Global Production Sharing-Benefits to East Asia-Lessons to Developing Countries

The  slicing of a production process into vertically separated stages that are carried out in different countries otherwise known as Global production sharing—has redefined the dynamics of the world trade over the past few decades. Developing countries aiming at industrializing but ignoring global production sharing or outsourcing system and its related benefits, risk not only failing their policy goals but also being displaced out of the global trading system.  Developing risk losing out skills upgrading associated with international trade in form of global production sharing (Suervey report by Gordon H. Hanson)

According to the study by the Asian Development Bank (Chandra Athukorala and Jayant Menon, 2010) world trade in parts and components increased from about 18.9% to 22.3% of total exports between 1992/93 and 2005/06. Most of this growth reuslting from global production sharing originated from East Asia and as result the share of the subcontinent in total world exports increased from 27% to 39% over the same period. Click for more information on global production sharing and lessons to developing countries.

Global Production Sharing: Implications for Trade and Investment Policy for Developing Countries

Developing countries and particularly African countries need to borrow a leaf from the East Asian countries on how to benefit from Global production sharing. Global production sharing which in itself is the process of ‘splitting of the production process into discrete activities (tasks) which are then allocated across countries’, opens up new opportunities for export-led economies if they strategize and specialize in division of labour. 

A country can benefit from the growth of world demand for automobiles and become competitive in the production of just a single auto part. Economic integration into the global market that developing countries crave cannot be easily achieved if countries continue to aim at completing production domestically. Due to technological advancement resulting in easy, fast and less costly telecommunication and transport, it is no longer important to aim at exploiting the comparative advantage on a product as a whole.  Examples from East Asia can help us understand why global production sharing is an alternative that developing countries should embrace.   

Global production sharing which is sometimes referred to as; international production fragmentation or vertical specialization or slicing the value chain or outsourcing or offshoring can be exemplified in about three products. Read more on how East Asian countries benifit from Global production sharing. 

Significance of Trade Facilitation Negotiations at the WTO

The significance of trade facilitation negotiations at the WTO is inscribed in paragraph 27 of the Doha Ministerial declaration where Members agreed to trade facilitation negotiations so as to; expedite the movement, release and clearance of goods including goods in transit, and enhance technical assistance and capacity building in this area. Members agreed to review and as appropriate, clarify and improve relevant aspects of Articles V, VIII and X of the GATT 1994. Within the framework of trade facilitation negotiations, WTO members agreed to identify needs and priorities of Members, in particular developing and least-developed countries. Noting the significance of trade facilitation, members committed to ensuring adequate technical assistance and support for capacity building in the area of trade facilitation.

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The Negative Effects of Special and Differential Treatment to Developing Countries: Case of Sanitary and Phytosanitary and Trade Barriers to Trade

There are negative effects of special and differential treatment to developing Countries. As a trade negotiator, I have been pondering on whether the aspect of special and differential treatment, which we in developing countries clamor for, is always good for us. I believe there are negative effects of special and differential treatment to developing countries. Is it true that developing countries, most especially least developing countries, cannot competitively engage in trade and integrate into the global economy, without having to apply a special and differential treatment in all situations? I ask this because the main objective of trade negotiations is to enable countries to meaningfully and competitively engage in trade at the global market without unnecessary barriers to trade. So is there a posibility that the developing countries may experience negative effects of special and differential treatment?


As a special and deferential treatment, Members of WTO, do not expect developing countries to implement international standards that are not appropriate to their development needs. (Refer to Article 12.4-12.5 of TBT and Article 10 of SPS Agreements). But this right could have negative effects on developing countries.  However, I feel that delaying to implement or failure to comply with international requirements under the guise of special and differential treatment could lead to developing countries and especially least developing countries loosing competitiveness in the global market. More so they risk being displaced in their own market, because even their own citizens do require safe and quality products. If they cannot get home made safe and quality products, they will import. On the whole, they might disintegrate from rather than competitvely engage in trade and integrate into the global market. Read the entire article on the Negative Effects of Special and Differential Treatment.

China's Export Restrictions Inconsistent with Her WTO Accession Commitments -Panel Report

A report by the World Trade Organization (WTO) issued On 5 July 2011,indicates that China's export restrictions were inconsistent with her WTO accession commitments. The the panel examined complaints by the United States, the European Union and Mexico regarding “China's export restrictions in relation to exportation of raw materials”.

The Panel is convinced that China's export restrictions are shielding domestic producers from foreign competition and so they cannot be justified in in the name of environmental conservation.China's export restrictions can create serious disadvantages for foreign producers by artificially increasing China’s export prices and driving up world prices.

The Panel found that China's export restrictions are inconsistent with the commitments that China had agreed to in its Protocol of Accession. The Panel also found that certain aspects of China's export restrictions limit the export of the raw materials and so are inconsistent with WTO rules and her WTO accession commitments. Read more on China's export restrictions and how they are inconsistent with the her WTO accession commitments