Production networks under The ASEAN Plus Six. A good deal or a threat?

This study breaks up the gross trade of ASEAN countries into the different components of Value-added trade to analyze the integration of ASEAN into the Global Value Chain (GVC). The study employs a global input-output database using data by the years1997, 2004, and 2012. The research considers the possible effects of expanding ASEAN into an ASEAN Plus Six agreement from the Vertical Specialization point of view. Gross trade is further broken down into nine components of value-added trade which creates a series of indicators of value creation, participation-position in GVC, among others. The study found that ASEAN has made significant gains in enlarging total trade (235%), and thus undergoing a particularly faster growth in production sharing structures. Over the time, ASEAN has assumed a notable function across the GVC as a provider of value-added through parts and components (33%) than as a producer of final goods (30%). Vertical trade accounts for more than 43% of ASEAN gross exports, but it depends on foreign intermediate goods (35%) to produce its exports, most of them are supplied from Asia. ASEAN single production region has gained a little while it has grown with Asian partners and lost market share with NAFTA and Europe. The ASEAN Plus six leads to a broad range of integration and might translate to larger gains than Intra-ASEAN trade. While ASEAN is expanding faster regionally than globally, both in supplies and in demand, the ASEAN internal market might not be large enough to drive growth. Meanwhile the dynamics of ASEAN appear as being part of a strong GVC through Asia.