20.14. Recommendation to identify trade in goods for processing. IMTS 2010 (para. 1.20), recommends that goods for processing and goods resulting from such processing (“compensating products” in customs terminology), are to be included in the merchandise exports and imports of countries at their full (gross) value. It encourages countries to explicitly identify in their trade statistics (preferably by special coding) goods for processing and goods resulting from such processing where no change of ownership takes place (para. 1.21). Further, IMTS 2010 (paras. 2.19 and 8.6) recommends that information about the customs procedure applied to individual transactions (or the nature of transaction) be included in the data set for trade statistics in order to facilitate the identification of re-exports and reimports but also of other types of trade, such as goods for processing, trade between related parties, goods on consignment, etc., as far as possible.
20.15. Identifying goods for processing. Customs procedures can provide a very reliable means of identifying goods for processing. However, if countries do not have customs procedures that are specific for goods for processing or if traders do not use those procedures, as it might be more convenient not to use them, the information on goods for processing from customs recording might be incomplete and inaccurate (see also para. 20.4). Distinguishing goods for processing from goods for repair and service operations can present a further difficulty. Also, customs records would usually not indicate whether there is a change of ownership and whether the transaction takes place between related parties. Therefore, compilers are encouraged to use additional means, such as special surveys or studies or linking custom records with information about the traders, to overcome these difficulties to the extent possible.
20.16. Avoiding double-counting in the balance of payments. International merchandise trade statistics are the main source of data on trade in goods for the balance of payments and national accounts. In order to obtain the value of total goods on a balance-of-payment basis from merchandise trade statistics, BOP compilers have to undertake several adjustments, among which the following three concern goods for processing:
(a) Subtracting goods sent for or returned after processing without a change of ownership
(b) Adding goods acquired from other economies than the own for processing abroad as imports (BPM6, para. 10.65) (i.e., additional materials used in the processing of the goods);
(c) Adding goods sold abroad after processing in other economies as exports (BPM6, para. 10.66).
Only in case (a) are the transactions within the scope of international merchandise trade statistics, and they would usually be included in the customs recording. Goods under (b) and (c) never cross the border of the reporting country. Compilers of balance of payments and national accounts would require additional to capture the required information regarding the transactions indicated in (b) and (c).[7]
20.17. Implications for users. The figures for imports and exports of “Total goods” in the BPM6 Goods and Services Account are expected, at least for some countries, to be significantly different from the figures for total imports and exports published in trade statistics, probably often reflecting the role of goods for processing without change of ownership but other differences as well. Similar differences are expected for the sub-item “Re-exports”. Further, the joint presentation of detailed data on trade in goods and trade in services will require explanations of why the detailed data do not add up to a total figure for trade. The agencies responsible for the dissemination on trade in goods on an IMTS and balance of payment/national accounts basis should agree on a uniform dissemination strategy which would entail uniform labeling and the provision of a reconciliation table.
[7] For an example, see Chan Ka-lin, “Development of trade in goods and services statistics in Hong Kong” (Census and Statistics Department, China, Hong Kong Special Administrative Region), presentation at the Global Forum on Trade Statistics, Geneva, 2-4 February 2011.