GLOBAL VALUE

CHAINS : U.S
OVERVIEW
D I V YAY U D H A K H I R E
 “The dynamics of trade in the world is
changing very rapidly as the years are
passing. In the 1800’s trade was centred to
importing the raw materials from the
Executive underdeveloped nations making the
finished goods from these materials and
summary then selling them all around the world.
After the WTO in 1995 and the
introduction of globalisation in early
2000’s gave rise to the establishment of
GVC’s in 2001.”
History
 PARTICIPATION OF U.S IN GLOBAL VALUE CHAINS
(GVC’s)
 According to OECD on the GVC’s in United States, in U.S GVC is
driven mainly by the exports through high degree of forward
participation through exports in GVC’s for chemicals and business
services. Manufacturing industries such as textiles, have only
marginal contributions in the overall Value Chain activity.

 In US majority of demand for manufactured goods and services

represent value added that has been created domestically. The
value-added share was about 9 % in 2016.

 In US the most important trading partners are Canada (13.5%),

China (11.7%), Mexico (9.6%).

 Services play an integral part not only in the terms of value added
but also play a pivotal role in the manufacturing competitiveness in
industries like Textile and apparel, Food and beverages and Motor
Vehicles.
TiVA Indicators : United States
Foreign value-added content of gross exports
 The foreign content of has declined in recent years from 35
12.7% to 9%; which was likely driven by increase in 30
exports of services which has high domestic-value added.
25
 Over last decade US industries except Motor vehicles
industries have been reliant on foreign demand. 20
 Canada has been United States' largest export market in 15
gross terms while for the final U.S value added it was
10
China in 2015. Mexico also increased its share of
manufactured imports to U.S. 5
 So at the global level through the TiVA indicators we see
0
that GVC integration has declined in the wake of 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Financial Crisis EU28 average G20 average China Japan

United States
Policies Shaping GVCs in US
1. Free Trade Agreements (FTAs)
 Mainly FTAs help in reducing the duty taxes or duty-free goods between the trading countries,
also areas like investment, intellectual property rights (IPR) and competition policy.
 The North American Auto Industry, is an example of GVC integration as a result of the NAFTA.

2. U.S Import Policies

 The U.S Customs and Border Protection (CBP) agency is responsible for trade facilitation, among
its many duties.
 CBP also looks over the Customs Trade Partnership Against Terrorism (CTPAT) program, which
was established under the Security and Accountability of every port of Act of 2006 (SAFE Port
Act) to ““strengthen and improve the overall security of the international supply chain and United
States border security”.
Policies Shaping GVCs in US
3. Free Trade Zones
 Free Trade Zones are those areas which are designated for production facilities and related
infrastructure and trade.
 In 1934, Congress established United states’ free trade zone program, called the Foreign Trade
Zones (FTZ) program. Today, 195 active FTZ’s operate on all the 50 states of United States.
Which include a wide range of industries like U.S Automakers, oil refineries, textile and apparel
companies, and pharmaceutical firms.

4. Digital Trade and Data Flow Limitations.

 The digital trade data is an integral part so “Cross-border data flows” means that the data and
information is transferred between countries through computers which are an integral part of
GVCs because they are the mode of transport of goods and services and also finances which are
the core of the trade and the value chains
Policies Shaping GVCs in US
 United States has always given priority support to the data flows with some regulations like the
privacy concerns at all the levels.

5. National Security- Related Controls

 Many a times the countries don’t allow trade of defense goods and dual-use goods like software
and technologies. And those MNCs which want to use these dual-use goods in the working of their
GVCs need to acquire license ; which are especially required in the light of exporting of goods or
technologies to China in the light of the US-China trade war.
 For example, in September 2017, President Trump blocked the $1.3 billion proposed acquisition of
Lattice Semiconductor by the Chinese investment company, Canyon Bridge Capital Partners due
to national security concerns.
 GVC for “Apple iPhone”
 One of the most trending electronic gadget is produced through a GVC which starts with its conceptualisation
and design in California which in United States and after using High-tech components needed to make the
iPhone from Japan, Korea, Germany, US, etc. The iPhone is then assembled in China by Taiwanese companies
Foxconn and Pegatron, and later the marketing and branding is managed in California.
 Some Other GVC’s
 Complex Distributed Value Chain: Nike  Managing Tiered Supply Chains: Boeing 787
Dreamliner
Way Forward after COVID-19
 COVID-19 and the preceding Global Pandemic led to the global slowdown and disruptions in many
sectors and GVCs and Supply Chains were no exception as its fragility was exposed.
 The World Trade Organization predicts a trade fall of between 13% and 32%, while UNCTAD estimates
a foreign direct investment contraction of 30% to 40% during 2020 and 2021.

 Policy Recommendations:
1. Focus on diversification away from traditional tasks and activities by automation and reshoring.
2. Strengthening regional value chains should be a priority for developing countries to diversify risk,
reduce vulnerability, increase resilience and foster industrial development.
3. Governments can collaborate with this type of GVC firms to improve them in handling the risks by
showing some of the threats that can occur and by giving stress tests for some important supply chains.
Thank You