1. The OECD-WTO Trade in Value- Added Database Delegations: Pre-Briefing Presentation 9 January 2013 Data included and accompanying this presentation are under embargo until 10.00am 16 January 2013

2. Overview Background – – What is TiVA? Why are we doing it? and What does it tell us? (Nadim Ahmad) The Database (Norihiko Yamano) Policy Implications (Crawford Falconer) Questions 2

3. A Horizontal Activity A good example of Inter-Directorate cooperation. Jointly developed by STD/STI/TAD Beginning in early 2012. 3

4. The rise of GVCs: apparel, cars, toys, planes, electronics… 4 Source: Rivoli (2005), WTO (1998), Feenstra (1998), www.newairplane.com, Linden et al. (2009)

5. Has meant that gross trade statistics …. may create ‘misleading perceptions’ and imperfect policies Export driven growth strategies may target the wrong industries and export markets. Gross Trade statistics typically reveal a low contribution made by the service sector (less than 25%), and cannot reveal whose final consumers drive supply P rotectionism can be counter-productive Imports can improve competitiveness And imports increasingly embody value originally generated in the importing country. This has led to calls for new statistics to better understand trade in the 21 st century 5

6. Trade in Value-Added 6

7. Also provides a means to better understand: – Systemic risks:- impact of macro-economic shocks on supply-chains – Integration of emerging economies in GVCs – Bilateral Trade Balances And in the future – Trade and jobs – Trade and Income 7

8. How can we do this? Using a global IO table 8

9. What are we doing? Using its database on national IO tables to create a global IO table. OECD: IO tables for 58 countries and 37 industries for 1995/2000/2005/2008,2009, (more than 95% of world GDP) Bilateral trade data for the flows; Announced a joint-initiative with the WTO to provide estimates of trade on a value-added basis. Collaborating closely with: – other institutions/initiatives: USITC, IDE-JETRO, WIOD; and national institutions (China) – forging closer links with others WB, IMF, Eurostat, UNSD. 9

10. A database on OECD.Stat With a number of indicators…………. – Decompositions of gross exports by industries into their domestic and foreign content, with the domestic content split into three (direct, indirect and re-imported) components and the foreign content broken down by source country; – The services content of gross exports by exporting industry (broken down by foreign/domestic origin); – Bilateral trade balances based on flows of value-added embodied in domestic final demand; – Intermediate imports embodied in exports, as a per cent of total intermediate imports. 10

11. What does the first release tell us? 11

12. Services matter Services Value-Added: % of exports, 2009 12

13. And have a high content in goods 13

14. Exports require imports Transport equipmentElectronics 14

15. And a significant share of total intermediate imports is used in exports 15

16. And Value-Added often returns 16

17. Who trades with who? 17

18. Japan – changes in balances value-added minus gross, USD millions, 2009 18

19. US – changes in balances value-added minus gross, USD millions, 2009 19

20. But this requires some assumptions And improving data quality is essential –More countries needed and more years. –Better disaggregation of sectors, in particular with more detail on exporting and importing firms and their cost structures –Significantly better information on services We are pursuing these: –Via working Parties WPTGS, WPGI, WPNA –Workshop on linking business and trade statistics: 25-26 October 2012 –Establishing links with other international associations where IO coverage is poor (Africa, South America) –On-going work on trade in services 20

21. And so the emphasis is on the fact that these are ESTIMATES As the quality of the underlying data improves so too will the accuracy of VA estimates Assumptions affect data for some countries more than other, depending on the quality of their underlying statistics But the general messages: –share of services, relative importance of sectors, integration into chains, bilateral trade patterns ….paint a meaningful picture 21

22. The Database Release 16 January 2013 10.00am, OECD Round table discussion featuring: OECD Secretary-General Angel Gurría WTO Director-General Pascal Lamy EU Trade Commissioner Karel de Gucht New Zealand Trade Minister Tim Groser Moderator: Alan Wheatley, Reuters A short video describing TiVA Live database & Press Release www.oecd.org/trade/valueadded - with methodological and FAQ noteswww.oecd.org/trade/valueadded 22

23. Pre-Release Material Circulated today and under embargo till the 10.00 am 16 th January –A Trade Policy Flyer –A Statistical snapshot paper –Country Notes Delegates invited to use the information to prepare briefings in capitals 23

24. Future plans Continued improvement in quality – – reconciling gross trade goods and services inconsistencies in collaboration with NSOs. Future expansions: more –countries, industries, years, indicators MCM May 2013: –Comprehensive report on policy implications of GVCs: covering trade policy, investment policies and other domestic policies aimed at drawing benefits from engagement in GVCs. Further ahead –Trade in jobs and Trade in Income 24

25. Important to recall that it’s not just about TIVA: – a global IO is able to answer many other policy questions – footprints, technology diffusion etc 25

26. Thank you for your attention Tiva.contact@oecd.org STD/STI/TAD 26