Session IIa: SelectedMeasurement Issues: SomeCurrent Account Issues
Papers by:
Hong Kong SAR (HK); Hungary(HU); EuroStat (EU)
Structure of the Discussion
•Due to globalization outsourcing acrossborders has increased:
•It includes – engaging in joint production,with and without crossing borders: globalmanufacturing, merchanting (HK,and HU)remittances (EU).
•The papers cover implementing problems,suggestions and plans for implementation
General
•Globalization also Leads to the Following:
•Complicated Movements of Commodities andServices which include:
•Involvement of additional agents (third parties)
•Movements without Crossing Borders
•Movements without Really Moving (accountingmovements)
•Involvement of Several Currencies andAccounting Methods
•Globalization - An Increase in volume andImportance
HK Paper
•Topic: The changed treatment of goods forprocessing and merchanting in SNA, rev.1 and BPM6
•The revisions discussed:
•Goods for Processing
•Merchanting
Goods for Processing:
•Before: Goods were reported – gross –and as goods - in both directions
•After: Net Difference is recorded asservices
•Advantages:
•Trade data in commodities are not“inflated”.
•No discrepancy between payments andvalue of goods crossing the border
Problems
•Goods are crossing the border
•Only value added is reflected in the dataso that production processes are difficultto analyze
•Hard to find the data in custom’s records
•Production processes difficult to analyze
Merchanting
•Definition: Purchase and sale of goods bya resident, from and to a non-resident,without the goods crossing the border.
•Revision:
•Before: Registered as net export ofservices
•Recommendation: registered as netexports of goods
Advantages
•Consistency in recording betweencountries. (The country of finaldestinations registers it as goods).
Disadvantages
•Inconsistency with the recommendationconcerning goods for processing
About a valuation of transactionswith the rest of the world (HU)
•The problem: VAT residents that are notrequired to set up business, local unit oremploy a person, but pay VAT.
•Some of the activity can be treated asMerchanting (differences between customdata and banking data)
•VAT data can be used to separate netflows of merchanting services
Layman‘s comments
•Two issues that are raised
•The major difficulty and revisions is not inthe “change of ownership” principle, but inthe change in classifications betweentrade in commodities and services
•Possible solution: separate the reclassifieditems for easy reconstruction of theSNA93 accounts
Layman’s comments
•The “special distributor” in VAT
•Hungary has actually two different (virtual)borders: the custom border and the VATborder. The “special distributor” is in thebetween-borders zone.
•The paper suggests methods forseparating the data for net flows ofmerchanting services
Layman’s comments
•An important issue: The bottom line (the deficitor surplus) does not change
•The components do change
•Missing issues: Over and under invoicing
•Volatility of exchange rates
•Calls for
•Mirror images of trade data
•Co-ordination among countries in applying therevisions
The work of the Luxembourg Groupon Remittances (EU)
•The group was established to prepareguidelines for measuring remittances senthome by migrant workers
•Possible Sources of data: household’ssurveys, International TransactionReporting Systems, Direct Reporting bymoney transfer operators, indirectmethods based on modeling.
Remittances
•A practical step-by-step approach issuggested
Layman’s comments
•The advantage of households’ surveyswith respect to other methods is the abilityto evaluate the effect on inequality andpoverty.
Questions
•HK and HU:
•Should be a threshold of value added todistinguish between reporting in gross(inflated) terms and net terms
•Should there be mirror reporting withmajor partners?
•Do the revisions inflate the GDP of TaxHeavens?
Layman’s Questions
•(HU) Is there a VAT on Merchanting of“Special Distributors”?
Questions to EU-papers
•Problems and Questions:
•Is there a way to distinguish betweenremittances transferred by residents andnon-residents?
•Are there guidelines for improvingcoverage and reducing reporting errors inhouseholds’ surveys
The END
•The END
•The End
•The end
•The end
•The end
•The end
The rest is redundancies
Sources of Information
•Goods in BoP: Export/Import Declarations
•Monthly Survey of value of “contractual re-importation”
•Annual survey of “trade in services”
Merchanting
•Definitions: r-resident; nr-non-resident
•Definition: (involve) “A Purchase of goodsby an r from nr and subsequent resale toanother nr without the goods crossing theborder and
•Transaction of good manufactured by nrthrough sub-contract processingarrangement and directly sold to nr withoutcrossing the border.
Issues Discussed
•Regulations: The effect of ChangedRegulations (Hong-Kong)
•Unobserved Economy: Measurement ofRemittances (Euro-Stat)
•Determining the Border Line – (Hungary)
Hong-Kong SAR
•Relevance to Other Countries: On one hand –one major partner; on the Other Ratio of MTTransactions to GDP 340%
•Important Problem for Small Open Economies
•Production in the Mainland. Other activities InHK.
•The Movement of Raw Materials and Products
•The movement of Services (“Merchanting”)
•
The Accounting
•Definition of An International Transaction:
•SNA 93 – Crossing a border
•SNA 93 – Rev. 1 : Change of Ownership
•