Trade data are set to get a makeover from the World Trade Organization, which is good news because the current method of accounting for the value of trade flows is misleading. Critics of free trade want to describe trade as a conflict between “us” and “them.” But who is “us” and who is “them”? Many products today contain parts that are produced in multiple countries. Official trade data, however, assign the value of those products to the country where the final assembly of the product occurred.
WTO’s “Made in the World” initiative aims to identify more accurate ways of accounting for the value of trade flows between countries. Hopefully it will help improve the quality of debate about trade policy. For more on this topic, see Dan Ikenson’s post “Lies, Damned Lies and Trade Statistics,” published December 16, 2010 at Cato-at-Liberty.