1. Michael Connolly CSO, Ireland Geneva May 2009
UNECE/EUROSTAT/OECD GGNA
Agenda item 4
Issue paper 5
Merchanting
Michael Connolly
CSO, Ireland
Geneva May 2009

2. Merchanting How in practice do we identify merchanting operations?
Multinationals trading activities in or out?
New recommendations - review
Merchanting of services – some observations

3. Merchanting
the purchase of a good by a resident (of the compiling economy) from a non-resident and the subsequent resale of the good to another non-resident;
during this process the good does not enter or leave the compiling economy
Source IMF BPM5

4. Movement of goods/services
Merchanting
Movement of goods/services
CountryB
exporter/seller
Country C
importer/buyer
Change in ownership
Cash settlement
Country A
Merchant
In Country A the Merchant is
Orchestrating these transactions

5. Merchanting
How in practice do we identify merchanting operations?

6. Merchanting -Identification
Identification when a stand alone entity
Ratio analysis using Business Register
Identification when part of a MNC having other activities – Survey questions

7. Merchanting
Multinationals trading activities in or out?

8. Merchanting
Merchanting as part of international manufacturing activities by MNCs is within the scope of the statistical treatment proposed for merchanting

9. Merchanting
New recommendations - review

10. Merchanting
SNA 2008 and BPM 6

11. Merchanting Proposals BPM6 & SNA 2008
Acquisition of goods by merchant to be recorded as negative exports of merchant’s economy
Similarly sale of goods by merchant recorded as a positive export
Difference between sales and purchases of merchanted goods is recorded under :
“Net exports of goods under merchanting”

12. Merchanting Impact of New Proposals
Resolves the difficulty with asymmetric recording
Resolves the issues with inventories and holding gains
Valuation principles are consistent
Recording of transactions in BOP still an issue

13. Merchanting
Merchanting of services – some observations

14. Merchanting Summary New Proposals
Revised treatment for Merchanting of goods is now adequate
IMF proposal in par of BPM6 recognises the potential significance of merchanting of services
Unfortunately deferred any specific treatment until next revision of the manual
Discussed this matter with Rob Dippelsman of IMF. He accepts that this is an issue for some countries, however they are not ready to include the matter in the current manual. Issue surrounding transformation - if it occurs not merchanting. How can we guage this in practice. - how can transformation occur with a service.

15. Any questions?