Value Added Measures – iPhones are Made in Japan and Korea, China does the Final Assembly only

Industrial supply chains add to the “blurriness” of the country of origin concept as the value of an imported good does not necessarily fully originate from the geographical origin mentioned in custom documents.

For example, the table below decomposes the US trade deficit in iPhones with China by the different countries having contributed to its production. Contrary to what is observed through the traditional measure, only a very small fraction of the US shortfall is value added originating from China — the remainder stems from Japan, other Asian countries and developed economies where conception and production of critical components as well as R&D or marketing efforts are located.

2009 US trade balance in iPhones (million dollars)

	China	Japan	Korea, Rep. of	Germany	Rest of world	World
Traditional measure	-1,901.2	0	0	0	0	-1,901.2
Value added measure	-73.5	-684.8	-259.4	-340.7	-542.8	-1,901.2

Source: Miroudot, S., Global Forum on Trade Statistics, 2-4 April 2011