1. GLOBALIZATION & FOREIGN TRADE
SEPTEMBER 2013
Rahmet USLU
Gülçinay MUMCU

2. OUTLINE
A- GLOBALIZATION & TRADE IN VALUE ADDED B- IMPORTANCE OF TRADE IN SERVICES STATISTICS
September Ministry of Economy

3. A- GLOBALIZATION & TRADE IN VALUE ADDED
September Ministry of Economy

4. Trade in Value Added
With globalization, global value chains (GVCs) have become a dominant feature of today’s global economy.
The (growing) process of international fragmentation, challenges our conventional wisdom on how we look at and interpret trade.
Measuring Trade in Value Added is important for understanding the supply side of trade and identifying the sources of competitiveness.
September Ministry of Economy

5. Trade in Value Added
Globalisation of production necessitates new trade statistics due to the fact that current trade statistics may lead to misguided decisions.
The (last) exporter country which makes only assembly can be awarded wrongly as if it produces the full commercial value.
In response, international institutions carry out studies to develop a database of Trade in Value-Added indicators.
September Ministry of Economy

6. “Trade in Value Added” and “Double Counting”
September Ministry of Economy

7. Trade in Value Added Apple’s Example
Source: Trade İn Value-added: Concepts, Methodologies And Challenges (Joınt OECD-WTO NOTE)
September Ministry of Economy

8. Trade in Value Added
The indicators of trade in value-added are derived from input-output tables.
There are many ongoing works which are carried out by international institutions in the measurement of trade in value-added.
One of them is the joint OECD-WTO Trade in Value Added initiative.
The recent Trade in Value Added database was released in May 2013.
September Ministry of Economy

9. Trade in Value-Added (TiVA) indicators include:
Decomposition of gross exports by industry into their domestic and foreign content
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
September Ministry of Economy

10. In Turkey, the latest input-output tables were published in 2002.
Trade in Value Added
In Turkey, the latest input-output tables were published in 2002.
Keeping the input-output tables up to date is essential.
In addition frequent revision is necessary.
September Ministry of Economy

11. Trade in Value Added
Turkish Statistical Institute (TurkStat) has been trying to develop statistics for 2012 through questionnaire.
A method is needed for providing continuity and keeping the data updated.
A method that will allow the data to be collected in one repository and will ensure data flow continously.
September Ministry of Economy

12. B- IMPORTANCE OF TRADE IN SERVICES STATISTICS
September Ministry of Economy

13. Turkey's Services Trade
2012 SERVICE EXPORTS
Total Exports
(42 billion $)
Tourism
(25,6 billion $)
Transportation
(11,1 billion $)
Services Account Surplus
(22,9 billion $) 13

14. Turkey's Services Trade
Turkey's Share in Global Services Exports (%)
Source: WTO 14

15. Turkey’s Services Trade
Travel
25.6 billion dollars of revenue in 2012.
6th in the world in terms of revenue
Regarding number of visitors;
6 th in the World and 4 th in Europe (2011 and 2012)
Tourism growth in period;
Turkey: %11,4
Construction
2nd in terms of the number of top constructing companies (ENR)
According to CB 1 billion dollars of revenue on average
7th in the world in terms of revenues
September Ministry of Economy 15

16. Turkey’s Services Trade
Logistics
Europe’s biggest truck fleet (45000 trucks /1400 companies)
25. Biggest flight fleet in the world (1 million flight in 2011 / international)
Privatization of railway transportation services and the high-speed railway projects are carried out rapidly. So we expect increase in exports of rail transportation services.
11th in the world in terms of receipts
Telecommunications
500 million dollars of revenue
12th in the world in terms of 2012 receipts
September Ministry of Economy 16

17. Why Trade in Services Statistics Matter?
GATS
Follow-up of Uruguay Round commitments
Progressive liberalization principle
Request-offer procedures, bilateral& plurilateral negotiations
Statistics are of crucial importance in order to submit requests to Members or assess the requests meaningfully
TISA (Trade in Services Agreement)&FTA’s (Free Trade Agreements)
Demise of the Doha Round Negotiations
Start of a comprehensive TISA agreements among 23 countries
More comprehensive FTA’s covering “trade in services” , “investment” , “government procurement”
Bilateral trade in services statistics are vital to undertake negotiations. (Going to the market without knowing how much you have in your pocket)
September Ministry of Economy 17

18. Why Trade in Services Statistics Matter?
High-Level Bilateral Meetings (JETCO etc.)
Without “trade in services data” agenda is missing
Service exporters only react (give feedback) when there is serious problems
High-level contacts are chosen according to sub-sectors traded
Increasing trade in services volume with regional trading partners
September Ministry of Economy 18

19. Why Trade in Services Statistics Matter?
Policy Making “Trade in Services Agenda”
No single institution responsible for “trade in services” before 2011 Public Administration Reform Package
By 8 June 2011, Ministry of Economy is assigned for legislative arrangements and implementation of them regarding “trade in services”
Policy making is sensitive both to sectors (even sub-sectors) and to countries.
There is an increasing need for sectoral and country-based statistics
September Ministry of Economy 19

20. Why Trade in Services Statistics Matter?
BOP approach and Current Account Deficit (CAD)
High “net errors and omissions” (some of which may have arised from missing “trade in services” data)
CAD is one of the most important macroeconomic indicators
Turkey has a significant trade volume and needs more accurate data to manage current account particularly “trade in services” operations
Obligations arising from EU Acquis
Turkey has started accession negotiations in 2005
EC directive 184/2005 on community statistics concerning balance of payments
ITS must be compiled with wide sectoral coverage and with enough geographical breakdown
September Ministry of Economy 20

21. What Are The Recent Problems?
Developing bilateral statistics
(compilation of trade in services statistics by trade partners)
Increasing the level of detail of existing data on trade in services (specifically construction and transportation)
Compilation of detailed sectoral statistics (such as, computer related, audio-visual, health and related, professional and education services sub-sectors)
September Ministry of Economy 21

22. Trade in Value Added References
OECD, Trade Policy Implications of Global Value Chains,
OECD-WTO, Trade In Value-Added: Concepts, Methodologies And Challenges (Joint OECD-WTO Note)
OECD-WTO Database on Trade in Value-Added,
September Ministry of Economy