1. European Commission Enterprise and Industry ‹#› Trade in intermediate products and EU manufacturing supply chains European Commission Enterprise and Industry Budapest, 25 January 2011

2. European Commission Enterprise and Industry ‹#› Trade in intermediates – the study Context Patterns of EU trade in intermediates Supply chains Case study

3. European Commission Enterprise and Industry ‹#› Context What are intermediates? Intermediate trade and globalisation

4. European Commission Enterprise and Industry ‹#› Intermediate products Products, parts and components, used for production of a final product. Directs inputs: parts and components used in the final products. Indirect inputs: some parts and components consist of other inputs which thus are used indirectly. Many goods, services, firms and countries involved in the process of a final product.

5. European Commission Enterprise and Industry ‹#› Intermediate trade and globalisation Increased globalisation Fragmentisation of production Location of production globally according to comparative advantages. Outsourcing-offshoring and Cross- border networks Global value chains Intra-firm trade

6. European Commission Enterprise and Industry ‹#› Patterns of EU trade in intermediate products Overview of EU27 intermediate trade EU27 exports and imports Geographical patterns

7. European Commission Enterprise and Industry ‹#› Overview of EU27 intermediate trade Percent of total EU trade in 2008 ExportsImports Intermediates5154 Consumer goods2223 Capital goods2018 Mixed categories (N.E.C) 75

8. European Commission Enterprise and Industry ‹#› EU27 trade in intermediates in 2008 (%) and 1999-2008 (percentage points) ImportsExports EU1561 (-4.5)58 (-5) EU129 (3.9)10 (3.9) Advanced OECD 11 (-5.3)12 (-3.4) ASIA3 (-1)3 (-0.5) BRIC9 (5)6 (3.1) ROW7 (1.9)11 (2.1)

9. European Commission Enterprise and Industry ‹#›

10. European Commission Enterprise and Industry ‹#› Supply chains Manufacturing Services Changes over time

11. European Commission Enterprise and Industry ‹#› Imported to domestic inputs in manufacturing 1995 and 2005 (%)

12. European Commission Enterprise and Industry ‹#› Imported to domestic inputs in services 1995 and 2005 (%)

13. European Commission Enterprise and Industry ‹#› Imported intermediates by industry Manufacturing: Highest shares of imported intermediates in high-tech, 55% Hungary, Ireland, Slovenia, Slovakia display high shares in all tech categories Services: highest shares in transport services, 26% Ireland, Denmark and Estonia above average all services.

14. European Commission Enterprise and Industry ‹#› Case Study – Who captures the value of the mobile phone? Stylised picture of the supply chain Breakdown of value by parts of the value chain Breakdown of value by regions

15. European Commission Enterprise and Industry ‹#› The vertical supply chain of a mobile phone Firm Distributors Pure component suppliers Big retailers Smaller retailers Sub- assembliers Consumer Engines’ final assembly Assembly to order Components manufactured by sub- assembliers Material providers, mines, concentrating plants Sub- component suppliers

16. European Commission Enterprise and Industry ‹#› The brand owner, captures a half of the total value. The distribution channel creates 14% of the total value added. Suppliers of material inputs account for 11% of the total value added. The value added breakdown by participants in the phone’s value chain

17. European Commission Enterprise and Industry ‹#› On average, overall 55% of the value added is captured in EU-27. Even in the case of final assembly in China and final sales in the U.S, EU-27 cap- tures 51% of the value added. In the case when the device was assembled and sold in Europe, the share of Europe rises to 68%. The phone’s value added breakdown by regions

18. European Commission Enterprise and Industry ‹#› Thank you For your attention.