Current trade statistics miss a vital part of the story of where production occurs in the globalized economy, the OECD and WTO said on Wednesday, adding that China's trade surplus with the United States was overstated by a quarter.
The Organization for Economic Cooperation and Development and the World Trade Organization unveiled a new database that seeks to measure the value-added in trade.
With manufacturing highly dependent on imports of raw and intermediate materials, the OECD-WTO database sought to reveal where value was being added throughout global trade.
It found that measured by value-added, China's bilateral trade surplus with the United States was over $40 billion (25%) smaller in 2009, and 30% smaller in 2005.
It said this reflected value attributable to goods China imported from the United States and Asian suppliers that China processed and ultimately sent the United States.
The OECD-WTO initiative also found that services were greatly underestimated in traditional trade statistics.
While services account for about two-thirds of output in developed economies, traditional statistics put their share in trade at less than one quarter, while on a value-added basis it rises to over 50% of exports for countries such as the United States, Britain and Germany.
Traditional Measures Drive Misguided Decisions
With production chains becoming increasingly globalized, the OECD and WTO cautioned that "traditional measures of trade..., alone, may lead to misguided decisions being taken" in trade policy.
"Blocking imports will damage a country own productivity growth and automatically damage its competitiveness," said OECD Chief Angel Guria.
The OECD-WTO calculations showed, for example, that a third of the value of the cars that Germany's powerhouse car industry exports is generated in other countries.
"If Germany would say 'no imports,' well, no export of cars!" said Guria.
WTO Director-General Pascal Lamy said "Countries that export more and best are the countries that import more and best."
Copyright Agence France-Presse, 2013