1. © 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, 23 - 24 February 2012

2. © Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts 23 - 24 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

3. © Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts 23 - 24 February 2012 Page 3 National accounts ESA 1995 Exports for cross-border processing 2010 Exports for outward processing (FTS)12 076 Mill. Euro Exports after inward processing (FTS)35 765 Mill. Euro Sales in the processing country (BOP) 9 292 Mill. Euro Total exports 57 133 Mill. Euro Imports for cross-border processing 2010 Imports after outward processing (FTS)14 259 Mill. Euro Imports for inward processing (FTS)35 490 Mill. Euro Sales of goods after processing (BOP) 9 292 Mill. Euro Total imports59 041 Mill. Euro Cross-border processing is about 6% of total imports and total exports 2010

4. © Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts 23 - 24 February 2012 Page 4 Important product groups for processing CNProduct groupOutward Inward 28, 29Chemical productsI 30Pharmaceutical productsI, E 50 - 63Textile and textile articlesE, I 7106-7112, 72-83 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

5. © Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts 23 - 24 February 2012 Page 5 Processing by product groups (1) Outward processing under customs control 2010 (FTS) Exports for processing 3379 Mill. Euro CN 50 – 63 367 Mill. Euro 12% CN 84, 85 1387 Mill. Euro 41% CN 87 932 Mill. Euro28% Imports after processing 4361 Mill. Euro CN 50 – 63 689 Mill. Euro 16% CN 84, 85 359 Mill. Euro 8% CN 87 3057 Mill. Euro70%

6. © Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts 23 - 24 February 2012 Page 6 Processing by product groups (2) Outward processing for free market circulation2010 (FTS) Exports for processing 8697 Mill. Euro CN 50 – 63 1294 Mill. Euro 15% CN 7106 – 7112, 72 – 832961 Mill. Euro34% CN 84, 85 2245 Mill. Euro 26% CN 87 557 Mill. Euro 6% Imports after processing 9898 Mill. Euro CN 50 – 63 2163 Mill. Euro 22% CN 7106 7112, 72 – 831718 Mill. Euro 17% CN 84, 85 3143 Mill. Euro 31% CN 87 749 Mill. Euro 8%

7. © Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts 23 - 24 February 2012 Page 7 Processing by product groups (3) Inward processing under customs control 2010 (FTS) Imports for processing 1 869 Mill. Euro CN 84, 85 696 Mill. Euro 37% CN 87 224 Mill. Euro 12% Exports after processing 3 423 Mill. Euro CN 87 1 295 Mill. Euro 38%

8. © Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts 23 - 24 February 2012 Page 8 Processing by product groups (4) Inward processing for free market circulation 2010 (FTS) Imports for processing 33 621 Mill. Euro CN 28, 29 5 269 Mill. Euro 16% CN 30 10 350 Mill. Euro 31% CN 88 14 588 Mill. Euro43% Exports after processing 32342 Mill. Euro CN 28, 29 900 Mill. Euro 3% CN 30 15 515 Mill. Euro 48% CN 88 10 521 Mill. Euro33%

9. © Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts 23 - 24 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) + 700 (AE2) + 300 (BE3) = 1800 Euro Exports/Imports after processing for P1: 1800 Euro * ¾ = 1350 Euro

10. © Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts 23 - 24 February 2012 Page 10 ESA 1995 – Country A Product group Intermediate ConsumptionFinal uses Total uses/ supply OutputImports AE1AE2TotalC+ GCFdiffExportsTotal P11800 1500505002050385020001850 P2700 P3 Total18000 15005012002750455027001850 GVA200700900 Output20007002700 ESA 1995 – Country B Imports country A = Export country B = 1350 + 450 + 50 = 1850 Intermediate consumption AE1 = 700 + 300 + 800 = 1800 Product group Intermediate ConsumptionFinal uses Total uses/ supply OutputImports AE1AE3TotalC+ GCFinv + diffExportsTotal P1500-105018501300 800500 P2700 P3300 Total000500-5018502300 11001200 GVA 8003001100 Output 8003001100

11. © Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts 23 - 24 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 = 700 + 1100 = 1800 Product group Intermediate ConsumptionFinal uses Total uses/ supply OutputImports AE1AE2TotalC+ GCFdiffExportsTotal P11100 1500 5002000310020001100 P2700 P3 Total18000 1500 5002000380027001100 GVA200700900 Output20007002700 Product group Intermediate ConsumptionFinal uses Total uses/ supply OutputImports AE1AE3TotalC+ GCFinv + diffExportsTotal P1 5008001300 800500 P2 P3300 Total000500 11001600 1100500 GVA8003001100 Output8003001100

12. © Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts 23 - 24 February 2012 Page 12 Example for cross-boarder processing (2) ESA 2010ESA 1995DifferenceSource Exports5001200 Exports for outward processing700-700FTS Sales abroad after outward processing500 BOP Imports11001850-750 Imports after outward processing1350-1350FTS Sales abroad after outward processing500-500 Processing fee including purchases of goods in the processing country 1100 BOP Country A: outward processing

13. © Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts 23 - 24 February 2012 Page 13 Example for cross-boarder processing (3) ESA 2010ESA 1995DifferenceSource Imports5001200 Imports for inward processing700-700FTS Domestic purchases after inward processing500 BOP Exports11001850-750 Exports after inward processing1350-1350FTS Processing fee received800 BOP Goods sold to foreign owners and used for inward processing300 BOP Domestic purchases after inward processing500-500 Country B: inward processing

14. © Federal Statistical Office of Germany, Foreign trade in Input-Output Accounts 23 - 24 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

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