1. CARICOM TRADE IN SERVICES STATISTICS (CTIS)PROJECT June-December 2016
Regional Training Workshop
November 21 to 25, 2016 by
Lucilla Lewis, Lead Consultant

2. 1.Manufacturing Services on Physical Inputs Owned by Others.
This is becoming increasingly prevalent with globalisation and increasing trend of outsourcing
Includes:
Processing, labeling, assembly, packing etc. UNDERTAKEN BY ENTERPRISES WHICH DO NOT OWN THE GOODS, SO ONLY THE SERVICE COMPONENT EQUIVALENT TO THE FEE CHARGED FOR THE SERVICE IS INCLUDED AND NOT THE VALUE OF THE MERCHANDISE. E.g. assembly of clothing and electronic parts, oil refining and liquefaction of natural gas.

3. 2. Maintenance and Repair Services
Includes on the credit side maintenance and repair services work done by residents on goods owned by nonresidents and on the debit side work done by non-residents on goods owned by residents e.g.
Ships, aircrafts and other transport equipment.
Cleaning of transport equipment, and maintenance of computers are not included here.

4. 3. Transport
International carriage of people and objects from one place to another.
The sub classification of transport is based on mode of transport and on what is being carried, or kind of service, as follows:
Mode
Sea
Air
Space
Rail
Road
Internal waterway
Pipeline
Electricity transmission
Other
Other supporting and auxiliary transport services
Postal and courier services
Kind of service
Passenger services
Freight services
Other services (includes postal and courier)

5. Transport cont’d
Passenger services covers all services provided in the international transport of nonresidents by resident carriers and vice versa. It includes: -fares -fares that are a part of package tours -taxes levied on fares -personal effects carried and charges for excess baggage -items purchased on board -fees payable to travel agents -rental of transport equipment with crew for a limited period for carriage of passengers. NB: Cruise fares are included in travel and not included here

6. Transport cont’d Freight services
First basic principle in line with BPM6:Very important and accounts for difference between trade balance in merchandise trade statistics and trade balance in BOP:
- goods are valued f.o.b at the customs frontier of the exporting economy
all freight costs up to the customs frontier of the economy of the exporter are shown as incurred by the exporter
Freight costs beyond the customs frontier of the exporting economy are shown as incurred by the importer
Residence of freight operator will determine if there is an import or export of freight services

7. Country Practices in converting imports c. i. f to c
Country Practices in converting imports c.i.f to c. (that is estimation of sea freight and freight insurance)
Country
Method
Comments
Belize
Ratio pro rating
Ratio provided by customs
Dominica
Based on a survey conducted for the OECS countries over 15 years ago
Jamaica
Actual data
Provided by customs department
St Kitts and Nevis
St Lucia
St Vincent and the Grenadines
Trinidad and Tobago
Turns out to be less than 1% of the c.i.f value of imports

8. Country Practices in converting imports c. i. f to f. o
Country Practices in converting imports c.i.f to f.o.b (that is estimation of sea freight and freight insurance)
Country
Method
Comments
Anguilla
Ratio pro rating
Based on a survey conducted for the OECS countries over 15 years ago
Antigua and Barbuda
Bahamas
Barbados
Grenada
Guyana
Montserrat
Suriname

9. Transport cont’d
Other supporting and auxiliary transport services: refers to freight services which are not directly related to transport of goods (sea) or people (air). E.g. cargo handling, storage and warehousing, towing, pilotage, navigational aids, salvage operations, agents fees, freight forwarding, cleaning of transport equipment.??? -services that relate to more than one mode of transport that cannot be allocated to an individual mode ???

10. Transport cont’d Postal and courier services Covers
Post office services such as post box rental, sale of stamps, etc. Especially inflows and outflows for international postal agreements
pick up, transport and delivery of letters, newspapers, periodicals, other printed materials, parcels and packages

11. 4. Travel
NB: unlike the other entries in EBOPS travel is a transactor -based component. It is a range of goods and services consumed by non-residents in the economy that they visit. It covers stays of any length providing that there is no change of residence- holiday makers, seasonal workers and other business visitors, short and long-term students, patients. (visitor is less than a year)
Travel includes:
Goods and services purchased by travelers (leisure, education, health) by another party on their behalf e.g. by employer (conference, training), Govt. (business or education) development bank, household survey, insurance company and Min of Health (health), students, transportation services within the economy visited, postal, telecom and other services consumed while in the economy visited.

12. Travel cont’d Excluded are: Cost of international passenger fares
Acquisition of valuables such as jewelry and expensive art???
Consumer durables such as cars and electronic goods
Other consumer purchases for own use which are in excess of customs threshold
Acquisition of goods and services by diplomats, consular staff and military personnel in the economy in which they are posted

13. Travel cont’d Differences between MSITS and the International Recommendations for Tourism Statistics (IRTS)2008 as well as in the Tourism Satellite Account: Recommended Methodological Framework (RMF)2008
Travel in MSITS is related to tourism in International Recommendations for Tourism Statistics (IRTS) but there are differences as follows:
Travel includes acquisition of goods and services by border and seasonal workers
Travel includes acquisition by students and medical patients away from their country of residence for more than one year
ALL OF THESE ARE EXCLUDED FROM TOURISM IN IRTS 2008

14. Estimation of tourist expenditure in system of tourism statistics (STS)
Country
Estimation Method for STS
Adjustments for travel credit in the BOP
Belize
No adjustment
Dominica
Medical students included
Jamaica
No adjustments made
St Kitts and Nevis
St Lucia
St Vincent and the Grenadines
Trinidad and Tobago
Adjustment made for education related tourism

15. Estimation of tourist expenditure in system of tourism statistics
Country
Estimation Method for STS
Adjustments for BOP
Dominica
Grenada
Antigua and Barbuda
St Lucia
Suriname
Jamaica

16. 5. Construction
What should be covered? It should cover management of the construction project, renovation, building, extension of fixed assets in the form of buildings, land improvement of an engineering nature, and other construction such as roads, bridges, dams, installation and assembly work, site preparation, general and specialised construction services such as painting, plumbing and demolition

17. Construction cont’d The categories in EBOPS are:
Construction in compiling economy
Construction abroad
Construction, as in the National Accounts, is valued on a gross basis- that is it includes the cost of all inputs (goods and services) and other costs of production and the operating surplus that accrues to the owners of the construction enterprise

18. Construction cont’d
Construction in compiling economy (significant in most member states yet coverage remains weak especially on subcontracting (credit side)
(Also significant through FATS and would not be included in EBOPS).
Credits
Goods and services acquired in the compiling economy by non resident construction enterprises (excluding compensation of employees)
Debits
Total cost of construction work done for residents of the compiling economy by non resident construction enterprises
Examples: the various road and bridge construction projects

19. Construction cont’d Construction abroad Credit
Construction work by resident construction enterprises for nonresidents
Debit
Goods and services acquired from residents in the host economy by construction enterprises of the compiling economy (excluding labor income).
Examples ??

20. Construction cont’d
Data sourcing approaches in the absence of survey data
Make informed assumptions based on:
-Discussions with business associations in the construction sector
-Discussions with project officers in the public sector
-Discussions with investor licensing and regulatory agencies
-Discussions with FDIs
Encourage formation of vibrant business associations in the sector
Work through the Coalition of Services Industries and forge relationships with key players in the sector.

21. Construction cont’d
Estimation challenges using tender documents and project milestones set -Compilation issues to be considered: -total project budget is not necessarily spent in one year -Payment of construction costs , which could be a proxy, is usually made in phases not necessarily time aligned with value of work done -existence of subcontracting arrangements Possibility of double counting

22. 6. Insurance and Pension Services
Disaggregation recommended in MSITS 2010:
Direct insurance
Life
Freight
Other direct – fire, motor, health, property, fire etc,
Reinsurance
Auxiliary insurance
Pension and standardised guarantee services
Pension services
Standardised guarantee services

23. Insurance and pension funds
Transaction components are:
Service
Investment income
Transfers
Investment

24. Insurance and pension funds
Measurement of service components
For direct insurance and reinsurance the value of the service is measured by the service charge included in premiums

25. Insurance: Summary Recommendation based on MSITS 2010
For exports of nonlife insurance services the service charge is estimated from the total nonlife insurance output by multiplying the gross premium earned from non residents by the ratio of service charge to gross premiums earned for all nonlife insurance operations
MSITS recommends the same estimation formula for life, annuities and pension funds providing a stable relationship is observed to exist

26. Insurance Cont’d
6.1 Direct Insurance (estimated as service charge included in total premium) Life Insurance 6.1.1a. Gross life insurance premiums receivable(CR) and payable (DR) 6.1.1b. Gross life insurance claims receivable (CR) and payable (DR)

27. Non-Life (estimated as a service charge in total premiums) 6. 1. 2
Non-Life (estimated as a service charge in total premiums) Freight Insurance a: Gross freight insurance receivable (CR) and payable (DR) b: Gross freight insurance claims receivable (CR) and payable (DR) Other Direct Insurance a: Gross other direct insurance premiums receivable (CR) and payable (DR) b: Gross other insurance claims receivable (CR) and payable (DR)

28. Insurance Cont’d
6.2 Reinsurance (estimated as service charge included in total premiums)
For resident insurance companies:
Premiums earned from abroad less claims payable plus premium supplements
For non resident insurance companies
Premiums from residents times the service charge (calculated as the ratio of the service charge for the domestic sector to premiums for the domestic sector); or
Premiums from residents times service charge [ratio used internationally (if domestic sector is small or non-existent)]

29. Calculation/Sources of Insurance Service Charge
Ratios of large insurance companies
Ratios from the resident insurance company
Ratios based on premiums payable abroad and claims receivable from abroad over a medium to long term

30. Calculation/Sources of Insurance Service Charge
2. Non-Life Domestic Insurance Value of Service Charge:
-Gross premiums earned + premiums supplements less adjusted claims; then
-calculate this value as a percentage of premiums earned by domestic insurance sector to get the service charge rate to be used for the non-resident insurance sector

31. Calculation of Insurance Service Charge
Country Practices (To be updated) Trinidad and Tobago Net Premiums used OECS Countries Service charge used: long term relationship between claims and premiums Belize Net premium is used; Data obtained from ITRS Jamaica Service charge used: calculated as long term relationship between claims and premiums

32. 7.“Other” Financial Services
Financial services includes:
Commissions and fees associated with financial transactions
Financial advisory services
Custody services for financial assets
Financial asset management services
Merger and acquisition services
Corporate finance and venture capital services
Credit card and other credit granting services
Foreign exchange services
Regulation and administration of financial markets
Credit rating
Service charges on purchases of IMF resources
Charges associated with undrawn balances under standby or extended arrangements with the IMF
FISM

33. “Other” Financial Services
Excluded from financial services are:
Interest earned on deposits, loans, financial leases, and debt securities which are included in investment income.
Dividends
Insurance services
Nonfinancial advisory services provided by banks such as management services
Gains and losses made on purchases and sales of securities and derivatives on own account

34. “Other” Financial Services
Measurement of Financial services
Explicit charges
Application and commitment fees, late repayment fees, penalties and account charges, commissions and other explicit fees

35. “Other” Financial Services
Margins on buying and selling transactions
The difference between the reference price which is the mid price, and the dealer’s buying price at the time of purchase represents the service charge to the seller e.g. on FX, shares, bonds, notes, financial derivatives, financial instruments.
E.g. the invoiced price of a security could include a charge for brokerage service as well as a charge for the international transfer of FX
Estimation of a dealers’ average margin

36. “Other” Financial Services
Asset management costs taken out of income
Such charges can be both explicit and implicit for administrative expenses, legal and accounting expenses etc. deducted by fund managers, holding companies, trusts etc.
E.g. a hedge fund may distribute a proportion of the net income from the fund to the entity that manages the fund

37. “Other” Financial Services
-FISIM (Financial Intermediation Services Indirectly Measured)
Income margins accruing to financial institutions resulting from the difference between interest paid on deposits and interest earned on loans
The reference rate is recommended - the going interbank lending rate or Central Bank lending rate can be used
COLLABORATION WITH NATIONAL ACCOUNTS COMPILERS RECOMMENDED and BOJ

38. Calculation of FISIM:
R=reference rate which should be from NA compilation
Rl=rate on loans; rd=rate on non resident deposits
FISIM on loans
(rl-R)Outstanding non-resident loans
FISIM on deposits
(R-rd)Total non-resident deposits
Explicitly charged FISIM ??

39. 8. Charges for use of Intellectual Property
MSITS 2010 disaggregates this as follows: -franchise and trademark licensing fees: which covers payments and charges for the use of trademarks and franchises (Lawyers, Company Registry, survey) -licences for the use of outcomes of research and development: which covers fees and charges for the use of proprietary rights arising from research and development

40. Charges for Use of Intellectual Property
Licences to produce and or distribute computer software: which covers charges for the authorised reproduction and or distribution through licensing agreement of produced software originals ???
Licences to reproduce and or distribute audiovisual and related products which is broken down into:

41. Charges for use of Intellectual Property
Licences to reproduce and or distribute audiovisual products
Fees and charges for the authorised reproduction and or distribution, through licencing agreements of produced audiovisual originals or prototypes (e.g. cinematographic works, sound recordings)
Fees for rights related to the reproduction and or distribution of recordings of live performances and radio, television, cable and satellite broadcast
Retransmission rights for sports events
Licences to reproduce and or distribute other products
Fees and charges for the authorised reproduction and or distribution through licensing agreements of original works of authors (translation rights) painters and sculptors excluding those relating to products of an audiovisual nature ???

42. 9. Telecommunications, Computer and Information Services
Telecommunication services covers the broadcast or transmission of sound, images, data, or other information by telephone, telex, telegram, radio and television satellite, electronic mail, fascimile including business network services, teleconferences and support services, mobile telecommunication services, internet backbone and online access services

43. Telecommunications, Computer and Information Services
Computer services which covers software and hardware related services and data processing services
Information services which covers
News agency services which is the provision of news, photographs and feature articles to the media
Other information services which includes database services such as database conception, database storage and dissemination, direct non bulk subscriptions to newspapers and periodicals, library and archive services ???

44. 10. Other Business Services
10.1 Research and development services
Work undertaken on systematic basis to increase knowledge stock:
Provision of customised and noncustomised R&D services
This covers the provision of research and development services that are made to order and development of noncustomised research and development
Sale of property rights arising from R&D
sale of patents (Protects innovation)
sale of copyrights arising from R&D (protects authors)
sale of industrial processes and designs including trade secrets
Other
Other: Includes testing and other product/process development activities

45. Other Business Services cont’d
10.2 Professional and Management Consulting Services Legal, accounting, management consulting and public relations Legal services (Registry, ITRS, survey) Accounting, auditing, bookkeeping, management consulting and public relations services ( ITRS, survey) Business and management consultancy and public relations services (ITRS, Survey) Advertising, market research and public opinion polling (ITRS, survey)

46. Other Business Services cont’d
10.3 Technical trade related and other business services
Architectural, engineering, and other technical services
Architectural services (VAT unit, sector profiling, survey)
Engineering services (VAT Unit sector profiling, survey)
Scientific and other technical services: includes surveying, cartography, product testing and certification and technical inspection services. (Find out from agro- producers/CARIRI?)

47. Other Business Services cont’d
Waste treatment and depollution, agricultural and mining services
Waste treatment and depollution: includes cleaning up of oil spills; restoration of mining sites, decontamination and sanitation services
Services incidental to agriculture, forestry and fishing: includes provision of agric machinery with crew, harvesting, treatment of crops, pest control, vet services animal care and breeding services, logging
Services incidental to mining, and oil and gas extraction: Includes mining services provided at oil and gas fields, including drilling, oil and gas well casing, mineral exploration, mining engineering and geological surveying
Operational leasing services
Other trade related services
other business services; Includes distribution services for water, steam, gas and petroleum products, electricity distribution (electricity transmission is included in transport), security and investigative services, real estate, translation and interpretation services, placement of personnel

48. 11. Personal, Cultural and Recreational Services
Comprises 2 subcomponents:
Audiovisual and related services which covers:
services associated with music, movies, radio, television and performing arts. That is production of motion pictures, radio and TV programmes, musical recordings, rental of audiovisual and related products and charges for access to encryped TV channels such as cable and satellite TV services
Artistic related services- services provided by performing artists (actors, musicians, dancers), authors, composers, sculptors, independent models, set, costume and lighting designers, and promotion services for the performing arts and live entertainment (ITRS)
Other personal, cultural and recreational services

49. Personal, Cultural and Recreational Services
Education services: covers delivery of education services either via TV, internet, or via satellite, or directly through movement of natural persons, in host economies (ITRS)
Health services: covers health services provided remotely through telemedicine or tele-diagnosis by hospitals, doctors, nurses, paramedicals, lab technicians, or directly through movement of natural persons in host country (ITRS)

50. Personal, Cultural and Recreational Services
Heritage and recreational services includes (ITRS)
services associated with museums and other cultural, sporting (Olympics Association), gambling and recreational activities (except those acquired by persons outside their country of residence which goes to travel)
An estimate of the service charge for gambling and betting services (similar to estimation of the service charge for insurance services)
Other personal services (ITRS)
Social services
Membership dues for business associations etc.

51. 12. Government services MSITS disaggregates this as follows:
Embassies and consulates
Military units and agencies
Other

52. THE OFFSHORE SECTOR CONTACTS FOR BUSINESS REGISTER
Regulators
Registry of Companies
MSITS RECOMMENDED APPROACH: TREATED AS FATS
CARICOM APPROACH!!??

53. END