The United States Experience in Collecting FATS

1. The United States Experience in Collecting FATS Anne Flatness U.S. Bureau of Economic Analysis 2008 APEC Capacity Building Seminar-Workshop on the Measurement of International Trade in Services 2 October, 2008 Manila, Philippines

2. Bureau of Economic Analysis • Data collection and dissemination agency • Part of the U.S. Department of Commerce • Compiles national and international accounts • Gross domestic product • International transactions accounts, also known as the balance of payments • Separate data system for multinationals • Regional statistics • Industry statistics, including input/output (I/O) accounts

3. U.S Sales of Services Billions $ U.S. International Sales of Private Services 1987-2006 Sales Abroad by Foreign Affiliates U.S. Cross-Border Exports

4. U.S. Purchases of Services U.S. International Purchases of Private Services 1987-2006 Billions $ U.S. Purchases from Foreign-Owned Affiliates U.S. Cross-Border Imports

5. Legal Framework • International Investment Survey Act of 1976 • Expanded as the International Investment and Trade in Services Survey Act in 1984 • Mandatory • Confidential • Paperwork Reduction Act

6. Conceptual Framework • International guidelines • IMF Balance of Payments Manual (5th ed. – “BPM5”) • Sixth edition scheduled for 2008 • OECD Benchmark Definition of FDI • Sets world standard for FDI statistics • System of National Accounts

7. United States Experience • First collected FDI operations data for 1950, covering outward investment • Collection became more regular and more detailed in the late 1970’s / early 1980’s • Sales of goods and sales of services now reported separately and by destination • More detailed breakdown of industry classifications

8. U.S. Collection Method • Largely a survey-based system • Benchmark surveys every 5 years • Most comprehensive in subject matter • Lowest reporting thresholds • Annual surveys in interim years • Higher exemption levels and fewer items • Use statistical sampling • Estimates are made for below-threshold companies

9. Types of Data Collected • Balance sheets • Income statements • Sales • Employment and employee compensation • Research and development expenditures • Taxes • U.S. trade in goods • Value added (estimates built up from other items)

10. Some Features of the Data on Services Supplied Through Affiliates • Covers sales of services only; excludes goods and investment income (where included in operating revenue) • Excludes U.S. cross-border trade, which is recorded in the BOP • Foreign affiliates: Sales to foreign persons • U.S. affiliates: Sales in the United States • Covers majority-owned affiliates only

11. Some Features of the Data on Services Supplied Through Affiliates (Cont’d) • Covers affiliates in all industries . . . • . . . but with services industries shown in greater detail • Foreign affiliates classified in their country of location • U.S. affiliates classified according to the country of their ultimate beneficial owner (UBO)

12. Recent Changes • Improved measurement of insurance • Old measure based on insurance-related operating revenue • New measure based on ‘normal’ losses; loss data collected on surveys • Wholesale and retail trade • Old measure regarded as sales of goods • New measure captures the services component of sales using estimates of margin output

13. Current Projects • Estimates covering banks • Beginning in 2002, requested that banks report sales of services; plan to incorporate estimates in the near future • Imputed services of banks and other financial firms (FISIM) • Beginning in 2002, requested that banks report interest received and paid, plan to incorporate estimates in the near future

14. Conclusions • BEA uses benchmark and annual surveys to collect data on FATS • Surveys are mandatory and confidential • Data presented by industry and by country of affiliate or UBO • New measures of insurance and wholesale and retail services • Expanding coverage to include banks