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Intrastat Simplification: Why Not Embrace the Single Flow?

This presentation discusses the challenges and alternatives to simplifying the Intrastat reporting system for foreign trade statistics, including the potential impact of a single flow option and the possibility of raising exemption thresholds.

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Intrastat Simplification: Why Not Embrace the Single Flow?

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  1. Intrastat simplification: why not to embrace the single flow Carla Sciullo Istat Foreign Trade Statistics STATISTICS: INVESTMENT IN THE FUTURE 2 Prague, 14-15 September 2009

  2. Presentation’s Structure • Background • Measuring Intrastat burden • Single Flow – why not to support it • Another simplification is possible • Comparing burden release impact • Conclusions and way forward

  3. Background 1/2 • Intrastat: since 1993 full set of information based on each country reporting both flows • Simplification not a new idea: • Thresholds • CN8 headings • Optional and simplified reporting • Only about 20% of all European companies involved in intra-eu trade are Intrastat respondents

  4. Background 2/2 • Ambitious strategy to reduce 25% of total administrative costs in the medium term (statistics related costs included ) • Intrastat is listed in the communication from the European Parliament and the Council on the reduction of response burden (November 2006) • Eurostat took on board this task organizing different working group: very accurate work which was concluded by half 2008 • Two methods analyzed: single flow versus higher exemption thresholds • In an European framework with no borders and a single market why asking twice the same information ? • In principle this makes perfect sense…but..

  5. Measuring Intrastat related burden 1/3 • Is it? • How is this being measured? No comprehensive study to prove it in an incontrovertible way In general, statistical reporting seems to contribute little to the general administrative burden • 2005: survey via the European Business test Panel • Only 270 questionnaire used and mostly coming from 6 member states “Intrastat is very burdensome”

  6. Measuring Intrastat related burden 2/3 2007: Eurostat survey on supplier satisfaction • 3350 companies from 14 member states • 85% of the company are satisfied about the way they submit Intrastat data • Majority of companies finds NC8 code the most difficult section to comply with Some interesting results from member states studies • The share of Intrastat in the total administrative burden is extremely small (0.15% in the Netherlands and 0.6% in the UK). The contribution of Intrastat simplification to reach administrative burden release will be negligible • The idea that Intrastat simplification is perceived as a priority by businesses is at least debatable: in fact the answers to the different surveys on this topic do not support his assumption, confirming that the pressure seems coming rather from the political authority and the administration than from the business community itself • The most burdensome field to complete is the product code (CN8)

  7. Measuring Intrastat related burden 3/3 2005 Italian Study Edicom III Project - action 8B: Survey on the administrative costs of enterprises for Intrastat respondents • 985 company contacted, 531 replied Main results • 50% find Intrastat at most a little burdensome • 70% find NC8 the most difficult part to fill in • About 30% say it is impossible to extrapolate Intrastat related part form total administrative costs

  8. Simplification: the alternatives SINGLE FLOW (SF) All countries would report only one flow, obtaining the other from the mirror flow declared by the partner countries; these two values theoretically should be equal (i.e.: imports declared by Italy from France should be equal to exports reported by France to Italy). Raising the exemption thresholds (ET) Up to 2008, Commission Regulation (EC) No 1982/2004, has foreseen that Member States could estimate up to 3% of the total value of each flow, in order to exempt business with small values of intra-Community trade. These thresholds maybe increased Measure of burden release: number of companies exempted from reporting Intrastat

  9. Single Flow – a problematic option 1/4 Source: Comext database, data extracted on 7/7/2009 Italian data versus main partners – 2007 Source: Comext database, data extracted on 7/7/2009 perfect world: import/export declared by ITALY towards its EU partner = export/import declared by EU partners towards Italy real world: ITALY imports from FRANCE are - 6%ofFRANCEexports towards ITALY ITALYexports towards SPAIN are + 10,6%ofSPAINimports from ITALY

  10. Single Flow – a problematic option 2/4 Impact of the SF application (only exports) on the number of CN8 codes and on value – 2005 data Source: Eurostat If in 2005 SF would have been used and Italian EU-imports would have been estimated by exports from EU25 to ITALY We would have had: + 2% of value - 1% of declared CN8 codes

  11. Single Flow – a problematic option 3/4 Besides asymmetries, still several reasons of skepticism persist • Quality issues • Existence of asymmetries negatively effect confidence in partners countries mirror data • Different exemption thresholds : problem with small countries reporting • Different response rates across countries • Different adjustments methods (non response, CIF-FOB, thresholds) • Much more difficult to monitor and correct errors on the arrivals’ side (assuming that dispatches would be collected) • Break in time series

  12. Single Flow – a problematic option 4/4 • Impact on other statistics (besides IT arrivals ) • National Account • timeliness • Balance of Payment • GDP • Timeliness and procedural aspects • Present deadlines can not be kept • Change for NSI’s production system • MS may decide to keep the survey on arrivals at national level. Specifically for the IT fiscal – statistical joint system, the fiscal obligation will not be cancelled

  13. Another simplification is possible Change of thresholds • Advantages • No implication on timeliness • Fast Implementation • No structural changes • Control on what is lost Less data with better quality: a DREAM • Disadvantages • Problems of coverage at more disaggregated level (by product, by partner). May need to go back to specific quality requirements • Harmonization of adjustment methods • Different impact in different countries

  14. Higher thresholds 1/4 • In principle • Monthly detailed data should be provided only by traders which are above the established thresholds • Annual or quarterly aggregated data should be provided by traders which are below the established thresholds • In practice • this is not always the case and there are some mixed situations

  15. Higher thresholds 2/4 These data are based on what has happened in 2007, and on the real number of traders who sent monthly data Source: Istat

  16. Higher thresholds 3/4 Impact of different coverage on NC8 codes – 2005 data • If for Italian import in 2005 we would have used 95%, instead of actual coverage, the value for 76% of good codes would have changed less then 10% • If all member states would have used a 95% coverage for exports in 2005, the value of 75% of good codes would have changed less then 10% Source: Eurostat

  17. Higher thresholds 4/4 Impact of lower coverage on specific NC chapters – Italian data 2007 Source: Istat If for Italy in 2007 we would have used a coverage of 95%, we would have lost 3,7% of the value of furniture exports but we could have exempted 35% of the respondents

  18. Simulation on burden release 1/2 2007 data May increase Source: Istat

  19. Simulation on burden release 2/2 In 2005 only 22%of firms active in intra community trade provided Intrastat data Source: Eurostat In 2005 in EU25 • a 95% coverage for both flows would have reduced of 46% the number of actual respondents • the adoption of SF based on export with a 97% coverage would have reduced of 41% the number of actual respondents

  20. Conclusions and way forward Implementation of single flow does not seem practical for the time being Solution foreseen: higher thresholds New Intrastat regulation • allows 95% coverage for arrivals • keeps SF as a medium term project • focus on quality

  21. Conclusions and way forward Next Steps • implement more stringent quality requirements • Eurostat committed with Member States to • solve largest asymmetries • homogenize and implement best practices • Important financial programme to support these actions A new round of evaluation of the possibility of implementing the SF is just behind the corner. Our job will be then to monitor that this move will be done when the preconditions of avoiding a disaster in terms of data quality will be met

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