© Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts Goods sent abroad for Processing in German National Accounts Liane Ritter Federal Statistical Office, Germany Task Force: Goods sent abroad for processing Luxemburg, February 2012

© Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts February 2012 Page 2 Content Data about processing from foreign trade statistics currently used in German national accounts Processing in supply and use tables - an example - Conclusion

© Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts February 2012 Page 3 National accounts ESA 1995 Exports for cross-border processing 2010 Exports for outward processing (FTS) Mill. Euro Exports after inward processing (FTS) Mill. Euro Sales in the processing country (BOP) Mill. Euro Total exports Mill. Euro Imports for cross-border processing 2010 Imports after outward processing (FTS) Mill. Euro Imports for inward processing (FTS) Mill. Euro Sales of goods after processing (BOP) Mill. Euro Total imports Mill. Euro Cross-border processing is about 6% of total imports and total exports 2010

© Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts February 2012 Page 4 Important product groups for processing CNProduct groupOutward Inward 28, 29Chemical productsI 30Pharmaceutical productsI, E Textile and textile articlesE, I , Precious metals and metals clad with precious metals; base metals and articles of base metals E, I 84,85Machinery and mechanical appliance, electrical equipment; parts thereof E, I 87Vehicles other than railway or tramway rolling stock, and parts and accessories thereof (E) I(E) 88Aircraft, spacecraft, and parts of thereofI, E

© Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts February 2012 Page 5 Processing by product groups (1) Outward processing under customs control 2010 (FTS) Exports for processing 3379 Mill. Euro CN 50 – Mill. Euro 12% CN 84, Mill. Euro 41% CN Mill. Euro28% Imports after processing 4361 Mill. Euro CN 50 – Mill. Euro 16% CN 84, Mill. Euro 8% CN Mill. Euro70%

© Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts February 2012 Page 6 Processing by product groups (2) Outward processing for free market circulation2010 (FTS) Exports for processing 8697 Mill. Euro CN 50 – Mill. Euro 15% CN 7106 – 7112, 72 – Mill. Euro34% CN 84, Mill. Euro 26% CN Mill. Euro 6% Imports after processing 9898 Mill. Euro CN 50 – Mill. Euro 22% CN , 72 – Mill. Euro 17% CN 84, Mill. Euro 31% CN Mill. Euro 8%

© Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts February 2012 Page 7 Processing by product groups (3) Inward processing under customs control 2010 (FTS) Imports for processing Mill. Euro CN 84, Mill. Euro 37% CN Mill. Euro 12% Exports after processing Mill. Euro CN Mill. Euro 38%

© Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts February 2012 Page 8 Processing by product groups (4) Inward processing for free market circulation 2010 (FTS) Imports for processing Mill. Euro CN 28, Mill. Euro 16% CN Mill. Euro 31% CN Mill. Euro43% Exports after processing Mill. Euro CN 28, Mill. Euro 3% CN Mill. Euro 48% CN Mill. Euro33%

© Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts February 2012 Page 9 Example for cross-boarder processing (1) Countries Country A: outward processing Country B: inward processing Enterprises AE1 produces products of P1 in country B by outward processing AE1 sells P1 for 2000 Euro. ¾ in country A (1500 Euro) and ¼ in country B (500 Euro) AE2 sells product P2 (700 Euro) to AE1 for processing in country B BE1 produces P1 for AE1 by inward processing and receives a processing fee of 800 Euro from AE1 BE3 sells product P3 (300 Euro) to AE1 for processing in counrtry B Aggregates Intermediate consumption of AE1: 800 (BE1) (AE2) (BE3) = 1800 Euro Exports/Imports after processing for P1: 1800 Euro * ¾ = 1350 Euro

© Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts February 2012 Page 10 ESA 1995 – Country A Product group Intermediate ConsumptionFinal uses Total uses/ supply OutputImports AE1AE2TotalC+ GCFdiffExportsTotal P P2700 P3 Total GVA Output ESA 1995 – Country B Imports country A = Export country B = = 1850 Intermediate consumption AE1 = = 1800 Product group Intermediate ConsumptionFinal uses Total uses/ supply OutputImports AE1AE3TotalC+ GCFinv + diffExportsTotal P P2700 P3300 Total GVA Output

© Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts February 2012 Page 11 ESA 2010 – Country A ESA 2010 – Country B Imports country A = Processing fee including goods bought abroad = 1100 Intermediate consumption AE1 = = 1800 Product group Intermediate ConsumptionFinal uses Total uses/ supply OutputImports AE1AE2TotalC+ GCFdiffExportsTotal P P2700 P3 Total GVA Output Product group Intermediate ConsumptionFinal uses Total uses/ supply OutputImports AE1AE3TotalC+ GCFinv + diffExportsTotal P P2 P3300 Total GVA Output

© Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts February 2012 Page 12 Example for cross-boarder processing (2) ESA 2010ESA 1995DifferenceSource Exports Exports for outward processing FTS Sales abroad after outward processing500 BOP Imports Imports after outward processing FTS Sales abroad after outward processing Processing fee including purchases of goods in the processing country 1100 BOP Country A: outward processing

© Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts February 2012 Page 13 Example for cross-boarder processing (3) ESA 2010ESA 1995DifferenceSource Imports Imports for inward processing FTS Domestic purchases after inward processing500 BOP Exports Exports after inward processing FTS Processing fee received800 BOP Goods sold to foreign owners and used for inward processing300 BOP Domestic purchases after inward processing Country B: inward processing

© Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts February 2012 Page 14 Conclusion In Germany only few product groups are affected by inward or outward processing Changes due to ESA2010 Exports and imports for/after processing have to be excluded from foreign trade Processing fees paid and received has to be included Sales and purchases of processed goods in the processing country have to be included only once Improvements for German SUT Better input structure for the outward processor No regrouping of products for the inward processing country necessary No statistical differences in connection with value added of the outward processor occurs

© Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts Thank you for your attention!