1. Goods sent abroad for processing
Based on presentation to SNA AEG Bangkok June 2005
By Anne Harrison OECD

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

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

4. 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 entity of A

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

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

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

8. 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?

9. Alternatives Always impute change of ownership or
Never impute change of ownership

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

11. Always impute change of ownership
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

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

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

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

15. 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?

16. 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

17. Both groups (SNA and BOPCOM)
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?