New manuals of trade in goods and trade in services: Goods for processing in Iceland

New manuals of trade in goods and trade in services: Goods for processing in Iceland Global Forum on Trade Statistics, Geneva 2-4 February 2011 Auður Ólína Svavarsdóttir

Outline • Changes of treatment of goods for processing in new manuals • with regards to the processing country • Icelandic example • How to publish? Auður Ólína Svavarsdóttir

Goods for processing, “old” manuals: • MSITS 2002: Goods for processing not included • IMTS, rev. 2 1998: Goods for processing included • Para. 28: Goods sent abroad or brought into a country for processing Auður Ólína Svavarsdóttir

Goods for processing, “old” manuals (cont.): • Coverage of goods for processing for the processing country: Included in trade in goods: • Import of material to be processed • Export of goods after processing Auður Ólína Svavarsdóttir

Goods for processing, new manuals: • MSITS 2010: Goods for processing included where there is no change of ownership • Manufacturing services on physical inputs owned by others • IMTS 2010: Goods for processing included • Goods for processing with or without change of ownership: Included at their full (gross) value Auður Ólína Svavarsdóttir

Goods for processing, new manuals (cont.): • Coverage of trade of goods for processing changes for the processing country: Over-coverage (double counting): • Trade in goods: import of material to be processed • Trade in goods: export of goods after processing • Trade in services: processing fee (no change of ownership) Auður Ólína Svavarsdóttir

Iceland as a processing country • Metal industry, major industry in Iceland • Imports raw material to be processed and exports goods after processing • Few companies and very important trade • Main source customs declarations Auður Ólína Svavarsdóttir

Iceland as a processing country (cont.) • Collection of information: • Weight • Value • Company id • Currency and exchange rate • Arrival/departure date • Date of customs clearance • Mode of transport • Customs tariff number • Etc., etc. Auður Ólína Svavarsdóttir

Iceland as a processing country (cont.) • The value of the import and export is based on LME (London Metal Exchange) • Goods only transported by air or sea Auður Ólína Svavarsdóttir

Iceland as a processing country (cont.) • Importers • Obligated to identify on the customs declaration if the good imported is for processing • Raw material imported for manufacture is exempted from excise tax and duties (Customs regulation) =>Incentive for the enterprises to identify goods for processing on import declaration Auður Ólína Svavarsdóttir

Iceland as a processing country (cont.) Two ways of trading in industry: • Some enterprises • Buy the raw material from abroad • Sell the finished product to abroad => Change of ownership, only included in trade in goods Auður Ólína Svavarsdóttir

Iceland as a processing country (cont.) Two ways of trading in industry (cont.): • Others • Make agreements with foreign enterprises to process raw material into finished product • The foreign enterprises provide the raw material and sell the good after processing => no change of ownership, included in trade in goods and the processing fee in trade in services Auður Ólína Svavarsdóttir

Iceland as a processing country (cont.) Trade in goods: Import of raw material for processing, no change of ownership, % of total import: Auður Ólína Svavarsdóttir

Iceland as a processing country (cont.) Trade in goods: Export of finished processed goods, no change of ownership, % of total export: Auður Ólína Svavarsdóttir

Iceland as a processing country (cont.) Trade in services: If the processing fee (manufacturing services on physical output owned by others) would have been included in trade in services => Auður Ólína Svavarsdóttir

Iceland as a processing country (cont.) Auður Ólína Svavarsdóttir

Iceland as a processing country (cont.) • The changes between manuals of how to treat goods for processing • Have major impact on data for goods and services for Iceland as a processing country • Recorded in goods and partly in services • Creates publication problems for Statistics Iceland Auður Ólína Svavarsdóttir

The publication problem • In Iceland • Statistics Iceland: trade in goods and trade in services • The Central Bank of Iceland: BOP • Statistics Iceland, not the Central Bank, publishes detailed data for trade in goods and trade in services Auður Ólína Svavarsdóttir

The publication problem (cont.) • High interest in data for goods and services • Data on total trade • Detailed data • For example, the Ministry of Foreign Affairs • trade with individual countries (goods and services) Auður Ólína Svavarsdóttir

The publication problem (cont.) • High influence of goods for processing in the Icelandic trade data =>How can we publish detailed data for trade in goods and services according to the new manuals? Auður Ólína Svavarsdóttir

The publication problem (cont.) • Publish • Total trade (goods and services) according to BOP (exclude goods for processing and goods after processing from trade in goods) • More detailed data according to IMTS and MSITS • Users interested in comparing data by countries (goods and services) do not get the right data Auður Ólína Svavarsdóttir

The publication problem (cont.) • Publish double series of all data of trade in goods (with and without goods for processing and goods after processing)? => Very confusing for the users Auður Ólína Svavarsdóttir

Thank you for your attention! Auður Ólína Svavarsdóttir

New manuals of trade in goods and trade in services: Goods for processing in Iceland