Measuring Trade in Services

The Manual on Statistics of International Trade in Services (2002,2010) Guidelines and recommendations on the measurement of trade in services Balance of Payments statistics Foreign Affiliates Trade in Services statistics Movement of natural persons © WTO/OMC

Short Presentation (1/2) BOP Statistics - Short Presentation (1/2) BOP summarises transactions of an economy with the rest of the world BOP Current account Capital & financial account Goods Services Of interest for GATS purposes but... 11 components Income Transportation Current transfers Travel Communications etc. © WTO/OMC

What is an International Transaction? Change in ownership of goods Provision of services Provision of labour Provision of capital Change in ownership of financial assets Residents / non-residents INTERNATIONAL © WTO/OMC

Concept of Residence Transactors Households / individuals Enterprises Others Country’s economic territory Centre of economic interest flexible one-year rule Principal residence Geographic territory Territorial enclaves (e.g. embassies…) Significant and lasting economic activity © WTO/OMC

EBOPS Main Components Commercial services: 1. Transportation 2. Travel 3. -10. Other commercial services 3. Communications services 4. Construction services 5. Insurance services 6. Financial services 7. Computer and information services 8. Royalties and licence fees 9. Other business services 10. Personal, cultural and recreational services Government services (not in GATS) © WTO/OMC

EBOPS Extended Balance of Payments Services Classification What is it? product-based classification, consistent with 11 BPM5 services components, more detailed than BPM5 services components, includes additional memorandum items. © WTO/OMC

EBOPS Detailed Components Breakdown of main components Sea transport (passenger, freight, other) Air transport (passenger, freight, other) Other transport (passenger, freight, other) Space, Rail, Road, ... Business travel Expenditure by seasonal and border workers Other Personal travel Health-related expenditure Education-related expenditure Postal & courier Telecommunication … 1. Transport 2. Travel 3. Communications services …etc © WTO/OMC

EBOPS Memorandum Items and Alternative Aggregations Memorandum items: useful additional information: Example Expenditure on goods Expenditure on accommodation and food and beverages All other travel expenditure Travel Aggregations of services and non-services transactions Example Audiovisual transactions Services: audiovisual services; audio-visual-related royalties and license fees Non-services: acquisition/disposal of audiovisual-related patents, copyrights… © WTO/OMC

Short Presentation (2/2) BOP Statistics - Short Presentation (2/2) More detail needed than 11 BPM5 services components MSITS introduces EBOPS (breakdown of BPM5 services) Most services delivered under Mode 3 and Mode 4 are not well covered or identified However, some BOP indicators helpful: Mode 3 Foreign Direct Investment Mode 4 Compensation of employees Workers’ remittances © WTO/OMC

Correspondence between modes of supply measurement and statistical domains Inadequacies Mode 1: Cross-border supply BOP: Commercial services (excl. travel, construction) No distinction between Modes 1 and 4 Mode 2: Consumption abroad BOP: Travel Contains goods and not divided into different types of services consumed by travellers Some Mode 2 transactions also in other BOP categories Mode 3: Commercial presence FATS BOP: Construction FDI (suppl. information) Very few countries produce FATS No distinction between Modes 3-4 FDI cover not only (majority) controlled companies Mode 4: Presence of natural persons BOP: Commercial services (excl. travel) Compensation of employees, workers' remittances (suppl. info.) No distinction between Modes 1 (3 for construction) and 4 No relationship with Mode 4 but of interest for labour mobility © WTO/OMC

Balance of Payments Statistics by Trading Partner At least for... Services as a whole 11 main services components of BPM5/EBOPS Main trading partners If possible.... More detailed EBOPS level Common geographical basis for all trade in services data © WTO/OMC

FATS Statistics - Short Presentation Coverage Operations of foreign affiliates, Particular focus on services Indicators Turnover Employment Value added … Concepts & definitions Manual on Statistics of International Trade in Services © WTO/OMC

FDI and FATS statistics

The FDI Universe FDI: the direct investor makes an international investment to obtain a lasting interest in an enterprise abroad.

Firms covered in FATS Ownership criteria Types of producers Majority-owned foreign affiliates( a single foreign investor own more than 50% of their ordinary shares or voting power) Includes subsidiaries and branches Excludes associates Types of producers Affiliates producing goods, services

Economic Variables for FATS Concepts in the MSITS Sales (turnover) and/or output Employment Value added Exports and imports of goods and services Number of enterprises Basic FATS variables (minimum recommended by MSITS) Compensation of employees Taxes on income Research and development expenditures etc... Additional FATS variables © WTO/OMC

Geographical allocation Foreign-owned affiliates in the compiling country

Geographical allocation

Statistics - Temporary movement of natural persons – mode 4 Mode 4 – important for developing countries

China’s experience The Department of Trade in Services of the Ministry of Commerce is in Charge of the National Statistics of TIS 2007: The Statistics System of International Trade in Services of China( the symbol of the foundation of the Chinese statistics on trade in services ) 2010: Revision of the Statistics System of International Trade in Services

Basic Framework of the Statistics of Trade in Services Statistics Standards 1.The Manual on Statistics of International Trade in Services (MSITS) 2.The Manual of Balance of Payment (BPM 5) (IMF) 3.General Agreement on Trade in Service (WTO) 4.System of National Accounts (SNA 1993) 5.The Classification of National Economy Industry (CHINA)

Framework of Statistics System Two Main Lines the Conventinal BOP + Enterprises Direct Survey Statistics on Resident/Non-Resident Trade in Services A Subordinate Line Foreign Affiliates Statistics(FATS） Presence of Natural Persons Statistics

The Method of Data Collection Administrative Records Enterprises Survey Scientific Estimation Data Sources include: records of the Banks, Administration of Foreign Exchange, Ministry of Transport and other organizations Set up the database of statistics on Trade in Services

Data Publishment Publish the data yearly on the import and export in services and on FATS, presence of natural persons statistics

Channel of Information Release Release statistical information and analysis articles on internet through the statistical column in the website of China Trade in Services http://tradeinservices.mofcom.gov.cn