Introduction ITC's Market Analysis Tools and trade analysis What is ITC? The UN body for design of policy recommendations to achieve economic and social development through trade and investment. • Mission The forum to negotiate multilateral trade rules, monitor their implementation and handle trade disputes ITC works with local and regional institutions and businesspeople to promote exports and trade. ITC enables small business export success in developing countries by providing, with partners, trade development solutions to the private sector, trade support institutions and policy-makers ITC activities Activities Business and Trade Policy ITC Clients Policy Makers Export Strategy Trade Intelligence Trade Support Institution Exporter Competitiveness One ITC Beneficiaries Trade Support Institutions Micro, Small and Medium-Sized Exporters Business Community One Many ITC Development Outcomes Export Impact for Good Generating sustainable incomes and livelihoods especially for poor households, by connecting enterprises to global markets ITC organisational chart MAR activities I. Market Analysis Tools II. Tailored Analysis III. Capacity Building and Training Trade Map Trade Competitiveness Assessment Introduction to Market Analysis Market Access Map Export Potential Assessment Preparation of Market Profiles Investment Map Export Opportunity Scan Training–of–Trainers Trade Competitiveness Map Sector Competitiveness Scan Mentoring for Tailored Analyses Customised analyses Face-to-face and E-training Customised training Workshop objectives • Understand some of the main trends in the current global trade environment • Introduce ITC's Market Analysis Tools and become knowledgeable in their use • Gain an insight into how these tools can facilitate trade analysis Some trends... ...of the current trading environment Trade is enormous... $13,700,000,000,000 or $420,000 per second • Globalization has accelerated over the last 20 years • The volume of trade as a percentage of global GDP has more than doubled since 1960 ...and it's more dynamic than the economy... World Trade vs. GDP Growth 13% 1960-2007 11% 9% GDP Trade 7% 5% 3% 1% 1960-70 1970-80 1980-90 1991-94 1995-98 1999 2000 2001 -1% Source: WTO 2002 2003 2004 2005 2006 2007 ... but it's not immune to the downturn... Annual Growth of Imports by Level of Development of Countries 2002-2007 30% 25% Developed Countries Developing Countries 20% 15% 10% 5% 0% 2002 2003 2004 Source: ITC Trade Map 2005 2006 2007 ...although downturn is not uniform... GDP and merchandise trade by region, 2005-07 Annual % change at constant prices Source: WTO ... and 2009 will be a tough year Growth of trade volumes Annual % change 18 Developing country exports 15 12 9 6 3 World trade 0 1981 1984 1987 1990 1993 1996 1999 -3 Source: World Bank, Global Economic Prospects 2009 2002 2005 2008 Global trade patterns are changing... • Trade flows within regions account for a higher share of world trade than flows between regions • Asia Pacific & EU trade more within the region • However many regions trade more with other regions than internally: Africa, South and Central America, Middle East and CIS ...with developing countries gaining ground... Share of Global Trade by Level of Development % of Total Trade Source: ITC analysis based on world trade statistics ...and "south-south" trade growing fast... Top 25 markets for developing countries # 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Importers TOTAL EU(27) United States of America China Japan Hong Kong (SARC) Republic of Korea Singapore India Chinese Taipei Canada Malaysia Thailand Mexico Australia Russian Federation Brazil Turkey Indonesia South Africa Philippines Saudi Arabia Argentina Pakistan Switzerland Colombia Imports 2007 5,186 1,126 1,108 573 422 277 197 166 139 111 98 88 80 80 76 63 62 52 49 37 35 34 27 21 17 16 Growth 2003-07 101% 112% 71% 158% 77% 68% 134% 109% 446% 102% 113% 109% 112% 149% 122% 323% 216% 215% 156% 219% 80% 191% 263% 156% 90% 197% Share in Total 100.0% 21.7% 21.4% 11.1% 8.1% 5.4% 3.8% 3.2% 2.7% 2.1% 1.9% 1.7% 1.5% 1.5% 1.5% 1.2% 1.2% 1.0% 1.0% 0.7% 0.7% 0.7% 0.5% 0.4% 0.3% 0.3% Source: ITC Trade Map …but mostly intra-region… Asia Pacific Intra-Trade: $ 1’121bn or 55% of S-S Trade $ 66bn $ 50bn $ 45bn $ 109bn Latin America $ 256bn $ 10bn Africa Intra-Trade: $126bn or 6% of S-S Trade $ 7bn $ 8bn $ 16bn $ 109bn Middle East and Arab $ 6bn $ 12bn Intra-Trade: $62bn or 3% of S-S Trade Total 2007 S-S Trade: $2’157 billion Source: ITC Intra-Trade: $27 bn or 1% of S-S Trade The mix of products traded is changing... Global trade by type of commodity % of total trade 80% Agricultural Mining Manufacturing 70% 60% 50% 40% 30% 20% 10% 0% 2001 2002 2003 2004 Source: ITC Trade Map 2005 2006 2007 ... but not all sectors are equally successful Top export industries for highperformance developing countries Top export industries for struggling developing countries (but not from struggling developing countries) (but not from struggling developing countries) Electrical, electronic equipment Cotton Machinery, boilers, etc. Wood and art of wood, wood charcoal Precision instruments Other made textile articles, worn clothing Plastics and articles thereof Fish, crustaceans, mulluscs Organic chemicals Edible vegetables, roots & tubers Articles of iron and steel Edible fruits, nuts, melons Copper and articles thereof Raw hides, skins, leather Furniture, lighting, prefab buildings Cereals Toys, games, sports requisites Cocoa & cocoa preparations Ships, boats Coffee, tea, mate and spices Footwear, gaiters, parts thereof Nickel and articles thereof The best performing exports from developing country exporters tend to be manufactured products, as opposed to commodities Trade in services grows quickly... Trade in Services as % of GDP 12 1975 – 2007 11 10 9 8 7 Source: World Development Indicators, World Bank 2007 2005 2003 2001 1999 1997 1995 1993 1991 1989 1987 1985 1983 1981 1979 1977 1975 6 ...significantly due to FDI... • In spite of quick growth in traded value, over the past 30 years the share of services, excluding Mode 3 (commercial presence), in global trade has been quite stable around 20% • BUT, Mode 3 is not captured in current trade in services statistics • FDI data shows that more than half of FDI flows are in the services sector • FDI keeps on growing globally... …which is ever more important FDI as % of World GDP 1985 – 2007 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% Source: World Development Indicators, World Bank 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 0.0% Market access issues are changing: • Trade agreements proliferate... Number of Existing Trade Agreements 1960 – 2007 All countries, all types of agreements Source: WTO … reducing tariffs… Applied MFN Tariffs, All Products, By Level of Income 12 2001 2007 10 8 6 4 2 0 Low Med-low Medium Source: World Trade Indicators, World Bank Med-High High … and making NTMs more important NTM Frequency By Level of Income, 2001 45 40 35 30 25 20 15 10 5 0 Low Med-low Medium Source: World Trade Indicators, World Bank Med-High High Business environment matters… Source: World Bank Doing Business Report 2009 ...because it affects trade, inter alia Source: World Trade Indicators 2008, World Bank Register to access ITC’s Market Analysis Tools Free to users from developing countries Thanks to financial contributions from ITC's Global Trust Fund and the World Bank, as of the 1st January 2008, all users from developing countries and territories may access ITC's market analysis tools free of charge. http://www.intracen.org/mat Free to users from developing countries Trade Map A web-based trade flow analysis tool Introduction • An exporter of pineapples is looking to diversify its client base…Which country should be targeted? • A shoe exporter needs an overview of trade barriers he/she would face for exports to Malaysia… • A trade mission needs to know our top export products to Germany… • Where could you import automotive components from? Who are the largest suppliers in your region? • What is the current trade between your country and the United States? Initial answers to these questions and many more are easily found in Trade Map Trade Map • Online application to produce reports on international trade flows • Every product (HS-6) to and from (almost) every country • Based on probably the largest trade flow database in the world • User-friendly interface, report-ready outputs • Flexibility for customising reports, analysis • Graphic presentation of outputs to facilitate analysis Key characteristics • Where does the data come from? • National Authorities • COMTRADE, produced by the United Nations Statistics Division database • What is Trade Map’s geographical coverage? • Information for over 220 countries and territories using data reported by 160 countries and territories • Data for non-reporting countries is spawned from mirror statistics • What is Trade Map’s product coverage? • For the Harmonized System • over 5,300 products at the 6 digit level • For the National Tariff Line • up to 30,000 products for 90 countries (~84% of world trade) • What is Trade Map’s time horizon? • Yearly, quarterly and monthly data Data classification • The Harmonized System (HS) • Is used as a basis for the collection of Custom duties and international trade statistics by almost all countries, representing about 98% of world trade • Developed by the World Customs Organisation – WCO (www.wcoomd.org) • Implemented late 1980s. • Harmonised different existing nomenclatures • Adopted by almost all countries in the world • Basis for all trade conversations internationally • Main revisions in 1996 and 2007 Data classification • The Harmonized System (HS) • Is a numerical classification system of products used as a basis for international trade statistics by almost all countries. • is harmonized up to six digits (HS-6) - You can compare HS data between countries. • Is broken down into 3 clusters: • HS-2: the chapter of the good (sector) HS-2 HS-4 • E.g. 09 = Coffee, Tea, Mate and Spices • HS-4: groupings within the chapter (sub-sector) • E.g. 0902 = Tea, whether or not flavoured • HS-6: product(s) within the grouping (product level) • E.g. 090210 = Green tea (not fermented) HS-6 Data classification • National Tariff Lines (NTL) codes • Classification of goods after the 6 digit level of the Harmonized System classification. • National Tariff Lines go from 8 digits to 12 digits. • Why use the HS and NTL classification? • The HS classification is standardised internationally HS-2 HS-4 • The NTL classification is not standardised internationally. Each country decides its own further classification after the Harmonized System. Hence, National Tariff Line codes can be different from a country to another. HS-6 NTL Data classification HS (International standard) 08 Edible fruit and nuts; peel of citrus fruit or melons. 08.04 Dates, figs, pineapples, avocados, guavas, mangoes and mangosteens, fresh or dried. 08.04.50 Guavas, mangoes and mangosteens. Australia 08.04.50.00 Fresh or dried guavas, mangoes and mangosteens Japan NTL (NON standard) 08.04.50.01.1 08.04.50.01.9 Mangoes, fresh Guavas and mangosteens, fresh United States: 08.04.50.40.40 08.04.50.60.80 08.04.50.80.00 Mangoes, fresh, if entered during the period from September 1, in any year, to the following May 31, inclusive Guavas and mangosteens, fresh, if entered during the period from June 1 to August 31, of the following year, inclusive Guavas, mangoes and mangosteens, dried Market Access Map Information on tariffs and other market access conditions Market Access • Information on market access conditions allows exporters to: • Evaluate the competitiveness of the product relative to suppliers from other countries under different tariff schemes • Select markets/market segments in which the product has the best prospects • Adapt, where necessary, the product to conform to the target market’s import regulations Types of tariffs • Ad valorem tariffs: • Levied on the basis of the value • Used by most countries; more than 87% of tariffs worldwide are ad valorem Ad valorem tariffs E.g. Australian tariff of 5% on imported wine (22.04.21.20.70) French wine: • AUD 8 / litre New Zealand wine: • AUD 6 / litre Tariff per unit = Price * Rate Tariff paid: AUD 0.40 /litre Tariff paid: AUD 0.30 /litre Types of tariffs • Ad valorem tariffs: • Levied on the basis of the value • Used by most countries: more than 87% of tariffs worldwide are ad valorem • Specific tariffs: • Levied on the basis of volume or weight • Users of specific tariffs include (% of MFN tariff lines): Switzerland (79.8%), Thailand (21.9%), Russia (12.2%), Argentina (12.1%), Belarus (11.9%), USA (8.2%), EU (4.6%) Specific tariffs change relative prices E.g. Switzerland's tariff on beef of CHF18 / kilo (02.01.30) Before border The prime beef is 4 times the price of the low quality beef, but also 4 times the quality After the border At border CHF18 specific tariff per kilo CHF3 / kg beef CHF12 / kg Argentine prime quality beef The prime beef is now only 1.4 times the price of the low quality beef, but still 4 times the quality =150% ad valorem equivalent = 600% ad valorem equivalent CHF21 / kg regular beef CHF30 / kg Argentine prime quality beef Types of tariffs • Ad valorem tariffs: • Levied on the basis of the value • Used by most countries: more than 87% of tariffs worldwide are ad valorem • Specific tariffs: • Levied on the basis of volume or weight • Users of specific tariffs include (% of MFN tariff lines): Switzerland (79.8%), Thailand (21.9%), Russia (12.2%), Argentina (12.1%), Belarus (11.9%), USA (8.2%), EU (4.6%) • Combined tariffs: • Contain both ad valorem and specific rates • Eg: 10% of the value + $2 per kilogram (Japan, EU, Canada) Compound tariffs E.g. USA tariff on chocolate of 4.3% and USD528 / ton (18.06.32.08) • Chocolate from Switzerland: USD 6,356 / ton Tariff: 4.3% Ad Valorem USD273 Tariff + USD528/ton Specific USD528 Tariff • Chocolate from Brazil: USD 3,181 / ton Tariff: 4.3% Ad Valorem USD137 Tariff + USD528/ton Specific USD528 Tariff Tariff = USD801 AVE = 13% Tariff = USD665 AVE = 21% Types of tariffs • Mixed tariffs: • Minimum or maximum of two kinds of tariffs • Eg: Min or Max (10%, $2/kg) (Canada, EU, Japan) Mixed tariffs e.g. Japanese tariff on shoes: Max. of 30% or JPY4,300 Yen / pair • Manolo Blahnik shoes: USD1,000 /pair Tariff: the maximum of 30% Ad Valorem Or JPY4,300/pair (USD36) Specific USD300 Tariff USD36 Tariff Tariff = USD300 AVE= 30% • Clark's shoes: USD30 /pair Tariff: the maximum of 30% Ad Valorem Or JPY4,300/pair (USD36) Specific Tariff = USD36 AVE= 120% USD9 Tariff USD36 Tariff Types of tariffs • Mixed tariffs: • Minimum or maximum of two kinds of tariffs • Eg: Min or Max (10%, $2/kg) (Canada, EU, Japan) • Variable tariffs: • Levied on the basis of the composition of the products • Eg: USD5/unit if lead content of paint > 2% on toys • USD200/unit on fridges if cooling system is not CFC-free Types of tariffs • Mixed tariffs: • minimum or maximum of two kinds of tariffs • Eg: Min or Max (10%, $2/kg) (Canada, EU, Japan) • Variable tariffs: • Levied on the basis of the composition of the products • Eg: USD5/unit if lead content of paint > 2% on toys • USD200/unit on fridges if cooling system is not CFC-free • Tariff quotas: • A two tiered tariff. A lower in-quota tariff is applied to the first Q units of imports and a higher over-quota tariff is applied to all subsequent imports. MAcMap includes ad valorem equivalents • Ad Valorem Equivalents – AVE: • Are a common measure of the effect of the different types of tariff on the product, as if they were all ad valorem. • Are calculated for specific, mixed, compound or variable tariffs and antidumping rates and countervailing duties • Are calculated by: AVE = Particular Tariff per Unit Unit Value • Allow for regional or sectoral tariffs to be added and compared • Allow for comparison of effective levels of protection across countries. • The total AVE is the sum of all individual ad valorem equivalents Common types of trade agreements • Partial Scope Agreement: reduces trade restrictions between partner countries for a few products • Free Trade Zone/Agreement/Area: eliminates trade barriers within the zone (FTA, RTA, etc.) • Customs Union: free trade zone + common external tariff • Common Market: customs union + free flow of factors of production within region (capital, labour) • Economic Union: unification/harmonization of economic policies: monetary policy, fiscal policy, regulatory regimes… Proliferation of FTAs Number of Free Trade Agreements 1960 – 2007 Source: World Trade Organization EU existing trade regimes GSP EBA Maldives China Djibouti Bangladesh Benin Yemen Sudan Senegal Somalia Togo Nepal Congo Dem.Rep. Bhutan Eq. Guinea Angola Chad Gambia Mauritania Kiribati Burkina Faso Laos Myanmar* Cape Verde Guinea-Bissau Samoa Sao Tome Sierra Leone Ctrl. Afr. Rep. Malawi Niger Mali Tuvalu Eritrea Vanuatu Cambodia Lesotho Interim EPA East Timor Mozambique Madagascar Zambia Uganda Liberia Rwanda Burundi Comoros Tanzania Haiti Solomon Isl. Qatar Afghanistan Ethiopia Greenland Guam Grenada Jamaica Guyana Belize Barbados Trinidad St. Vincent St. Kitts St. Lucia EUMontserrat CARIFORUM Palau Nauru Kenya Oman Georgia Cuba Pakistan Argentina Papua NG New Zealand El Salvador Mongolia Brazil Uruguay Paraguay Armenia India Venezuela United States Japan Guatemala Nicaragua Singapore Taiwan Norway Iceland Peru Ecuador Korea, Rep. EEA Liechtenstein Nigeria Switzerland Mexico Ukraine Hong Kong Bolivia Colombia Tonga Canada Costa Rica Sri Lanka Ivory Coast Kyrgyzstan F. Polynesia Botswana Mauritius Ghana Cook Is. Vietnam Micronesia Seychelles Cameroon Zimbabwe Marshall Is. Brunei Philippines Tokelau Cayman Is. Antartica Malaysia Bermuda Thailand Libya Indonesia Azerbaijan Aruba Am. Samoa St. Piere. Mayotte Belarus* St. Helena Gibraltar Niue Iran Iraq Uzbekistan Russia Turkmenistan Turks Tajikistan Norfolk Is. Pitcairn Anguilla Kazakhstan Wallis Cocos Is. McDonald Is. B.I.O.T. N. Mariana Is. New Caledonia Bouvet Is. Christmas Is. Netherlands Antilles S. Sandwich Is. Falkland Is. EAC East African Community EBA Everything but arms EEA European Economic Area SGP Sistema General de Preferecias Euro-Med Euro-Mediterranean Partnership * Belarus and Myanmar (LDC) are temporarily suspended from the GSP regime Saudi Arabia Honduras GSP+ Panama EU-EAC Swaziland NMF OMC Bahrain Australia Fiji Namibia Kuwait Macao U.A.E South Africa EuroMed Jordan Albania Chile Croatia San Macedonia Marino Andorra Bosnia Turkey Egypt Tunisia Morocco Israel Algeria Syria Palestine Moldova Serbia Kosovo Montenegro Lebanon Bilateral Others nonreciprocal Implications • Almost every country in the world is member to an ever increasing number of trade agreements • Every trade agreement has its own rules of origin • It is difficult to keep up-to-date on what tariffs are applied and faced by your country and your competitor countries • It is confusing to understand what are the best conditions you face to access one specific market • It is key to have more clarity and transparency on what tariffs and rules of origin apply to specific products in specific markets Features of MAcMap • Wide geographical coverage: • tariffs applied by 169 countries to the products exported by over 200 countries and territories • Wide coverage of instruments: • ad-valorem tariffs; specific tariffs; tariff quotas and antidumping duties • Preferences: • Covers most bilateral and regional agreements • Rules of Origin and Certificates of origin also included for most agreements • Analytical flexibility: • Permits any analysis: by region, by economic sector or by measure MAcMap: sources of data • Market Access Map is continuously updated. Data is sourced from: • Applied tariff data is collected by ITC directly from national customs institutions • Tariff quota data from WTO (agricultural notification of tariff quota) and national sources for bilateral and regional tariff quota agreements • Trade data from national sources, IDB (integrated database), WTO and the COMTRADE database of the United Nations Statistics Division (UNSD). Investment Map For an improved identification of opportunities for FDI attraction What is it? • An interactive tool that combines statistics on FDI, international trade, tariffs and information on foreign affiliates for better investment targeting and promotion • A joint undertaking • Between the United Nations Conference on Trade and Development (UNCTAD) and the International Trade Centre (UNCTAD/WTO) • In partnership with: • Multilateral Investment Guarantee Agency (MIGA) • World Association of Investment Promotion Agencies (WAIPA) Main features • Integrates data on • • • • FDI flows and stocks Trade flows Tariffs Information on activities of foreign affiliates in developing countries • Presents data and analyses in multi-functional dimensions and graphs • Links to other related resources: • UNCTAD World Investment Directory and Investment Compass • World Bank and third party indicators on business environment • World Bank privatisation database Geographic coverage • Total FDI flows and stocks for around 80 countries and territories • FDI flows and stocks partially classified by up to 150 industries (ISIC rev 3) • covering goods and services in approximately 60 developing and transition economies • Trade and tariff data covering over 180 countries and territories • Information on the location, sales, employment and parent company for around 74,000 foreign affiliates in developing countries Sources of Data • Foreign Direct Investment: UNCTAD and ITC • Trade data: Trade Map (ITC) • Tariffs: Market Access Map (ITC) • Activities on Foreign Affiliates: Dun & Bradstreet Database Data limitations • FDI • International reporting practices (IMF BOPMV; OECD,2004) are not followed uniformly • Countries that report often do so with considerable time lag • FDI data are affected by: • Identification of ultimate owner • Valuation problems of FDI stocks • Round-tripped investment and transhipped investment • Foreign affiliates • Data on foreign affiliates vary from country to country • Data available ONLY for developing countries • Dependant on quality of business registration information Data limitations • Different data classifications: • FDI data cannot always be allocated accurately to a given industry or a given country • Investment flows may fall under multiple activities • Foreign affiliates are based on the United States nomenclature, US SIC87. • Its conversion to the ISIC nomenclature can only be approximative • Trade data (HS 6 digit level) are converted into the ISIC classification. Measuring FDI FDI flows • Are the total amount of FDI undertaken over a given period of time (quarter, year), and they comprise: • Net sales of shares with the parent company (10% participation threshold) • Net intra-company loans (short- and long- term) with the parent company • Reinvested earnings of a foreign affiliate in the host country • Sources: Central Banks and/or Statistical offices Measuring FDI FDI stocks • Are the total accumulated value of foreign-owned assets at a given time, and they comprise: • The value of the share of their capital and reserves belonging to foreign companies • The net indebtedness with the parent companies • Sources: Balance sheets or enterprise surveys Measuring FDI • Stocks and flows are related over time: Flow • Stockt = Stockt-1 + Flowt • Flowt = Stockt – Stockt-1 Stock Flow Measuring FDI • Flows are named according to the OWNERSHIP or Origin of the money, not the direction of the flow: • INflows = FOREIGN money • OUTflows = DOMESTIC money Structure of tool • Module 1: Identify industries for inward investment • Foreign Direct Investment: e.g. inflows, stocks, changes, etc • Foreign affiliates: e.g. number of affiliates, number of employees, leading parent company and investor country, addresses, etc • International Trade: e.g. exports, imports, changes, etc • Tariffs: Maximum, minimum and average tariff faced and applied, etc • Module 2: Identify competing locations • Similar information for competing locations for a specific industry • Module 3: Identify investor countries • Similar information for the main investor countries for a specific industry • Module 4: Analyse investor profile • Similar information classified per industry for any specific investor country When in doubt... http://www.intracen.org/MAT Contains: • Video tutorials • User guides • FAQs Workshop evaluation http://www.intracen.org/mas/usersfeedback.htm And click on Online Survey Or go directly to http://www.intracen.org/eSurvey/survey.aspx?surveyid=193