Overview of Vietnam and ASEAN+3 Trade

170   

Vietnam - ASEAN +3 trade impact assessment studies basically adopted various methods such as trade indicators and regression models... However, analysis and evaluation of trade between Vietnam and ASEAN + 3 using intra-industry trade index (IIT) for each SITC code in the period 2000 to 2013 are limited. Therefore, this paper combines potential trade indicators including RCA, and TC with IIT calculation, contributing to analyze more clearly trade between Vietnam and ASEAN + 3, particularly intra-industry trade in the period 2000 -2014.

171   

trade with the whole world. World economy and international trade activities have recently tended to grow but still at low rates (WTO, 2015). Continuous fluctuations in world petrol and oil price are the main reason considerably affecting world trade in general and ASEAN +3 trade in particular.

During the period of 2000-2014, Vietnam consistently had trade deficit with ASEAN +3.

The level of trade deficit climbed rapidly over time. In 2000, trade deficit of Vietnam with ASEAN +3 was 2.82 billion US dollars but this figure amounted to 45.49 billion US dollars in 2014. The reason was that Vietnam mainly exports raw and low value added products such as electronic components, machinery components, equipment and parts, crude oil, rice, textile and fisheries,... to the ASEAN + 3. Besides, that ASEAN countries and Vietnam exported the similar labor-intensive products to ASEAN+3 such as rice and textiles also resulted in low export values of Vietnam. Meanwhile, Vietnam primarily imported high-value commodities such as petroleum, computers, electronic products, machinery, wood and input materials ... from ASEAN + 3.

2.2. Trade structure of Vietnam – ASEAN+3 by market

It is clearly seen that ASEAN + 3 countries are important partners of Vietnam, accounting for over 50% of Vietnam's trade in 2013 and 2014. In addition, Vietnam's trade with countries outside ASEAN + 3 increased by 1.17% as compared with 2013 (Statistics from UNComtrades).

In ASEAN + 3, Vietnam's trade with ASEAN countries accounted for the highest proportion from 2000 to 2009 (Figure 2). However, from 2010 up to now, China has outweighed ASEAN to become the largest trading partner of Vietnam in ASEAN + 3. By 2014, the proportion of Vietnam's trade with ASEAN, Vietnam, Korea, and Japan in Vietnam’s total trade values with ASEAN +3 decreased. By contrast, the proportion of Vietnam-China trade increased by 2.13% compared with 2013. The reason was that Vietnam-China trade increased significantly in 2014 (nearly 8.6 billion US dollars). However, trade between China and Vietnam increased mainly due to a rapid increase in Vietnam's imports from China. Hence, China was also the partner that Vietnam had the largest trade deficit in the ASEAN + 3. Regarding to exports, ASEAN and Japan were the largest partners of Vietnam in the region. While Vietnam had trade deficit with ASEAN trade, Vietnam consistently had trade surplus with Japan. In 2013 and 2014, the trade balance of Vietnam -Japan was nearly 2 billion US dollars in surplus.

Intra-ASEAN trade plays an important role in Vietnam's trade (Nguyen Hong Son et al, 2015). In ASEAN, Singapore, Thailand, Malaysia, and Indonesia are the main partners of Vietnam. In the years of 2000-2001, Singapore was the largest partner of Vietnam in ASEAN (over 50%). However, trade growth of Vietnam-Singapore then decreased. From 2010 to 2014, Thailand became the largest partner of Vietnam in ASEAN.

172   

Figure 2: Structure of Vietnam's trade with ASEAN + 3

Source: Authors' calculations based on data from UN Comtrade and Vietnam General Department of Customs

2.3. Trade structure of Vietnam - ASEAN + 3 by commodity

In terms of trade by commodity, trade between Vietnam-ASEAN + 3 is mainly in machinery and transport equipment (S7), accounting for 38.64% of Vietnam-ASEAN+3 trade in 2013. Next is the manufactured goods classified by material (S6), constituting 20.81% (Statistics from UNComtrades).

To be more specific, the export structure of Vietnam to ASEAN + 3 changed markedly over the period 2000-2013. Before 2006, raw and preliminarily processed products accounted for a high proportion of total exports of Vietnam to ASEAN + 3 (56%-60%). Since 2007, the proportion of preliminarily processed products decreased whereas the share of processed products increased rapidly, accounting for over 60% of Vietnam's exports to the ASEAN + 3.

According to statistical data from UN Comtrade, agricultural products, textiles, fisheries, electronics, and crude oil are the main export products of Vietnam to ASEAN + 3. Table 1 below shows that the export values of these commodities increased significantly during the period 2000-2013. In particular, electronic products exported to ASEAN + 3 witnessed a rapid growth from 444.9 million USD in 2000 to 10433.8 million USD in 2013, an increase of 23.5 times.

This is also the sector accounting for over 20% of Vietnam's exports to ASEAN + 3 in 2013.

Exports of high-tech commodities to ASEAN + 3 also increased over time, making up of 17.78%

of total export to ASEAN + 3 in 2013. Groups of traditional products such as agricultural products, textiles and fisheries have remained a key role in Vietnam's exports to ASEAN + 3 but tended to gradually decrease (Nguyen Anh Thu et al, 2014; Nguyen Hong Son et al, 2015). The shift is consistent with the trend of economic restructuring of Vietnam.

Regarding to imports, from 2000 to now, Vietnam's imports from the ASEAN + 3 have seen no major changes. Processed products are mainly imported items of Vietnam from the ASEAN + 3. Preliminarily processed products account for only a small share in the import structure due to

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

ASEAN Japan South Korea China

173   

Vietnam’s advantage of producing these products. Electronics are important import products of Vietnam. Imports of electronic goods of Vietnam from the ASEAN + 3 increased rapidly, from 861.5 million USD in 2001 to 27545.4 million USD in 2013 (nearly 32 times). Also, according to data from Vietnam's General Department of Customs, commodities such as petroleum, machinery, tools & parts, computers, etc. are the leading import items of Vietnam from the ASEAN + 3.

Table 1: Share of exports and imports of some commodities between Vietnam and ASEAN + 3

Unit: %

2000 2003 2006 2009 2011 2012 2013 Export Agricultural products 26.19 26.92 25.82 24.82 24.88 22.90 21.33

Garments and Textiles 12.44 9.72 8.06 9.97 11.50 11.01 13.30 Resources intensive

products 6.88 9.16 9.95 10.99 12.63 11.58 10.85

High-tech commodities 9.04 7.91 7.93 9.94 10.80 14.70 17.78

Fisheries 12.23 11.43 8.21 6.22 5.02 4.56 4.65

Electronic products 6.28 8.66 8.49 10.78 12.14 16.52 20.07 Import Agricultural products 6.13 8.15 7.09 6.32 6.79 6.13 5.57

Garments and Textiles 10.72 11.62 9.80 9.32 10.18 9.86 9.98 Resources intensive

products 25.47 23.78 26.57 20.01 19.51 17.07 13.21

High-tech commodities 13.10 10.24 11.02 16.05 17.39 23.81 29.14 Electronic products 10.91 9.73 9.73 14.20 17.53 25.32 30.47

Source: Authors’ calculations based on data from UN Comtrade

3. Merchandise trade integration between Vietnam and ASEAN+3: Trade indicators