14.187. Statistics Sweden wants to ensure better consistency between national accounts and balance of payments in the treatment of merchanting and goods sent abroad for processing. The current treatment leads to discrepancies between the two accounts, with neither national accounts nor balance of payments compiling these transactions satisfactory.
14.188. At present merchanting and manufacturing services transactions are collected via a number of sources, e.g. international trade in services survey (ITSS), customs records, structural business survey (SBS); and there are major issues:
14.189. The project team in Statistics Sweden generated two action points:
a) Change SBS/Prodcom questions in order to distinguish properly between merchanting and manufacturing services (outwards processing); and
b) Obtain a list from the SBS that identifies the companies engaged in manufacturing services.
14.190. The implementation of these action points would:
a) Provide a better sample for the collection of data on processing fees in the international trade in services survey; and
b) Provide a sample which would also allow the collection of data on non-cross border exports and imports of goods (i.e. goods crossing international borders which have Swedish ownership) and therefore enabling Statistics Sweden to adapt international merchandise trade data to the change in ownership principle.
14.191. Statistics Sweden wants to compile, in a single document, standardised information on globalisation related key variables, the objectives being:
14.192. The document will give, using detailed structured descriptions, a full understanding of the following key globalisation variables:
14.193. Enterprise A - Manufacturing industry
a) Company A manufactures goods in Sweden.
b) After being produced the final product is sent abroad (to country B) and held as inventory (export of 50SEK recorded in Intrastat). Company A still owns the goods.
c) Finally, the goods are sold to consumers in countries C and D, total amount received from the sale by company A is 100SEK.
d) Problem: inconsistency between Production (SBS and STS, valued at market prices) and export figures (Intrastat, valued at delivery prices).
14.194. Solution: The Large Cases Unit delivers the correct export data (i.e. 100SEK) to national accounts.
14.195. Enterprise D - Foreign affiliate
a) Enterprise D is foreign owned, part of a multinational group and classified in the R&D industry. The head unit of the group is located abroad.
b) Enterprise D produces trade margins (merchanting) but their employees in Sweden work almost exclusively with R&D.
c) Problem 1: income from trade when the activity in Sweden is R&D. Classifying the company in R&D industry is not 100 percent clear.
d) Problem 2: which unit owns the IPP produced in Sweden?
14.196. Depending on which enterprise owns the R&D produced by the unit in Sweden the merchanting and production of this unit can be seen as:
Production Account | Expenditure Approach | ||
Goods acquired under Merchanting | 100 | Export of goods | 50 |
Goods sold under Merchanting | -50 | GFCF | 30 |
Production R&D for own use | 30 |
|
|
Gross Output | 80 | Total expenditure | 80 |
14.197. Key question - Which unit really owns the R&D and how should we interpret merchanting income (compensation for R&D or licenses).
14.198. Enterprise E - Manufacturing industry
a) Enterprise E is located in Sweden, foreign owned and carries out processing services for the foreign head unit.
b) The material inputs used in the processing service come from Sweden and most part of the final processed products are sold to Swedish consumers.
c) Problem 1: SBS collects the value of the processing service as the output value whereas STS collects the value of the final product.
d) Problem 2: Neither the export of the material input nor the import of the final product are collected in international merchandise trade statistics (given that the head unit has ownership of these inputs and final product).
14.199. Problems:
14.200. Current solution: Output according to SBS and imputation of foreign trade flows.
14.201. Enterprise F - Manufacturing industry
a) Enterprise F is classified in the manufacturing industry. F produces "input f" in Sweden.
b) Input f is then sent to factories abroad for further processing together with other material input from other countries. Company F still owns material input f.
c) After the processing is carried out, company F sells the final product and delivers directly to final customers from the country where the processing service has taken place.
d) Problem 1: Merchanting is reported and registered both in SBS, ITSS and national accounts instead of manufacturing services.
e) Problem 2: Export of input f is registered in international merchandise trade statistics and in the national accounts (but there has been no change in ownership).
f) Problem 3: Export of final product, import of other material inputs used in the processing carried out abroad and import of the processing service are not registered.
14.202. While overall the current treatment does not affect GDP, it is incorrect.
Current treatment | Correct treatment (ESA 2010) | ||
Goods sold under merchanting | 100 | Export of final product | 100 |
Goods acquired under merchanting | -70 | Import of material inputs produced abroad and directly sent to processor abroad | -30 |
Export of material input | 10 | Import of processing service | -30 |
Value added and net exports | 40 | Value added and net exports | 40 |
Back to B.1.5.Detailed Country Cases