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21 September 2012 | Anna Reynolds
Global supply chains are binding countries together, according to World Trade Organization director-general Pascal Lamy.
Speaking at a seminar in Beijing, China on how value chains are shaping world trade, Lamy said: “The high level of import intensity in export production has created an unprecedented level of inter-dependency among countries engaged in supply chains.
It is no longer just about exports. Imports are essential to export. It is no longer just about ‘them’. It is about ‘us’.”
Lamy added that to understand the true nature of trade relationships you need to know what each country in a global supply chain contributes to the value of a final product. He also stressed the importance of knowing how much employment international trade is generating along the chain, and said trade should be measured in terms of ‘value added.’
He explained there are huge opportunities available through international production for developing countries, as reduced costs are enabling them to reach out into the global market. But he warned these governments have to be willing to create attractive environments for this type of engagement to go ahead.
Lamy said the industry tends to look only at the international aspects of a supply chain, the size of countries involved, and the overall value created. While this is important, “localising” the amount of value created through a supply chain can be vital to a nation’s development.
To make the most of the growth, employment and diversification that arises from participating in a global supply chain, Lamy advised governments look beyond traditional trade policies and instead suggested focusing on the impact of various other policies, including investment, technology, innovation and intellectual property.
He added the long-term success of a country’s economic prosperity will be influenced by factors other than trade, such as education and “social safety nets”.
The inter-agency seminar was also supported by the United Nations Conference on Trade and Development and the Organisation for Economic Co-operation and Development.