New WTO database will provide stats on value-added trade flows

The World Trade Organisation and the Organisation for Economic Co-operation and Development (OECD) have signed a letter of understanding to develop statistics on trade in value added. Among other things, the two organisations will produce a publicly-available database of trade flows estimated in value-added terms.
“Improved measurement and knowledge of actual trade flows will help better understand the interdependencies of today’s national economies, supporting the design of better policies and better trade regulation worldwide,” Director-General Pascal Lamy said.
The WTO has regularly pointed out that globalisation is changing business models and increasing international fragmentation of production. “Companies divide their operations across the world, from the design of the product and manufacturing of components, to assembly and marketing, creating global production chains. More and more products are ‘made in the world’ rather than in any particular country. Traditional statistics are necessary but are no more sufficient to identify the contribution of each trade partner to the total value of the final good in the supply chain.
“By contributing to specific segments of global value chains, trade partners are actually “trading tasks” rather than trading final products. Attributing the full commercial value of imports to the last country of origin can skew bilateral trade balances, pervert the political debate on trade imbalances and may lead to wrong and counter-productive decisions. Besides correcting for these accounting biases, the measure of trade in value added provides additional information on the contribution of each national sector of activity to the domestic value of total exports. This information is particularly relevant to analyse the source of international competitiveness and understand the relationship between trade and development,” a WTO statement said.