The NYT had an interesting article arguing that trade has stopped growing in the last couple of years. The piece notes data showing that combined U.S. exports and imports fell in the 2015 compared to 2014 and seem likely to fall again in 2016. It then raises the concern that this will lead to slower growth going forward. There are a couple of points that complicate this issue.

The first is that the drop in the dollar value of trade is the result of lower prices, not a smaller volume of goods and services being imported and exported. While the nominal value of exports fell by $111.0 billion from 2014 to 2015, the real value actually rose by $2.3 billion. On the import side, the nominal value fell by $97.8 billion while the real value rose by $116.5 billion.

In other words, the actual amount of goods and services crossing U.S. borders in 2015 was in fact higher in 2015 than in 2014, we were just paying less for what we imported and foreigners were paying less for what we exported to them. The big factors here were the sharp drop in oil prices and comparable drops in the price of many agricultural commodities that we export. It is not clear that this is bad for economic growth, but in any case the issue is not a drop in the quantity of goods and services crossing national borders.

The other point is that the definition of a traded item can change depending on the property rules in place at the time. To take a simple example, suppose that one billion people in China use Microsoft's Windows operating system. If we make them all pay $50 for each system then this is $50 billion in U.S. exports to China. Now suppose that everyone in China is able to use Windows at no cost. In this case we have $50 billion less in exports, but we still have one billion people in China getting the benefit of the Windows operating system.

Much of the focus of U.S. trade policy in recent decades has been about making other countries pay for items that in principle could be free through patents and copyright protection. (Yes, this is protectionism, even if your friends profit from it.) It is not clear that we are boosting world growth by making countries pay more money for items like prescription drugs, software, recorded music and video material, although we would certainly be increasing the dollar value of trade flows.

The long and short is that it is not clear what we are measuring when we see a decline in trading or volume or what it would mean if trading volume increases because we can force other countries to pay for items that would otherwise be available for free. (Yes, these issues are covered in my new book, Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer, which is available for free.)