Research Rewrites Global Trade Data

Cars made in one country include parts from all over the world. Labels could end up being larger than products if companies went into detail about the origin of every ingredient and component. Still the labels would be more accurate and could transform perceptions of trade deficits, according to a joint study by the Organisation for Economic Co-operation and Development and the World Trade Organization which tracked origin of components and services rather than final products. The study, summarized by the Financial Times, suggests that the US deficit with China in 2009 was about 25 percent less than previously reported; that a third of a German car could include parts made in other countries; and that demands for increasing the valuation of the Chinese currency might accomplish little. The report shows a new lineup for trade partners. For example, the US and not Germany is France’s largest trading partner. WTO President Pascal Lamy has suggested that better statistics and trade data could lead to better policies. – YaleGlobal