the new ASEAN members; the contribution of tariff reductions on
other agrcultural commodtes; and the contrbuton of tarff reductons
on ndustral products.
The decomposton of the total mpacts on output reveals the drect
effect of trade lberalsaton and the effect of resource relocaton. Takng
the processed-food sector in China, for example, the tariff reduction in
the agricultural sector increases its production by 0.26 per cent, but the
lberalsaton of ndustry draws resources out of the agrcultural sector and
reduces processed-food production by 0.03 per cent. The combined impact
s to ncrease processed-food producton by 0.24 per cent. As vegetables
and fruts are the most mportant ntermedate nputs of the processed-food
industry, the increase in output of the processed-food sector promotes the
producton of vegetables and fruts.
11
Chna's huge domestc market wll provde great opportuntes for ASEAN
countries, but the effects on output will be determined by their comparative
advantages and by competition among sectors. As Table 13.12 shows, the
supply prices of all commodities in ASEAN+5 rise; however, this is not the
case for output. In agricultural sectors, the output of sugar and vegetable
oil increases but other agricultural sectors shrink. In the industrial sector,
the output of natural resource-related industry, electronics and metal
and machnery ncreases but the others declne. The full mplementaton
of the ACFTA should, therefore, help ASEAN+5 members to exploit their
comparatve advantages.
According to the ACFTA, the new ASEAN members will have a transitional
