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The Treatment of Merchanting in Balance of Payments Statistics

このプレゼンテーションでは、出席者間で討論をし、アクション アイテムを作成する場合があります。 PowerPoint を使ってプレゼンテーションの実行中にアクション アイテムを作成するには ... スライド ショーの実行中にマウスの右ボタンをクリック [ 会議メモ] をクリック [ アクション アイテム] タブをクリック アクション アイテムを入力する [ OK] をクリック このようにすると、入力したアクション アイテムを集めたスライドが、プレゼンテーションの最後に自動的に作成されます。.

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The Treatment of Merchanting in Balance of Payments Statistics

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  1. このプレゼンテーションでは、出席者間で討論をし、アクション アイテムを作成する場合があります。PowerPoint を使ってプレゼンテーションの実行中にアクション アイテムを作成するには ... • スライド ショーの実行中にマウスの右ボタンをクリック • [会議メモ] をクリック • [アクション アイテム] タブをクリック • アクション アイテムを入力する • [OK] をクリック • このようにすると、入力したアクション アイテムを集めたスライドが、プレゼンテーションの最後に自動的に作成されます。 The Treatment of Merchanting in Balance of Payments Statistics April 2004 Bank of Japan

  2. BPM5 (Paragraph 262) • Merchanting is defined as the purchase of a good by a resident (of the compiling economy) from a nonresident and the subsequent resale of the good to another nonresident; during the process, the good does not enter or leave the compiling economy.

  3. BPM5 (Paragraph 207) • When goods are acquired from one economy, relinquished again to that or some other economy, and do not cross the frontier of the economy in which the temporary owner is a resident, the activity is considered a merchanting transaction rather than an import and re-export of the goods.

  4. How was it treated in BPM4? • Merchanting was to be recorded under the item “Other goods and services”. • The treatment was essentially the same as under BPM5, that is, the differential amounts for goods were accounted on net basis.

  5. Typical Merchanting Trade Movement of goods

  6. How should the compiling methodology be reviewed? • The BPM5 treatment of Merchantingshould be reviewed not as a service but as a component in the trade of goods, and BOP should account imports (= acquisitions) and exports (= resale) on a gross basis, • becausethe currenttreatment contains 4 major problems such as...

  7. Disadvantage of treating Merchanting as Services 1/4 • The first problem is that it requires exception to the change of ownership principle to record goods. • Paragraph 207 says that “It is recommended that the country of the temporary owner exclude such goods from the goods component….”

  8. Disadvantage of treating Merchanting as Services 1/4 • However, the demarcation between “temporary” transactions and other transactions is not clear. • Thus, the rationale for changing the treatment is weak. • In fact, Paragraph 268 says that “Goods not crossing frontiers should be included in exports and imports if changes of ownership occur.”

  9. Disadvantage of treating Merchanting as Services 2/4 • The second problem is that it could result in discrepancies in global totals.

  10. Disadvantage of treating Merchanting as Services 3/4 • Difficulty in regional breakdowns of merchanting services will generate discrepancies in bilateral statistics. Export of 20 merchanting services to B or to C ? At what ratio should it be assigned?

  11. Disadvantage of treating Merchanting as Services 3/4 • For example, regional treatment in Japan’s merchanting is not thoroughly consistent. Case A Case B Japan’s “Other Business Services” vis-à-vis the Middle East shows very large negative receipts

  12. Disadvantage of treating Merchanting as Services 4/4 • Losses incurred at resale will generate negative service output, which may conflict with the concept of service as output.

  13. Treatment of Merchanting as Services on a net basis... • (1) Requires exception to change of ownership principle. • (2) Results in discrepancies in global totals due to asymmetry. • (3) Involves difficulty in regional breakdowns. • (4) Generates negative service output with losses incurred at resale.

  14. Disadvantage of treating Merchanting as Goods 1/2 • Freight and insurance charges may become mixedin with goods. Assume that freight =10 is added to the resale value = 100, and that Country C bears the freight cost (in principle, importer bears freight charges).

  15. Case in Which Merchanting Includes Freight overvalued

  16. Case in Which Merchanting Includes Freight overvalued

  17. Disadvantage of treating Merchanting as Goods 1/2 • However, in reality, it is unavoidable for some goods to become mixed in with the service component. (BPM5 Paragraphs 223, 228, etc.) • Therefore, it appears that the first problem related to gross basis accounting are relatively minor ones.

  18. Disadvantage of treating Merchanting as Goods 2/2 • Because of the large volume of merchanting on gross basis, revising the treatment may affect the perception of statistics on trade in goods • In the case of Japan, based on the 2003 preliminary figures, merchandise exports and imports could be increased by 32.5% and 40.6%, respectively (including non-monetary gold).

  19. Disadvantage of treating Merchanting as Goods 2/2 • However, this problem can be significantly alleviated through the following measures: • (1) separating merchanting from other transactions in goods by creating a sub-component for goods in merchanting; • (2) creating a time series covering a sufficiently long retroactive period.

  20. Net basis vs. Gross basis(wrap- up) • Both net accounting (service) and gross accounting (goods) have disadvantages. • Shortcomings of net accounting are more serious and all of them could be avoided by shifting to gross basis. • Meanwhile, the problem of mixed-in freight is unavoidable under the current treatment too.

  21. Exception to rule • →Should an exception be approved? Yes. • IMF Compilation Guide (Paragraph 138) says, “Merchanting transactions—that is, the buying and selling of goods (including nonmonetary gold) that do not cross national boundaries—should be recorded in the BOP as service transactions” • Even if the treatment of merchanting is changed to gross basis accounting, non-monetary gold should be an exception.

  22. Why should non-monetary gold be an exception? • (1) Gold is special goods in that it has characteristics of both goods and financial assets. • (2) Dealing in gold are widely undertaken without any physical movement of gold through use of the books of the London gold dealers.

  23. Non-monetary gold in Japan’s merchanting • During 2003, Japans gross transactions of non-monetary gold not involving the crossing of frontiers amounted to 7341 billion yen in imports and 7373 billion yen in re-exports. These amounts were equivalent to 45.6% and 43.7% of gross merchanting transactions, respectively. • These amounts were equivalent to 18.5% and 14.2% of total merchandise exports and imports, respectively

  24. Non-monetary gold not crossing frontiers • They can be treated as either (1) service or (2) financial transactions. • If (1) is applied, the margin on acquisition and resale price is recorded as a service • Regarding (2), it is necessary to define “Financial Gold” appropriately.

  25. To conclude, • There is room for reviewing the current treatment of Merchanting. • Gross basis accounting (i.e., recording the pertinent transaction under Goods) could be more appropriate methodology. • In case of non-monetary gold not involving the crossing of frontiers, the special characteristics of gold as a good should be considered.

  26. Thank you for listening!

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