Pierre TEILLET Coordinateur du projet ESSnet Profilage des Groupes Multinationaux « grands et complexes »: un projet européen: objet, échéancier, expérience des partenaires Paris I - 23 mars 2010

Page 2 Insee 23 mars 2010 ESSnet on « profiling large and complex MNEs » › the context * slides 3 to 8 › current state of operationsslides 9 to 10 › about definitions of enterprises slides 11 to 13 › about operational optionsslide 14 to 16 › examplesslide 17 › next workslide 18 As presented at the 6-7 October 2009 Luxemburg Seminar › Suivi de “expériences des autres pays” 19

Page 3 Insee 23 mars 2010 ESSnet on « profiling large and complex MNEs » the context * › part of the MEETS programme (M odernisation of European Enterprise and Trade Statistics) › to achieve a streamlined framework of business-related statistics › as a part of the system of the EGR (Euro Groups Register) › to achieve coordinated and meaningful statistical unit structures for enterprise groups › (with maximum use of existing knowledge (EU and non EU)) * As presented at the 6-7 October 2009 Luxemburg Seminar

Page 4 Insee 23 mars 2010 ESSnet on « profiling large and complex MNEs » the general approach * › objectives & results structured into 3 steps: – : a positioning paper on feasibility of profiling; an input on statistical units for an eventual change of EU regulation – : methodology, tools, guidelines … –2013 & on: full implementation of profiling inside EU › throughout the project: testing, iterations and early results * As presented at the 6-7 October 2009 Luxemburg Seminar

Page 5 Insee 23 mars 2010 ESSnet on « profiling large and complex MNEs » the work programme * › ESSnet, a new way for developing European Statistics: –a partnership of NSIs –cooperating to develop a common methodology –willing to disseminate the results to the whole ESS –with the strong support of Eurostat › The « profiling » partnership: –7 NSIs : CBS –NL, DESTATIS –DE, ISTAT –IT, ONS –GB, SF –FI, OFS –CH, INSEE –FR coordinator * As presented at the 6-7 October 2009 Luxemburg Seminar

Page 6 Insee 23 mars 2010 ESSnet on « profiling large and complex MNEs » the actions planned under the partnership * › WP A. To define the feasibility and the scope of ‘profiling’ large and complex MNEs. › WP B. To develop a common conceptual framework, methodology, rules and standards for profiling › WP C. To develop processes / workflows, tools,operational guidelines and quality control of profiling, organisational and financial models › WP D. To test and implement 'profiling' › WP E. To develop a model for sharing of 'profiles' (including legal framework) › WP + To disseminate and train › WP M To manage the ESSnet WP = working package; managed by a leading partner (LP), 1 to 3 working partners (WP), all others being reviewing partners (RP) * As presented at the 6-7 October 2009 Luxemburg Seminar

Page 7 Insee 23 mars 2010 ESSnet on « profiling large and complex MNEs the partnership * * As presented at the 6-7 October 2009 Luxemburg Seminar

Page 8 Insee 23 mars 2010 ESSnet on « profiling large and complex MNEs general organisation * * As presented at the 6-7 October 2009 Luxemburg Seminar

Page 9 Insee 23 mars 2010 ESSnet on « profiling large and complex MNEs current state of operations (1) › Framework partnership agreement: signed in October 2009 › Specific Grant Agreement: signed in December 2009 › Kick-off meeting, 2 all-partners coordination meetings › 2 Workshops: –London Jan on feasibility - the “why” and the “who” with the stress on stakeholder views –Amsterdam Feb on Statistical Units › An organised cooperation between Work package leaders with trilateral meetings.

Page 10 Insee 23 mars 2010 ESSnet on « profiling large and complex MNEs current state of operations (2) › Consultation with stakeholders is ongoing › When and if trade-off will be necessary, setting priorities among their wishes could become unavoidable › Current list of main stakeholders : –National Accounts –Balance of Payments –FATS and FDI –SBS

Page 11 Insee 23 mars 2010 ESSnet on « profiling large and complex MNEs » definitions of « enterprise » In the present EU regulation: Enterprise, defined as the smallest combination of legal units - that is an organisational unit - producing goods and services (for the market) - … with a certain degree of autonomy in decision making - especially for the allocation of its current resources is used at national level, without international comparability: - the sum of the parts usually differs from the total - the required level is not specified (national, European or global?) - the standards for data collection are not consistent either conceptually or in practice so that the ultimate question will be one of « global profiling » versus profiling relative to any kind of territory

Page 12 Insee 23 mars 2010 ESSnet on « profiling large and complex MNEs » definitions of « enterprise » I ssues coming from London Workshop Probably necessary to choose between: –present definition of enterprise (easy to use with legal administrative or fiscal data, but not consistent with management structure) –a new one (at least partly) based on group operational segments or divisions (GODs) (found in Annual Reports according to IFRS) GODs definition, usually crosses national boundaries, thus needs choice : –enterprises crossing national boundaries –GODs split into enterprises within national boundaries –with a classification dilemma (simplest example next slide) GODs definition not directly related to legal units: –(some) legal units may be split into more than one enterprise –need to find a way to relate the enterprise to the institutional unit –need (eventually) to create “rest of world” units for outside EU No role in the EU for the local unit

Page 13 Insee 23 mars 2010 ESSnet on « profiling large and complex MNEs » definitions of « enterprise » The territorial classification dilemma: What is › global classification? › national classification? › when France and Germany › distribute GB output France (Distribution) GB (Manufacturing) Germany (Distribution)

Page 14 Insee 23 mars 2010 ESSnet on « profiling large and complex MNEs » five types of operational options (1): ** › 1 Sharing a model: –a “model” of statistical units is essential for successful profiling –all countries need to use the same standards (for profiling both MNEs and large domestic groups) –we recognise that new SNA/ ESA manuals focus on the legal units › 2 Dealing with complexity: –we cannot deal with all cases (initially or indeed in the future) –we need a mechanism to develop rules based on new cases (within the BRWG or the EGR Steering Group?) rather than a complete set of new rules –new rules and mechanism must include treatment of holdings, SPEs, off-shoring, family closed companies, family groups, accountancy firms and other partnerships, etc ** suggested by London and Amsterdam Workshops

Page 15 Insee 23 mars 2010 ESSnet on « profiling large and complex MNEs » five types of operational options (2): › 3 Using, first, top-down profiling, then complete with bottom-up information: –delineating the global enterprise group by creating a cluster of all legal units belonging to the group –investigating the operational structure (as independently as possible from “legal” or administrative structure) –identifying all market-oriented entities (the future enterprises) and allocating all other entities to these –link (at least try to ) all legal units to enterprises (recognising that relationships can be: 1 to1; several to 1; many to many) › Which is different from the present definition (clearly bottom-up): –only way to deal with groups with hundreds of affiliates, –avoiding time lag and quality problems of administrative data, –improving the cost /efficiency ratio But leading to the following questions

Page 16 Insee 23 mars 2010 ESSnet on « profiling large and complex MNEs » five types of operational options (3): › 4 Using (largely) the IFRS, we need to study their pros and cons: –Pros: –Most widespread “administrative” “ EU” standards –Good standardisation of elementary flows and stocks –Compulsory for stock-traded and bond-traded groups –Include “operational segments” (with turn-over, operational results and employment figures) –Cons: –Consolidated data (no national figure if intra-group flows) –No standardised publication tables –Uncertain stability for the operational segments › 5 to restore consistency between EU and national statistics, assigning dual (plural) classifications to statistical units –Group-consistent classification –Own-activity classification (solves ancillary activities problem and also commercial but not trade activities problems)

Page 17 Insee 23 mars 2010 ESSnet on « profiling large and complex MNEs the first « examples » studied › testing, iterations and early results are objectives throughout the project › but restricted to “examples” until now › first “cases” studied in common: ** –4 groups within the motorcar industry (to check their similarities and differences) –A large integrated European group –Several differentiated MNEs –Several MNEs with so-called SPEs seen both from the country of origin and from the country of SPEs

Page 18 Insee 23 mars 2010 ESSnet on « profiling large and complex MNEs the future work › Next Workshop in Paris in June, main discussion on: –Options for the profiling –Draft report on statistical units › Development of current “examples” and new ones (choosing MNEs but not only the very complex ones) › Next coordination meeting in London (14-15 April) › New “state of the art” presentation at Q2010 in Helsinki

Page 19 Insee 23 mars 2010 ESSnet on « profiling large and complex MNEs experience des autres pays › 20 ans de profilage aux Pays-Bas & en Grande-Bretagne –Objectif GB: ‐ Lié à absence de fichier central d’UL ou d’Entreprises ‐ => nécessité de constituer ce fichier statistique ‐ Avec structures juridiques très complexes depuis longtemps –Objectif NL: ‐ Structure économique très concentrée ‐ Données disponibles consolidées ‐ Dissociation structure légale / structure managériale › Expériences au Canada, Australie, NouvelleZélande … › “Seeing the whole elephant” suivi de “Project MNEs”