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1993 SNA Update Information - Country comments for issue:

Issue description
Issue description in [English] | [French] | [Russian] | [Spanish]
Merchanting is defined in the Balance of Payments Manual as the purchase of a good by a resident (of the compiling economy) from a nonresident and the subsequent resale of the good to another nonresident, without the good entering the merchant’s economy. The SNA does not cover the topic. The existing definition of merchanting may capture activity that is part of the production process in an increasingly globalized and inter-connected world, which is not the intent behind the definition of merchanting activity. Therefore, there is a need for a clear and precise definition of merchanting; arising out of this there needs to be clear guidance on whether merchanting (when redefined) should be recorded on a net or a gross basis and under goods or services.
Country comments
Number of country comments for selected issue:31
  Date postedSourceComment
 11/27/2006AustraliaWe agree with the recommendations made by AEG
 10/11/2006ArmeniaThe National Statistical Service of the Republic of Armenia agrees with the most recent AEG recommendations.
 9/29/2006Bank of KoreaAlthough we think that the recommendations made by AEG are valid in theory, practical implementations should be delayed because it is difficult to collect exports and imports data which are related with merchanting, especially holding gains and losses of inventory assets, at present in Korea.
 9/15/2006United KingdomWe agree with all the recommendations made by the AEG.
 9/15/2006LatviaAfter deep discussions and expert consultations we basically support the 1993 SNA Update Issues.
 9/15/2006SwedenSweden has been uncertain how to treat goods developed and designed by a domestic company but produced by another company (daughter company or independent) in a foreign country, bought back by the domestic company and then sold on the world market without entering the domestic territory. The Swedish solution is to treat the income of these transactions as merchanting which mean that the margin between the selling price on the world market and the price paid to the producer is registered as a margin in the domestic economy. The SNA93 recommendations for these transactions have not been clear.
In the Frankfurt AEG meeting new recommendations for merchanting has been made. The activities concerned were 1) global manufacturing, 2) global wholesaling and 3) commodity dealing. AEG recommended that goods acquired by global manufacturers, wholesalers and retailers should be registered as negative exports on acquisition and positive export on disposal. The net effect will be an export of goods but appears as a production of a service in the global manufacturers/wholesalers economy.
The recommendations of AEG confirms that the transactions described above shall result in an output value in the global manufacturers/wholesalers economy despite no goods has been produced in or even entered the domestic territory. Just the change of ownership when trading the goods justifies an output value if the selling price is higher than the acquisition price. This will result in an increase of GDP in the country in which the manufacturer/wholesaler is registered. This is in line with the present Swedish treatment of the transactions in question.
Sweden support the AEG recommendation of issue 41 Merchanting.
 9/14/2006Bank of LithuaniaWe agree with the AEG recomendations.
 8/18/2006NetherlandsWe generally support the recommendations made at the Frankfurt Meeting of the AEG.
 8/18/2006USAWe agree with most of the recommendations of the AEG regarding merchanting. However, we disagree with the recommendation classifying the net exports of the entities conducting merchanting as trade in goods; we prefer that they continue to be classified as trade in services. Trade related activities, broker or agent commissions and other trade-related services, are considered services under BOP standards. The production function of a firm engaging in merchanting may simply involve a desk and computer screen, unlike the production function for a goods manufacturer or goods exporter. The proposed inclusion of merchanting in goods trade therefore appears inconsistent with other economic classifications. We also recognize that many countries will encounter considerable difficulty in measuring merchanting flows in practice.
 8/2/2006European Central BankThe ECB generally supports the recommendations made by the AEG.
 8/1/2006Hong Kong, ChinaWe agree to the adoption of the change in ownership principle and support the proposed treatment of recording merchanting activities in net exports of goods. This approach is more practical for implementation because it does not require separate recording of the sales and purchases of merchanting-related goods in exports and imports of goods respectively.
Nevertheless, we note that this recommendation, together with that on goods sent abroad for processing, will result in a greater divergence between (a) trade in goods in the GDP and BoP statistics which are based on the change in ownership principle and (b) international merchandise trade statistics which are generally based on Customs records.
We suggest that the issues of (a) harmonization of the two sets of external trade statistics, including the differences in interpretation and application and (b) implication on international trade negotiations to be resolved among international statistical organizations first before a final decision on the change to the SNA is to be made.
Furthermore, it would be useful for clarification to be made as whether or not the recommendation also requires the breakdowns of net exports of goods related to merchanting activities into (a) global manufacturing; (b) global wholesaling/retailing; and (c) commodity dealing.
 8/1/2006National Bank/ National Bureau for Statistics MoldovaNational Bank and National Bureau for Statistics of Moldova agree with the recommendations made at the latest meeting of the AEG.
 8/1/2006Reserve Bank of South AfricaWe carefully worked through all the issues and would like to give our general support to the recommendations made by the AEG.
 8/1/2006Central Bank of ChileNos parece bien clasificar la compraventa en la categoría bienes y sin hacer distinción entre el sector manufacturero mundial, el comercio al por mayor y menor y el corretaje de mercancías. Sugerimos que se registre en una categoría especial en bienes (bienes en compraventa) y en términos brutos. Aceptamos que la adquisición del bien se registre como una exportación negativa en lugar de como una importación, clasificándose como bienes en compraventa, y la enajenación como una exportación de bienes en compraventa, lo cual es compatible con el principio de cambio de propiedad, evitando un tratamiento excepcional a esta regla. Además, no existirían inconsistencias con los datos de inventario y balance general del comerciante y productor.
El registro de bienes a nivel mundial sería simétrico y no se producirían exportaciones de servicios negativas. Idealmente nos hubiera gustado el tratamiento expuesto por Hidetoshi Takeda en el Issues Paper for the July 2005 AEG Meeting (caso Número 41). Además, no nos queda claro el tratamiento cuando este tipo de transacciones arroja pérdidas, ni si el registro de las exportaciones negativas es equivalente a un registro en términos brutos o netos. Ello quedaría claro si se desarrollara un ejemplo, incluyendo el caso de las cuentas nacionales. De la misma manera, nos gustaría conocer los argumentos del por qué registrar una importación como una exportación negativa.
 7/31/2006IsraelAs expressed by us in various papers, we disagree with the term “merchanting” for global manufacturing. Global manufacturing is not a minor phenomenon, and deserves a separate category. We are also in favour of the gross recording of flows of goods in cases of global manufacturing. Gross recording ensures consistency in recording between countries, and is also important for input-output analysis.
 7/31/2006Macao SARStatistics and Census Service of Macao SAR agrees to the AEG recommendations and has no further comments.
 7/31/2006Bosnia and HerzegovinaWe agree with AEG recommendations on the update of the 1993 SNA and do not have any further comments.
 7/31/2006Central Bank of NicaraguaActualmente, en las estadísticas de balanza de pagos de Nicaragua no se registra el servicio de comercialización, debido a la falta de información de las transacciones que la comercialización de mercancías implica.
Asumiendo las recomendaciones del BPM5 y del SCN93, sobre el registro de este tipo de transacción del comercio mundial (manufacturas mundiales de mercancías, ventas al por mayor/menor, y arbitraje de mercancías) deben de prevalecer el status quo de las mismas, es decir, registrar el valor neto de la transacción en el comercio de servicios, considerando que si se registran las importaciones en datos brutos como bienes, distorsionará el análisis económico que se puede derivar de la balanza de pagos.
Por otro lado, sería necesario asegurar una consistencia en el intercambio de los datos entre los países, sino las asimetrías bilaterales podrían aumentar. Por tanto, el cambio metodológico implicaría un costo significativo en la adopción simultánea de una nueva metodología para todos los países.
 7/28/2006VietnamWe agree with AEG that all the types of merchanting (global manufacturing, global wholesaling/retailing, and commodity dealing that it setted by trade in commodities) should be recorded:
- The acquisition of goods is recorded as import by the global manufacture, global wholesaler, retailer research organizations commodity dealer. The subsequent resale of goods is recorded as exports by the merchant. The difference between the two is shown as net exports of goods by the merchant. The merchant’s output is recorded as a wholesale/retail service within the national accounts, exclusive of holding gains/losses while the goods as held by the merchant.
 7/28/2006National Bank of SlovakiaConcerning the results of the most recent AEG meeting, we fully support the conclusions and recommendations made by the AEG.
 7/28/2006LithuaniaIn general we support the recommendations.
 7/28/2006Bank of PortugalBanco de Portugal would like to express general support for the recommendations made in the Frankfurt meeting of the Advisory Expert Group on National Accounts (AEG).
 7/28/2006Bank of PolandPlease find our general support for the AEG recommendations made during its recent meeting in Frankfurt.
 7/27/2006Bank of Sierra LeoneWe agree with the recommendations made by the AEG.
 7/25/2006Bank of ItalyWe broadly support the conclusions.
 7/24/2006Switzerland m4Switzerland41;
 7/24/2006National Bank of the Republic of AzerbaijanWe have analyzed the “Comment on the recommendations of the most recent Advisory Expert Group on National Accounts (AEG) meeting (January 30 – February 8, 2006) in Frankfurt” within the scope of our responsibilities and I am pleased to inform you that we are in agreement with the AEG recommendations.
 12/13/2005CanadaMerchanting should be addressed in SNA93 rev1 as it is an issue that is increasingly important in a globalized international context. Canada will participate in the discussion of the forth coming issue paper.
 12/2/2005Hong Kong, China issue41hk;
 7/6/2005SwedenThe problem in short is that a margin is charged in a transaction very much like merchanting but the margin is only to a small extent charged to pay expenses the multi national enterprise (MNE) have had for the trade service. Instead it is charged to pay other cost like R&D. So, despite the transactions has similarities with "traditional" merchanting they are more complex and related to MNE:s activities and trade outside their territory of residence. Until now we have treated this as a special case of merchanting but we feel not comfortable with this and we think other have or will be facing the same femonenon.
Please read the attached note ( 3 pages) which we hope will explain more in detail what it is all about.
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