Validation in International Trade in Goods Statistics Lídia Bassó Hungarian Central Statistical Office Dpt. of Services and External Trade Statistics Validation in International Trade in Goods Statistics Lídia Bassó MEDSTAT study visit on ITGS Budapest, 27-28 May, 2013

Abbreviations AVG – average CN8 – 8-digit commodity code of the Combined Nomenclature NoT ˜– nature of transaction NSI – National Statistical Institute STD – standard deviation SU quantity – quantity measured in supplementary unit

Topics covered Validity checking Credibility checking Types of credibility errors Credibility checking at trader level Credibility checking at item level Calculation of credibility ranges Manual adjustments of credibility ranges Priority setting of credibility errors Process of credibility checking & correction

Validity checking Clear-cut if data are right or wrong Individual compulsory boxes are filled in with valid codes or figures Customs checks and corrects them NSI checks them again Logical connections between boxes within the item (record) NSI checks CN8 and mode of transport – which commodities might be transported by fixed transport installations (e.g. gas, oil) own propulsion (vehicles) Some limits in the text of CN8 for unit value or unit net mass

Credibility checking Most often using several data within the item for checking NOT clear-cut if data are right or wrong More or less suspicious data for the statistician Statistical checks

Types of credibility errors Definite error (D) when error is very likely MUST always be checked and corrected / accepted Possible error (P) suspicious data to be checked acc. to priority order

Credibility checking at trader level (P) New CN4 or country code / flow declared by trader for which trade fairly concentrated in the past 24 months number of CN4 codes declared ≤ 10 or number of countries declared ≤ 4 AND value of trade on the new code exceed a given value (36 000 €)

Credibilty checking at item level Same stat. value for more items within one declaration (P) Net mass or suppl. quantity > stat. value (1€ ~ 275 HUF) (D) Stat. value / invoice value > 2 or < 0,5 (P) Some CN codes always checked with trader if it is correct (D) excluded by regulation (4907, 71189000) vessels & aircraft, treasures of art Items of high value (imp. 4 million €; exp. 8 million €) (D) Credibility ratios (D) or (P) value / net mass (value / SU quantity) (net mass / SU quantity )

Credibility ranges Defined for credibility checking of CN8s/flow Aim – control credibility ratio(s) of declared items unit value credible D P P D

Calculation of credibility ranges (1) Calculated for credibility ratios of CN8s/flow, quarterly from item level credibility ratios of the past 12 months NoT code 11 only, excl. some spec. CN8 codes where variety of ratios is extreme Data cleaning some of the highest and lowest ratios (outliers) excluded Calculation based on variability of the item level credibility ratios

Calculation of credibility ranges (2) Intervals where the credibility ratios are accepted. IF THEN Coefficient of variation (%) Credibility range from AVG (x) 0 – 9 1/1.5x – 1.5x 10 – 19 1/2x – 2x 20 – 39 1/3x – 3x 40 – 59 1/4x – 4x 60 – 79 1/5x – 5x 80 – 89 1/6x – 6x 90 – 99 1/7x – 7x 100 – 1/8x –8x products of low variability products of high variability

Manual adjustments of credibility ranges Changing upper and/or lower limit of the general range e.g. limit in text of CN8 next automatic calculations can not overwrite Defining individual limits by CN8/flow/trader

Priority setting of credibility errors (1) Value of transaction (€)   Declared item’s difference form its credibility limit < 2x 2x – 5x 5x – 10x 10x – 100 100x < Low var. High var. < 200 9 201 – 2 000 8 3 7 1 2 2 001 – 8 000 6 4 8 001 – 200 000 5 D 200 001 <

Priority setting of credibility errors (2) Type of credibility error Priority Same stat. value for more items within one decl. 1 Stat. value / inv. value > 2 or < 0,5 1/2/3/9 New CN4 or country at trader level 2 Depending on stat. value When more errors with different priorities in one item, the highest one is the overall priority.

Process of credibility checking & correction A programme selects credibility errors, allocating priorities Checking/correction by contacting trader about definite errors (error list sent by post) expert correction on the basis of past info (until answer arrives) + phone calls when urgent Direct contact with traders, never sent back to Customs! IT application running on PCs (with all necessary info available) to manual checking & correction of credibility errors set manual credibility limits

Checking validity of traders’ total values (TV) For the top 100 traders Aim – detection of outliers Classifying total value / trader /flow of the ref. month on the basis of its own last 12 months’ average, minimum, maximum values accepted if AVG * 0.5 ≤ TV ≤ AVG * 2 suspicious if min. ≤ TV ≤ max. upper outlier if not accepted and. TV > max. lower outlier if not accepted and TV < min. no value if TV = 0 can not be classified if AVG = 0 (no past data) List of the outcome Manual checking, consultation with traders

Thanks for your attention! lidia.basso@ksh.hu