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23.2.        Physical movement and change of ownership. The compilation of trade statistics is based on the physical movement of goods across borders which is captured by customs records. Large parts of trade in ships and aircraft do not physically pass through customs, and customs often does not receive any declarations. Further, it is not necessarily obvious when a physical movement of a ship or aircraft is part of a trade transaction. Therefore, IMTS 2010 recommends in exceptional cases, such as that of trade in ships and aircraft, when the general guideline is not applicable or not sufficient, to use the criterion of change of ownership to determine whether certain goods should be recorded.[3] Change of ownership is defined in accordance with the 2008 SNA[4] and BPM6[5] as change of economic ownership. When the criteria of change of ownership is used for the recording of goods in IMTS, an export of a good should be recorded when the economic ownership changes from a resident unit to a non-resident unit and an import recorded when the change is from a non-resident to a resident unit. However, the application of these criteria requires a data source that will provide reliable information on the change of ownership of ships and aircraft. While national (or international) ship and aircraft registers are in general viewed as possible sources of such information, they might not, as is explained further in the next section, be available or provide the required information.

Box XXIII.1

Ownership, institutional unit and residence

  • Ownership. Two types of ownership can be distinguished: legal ownership and economic ownership. The legal owner of entities such as goods and services, natural resources, financial assets and liabilities is the institutional unit entitled in law and sustainable under the law to claim the benefits associated with the entities. The economic owner of such entities is the institutional unit entitled to claim the benefits associated with the use of the entity in question in the course of an economic activity by virtue of accepting the associated risks. (2008 SNA, para. 10.5). Every entity (i.e., every good such as an aircraft) has both a legal owner and an economic owner, though the economic owner and the legal owner of an entity (e.g., an aircraft) can be the same (ibid., para.10.6). A legal owner may contract with another unit for the latter to accept the risks and rewards of using the product in production in return for an agreed amount that has a smaller element of risk in it. Such an example is when a bank legally owns a plane but allows an airline to use it in return for an agreed sum. (ibid., paras. 2.46-2.49 and 3.21-3.29)
  • Institutional unit. An institutional unit is an economic entity that is capable, in its own right, of owning assets, incurring liabilities and engaging in economic activities and in transactions with other entities (ibid, para. 4.2).
  • Residence. The residence of each institutional unit is the economic territory with which it has the strongest connection, in other words, its centre of predominant economic interest (ibid., paras. 4.10-4.15).
  • Clarification: A resident institutional unit can be partially or entirely owned by a non-resident institutional unit and a change of ownership can take place between the parent and its affiliate resident in another country.

23.3.        Processing versus repair and services transactions (without change of ownership). Ships and aircraft can enter a country for outfitting or partial refitting, sent by a foreign owner who retains ownership. There is the practical issue of obtaining information on such transactions on both the side of the sending (exporting) country and the side of the service-providing or processing country. However, apart from the practical issue of how to capture these transactions, there is also a need to decide whether a given transactions is a repair or other service, or a processing transaction (see chapt. XX for details). If it has been determined that a ship or aircraft is sent for processing and assuming that the general guideline can be applied, an import would have to be recorded when the good enters the country and an export when the good leaves the country after processing. The recording of a goods transaction requires valuation at gross value, meaning valuation at the full transaction value of the ship or aircraft. Given the high value of some aircraft and ships, the merchandise trade statistics of countries can be strongly affected by only a few of such transactions. Therefore compilers are advised to inform users in the metadata about such transactions and their treatment.[6] Further, countries might consider cooperating with their trading partners regarding the recording of these transactions in order to achieve uniformity in recording and to improve international comparability. This is of particular importance as the sending (exporting) country might not have any information at all about such transactions, while the service-providing or processing country should be well aware of large outfitting and refitting activities taking place in its economic territory. 

23.4.        Recording of partner country. Aircraft and ships, when used in one country and then exported to another country, will always retain the same country of origin. This is the case for almost all other used goods (see chapt. XVI for details). IMTS 2010 (para. 6.26) recommends that the country of consignment be recorded for imports as second partner attribution, alongside country of origin. Compilers and users might view that the country of consignment provides more useful information on the trade of ships and aircraft (and other used goods). Therefore, it is good practice to provide this kind of partner information in addition to, and not as replacement for, the data on compiled on a country-of-origin basis (for country experience see Box XIII.2).

Box XXIII.2

Recording of trade in an aircraft: example of Canada

A company in country A buys an aircraft built inCanada, which is treated as a domestic export ofCanada. After several years of use, the original aircraft is traded in for a newer model. The original aircraft is returned toCanadafor refurbishment and subsequent sale to country B. The return of the aircraft is treated as a Canadian reimport and the subsequent sale treated as a domestic export.

 


[3] See IMTS 2010, para. 1.4. Categories of goods where the criterion of change of ownership can be applicable for the recording of international merchandise trade transactions are ships and aircraft (para. 1.29), satellites and their launchers (para. 1.33), power lines, pipelines and undersea communications cables (para 1.36) and mobile equipment that changes ownership while outside the country of residence of its original owner (para. 1.39).

[4] System of National Accounts 2008 (2008 SNA), European Commission, International Monetary Fund, Organization for Economic Co-operation and Development, United Nations, World Bank; available in PDF format at the website of the United Nations Statistics Division at http://unstats.un.org/unsd/nationalaccount/sna2008.asp.

[5] International Monetary Fund, Balance of Payments and International Investment Position Manual, Sixth Edition (BPM6) (Washington, D.C., 2009). Available from http://www.imf.org/external/pubs/ ft/bop/2007/bopman6.htm.

[6] Compilers of IMTS might wish to exclude the retrofitting or outfitting transactions on the basis that they entail only a temporary movement of a good and that including them would distort the trade statistics. There can be borderline cases and it is for the national compiler to decide whether the transaction constitutes processing, or a service or repair. However, to exclude processing activities involving ships and aircraft in general cannot be recommended. It should be considered that other processing operations also entail the recording of high values for imports and exports while the actual value added may be relatively minor. The individual value of such transactions might be very small compared with the value of a ship or aircraft but the value of the sum of such transactions can easily equal or exceed the value of the trade in ships and aircraft.