Part III - New Focus on World Trade

Part III (and last) referred to a New Focus on World Trade

The first part of Pascal Lamy’s speech in Lausanne will constitute our third and last contribution to this new focus of world trade flows, and the new tools designed to ensure a better way of measuring what is actually happening.

Mauricio López Dardaine

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“… So we can talk about geography, I’ll tell you about statistics. This may seem bizarre coming from a director of the WTO.

Weird if one considers the organization I shall still head for six months is certainly better known because of its contribution to international law rather than to the art of data and indicators.

However, five years ago I realized that the negotiations that took place at the WTO -negotiations aiming at modernising international trade rules so they can cross the threshold into the XXI Century- were still based on a perception of international trade flows going back to the XX Century. And this gap may certainly have to do with the difficulties faced by the negotiators in order to successfully secure the Doha Round.

And not because the realities of globalisation have escaped their attention, but rather because they did not have in their hands the statistical tools enabling them to precisely apprehend the full scope of the transformations at work. In fact, the statistic measurement of trade flows had not yet been adapted to these new realities. And then, as say my expert colleagues in the realm of statistics: ‘only what one is able to measure actually counts; what can’t be counted, does not count’.

In other words, one can expect many a mistake when what actually matters cannot be [properly] measured.

When in the XIX Century David Ricardo created what would become the foundation of the international trade theory, countries exported what they [actually] produced. Ricardo used the example, since then famous, of the exchange of a British manufactured good -textiles- for Porto wine. The production of textiles, based on wool coming from British sheep, allowed the British to drink good wine. On the other hand, the Portuguese could dress well owing to their expertise as viticulturists. During a number of decades, well after the effects of the industrial revolution, the example referred to textiles and wine kept its full validity, because both the products and the services needed to manufacture a certain good came from the same country.

The industrial revolution was born in Great Britain, a country with coal and iron mines, and with a considerable urban population that could work in the factories. When you bought a steam engine in Great Britain, you knew all its components, from the iron for the wheels to the instruments to gauge the pressure in the boiler were of British origin.

Since then, many things have changed. Of course, the origin of Porto wine is still Portugal. Thanks to the origin denomination regulations, today a British consumer has more guaranties in this respect than his XIX Century forbear. On the contrary, as far as manufactured goods are concerned, the concept of country of origin has become progressively obsolete, while firms had more and more recourse to national and later international sub-processing regarding all that is not or ought not to be part of their core-business…”