International trade in goods and services illustrates countries’ integration into the world economy. In relation to their gross domestic product (GDP), small countries are generally more integrated. They tend to specialise in a limited number of sectors and, to satisfy domestic demand, they need to import and export more goods and services than larger countries. Size alone, however, does not determine the level of trade integration.

Trade balance data for 2000 and 2007 for OECD countries, OECD accession countries and countries of the Enhanced Engagement Programme (EEP) vary widely. Some countries are in surplus or in deficit in both years. Countries’ surpluses or deficits may deteriorate, improve or remain stable.

OECD’s trade deficit grew steadily during the reference period to reach USD 942 billion in 2007. A detailed analysis of the trade balance of the United States, Japan and the European Union reveals different dynamics.

The OECD area’s recent trade performance is closely linked to trade with China and Hong Kong (China): (almost) half of the total OECD trade deficit is due to its deficit with these partners. The deterioration has accelerated since 2002 and exceeded USD 500 billion in 2007.

The United States remained the largest exporter of goods and services in 2007 with 9.6%, despite a marked decrease of almost five percentage points between 2000 and 2007. Germany, the OECD country with the second highest share, increased its market share by almost 1.1 percentage point (from 7.9% to 9.0%) in the same period.

The (geometric) average annual growth rates of market shares for total trade, for 2000 to 2007, show the differences in countries’ export performance. The OECD member with the highest average growth rate was the Slovak Republic (an average annual increase of 11.1%), followed by the Czech Republic (+8.7%) and Poland (+8.0%). The largest average decreases were observed in Canada (–5%), Japan (–5%) and the United States (–4.9%).

In 2007, Germany was the largest exporter of goods to the European Union (EU25) with an export market share of 17.7%, slightly higher than in 2000 (16.4%). During the same period, France, the United Kingdom, the United States and Japan recorded losses in export market shares. The export shares of the Netherlands and Belgium increased notably, as did those of Poland, the Czech Republic and Hungary. China and the Russian Federation with 5.2% and 3.4%, respectively, of total exports to the European market also had significant increases.

Between 2000 and 2007, some OECD countries lost large shares of exports to India: Belgium (from 12.1% to 6.0%), the United Kingdom (from 11.8% to 4.8%) and Japan (from 9.4% to 5.1%). In contrast, China’s export shares increased from 5.9% in 2000 to 19.7% in 2007. This trend illustrates the growing “southsouth” trade that is gradually replacing traditional trade links.

The United States is by far the largest OECD exporter of services (relative to available OECD countries in 2000 and 2006) to the European Union. Its share has however weakened, from 26.6% in 2000 to 22.6% in 2006. The United Kingdom, Germany, Spain and Japan have instead slightly improved their export shares over the period.

The highest penetration of imports of goods and services is observed in smaller countries such as Luxembourg (import penetration rate of 218% in 2007), Belgium (88%), the Slovak Republic (86%), Hungary (80%) and Ireland (78%). Import penetration is lowest in larger countries such as the Japan (16.2%) and the United States (16.4%).

The sensitivity of trade flows to price changes is measured through price elasticity. For most OECD countries, price elasticities of both imports and exports are negative and inelastic for the period from 1970 to 2006. This means that, when the price goes up, the trade volume decreases but by less than the price increase. Mexico, with an elasticity of –1.38, is the only country where imports are relatively more sensitive to a price change. Although trade flows react in general rather insensitively to prices changes, relative sizes of the sensitivity vary significantly. For imports, the price elasticities of eight countries are less than 0.2 in absolute terms and those of seven countries are more than 0.4 in absolute terms. Furthermore, export elasticities of two countries are less than 0.2 and those of ten countries are more than 0.4.

Intra-regional trade has become more prominent following the increase in regional integration agreements in some major areas (EU, NAFTA, ASEAN and MERCOSUR). Nevertheless the share of intraregional trade in world trade (which also depends on the number of member countries and the trade size of the region) has not grown significantly in recent years.