Reconciling merchandise trade statistics and Balance of Payments: the recommendations of the Task Force BoP/FTS

1. Reconciling merchandise trade statistics and Balance of Payments: the recommendations of the Task Force BoP/FTS Item 13 of the Agenda Document STD/SES/WPTGS(2008)23 Daniela Comini, Eurostat/BoP

2. To reflect on possible ways to increase consistency between FTS and BoP Eurostat has activated a small Task Force • TF BoP/FTS provided a set of recommendations useful for keeping the transition from FTS to BoP under control • TF BoP/FTS is a very informal forum for discussing new issues affecting FTS and BoP (is e. g. currently analysing the data on goods for processing produced by EU FTS to see how far they could be used for compiling “Manufacturing services on physical inputs owned by others”)

3. Steps followed to increase consistency between FTS and BoP • 1) Clarifying the treatment of borderline transactions • 2) Monitoring the transition from FTS to BoP via the regular compilation of Reconciliation Tables • 3) Defining a set of fundamental adjustments • 4) Providing guidelines for making fundamental adjustments

4. 1) Clarifying the treatment of borderline transactions • Identifying transactions which could create doubts in the transition from FTS to BoP; • Clarifying the coverage of these transactions according to EU FTS Regulation and BoP Manuals; • See Annex 1 to STD/SES/WPTGS(2008)23 for “The List” of all the transactions where an adjustment can be expected in the transition from FTS to BoP; • R1: BoP compilers should carefully check “The List”before making adjustments to FTS data

5. 2) Monitoring the transition from FTS to BoP: regular compilation of Reconciliation Tables Results collected with the Reconciliation Tables revealed that: 2a) in many cases the differences between EU FTS and EU BoP were due to BoP compilers using different FTS data than those reported to Eurostat/FTS, mainly because BoP compilers were not using FTS data compiled according to the Community concept; R2: BoP data reported to Eurostat have to be compiled according to the Community concept: quasi-transit trade has to be included and partner country has to be country of consignment for Intra and origin for Extra

6. 2) Monitoring the transition from FTS to BoP: regular compilation of Reconciliation Tables • Results collected with the Reconciliation Tables revealed that: • 2b) BoP compilers were making adjustments to FTS data which should not be required if their data sources, FTS data, would be compiled according to Intrastat and Extrastat requirements; • R3: Shortages of FTS data should be addressed by FTS compilers (e.g. estimations for transactions under thresholds or late reporting)

7. 3) Defining a set of fundamental adjustments A) Goods for processing not returning to the reporting country; B) Repairs of goods; C) Goods procured in ports by carriers; D) Returned goods; E) Goods entering/leaving custom warehouses; D) Stocks of goods located abroad; F) Only for Imports: CIF/FOB adjustment. R4: BoP compilers should dedicate particular attention to these adjustments

8. 4) Providing guidelines for making the fundamental adjustments Sources and methods which could be used: For some adjustments FTS data can provide all or part of the information necessary for making the corrections: Repairs, Returned goods, Goods in custom warehouses; For other adjustments supplementary information must be collected: Goods for processing not returning to the reporting country, Stocks of goods located abroad; Goods procured in ports by carriers; CIF/FOB adjustment See Document STD/SES/WPTGS(2008)23 page 6-7, and moreover documents BP/07/37 and BP/08/36