Services Account: Treatment of Transport and Travel

1. Services Account:Treatment of Transport and Travel Workshop on International Trade in Services Beirut April 18-20, 2011

2. Transport Services:Coverage Transport services includes: • services provided by all modes of transport performed by residents of one economy for those of another. • carriage of passengers and the movement of goods (freight) as well as rentals (charters) of carriers with crew. • supporting and auxiliary services: cargo handling, navigation fees and maintenance and cleaning of carriers. • ostal and courier services cover the pick-up, transport, and delivery of letters, newspapers etc., including post office counter and mailbox rental services. Services Account--Transport and Travel

3. Transport Services: Classification By type of carrier • Sea Transport • Air Transport • Other Transport • Postal and Courier Services By functional category • Passenger • Freight • Other Services Account--Transport and Travel

4. Transport Services: Classification • The standard components breakdown transport by both dimensions. • A breakdown of total transport services into freight transport passenger transport and other transport alone is proposed as simplified standard components for those countries that are unable (for example, for reasons of confidentiality) to provide the full breakdown by mode of transport. Services Account--Transport and Travel

5. Transport Services: Classification • By type of carrier • Sea transport covers all transport services by sea. • Air transport covers all transport services provided by air, including international passenger transport. • Other transport: • Additional modes such as • Space • Rail • Road • Inland waterway • Pipeline transport and electricity transmission Services Account--Transport and Travel

6. Passenger Services • All services provided, between the compiling economy and abroad or between two foreign economies, in the international transport of: • Nonresidents by residents carriers (credit); and • Residents by nonresident carriers (debit) • Excluded are passenger services provided to nonresidents • by resident carriers within the resident economies (included under “travel”) • Included are passenger services performed within an economy by nonresident carriers. Services Account--Transport and Travel

7. Passenger Services: Exclusions • Services to nonresidents within the economy of the carrier; this is travel. • Carriers do not ask the residence of internal ticket buyers. • All goods and services bought by nonresidents within compiling economy are either travel or government services n.i.e. Services Account--Transport and Travel

8. Passenger Services: Inclusions Fares and incidental outlays: • On-board food, gifts, souvenirs • Excess baggage charges • Accompanying personal effects, including autos • Any taxes levied on passenger services e.g., sales or value added taxes. • For practical reasons fares that are part of package tours are included, but exclude cruise fares which are included in travel. • Rental of transport equipment with crew to transport persons. • Covers rentals or operational leases of vessels, aircraft, freight cars, or other commercial vehicles with crews for limited periods for the carriage of passengers. Services Account--Transport and Travel

9. Freight Services • The treatment of freight services is a consequence of adopting FOB as the uniform valuation principle for goods. • Since the FOB valuation is as at the customs frontier of the exporting economy, so: • all freight costs up to the customs frontier are shown as incurred by the exporter; • all freight costs beyond the customs frontier are shown as incurred by the importer. Services Account--Transport and Travel

10. Freight Services • When actual arrangements for paying freight costs differ from the FOB terms of delivery, rerouting is needed. • Rerouting of freight services may mean that a transaction that is actually between two residents is treated as a transaction between a resident and a nonresident and vice versa, as shown in Box 10.1 in BPM6. • Freight services include loading on board or the unloading of goods from carriers if the contracts between owners of goods and carriers require that carriers provide the service. Services Account--Transport and Travel

11. Other Transport “Other” subhead under sea and air includes”: • Cargo handling (stevedoring-NOT done by or for account of nonresident carrier) • Navigation fees • Maintenance and cleaning of equipment • Commissions and agent fees for transport related services Warehousing • Packing, packaging, binding • Forwarding, handling, and transferring • Airport and harbor dues • Towing, pilotage, and other navigational aid for carriers • Salvage operations Services Account--Transport and Travel

12. Travel • Travel credits cover goods and services for own use or to give away, acquired from an economy by nonresidents during visits to that economy. • Travel debits cover goods and services for own use or to give away acquired from other economies by residents during visits to other economies. • The standard component breakdown of travel is between business and personal travel. • Supplementary data for groups of special interest e.g. border, seasonal, and other short-term workers within business travel, health-related and education-related outlays under personal travel. Services Account--Transport and Travel

13. Travel • A separate supplementary breakdown of travel into types of goods and services is also suggested. • A demand oriented activity; travelers moves to the location of the provider (residents of the economy visited) for the goods and services desired. An assortment of services, consumed by travelers. It is a transactor-based classification and is for this reason not identified as a service in the Central Product Classification. • Travel covers goods and services acquired in an economy by travelers during visits of less than ONE year in the economy. Services Account--Transport and Travel

14. Travel • One year rule does not apply to students and medical patients; their expenditures are included in travel. • Travel excludes goods for resale, which are included in general merchandise. • Travel excludes acquisition of valuable, consumer durable goods, and other consumer purchases for own use that are included in general merchandise (i.e., in excess of customs threshold). Services Account--Transport and Travel

15. Exclusions from Definition of Travelers • Personnel stationed on a military base • Diplomats and embassy personnel • Individual temporarily engaged in a productive activity directly for an entity resident in the compiling economy, BUT their expenditures on goods and services in the host economy are included in travel (BPM6). Services Account--Transport and Travel

16. Business Travel • Carrier crews stopping over (but in-flight, or shipboard expenses incurred by resident crew on resident carrier not included) • Government employees on official travel • Employees of international organizations on official business • Employees doing work for enterprises that are not resident in the economies in which the work occurs. • Travel includes the personal acquisition of goods and services while on business travel, but not the sales or purchases business travelers may conclude on behalf of the enterprise they represent. Services Account--Transport and Travel

17. Personal Travel Personal travel - travelers going abroad for purposes other than business Goods and services covered under travel: • All goods and services acquired by travelers from the economies in which they are traveling and for their own use. • Paid or provided without quid pro quo (contra entry: current transfers) • Where important, supplementary data into subcomponents: • Health-related outlays incurred by patients. • Education-related outlays incurred by students. • All other personal travel Services Account--Transport and Travel

18. Other Issues Related to Travel A separate supplementary breakdown of travel may be provided according to product group: • Goods • Local transport services • Accommodation services • Food serving services; and • Other services This breakdown would allow for close links with tourism satellite accounts as well as supply and use tables. Services Account--Transport and Travel

19. Other Issues Related to Travel • The term time-share covers a wide range of arrangements. • They can roughly be classified in the categories described in Table 10.3 of BPM6. • Accommodation services consumed by the time-share holder would be partially received and paid in kind (with a counter entry of investment income receivable for the value of accommodation services in kind, net of operational costs such as periodic management fees) Services Account--Transport and Travel

20. Treatment of Alternative Time-Share Arrangements Services Account--Transport and Travel