new manuals of trade in goods and trade in services: goods for processing in iceland global forum on...

New manuals of trade in goods and trade in services:

Goods for processing in Iceland

Global Forum on Trade Statistics, Geneva

2-4 February 2011Auður Ólína Svavarsdóttir

Outline

• Changes of treatment of goods for processing in new manuals• with regards to the processing country

• Icelandic example

• How to publish?

Auður Ólína Svavarsdóttir

Goods for processing, “old” manuals:

• MSITS 2002: Goods for processing not included

• IMTS, rev. 2 1998: Goods for processing included• Para. 28: Goods sent abroad or brought into a country for

processing


Goods for processing, “old” manuals (cont.):

Þ Coverage of goods for processing for the processing country:

Included in trade in goods:

• Import of material to be processed

• Export of goods after processing


Goods for processing, new manuals:

• MSITS 2010: Goods for processing included where there is no change of ownership• Manufacturing services on physical inputs owned by

others

• IMTS 2010: Goods for processing included• Goods for processing with or without change of

ownership: Included at their full (gross) value


Goods for processing, new manuals (cont.):

Þ Coverage of trade of goods for processing changes for the processing country:

Over-coverage (double counting):• Trade in goods: import of material to be processed• Trade in goods: export of goods after processing• Trade in services: processing fee (no change of

ownership)


Iceland as a processing country

• Metal industry, major industry in Iceland

• Imports raw material to be processed and exports goods after processing

• Few companies and very important trade

• Main source customs declarations


Iceland as a processing country (cont.)

• Collection of information:• Weight• Value• Company id• Currency and exchange rate• Arrival/departure date • Date of customs clearance• Mode of transport• Customs tariff number• Etc., etc.



• The value of the import and export is based on LME (London Metal Exchange)

• Goods only transported by air or sea



• Importers • Obligated to identify on the customs declaration if

the good imported is for processing

• Raw material imported for manufacture is exempted from excise tax and duties (Customs regulation)

=>Incentive for the enterprises to identify goods for processing on import declaration



Two ways of trading in industry:

• Some enterprises • Buy the raw material from abroad • Sell the finished product to abroad

=> Change of ownership, only included in trade in goods



Two ways of trading in industry (cont.):

• Others• Make agreements with foreign enterprises to

process raw material into finished product • The foreign enterprises provide the raw material

and sell the good after processing

=> no change of ownership, included in trade in goods and the processing fee in trade in services



Trade in goods: Import of raw material for processing, no change of ownership, % of total import:


Year % of total import of goods

2006 2.1

2007 2.1

2008 4.2

2009 4.1


Trade in goods: Export of finished processed goods, no change of ownership, % of total export:


Year % of total export of goods

2006 10.4

2007 14.0

2008 13.7

2009 10.7


Trade in services: If the processing fee (manufacturing services on physical output owned by others) would have been included in trade in services =>


Year Increase in exports of services

2006 16.3

2007 20.9

2008 25.4

2009 14.3



2006 2007 2008 2009

0.0

100,000.0

200,000.0

300,000.0

400,000.0

500,000.0

600,000.0

Total imports of goods

Total imports of goods minus imports of goods for processing

Total exports of goods

Total exports of goods minus exports of goods after processing

Total exports of services

Total exports of ser-vices plus processing fee


• The changes between manuals of how to treat goods for processing

• Have major impact on data for goods and services for Iceland as a processing country• Recorded in goods and partly in services

Þ Creates publication problems for Statistics Iceland


The publication problem

• In Iceland• Statistics Iceland: trade in goods and trade in

services • The Central Bank of Iceland: BOP

• Statistics Iceland, not the Central Bank, publishes detailed data for trade in goods and trade in services


The publication problem (cont.)

• High interest in data for goods and services• Data on total trade• Detailed data• For example, the Ministry of Foreign Affairs• trade with individual countries (goods and

services)



• High influence of goods for processing in the Icelandic trade data=>How can we publish detailed data for trade in

goods and services according to the new manuals?



• Publish • Total trade (goods and services) according to BOP

(exclude goods for processing and goods after processing from trade in goods)

• More detailed data according to IMTS and MSITS

Þ Users interested in comparing data by countries (goods and services) do not get the right data



• Publish double series of all data of trade in goods (with and without goods for processing and goods after processing)?

=> Very confusing for the users


Thank you for your attention!


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