Harmonized System Case Study

According to the Harmonized System (HS), which is the standard coding system widely used to record statistics of international trade, I can categorize products into 9 groups: that is, 1) Animal, Vegetables, and Food (‘AVF’); 2) Mineral Products (‘M’), 3) Chemical Products (‘C’), 4) Plastic and Rubber (‘PR’), 5) Hides and Woods (‘HW’), 6) Textiles and Footwear (‘TF’), 7) Stone and Metal (‘SM’), 8) Machinery and Electrical Products (‘ME’), 9) Transportation (‘T’). See Appendix for more details of categorizations. After adopting this way of categorization, Figure 5 decomposes ‘WORLD’ and ‘NON-DEFICITS’ of the deficits in Figure 2 in forms of different product groups.

[FIGURE 5 INSERTED HERE]

In Figure 5, all of the deficits share the same characteristic;

As already mentioned that product similarities may thwart the volume of trade among the ASEAN countries, but how could Singapore and Thailand earn external surplus from the non-surpluses trades despite the existence of product similarities in the region? The simple answer would be that Singapore and Thailand have other surplus-making products that could not be produced in the non-surpluses. This is due to two facts. The first fact is that Singapore and Thailand act as product distributors buying foreign products and selling them to the non-surpluses. For example, Singapore has earned external surplus from ‘M’ which are mainly petroleum products and energy, in her trade with the non-surpluses, while her global position of ‘M’ has been in deficit. This is because Singapore is a major oil-trading hub which buys oil from the world market and sells it to Asian countries including the non-surpluses. Similarly, Thailand also purchases pharmaceutical products from the world market and distributes them to the non-surpluses. This takes part in causing external trade deficits of ‘C’ in her global trade but external trade surplus in her non-surpluses position. The second fact is that some products of Singapore and Thailand that are mainly intended for domestic consumption might spill to the non-surpluses and generate some external surplus. For example, the Thai dairy products are intended for domestic consumption, but Thailand could earn some external surplus from border trading with her neighbor