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Tim Groser

17 January, 2013

Groser welcomes new OECD-WTO report on international trade

Trade Minister Tim Groser has welcomed the OECD-WTO’s estimates of “Trade in Value-Added” at the launch of the new database in Paris.

“This new data estimates trade in value-added terms, which helps convey the interdependencies of global value chains and reveal who ultimately benefits from trade,” Mr Groser says.

“Engaging internationally is crucial to all countries’ future prosperity. New Zealand is especially well connected to global value chains in the agriculture and food sectors.”

According to OECD estimates, 81 percent of New Zealand exports’ value is created domestically. This is higher than the OECD average of 72 percent, reflecting both our geographic distance and the importance of agricultural products to our exports.

Mr Groser says the database provides an important reminder that imports are vital to the production of exports. About a third of New Zealand’s imports of intermediate inputs are used to produce goods and services that are then exported.

“Now that we can quantify the contribution of imported inputs to value-added exports, there is no escaping the fact that any barriers to imports become barriers to our exports and to our firms engaging internationally.

“The data also shows that services are fundamentally more important to trade than previously acknowledged,” says Mr Groser. Services represent 46 percent of the value of New Zealand’s exports when you take into account that services contribute a significant share to the value added in manufacturing exports. This is double what traditional statistics indicate is the share of services in our exports.

“This reinforces just how critical an efficient services sector is to all export industries.

“Countries must ensure their businesses can access world class inputs at competitive prices if they are to be productive and reap the benefits from global trade and value chains.”

Building a more competitive and productive economy for New Zealand is one of the Government’s key priorities. As part of the Business Growth Agenda the Government has committed to the goal of lifting New Zealand’s exports to 40 percent of GDP by 2025, from the current 30 percent.

Further information:

Traditional trade statistics measure the total (gross) value of goods and services traded, every time they cross borders, rather than the value that has been added within that country’s borders. The OECD-WTO Trade in Value-Added database is the first time that the value-added contribution to trade has been estimated on a consistent basis across countries. This is useful because increasingly different parts of the process of producing a good – from design, production, assembly, through to its delivery to the end consumer - take place in different countries, a phenomenon referred to as “Global Value Chains”.

In March 2012 the OECD and World Trade Organisation (WTO) launched a joint initiative to measure trade in terms of the value that is added by a country in the production of any good or service that is exported. Using a model, the OECD (lead) and WTO estimate how exports of a country feed into intermediate inputs or final consumption in the importing country, in order to estimate trade flows in value-added terms. The database currently covers 40 countries and 18 industries.

More information and the Trade in Value-Added database is available at www.oecd.org/trade/valueadded

The OECD/WTO Trade in Value-Added country note on New Zealand is attached.

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