As recently as 30 years ago, products were assembled in one country, using inputs from that same country. Measuring trade was thus easy. 2011 is very different. Manufacturing is driven by global supply chains, while most imports should be stamped “made globally”, not “made in China”, or similar. This is not an academic distinction. With trade imbalance causing friction between leading economies, the measures we use can gravely exacerbate geopolitical tensions at a time when co-operation is more vital than ever.

International trade is currently measured in what is known as gross value. The total commercial value of an import is assigned to a single country of origin, as the good reaches customs. This worked fine when economist David Ricardo was alive: 200 years ago Portugal was trading wine “made in Portugal” for English textile “made in England”. But today the concept of country of origin is obsolete. What we call “made in China” is indeed assembled in China, but its commercial value comes from those numerous countries that precede its assembly. It no longer makes sense to think of trade in terms of “them” and “us.”

This is not to suggest that all international trade tensions will vanish overnight if we change the way trade is measured. But if we are to debate something as important as trade imbalances, we should do it on the basis of numbers that reflect reality. A distorted trade picture can inflame bilateral relations, while raising anti-trade sentiment at a time when protectionist pressures are already rising. Economists have long abandoned the view that trade is a zero-sum game, but the day-to-day worlds of politics and markets still seem to work on old mercantilist beliefs. The crisis has naturally exacerbated this feeling, even at a time when global manufacturing has made distinctions between “us” and “them” ever less relevant.