GLOBAL: Database offers new insight into trade flows
A new database developed by the World Trade Organization (WTO) and the Organization for Economic Cooperation and Development (OECD) aims to give a more accurate insight into global trade flows by measuring the value added to goods by importing countries.
According to early analysis of the Trade in Value-Added database, China's bilateral trade surplus with the US was US$40bn, or 25% less than previously thought in 2009, thanks to imports of US higher-value goods and levels of foreign-sourced material in exports from China.
Meanwhile, trade surpluses for commodity-rich exporters including Brazil, Australia and Canada are reduced because of the value added by importing countries in processing and then re-exporting the materials.
Similarly, service industries are responsible for an average of 50% of OECD countries' exports on a value-added basis – about double previous estimates.
The two organisations said the new database represented a break with the conventional measures of trade, placing more emphasis on the value added by importing countries.
“This has important implications for how we should understand today's trade policy,” said WTO director-general Pascal Lamy.
“Realising that imports of a country are good for its exports changes what trade negotiators call ‘defensive interests’ and also how they evaluate the cost/benefit balance of adopting trade remedy measures.”
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