1. www.bea.gov Data Collection on Factoryless Goods Producers and Global Production Brent Moulton (with Maria Borga) Group of Experts on National Accounts – UNECE Geneva May 9, 2014

2. www.bea.gov 2 Globalization ▪ Globalization has affected global manufacturing arrangements:  Traditional, integrated manufacturer  Manufacturing service provider  Factoryless goods producer ▪ International guidelines and manuals:  System of National Accounts 2008  Balance of Payments and International Investment Position Manual, 6 th edition  The Impact of Globalization on National Accounts

3. www.bea.gov International Standards: BPM6 and SNA 2008 ▪ New treatment of “goods-for-processing” ▪ When ownership does not change and goods are returned after processing  Gross merchandise trade flows are excluded  Value of the processing service included as services trade measured by the processing fee  No impact on overall trade balance but it shifts the balance between goods and services  Impacts input-output accounts 3

4. www.bea.gov U.S. Classification Guidance on Factoryless Goods Producers ▪ Explicit guidance to classify factoryless goods producers (FGP) in the manufacturing sector  Report the value of final product produced  Report purchases of contract manufacturing services (CMS) ▪ Manufacturing service providers are also classified in manufacturing sector  Report receipts from CMS 4

5. www.bea.gov Contract Manufacturing Services ▪ CMS is a key element in identifying the relationship between firms that outsource the fabrication of products—while still controlling the production process— and firms that do the processing  May help classify units to appropriate industry  May help identify the “goods-for-processing” international trade flows 5

6. www.bea.gov Surveys with CMS Questions ▪ BEA Surveys  2009 Benchmark Survey of U.S. Direct Investment Abroad (BE-10)  2011 Benchmark Survey of Transactions in Selected Services and Intellectual Property Products with Foreign Persons (BE-120) ▪ Census Bureau Surveys  2007 Economic Census  2011 Report of Organization Survey (COS)  2012 Economic Census 6

7. www.bea.gov Responses on CMS from BE-10 Survey ▪ 23% of US parents reported purchasing CMS 7

8. www.bea.gov Responses on CMS from BE-10 Survey 8 ▪ Within manufacturing, 24% of parents that purchased CMS were in computers and electronic products manufacturing  Other prominent industries included machinery, chemicals, medical equipment, transportation ▪ US manufacturing parents that purchased CMS accounted for  39% of value added for all manufacturing parents  36% of value added for all wholesale parents

9. www.bea.gov Conclusions ▪ Responses from BEA and Census surveys indicate:  Domestic purchases of CMS more prevalent  Firms that purchased CMS from their affiliates are larger than other firms purchasing CMS outside the U.S.  For U.S. parents who purchased CMS outside the U.S., they were just as likely to own as to not own the material inputs 9

10. www.bea.gov Next steps ▪ Analyze adequacy of data from Census, BEA, and other sources ▪ Special inquiry questions were added to 2012 Economic Census. These questions should help identify FGP activity 10

11. www.bea.gov Next steps ▪ Research project will combine BEA data on multinational enterprises and trade in services with Census Bureau foreign trade data  Product detail and special inquiries to identify firms that purchased CMS from foreign firms  Also identify US firms that provided manufacturing services to foreign firms ▪ Output of research will be a report that  Assesses the state of current data collections for FGP  Recommends any additional data collection that may be needed 11