Reconciliation between Balance of Payments and Foreign Trade Statistics

1. Reconciliation between Balance of Paymentsand Foreign Trade Statistics Daniela Comini Eurostat - Balance of Payments See document STD/NAES/TASS/SERV(2007)9

2. Figure 1 -Trade in goods balance: BoP and FTS Balances of opposite signe? Large differences between BoP and FTS balances??

3. Eurostat’s investigations on the discrepancies between BoP and FTS • Produced a number of analitical documents, including a Working paper • Some differences between BoP anf FTS are unavoidable, but … • The adjustment practices followed by Member States in the transition from FTS to BoP are very heterogeneous and should be harmonised

4. Eurostat’s investigations on the discrepancies between BoP and FTS • The coverage of transactions in goods assured by FTS may differ accross MSs, but this can only partially explain the etherogeneous practices. • Sometimes BoP compilers made adjustements to FTS data without being fully aware about the coverage assured by FTS.

5. How to reduce the discrepancies? • Time to move from the analysis of the problem to concrete actions. • New Task Force Reconciliation BoP-FTS was created by BoP WG in October 2005, with the task of defining the priority actions and developing the tools to increase consistency beween BoP and FTS • Partecipants: BoP and FTS experts from Eurostat and from 10 MSs

6. 1st Step: List of special transactions in goods: treatment in Intrastat, Extrastat and BoP Purpose: identify all the transactions where doubts can arise about treatment in EU IMTS and EU BoP Same idea as in Annex E of IMTS Compilers Manual, but extended to a much longer list of transactions Growing with time: draft 7, see page 9-34 of doc STD/NAES/TASS/SERV(2007)9

7. From the « List of special transactions» to the EU Reconciliation Table The “List of special transactions” has been used to identify all the conceptual adjustments which can be expected in the transitions from FTS to BoP Conceptual adjustments are all those shaded (in grey) in the “List”; “Practical adjustments, due to the specific data-coverage assured by national FTS, should possibly be addressed by FTS Identified “Conceptual adjustments” are (almost) all listed in the EU Reconciliation table, to avoid MSs reporting adjustments under “Others”

8. 2nd step: the EU Reconciliation Table Includes most of the conceptual adjustments identified in the “List”, in bold those which are considered “fundamental” To harmonise adjustment practices in MSs, TF BoP/FTS recommends to look at the “List of special transactions” before making any adjustment, and to avoid reporting adjustments under “Others”

9. 2nd step: The EU Reconciliation Table Will be compiled regularly by EU BoP compilers, as part of BoP Quality reports Has been slightly amended after the experience gained with the first pilot-round See page 36-37 of doc STD/NAES/TASS/SERV(2007)9 The results of the first pilot-round has been used by the TF BoP/FTS to identify « fundamentaI adjustements »

10. 3rd step: «Fundamental adjustements » in the transition from FTS to BoP • Goods for processing not returning to the reporting MSs; • Repairs of goods; • Goods procured in ports by carriers; • Returned goods; • Stocks of goods located abroad; • Only for imports: CIF/FOB adjustment. See page 35 of doc STD/NAES/TASS/SERV(2007)9

11. Conclusions • The TF BoP/FTS has delivered two very useful tools for increasing consistency between BoP and FTS: the list of transactions and the EU Reconciliation Table. • Work on best practices for making the few adjustments which have been defined as fundamental is on-going. • Some concrete effects of the activity of the TF can already be observed:

12. Figure 2: Differences between FTS and BoP, reporter EU 27, with partner Extra EU27 (million Euro)