session iia: selected measurement issues: some current account issues papers by: hong kong sar (hk);...
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Session IIa: Selected Measurement Issues: Some
Current Account Issues Papers by:
Hong Kong SAR (HK); Hungary (HU); EuroStat (EU)
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Structure of the Discussion
• Due to globalization outsourcing across borders has increased:
• It includes – engaging in joint production, with and without crossing borders: global manufacturing, merchanting (HK,and HU) remittances (EU).
• The papers cover implementing problems, suggestions and plans for implementation
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General
• Globalization also Leads to the Following:• Complicated Movements of Commodities and
Services which include:• Involvement of additional agents (third parties)• Movements without Crossing Borders• Movements without Really Moving (accounting
movements)• Involvement of Several Currencies and
Accounting Methods• Globalization - An Increase in volume and
Importance
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HK Paper
• Topic: The changed treatment of goods for processing and merchanting in SNA, rev. 1 and BPM6
• The revisions discussed:
• Goods for Processing
• Merchanting
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Goods for Processing :
• Before: Goods were reported – gross – and as goods - in both directions
• After: Net Difference is recorded as services
• Advantages:• Trade data in commodities are not
“inflated”. • No discrepancy between payments and
value of goods crossing the border
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Problems
• Goods are crossing the border
• Only value added is reflected in the data so that production processes are difficult to analyze
• Hard to find the data in custom’s records
• Production processes difficult to analyze
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Merchanting
• Definition: Purchase and sale of goods by a resident, from and to a non-resident, without the goods crossing the border.
• Revision:
• Before: Registered as net export of services
• Recommendation: registered as net exports of goods
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Advantages
• Consistency in recording between countries. (The country of final destinations registers it as goods).
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Disadvantages
• Inconsistency with the recommendation concerning goods for processing
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About a valuation of transactions with the rest of the world (HU)
• The problem: VAT residents that are not required to set up business, local unit or employ a person, but pay VAT.
• Some of the activity can be treated as Merchanting (differences between custom data and banking data)
• VAT data can be used to separate net flows of merchanting services
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Layman‘s comments
• Two issues that are raised
• The major difficulty and revisions is not in the “change of ownership” principle, but in the change in classifications between trade in commodities and services
• Possible solution: separate the reclassified items for easy reconstruction of the SNA93 accounts
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Layman’s comments
• The “special distributor” in VAT
• Hungary has actually two different (virtual) borders: the custom border and the VAT border. The “special distributor” is in the between-borders zone.
• The paper suggests methods for separating the data for net flows of merchanting services
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Layman’s comments
• An important issue: The bottom line (the deficit or surplus) does not change
• The components do change • Missing issues: Over and under invoicing• Volatility of exchange rates
• Calls for • Mirror images of trade data• Co-ordination among countries in applying the
revisions
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The work of the Luxembourg Group on Remittances (EU)
• The group was established to prepare guidelines for measuring remittances sent home by migrant workers
• Possible Sources of data: household’s surveys, International Transaction Reporting Systems, Direct Reporting by money transfer operators, indirect methods based on modeling.
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Remittances
• A practical step-by-step approach is suggested
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Layman’s comments
• The advantage of households’ surveys with respect to other methods is the ability to evaluate the effect on inequality and poverty.
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Questions
• HK and HU:
• Should be a threshold of value added to distinguish between reporting in gross (inflated) terms and net terms
• Should there be mirror reporting with major partners?
• Do the revisions inflate the GDP of Tax Heavens?
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Layman’s Questions
• (HU) Is there a VAT on Merchanting of “Special Distributors”?
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Questions to EU-papers
• Problems and Questions:
• Is there a way to distinguish between remittances transferred by residents and non-residents?
• Are there guidelines for improving coverage and reducing reporting errors in households’ surveys
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The END•The END
• The End• The end
• The end• The end• The end
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The rest is redundancies
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Sources of Information
• Goods in BoP: Export/Import Declarations
• Monthly Survey of value of “contractual re-importation”
• Annual survey of “trade in services”
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Merchanting
• Definitions: r-resident; nr-non-resident• Definition: (involve) “A Purchase of goods
by an r from nr and subsequent resale to another nr without the goods crossing the border and
• Transaction of good manufactured by nr through sub-contract processing arrangement and directly sold to nr without crossing the border.
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Issues Discussed
• Regulations: The effect of Changed Regulations (Hong-Kong)
• Unobserved Economy: Measurement of Remittances (Euro-Stat)
• Determining the Border Line – (Hungary)
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Hong-Kong SAR
• Relevance to Other Countries: On one hand – one major partner; on the Other Ratio of MT Transactions to GDP 340%
• Important Problem for Small Open Economies• Production in the Mainland. Other activities In
HK.• The Movement of Raw Materials and Products• The movement of Services (“Merchanting”) •
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The Accounting
• Definition of An International Transaction:
• SNA 93 – Crossing a border
• SNA 93 – Rev. 1 : Change of Ownership
•