[Music] trade is the engine of the global economy. More people, more goods, and more services are crossing borders today than ever before. But trade has changed dramatically in the 21st century. Through much of history, a good produced in the country was largely made a part source. Today, products are composed of parts from all over the world. To fully understand trade, we have to measure the value added at each point in the process. Imagine China exports a $100 smartphone to the United States. China may have only produced $10 or $20 of the total value of that phone. The rest of it was imported from elsewhere: graphic design from a California studio, computer code from programmers in France, a silicon chip from a factory in Singapore, precious metals mined in Bolivia. Many countries benefit from the export of this phone, but standard trade data does not reflect this. What's needed is a system for tracing the value that is added by all countries involved in producing this phone. The OECD WTO trade and value-added initiative aims to help people

understand that traditional trade data is not actually telling the whole story. Standard data shows that China has high surpluses with the United States and the European Union and a large deficit with Japan. Looked at in value-added terms, China surpluses and deficits decrease as Chinese exports have a high foreign content. Japan is another country that has run high trade surpluses with the United States and more recently with China. Value-added data reveals smaller surpluses with China and larger surpluses with the United States. This analysis can illustrate who actually benefits from trade and by how much in terms of both income and jobs. Trade improves competitiveness. Cheaper imports of parts and cheaper access to services bring benefits to consumers and companies alike. To realize the full potential, we need seamless border crossings, simpler customs procedures, sophisticated logistics, and more trade liberalization, especially in services. [Music] you [Music]

Made in the world: Better understanding global trade flows

Made in the world: Better understanding global trade flows