1. STD/PASS/TAGS – Trade and Globalisation Statistics Trade in Goods and services A report of differences in two OECD datasets (Balance of payments and Annual National Accounts) OECD statistics directorate

2. STD/PASS/TAGS – Trade and Globalisation Statistics Introduction Eurostat/European Central bank Task force has investigated conceptual and actual differences between b.o.p statistics and the Rest of the World account. Generally less understanding of differences between b.o.p. and national accounts series than goods in b.o.p. and Foreign trade.

3. STD/PASS/TAGS – Trade and Globalisation Statistics The OECD comparison 10 annual series in national currency and current price were extracted from OECD MEI database and ANA database. (mid may 2007) Examination of the actual differences between the series in SNA and the series in BOP datasets (i.e. series x (SNA) in year t – series x (BOP)) in year t Series compared: Goods, Services, Income, Transfers, Capital. Aim: Investigate if possible to reproduce the conclusions drawn by Eurostat noting some EU peculiarities and adding some OECD specific remarks.

4. STD/PASS/TAGS – Trade and Globalisation Statistics Preliminary remarks Most conceptual differences are expected to disappear after the current update on the international statistical manuals (1993 SNA and BPM5) Specific compilation practices have impact on consistency (including revision practices)

5. STD/PASS/TAGS – Trade and Globalisation Statistics Main conclusions 1/2 For most countries, trade in goods series have the best match in relative terms where most national mean differences were less than one percent between SNA and BOP. The second best match was for trade in services where most national mean differences were less than three percent. The third best match was for income where most national mean differences were less than ten percent.

6. STD/PASS/TAGS – Trade and Globalisation Statistics Main conclusions 2/2 Current transfers and capital account usually poorly match.

7. STD/PASS/TAGS – Trade and Globalisation Statistics TF conclusions regarding differences in trade in goods Transit trade: The TF advises to register the gap between imports and export in some entities involved in transit trade to be recognized preferably as a service in b.o.p. statistics. Repairs: Repairs should be recorded net both in b.o.p. and in the SNA. Reclassifications between goods and services: This relates to certain types of goods recorded in external trade statistics which are reclassified to service in RoW by some countries while they are retained in goods in b.o.p.

8. STD/PASS/TAGS – Trade and Globalisation Statistics Exports and imports of Goods – Mean Differences SNA-BOP as % of BOP

9. STD/PASS/TAGS – Trade and Globalisation Statistics OECD remarks from summary table on goods comparison 1/2 For exports of goods : Zero or negligible mean % differences [1996-2005] for Canada, Czech Republic, Finland, Iceland, Japan and UK. The largest mean % differences were for Greece +25.5%, Turkey – 13.2%, and Portugal +5.8%. The remaining countries had mean % differences of below 4% with a slight majority having a positive sign. For Imports of goods, there was zero or negligible mean % differences for Canada, Iceland, United Kingdom. The largest mean % differences are found for Greece + 17.7%, Ireland + 4.87%, Australia + 3.85% and Turkey + 3.42%

10. STD/PASS/TAGS – Trade and Globalisation Statistics OECD remarks from summary table on goods comparison 2/2 Greece: The larger differences appearing may be explained by recent OECD SNA revision that has not yet been reflected in the OECD b.o.p. Regarding Turkey, the difference due to the country following SNA 68 for NA data. The differences shown for the Netherlands, (1.92% for credits; 0.94% for debits) can be according to the TF paper related to transit trade.

11. STD/PASS/TAGS – Trade and Globalisation Statistics TF conclusions regarding differences in trade in services Incidence of methodological differences higher than for goods. Differences are principally linked to the treatment of construction services and FISIM. On Construction: The TF noted on Construction that BOP is in line with SNA 93 not with ESA 95. On FISIM: At present FISIM is identified in national accounts, as recommended by ESA 95 and SNA 93, and not in BOP. Therefore a methodological difference exists and FISIM are classified under (financial) services in the RoW account, while they are indistinctly recorded under investment income in BOP.

12. STD/PASS/TAGS – Trade and Globalisation Statistics Exports and imports of Services – Mean Differences SNA-BOP as % of BOP

13. STD/PASS/TAGS – Trade and Globalisation Statistics OECD remarks from summary table on services comparison Expected B.o.p. services figures to be smaller than NA figures (non inclusion of FISIM). The case for 12 countries, otherwise not clear. So no obvious link can be drawn from the absence of FISIM in b.o.p. service data and the relative size of the figures compared to SNA figures. Zero or negligible mean % differences for the United Kingdom which has totally integrated the b.o.p. and SNA processes. FISIM are also already integrated into b.o.p. data. For Exports, the largest mean % differences appear for Japan -27.98%, Portugal -22.88%, Austria, -15.82% Luxembourg +11.34% and the Netherlands+11.07%. For imports, they were shown for Austria -36.06%, Japan -16.54%, the Netherlands +13.84%, Luxembourg +13.80%.

14. STD/PASS/TAGS – Trade and Globalisation Statistics TF conclusions regarding differences in trade in income Regarding Income from collective investment institutions (CIIS), the TF notes that the main methodological difference between BPM5/SNA93 and ESA 95 is due to the treatment of undistributed earnings. While ESA 95 requires the recording of distributed and retained earnings, BPM5 and SNA 93 only provide for the recording of distributed earnings.

15. STD/PASS/TAGS – Trade and Globalisation Statistics OECD remarks from summary table on income comparison No striking influence of FISIM on the income data zero or negligible mean % differences for United Kingdom (for exports). Norway also shows a perfect match since 1999. For Exports, the largest mean % differences were for Turkey +65.82%, the Netherlands +52.99%, Slovakia +46.36% and Canada - 30.50%. For Imports, they were shown for the Netherlands +53.41%, Greece +26.52%, Japan +23.82% and Canada -17.49%.

16. STD/PASS/TAGS – Trade and Globalisation Statistics Exports and imports of Income – Mean Differences SNA-BOP as % of BOP

17. STD/PASS/TAGS – Trade and Globalisation Statistics TF conclusions regarding differences in transfers Taxes on income and wealth: The treatment of tax refunds differs between BPM5 and ESA 95. BPM5 states that current taxes on income and wealth should be recorded on the credit side, whereas refunds of taxes are included in the debit side. ESA 95 states that the total value of taxes should be reduced by the amount of any rebates or refund (i.e. net recording).

18. STD/PASS/TAGS – Trade and Globalisation Statistics OECD remarks from summary table on transfers comparison The amounts are much smaller than for the 3 other items. However the differences can still be very large There was zero or negligible mean % differences for Canada only. Relatively close match for Korea, Mexico, Norway and Poland. For Exports, the largest mean % differences were for Greece -98.37% and Spain -79.69% For Imports, they were shown for Spain -44.46% and Switzerland +41.34%.

19. STD/PASS/TAGS – Trade and Globalisation Statistics Exports and imports of Capital – Mean Differences SNA-BOP as % of BOP

20. STD/PASS/TAGS – Trade and Globalisation Statistics OECD Remarks on Capital series Data poorly correspond. Zero or negligible mean % differences for Canada. The largest differences in exports were shown for Slovakia -449% and Sweden - 127.57% and for imports were shown for the Czech republic -326.06% and Ireland - 106.87%

21. STD/PASS/TAGS – Trade and Globalisation Statistics

22. Questions? Delegates are asked if such comparisons are deemed useful and if more of them should be done (on which series ) ? Also, should the same comparison be done in say 2 years in order to assess if the discrepancies between National Accounts and balance of payments series are growing or diminishing ?