New manuals of trade in goods and trade in services: Goods for processing in Iceland Global Forum on Trade Statistics, Geneva 2-4 February 2011 Auður 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 : Goods for processing included Para. 28: Goods sent abroad or brought into a country for processing Auður Ólína Svavarsdóttir

Goods for processing, “old” manuals (cont.):  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 Auður Ólína Svavarsdóttir

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 Auður Ólína Svavarsdóttir

Goods for processing, new manuals (cont.):  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) Auður Ólína Svavarsdóttir

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 Auður Ólína Svavarsdóttir

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. Auður Ólína Svavarsdóttir

Iceland as a processing country (cont.) The value of the import and export is based on LME (London Metal Exchange) Goods only transported by air or sea Auður Ólína Svavarsdóttir

Iceland as a processing country (cont.) 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 Auður Ólína Svavarsdóttir

Iceland as a processing country (cont.) 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 Auður Ólína Svavarsdóttir

Iceland as a processing country (cont.) 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 Auður Ólína Svavarsdóttir

Iceland as a processing country (cont.) Trade in goods: Import of raw material for processing, no change of ownership, % of total import: Auður Ólína Svavarsdóttir Year% of total import of goods

Iceland as a processing country (cont.) Trade in goods: Export of finished processed goods, no change of ownership, % of total export: Auður Ólína Svavarsdóttir Year% of total export of goods

Iceland as a processing country (cont.) Trade in services: If the processing fee (manufacturing services on physical output owned by others) would have been included in trade in services => Auður Ólína Svavarsdóttir YearIncrease in exports of services

Iceland as a processing country (cont.) Auður Ólína Svavarsdóttir

Iceland as a processing country (cont.) 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  Creates publication problems for Statistics Iceland Auður Ólína Svavarsdóttir

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 Auður Ólína Svavarsdóttir

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) Auður Ólína Svavarsdóttir

The publication problem (cont.) 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? Auður Ólína Svavarsdóttir

The publication problem (cont.) 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  Users interested in comparing data by countries (goods and services) do not get the right data Auður Ólína Svavarsdóttir

The publication problem (cont.) 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 Auður Ólína Svavarsdóttir

Thank you for your attention! Auður Ólína Svavarsdóttir