Increased “interdependency” in global production networks for electronics requires greater multilateral cooperation, the World Trade Organization (WTO) said, warning against supply chain disruptions for exporters including those in the Philippines.
In a publication titled “15 Years of the Information Technology Agreement” released on Monday, the WTO said countries have become more vulnerable to shocks due to the tendency to specialize in production tasks in which they have comparative advantages.
“This means that macroeconomic crisis or natural disasters in one country can rapidly affect factories located far away,” the WTO said. The report cited as an example the 2011 earthquake and tsunami in Japan, which affected production in most of its trading partners.
The WTO said electronics manufacturers in the Philippines reported a 7.4% increase in production costs due to supply shocks from Japan. The country posted the highest rise in production cost for electronics following the Japan disaster. It was followed by Thailand, which reported a 5.7% hike and Taiwan, 5.6%.
The WTO said the stronger impact on the Philippines may be due to the close relationship of its electronics industry not only to Japanese firms but also to factories in other Asian countries.
Aside from economic crises and natural disasters, protectionist policies and unilateral changes in regulatory frameworks may also disrupt supply chains, the WTO said.
The WTO report said increased trade in these goods has been facilitated by the IT Agreement signed in 1996, which requires zero tariffs on IT products.
The WTO noted that trade in IT products amounted to $2.95 trillion in 2010 — almost triple the 1996 value of $1.1 trillion.
China was the top exporter of IT products in 2010, with $386.5 billion worth of outbound shipments. It was followed by the European Union, $267.4 billion; the United States, $133.6 billion; and Singapore, $122.5 billion.
The EU was the top importer of IT products, with inbound shipments totalling $387 billion. Next on the list was China, $291.7 billion; the US, $222 billion; and Singapore, $86.7 billion.
The Philippines was the 11th top exporter of IT products in 2010, with total exports amounting to $29.2 billion or a share of 2.1% of the world’s total. In terms of imports, the country ranked 12th, having imported a total of $18.8 billion worth of products.
***
By Kim Arveen M. Patria
Source: BusinessWorld, May 16, 2012
To view the original article, click here.
Comment here