MIRROR EXERCISES FINLAND - RUSSIA Seminar on External Trade Statistics (ETS) 6-7 March 2006 Luxembourg

6-7 March 2006Finnish National Board of Customs2 Foundations for the co-operation Bilateral agreement between Federal Customs Service of Russia and Finnish National Board of Customs; questions on statistics one part of it First meeting in June 1997 Since then the meetings arranged annually Between the meetings statistical information exchanged quarterly

6-7 March 2006Finnish National Board of Customs3 Objectives of the RU-FI mirror exercises To clear up the discrepancies by measuring the extent of differences find out the most significant CN-headings in this respect To find out the reasons of the discrepancies methodological reasons other reasons To remove or at least minimize the discrepancies

6-7 March 2006Finnish National Board of Customs4 Extent of total discrepancy Table 1: Differences between Finnish export- and Russian import statistics, YearFinland’s exportRussia’s importImport - Export Million USD % of export , , , , , , , , ,1

6-7 March 2006Finnish National Board of Customs5 Extent of total discrepancy Table 2: Differences between Russian export - and Finnish import statistics, YearRussia’s exportFinland’s importImport - Export Million USD % of export , , , , , , , , ,3

6-7 March 2006Finnish National Board of Customs6 Exports of EU Member States to Russian Federation 2004 and 2005, Jan-Nov

6-7 March 2006Finnish National Board of Customs7 Russian imports and EU exports, negative discrepancy, year 2004

6-7 March 2006Finnish National Board of Customs8 Method to identify discrepancies Reconciliation exercise: RU-imports and FI-exports FI-imports and RU exports From aggregated CN-2 digit level to the most detailed CN-8 digit level Imports studied on the basis of country of origin country of consignment

6-7 March 2006Finnish National Board of Customs9 Perceived reasons for the discrepancies Two systems for recording the trade: the general trade system (UN principal) the special trade system (EC legislation) Triangular trade Goods recorded as traded while in transit Differences in exchange rates used Timing differences in reporting

6-7 March 2006Finnish National Board of Customs10 Perceived reasons for the discrepancies (cont.) Classification of goods in different commodity codes Reporting concessions and simplifications Confidentiality of data (CN-codes, country codes) The use of different transaction codes The concepts country of origin and country of consignment Measurement errors in quantities

6-7 March 2006Finnish National Board of Customs11 Perceived reasons for the discrepancies (cont.) CIF valuation in imports and FOB valuation in exports Fraudulent declarations: double invoice conscious use of incorrect CN-codes bypassing the customs control regarding payments money circulated through several operators

6-7 March 2006Finnish National Board of Customs12 RUSSIAN IMPORT FROM FINLAND 2004 by country of origin and consignment The country of origin – Finland million USD The country of consignment – Finland million USD The countries of consignment – EU excl. Finland 116 million USD The consignments of other countries excl. EU 17 million USD The country of consignment – Finland million USD The country of origin – Finland million USD The countries of origin – EU excl. Finland million USD The country of origin – other countries excl. EU million USD 262 million USD origin unknown Source: Federal Customs Service of Russia

6-7 March 2006Finnish National Board of Customs13 An example on fraudulent movement of goods Producer of goods Customs warehouse FINLAND (A BALTIC COUNTRY) RUSSIA Warehouse 4 5 Outlet 6 7 Black Warehouse Ware- house Outlet

6-7 March 2006Finnish National Board of Customs14 An example on fraudulent movement of goods Explanations to the previous diagram : 1.Purchase of goods (RU) 2.Producer (FI) delivers goods to customs warehouse in Finland. Forward agencies divide the delivery into several partial deliveries. 3.Goods are moved from warehouse to warehouse in Finland or in Baltic Countries and during the movements low-priced goods are added to the deliveries. 4.Part of the delivery can be even sold to the black markets in EU. 5.Deliveries are transported to Russia in lorries, passenger cars or vans. 6.In Russia the valuable goods (e.g. mobile phones) are unloaded in the black intermediate warehouses. 7.Vehicles continue with the transportations to the final destinations, where the low-priced goods are customs declared.