Monday, June 11, 2012

Made in the World

(Stoyan Nenov/Reuters. An assembly line at Great Wall plant, which turns out three models, near Lovech, Bulgaria.)
The NYT had this piece on cars from China but assembled in Bulgaria.
"These were the first Chinese cars built in Bulgaria. Late in 2009, Great Wall Motor started talks with a potential Bulgarian partner for construction of an assembly plant, its first in Europe, on abandoned farmland outside Bahovitsa, a quiet village near Lovech in northern Bulgaria."
In the context of China, this is a rare occurence since one would imagine the product would be produced in China. Is this another example of a trend of what the WTO calls "Made in the World"?
Explaining the "Made in the World" Initiative, the WTO website states:
"Today, companies divide their operations across the world, from the design of the product and manufacturing of components to assembly and marketing, creating international production chains. More and more products are “Made in the World” rather than “Made in the UK” or “Made in France”. The statistical bias created by attributing the full commercial value to the last country of origin can pervert the political debate on the origin of the imbalances and lead to misguided, and hence counter-productive, decisions. The challenge is to find the right statistical bridges between the different statistical frameworks and national accounting systems to ensure that international interactions resulting from globalization are properly reflected and to facilitate cross border dialogue between national decision makers."
It is more of a statistical tool to analyse the value addition to a product in different countries and the complex nature of world trade. The interconnectedness and complex nature of global supply chains is sought to be captured by trade statistics to actually depict the nature of the product in terms of the value addition. This undoubtedly questions the notions of a product of being made in a particular country vis a vis being made in different parts of the world. Richard A Mc Cormack concluded that by this initiative the WTO is one step closer to eliminate the country of origins labelling.

Michele Nash-Hoff is severely critical of this initiative in this piece titled "Changing to WTO's 'Made in the World' Labeling Would Harm Americans" in the Huffington Post where she avers:
"This Initiative could have dire consequences for America's manufacturers and consumers. For manufacturers, it could eliminate one of the options allowed by the WTO -- filing a charge for product "dumping" against another country to have countervailing duties applied against that country. For consumers, "Made in the World" labels wouldn't allow you to protect your family from the tainted, harmful, and even life threatening products coming from China. You wouldn't be able to support saving and creating jobs for other Americans by buying "Made in USA."
Trade Diversion clarified the position of the "Made in the World" exercise in this blogpost with a clarification from the WTO. Today, a "Made in X" product at times evokes strong, domestic, protectionist views. Will the "Made in the World" label lessen this possibility? Will it be a precursor to increased international trade since the resistance to products from particular countries will reduce? It would also be interesting to see how much of products traded actually fall under this category. Is it restricted to only a certain class of products? The country of origin labelling will have to remain for the remaining products. The Agreement on Rules of Origin is not going away anywhere in a hurry.

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