Annual Report Examines Falling Trade Deficit, Using Value Added to Analyze Trade Data
The International Trade Commission released this week its annual compendium of data and analysis examining changes in trade with key U.S. partners and in important industries. Shifts in U.S. Merchandise Trade 2013 offers a comprehensive review of U.S. trade performance in 2013, focusing on changes in U.S. exports, imports and trade balances in nine sectors: agricultural products, chemicals and related products, electronic products, energy-related products, footwear, forest products, machinery, minerals and metals, transportation equipment, and textiles and apparel. There are also profiles of the U.S. industry and market for over 250 industry groups and subgroups, offering data for 2009-13 on consumption, production and trade.
This year’s report also includes a special chapter on the use of value added as a method of analyzing trade flows and describes how this information can help business officials, government representatives and others better understand the economics of global manufacturing and gain a more precise and nuanced picture of trade deficits and surpluses. The report notes that traditional trade statistics do not fully account for global supply chains, particularly the way “slices of value” are added at each step of increasingly international manufacturing processes, and that attributing the entire export value to the last exporting country does not provide information on the source of value in global trade. In contrast, “value-added” international trade statistics reflect the value added at each step of the supply chain across national borders. The report concludes that while the use of value-added statistics has become more routine for analyzing trade flows, challenges remain, including a lack of data broken out at an intermediate input level by industry or country as well as difficulties getting timely data.
Highlights of the 2013 report include the following.
- Nine of the ten U.S. merchandise sectors addressed in this report (all except the agricultural sector) registered trade deficits in 2013, and eight of the ten (all except chemicals and related products and energy-related products) experienced greater trade deficits or declines in trade surpluses. The most significant deficit expansions occurred in transportation equipment (up $5.9 billion, or 8.1 percent) and electronic products (up $3.5 billion, or 1.4 percent). There were significant reductions in the deficits for energy-related products (down $55.9 billion, or 21.8 percent) and chemicals and related products (down $2.3 billion, or 6.6 percent).
- U.S. exports increased by one percent to $1.37 trillion, including larger totals for six of the ten reviewed sectors. The greatest absolute increases occurred in aircraft (up $9.7 billion, or 10.2 percent) and petroleum products (up $8.3 billion, or 7.5 percent), while the largest decreases were seen in construction and mining equipment (down $6.2 billion, or 20.8 percent) and coal, coke and related chemical products (down $4.1 billion, or 23.1 percent).
- The value of total U.S. imports slid 0.5 percent to $2.24 trillion, with the largest absolute increases being in motor vehicles (up $8.4 billion, or 4.9 percent) and telecommunications equipment (up $5.3 billion, or 6.4 percent) and the largest decreases being in crude petroleum ($33.5 billion, down 14.6 percent), petroleum products (down $11.6 billion, or 9.0 percent) and steel mill products (down $4.8 billion, or 10 percent).
- Among its top five trading partners, the U.S. witnessed bilateral deficit increases with the European Union (up 8.2 percent to $149.9 billion), China (up 0.8 percent to $323.8 billion) and Canada (up 1.9 percent to $81.2 billion). Lower deficits were recorded with Japan (down 2.1 percent to $78.3 billion) and Mexico (down 5.2 percent to $96.0 billion).