3D PRINTING AND INTERNATIONAL TRADE

Or: How I Learned to Stop Worrying and Love the 3Dprinting

Javier Lopez-Gonzalez with Andrea Andrenelli

TPRF 16 December 2021

What is the issue?

• 3D printing technologies have attracted the attention of the trade policy community for their potential to disrupt international trade.
• However, the nature and capabilities of 3D printing technologies are not well understood, and actual evidence on its impact remains scarce. This is affecting existing discussions which are taking place in an empirical vacuum.
• Our paper aims to contribute to a better understanding of the issues concerning 3D printing and trade by:
• Identifying the existing and emerging capabilities of the technology
• Highlighting what existing data can tell us about current trends in adoption; and
• Empirically identifying some linkages between the use of 3D printing technologies and trade in 3D printable goods.

WHAT DO WE KNOW ABOUT 3D PRINTING TECHNOLOGY AND TRADE?

A brief history of additive manufacturing

Source: Wohlers Associates (2019), reported in World Economic Forum (2020)

There are many different 3D printing technologies

• Material extrusion (yoda): Drawn through a nozzle material is, heated and deposited layer by layer it is ☺ (FDM).

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• Powder bed fusion (mug): thermal energy is used to fuse regions of a powder bed which is lowered to allow for superposition of another layer

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• Stereolithography (cog): process uses liquid resin and ultraviolet light to harden specific parts, creating solid elements of an object

Additive manufacturing is more complex than one might think

Additive manufacturing is best suited for production of fewer but more geometrically complex items

• Unit costs for 3D printing remain relatively constant (less scope for scale than with traditional manufacturing).

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• Types of products that can be 3D printed depend on size, capabilities and materials.
• While we can print ‘houses’, bridges and even food…
• tech is most often associated with manufacturing of smaller, geometrically complex objects of plastic, metal, ceramic or paper.

Impact on trade will depend on scope of what can be printed and how tech is deployed: Concentrated versus distributed manufacturing

What do we learn from this review of the literature?

• 3D printing is a versatile technology with many potential applications across a range of specific tasks and sectors. It is especially well suited for production of low-volumes of geometrically complex and materially simple objects.

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• However, cost and quality advantages of traditional manufacturing are likely to remain for the production of many products.

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• Trade impacts will also depend on how the technology is used:
• Concentrated manufacturing is likely to lead to more trade in goods and services (think productivity enhancing production technology);
• Distributed manufacturing ambiguous (think technology enabling digital delivery). Reductions in trade in goods need be assessed with positive changes in trade in raw materials and design services (as well as income effects).

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• Overall, impact likely to work in complex ways

USING EXISTING DATA TO MAP THE EVOLVING 3D PRINTING LANDSCAPE: 5 KEY OBSERVATIONS

Capturing international adoption and diffusion is difficult

• Very little publicly available data on:
• 3D printing technology adoption and diffusion;
• Trade in 3D printers;
• Items that can be 3D printed; and
• materials used to 3D print.

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• Specialised industry reports (Wohlers) useful but not for cross-border elements so need to proceed using proxies.

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• Currently, no specific HS code for 3D printers but WCO guidance (and Abeliansky et al. 2015, 2020) suggest:
• HS 857780: ‘Machinery for working rubber or plastics or for the manufacture of products from these materials, not specified or included elsewhere in this Chapter.’

1. Trade in 3D printers is growing but concentrated in terms of both exports and imports

Note: 3D printers identified as HS code 847780 referring to “Machinery; for working rubber or plastics or for the manufacture of products from these materials – Other machinery”. See Abeliansky, Martínez-Zarzoso, and Prettner (2015).

Source: Own calculation using COMTRADE.

2. Trade in materials used for 3D printing is also concentrated

Note: OAS stands for ‘Other Asia, not elsewhere classified’. Polymers: HS 39.01 to 39.14; Stainless steel: 72.18 to 72.23; Titanium: 81.08; Aluminium: 76.01 to 76.07; Cobalt: 81.05; Nickel: chapter 75; Ceramics: ‘other clays’ – 25.08; Paper: chapter 47.

Source: Author’s calculation from COMTRADE data.

3.Trade in 3D printable goods has kept pace with total trade (little evidence of substitution to date)

Note: 2002=100. Totrade = total trade; AIR=aircraft parts; LTECH= low-tech 3D printable items (e.g. knives, handtools, candles); MACH= machine parts; MED= medications & pharmaceuticals; ORTHO= Orthopaedic appliances (e.g. hearing aids, artificial joins, spectacles, dental instruments). In 2019, AIR accounted for 18.9% of the total value of 3D printable trade; LTECH for 27.9%; MACH for 6%, MED for 38%; ORTHO for 9.1%.

Source: Own using CEPII BACI database; Arvis et al. (2017). Data translated from SITC3 to the HS2002 nomenclature.

4. OECD countries are leading innovators and use important across a range of manufacturing activities

OECD countries leading innovators (Share in total stock of patents (2013-17)

Industry distribution of customers of 3D printing companies (FactSet)

Note: Based on a sample of 101 company relationships. The figure reflects the number of business relationships and not their economic value. Data extracted in 2019.

Source: OECD patent statistics.

5. Open source 3D printable items concentrate in few product categories

Note: Includes items whose functions can be performed by 3D printed products while being classified in the Harmonised System in different materials (e.g. tool handles normally made of wood, but that can be 3D printed in polymers).

Source: Authors’ calculation based on Thingi10k.

3D PRINTING ADOPTION AND TRADE IN GOODS: WHAT IS THE EVIDENCE TO DATE?

Literature is divided

• Leering (2017) raised the alarm 🡪 3D printing could reduce trade by as much as 22% (!) by 2060 (estimates revised to 4.5% by 2040 in Leering (2021)).
• Cavedagna and Laperti (2017), using patent statistics from the US, noted that adoption correlated with higher domestic value added in exports in machinery equipment sector.
• Abeliansky et al (2015 and 2020) used a gravity model and found that 3D printers mostly importuned in large economies with high transport costs. Also found negative correlation between the one-year lag of sales of industrial 3D printers and the volume of imported hearing aids
• Freund, Mulabdic and Ruta (2019) adopted a difference-in-difference approach and synthetic control approach showing that.
• 3D printing adoption had a strong and positive impact on trade flows of hearing aids – resulting in a 58% percentage increase in exports and a 104% increase in imports relative to similar products
• A positive impact of 3D printing adoption on trade in 3D printable products (with hypothesized differences due to weight of products).

Modelling the links between imports of 3D printers and exports of 3D printable items

Imports of 3D printers and exports of 3D printable items

• At mean, increase of USD 14 000 in imports of 3D printers 🡪 increase in USD 3.3 million in exports of 3D printable goods!

• 1% increase in imports of 3D printers 🡪 0.02% increase exports of 3D printable items.

• Impact stronger for higher tech 3D printable items (e.g. orthopaedic appliances, aircraft parts).
• Robustness checks: i) alternative models (OLS, FE); ii) instrument reduction; iii) different measures of exports and of 3D printing adoption; and iv) placebo tests

WHAT DID WE LEARN?

Conclusions and way forward

• A better understanding of the technical features of 3D printing can help focus trade policy discussions on the likely implications of the technology.
• While progress is on the way, more needs to be done for comprehensive, internationally comparable and publicly available statistics on global 3D printing adoption.
• There is growing evidence of a complementary relationship between 3D printing adoption and trade in goods in the short-term.
• Concerns raised on the substitution of physical trade under the debate on the renewal of the Moratorium on Customs Duties on Electronic Transmissions might be premature.
• Way forward:
• Need better measurement (adoption of tech and 3D printable items (goods and services) as well as materials)
• Distinction between household use and industry use likely to matter

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