1. MIRROR EXERCISES FINLAND - RUSSIA Seminar on External Trade Statistics (ETS) 6-7 March 2006 Luxembourg

2. 6-7 March 2006Finnish National Board of Customs2 Foundations for the co-operation Bilateral agreement between Federal Customs Service of Russia and Finnish National Board of Customs; questions on statistics one part of it First meeting in June 1997 Since then the meetings arranged annually Between the meetings statistical information exchanged quarterly

3. 6-7 March 2006Finnish National Board of Customs3 Objectives of the RU-FI mirror exercises To clear up the discrepancies by measuring the extent of differences find out the most significant CN-headings in this respect To find out the reasons of the discrepancies methodological reasons other reasons To remove or at least minimize the discrepancies

4. 6-7 March 2006Finnish National Board of Customs4 Extent of total discrepancy 1996-2004 Table 1: Differences between Finnish export- and Russian import statistics, 1996-2004 YearFinland’s exportRussia’s importImport - Export Million USD % of export 19962 4781 675 -803-32,4 19972 9831 874-1 109-37,2 19982 5841 440-1 144-44,3 19991 709 938 -771-45,1 20001 987 958-1 029-51,8 20012 5121 274-1 238-49,2 20022 9771 515-1 462-49,1 20033 9711 854-2 118-53,3 20045 4402 332-3 108-57,1

5. 6-7 March 2006Finnish National Board of Customs5 Extent of total discrepancy 1996-2004 Table 2: Differences between Russian export - and Finnish import statistics, 1996-2004 YearRussia’s exportFinland’s importImport - Export Million USD % of export 19962 6382 239 -399-15,1 19972 7742 416 -358-12,9 19982 0712 123 52 2,5 19992 0662 282 216 10,5 20003 1053 183 78 2,5 20013 1113 074 -37 -1,2 20022 9303 316 386 11,6 20034 3184 924 606 14,0 20045 8266 600 774 13,3

6. 6-7 March 2006Finnish National Board of Customs6 Exports of EU Member States to Russian Federation 2004 and 2005, Jan-Nov

7. 6-7 March 2006Finnish National Board of Customs7 Russian imports and EU exports, negative discrepancy, year 2004

8. 6-7 March 2006Finnish National Board of Customs8 Method to identify discrepancies Reconciliation exercise: RU-imports and FI-exports FI-imports and RU exports From aggregated CN-2 digit level to the most detailed CN-8 digit level Imports studied on the basis of country of origin country of consignment

9. 6-7 March 2006Finnish National Board of Customs9 Perceived reasons for the discrepancies Two systems for recording the trade: the general trade system (UN principal) the special trade system (EC legislation) Triangular trade Goods recorded as traded while in transit Differences in exchange rates used Timing differences in reporting

10. 6-7 March 2006Finnish National Board of Customs10 Perceived reasons for the discrepancies (cont.) Classification of goods in different commodity codes Reporting concessions and simplifications Confidentiality of data (CN-codes, country codes) The use of different transaction codes The concepts country of origin and country of consignment Measurement errors in quantities

11. 6-7 March 2006Finnish National Board of Customs11 Perceived reasons for the discrepancies (cont.) CIF valuation in imports and FOB valuation in exports Fraudulent declarations: double invoice conscious use of incorrect CN-codes bypassing the customs control regarding payments money circulated through several operators

12. 6-7 March 2006Finnish National Board of Customs12 RUSSIAN IMPORT FROM FINLAND 2004 by country of origin and consignment The country of origin – Finland 2 069 million USD The country of consignment – Finland 1 937 million USD The countries of consignment – EU excl. Finland 116 million USD The consignments of other countries excl. EU 17 million USD The country of consignment – Finland 9 540 million USD The country of origin – Finland 1 937 million USD The countries of origin – EU excl. Finland 3 428 million USD The country of origin – other countries excl. EU 4 776 million USD 262 million USD origin unknown Source: Federal Customs Service of Russia

13. 6-7 March 2006Finnish National Board of Customs13 An example on fraudulent movement of goods Producer of goods Customs warehouse 1 2 3 FINLAND (A BALTIC COUNTRY) RUSSIA Warehouse 4 5 Outlet 6 7 Black Warehouse Ware- house Outlet

14. 6-7 March 2006Finnish National Board of Customs14 An example on fraudulent movement of goods Explanations to the previous diagram : 1.Purchase of goods (RU) 2.Producer (FI) delivers goods to customs warehouse in Finland. Forward agencies divide the delivery into several partial deliveries. 3.Goods are moved from warehouse to warehouse in Finland or in Baltic Countries and during the movements low-priced goods are added to the deliveries. 4.Part of the delivery can be even sold to the black markets in EU. 5.Deliveries are transported to Russia in lorries, passenger cars or vans. 6.In Russia the valuable goods (e.g. mobile phones) are unloaded in the black intermediate warehouses. 7.Vehicles continue with the transportations to the final destinations, where the low-priced goods are customs declared.