Estimation techniques for missing intra-EU trade

1. Estimation techniques for missing intra-EU trade ADVANCED ISSUES IN INTERNATIONAL TRADE IN GOODS STATISTICS ESTP training course 2 – 4 April 2014

2. Estimation techniques for missing intra-EU trade According to theRegulation (EC) No 638/2004 art. 12 ‘MemberStatesshallprovide to theCommission (Eurostat) withmonthlyresultswhichcovertheirtotal trade ingoods by usingestimates, wherenecessary’

3. Estimation techniques - prerequisities • Arrivals 2012 2013 • Exemption threshold 269 348 EUR (1.1mln PLN) 265 239 EUR (1.1mln PLN) • Trade coverage 96.3% 96.0% • Number of PSIs 18 547 15 080 • Statistical value thresh.8 805 831 EUR (36mln PLN) 10 127 315 EUR (42mln PLN) • Trade coverage 70% 70% • Number of PSIs 3 876 3 141 • Dispatches • Exemption threshold 269 348 EUR (1.1mln PLN) 265239 EUR (1.1mln PLN) • Trade coverage 97.9% 97.9% • Number of PSIs 12 295 10 458 • Statistical value thresh. 17611 662 EUR (72mln PLN) 18325617 EUR (76mln PLN) • Trade coverage 70% 71% • Number of PSIs 2 668 2 141

4. Estimation techniques – data sources • Data sources for estimation techniques for missing intra-EU trade come from the Analytical Database of the IT system: • Intrastat data (INTRASTATsystem) • Extrastat data (CELINAsystem ) – for new MS • VAT data - for taxable persons below the exemption threshold and for new PSIs above the exemption threshold for which the trade pattern is unknown. VAT data are also used for comparison of data coming from the INTRASTAT/CELINA system • Business register (the national tax ID number called NIP, the ID number assigned to each company in the national register of business entities called REGON, threshold category, priority code) • Table of trade pattern coveringturnover between PL and partner Countries for the year t-1

5. Method of estimating non/ lateresponse– prerequisites • Threshold category– the IT system checks if Intrastat declarations were submitted according to the corresponding threshold • Priority code – the code granted to all categories of intra-EU trade operators: code 1 –for trade operatorsbelow the exemption threshold(the lowestlevel) code 2 - for PSIs above the exemption threshold andbelow the statistical value threshold (basic data required) code 3 - for chosen PSIs above the exemptionthreshold and below the statistical valuethreshold (detailed data required ) code 4 - for the biggest PSIs above the exemption threshold and below the statistical value threshold (detailed data required) code 5 - for PSIs above the statistical valuethreshold (detailed data required )

6. Description of the estimation method Estimationmethodconsists of 3 stages: - Estimatingtrade for trade operatorswith trade volume below the exemption threshold (category 1, priority 1) • Estimatingtrade for PSIs with trade volume below the statistical value threshold (category 2, priorities 2, 3, 4) • Estimatingstatistical value for PSIs with category 2 and for PSIs with trade volume above the statistical value threshold (category 3, priority 5) which did not report statistical value or reported null

7. Assumptions for estimatingtrade below the exemption threshold The basis for calculating the total value of trade of those trade operators that in a given reference year did not exceed the exemption thresholds established separately for dispatches and arrivals, is the sum of the values registered in the VATsystem. In fact, as estimation refers to the particular month, this is the monthly average value calculated on the basis of the sum of VAT values in the year t-1 of PSIs above the exemption threshold. The trade pattern (commodity code, country of destination/consignment/origin, nature of transaction) of trade operators below the exemption threshold is created on the basis of a real trade pattern of PSIs most similar in value.

8. What is the PSI most similar in value The notion of ‘PSIs most similar in value’ is used in the algorithm created for estimating trade below the threshold. These are the PSIs which are used to create the pattern of trade of ‘0000000000’ PSI, representing the whole trade value of trade operators below the threshold. The PSIs most similar in value in Poland mean PSIsreporting their trade value to the system due to having exceeded the established threshold. The simplified picture of the algorithm creating the set of ‘PSIs most similar in value’ consists of: • Calculating the average monthly trade value of operators below the threshold (A value) • Creating the initial set of PSIs consisting of those PSIs above the threshold which declare a trade value >0 for each month under estimation • The created set is sorted in ascending order • Starting from the PSI with the lowest reported trade, the algorithm takes subsequent PSIs comparing the sum of their monthly trade value (B value) with the average monthly trade value of trade operators below the threshold (A value) • Step 4 is repeated until B<=A • PSIs identified in steps 4 and 5 create the set of ‘PSIs similar in value’ and their trade pattern is used to estimate the pattern of trade for ‘0000000000’ PSI

9. Estimating trade below the exemption threshold – category 1 • Estimating trade oftrade operators with trade volume below the exemption threshold (category 1, priority 1) • Value (statistical and invoiced), quantities (net mass, supplementary units), mode of transaction, country of origin/destination/consignment are calculated in total on the basis of VAT data (VAT-7 form) from the year t-1 • Values calculated in totalare redistributed on the basis of the pattern of trade • The pattern of trade is determined on the basis of PSIs which are similarin value(PSIs just above the threshold - JATT) taking into account all categories of PSIs different thancategory 1 • The pattern of trade is used as the basis to generate declarations and lines on declarations for trade operatorsbelonging to category 1. Such declarations are registered in data sets under the NIP (tax ID number)/REGON(ID number assigned to each company)code consisting of zeros

10. Estimatingtrade above the exemption threshold – PSIs category 2 • Trade data for PSIs above the exemption threshold are estimated for each PSI separatelyand include all data elements • The system starts the imputation process for the PSI of priority >1 when the declaration is missing or when the declarationis not accepted by the IT system • The real pattern of trade is determined on the basis of average monthly volume of trade in the year t-1 for each PSI above the exemption threshold (priorities 2, 3, 4) • The real trade patternis used to generate lineson declarations • If the real trade patternfor the PSI for the year t-1 is unknown, the data for such PSIs are estimatedcollectively

11. Estimatingtrade above the exemption threshold –category 2 Total values which are calculated colectivelyare redistributed on the basis of the ‘artificial’ pattern of tradefor the year t-1 ‘Artificial’ pattern of trade is calculatedon the basis of chosen PSIs among thosewith the biggest ratio of declaredtrade All chosen PSIs are supplied with the same ‘artificial’ ratio of turnover ‘Artificial’ pattern of trade is used as the basis to generate lines on declarations for PSIs belonging to category 2 (priorities 2,3,4). Such lines are registered in data sets under the NIP(tax ID number)/REGON(ID number of PSI assigned to each company) code consisting of all digits 1

12. Description of the method – non response estimation Statistical value is estimatedfor each individual PSI on the basis of an average statistical value from the year t-1 Distribution of the estimated data is carried outon the basis of the trade patternof the tradevolumefor PSIs of priority <5 and for PSIs of priority=5 Imputation of net mass and supplementary units is carried outfor each CN8 In case of thelack of average price of net mass per 1 kilo or 1 supplementary unit requiredfor data imputation - the IT system will be searching any values on a higher level of data aggregation. If there is no data available on any higher level of aggregationsuch data are not estimatedbutstored in the createdtable of mistakes beingsubjectto the decision of the operator

13. Distribution of missing trade by partner and product For distribution of non/late/partialresponse, Poland usesthe trade pattern of defined (qualified) characteristics, i.e. trade patterns of PSIswhich declare the highest trade value The trade pattern of PSIswithsimilarcharacteristics was abandonedsince this approach is possible only if - inthe IT system information about thecharacteristics of activities of each PSI is available - classes of similar PSIsare also required because theyallow mapping by PKD (NACE) codes Asignificant numberof trading units are trading agents whichhavebeengrouped in Section G, Division 46 of NACE rev. 2. Each individual agent deals with products classified under Division 46 whichdisplayswhatspecificgoodseach agent dealswith. This causesproblemswithNLPR trade distributionby PSIsaccording to similar characteristics

14. What is the Polish method like? It is: • simple • efficient • of a high quality being constantly confirmed in reconciliation exercises with Partner Countries

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