Analysis of newly released data from the Organization for Economic Cooperation and Development (OECD) on the source of value added in bilateral imports shows that the share of U.S.-produced content in manufactured imports from Mexico and Canada has eroded significantly since the mid-1990’s. The share of U.S.-produced content in manufactured goods imported
The share of U.S.-produced content in manufactured goods imported by the United States from Mexico was 16 percent in 2011, down from 26 percent in 1995, the first year for which the data are available. The same holds true with Canada: the share of U.S. content in imports from Canada fell from 21 percent in 1995 to 15 percent in 2011.
This pattern of declining share of U.S.-produced value in NAFTA imports is also seen in the United States’ largest import from NAFTA, motor vehicles, where the share of U.S. content in imports from Canada and Mexico each fell by more than 8 percentage points over the same period. The pattern is also evident, although to a lesser extent, in U.S. imports of basic metals, the United States’ second largest import
In March 2017, the Organization for Economic Cooperation and Development (OECD) expanded its database on Trade in Value-Added (TiVA) to include, for the first time, a separate table on the source of value added in bilateral imports. This expansion facilitates the examination of how value originally produced in the U.S. is incorporated into products imported into the U.S. from specific countries. Prior
versions of the TiVA database only presented this data at the global level. The TiVA database includes annual data for all years from 1995 to 2011, allowing for the examination of trends over this time period.
This report focuses on the source of value-added in U.S. imports of manufactured goods from its North American Free Trade Agreement (NAFTA) partners Mexico and Canada. Subsequent versions of this report will examine imports into the U.S. from our other major trade partners. The focus in this report is on manufactured products as they are more likely than services or agricultural products to be produced
within global production chains. This report also examines the two manufacturing industries in the OECD database where U.S. gross imports from NAFTA were the largest in 2011: motor vehicles and basic metals.
Trade in Value Added
During production, goods and services may move across multiple national borders in order to produce and services may move across multiple national borders in order to produce a final product. As a result, goods and services that are traded can be composed of inputs sourced from various countries around the world. However, these multiple sources of inputs are not reflected in conventional trade statistics which are based on the gross commercial value of products as they enter and exit a country’s borders. The TiVA database addresses this issue by decomposing the value of traded products into the contributions made by each country at different points in the production chain. This allows for an examination of trade flows based not only on where the good or service was exported from but also where the value in the good or service was created.
By, Anne Flatness, economist from the Department of Commerce, and Chris Rasmussen, Team leader of the Quantitative Analysis Team in the Office of Trade & Economic Analysis
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