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F.3.  Secondary activities and compilation of a breakdown by product for sales/turnover, output and trade variables 

15.99.        As outlined above, MSITS 2010 recommends that FATS variables be classified by the activity of the affiliate according to ISIC rev.4. Details should be produced having in mind ICFA rev.1 and its more detailed breakdown for services (see above section). Using ICFA rev.1 for presentation purposes allows activities of services enterprises to be viewed within the context of the activities of all enterprises and provides a link for the presentation of services FATS data and resident/non-resident trade in services data. Within the context of the present Guide, there is an additional interest in compiling information on services produced as secondary activities of enterprises, i.e., services produced by enterprises primarily engaged in such goods producing activities as agriculture and manufacturing.[1] For example, services supplied by enterprises primarily engaged in manufacturing activities may be of particular interest in the context of the supply of manufacturing services on physical inputs owned by others. Besides providing a bridge with the EBOPS 2010 classification primarily used to classify resident/non-resident transactions, ICFA rev.1 provides a framework for displaying services produced as a secondary activity by enterprises classified as goods producers.[2] 

15.100.        In that context, and as a longer-term goal, MSITS 2010 encourages compilers to work towards disaggregating some of the variables by product, including sales (turnover), output, exports and imports, the type of information that would be of most interest for trade negotiators and analysts.  If implemented for services, this should be done using a product classification system compatible with EBOPS 2010. Product-based statistics are more likely to be free of problems of interpretation related to secondary activities and are consistent with the basis upon which GATS commitments are made and with the basis of classification used for trade between residents and non-residents. In addition such a compilation practice is important to achieve because goods-producing industries can be important suppliers of services.

15.101.        MSITS 2010 and the present Guide recognize that this may be a difficult task, in particular with respect to data collection, as it will necessarily increase substantially the reporting burden for respondents as well as the work of compilation. MSITS 2010 recognizes this and encourages compilers in a first step to at least achieve for output (or sales) a breakdown between total goods and total services for each activity. Such a solution, while providing more relevant data to users, would incur fewer burdens for respondents and compilers than establishing a more detailed breakdown by product. Although that solution would be much easier to implement, to achieve it, compilers must ensure that such a breakdown is feasible or can be derived from the data sources. Some countries have been able to produce such data because the information or estimates on sales of goods and sales of services was gathered through the data sources used to collect FATS. It is also important to note that the investment income element should be separated out from sales of services and goods.

15.102.        In structural business surveys, information is often requested on turnover with a breakdown in a number of goods and services product groups. Consequently, if inward FATS are compiled using that source, then a further breakdown of sales (or output) of services can be established or easily estimated. A similar breakdown can be achieved for the trade variables if they are included in the survey.

15.103.        As described in section E.3, for trade variables, a breakdown by product can be derived from information provided by reporting units in sources used for FATS, whether business activity surveys (only for inward), FATS or FDI surveys. However, linking information with BOP trade in goods or merchandise and services data could ensure the compilation of more detailed statistics. Section E.3 further describes the possibilities offered by such a linking exercise. Data obtained through such work could also help for the first steps in estimating a more detailed breakdown of output or turnover, in particular if enterprises are services export oriented, or if it is assumed that the pattern of services exports by product is similar to that of services sales or output in the host economy.

15.104.        It is advised that a breakdown by service product of output and/or sales or turnover be derived, as well as trade variables from data sources (e.g., breakdown in FDI or FATS surveys, or for inward FATS, structural business surveys). Given the difficulty of producing a breakdown by product, for each activity, countries are encouraged to at least compile a breakdown of output or turnover into sales of goods and sales of services (excluding investment income). For trade variables, it is considered good practice to investigate possibilities for linking FATS and resident/non-resident trade in services statistics, in order to develop a breakdown.

 

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[1] There is also interest more generally in knowing which services activities produce goods and in what proportion.

[2] Establishing a correspondence between the two bases of classification may be useful, in particular for activities that tend to be carried out only by enterprises specialized in the activity and that generally do not engage in significant secondary activities.