Changing face of global trade

Business competitiveness and export performance are increasingly tied to countries’ integration into global production chains and a willingness to open markets to wider imports.

This is one of the key findings of the preliminary international trade data released by the Organisation for Economic Co-operation and Development (OECD) and the World Trade Organization (WTO).

Their joint "Trade in Value-Added Initiative" breaks with conventional measurements of trade, which record gross flows of goods and services each time they cross borders.

It seeks instead to analyse the value added by a country in the production of any good or service that is then exported, and offers, the partners believe, a fuller picture of commercial relations between nations.

"Countries’ capacity to sell to the world depends on their ability and readiness to buy from the rest of the world," OECD Secretary General Angel Gurria said during the launch of the new database in Paris.

Among the key findings are: China’s bilateral trade surplus with the USA shrinks by 25% on a value-added basis, reflecting the high level of foreign-sourced content in Chinese exports; one-third of the total value of motor vehicles exported from Germany actually comes from other countries; nearly 40% of the total value of China’s electronics exports come from foreign sources.

While conventional trade data suggests that services represent less than one-quarter of total trade, on a value-added basis services trade reaches an average 50% of OECD countries’ exports.

It is in fact well above that in the USA, the UK, France, Germany and Italy — in large part because services add significant value to manufacturing output.

 

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