1. Goods for processing abroad
Compilation in German BOP
Simon Lohner

2. Goods for processing abroad Content
Example for current compilation of „normal“ goods for processing abroad in BOP
Example for current compilation of „modified“ goods for processing abroad in BOP
Compilation of goods for processing abroad according to BPM 6
Comparism BPM 5 – BPM 6
Challenges of the compilation
8. November 2011

3. Goods for processing abroad Example 1
Country A sends goods to country B (1) for assembly. Country A purchases additional material from country B and C abroad (2). The final product is brought back to country A (3). Country A pays a fee to country B (4) for the assembly.
Country B
Country C
Country A 4 1 2 3 2
8. November 2011

4. Goods for processing abroad Current Compilation
Recording of the related movements
Step 1: Recorded under Trade in Goods – Processing abroad (data source: Intrastat/Extrastat reports – nature of transaction)
Step 2: Must not be recorded
Step 3: Recorded under Trade in Goods – Processing abroad (data source: Intrastat/Extrastat reports – nature of transaction)
Step 4: Must not be recorded
8. November 2011

5. Goods for processing abroad Example 2
Country A sends goods to country B (1) for assembly. Country A purchases additional material in country B and C (2). The final product is sold to country C (3*). Country A pays a fee to country B (4) for the assembly.
Country B
Country C
Country A 4 3* 1 2 2
8. November 2011

6. Goods for processing abroad Current Compilation
Recording of the related movements
Step 1: Recorded under Trade in Goods – Processing abroad (data source: Intrastat/Extrastat reports – nature of transaction)
Step 2: Must not be recorded
Step 3*: Rerouting of sale  in BOP the finished goods are treated as a fictitious re-import of country A (recorded under Trade in Goods – Processing abroad) followed by an export to country C (recorded under Trade in Goods – General Merchandize). The processing process is completed (data source: direct reporting BOP)
Deviation of BPM5, but accepted by Eurostat (recommendation of Task Force 2)
Step 4: Must not be recorded
8. November 2011

7. Goods for processing abroad Compilation with BPM 6
BPM 6: Strict application of the change of ownership principle
Step 1: Must not be recorded in BOP but it is part of FTS, therefore FTS has to be adjusted (data source: Intrastat/Extrastat reports – nature of transaction)
Step 2: Recorded under Trade in Goods – General Merchandise (data source: direct reporting BOP)
Step 3: Must not be recorded in BOP, but it is part of FTS, therefore FTS has to be adjusted (data source: Intrastat/Extrastat reports – nature of transaction)
Step 3*: Recorded under Trade in Goods – General Merchandise (data source: direct reporting BOP)
Step 4: Recorded under manufacturing services on physical input owned by others (data source: direct reporting BOP)
8. November 2011

8. Goods for processing abroad Comparism
Recording of the
currently
future
1) Export of goods for Processing
Trade in Goods – processing
Not recorded
2) Purchase of additional material abroad
Trade in Goods – General Merch.
3) Import of goods after processing
3*) Sale of goods after Processing abroad
Rerouting trade in
Goods – Processing
Goods – General Merch.
4) processing fee
Service
8. November 2011

9. Goods for processing abroad Challenges
Current Problems:
Sale of processed goods abroad is not treated in a methodological correct way
No direct information about the classification of goods (HS) sold abroad
Sale of goods abroad difficult to capture (especially for processing in the compiling economy!)
Future Problems:
BOP does not know who sends goods abroad  no control if everybody reports the fee to BOP
8. November 2011

10. Thank you for your attention. Any Questions?
8. November 2011