International trade statistics

1. Business Statistics and Registers International trade statistics Demarcation, principles and methods, 1

2. Principles and concepts • The definitions adopted in the SNA and BPM that are used in or are relevant to international merchandise trade statistics include goods, services, economic territory, rest of the world, institutional unit, centre of economic interest, resident unit and change of ownership • As defined in the Balance of Payments Manual (BPM), goods covers general merchandise, goods for processing, repairs on goods, goods procured in ports by carriers, and non-monetary gold • In accordance with general balance of payments principles, change of ownership is the principle determining the coverage and time of recording of international transactions in goods

3. Principles and concepts • General merchandise refers to movable goods for which changes in ownership occur between residents and nonresidents • Goods for processing covers goods that are exported or imported for processing • Processing can consist of any activity performed under contract: oil refining, metal processing, vehicle assembly, clothing manufacture, etc. • A distinction must be made between processing in which goods undergo substantial physical change and other processing • Strictly speaking the former is included under goods and the latter, under services • However, for practical reasons, all processing is included under goods

4. Data sources • There are a variety of sources that can be used to compile international merchandise trade statistics • The collection of data on international merchandise trade through customs administrations has a long history • It is recommended that statisticians take advantage of this source • In a growing number of cases, full coverage of international merchandise trade statistics cannot be achieved by use of customs records only • It is recommended that in such cases, other sources be used

5. Trade systems • General trade system: statistical territory of a country coincides with its economic territory • Under the general trade system, imports include all goods entering the economic territory of a compiling country and exports include all goods leaving the economic territory of a compiling country • Special trade system (strict definition): statistical territory comprises only the free circulation area

6. Trade systems • Imports include all goods entering the free circulation area of a compiling country, which means cleared through customs for home use, and exports include all goods leaving the free circulation area of a compiling country • Goods imported for inward processing and goods which enter or leave an industrial free zone would not be recorded • Products after inward processing would not be included in exports • Special trade system (relaxed definition): (a) goods that enter a country for or leave it after inward processing and (b) goods that enter or leave an industrial free zone are also recorded

7. Domestic goods • Domestic goods are goods originating in the economic territory of a country • In more detail, domestic goods consist of: (a) Goods originating in the free circulation area of a country (b) Goods originating in industrial free zones (c) Compensating products obtained under the inward processing procedure when such processing confers domestic origin.

8. Foreign goods • Foreign goods are goods which originate from the rest of the world • In more detail, foreign goods consist of (a) Goods originating in the rest of the world, (other than compensating products) (b) Compensating products obtained under the outward processing procedure when such processing confers foreign origin

9. Coverage • International merchandise trade statistics should record all goods which add to or subtract from the stock of material resources of a country by entering (imports) or leaving (exports) its economic territory • Goods simply being transported through a country (goods in transit) or temporarily admitted or withdrawn (except for goods for inward or outward processing) do not add to or subtract from the stock of material resources of a country

10. Time of recording • Transactions should be recorded at the time when the change of ownership takes place • Data-collection systems, however, are usually set up to record transactions associated with the movement of goods across borders • The change of ownership is largely approximated by the cross-border movement of goods • It is recommended that goods be included at the time when they enter or leave the economic territory of a country • In the case of customs-based data-collection systems it is recommended that the time of recording be the date of lodgment of the customs declaration

11. Change of ownership • Application of the change of ownership (between a resident and nonresident) concept to goods ensures, in principle, that the goods component is consistent in coverage and timing with other items, particularly financial items, in the balance of payments • However, change of ownership and movements of goods often do not occur at exactly the same time  • Goods for export/import are generally considered to change ownership at the time the exporter/importer ceases/starts to carry the goods on his books as a real asset 

12. Change of ownership (cont’d) • The definition of residence has implications for the coverage of goods because of the change of ownership rule • Enterprises are always considered residents of the economies in which the enterprises operate, but enterprises in different economies may be under the same management. • Affiliated enterprises may therefore engage in transactions that are not subject to the legal changes of ownership

13. Not changing ownership • Goods that cross frontiers without changing ownership should not be covered under goods • Among the goods that may cross frontiers without changes of ownership are: direct transit trade, returned exports and imports, goods shipped under operational, goods that cross frontiers and are lost or destroyed before being delivered by exporters, and temporary exports and imports of goods that are not for sale etc.  • It is sometimes impossible to anticipate, at the time goods originally cross a frontier, whether or not goods will be returned in the future • Therefore, it is recommended that deductions, which are later found necessary, from exports and imports should be made in the periods when the goods are returned

14. Valuation • Statistical value is the value assigned to goods by a compiler of international merchandise trade statistics • In the past, most countries had no specific system for valuation • National practices of customs valuation often vary from country to country • Trade statisticians must be aware of those practices

15. CIF and FOB • In principle countries can choose FOB type or CIF-type values • FOB-type values include the transaction value of the goods and the value of services performed to deliver goods to the border of the exporting country • CIF-type values include the transaction value of the goods, the value of services performed to deliver goods to the border of the exporting country plus the value of the services performed to deliver the goods from the border of the exporting country to the border of the importing country

16. CIF and FOB • To promote the comparability it is recommended that: (a) The statistical value of imported goods be a CIF-type value (b) The statistical value of exported goods be an FOB-type value • Other valuation expressions are also used • Often they can be related to CIF or FOB

17. Special cases of valuation • Unissued banknotes and securities and coins: transaction value of the printed paper or stamped metal, not face value • Carriers of information and software: full transaction value • Goods for processing and the goods resulting from such processing: gross value before and after processing • Goods for repair: value of repair only

18. Repair • The category ‘repairs on goods’ covers repair activity that involves work performed by residents on movable goods owned by nonresidents (or vice versa) • Examples of such goods are ships, aircraft, and other transportation equipment. • It is recommended that the value of all repairs be included under goods • It is in practice difficult to make distinctions between the two types of goods and the fact is that the bulk of international repairs are performed on investment goods