In Europa Universalis II, generated trade is an income stream created by trading posts and settlements, but not accruing to the owner. Rather, trade flows to centers of trade, and its value as income is allocated to countries according to their merchants. You can see generated trade for your own cities on the city screen; it is the number shown to the right of the coat of arms of its owner. You can see it for any known province on the province screen, as "trade revenues".
Generated trade from a province is not affected via occupation. However, it can be eliminated via blockade of a port, or reduced by pirates. You can see this by mousing over the generated trade number; a tooltip will appear breaking down the value as computed below and as affected by outside factors.
The computation of generated trade is fairly simple. First, for each province you need to know the market price of its type of goods. With the market price in hand, the trade generated by a particular trading post or settlement is computed by simply multiplying it by the population scale factor. That is,
generated_trade = market_price(province_goods) * factor(pop)
The population scale factor is determined by the level of the trading post or colony, or the population of a city.