Discussion on Future of trade in Asia starts to take shape

2017 2018 2019 2020 2021 2022
Revenue $160,546,000.00 $170,756,000.00 $181,193,000.00 $192,267,933.50 $204,019,792.40 $216,489,952.00
Cost of Revenue $77,379,000.00 $79,419,000.00 $84,141,000.00 $89,283,891.71 $94,741,128.81 $100,531,924.80
Gross Profit $83,167,000.00 $91,337,000.00 $97,052,000.00 $102,984,041.80 $109,278,663.60 $115,958,027.20
Operating Expense $59,304,000.00 $65,195,000.00 $67,639,000.00 $71,773,251.46 $76,160,197.90 $80,815,284.60
Selling, General and Administration $36,347,000.00 $34,917,000.00 $39,422,000.00 $41,831,563.44 $44,388,404.94 $47,101,526.48
Depreciation Amortization $25,847,000.00 $24,387,000.00 $28,217,000.00 $29,941,688.03 $31,771,792.96 $33,713,758.12
Operating Income $23,863,000.00 $26,142,000.00 $29,413,000.00 $31,210,790.30 $33,118,465.69 $35,142,742.59
Net Operating Interest Income Expense -$6,300,000.00 -$7,957,000.00 -$8,422,000.00 -$8,936,772.04 -$9,483,008.13 -$10,062,631.42
Other Income Expense -$2,424,000.00 $6,688,000.00 -$2,523,000.00 -$2,677,211.57 -$2,840,848.91 -$3,014,488.14
Pretax Income -$6,300,000.00 $24,873,000.00 $18,468,000.00 $19,596,806.69 $20,794,608.65 $22,065,623.03
Tax Provsion -$14,708,000.00 $4,920,000.00 $3,493,000.00 $3,706,500.21 $3,933,050.03 $4,173,447.11
Net Income Common Stockholders $29,450,000.00 $19,370,000.00 $13,900,000.00 $14,749,600.01 $15,651,129.54 $16,607,762.62
Net Income $0.00 $0.00
Average Dilution Earnings $13,000.00 $19,000.00 $21,000.00 $22,283.57 $23,645.59 $25,090.86
Basic EPS 0.0019 0.0029 0.0048 0.0051 0.01 0.57%
Reference Items
Enterprise Values 352,545 379,015 436,496 351,208 348,317 340,447
EBITDA 51,515 56,659 59,287 55,123 56,294 57,118
EV/EBITDA 6.84x 6.69x 7.36x 6.37x 6.19x 5.96x
P/E 8.17x 10.0x 20.7x 16.5x 12.6x 11.2x
Formulas used:
1.061122303 1.061122303 1.061122303



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  1. The following chart (posted in PPT20) offers estimates as to when various economies will return to 2019 level (i.e. pre-COVID).  Note the difference between the developed and developing world in terms of length to recovery.

Economist Intelligence Unit July 2020

Using your highly developed second order thinking skills, assess whether this forecast (assumed to be correct) highlights a permanent shift in the relationship between the developing countries and the developed ones.  What are possible consequences of such realignment?  What countries (or block of countries) would benefit the most and which would be affected negatively the most by any such realignment?

  1. Since PPT20 was issued there has been a highly reported  world trade event, namely, the signing of the Regional Comprehensive Economic Partnership (RCEP), a free trade agreement between most all of the Asian nations, including China, Japan and Korea.  Details of this agreement are attached at Appendix A and Appendix B.  RCEP was originally conceived to counter the Trans-Pacific Partnership (TPP) which included many of the same countries together with the US but without China.  As we have discussed, the US withdrew its participation in TPP and it was never included in RCEP.

What is your opinion as to the significance of RCEP?  Will RCEP greatly alter the world trade landscape?  Will the WTO be affected and, if so, how?  Will the US and the EU be affected in similar or disparate ways?

  1.  Congratulations!  Based upon the knowledge and skills acquired in Economics 333 at DePaul, you have been selected at the United States Trade Representative (USTR) in the upcoming Biden administration.  Among your many responsibilities is participating in events such as that sponsored by the World Trade Center St Louis.
Re-Engage in Trade: U.S. Presidential Election & Implications on Trade Policy (Online Event)

Date: November 20, 2020

Time: 12:00 pm  to  1:00 pm

Join us for a bipartisan panel discussion on the US Presidential election and its implications on trade policy. We will examine how the outcome affects FTAs, tariffs, exports, imports, reshoring, compliance and more. What does this mean for countries traditionally viewed as US allies or foes and broader US global engagement? What will remain the same, regardless of who is in the White House?


Briefly outline the topics and issues that you believe are the most important for the new administration to consider and state the position on each that you would convey to Friday’s audience on behalf of the new administration.


Asia-Pacific nations sign historic accord in ‘victory’ for free trade

  • China, Japan and South Korea link up • $200bn set to be added to global economy by 2030

Financial Times  16 November 2020

Li Keqiang, the premier of China, said that the deal was ‘a victory of multilateralism and free trade’

Leaders from 15 Asia-Pacific nations sealed one of the biggest trade deals in history, seeking to reduce barriers in an area covering a third of the world’s population and economic output.

Yesterday’s signing of the Regional Comprehensive Economic Partnership, or RCEP, marks a major step forward for economic integration in the region, and follows almost a decade of negotiations.

Economists said that the deal, the first trade agreement bringing together China, Japan and South Korea, could add almost $200bn annually to the global economy by 2030.

The RCEP takes most of the existing agreements signed by the 10 members of the Association of Southeast Asian Nations — Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam — and combines them into a single multilateral pact with Australia, China, Japan, New Zealand and South Korea.

By combining a mishmash of separate arrangements into a single deal, RCEP brings Asia a step closer to becoming a coherent trading zone like the EU or North America.

China’s premier, Li Keqiang, described the agreement as “a victory of multilateralism and free trade”, according to the official Xinhua news agency.

Japan and South Korea are set to be among the biggest winners from the deal, but the benefit of cheaper goods will spread as far as Europe and the US.

Appendix A-1

“This is a major step forward for our region”, said Lee Hsien Loong, Singapore’s prime minister. “At a time when multilateralism is losing ground, and global growth is slowing, the RCEP shows Asian countries’ support for open and connected supply chains, freer trade and closer interdependence.”

Analysts said the deal was likely to further diminish US influence in the region after President Donald Trump withdrew from the Trans-Pacific Partnership, another large trading pact.

The deal would have been even larger but India withdrew in 2019 and has refused to return. Indian businesses had feared a deluge of cheap Chinese imports, and complained the deal would do little to advance trade in services.

“By some measures, this is the largest free-trade agreement in history,” said Peter Petri, professor of international finance at Brandeis University. “About 30 per cent of the world’s people are covered.”

According to estimates by Prof Petri and Michael Plummer, a professor of international economics at Johns Hopkins University, RCEP will add $186bn to the size of the global economy and 0.2 per cent to the gross domestic product of its members.

“From a global perspective, the RCEP agreement, even if a littler shallower than other ‘megadeals’, signals that Asia keeps pushing ahead with trade liberalisation even as other regions have become more sceptical,” said Fred Neumann, co-head of Asian economic research at HSBC.











Appendix A-1


Future of trade in Asia starts to take shape

Absence of India gives China important voice in setting standards for the region

RCEP   Commerce rules   Financial Times  16 November 2020

After almost a decade of negotiations, leaders from 15 Asia-Pacific nations yesterday have sealed one of the biggest trade deals in history. The Regional Comprehensive Economic Partnership, or RCEP, is the first agreement to bring together China, Japan and South Korea, and economists say it could add almost $200bn annually to the global economy by 2030.

What is in the deal?

The agreement has all the usual chapters of a free trade deal: tariffs, customs administration, sanitary measures, services, investment and others. But two elements are significant.

The first is rules of origin, the criteria that determine where a product was made. All of the trade agreements of the Association of Southeast Asian Nations have different rules of origin so, for example, if a company in Indonesia makes a bicycle, it might be eligible under a free trade deal with Japan, but would need different components to be eligible under a deal with South Korea.

RCEP will sweep all that away. “When you manufacture a product for RCEP, it works for all 15 countries. And there’s only one piece of paper that you need,” said Deborah Elms, executive director of the Asian Trade Centre consultancy in Singapore. The second crucial factor is that it marks the first free trade deal between China, Japan and South Korea. Although RCEP is a fairly shallow agreement, this is a big step.

What is left out?

Unlike the overlapping Trans-Pacific Partnership trade deal, the RCEP is relatively unambitious, eliminating 90 per cent of tariffs compared with almost 100 per cent in TPP. Agriculture is largely absent and the coverage of services is mixed. RCEP does relatively little to set common standards for products.

“The critical point about RCEP is that the region is enormously diverse. There are big countries and small countries, rich countries and poor countries,” said Peter Petri, professor of international finance at Brandeis University.

“The rules have essentially accommodated all of these diverging interests.” Ms Elms said the ecommerce chapter was a particular disappointment. The 15 countries were unable to agree any rules on cross-border data flows or a customs moratorium on data transmission.

Appendix B-1

The biggest absence, however, is India. As a huge economy with relatively few free trade agreements, Indian participation could have led to a dramatic increase in commerce. But New Delhi feared its manufacturers would be swamped by Chinese competition.

What does it mean for China and the US?

A common criticism of RCEP is the dominant size of China within it, a fear that became much stronger when India pulled out. The deal gives China an important voice in setting standards for regional trade, and if Beijing uses that power collaboratively, its soft power will grow. “RCEP has never been China-led or China-driven. This was Asean’s agreement,” Ms Elms said. “But once the agreement takes effect, it will be hard for Asean to stay in the driver’s seat.”

The US sits outside both the main trading groups in Asia after Mr Trump withdrew from the TPP. That means neither the EU nor the US, the traditional trade superpowers, will have a voice when Asia sets its trading rules.

What happens next?

It will take some time to ratify RCEP and even longer for some of the tariff provisions to come into effect. But RCEP is likely to shape the future of trade in Asia.

One of the most significant effects may be to accelerate talks on a China-Japan-South Korea free trade deal.

But the greatest consequence may be taking the first step towards Asia’s emergence as a coherent trading zone, like Europe or North America. “Asia is integrated, but it’s for the purpose of delivering goods to other markets,” said Ms Elms. “RCEP changes that.”









Appendix B-1

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