Global Trade and International Classifications

1. Global Trade and International Classifications

3. The future of international trade statistics Responding to demands of policy makers for more information on international trade and its relation to global value chains, employment, environment and the interdependence of economies, the participants of the Global Forum on Trade Statistics identify the following points of improvement. • Improve the relevance of international trade statistics by connecting trade information and integrating it with its economic, social, environmental and financial dimensions while minimizing the response burden. • Improve the statistical production process by better defining and organizing the co-operation among national stakeholders • Improve international classifications and correspondence tables relevant for research on international trade and globalization, such as research on trade in value added, on global value chains and on outsourcing of business functions.

4. Global Business Strategies Import of intermediate processing services Production Process Import of intermediate goods Manufacturing Processes Processing primary goods  processing intermediate goods  producing final goods Import of primary goods Import of final goods processing services Import of support business services Support Business Functions Distribution and Logistics; Marketing and Sale; ICT Services; Research and Development; Legal and Administrative Services

5. Revision of the Classification by Broad Economic Categories (BEC) 13/07/2014 5

6. Global Value ChainsThe Apple iPod, and Emblematic Case: Low Cost Assembly and Global Sourcing Designed in Cupertino Assembled in China Regional production systems are nested within global production systems

7. The iPhone example (Xing and Detert, 2010) Components: $10.75 JPN $60.6 Apple sold 11.3 million iPhones in the US in 2009 $22.96 KOR Retail price: $500.00 (Profit margin: 64%) USA CHN $30.15 GER $48.04 Assembly: $6.50 ROW iPhone: $179.00

8. Lead Firm Lead Firm Lead Firm Exports Industrialized countries Developing countries Component and Material Suppliers Component and Material Suppliers Global sourcing and MNC affiliates Market Modular Relational Captive Hierarchy End Use Customers Integrated Firm Relational Supplier Full-package Supplier Turn-key Supplier Price Suppliers Captive Suppliers Materials Local MNC affiliates

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12. New Classification for Business Functions 13/07/2014 12

13. A value chain describes the full range of activities that firms and workers carry out to bring a product from its conception to its end use and beyond.

14. CORE FUNCTIONS SUPPORT SUPPORT C. FUNCTIONS Global Production  International SourcingPeter Boegh Nielsen (Statistics Denmark)

15. Core business function Production of final goods or services intended for the market or third parties carried out by the enterprise and yielding income. The core business function equals in most cases the primary activity of the enterprise. It may also include other (secondary) activities if the enterprise considers these to comprise part of their core functions. CPC classes 88 Manufacturing services on physical inputs owned by others 854 Packaging services 87 Maintenance, repair and installation (except construction) services 89 Other manufacturing services; publishing, printing and reproduction services; materials recovery services 15

16. Support business function • Distribution and Logistics • CPC classes • 61 Wholesale trade services • 62 Retail trade services • 65 Freight transport services • 671 Cargo handling services • 672 Storage and warehousing services • 6791 Freight transport agency services and other freight transport services • Postal and courier services • Marketing, sales and after sales services including help desks and call centres • CPC classes • 83114 Marketing management consulting services • 836 Advertising services and provision of advertising space or time • 837 Market research and public opinion polling services • 83812 Advertising and related photography services • 85931 Telephone call centre services • 85962 Trade show assistance and organization services • Engineering and related technical services • CPC classes • 833 Engineering services • 8391 Specialty design services 16

17. Support business function • Distribution and Logistics • Marketing and sales • After sales services including help desks and call centres • Engineering and related technical services • ICT services • Administrative and management functions • Research & Development • Procurement • Finance and Accounting • Facility Management 17

18. EBOPS 2010 to CPC, version 2.0 Correspondence Table 13/07/2014 18

19. International Trade in service statistics Service exports/imports Statistics - BOP FATS statistics Transactions between residents and non-residents Transactions between residents 13/07/2014 19

20. Services transactions between residents and non-residents (BPM5) • Transportation • Travel • Communication services • Construction services • Insurance services • Financial services • Computer and information services • Royalties and license services • 9. Other business services • 10. Personal, cultural and recreational services • 11. Government goods and services 20

21. Services transactions between residents and non-residents (BPM6) • Manufacturing services on physical inputs owned by others • Maintenance and repair services • Transportation • Travel • Construction • Insurance and pension services • Financial services • Charges for the use of intellectual property • 9. Telecommunications, computer and information services • 10. Other business services • 11. Personal, cultural and recreational services • 12. Government goods and services 21

22. Starting from the existing correspondence table between EBOPS 2002 and CPC 1.0, the new correspondence table was established and was subsequently amended in accordance with the text of Chapter 10 of BPM6 and Chapter 3 of MSITS 2010. • References: • MSITS 2010, Chapter 3, Section O • BPM6, Chapter 10 • CPC, version 2.0 (see http://unstats.un.org/unsd/cr/registry/cpc-2.asp)