Press Release
Launch of Joint WTO-IDE/JETRO publication,“Trade in value-added”: a new measurement of international trade
Institute of Developing Economies (IDE), JETRO and the World Trade Organisation (WTO) have launched a report on the joint research project on “trade in value-added”, a new measurement of international trade. The launch took place at the WTO headquarters in Geneva between 9:15 and 11:45 in the morning, local time, of 6th June, 2011, chaired by Director-General Mr. Pascal Lamy and President of IDE Professor Takashi Shiraishi.
The recent development of distribution system and new communication technology has brought in a rapid expansion of production networks across borders, and the vertical division of labour between countries became increasingly complex and intertwined. Production processes are fragmented into several stages and countries specialize in each production stage according to their own comparative advantages, for producing just a single final good to consumers.
This change has many implications for the way we understand the international trade. The traditional concept of the “country of origin” became practically irrelevant and outmoded. What we see today are no longer the products “made in Japan” or “made in the USA”; rather, they are truly “made in the world”.
The “trade in value-added” approach enables us to redefine the relationship between the countries of origin-destination in international trade. In contrast to the orthodox concept of trade balances based on foreign trade statistics, it focuses on the value-added contents of traded goods, and considers the contribution of countries to value-added generation at each stage of production process of a given commodity. For example, it is known that China’s exported goods use for their production a large amount of intermediate inputs supplied by neighbouring Asian countries. Accordingly, a significant part of Chinese export is attributable to foreign origins in terms of value-added.
The concept of “trade in value-added” is not necessarily new or surprising. It has already been studied widely at the venues like the World Trade Organisation, with a hope of bringing an alternative perspective on the issue of trade imbalances, and thus facilitates trade negotiations among countries concerned. In practice, however, the idea was hardly realised due to the lack of appropriate methodology or database. The evaluation of “trade in value-added” requires a rigorous estimation of value-added generation process, which cannot be captured by the conventional trade statistics that only record physical transfer of commodities across borders.
The international input-output table constructed by Institute of Developing Economies, JETRO, is considered to offer a powerful analytical tool for this problem. This massive dataset combines national input-output tables of various countries at a given point of time. It provides a detailed map of international transactions of goods and services, and thus enables us to trace value-added generation process of every commodity in every country at every production stage.
The report, “Trade Patterns and Global Value Chains in East Asia: From Trade in Goods to Trade in Tasks”, is a product of the first-ever joint experiment to measure and analyse “trade in value-added”, by integrating IDE’s experience in international input-output analyses and the WTO’s expertise on international trade.
WTO and IDE hope that analysts and policy makers not only of East Asia but also other region, in particular, in developing world, share the concept of the “made in the world” through this book.
The recent development of distribution system and new communication technology has brought in a rapid expansion of production networks across borders, and the vertical division of labour between countries became increasingly complex and intertwined. Production processes are fragmented into several stages and countries specialize in each production stage according to their own comparative advantages, for producing just a single final good to consumers.
This change has many implications for the way we understand the international trade. The traditional concept of the “country of origin” became practically irrelevant and outmoded. What we see today are no longer the products “made in Japan” or “made in the USA”; rather, they are truly “made in the world”.
The “trade in value-added” approach enables us to redefine the relationship between the countries of origin-destination in international trade. In contrast to the orthodox concept of trade balances based on foreign trade statistics, it focuses on the value-added contents of traded goods, and considers the contribution of countries to value-added generation at each stage of production process of a given commodity. For example, it is known that China’s exported goods use for their production a large amount of intermediate inputs supplied by neighbouring Asian countries. Accordingly, a significant part of Chinese export is attributable to foreign origins in terms of value-added.
The concept of “trade in value-added” is not necessarily new or surprising. It has already been studied widely at the venues like the World Trade Organisation, with a hope of bringing an alternative perspective on the issue of trade imbalances, and thus facilitates trade negotiations among countries concerned. In practice, however, the idea was hardly realised due to the lack of appropriate methodology or database. The evaluation of “trade in value-added” requires a rigorous estimation of value-added generation process, which cannot be captured by the conventional trade statistics that only record physical transfer of commodities across borders.
The international input-output table constructed by Institute of Developing Economies, JETRO, is considered to offer a powerful analytical tool for this problem. This massive dataset combines national input-output tables of various countries at a given point of time. It provides a detailed map of international transactions of goods and services, and thus enables us to trace value-added generation process of every commodity in every country at every production stage.
The report, “Trade Patterns and Global Value Chains in East Asia: From Trade in Goods to Trade in Tasks”, is a product of the first-ever joint experiment to measure and analyse “trade in value-added”, by integrating IDE’s experience in international input-output analyses and the WTO’s expertise on international trade.
WTO and IDE hope that analysts and policy makers not only of East Asia but also other region, in particular, in developing world, share the concept of the “made in the world” through this book.
Contact:
External Relations Division, Research Promotion Department, IDE-JETROTel:043-299-9536 FAX：043-299-9726 E-mail：info 
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