merchanting michael connolly cso, ireland geneva april 2008 unece/eurostat/oecd wggna agenda item 9...
TRANSCRIPT
Merchanting
Michael Connolly
CSO, Ireland
Geneva April 2008
UNECE/EUROSTAT/OECDWGGNA
Agenda item 9Invited paper 15/Rev.1
Merchanting
the purchase of a good by a resident (of the compiling economy) from a non-resident and the subsequent resale of the good to another non-resident;
during this process the good does not enter or leave the compiling economy
Source IMF BPM5
Merchanting
CountryBexporter/seller
Country Cimporter/buyer
Country AMerchant
Movement of goods/services
Change in ownership Cash settlement
Merchanting So what is the problem with merchanting?
In the trade data for countries B &C the exports and imports are included
How do we treat the transactions in the accounts of Country A?
Merchanting
The solution to this difficulty centred around the treatment for the change of ownership.
Change in ownership would normally require that we record exports from County B to Country A
and
record exports from Country A to country C
Merchanting This difficulty was simplified by imputing no
change in ownership involving the merchant
and therefore recording the merchant’s margin as the net
export of a service in Country A
and record the exports /imports of goods
between B and C
Merchanting
Solution agreed in BPM5/SNA’93 solved one problem and created others
Goods account does not add up Difference between the value of imports
and exports is the merchants surplus Recorded under Services
Edition of the Manual Required recording Classified in the BPM
Methodology
BPM 1st Edition - 1948 Record net under
Merchandise
Other Transactions in
Merchandise
BPM 2nd Edition - 1950 Record gross under
Merchandise
Other Transactions in
Merchandise
BPM 3rd Edition - 1961 Record net under
Merchandise
Merchandise transactions
abroad
BPM 4th Edition - 1977 Record net under Other
Goods Services and
Income
Other Goods Services and
Income
BPM 5th Edition - 1993 Record net under
Services
Business Services
Merchanting
CountryBexporter/seller
Country Cimporter/buyer
Country AMerchant
Value of exports = 60 Value of imports =80
Value of services exports = 20
Country A Country B Country CGoods Exports -80 Imports 100
Services Exports -20 ImportsCash Payments -80 -100 Receipts 100 80
Total 0 0 0
Merchanting
Commodity Trading International Wholesale Retail Global Manufacturing
and Interaffiliate transactions in Goods and
Services Outsourcing of Services (abroad)
Merchanting Global Manufacturing
Country Bowner of goods
Country Dimporter/buyer
Country AGroup Company
Movement of goods/services
Change in ownership Cash settlement
Country CProcessor/exporter
Goods for processing
Merchanting of Services
Not addressed in the current manuals Was mentioned as far back as 1961
“the compiling country’s residents may carry out international transactions in goods and services that are entered only on a net basis. Such transactions involve the purchase of goods or services in one foreign country and the sale or granting of them to another foreign country”
MerchantingCSO Treatment
Impact of Globalisation on services» Inclusion of transactions in services
» Potential for statistical distortion arising from large transactions in goods and services sourced and delivered abroad
» Outsourced services
» Third era of Globalisation
Merchanting Goods & Services
Country IEowner of goods
Country DEProducer Goods
Market EMEAMany customers
Country USDirect Investor
Country FRProducer services
100% 100%
Merchanting SNA Rev.1 and BPM 6
Current treatment causes assymetries in Goods account (no services)
Inconsistencies in recommended treatment and impact on inventories and balance sheets
Inconsistencies with Supply and Use tables Valuation in Cross Border transactions
Merchanting Proposals BPM6 & SNA Rev1
New proposals apply to the merchanting of goods only - no mention of merchanted services
Acquisition of goods by merchant to be recorded as negative exports of merchant’s economy
Similarly sale of goods by merchant recorded as a positive export
Difference between sales and purchases of merchanted goods is recorded under :
“Net exports of goods under merchanting”
Merchanting Proposals BPM6 & SNA Rev1
In Supply and Use Tables the difference between sales and purchases to be shown as production of a service
In general Merchanting activities to be recorded in Goods account rather than the Services account
Merchanting
CountryBexporter/seller
Country Cimporter/buyer
Country AMerchant
Movement of goods/services
Export 80Import100
Change in ownership Cash settlement
100 Cash settlement80
Goods under Merchanting
20 (-80+100)
Country A CountryB CountryCExports -80Imports 100Goods under merchanting Exports -80
100Services Exports ImportsCash Payments -80 -100 Receipts 100 80
Total 0 0 0
MerchantingImpact of New Proposals
Resolves the difficulty with asymmetric recording
Resolves the issues with inventories and holding gains
Valuation principles are consistent Recording of transactions in BOP still an
issue
MerchantingDifficulties with New
Proposals
Does not consider or address the merchanting of services» major aspect of Globalisation
» falls within the definition of merchanting
MerchantingConclusions
Merchanting of services needs serious consideration
Revised treatment for Merchanting of goods is now adequate
Separate recommendations are required for Merchanting of Services similar to BPM5 i.e. separate item in Services Account