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OECD Working Party on International Trade in Goods and Trade in Services Statistics November 2011

OECD Working Party on International Trade in Goods and Trade in Services Statistics November 2011. Australian Bureau of Statistics Foreign Affiliate Trade in Services. Overview. BoP covers resident to non-resident activity

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OECD Working Party on International Trade in Goods and Trade in Services Statistics November 2011

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  1. OECD Working Party on International Trade in Goods and Trade in Services Statistics November 2011 Australian Bureau of Statistics Foreign Affiliate Trade in Services

  2. Overview • BoP covers resident to non-resident activity • From this perspective, trade by foreign affiliates is considered non-resident • Trade by foreign affiliates important for trade negotiations and understanding reach of an economy

  3. Overview (continued) • Service providers can and do establish overseas presence • The WTO’s General Agreement on Trade in Services (GATS) identifies four “modes of supply” • Wider definition than BoP

  4. Modes of Supply

  5. Modes of Supply

  6. ABS Studies • Australian Outward Finance and Insurance Foreign Affiliate Trade, 2009-10 (5485.0) • Australian Outward Foreign Affiliate Trade, 2002-03 (5495.0) • Economic Activity of Foreign Owned Businesses in Australia, 2000-01 (5494.0)

  7. SOFI FATS • Survey of Outward Finance and Insurance Foreign Affiliate Trade in Services (SOFI FATS) • Survey funded by the Australian Department of Foreign Affairs and Trade (DFAT) • Limited Resources • No funding for inwards equivalent

  8. SOFI FATS (continued) • Run in respect of the 2009-10 reference period • only for OUTWARD trade • only for the finance and insurance industry • Survey in 2002-03 identified finance and insurance industry as the largest services industry • Sent to ALL Australian enterprises who may have affiliates overseas that primarily trade in finance and/or insurance

  9. SOFI FATS (continued) • Only affiliates that were controlled by Australian resident enterprises were included (i.e. greater than 50% ownership) • Frame created from a question about direct investment in the International Investment survey. • Direct investment includes all investment where the investor owns 10% or more of total equity capital.

  10. SOFI FATS (continued) • Survey collected data on: • Number of affiliates • Employment, wages and salaries • Sales and purchases of services • Equity and profit • FISIM and GVA data were derived from the data collected

  11. SOFI FATS (continued) • Processing was done using IPS and Microsoft EXCEL • Confidentiality • ABS confidentiality rules • Perturbation • Collapsing cells

  12. The Form • Very detailed • Large provider burden • Asked for Balance sheet information, and detailed profit/loss statements • Electronic and utilised macros • Split between resident/non-resident was key

  13. The Form (continued) • Original plan to send to affiliates, but feedback indicated that parents wished to complete themselves

  14. Results • 30 Australian enterprises with 1,245 finance and insurance affiliates • 70 Countries

  15. Results (continued) • 75,919 staff employed • $6.7 billion in wages and salaries paid. • $71.1 billion in Australian equity • $6.5 billion in profit • New Zealand, United Kingdom and the United States dominated data.

  16. Results (continued) • $39b in finance & insurance sales • FISIM high proportion of total sales • 96% of sales (mode of supply 3) • Shows most activity in host country

  17. Global Financial Crisis Impacts • GFC likely to have impacted profits. • Return on equity 6.8% • Difficult to measure impact • Ratio of income earned to stock down.

  18. Global Financial Crisis Impacts (continued) • Americas only $99 million profit. • Rates of return on equity for each region: • Americas -0.1% • Europe 2.7% • Asia-Pacific 13.2%

  19. 2002-03  2009-10 Comparison • Number of affiliates rose from 463 to 1245 (169%) • Sales (excl. FISIM) rose 11% • Purchases (excl. FISIM) rose 150%

  20. Conclusion • Unlikely for a survey like this to be run in near future • Prefer to cover all industries • Prefer to collect both inward and outward • OECD provided useful comments which will be used in future studies

  21. Discussion points • Experience of other countries • Managing expectations from a client-funded survey • Impact of confidentiality • Testing data collection from non-residents • The challenge of presenting asymmetrical views of data

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