On October 1, 2012 in Washington D.C., WTO Director-General Pascal Lamy gave a speech at Brookings Institutes about the future of trade. In his speech, he mentioned about new trading powers – China, Brazil, India, Mexico and Malaysia as the drives of global export growth. Nature of trade has changed because of the increasing integration of production of products.
“For centuries, the mercantilist approach of single country product was a driving force in trade policy”, Lamy said, and has still been a heated argument about whether exports were good and imports bad. It is now very hard to disintegrate the goods and services since nearly 60% of the merchandise trade happened in components. Such changes in the nature of trade from single manufacturing sites to global value-chain productions has urged for re-thinking of our trade calculation. According to Lamy, “if the measure of trade was in value-added rather than gross statistical terms, bilateral trade balances would look very different” – WTO economists believe that China’s $295 billion trade surplus with the U.S. would be reduced by nearly half.
On the other hand, Lamy also suggested that tariffs and other trade regulations can have profound impact in trade. He points out that an “open” conversation on international trade should be facilitated given the changing environment.
For more information: http://www.wto.org/english/news_e/sppl_e/sppl250_e.htm