Transcript Session IIa: Selected Measurement Issues: Some Current Account

Session IIa: Selected
Measurement Issues: Some
Current Account Issues
Papers by:
Hong Kong SAR (HK); Hungary
(HU); EuroStat (EU)
Structure of the Discussion
• Due to globalization outsourcing across
borders has increased:
• It includes – engaging in joint production,
with and without crossing borders: global
manufacturing, 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 and
Services which include:
• Involvement of additional agents (third parties)
• Movements without Crossing Borders
• Movements without Really Moving (accounting
movements)
• Involvement of Several Currencies and
Accounting Methods
• Globalization - An Increase in volume and
Importance
HK Paper
• Topic: The changed treatment of goods for
processing 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 as
services
• Advantages:
• Trade data in commodities are not
“inflated”.
• No discrepancy between payments and
value of goods crossing the border
Problems
• Goods are crossing the border
• Only value added is reflected in the data
so that production processes are difficult
to analyze
• Hard to find the data in custom’s records
• Production processes difficult to analyze
Merchanting
• Definition: Purchase and sale of goods by
a resident, from and to a non-resident,
without the goods crossing the border.
• Revision:
• Before: Registered as net export of
services
• Recommendation: registered as net
exports of goods
Advantages
• Consistency in recording between
countries. (The country of final
destinations registers it as goods).
Disadvantages
• Inconsistency with the recommendation
concerning goods for processing
About a valuation of transactions
with the rest of the world (HU)
• The problem: VAT residents that are not
required to set up business, local unit or
employ a person, but pay VAT.
• Some of the activity can be treated as
Merchanting (differences between custom
data and banking data)
• VAT data can be used to separate net
flows of merchanting services
Layman‘s comments
• Two issues that are raised
• The major difficulty and revisions is not in
the “change of ownership” principle, but in
the change in classifications between
trade in commodities and services
• Possible solution: separate the reclassified
items for easy reconstruction of the
SNA93 accounts
Layman’s comments
• The “special distributor” in VAT
• Hungary has actually two different (virtual)
borders: the custom border and the VAT
border. The “special distributor” is in the
between-borders zone.
• The paper suggests methods for
separating the data for net flows of
merchanting services
Layman’s comments
• An important issue: The bottom line (the deficit
or 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 the
revisions
The work of the Luxembourg Group
on Remittances (EU)
• The group was established to prepare
guidelines for measuring remittances sent
home by migrant workers
• Possible Sources of data: household’s
surveys, International Transaction
Reporting Systems, Direct Reporting by
money transfer operators, indirect
methods based on modeling.
Remittances
• A practical step-by-step approach is
suggested
Layman’s comments
• The advantage of households’ surveys
with respect to other methods is the ability
to evaluate the effect on inequality and
poverty.
Questions
• HK and HU:
• Should be a threshold of value added to
distinguish between reporting in gross
(inflated) terms and net terms
• Should there be mirror reporting with
major partners?
• Do the revisions inflate the GDP of Tax
Heavens?
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 between
remittances transferred by residents and
non-residents?
• Are there guidelines for improving
coverage and reducing reporting errors in
households’ surveys
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The rest is redundancies
Sources of Information
• Goods in BoP: Export/Import Declarations
• Monthly Survey of value of “contractual reimportation”
• Annual survey of “trade in services”
Merchanting
• Definitions: r-resident; nr-non-resident
• Definition: (involve) “A Purchase of goods
by an r from nr and subsequent resale to
another nr without the goods crossing the
border and
• Transaction of good manufactured by nr
through sub-contract processing
arrangement and directly sold to nr without
crossing the border.
Issues Discussed
• Regulations: The effect of Changed
Regulations (Hong-Kong)
• Unobserved Economy: Measurement of
Remittances (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 MT
Transactions to GDP 340%
• Important Problem for Small Open Economies
• Production in the Mainland. Other activities In
HK.
• 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
•