PRESS RELEASE 
 
PRESS/417 
27 October 2005 
 
(05-4930) 
TRADE STATISTICS  
Trade Growth in 2005 to slow  from record 2004 pace  
Lower economic output, brought on in part by the sharp rise in oil prices, will slow world trade 
growth in 2005, according to World Trade Organization economists. World merchandise exports 
are expected to grow by 6.5 per cent in 2005, ma rkedly less than the 9 per cent growth recorded 
in 2004.  
 
“While growth in trade will remain satisfactory in 2005 the decelerating trend is cause for some concern,” said WTO Director-General Pascal Lamy. “To set us on the right course we need to 
create more opportunities for trade, particularly in developing countries, and we need to adjust 
global trade rules to better meet the needs of entrepreneurs in the 21
st century. The way to 
achieve this is through the successful conclusion of the Doha Development Agenda round of global 
trade negotiations.” 
 Trade growth picked up in OECD countries in th e second quarter of 2005, but available information 
points to significant growth deceleration in intra-Asian trade and in US imports in the first half of 
2005. The steep rise in real oil prices, to their highest level in more than two decades, has negatively affected consumer and business confidence in the oil importing countries. The full 
impact of the price increases is still to be felt in consumer and business expenditure.  
 The main statistics show that world merchandise exports increased in nominal terms by 21 per 
cent to $8.9 trillion in 2004. In real terms, merchandise exports rose by 9 per cent in 2004 
compared with nearly 5 per cent in 2003. Trade in  commercial services grew in nominal terms by 
18 per cent to $2.1 trillion in 2004, which was also  stronger than the 14 per cent growth recorded 
in the preceding year. 
 The WTO annual publication International Trade Statistics provides detailed information on global 
trade flows by region and product in 2004. The ta bles and charts will be available on the WTO 
website today. The printed version of this report will be available in December.  
Highlights 
Key features of the world trade developm ents in 2004 include the following: 
- Strong economic growth and rapid trade expansion were present in all regions in 2004. 
 
- The expansion of merchandise trade continued to exceed merchandise output growth by a large 
margin. The excess of trade over output growth was again particularly large for manufactures.  PRESS/417 
Page 2 of 2 
 
 - The sharp rise in prices and traded volumes of many primary commodities has often been a 
major factor explaining the relative strength of regions and product groups in international trade 
flows. The most prominent illustration of this is, of  course, export growth of net oil exporters. The 
sharp increase in net oil imports of China, the United States and India since 2000 had been a 
major factor behind the expansion of oil trade and the increase in oil prices. 
 - Sharp price increases for iron and steel, ores, non-ferrous metals and fuels combined with a 
further depreciation of the US dollar vis-à-vis  the currencies of major European traders led to a 
double-digit price increase for world merchandise trade, the largest annual increase since 1995. These four product groups ( iron and steel, ores, non-ferrous metals and fuels) recorded export 
growth in excess of 30 per cent in 2004. Product groups with the weakest nominal growth in 2004 
included agricultural products, textiles and clothing.  
- Transportation services expanded by 23 percent to $500 billion, the fastest increase among all 
services categories. The expansion was boosted by rising transportation costs and a strong increase in the volume of merchandise trade. 
 
- Oil exporting regions (the Commonwealth of Independent States, the Middle East and Africa) increased their merchandise exports much faster than the global average. North America and 
Europe are the two regions whose merchandise export and import growth remained below the 
global average growth in 2004.  
- The merchandise exports of least-developed countries (LDCs) are estimated to have increased by 
one third to $62 billion in 2004. Higher commodity prices and an increase in the volume of crude oil contributed to this strong performance. Non- oil exporting LDCs recorded lower than average 
export growth for the group.  
 - The emergence of China as a major import and export market for goods and services continued 
unabated in 2004. The share of China in the expo rts and imports of many countries has doubled 
between 2000 and 2004. By 2004, China had become the world’s third largest merchandise trader.  
See also International Trade Statistics 2005 on the WTO website at  
 
http://www.wto.org/englis h/res_e/statis_e/its2005_e/its05_toc_e.htm  
 
END World Trade Developments in 2004 and Prospects for 2005. 
 
1.  Highlights of world trade in 2004 
 
The year 2004 witnessed strong economic growth acr oss most major regions, providing a solid basis 
for vigorous global trade expansion.  Trade and GDP were particularly buoyant in South and Central 
America and in the Commonwealth of  Independent States (CIS), while North America, Asia and to a 
lesser extent Europe also recorded some accel eration in trade and output growth. A noteworthy 
feature in 2004 was that the two most populous countries in the world – China and India – recorded 
outstanding economic growth (9.5 per cent and 7.3 per cent respectively) and trade expansion for the 
second year in a row.  Trade growth continued to exceed output growth in 2004.  Sectoral developmen ts highlight the fact 
that the excess of trade over output growth was pa rticularly large for manufactures and only marginal 
for agricultural products.  The volume of trade in fuels and other mining pro ducts expanded somewhat 
faster than output, with output recording its highest growth in more than a decade.  The sharp rise in 
demand for many primary commodities, in particular  fuels and other mining products, resulted in tight 
markets and substantial price increases.  The de preciation of the US dollar by nine per cent vis-à-vis  a 
basket of European currencies in 2004 contributed to  a rise in Europe's dollar trade prices and nominal 
trade values.  The combination of higher commodity  prices and stronger European currencies led to a 
double-digit nominal price rate of growth in international trade. 
 Price developments were often the major factor in  explaining the relative strength of trade flows in 
2004. This observation is valid for both merchandise and commercial services trade.  Largely due to 
sharply higher prices, the value of world exports  of iron and steel, ores and minerals, non-ferrous 
metals and fuels increased between 30 per cent and 45 per cent in 2004.  This recent surge in value 
growth contrasted with the long-term decline of th e shares of these product categories in world trade.  
 A new and more detailed product breakdown of wo rld merchandise trade presented in this report 
highlights the strength of exports of  scientific and controlling instrume nts, which expanded faster than 
other manufactured goods, both the short- and medi um-term.  In 2004, trade in scientific and 
controlling instruments almost equalled that in textiles.   Merchandise exports of the (CIS), Africa, and the Mi ddle East, consisting for the most part of fuels 
and other mining products, rose between 29 per cen t and 37 per cent in 2004.  South and Central 
America's exports, which are more diversified, in creased by nearly 30 pe r cent, helped by the 
economic recovery in Argentina and Venezuela.  Im ports of Asia, Europe a nd North America, all net 
importers of fuels and other mining products, increased in value terms faster than exports largely due 
to relative price developments. The rise in commodity prices, together with an increase in fuel export 
volumes, enabled the LDCs to participate fully in  the global trade expansion and to increase their 
share in world merchandise e xports and imports in 2004. 
 
A particularly notable feature of world trade in 200 4, after the rise of oil prices, was the continuing 
emergence of China as a major market for, and su pplier of, goods and services.  The sustained and 
dynamic growth of China's exports and imports over recent years ranked it third among the leading 
traders in 2004.  For many comm odities, China has become the larg est importer and for a number of 
manufactured goods, the largest supplier in the worl d.  Chart 1 below highlights China's increased 
importance as a trading partner for selected econo mies between 2000 and 2004.  Unsurprisingly, the 
share of China tends to be particularly high in  many Asian economies, and a number of commodity 
exporters in Africa and the Middle East are also sh ipping a major part of their exports to China (e.g. 
Sudan, Congo and Yemen).  
For a number of countries, China's export or import sh are has doubled over the last four years.  The 
rapid rise of China in international trade is creating opportunities for many but also calling for 
adjustment from others.  Suppliers of primary commodities welcome increased Chinese demand, - 2 - 
while other importers have to compete more str ongly and pay, on average, higher prices for their 
commodity imports.  China's enhanced role as a supp lier of electronic goods a nd textile products has 
sharpened the competition and exerted a downward pressu re on prices in these sectors.  While this is 
good news for consumers, producers of these goods in  developed and developing countries are forced 
to adjust to a new situation.  The international tr ading system faces a challenge in ensuring that these 
adjustments proceed gradually without protectionist  backlashes.  The ongoing trade negotiations of 
the Doha Round provide an opportunity to strengthen the global trading system against costly inward-
looking tendencies.  
Chart 1 
Share of China in selected economies' merch andise exports and imports, 2000 and 2004 
(Percentage share) 
 
     a   2003 instead of 20040 5 10 15 20 25 30 35 40 45 50Sudan
Hong Kong, China
Korea Dem. Rep. a
Yemen
Congo a
Korea Rep.
Chinese Taipei
Macao, China
Japan
Chile
Singapore
Australia
India
Thailand
Indonesia
Malaysia
Brazil
New Zealand
Extra-EU(25)
United States64%
Exports
0 1 02 03 04 05 0Myanmar a
Macao, China
Hong Kong, China
Kyrgystan a
Korea Dem. Rep. a
Japan
Cambodia
Vietnam
United States
Korea Rep.
Australia
Extra-EU(25)
United Arab Emirates a
New Zealand
Chinese Taipei
Malaysia
Indonesia
Thailand
South Africa
BrazilImports
2000 2004 
 
 
2. Trade volume and output developments in 2004 
 
In 2004, the volume of merchandise trade exports rose by 9 per cent, the highest performance since 
2000.  This acceleration is attributable largely to the dynamic performance of trade in manufactures, 
which expanded by 10  per cent, or twice as fast as in 2003.  World merchandise production was up by 4 per cent, the best result since 2000, when global merchandise production rose by more than 5 per cent (Chart 2).  
Agricultural trade is estimated to have grown in r eal terms by 3.5 per cent in 2004, a rate unchanged 
from the preceding year.  North American exports of agricultural products stagnated and those of 
Europe rose by 2.5 per cent, which was less than th e global average.  South and Central America, as 
well as the CIS region and Africa, recorded above  average export growth. Asia, a net importer of 
agricultural products, increased its exports by 3 per cen t in 2004.  Agricultural trade growth continued 
to exceed output growth (3 per cent), but by the smallest margin since 2000. 
 Sharply higher prices for fuels a nd mining products on in ternational markets went together with a 
further strong volume rise in global trade in this categ ory.  The expansion of trade in fuels and mining 
products in 2004 was 5.5 per cent, which was even more vigorous than in the preceding year. This 
was  despite a deceleration of shipments from the Middl e East, the major supplier, to about 5 per cent.  
A rebound of exports from both Americas, combined w ith a continuation of the high export expansion 
of the CIS and Africa, contributed to this r obust trade expansion in 2004, which significantly 
exceeded the average long term growth (1973-2004).   A large part of the increased exports were - 3 - 
directed to the United States and China to cover th eir high oil import demand.  Output growth in the 
global mining sector rose by somewhat more than 4 per cent.  Such a strong annual expansion in output was last seen in 1989. 
 
Global trade growth in manufactures, which expa nded by 4 per cent in 2004, exceeded growth in 
global manufacturing output by a large margin.  Once again, it is mainly the manufacturing sector which is largely responsible for the excess of me rchandise trade growth over merchandise output (see 
Chart 2 and Chart II.1).  
Trade in manufactures rose by 10  per cent in real terms in 2004, the highest performance since 2000.  
A rebound of exports from North America (9 per cent)  and Europe (7 per cent) was the principal 
factor behind the more vigorous expansion of global trade in manufactures.  The two regions 
combined still account for nearly two thirds of global  trade in manufactures.  Asia's real exports of 
manufactures are estimated to have expanded by 15 per cent and amount to 30 per cent of world trade. 
The strength of Asia's trade performance had been  even more outstanding over the medium term. 
Between 2000 and 2004, the export volume of manufactures  from Asia is estimated to have increased 
by 40 per cent, from Europe by 13 per cent, while North America's export volu me (due to contraction 
in 2001 and 2002) only regained its previous peak level of 2000 in 2004.  
Real trade in commercial services at a global level is difficult to estimate due to insufficient price 
information.  However, for some major traders,  information is provided in their national accounts 
data. According to this information, real export and import growth of services was less dynamic than 
that of merchandise.
1 
 
Chart 2 
Volume growth of world merchandise tr ade and output by sector in 2004 
(Percentage change) 
ManufacturesAgriculture
Fuels and mining 
products
02468 1 0 1 2Output
TradeWorld
tradeWorld
output
 
3. Merchandise and commercial servi ces trade in dollar value by sector 
 
In 2004, the dollar value of world trade was boosted by  volume and price changes.  Prices of primary 
products and of transportation services recorded very sharp increases.  World merchandise trade 
expanded by 21 per cent, to $8.9 trillion.  This re presents the strongest annual value increase since 
1979 (see Table II.1). Price changes accounted for sli ghtly more than half of this value increase. 
                                               
1 In the United States real services exports rose 7.4 per cent and imports 9.6 per cent in 
2004, in each case about 1.5 percentage points less than the rise in its real goods trade.  In the EU(25) real services exports went up by nearly 5 per cent and real services imports by about 3 per 
cent in 2004. Again, the expansion of goods trade wa s significantly stronger than that of services 
trade - 4 - 
Exports of fuels and other mining products expanded  by almost one third in 2004 and, as in the 
preceding year, substantially faster than trade in  manufactures or agricultural products, which rose by 
20 per cent and 15 per cent respectively.  World co mmercial services exports rose 18 per cent in 2004, 
and for the first time surpassed the $2 trillion mark (Table 1).  Between 2000 and 2004, both global 
merchandise and commercial services exports rose at an  average annual rate of about 9 per cent.  For 
the first time since 1995, the export expansion of  transportation services exceeded that of other 
commercial services.  Travel services recovered st rongly in 2004, but still account for a smaller share 
in services trade than in 2000.  
Table 1 
World exports of merchandise and commercial services, 2000-04 
(Billion dollars and percentage) 
 
  Value  Annual percentage change 
 2004  2000-04 2002 2003 2004 
Merchandise 8907  9 5 17 21 
Agricultural products 783  9 6 16 15 
Fuels and mining products 1281  10 0 23 32 
Manufactures 6570  9 5 16 20 
       Commercial services 2125  9 7 14 18 
Transportation 500  10 4 14 23 
Travel 625  7 4 10 18 Other commercial services 1000  11 10 16 16 
              
 
 
Merchandise trade by product group 
 An overview of world merchandise exports by pr oduct in 2004 is provided in Chart 3 and in 
Table IV.1 according to a new, more detailed prod uct breakdown.  For a description of changes, see 
Box.1.  One outstanding feature of merchandise tr ade in 2004 was the unusually large variation in the 
year-to-year value changes between the various pr oduct groups.  In four product groups – iron and 
steel, ores and minerals, non-ferrous metals, and fu els – world exports expanded between 46 per cent 
and 31 per cent, while for three others – agricu ltural products, textiles, and clothing – the export 
growth was far weaker, ranging between 15 and 11 per cent.  The wide differences observed in value 
growth are largely explained by the divergent pr ice trends among products .  United States import 
price developments illustrate this feature rather we ll.  In 2004, US import prices for iron and steel 
products rose by nearly 40 per cent, while those of clothing stagnated.  United States import prices for fuels and other mining products averaged 28 per cen t, while those for agricultural products rose by 
9 per cent.  For more information on trade pri ces, see Appendix Tables A.26 through A.28.  The new 
product breakdown adopted in this report also high lights the dynamic trade expansion of the category 
scientific and controlling instruments in recent years .  In 2004, world exports in this category rose by 
27 per cent, to $188 billion, nearly matching world expor ts of textiles.  Trade in this product group is 
largely concentrated on flows betwee n Europe, Asia and North America. 
 
BOX 1:  New country and product groups in WTO's trade statistics 
 
 The WTO has recently adopted new standard geographical and commodity groups which 
appear for the first time in this year's edition of International Trade Statistics .  It is hoped that these 
changes will provide additional insight into recen t economic and technological developments, while 
still maintaining a high degree of historical consis tency with earlier editions of the publication.  The 
most important changes to the geographical groups involve the enlargement of the European Union 
from 15 to 25 members and the inclusion of Mexico in North America.  Existing product groups have 
been carried over with few changes, although mo re detailed breakdowns ha ve been provided for 
certain products.  Please refer to the technical notes for details. 
 - 5 - 
Summary of changes to the geographical groups  
 
The accession of 10 new member States to the Eur opean Union in May 2004  rendered our previous 
groups Western Europe  and Central and Eastern Europe, the Ba ltic States and the Commonwealth of 
Independent States (transition economies)  obsolete.  Consequently, two new groups have been 
created: Europe  and the Commonwealth of Independent States.   The new  Europe  aggregate is divided 
into the European Union (25)  and Other Europe . 
 
Mexico has been included in North America because of its geographic location and its high level of 
economic integration with the region.  In th e past, Mexican trade flows largely dominated Latin 
America 's  trade with the United States and tended to di stort aggregate trade figures for the region.  As 
a result, the former Latin America  group has been replaced by a new group labelled South and Central 
America and the Caribbean  which excludes Mexico.  Other regions remain unchanged from previous 
years. 
 
It will still be possible for users to obtain regional trade figures for Latin America  and North America 
excluding Mexico  through our online database at http://stat.wto.org.  However, for the new Europe  
aggregate, we are unable to provide historically consistent time series at  the detailed product by 
partner level prior to the year 2000. 
 
Summary of changes to the product groups  
 
Product classifications require periodic adjustment s to account for technologi cal developments and 
changes in global trade patterns.  There have been  many such developments in recent years that 
warranted the current revisions to WTO's produc t groups.  These revisions fall into two broad 
categories: 1) the renaming of existing groups to promote transparency and clarity of presentations; 
and 2) the addition of new groups to provid e more detailed breakdow ns for major products. 
 
All existing WTO products have been carried over unde r the new classification, but some have been 
renamed in the interest of clarity.  For example, the previous Mining products  group continues to exist 
under the new name Fuels and mining products .  This change reflects the fact that fuels represent the 
largest component of this particular aggregate.  Another example is the former Electrical machinery 
and apparatus , which has been renamed simply Electrical machinery  to facilitate presentation in 
tables. 
 
More significant from the user's point of view is the addition of new product aggregates.  The group 
Chemicals  has now been broken down into Pharmaceuticals  and Other chemicals  due to the increased 
importance of pharmaceutical products in international trade.  Office and telecommunications 
equipment  has also been disaggregated into the subgroups Electronic data processing and office 
equipment , Telecommunications equipment  and Integrated circuits and electronic components .  Other 
consumer goods, renamed as  Other manufactured goods,  were subdivided into Personal and 
household goods , Scientific and controlling instruments , and Miscellaneous manufactures .  This was 
done because the existing groups had become quite large and were too hete rogeneous to provide 
meaningful information.  Please refer to the tec hnical notes for the precise definitions of the new 
products.  
 World exports of agricultural products  expanded by 15 per cent, to $783 billion dollars in 2004.
2  
Export growth was not only less rapid than in 2003, but also lower than for world merchandise trade, 
bringing the share of agricultural products in globa l merchandise trade back to its long-term low of 
8.8 per cent (first reached in 2000).  The rise in  the dollar value of global agricultural trade is 
attributable largely to price developments, as unit va lues of agricultural products are estimated to have 
increased by 11 per cent in 2004.  Exports of agricult ural raw materials expanded faster than those of 
                                               
2 The definition of agricultural products applied in this report differs from that used in the 
WTO Agreement on Agriculture. See Technical Notes in the Appendix.  - 6 - 
food, which represents a departure from past trends.  Europe's exports of agricultural products rose 
somewhat less than global trade, and accounted for 47 per cent of world exports in 2004.  Intra-European trade in agricultural products represente d 38 per cent of the world total in these products in 
2004.  North America not only recorded the slowest export growth in 2004, but its share in world 
exports of agricultural products has decreased by  4 percentage points since 2000, to less than 
17 per cent in 2004.  United States exports of agri cultural products, affected by poor weather and the 
discovery of Bovine Spongiform  Encephalitis(BSE) in the US cattle livestock in December 2003, 
recorded 4 per cent growth – the lowest rate among the major exporters (see Table IV.8).
3 
Agricultural product exports of South and Centra l America, Africa and the CIS recorded above-
average growth for the second year in a row.  C onsequently, their share in world exports in this 
category has increased markedly between 2000 and 2004 .  Although Asia's agricultural exports have 
exceeded those of North America since 2003, the region remains the world's largest net importer.  Australia's exports rebounded by 35 per cent, th e strongest gain among the leading agricultural 
exporters in 2004.  Among the leading agricultural importers, China reported an import expansion of 
about 40 per cent for the second year in a row. 
 
Chart 3 
World merchandise exports by  product group, 2004 
(Annual percentage change) 
Automotive products 
($847bn)Other machinery 
($1134bn)
Other semi manufactures 
($633bn)Other chemicals 
($729bn)Scientific and controlling 
instruments  ($188bn)
Agricultural products 
($783bn)Non-ferrous metals 
($172bn)
Office & telecom. equip. 
($1134bn)Iron and steel  ($266bn)
Ores & minerals 
($116bn)
Fuels  ($993bn)
Pharmaceuticals 
($247bn)
Textiles  ($195bn)
Clothing  ($258bn)
0 5 10 15 20 25 30 35 40 45 50Average
 
Exports of textiles and clothing  recorded increases of 13 per cent and 11 per cent respectively, the 
weakest growth among the major product groups in 2004.  The relatively lacklustre growth in the 
dollar value of these products can be partly  attributed to moderate price changes.4  Since 2000, the 
combined share of textiles and clothing has decreased by one half of a percentage point, to 
5.1 per cent of world merchandise exports in 2004.  The rather moderate nominal expansion of world 
trade in textiles and clothing was accompanied by  profound shifts among s uppliers.  Hong Kong, 
China, the Republic of Korea and Chinese Taipei e xperienced an absolute decline in their export 
shipments of clothing, as did the United States and Me xico, not only in 2004 but in each of the four 
years ahead of the termination of the ATC quota system (December 31, 2004). Among the countries 
that increased  their share  in (textiles and) cl othing exports in recent ye ars are China, Turkey, 
                                               
3 Bad weather and diseases led to an 11 per cent decline in US soybean production and a 
15 per cent fall in  US soybean exports.  Cattle and beef exports shrank by 83 per cent or 2.9 
billion in 2004. 
4 In the United States, for example, clothing import prices stagnated, while import prices 
of all merchandise rose by 5.7 per cent (see Appe ndix Table A28). United States clothing imports 
rose by 6 percent in value and volume terms in 2004. - 7 - 
Romania, Viet Nam and Tunisia.  These countries recorded double digit export growth not only in 
2004, but also over the entire 2000-2004 period.  
Among the major suppliers, China expanded its ship ments of textiles and clothing more than two 
times faster than global trade over the last four years.
5  In 2004, US imports of clothing from China 
rose by more than one third, to $ 16.2 billion, exceeding for the first time the corresponding imports of the EU(25) and Japan (Table IV.81).  Europe 's textile and clothing exports increased somewhat 
more than 10 per cent, and thereby only slightly less than world trade.  Africa's exports of clothing 
rose by about 10 per cent, to $9.5 billion in 2004.  Although African exports  continued to expand 
faster to the United States than to the EU(25) mark et, and continued to gain import market share in the 
former and a loss in the second, African clothing sh ipments to the EU(25) ($7.7 billion) were still 
three times larger than those to the United States (see Table IV.81).  World trade in automotive products  rose by 16 per cent, to $847 billion in 2004.  For the first time 
since 1997, trade in automotive products expanded l ess than that of manufactured goods.  Europe's 
exports of automotive products again rose faster th an the global average and accounted for 57 per cent 
of world trade.  A large part of this increase is due to an expansion of intra-European trade.  Asia's 
exports expanded by 20 per cent, to $172.5 billion in 2004, exceeding for the first time those of North 
America.  Among the Asian countries, the Rep ublic of Korea sharply increased its exports 
(40 per cent) while those of Japan continued to la g behind the growth in global exports of automotive 
products.  Despite this less dynamic export performan ce, Japan still accounts for more than two thirds 
of Asia's automotive exports.  The share of Nort h America in world exports of automotive products 
decreased by 7 percentage points between 2000 and 2 004, to 20.3 per cent of world exports.  Most of 
this decline has to be attributed to the sluggishn ess of intra-North American trade.  The net-fuel 
exporting regions – the Middle East, Africa, the CIS and to a lesser extent also South and Central 
America – have been the most dynamic import ma rkets for automotive products over the last two 
years.  While Europe's automotive product exports ex ceed those of Asia to Africa and the CIS, Asian 
exports are greater than those of Europe to the Middle East and to South and Central America (see Table IV.64).  
International trade in office and telecom equipment rose 19 per cent, to $1134 billion in 2004.  Trade 
in this product category expanded at nearly twice the rate of world merchandise trade in the 1990s, 
but has fallen short of the rate of global trade expansion in each year since 2000.  A new breakdown 
of world trade statistics in office telecom equipment into three subcategories, namely electronic data 
processing (EDP) and office equipment, telecom equi pment and integrated circuits, reveals marked 
differences in their recent trade performance.  Intern ational trade in telecom equipment was the least 
affected by the burst of the IT bubble in 2001-02 and recorded an outstanding growth rate of 
25 per cent in 2004.  Exports of EDP and office equipm ent, as well as those of integrated circuits, 
contracted sharply in 2001-02 and grew less str ongly thereafter.  Only in 2004 did these two product 
groups recover fully from their trade contraction and attain their previous peak level of 2000.   
 
A regional breakdown of exports of  office and telecom equipment in  2004 confirms Asia's leading 
role in world trade in these products.  Asia's e xports of office and telecom equipment rose by 
25 per cent, two times faster than exports of all th e other regions combined (12.4 per cent).  Within 
Asia it is above all the rise of exports from China which is outstanding.  Its exports of office and 
telecom equipment are reported to have increased by 46 per cent, or three times faster than the rest of 
the world.  The increase of Chinese imports by more than one third is still twice that of all other 
countries combined.  China has beco me the world's largest importer of  integrated circuits and its 
exports of EDP and office equipment exceeded the co mbined exports of the United States and Japan 
(Tables IV.50 and IV.58).  
                                               
5 Some caution is indicated in the analysis of the rise in China's textiles trade.  Chinese 
customs reports indicate that $2.4 billion or 16 per cent of China's textiles imports originated from 
China in 2004. These imports from China entail a certain type of double counting (see Box 2).   - 8 - 
It is a well known feature of international trade in office and telecom equipment that it contains a 
large element of double counting lin ked to the deep cross-border integration of the production process 
of electronic goods.  This leads to a large back-and-forward flow of intermediate inputs or 
components.  In the case of China, a further elemen t to be taken into account is the ever closer link 
between the Chinese economy and that of Hong Kong,  China.  There are few trade barriers left 
between China and Hong Kong, China.  The latte r economy has long since abolished all tariffs and 
China's imports into bonded areas, the main source of  its exports, are also duty free.  In addition, the 
Closer Economic Partnership Agreement (CEP A) between the two economies and China's 
membership in the Information Technology Agreemen t (ITA) provide for duty free import into China 
of a large number of IT products.  Against this background one has to note that a large and increasing 
part of China's trade in office and telecom equipm ent is affected by exports of office and telecom 
products which return to China after being expor ted to Hong Kong, China, which is used as a 
transportation/distribution hub(see Box 2).    
BOX 2:  China's trade statistics 
 
 China's share in world merchandise trade has more than doubled over the last decade and 
exceeded 6 per cent in 2004.  An analysis of th is outstanding trade performance calls for good 
knowledge of China's trade statistics.  A closer look at China's merchandise trade returns reveals a 
unique feature: China reports sharply rising imports  from China, a trade flow which accounted for 
nearly 7 per cent (or $38.7 billion) of its merchandise imports in 20041.  These imports consist of 
products which have been "produced or manufactur ed wholly" in China and have not undergone 
"substantial transformation" abroad after being exporte d.  Even if China's cu stoms authorities strictly 
apply the international recommendations in respect to the "rules of origin", it might be argued that 
these goods should not to be considered as a part of China's foreign trade (with adjustments made on 
both the export and import side) in an economic analysis. 
 
 What explanation can be given for the existen ce and rise of China's imports from China?  The 
deep integration of the economy of Hong Kong, China with that of China through FDI flows and 
reduced trade barriers increases not only the excha nges between the two economies, but blurs in some 
cases the differences between foreign and domestic tr ade, thus complicating the analysis of China's 
reported trade by trading partner.  The sharp rise in  recent years of this particular trade flow can be 
attributed to various factors, all of which are linked to these closer economic ties between China and 
Hong Kong, China:  
 
Hong Kong, China's conversion to a services econom y was supported by its enhanced role as a 
distribution centre of globally operating multinationals  with production plants in China.  These firms 
produce goods in China, export them to an affiliate d or unaffiliated global distributor located in Hong 
Kong, China, from which goods are then shipped to many destinations including shipments back to 
China.  
 
Some goods produced in one bonded area in China have to be processed further or used as inputs in a 
plant located in a second bonded area in China.  Th e shipment between the two plants may made, 
however, not directly but via Hong Kong, China.  Th e reason for this triangular trade could be higher 
administrative and/or transportation costs between  the two bonded areas in  China than between 
bonded areas in China and Hong Kong, China.  The higher administrative costs (time and fees) for 
trade between bonded areas in China might be due to the administration of tax collection and tax 
refund systems.  Triangular trade flows between two bonded areas in China via Hong Kong, China 
and the return of goods through a distribution pl atform located in Hong Kong, China obviously 
involve minimal value-added.  The question arises whether these trade flows should be recorded as 
foreign trade.  
 
Another category of products repor ted as imports from China involve trade flows linked to inward 
processing activities of Hong Kong, China based co mpanies. Textiles produced in China which 
undergo some transformation by a Hong Kong, China company in Hong Kong, China, and are - 9 - 
thereafter returned to China, may include value adde d that is too small (less than 30 per cent) to 
qualify as a foreign product (of Hong Kong, China). 
 
The product structure of China's imports from China re veals that in absolute terms, office and telecom 
equipment is the largest category ($ 19.5 billion in 2 004) in this particular trade flow. The share of 
these returned goods is particularly large in el ectronic data processing equipment (29%), telecom 
equipment(25%) and in textiles imports (16%). 
_______________________________ 
1 General Administration of  Customs of the People's Republic of China, China's Customs Statistics , 
Monthly Exports and Imports,  12, 2004, p.4 
 
In 2004, international trade in  chemicals  continued to expand faster than trade in manufactures.  
Global exports of chemicals rose by 21 per cent to  $976 billion and accounted for 11 per cent of world 
merchandise trade for the first time.  Trade in pharmaceuticals,  which was the most dynamic 
component of world chemicals trade over the last decade, expanded slightly less than other chemicals,  
which rose by 22 per cent in 2004.6  Other chemicals include petrochemicals, which recorded a 
substantial price increase in 2004, contributing to a large rise in export valu es.  Largely due to these 
relative price differences between pharmaceuticals a nd other chemicals, all regions whose chemicals 
exports contain a large share of petrochemicals, such as the Middle East, the CIS and South and 
Central America, recorded particularly strong grow th in their chemical exports in 2004 (ranging 
between 25 per cent and 30 per cent).  North America' s exports of pharmaceuticals, which lost market 
shares at the beginning of this decade, surged 25 per cent in 2004, boosted by an increase of one third 
in US shipments to Europe.  Despite this marked rise  of US exports to Europe, the bilateral trade flow 
in pharmaceuticals remained largely in favour of Europe (Table A.16).  European pharmaceutical 
exports to the world rose to $200 billion and accounted for about 80 pe r cent of world trade.  Intra-
European trade alone accounts for 56 per cent of worl d pharmaceutical exports in 2004.  Switzerland 
maintained its prominent position as the world's third largest export er.  Its pharmaceuticals exports 
rose by 23 per cent, to $23 billion, and nearly matc hed those of the United States (see Table IV.40). 
 
The sharp rise in average crude petroleum and coal prices in 2004 boosted the dollar value of 
international fuels  trade to nearly $1000 billion, a new reco rd level.  Strong domestic oil demand in 
the United States and China, which was not matched by  an increase in domestic oil output, led to a 
surge in net imports of oil.  Although global oil production rose by 4.5 per cent in 2004, the rise in import demand led to a reduction in spare pr oduction and refining capacity, and as temporary 
transportation bottlenecks emerged, tight markets re sulted in higher prices.  Chart 4 reports on the 
evolution of oil demand in some major economies and highlights the marked rise of oil imports of the United States, China and India. The EU(15), Japan  and the Republic of Korea which had long been 
large net importers of oil, diversified their ener gy sources and limited the rise in oil demand over the 
last decades.
7 
 
                                               
6 A review of the dynamic expansion of world exports of pharmaceuticals can be found in 
WTO, World Trade Report 2005 available at : 
http://www.wto.org/english/res_e/ booksp_e/anrep_e/wtr05-1b_e.pdf 
7 In the case of the EU(15) the rise in North Sea oil production sharply reduced the need 
for extra-regional oil imports. Beside energy co nservation measures, an increase in liquefied 
natural gas contributed to limit oil imports of Japan and the Republic of Korea. - 10 -  
Chart 4 
Oil demand and net oil imports of  selected economies, 1971-2004 
(Million metric tons) 
Source:   IEA, Oil information 2005.China
050100150200250300
19711974 1977
1980
1983198619891992 1995
199820012004India
050100150200250300
1971
1974 1977 1980
1983 1986 1989
1992
1995 1998
2001
2004Net Imports
Demand 
Japan
050100150200250300
1971
1974
1977 1980
1983
1986 19891992
1995
1998
2001
2004Korea, Republic.of
050100150200250300
1971
1974
1977 1980 1983 19861989 1992 1995 1998 2001
2004
United States
02004006008001000
1971 1974
1977 1980 1983
1986
1989 1992 1995 1998
2001 2004EU (15)
02004006008001000
1971 1975 1979 1983 1987 1991 1995 1999 2003
 
 
The share of crude petroleum and petroleum products in international fuels tr ade has remained rather 
stable over the last decades, at about 80 per cent, which is more than twice the share oil holds in 
global energy consumption.  Natural gas has increase d its share in the value of world fuels trade to 
about 13 per cent, largely at the expense of coal, wh ich in 2004 is estimated to have counted for about 
5  per cent.  The Middle East remained by far th e largest exporter of fuels in 2004 ($284 billion), 
although both the CIS and Africa recorded larger export growth not only in 2004, but also over the - 11 -  
2000-04 period.  Africa's oil production rose by 10 pe r cent, or more than twice global output growth, 
in 2004.  Its fuels exports, estimated at $120 billion,  exceeded those of the CIS for the first time.  The 
expansion of African fuel exports in recent years is  partly due to the emergence of new producers and 
exporters in the region, such as Chad, Equatorial Gu inea and Sudan.  Despite the rise in the number of 
African oil exporters, a large majority of the more than fifty African countries remain net importers of 
fuels.8 
 
Commercial services trade9 
 
Exports of transportation  services increased in 2004 by 23 per cent to $500 billion.  Among the three 
major commercial services categories, transportatio n services account for the smallest share but for 
the strongest increase in 2004.  This is a departur e from past trends, when transportation services 
recorded trade growth well below that of the two other services categories.  An explanation for this 
untypical development can be found in the comb ination of strong merchandise trade growth and 
higher transportation costs.10  Asia and the CIS region, which recorded the most dynamic expansion 
of merchandise trade, also reported the largest increase in imports of transportation services.  
Travel services  rose worldwide by 18 per cent, to $626 billi on, and thereby much faster than in the 
preceding year.  This acceleration in the export growth  of travel services can be largely attributed to 
the rebound of exports in Asia (31 per cent) after the contraction in 2003 caused by the outbreak of 
the SARS epidemic.  Asia's travel receipts in  2004 exceeded those of North America (including 
Mexico) for the first time, although the latter region recorded positive annual gr owth for the first time 
after the events of September 11, 2001.  United States ' exports of travel receipts in 2004 did not fully 
recover to their previous peak level observed in 2000.  Europe, which accounts for more than one half 
of global travel receipts, was the only region which recorded lower growth in 2004 than in 2003, a 
development largely due to the more m oderate appreciation of the US dollar vis-à-vis  the euro and 
other European currencies (see Chart 8).
11  African travel receipts continued to expand for the second 
year in a row, at a rate faster than worldwide receipts.  In partic ular, North African countries reported 
a strong expansion of travel receipts (e.g. Egypt 34 per cent, Tunisia 25 per cent and Morocco 
22 per cent).  The expansion of S outh and Central America's exports of travel services (15 per cent)  
remained below the global average, as the sharply higher receipts of Brazil (30 per cent), Argentina 
(28 per cent) and Chile (27 per cent) contrasted with the stagnation of receipts of the Dominican 
Republic.  The Dominican Republic, which was the re gion's largest exporter of travel services during 
the 2001-2003 period, was replaced by Brazil, whic h became South America's leading exporter of 
travel services for the first time in 2004. 
 
BOX 3:  The relative importance of modes of supply in trade of commercial services 
 
The GATS refers to measures by Member s affecting trade in services whereby "services" include[s] any service 
in any sector except services supplied in  the exercise of governmental authority.1  For the purpose of the 
negotiations, services were detailed in the Services S ectoral Classification List (GNS/W/120).  GATS also 
defines four different modes through which services can be supplied.  These are cross-border (mode 1), 
consumption abroad (mode 2), commercial presence (mode 3) and presence of natural persons (mode 4).  
Members of the WTO specify their commitmen ts by type of service and by mode. 
 
Trade analysts and nego tiators are naturally interested in informati on on trade in services according to the above 
categories.  Unfortunately, current st atistical measures for international trade in services do not fully match the 
                                               
8 See WTO, World Trade Report 2005, Part B, on oil market developments and developing 
countries. 
9 Commercial services data reported below are based on Balance of Payments Statistics 
which do not cover all modes of supply.  For the relative importance of modes of supply in trade of 
commercial services, see Box 3. 
10 According to U.S. Department of Labor stat istics, oil tanker freight rates increased by 
more than one third and those of ocean liner freights by 9 per cent in 2004. 
11 Expressed in euro terms, Europe's travel receipts rose by 4.1 per cent in 2004 and -
0.9 per cent in 2003. - 12 -  
coverage of the Services Sectoral Classification List nor do they allo w for the modal allocation of these 
transactions.   
 
The recently adopted Manual on  Statistics of International Trade in Services sets out a statistical framework that 
attempts to close this gap.  It allows for an improved assessment of services trade liberalization in a GATS 
context.2 It builds on existing statistical frameworks such as the IMF Balance of Payments Manual (BPM5) to 
measure flows related to modes 1, 2 and 4, and sugges ts the development of a new statistical framework for 
collecting information on the activities of affiliates abro ad, the Foreign Affiliate Trade in Services (FATS) 
statistics framework.  
    
The Balance of Payments (BOP) records international transactions between residents and non-residents of an 
economy.  For services, these transactions are classifi ed according to 11 main components: transportation, 
travel, communication, construction, insurance, financia l services, computer and information services, royalties 
and licence fees, other business services, personal, cultur al and recreational services, and government services 
not included elsewhere. 
 
While these components collectively match the GATS product coverage relatively well, some deviations exist.  
For example, of the larger BOP roya lties and licence fees component GATS refers only to franchise payments.  
Also the BOP statistics record the value of repair  of most goods sent abroad in the goods account. 
 
A further difficulty is that these international transac tions in services often include delivery through several 
modes.  Currently, statistical systems are not able to id entify the share of different modes in an international 
transaction.  The Manual consequently suggests the allocation of a services component to the mode believed to 
be mostly employed for delivering the service.  For exam ple, transportation services  are deemed to be supplied 
cross-border and the transactions would be allocated to mode 1.  Following this simplified approach, the Manual 
recommends the following statistical coverage of modes of supply3  
 
Table 1: Statistical coverage of modes of supply (approximations) 
Mode of supply  Relevant statistical domains  
Mode 1: 
Cross border supply BOP: part of commercia l services (excluding travel  and construction services ) 
Mode 2: 
Consumption abroad BOP: Travel  
Mode 3:  
Commercial 
presence  FATS statistics  
BOP: construction services (part of)  
Mode 4: 
Presence of natural 
persons BOP: part of commercia l services (excluding travel )  
BOP: labour-related flows (s upplementary information) 
 
It should be mentioned that this approach does not strictly adhere to GATS concepts.  Nevertheless, it allows a 
statistical approximation to be made on the relative importance of modes of supply.   
 
FATS statistics are a new statistical framework that countries have started to implement in their standard data 
collection activities.  The aim of this framework is to m easure the affiliates activities, for example, their sales or 
value added.  Currently, these statisti cs are mostly available for OECD memb ers.  Using these data on services-
producing activities, the Secretariat estimated that glob al sales delivered through "commercial presence" are 
approximately 1.5 times higher than conventional trade (cross-border supply of services).4  Combining this 
estimate with BOP statistics allows an estimation of trade flows in services according to their relative 
importance as follows: 
 
cross-border supply 35%  
consumption abroad 10-15%  
commercial presence 50%  
presence of natural 
persons 1-2%  
 
------------------------------------------------------------------------------- 
 1 The Results of the Uruguay Round of Multilateral Tr ade Negotiations, The Le gal Texts, WTO, 1995. 
 2 Manual on Statistics of International Trade in Services , Statistical Papers, Series M, No.86, United Nations. 
 3 Manual on Statistics of International Trade in Services, Statistical Papers, Series M, No.86, United Nations, p.24 
 4For more detailed information on FATS statistics, s ee International Trade Statistics Report 2004, Box 1 - 13 -  
 
Exports of other commercial services  , the largest and most heterogeneous group of the three major 
services categories, rose by 16 per cent to $1000 billion in 2004.  In contrast to travel and 
transportation services the 2004 growth rate remained  unchanged from the preceding year, and for the 
first time since 1995 also weaker than  for all services combined.  This untypical  weak performance of 
other commercial services can be partly attributed to  developments in US services trade.  In 2004, US  
receipts for telecom services declined and those of insurance and education services rose only 
marginally.12  In contrast to the deceleration of export growth in North America and Europe, Asia's 
exports of other commercial services recorded outsta nding growth of nearly one quarter (its highest 
annual growth since 1980).  Asia's growth in 2004 is partly affected by statistical revisions, resulting 
in an improved coverage of trade flows.13  As a consequence of these revisions, India emerged as 
Asia's second largest exporter of other commercial services in 2004, ahead of China and Hong Kong, 
China.14 
 4. Trade by region and country 
 
The large impact of the rise in commodity prices in 2004 on regional trade developments is highlighted by the fact that all those regions whic h export mainly primary products (i.e. fuels, other 
mining products and agricultural products) recorded the highest export growth rates in 2004.  In three 
cases, Africa, the CIS and the Middle East, fuels and other mining products accounted for 55 to 
75 per cent of their merchandise exports in 2004.  The sharply higher export earnings allowed these 
regions to expand their merchandise imports at a rate faster than the global average, but still 
somewhat more slowly than their exports (Chart 5) .  The share of the four regions combined reached 
12.8 per cent of world trade, the highest level in mo re than a decade.  Merchandise exports of North 
America and Europe, however, expanded not only less ra pidly than global trade but also less strongly 
than their higher priced imports.  Asia's merchandise  imports also rose faster  than exports and more 
rapidly than world trade.  Between 2000 and 2004, all regions increased their share in merchandise 
exports at the expense of North America, a reversal  of the developments observed in the 1990s.  North 
America, which had increased its share in world exports between 1990 and 2000 by almost three percentage points, lost nearly five percenta ge points in its share over the last four years. 
 
A summary review of the annual trade performance of more than 180 individual countries in 2004 shows that the expansion was broadly based acros s individual traders for both merchandise and 
commercial services trade (exports and imports).  The difference between global trade growth (the 
weighted average), the arithmetic average and the median value was less than two percentage points 
in every case in 2004.  In addition, the standard de viation of the export and import growth rates, an 
indicator measuring the degree of variation of variab les, was one of the lowest observed in the last 
decade.  Another notable development in 2004 was th e small number of traders which recorded a year 
to year decline in their exports and/or imports  (ranging from 6 for commercial services imports to 21 
for merchandise exports).  
                                               
12 Referring to unaffiliated services only.  The sluggishness in insurance services was not 
due to a slowdown in premium receipts but to a marked reduction in payments for actual losses. 
13 Major revisions to the commercial services data in recent years were reported in a 
number of Asian countries, most recently for India. 
14 Unfortunately the explanations provided for th e sharp upward revision of India's services 
trade remain scarce and therefore not fully understood.    - 14 -  
Chart 5 
World merchandise trad e by region, 2004 
(Annual percentage change in dollar values) 
 
Africa 
North America Europe Asia South and Central 
America                Middle East Commonwealth of 
Independent States
0 5 10 15 20 25 30 35 40Imports
Exports
Average
 
 
North America 
Stronger economic growth in North America came t ogether with an acceleration of the region's trade 
in 2004.  The region's imports of both merchandise  and commercial services continued to expand 
faster than its exports (Table 2).  The nominal trade expansion of the United States, Canada and 
Mexico followed a rather similar pattern in 2004, as in each country  an acceleration to double digit 
growth could be observed.  However, some differe nce should be flagged in respect to trade volume 
developments.  Real merchandise trade in the Unite d States was more dynamic than trade in the other 
two countries.  Canada recorded the lowest import growth in the region (8 per cent) and Mexico's 
exports recovered in real terms by a moderate 2.5 pe r cent after contracting over three years.  In 2004, 
Mexico's clothing exports to the United States decr eased, and those of labour intensive personal and 
household goods and scientific and control instrume nts stagnated, while shipments of automotive 
products rose less than US imports from other suppliers. 
 
Table 2 
GDP and trade developments in North America, 2000-04 
(Annual percentage change) 
 
 North America  United States  Canada 
  2000-04 2001 2002 2003 2004  2000-04 2001 2002 2003 2004  2000-04 2001 2002 2003 2004
                  
GDP 2.3 0.8 1.7 2.6 4.1  2.3 0.8 1.6 2.7 4.2  2.5 1.8 3.4 2.0 2.8 
                  
Merchandise                   
  Exports (value) 2 -6 -4 5 14  1 -7 -5 5 13  3 -6 -3 8 16   Imports (value) 5 -6 1 8 17  5 -6 2 9 17  3 -7 0 8 14 
                  
  Exports (volume) 0.0 -5.0 -2.5 1. 0 7.5  0.5 -6.0 -4.0 3.0 9.0  0.5 -
4.0 0.0 -1.5 7.0 
  Imports (volume) 3.5 -3.5 3.5 4. 5 10.5  4.5 -3.0 4.5 5.5 11.0  1.5 -
6.0 0.5 4.0 8.0 
                  Commercial services                    Exports (value) 3 -4 2 5 11  3 -4 2 5 11  4 -3 4 5 11   Imports (value) 6 -1 3 9 13  6 -1 2 8 14  6 -1 3 12 12 
                  
 
 Intra-North American trade expanded as fast as the region's total exports but far less than overall 
imports in 2004.  Between 2000 and 2004, the sh are of intra-regional trade remained roughly - 15 -  
unchanged at 56 per cent on the export side, but decreas ed by 4 percentage points to slightly more 
than 35 per cent on the import side. (Table  III.13)  
One of the outstanding features of North American tr ade in recent years is the moderate expansion of 
its exports to Asia and in particular to Japan, wh ich is still its major export market in Asia.  Between 
2000 and 2003 North America's exports to Japan d ecreased by 29 per cent, while those to China 
surged by 70 per cent.  In 2004, North American exports to Japan recovered by 5 per cent, while 
shipments to China grew by one quarter.  Exports to Europe rose at about the same rate as intra-trade, 
while shipments to South and Central America, the Middle East, Africa and the CIS rose between 19 
per cent and 31 per cent  (Table III.12). 
 Imports from the three latter regions, all net expor ters of fuels and minerals, were again buoyant, 
advancing between 23 per cent and 47 per cent in 2004 (Table III.13).  North America's imports from 
Europe rose by 13 per cent, at roughly the same rate  as intra-trade.  Merchandise imports from Asia 
rose by 19 per cent, which was as fast as total im ports.  The average rise in North America's imports 
from Asia in 2004 is the result of quite diverg ent developments among As ian suppliers.  While 
imports from China surged by more than 30 pe r cent, those from Singapore and Hong Kong China 
decreased.  Imports from Japan rose by 11 per cent in  2004, but their value remained below the peak 
level reached in 2000.   
 
North American merchandise trade by product record ed large differences in annual variations for 
2004, and a similar growth pattern can be detected for exports and imports.  Exports and imports of 
agricultural products recorded the smallest year to year change (at about 10 per cent) among all 
sectors, while trade in fuels and other mining pr oducts rose between one quarter (exports) and one 
third (imports).  Trade in manufactured goods, which account for three quarters of North America's 
merchandise exports and imports, rose by 14-15 pe r cent, very close to the region's overall trade 
growth.  At a more detailed product level, the varia tion is considerably larger than for the three major 
product groups.  North American exports of clot hing shrank in absolute terms for the fourth 
consecutive year, while those of iron and steel rose by 37 per cent in 2004.  Exports of chemicals, and 
in particular pharmaceuticals, increased by more th an one fifth, as did telecommunication equipment.  
The strength of telecom equipment (22 percent) cont rasted with the continued sluggishness of exports 
in EDP and office equipment (6 per cent) as well as in in tegrated circuits (4 per cent).  Imports of iron 
and steel products surged by 83 per cent, while those of automotive products and clothing rose by 
8 per cent and 6 per cent respectively.  Imports of telecom equipment rose by nearly one quarter, and 
in marked contrast to exports, imports of EDP and office equipment and integrated circuits grew at 
least as fast as trade in manufactures (Tables III.10 and III.11). 
 
Commercial services exports and imports of the region accelerated to double digit growth but remained less dynamic than global trade in 2004.   The expansion of services exports was rather 
similar for the United States, Canada and Mexico but differed significantly across sectors. The region's transportation services exports rose by near ly 19 per cent, while other commercial services 
exports rose by 6.5 per cent in 2004.  As already indicated above, US receipts of  telecommunication 
services declined and those of insurance and educa tion services increased only marginally in 2004.  
Another factor contributing to the region's sluggish  exports of other commercial services exports is 
the further decrease in Mexico's exports.  
South and Central America (including the Caribbean)  
 
Following three years in which the region's averag e per capita income declined, economic output in 
South and Central America picked up by 6.3 per cent in 2004.  Merchandise trade expanded sharply 
through a combination of higher prices and str onger volume changes.  The rebound in the region's 
merchandise import volume from near stagnation to 17 per cent was particularly marked (Table 3).  
Intra-regional trade rose again slightly faster th an extra regional trade in 2004.  Exports to Asia 
continued to rise sharply (37 per cent) while shipme nts to North America, the region's largest export - 16 -  
market, rose by 27 per cent – somewhat less than the average (Table III.23).  Shipments to Europe 
rose by nearly 30 per cent, accounting for more than one fifth of South and Central America's exports. 
 
Table 3 
GDP and trade developments in South and Central America, 2000-04 
(Annual percentage change) 
 
 South and Central America  Brazil  Other South and Central America 
  2000-04 2001 2002 2003 2004  2000-04 2001 2002 2003 2004  2000-04 2001 2002 2003 2004
                  
GDP 1.8 0.5 -1.4 2.1 6.3  2.2 1.4 1.5 0.6 5.2  1.5 -0.2 -3.8 3.3 7.2
                  
Merchandise                   
  Exports (value) 9 -4 0 13 30  15 6 4 21 32  7 -7 -1 10 29  Imports (value) 4 -1 -13 5 27  3 0 -15 2 30  4 -1 -12 7 25
                  
  Exports (volume) 6.5 5.0 2.0 6.0 13. 0  13.5 11.5 9.0 15.5 19.0  3.0 2.5 -1.0 1.5 10.0
  Imports (volume) 1.5 1.5 -11.5 1.5 17. 5  -0.5 0.0 -13.5 -3.5 18.0  2.5 2.0 -11.0 3.5 17.0
                  
Commercial services                    Exports (value) 4 -2 -3 9 14  6 -3 1 9 20  4 -2 -4 10 13  Imports (value) 1 0 -11 4 14  1 2 -15 6 12  2 0 -10 3 15                                    
 
 
The region's expansion of merchandise exports an d imports exceeded those of global trade by a 
significant margin, while commercial services trade gr ew at 14 per cent (less than the global average). 
The relative sluggishness of the region's commercial services trade could be observed in all three 
services categories, but was particularly pronoun ced for the other commercial services category. 
 Looking at the 38 individual economies' trade perfo rmances in the region, on e notices quite divergent 
developments.  Brazil, which accounted for one thir d of the region's merchandise exports showed a 
stronger trade performance than the regional averag e.  The most dynamic export growth (between 40 
per cent and 50 per cent) was reported by Chile, Ve nezuela and Peru (TableIII.24), while merchandise 
exports of Costa Rica, the Dominican Republic and El  Salvador increased only by 5 per cent or less.  
A few Caribbean islands even reported a decline in  their exports in 2004.  The surge in merchandise 
imports of Argentina and Venezuela (more than 60 per cent) contrasted with the moderate import 
growth of a number of Central American and Ca ribbean economies (such as Costa Rica, El Salvador, 
the Dominican Republic and Jamaica).  At the core  of the weak trade growth of Costa Rica, the 
Dominican Republic and El Salvador is the stagnati on of their trade in manufactures with the United 
States (Table IV.25).  Costa Rica's trade was aff ected by the sluggishness of trade in integrated 
circuits while the other two count ries were affected by the declin e in their textile processing trade 
with the United States.  
The weakness observed in the merchandise exports of a number of countries in the region can be 
partly attributed to their export structure, wh ich often reveals a large dependence on agricultural 
products.  Agricultural products have  faced relatively weak demand gr owth over the last two decades 
and relatively soft price trends.  In 2004, price developments for agricultural products were rather 
mixed, simultaneously showing declines for a numbe r of products (such as shrimps, cocoa, cotton and 
hides and skins) and marked increases for others (s uch as rice, beef, soybeans, bananas and rubber).  
The importance of agricultural products for the regi on's overall export performance is highlighted by 
the 29 per cent share this category holds in mercha ndise exports, a share which is more than three 
times larger than the corresponding share in world tr ade, and also by far the largest in any region 
(Chart 6).  - 17 -  
Chart 6 
Product structure of South and Centra l America's merchandise exports, 2004 
(Percentage) 
 
UnspecifiedAll other 
manufactures 
(10.0%) 
Iron and steel (4.4%) Chemicals (6.0%) Transport equipment 
(6.7%) 
Other mining  
products (12.8%) Food  
(25.5%) 
Fuels 
(20.2%) Textile & clothing 
(5.5%) 
Other machinery 
(3.7%) 
Raw materials 
(3.4%) Manufactures
(36.3%)Agricultural 
products  
(28.9% )
Fuels and 
mining products 
(33.0%)
 
 
Europe  
Economic growth strengthened throughout Europe in  2004, but marked differences continued to 
prevail within the region.  The euro-area and Switz erland staged a moderate recovery while the ten  
new EU members and South-East Europe reported GDP  growth in excess of 5 per cent.  Europe's 
merchandise and commercial services trade growth w as somewhat less than the global average (in  
exports and imports), and recorded no acceleration in nom inal growth in 2004, in contrast to all other 
regions.  This relative weak nominal trade growth is due to the markedly lower depreciation of the 
dollar vis-à-vis  the European currencies in 2004 compared to  2003, and the high level of intra-trade 
(Chart 7).  
Chart 7 
Dollar continued its decline vis à vis European currenciesa in 2004 
(Indices Jan 2001=100) 
708090100110
2001 2002 2003 2004 2005-5.5%
-14%
-9%
 a  Currency basket weighted by trade valu es.  European currencies are those of Euro Area, the UK, Switzerland, Sweden, Norway, B ulgaria, 
Czech Rep, Estonia, Hungary, Latvia, Lit huania, Poland, Romania and Slovak Rep. 
 - 18 -  
The share of intra-trade in merchandise exports is n early three quarters, which is the highest share of 
intra-trade of all the seven major regions distinguished  in this report (Table III.3).  Measured in euro 
terms, merchandise exports rose by 8.3 per cent and those of commercial services by 6.5 per cent.  
These rates were higher than in the preceding year, when both decreased slightly (Table 4).  Export 
and import volumes, adjusted for price and exchange ra te changes, show that Europe's trade recovered 
by more than 6 per cent in 2004.  Exports to othe r regions are estimated to have grown significantly 
faster than intra-trade and also faster than imports from these regions.  Europe's merchandise exports rose by 19 per cent, to $4030 billion – equivalent to 45 per cent of 
world merchandise exports in 2004.  Iron and steel , fuels and other mining products reported the 
fastest growth due to large price increases, but  combined these groups account for only 10 per cent of 
Europe's exports.  Among manufactured goods, chem icals and transport equipment recorded much 
faster growth than exports of office and telecom equipment or textiles and clothing (Table IV.33).  
Given the large share of intra-trade, it is not surpri sing that the pattern of Europe's import growth by 
product remained rather similar to that of exports  in 2004.  On the import side, iron and steel and 
mining products are also the most dynamic product groups.  Import expansion rates in these product groups exceeded those of chemicals and transpor t equipment, office and telecom equipment and 
textiles and clothing by a large margin.  
Table 4 
GDP and trade developments in Europe, 2000-04 
(Annual percentage change) 
 
  2000-04 2001 2002 2003 2004 
      
GDP 1.5 1.6 1.2 1.0 2.3 
      
Merchandise      
  Exports (value in dollars) 11 1 7 19 19   Imports (value in dollars) 11 -2 5 20 20 
      
  Exports (value in euros) 3 4 2 -1 8   Imports (value in euros) 3 1 0 0 9 
      
  Exports (volume) 3.0 2.5 2.0 2.0 6.5   Imports (volume) 2.5 0.5 0.5 3.0 6.5 
      
Commercial services      
  Exports (value in dollars) 12 3 9 19 17 
  Imports (value in dollars) 11 3 8 19 15 
        Exports (value in euros) 4 6 3 -1 7 
  Imports (value in euros) 3 6 3 -1 5 
            
 
 
Europe's merchandise trade with other regions showed  large variations in 2004.  Exports to North 
America, its largest export market, showed  the sm allest increase(14 per cent) not only in 2004 but 
also for the 2000-04 period.15  As European imports from North America expanded even less than 
exports to North America, the bilateral surplus in Eu rope's favour increased further in 2004.  Europe's 
merchandise trade with Asia (exports plus imports) has exceeded that with North America since the 
late 1990s.  In 2004, Europe's imports from Asia rose by 23 per cent, slightly faster than exports to 
Asia, which widened the bilateral deficit.  Europe's trade with Asia reveals a trend increase with 
China and a decrease in the share of Japan and the six more developed East Asian traders, which continued in 2004.  Europe's trade with the CIS co untries increased by more than one third on both 
the export and import side, making the region Europe 's fastest growing trading partner not only in 
2004, but also for the 2000-04 period.  With a share of 2.2 per cent, Europe's exports to the CIS 
                                               
15 With one exception: between 2000-2004 Europe's exports to South and Central America 
rose less than shipments to North America (2.8 per cent and 7.8 per cent respectively). - 19 -  
remained smaller than those to Africa or the Middl e East, but its imports from the CIS exceeded those 
from the latter two regions.   
The review of the leading merchandise traders in Eur ope (Table III.36) shows that at the country level 
the trade performances differed significantly.  Broa dly speaking, in 2004 the countries situated at the 
eastern and south-eastern border of Europe report mu ch faster trade expansion than those in the 
western part of Europe.  France, the United Ki ngdom, Spain, Ireland and Portugal recorded export 
growth between 12 per cent and 15 per cent, while Poland, the Czech Republic, Turkey, Romania and 
Bulgaria report expansion rates ranging from 30 pe r cent to 41 per cent.  For the latter group of 
countries, imports showed a similar strong perfo rmance.  Irish merchandi se trade recorded the 
weakest growth in exports and imports in the regi on in 2004, a tendency discernible over the last four 
years.  This recent development contrasts shar ply with the 1995-2000 period when Ireland recorded 
trade expansion at a rate more than three times f aster than the West Europ ean average.  One major 
element in the loss of vigour in Ireland's trade is the importance of office and telecom equipment, a 
product group whose global exports expanded much faster than those of manufactures in the 1990s, 
while the opposite can be observed for the years 2000-2004.  Although Europe's commercial services exports a nd imports expanded less rapidly than the global 
average in 2004, its trade growth was still faster  than world commercial services trade over the 2000-
04 period (Tables III.4 and III.5).  Europe's commerc ial services exports rose by 17 per cent, to $1125 
billion, accounting for more than one half of wo rld services exports in 2004.  Commercial services 
imports went up by 15 per cent, to $1025 billion, an  increase inferior to that of 2003.  Europe's 
commercial services exports expanded faster than its  imports in all three services categories, which 
enhanced the surplus position in all of them.  Tr ansportation services expanded faster than travel or 
other commercial services on the export and import side.  Among the leading European traders in 
commercial services, the United Kingdom strengthened its leading exporter position, but the strongest 
export growth rates (in excess of one quarter) we re reported by Sweden, Greece and Luxembourg.  
France and Switzerland reported relativ ely sluggish growth in their services exports, both in 2004 and 
in the 2000-04 period (Table III.38).  Commonwealth of Independent States (CIS) 
In 2004 the CIS recorded a GDP growth rate of near ly 8 per cent, the strongest of all regions.  The 
trade expansion of the CIS was also more buoyant th an that of any other region of the world (Table 
5).  The above average output and trade growth of the region in 2004, and also in the 2000-04 period, 
contrasts sharply with developments in the second half of the nineties, when economic activity was 
nearly flat and imports contracted (Table III. 43).  In 2003 and 2004, the region's trade benefited 
greatly from the price surge for fu els, ores and metals, products whic h accounted for more than one-
half of the regions' merchandi se exports in 2004 (Chart 8). 
 - 20 -  
Chart 8 
Product structure of CIS's merchandise exports, 2004 
(Percentage) 
Manufactures 
(33.1%)
Fuels and 
mining products 
(53.5%)Agricultural 
products 
(9.0%)Unspecified
(4.4%)
 
 
CIS comprises 12 countries, but the Russian Federa tion alone accounts for two thirds of the region's 
merchandise exports and more than one-half of its imports.  Intra-regional trade rose slightly faster 
than total exports in 2004, and accounted for one-fift h of the total.  The importance of intra-regional 
trade differs significantly from one product group to  another and also among members of the CIS.  
The share of intra-trade in CIS exports of agricu ltural products and manufactures was about one-third, 
while for fuels and other mining products the shar e dropped to 13 per cent in 2004 (Table III.45). 
 
Among the members of CIS, intra-regional trade accounted  for more than one half of  total exports for  
Belarus, Georgia and Moldova, while for the Russian  Federation, Azerbaijan, Tajikistan and Armenia 
the corresponding share was about 17 per cent in 2004.  On a country level, merchandise export and 
import growth was reported above the regional av erage by Kazakhstan, Belarus, Azerbaijan and 
Georgia.  Armenian merchandise trade, howev er, expanded only marginally (Table III.46). 
 Europe is the largest trading partner for the CIS,  accounting for nearly one half of its exports and 
merchandise imports in 2004.  Two-th irds of CIS exports to Europe c onsist of fuels and other mining 
products, while manufactured goods account for nearly  90 per cent of imports from Europe.  Asia's 
share in CIS exports decreased sligh tly, to 13.3 per cent in 2004.  Wh ile Asia's share in CIS exports 
rose marginally between 2000 and 2004, its share in  the CIS gained four percentage points over the 
same period.  Most of these gains can be attribut ed to China, which accounted for more than one-half 
of CIS imports from Asia in 2004.  CIS commercial services exports and imports conti nued to expand faster than world services trade, 
rising by nearly one-quarter in 2004.  In contrast to merchandise trade, the re gion records an excess of 
commercial services imports over exports.  - 21 -  
Table 5 
GDP and trade developments in the Commonweal th of Independent States (CIS) , 2000-04 
(Annual percentage change) 
 
 CIS  Russian Federation  Other  
  2000-04 2001 2002 2003 2004  2000-04 2001 2002 2003 2004  2000-04 2001 2002 2003 2004
                  
GDP 6.7 5.9 5.2 7.6 7.9  6.0 5.1 4.7 7.3 7.1  8.5 8.4 6.8 8.5 10.3
                  Merchandise                   
  Exports (value) 16 -1 6 27 37  15 -3 5 27 35  20 6 8 28 40
  Imports (value) 21 16 10 27 30  21 20 13 25 27  20 10 6 31 35                    E x p o r t s  ( v o l u m e )  9 . 5  4 . 5  8 . 5  1 3 . 0 1 3 . 0  ……………  …  …  ………  I m p o r t s  ( v o l u m e )  1 5 . 0  2 4 . 5  8 . 0  1 3 . 0 1 5 . 0  ……………  …  …  ………
                  
Commercial services                  
  Exports (value) 18 13 19 16 23  20 17 20 20 25  15 8 18 12 20  Imports (value) 20 24 16 17 25  19 23 15 16 24  23 26 20 19 27
                                    
 
 
Africa 
Economic growth in Africa was 4.5 per cent in 2003  and 2004, strong enough to exceed significantly 
the region's population growth (Table 6).  While both North and Sub-Saharan Africa recorded robust 
growth on average, individual country performanc es varied greatly.  Double digit GDP growth could 
be observed in a number of countries that e xpanded their oil production (e.g. Angola, Chad, 
Equatorial Guinea and Sudan).  A few countries re corded a marked pick-up in economic activity as 
civil strife was reduced (e.g. Sierra Leone and th e Democratic Republic of Congo), while in others 
political instability led to stagnation or a decline in economic output.  
Table 6 
GDP and trade developments in Africa, 2000-04 
(Annual percentage change) 
 
 Africa  South Africa  Other Africa 
  2000-04 2001 2002 2003 2004  2000-04 2001 2002 2003 2004  2000-04 2001 2002 2003 2004
                  
GDP 4.0 3.5 3.4 4.5 4.4  3.2 2.7 3.6 2.8 3.7  4.1 3.7 3.4 5.0 4.6 
                  Merchandise                   
  Exports (value) 12 -7 2 25 32  11 -2 2 23 26  12 -8 2 26 34   Imports (value) 13 4 2 22 27  18 -5 4 40 39  11 6 1 17 23 
                  
Commercial services                 
  Exports (value) 12 1 4 24 20  13 -7 1 60 10  11 2 5 18 22   Imports (value) 10 2 6 16 16  13 -10 3 49 16  9 4 6 11 15 
                                    
 
 
Africa's trade expansion remained robust in 2004 due  to the rise in global demand for its major export 
commodities.  Over the two years 2003-04, the value of Africa's merchandise exports (imports) increased by two-thirds (55 per cent), which was more than over the 12 preceding years (1990-2002).  
Commercial services exports rose by 20 per cent in 2004, again faster than the world average and 
faster than the region's commercial services imports.  Travel services receipts, which account for more 
than one half of Africa's commercial services expor ts, are estimated to have increased by somewhat 
more than 20 per cent in 2004.  
The outstanding feature of Africa's merchandise export s was the 44 per cent rise in shipments of fuels 
and mining products in 2004.  Fuels alone accounted  for nearly 52 per cent of Africa's merchandise 
exports and other mining products for about 7 per cent (Chart 9).  Exports of agricultural products and 
manufactures are both estimated to have increased  in value terms by one-fifth in 2004.  Among 
agricultural products, shipments of raw materials rose by more than a quarter, while fish exports rose 
at only half that rate.  Africa's clothing exports rose by 10 per cent, to $9.5 billion dollars in 2004.  
The expansion of Africa's clothing exports to th e European Union and the United States decelerated - 22 -  
sharply in 2004 if compared with 2003.  Exports of other semi-manufactures, the largest product 
group within Africa's exports of manufactures, which includes precious stones, rose by nearly one-quarter, to $16.4 billion in 2004. 
 
Chart 9 
Product structure of Africa 's merchandise exports, 2004 
(Percentage) 
Manufacture
s (25.1%)
Fuels and 
mining products 
(59.1%)Agricultural 
products
 (12.1%)Unspecified
(3.7%)
 
 
The Middle East 
Economic growth in the Middle East remained r obust, with average regional GDP growth exceeding 
5 per cent in 2004.  Oil and gas production, still th e core economic activities of the region, increased 
by 6.5 per cent and 7.5 per cent respectively.16  The marked increase in oil and gas output combined 
with sharply higher prices led to booming trade in 2004.  The region's merchandise exports rose by 
29 per cent, to a new record export level of $390 bi llion dollars (Table 7).  The share of the Middle 
East in world merchandise exports rose to 4.4 per cent, its highest level since 1990 (Table III.58).  
The region's merchandise import growth accelerated  to 27 per cent, and imports amounted to $252 
billion in 2004.  The share of the Middle East impor ts in world imports rose to 2.7 per cent, which 
was  still below the leve l recorded in 1990. 
 
Fuels, which accounted for 73 per cent of the region' s exports, rose by nearly one-third to $284 billion 
in 2004.  This represented 29 per cent of global tr ade in fuels (Chart 10).  Chemicals, mainly 
petrochemicals, are the principal product group among the manufactured goods exported from the 
Middle East.  Their shipments increased by 30 per cent, to $25.8 billion in 2004.  Exports from the 
Middle East are largely destined for Asia which alone accounted for one-half of the region's total 
exports in 2004.  Europe and North America both hold a share of about 15 per cent in Middle East 
exports.  Intra-regional trade is est imated to have been in the range  of 5 per cent to 10 per cent in 
recent years, most likely the lowest intra-regional trad e share of all seven regions distinguished in this 
report.  
The importance of Asia as an export market for th e Middle East is particularly pronounced in fuels 
trade.  The region's exports of manufactures are mo re evenly shared by Europe (24 per cent), Asia 
(23 per cent) and North America (20 per cent) (Table III.60).  
                                               
16 See BP, Statistical Review of World Energy, June 2005. - 23 -  
Chart 10 
Product structure of the Middle Ea st's merchandise exports, 2004 
(Percentage) 
Manufactures 
(22.1%)
Fuels and 
mining products 
(74.6%)Agricultural 
products 
(2.4%)Unspecified
(0.9%)
 
 
Commercial services exports from the Middle East are estimated to have increased by 16 per cent, to $36 billion, or two per cent of world services exports  in 2004.  Commercial services imports rose by 
20 per cent to $61 billion, accounting for three per cen t of global services imports.  Israel is the largest 
services exporter in the region ($14 billion) and the United Arab Emirates the region's biggest 
services importer.  
Table 7 
Trade developments in the Middle East, 2000-04 
(Annual percentage change) 
 
  2000-04   2001 2002 2003 2004 
       
GDP 4.4  2.5 3.6 5.2 6.3 
       
Merchandise        
  Exports (value) 10  -11 5 20 29   Imports (value) 12  6 4 13 27 
       
Commercial services       
  Exports (value) 5  -5 -2 13 16 
  Imports (value) 7  -3 1 12 20 
              
 
 
Asia 
The rise in Asia's GDP growth to nearly 5 per cen t in 2004 was due to an increase in Japan's GDP 
growth and a continuation of strong output growth  in developing Asia, particularly China.  The 
region's merchandise export and import volumes are est imated to have risen by 14 per cent, about 
three times faster than GDP growth (Table 8).  The marked acceleration in the region's merchandise 
exports and imports in dollar terms is more due to price than volu me changes.  Asia's merchandise 
imports rose by 27 per cent to $2224 billion in 2004, with nearly half of the increase due to higher import prices.  
Asia's commercial services exports and imports  rebounded by about one quarter in 2004.  The 
interpretation of this outstanding expansion has to ta ke into account the fact that Asia's commercial 
services trade was negatively affected by the impact of the SARS epidemic in 2003.  Travel receipts 
recovered sharply (31 per cent) from their exceptiona lly low level in 2003.  Estimates of Asia's 
commercial services trade flows in 2004 include the latest Indian services data, which do not seem to 
be directly comparable with those reported for 200 3, due to enhanced coverage.  Excluding Indian - 24 -  
data from Asia's services trade aggregate lowers the region's growth rates reported above by 2 to 
4 percentage points.  
But even taking into account these "special" features noted above, Asia's commercial services trade 
remained one of the most dynamic regional trade flows in 2004.  A breakdown of Asia's commercial 
services reveals that transportation services were particularly strong in 2004. 
 
Table 8 
GDP and trade developments in Asia, 2000-04 
(Annual percentage change) 
 
 Asia Japan Developing Asiaa 
  2000-04 2001 2002 2003 2004 2000-04 2001 2002 2003 2004 2000-04 2001 2002 2003 2004
 
GDP 3.3 2.2 2.6 3.8 4.8 1.0 0.4 - 0.3 1.4 2.7 5.2 4.4 5.8 5.3 5.3
 Merchandise  
  Exports (value) 10 -9 8 18 25 4 -16 3 13 20 12 -7 10 20 27
  Imports (value) 10 -7 6 19 27 5 -8 -3 14 19 12 -7 9 21 30
   Exports (volume) 8.0 -3.5 11.0 11.5 14. 0 3.0 -9.5 8.0 5.0 10.5 10.5 -1.0 13.0 14.5 16.0
  Imports (volume) 8.0 -2.5 8.0 13.0 14. 5 3.5 -2.0 2.0 7.0 7.0 9.5 -2.5 10.0 15.0 16.5
  
Commercial services 
  Exports (value) 10 -1 7 9 27 7 -6 2 8 25 11 1 9 8 28
  Imports (value) 8 -3 5 8 25 4 -7 0 3 22 11 0 7 10 27
  
a Defined as Asia excluding Japan,  Australia and New Zealand. 
 
Asia's agricultural exports rose by 18 per cent to $143 billion, and accounted for 6 per cent of the 
region's merchandise exports.  Shipments of fuels and mining products rose by one third, while 
exports of manufactures went up by one quarter.  Among Asia's exports of manufactures, iron and 
steel and scientific and controlling instruments incr eased by one-half, which was much faster than 
exports of clothing (13 per cent), textiles (16 per ce nt) or automotive products (20 per cent).  Asia's 
shipments of office and telecom equipment rebounde d by one quarter to $625 billion, maintaining 
their share of 31 per cent in Asia's exports of manufactures.  
Intra-Asian trade, accounting for one half of Asia's  merchandise exports, expanded slightly faster than 
total exports.  China further consolidated its positio n as the leading market in the region for Asian 
traders, with Asia's exports to China rising by 30 per cent in 2004.  The rapid rise in China's importance as a trading partner of individual economi es is shown in Chart 1.  In only four years,  
China's share has doubled in the imports and exports of a number of Asian traders. Asia's exports to 
North America rose by 20 per cent, while those to Eu rope increased by 24 per cent.  In 2004, but also 
over the last four years, the share of North America in Asia's exports decreased to 22.3 per cent, while 
that of Europe remained unchange d at 17.5 per cent (Table III.68). 
 Although Asia's shipments to the Middle East, A frica, South and Central America and the CIS 
increased much faster than those to other regions, th eir combined share in Asia's merchandise exports 
was still less than 8 per cent in 2004. 
 
5.  Trade developments of selected Regional Trade Agreements and of the LDCs  
 
Regional trade agreements (RTAs) 
 
Information on a number of major regional trade ag reements is provided in  Table I.10 and Appendix 
Table A.3.  Intra-trade of the enlarged EU lagge d behind its extra-regional exports and imports in 
2004.  Despite a further rise in the European currencies vis-à-vis  the US dollar, which tends to boost 
the share of intra-EU trade, subdued growth in EU countries kept nominal intra-regional export 
growth below that of extra-regional exports.  Extr a-regional imports comprise a larger component of 
fuels than intra-trade, which contributed to  the strength in extra-regional import values. - 25 -  
 
Although the EU's extra-regional trade expanded somewhat  faster than its intra-regional trade, at more 
than two thirds of total EU trade, the latter remained  far more important than in any other major RTA.  
NAFTA's intra-trade expanded by 14 per cent, in line with its total export growth, but lagged behind 
its overall import growth in 2005.17  In 2004, ASEAN's intra-trade rose by 22 per cent, which was 
faster than its exports to other re gions, but not as fast as imports from outside the region.  The share of 
intra-regional trade in ASEAN's e xports and imports remained at 23 per cent in 2004, below the levels 
reached in 2000, and for exports even  below the level reached in 1995. 
 
Intra-MERCOSUR trade recovere d strongly as the economies of its  members experienced a sharp 
rebound in their GDP growth in 2004.  However, desp ite the recent surge in intra-trade, its value in 
2004 was still lower than in 1997, and accounted  for about one-eighth of MERCOSUR's total 
merchandise exports.  
In five major RTAs, no trend can be detected in respect of an increase or decrease in the relative 
importance of intra-RTA trade between 2000 and 2004.   The number of cases in which an increased 
share of intra-trade could be observed is identical to that in which a decrease occurred.  The large 
differences in the importance of intra-trade in total trade among the various RTAs, ranging from two 
thirds to less than 15 per cent, continued to prevail. 
 
Trade of the Least-developed countries (LDCs) in 2004 
 
Benefiting from the rise in commodity prices, me rchandise exports of the LDCs increased by one 
third to $62 billion in 2004, a new peak leve l.  Exports of the five oil-exporting LDCs
18 alone 
increased by about one half and their combined ex ports accounted for some 47 per cent of the total 
merchandise exports of the 48 LDCs in 2004.  LD Cs merchandise imports are estimated to have 
increased  by 17 per cent to $71 billion, only half th e expansion rate of their exports (Table III.81). 
 The group of LDCs which exports primarily ma nufactured goods increased their shipments by 
19 per cent to $17 billion, an increase close to th at of world exports of manufactures.  The trade 
performance of the LDCs that export primarily non-fuel commodities again showed very large 
variation in 2004.  Ores and non-ferrous metal expor ters, such as Zambia and Mozambique, reported a 
sharp export rise while other LDCs experienced a mark ed decline in their exports for various reasons. 
 Looking at the major trading partners of the LDCs , it appears from the data presented in Table III.82 
that the EU(25) is the largest market for manuf actures originating from the LDCs ($9.2 billion) and 
Asia
19 the largest market for its fuel exports ($10.6 bi llion).  In 2004, the EU(25) was still the largest 
market for LDC exports of agricultural products ( $3.2 billion), but Asia's imports of agricultural 
products from LDCs increased much faster and also  exceeded the $3 billion mark.  North American 
imports from LDCs consist above all of fuels and other mining products ($7.3 billion) and 
manufactured goods ($6.1 billion).  Agricultural prod ucts accounted for only five per cent of North 
American merchandise imports from the LDCs in 2004. 
 
6.  Trade developments in  the first half of 2005 and prospects  
 
The cyclical downswing of economic activity in the OECD, which started in the first half of 2004, 
was arrested in the first six months of 2005.  It is  estimated that the year to year change in GDP 
growth of the OECD countries was limited to 2.6 per cent in the first half of 2005, markedly less than 
the 3.5 per cent full year growth in 2004 (Chart 11).  Signs of an improvement in the economic 
                                               
17 Intra-NAFTA trade growth measured by exports differed in 2004 from that recorded by 
import data due to reporting discrepancies on bilateral trade between the United States and Mexico. 
18 Angola, Equatorial Guinea, Yemen, Sudan and Chad. 
19 Based on a sample of 12 Asian economies.  For details see Table III.82. - 26 -  
situation could be found in the Japanese econom y, which after stagnating in most of 2004, 
experienced a revival in domestic demand growth in the first six months of 2005.  In Europe, and in 
particular in the euro area, GDP growth remain ed weak.  Despite some deceleration, economic 
activity in the United States remained far stronger th an in Europe or Japan.  A noticeable development 
in the United States economy was that exports of goods and services – measured at constant prices 
and seasonally adjusted – expanded somewhat faster than imports in the first half of 2005.  Among 
the developing regions, a slowdown from last year's  high growth rates could be observed in a large 
number of economies in East Asia as well as in Sout h America.  China was a major exception, as its 
first half growth of 9.5 per cent in 2005 matched that  of 2004.  Despite the continuous strength in its 
economic activity, China's real import growth decelerated sharply, while its export growth was 
maintained.  
Chart 11 
Real GDP and trade growth of OECD countries, 2003-05 
(Percentage change on a quarter to quarter basis) 
GDP Exports of goods and services Imports of goods and servicesJapan
-10-50510152025
Q1 2003 Q1 2004 Q1 2005OECD Countries
-10-50510152025
Q1
2003Q1
2004Q1
2005European Union (15)
-10-50510152025
Q1 2004 Q1 2005United States
-10-50510152025
Q1
2003Q1
2004Q1
2005
 
 
Source :  OECD, National Accounts Statistics. 
 
The marked depreciation of the US dollar against a trade-weighted basket of European currencies 
between April and December 2004 was reversed in th e first six months of 2005.  By mid-year 2005, 
the dollar had regained most of its losses and even exceeded its average value in 2004 (Chart 8).    
Exchange rate movements in Asia  were rather moderate, although in a direction favourable for an 
adjustment in worldwide external imbalances.  The US dollar's moderate depreciation against a basket 
of Asian currencies in 2004 continued in the first half  of 2005.  With the termination of the fixed peg 
of the Chinese Renminbi to the US dollar on July 21, and a shift to a new currency regime, a small 
appreciation of the Chinese currency occurred against the US dollar.  - 27 -  
Despite the slowdown in global economic activity, co mmodity prices strengthened considerably in the 
first half of 2005.  In particular, prices for meta ls and crude oil increased further by 24 per cent and 
43 per cent respectively (on a year to year basis) .  However, prices of agricultural raw materials 
stagnated and those of food decreased.  Availa ble information on prices for manufactured goods 
indicates an increase of about four per cent.20  The sharp rise in prices of fuels continued unabated 
into the third quarter and provided a further boost to  the exports of all oil exporting regions, and in 
particular the Middle East, the CIS and Africa.  Ho wever, the estimated 40 per cent increase in real 
crude oil prices is threatening to dampen economic growth in the United States, Western Europe and 
East Asia (Chart 12). 
 
Chart 12 
Nominal and real petroleum prices, 1970-2005 
($ per barrel) 
 
0102030405060
1970 1975 1980 1985 1990 1995 2000 2005Real price (at 1990 $)
Nominal prices
 
Note:  Real price is obtained by deflating the nominal IM F petroleum spot price by the world GDP deflator (1990=100). 
2005 annual data are estimated by assuming for the s econd half an average price of $60 per barrel. 
 
It is estimated that the dollar value of world me rchandise exports increased by 14 per cent in the first 
half of 2005.  This is a markedly lower expansi on than in 2004, when the value of global merchandise 
exports rose by 21 per cent.  The trade decelerati on was particularly pronounced in Asia and in 
Europe. North America's imports increased in nomi nal terms about as fast as world trade and still 
faster than its merchandise exports.  Adjusted for price and exchange rate changes, trad e of the major industrial economies stagnated in the 
first quarter of 2005, but picked up in the second quarter.  It is unlikely that the momentum of the 
rebound in the second quarter can be upheld in the sec ond half of the year, given the poor short-term 
growth prospects for Europe and uncertainty linke d to sharply higher and volatile oil prices.  
Increased import demand from the oil exporting regions will not be sufficient to offset weaker import 
growth in the United States, Europe and East As ia.  The volume of world merchandise trade is 
projected to rise by 6.5 per cent in 2005, and provided the world economy recovers moderately in 
2006 – as is generally predicted – world trade grow th should accelerate again to around 7.0 per cent in 
2006.    
__________ 
 
                                               
20 US import (export) prices of manufactured goods increased by 2.2 per cent 
(3.5 per cent) in the first six months of 2005.