Goods sent abroad for processing

Previous question Records goods sent for processing gross or net? Opinions divided both in BOPCOM and AEG

“Gross” and “net” Gross : impute a change of ownership Net: do not impute change of ownership

BPM position Goods A to B to A - yes Goods A to B1 to B2 - no Goods A to B to C - no EXCEPT If B is unincorporated subsidiary of A If B is direct investment ent of A

SNA position (domestic) Goods A to B to A - no Except if B is establishment of A Goods from abroad - yes

Summary We have a hybrid system Not transparent for either compilers or analysts

Accounting implications Goods out less goods in SHOULD be equal to processing fee Different data sources Different products Different times Holding gains

Analytical implications What is processor doing? Who takes on risk of production? Major interaction with out-sourcing Ratio of imports to domestic production Is processing a good or a service?

Alternative Always impute change of ownership or Never impute change of ownership

SNA (domestic) Either alternative significant change especially for input output tables Changing rules for domestic processing might be more significant that for international

Always impute change own Imports Exports Change own *** Goods rec’d for processing 100 Goods sent after processing 120 Goods rec’d after process’g 110 Goods sent for processing 50

Never impute change own Imports Exports Change own *** Processing fee to non-res 60 Processing fee from non-res 20

Supply and use Intermediate cons 100 Value added 20 Output 120 OR Intermediate cons/output 120

Problem Goods sent for processing in period t Goods returned after processing in period t+1

Questions for the AEG Always impute change for goods going abroad? Never impute change for goods going abroad? Keep present situation? If a or b, make same changes for domestic processing?

Questions for BOPCOM If AEG says always impute change, would BOPCOM follow or go for never? If the latter would this apply to unincorporated establishments and to direct investment enterprises

Both groups However processing recording, robust valuation needs values of goods on and out (from Customs) reconciled with processing fee (from business) Does BOPCOM support provision of this data?