Integrated Global Accounts and Global Production (IGA) Project description

Transcription

1 EUROSTAT Integrated Global Accounts and Global Production (IGA) Project description Luxembourg, 2016

2 Contents 1. Purpose Action Required Current Situation and Mandate for Change Problem statement Capturing globalisation in the methodological framework of NA and BOP Anticipating possible global accounting frameworks Knowledge sharing on globalisation for NA and BOP Mandate Objectives and Deliverables Scope Aims and Objectives Deliverables and Key Milestones Indicators What the project does not include Impact Assessment Stakeholder Analysis Project Environment Cost-Benefit Analysis Risk Analysis Approach General Description Resources and Lead Times Project Funding Project Organisation Project Manager Reporting Structure Project Team Project Documentation Annex 1 Abbreviations Annex 2 Eurostat s background note on globalisation (extract) Annex 3 Stakeholder Analysis Annex 4 - Risk Analysis Annex 5 Indicative timetable Annex 6 Project governance / 29

3 1. Purpose The purpose of this document is to outline the scope, approach, objectives, and resources implications and impact on stakeholders of a project on Integrated Global Accounts and Global Production (IGA) for agreement by the Directors of Macro-Economic Statistics (DMES) meeting and the Eurostat s Directors Meeting (DM). This business case comes, firstly, in response to the April 2015 DM seminar decision on the background note on globalisation (Annex 2). The internal Eurostat note outlined the challenges to measure globalisation and maintain the quality of 'traditional' macro-economic aggregates like GDP, GNI, etc. and pointed out that Eurostat can play a more prominent role. A specific area where a concerted action would be relevant is the one of the accounting frameworks. Eurostat has already been contributing to globalisation related activities at international level 1 and has put in place certain projects 2. There is a need, however, to streamline this work through intensifying the cooperation of national accountants, involving the balance of payments (BOP) statisticians and bridging the work to the ongoing EU and international projects, including on business and other statistics. Secondly, Member States identified globalisation as the highest priority in the research agenda of the future edition of the System of National Accounts (SNA), respectively of the European System of Accounts (ESA). Therefore, the business case offers a framework in which relevant discussions to take place. Since SNA 2008 and the 6 th edition of Balance of Payments and International Investment Positions Manual (BPM6) already treat globalisation related concepts harmoniously, it is appropriate that this framework is cooperatively used by NA and BOP experts. The IGA project proposes joint actions on integrated global accounts and global production for NA and BOP. While the concept of global accounts is yet to be defined by the international statistical community, concrete recommendations on how to statistically measure global production are already elaborated. Through contributions to international activities and European and national actions and research, the aim is to improve the fitness of statistics provided by the accounting frameworks for analysis of globalisation. 2. Action Required At its meeting on 9-10 December 2015, DMES supported the initiation of the IGA project and its start during the second half of 2016 and asked that the amended by the project Task Force business case is presented for approval at the June 2016 meeting. 1 To note the cooperation with OECD, UNSD/UNECE, IMF and the WB on initiatives such as the publication the impact of globalisation on national accounts and the Guide on measuring global production. 2 To note the competitiveness project and the Full International and Global Accounts for Research in Input- Output Analysis (FIGARO) project on establishing Methodological framework to construct EU/EA Multi- Country Supply, Use and Input Output Tables. Eurostat s Unit E2 regularly produces indicators for environmental 'footprints' (emissions induced by international trade, raw material equivalents of imports and exports). Methods are being developed to help Member States with such calculations. E2 is also very interested in now-casted Supply and Use Tables. 3 / 29

4 The DMES is asked to provide feedback, give strategic orientation on the open conceptual issues and support to the business case. The Eurostat s DM has given a positive feedback at its meeting on 7 th September 2015 and approved the approach outlined and the resource profile. In case of a positive DMES feedback, Eurostat will proceed to the detailed planning phase and implementation. The detailed planning will be provided for DMES written consultation. 3. Current Situation and Mandate for Change Globalisation 3 is a centuries old phenomenon of growing interaction between national economies. In recent decades, this phenomenon has gained a new momentum, mainly because of political developments and progress in information and communication technology. The traditional trade between countries has grown considerably. At the same time there has been a deepening of globalisation through, for example, global production arrangements. There are two main issues regarding globalisation in connection with national accounts/bop. The first one is the measurement of the phenomenon itself. The growing interconnectedness of national economies should be measured for policy purposes. What is the impact of (national or international) political decisions, how does a financial crisis or a natural disaster in one country influence the economies of other countries are the kind of questions that should be answered with the data on globalisation. The second issue is that compiling national accounts in a globalised economic environment is more and more challenging. Besides the straightforward international trade in goods, the international trade in services is growing fast. Furthermore, goods sent abroad for processing and merchanting can blur the economic picture. Goods cross the border without change of economic ownership in case of goods sent abroad for processing. In case of merchanting it is the reverse, no goods crossing the national border but there is a change of economic ownership. Especially in case of transactions between units in different countries of the same multinational enterprise the economic ownership is not always easy to determine. It is obvious that the same transaction should be included in the national accounts/bop of the countries concerned in the same (correct) way (as regards data and classification). If not, new asymmetries arise. Integrating incorrect flows in the national accounts/bop does not only mean that the phenomenon globalisation is not captured correctly, it could also mean that traditional indicators like GDP are not measured correctly. 3 Narrative to the chapter based on the introduction of Chapter 16 National accounts in a globalising world of Understanding National Accounts (OECD 2014, Lequiller and Blades, second edition) 4 / 29

5 3.1 Problem statement Capturing globalisation in the methodological framework of NA and BOP The globalisation phenomenon has been in consideration during the preparation of the present international methodological standards for NA and BOP, SNA 2008 and BPM6. Both guidelines, published in 2009, addressed consistently the application of the principle of economic ownership and the treatment of stocks and flows as well as remittances resulting from the movement of persons abroad. To measure the global production processes and relate them to the associated financial transactions, changes were introduced in the recording of merchanting and goods sent abroad for processing. Guidelines were provided on the treatment of the special purpose entities and, for BOP, on the currency unions. Other globalisation aspects (e.g the treatment of the multinationals) however left for consideration as part of the future research agendas. In 2011, UNECE, together with Eurostat and the OECD, published a comprehensive guide on The impact of globalisation on national accounts 4. The guide raised a number of conceptual and measurement issues, suggested some solutions and identified the following main priorities for future work: conceptual and practical measurement issues in relation to global manufacturing recording of international transactions in intellectual property products outstanding measurement and data issues related to the implementation of the new standards on goods for processing and merchanting a conceptual framework for dealing with the special purpose entities, including a harmonised definition. To assist conceptually and practically with the implementation of SNA 2008/ESA 2010 and BPM6 principles regarding enterprises participating in the global production, an international task force led by UNECE and in which Eurostat participated prepared the Guide on Measuring Global Production 5 in After providing typology of the global production arrangements and clarifying the application of the principle of economic ownership inside multinational enterprises, the document gives recommendations on the data sources and compilation techniques and how to treat the various enterprises. These recommendations (11 in total ) shed light in particular on the recording of transactions of so-called factoryless goods producers, quasitransit trade and merchanting in services. It is intended to continue to develop the typology and deepen the research in Trade in Value Added in cooperation with OECD (see section for FIGARO). 4 accounts_final pdf 5 duction_-_ces.pdf 5 / 29

6 As this overview shows number of methodological issues related to globalisation are still open for NA and BOP. This was confirmed at the April 2015 IARIW-OECD conference on the future of SNA 6 which acknowledged the need of appropriate treatment of globalisation in NA. The IMF Committee on Balance of Payments Statistics is also expected to discuss the research agenda for the next BPM and address globalisation. Eurostat needs to continue to be a leading partner, including being able to support EU Member States during the implementation. Some of the discussion topic promise to be challenging, for instance: the one of the multinationals or the possible treatment of emissions trading in NA. A close follow-up of the globalisation related discussion internationally is needed as well as a lot of networking within the EU NA and BOP communities Anticipating possible global accounting frameworks Mandated by the UN Statistical Commission, the Friends of the Chair group on the measurement of international trade and economic globalization, in which Eurostat participated, recommended the development of a system of extended international and global accounts 7. This system is based conceptually on the interconnectedness of economies through global value chains and consists of two complementary parts. On the one hand, the national accounts are extended by enhancing its international components. These improvements and enhancements of the extended national accounts are still under the purview of the national data compilers and may need close cooperation with compilers from partner economies. The enhancements include reducing bilateral trade and investment asymmetries, accounting for knowledge transfers or classifying firms according to trade intensity, foreign ownership or size class. On the other hand, the extended national accounts can be used as improved building blocks for regional and global accounts, which are linked to the exploration of the regional and global Supply, Use and Input-Output analysis to measure globalisation. Eurostat is already active in this area and cooperating internationally, especially with focus on a regional account for the European Union. The FIGARO project started in October 2015 and aims to create a methodological framework and produce European Supply, Use and Input-Output suitable for integration into the global tables published by OECD. This project has been conceived for implementation only by Eurostat since it reuses existing data already transmitted by Member States. At the global level, OECD has positioned itself with the TiVA database, which builds on the extended national supply and use tables. The ambition is that this new system, which is built on NA and BOP, will form an integral international and global framework for decomposition and linkages of production, income, expenditures, assets, liabilities, and environmental-economic transactions across regions, countries, and industries. It will provide additional breakdowns of the globalisation relevant entries of the core accounts and show the / 29

7 global linkages with alternate scope and concepts to the core accounts, such as the global supply and use tables. The UN expert group on international trade and economic globalisation started its work in January As highlighted in the minutes of the first meeting 8, the group will prepare a handbook on the global value chain (GVC) approach for measuring trade and globalisation by mid The handbook will also outline the general statistical framework of extended national and global accounts, the global value chain satellite accounts based on extended national and multi-country GVC industry related supply and use tables and input-output tables and a framework of integrated business, investment and trade statistics, their classifications and requirements for the national and global business registers. The Handbook would draw upon earlier work by UNECE on Global Production, by OECD on Extended Supply and Use Tables, and by Eurostat on Global Value Chains and economic globalization. Some ongoing European projects are considered for presentation in the handbook, namely FIGARO and the integration project for business registers. Also the joint work between OECD and Eurostat to develop guidelines on the compilation on regional Inter-Country Input-Output tables in a way that ensures seamless integration of such initiatives into the global OECD- WTO Trade in Value Added Database, will be part of this Handbook. It would be appropriate that Eurostat and Member States are contributing to this initiative, particularly in the drafting of relevant to the EU chapters of the Handbook. The implications of such a system at European and national levels need to be assessed. Various questions exist in relation to the European policy needs, methodological and compilation aspects, cost of producing such statistics, etc. Moreover, the future work on international and global accounts would stimulate a reflection on the feasibility of producing European accounts or another type of EU input to the global accounts. These major questions necessitate a unified EU response Knowledge sharing on globalisation for NA and BOP Besides Eurostat, several Member States are quite active in the area of globalisation. Examples include but are not limited to the Netherlands, Finland and the UK. Though, the globalisation topic, although present, has not been clearly articulated in the agendas of the NA Working Group, BOP Working Group or DMES. This can be explained with the attention given to the implementation of ESA 2010 and BPM6. It would be appropriate, however, to consider some future arrangements providing a platform for priority setting and knowledge sharing for NA and BOP regarding globalisation. It seems appropriate to initiate a discussion at DMES level to identify the most appropriate way to deal with globalisation at EU level. The IGA Task Force will be the expert group to prepare this discussion / 29

8 Considering that the globalisation has two statistical legs: in primary statistics and in the accounting frameworks, the experience of business statisticians could be useful although need not to be strictly followed. Eurostat has supported the Member States to implement individually and jointly projects on global value chains. The results have been shared and made available to the broader user. They helped to reach a consensus on the work priorities outlined in the Riga Memorandum Towards Global Business Statistics 9 approved by the ESSC in September Considering that the resources in NA and BOP are also scarce, setting up right priorities for NA and BOP will be important. In this context, on the one hand side, joint activities with primary statistics are desirable and, on the other hand side, the cooperation of the ECB shall be sought and the work on globalisation at ESF/CMFB levels reflected. In summary, NA and BOP will face much more demands to answer the globalisation questions in the future. The work on global production and on integrated and global accounts will be both intellectually challenging and resource demanding. There is a need for priority setting, knowledge sharing and formulating a unified EU response where appropriate. At Eurostat level, the work needs to be streamlined and the capacity strengthened. Resource should also be made available to the Member States to support the national implementation, in particular in relation to the recommendations on measuring global production. 3.2 Mandate At its April 2015 seminar, the DM requested that specific business cases are developed for the proposals presented in the background note on globalisation. This business case elaborates on the proposed future steps in relation to the topics of global production and integrated and global accounts. In the context of the European Statistical Programme (as well as its foreseen extension for ), the project relates to the following headings: 1.3 Economic globalisation with the enhanced measurement of the globalised production; analysis of global value chains, through appropriate input-output tables and foreign trade and business statistics 2.1 Economic and social performance with the implementation of ESA 2010 and the database for growth and productivity measurement. A specific entry to the Annual Statistical Programme 2017 on Integrated Global Accounts is also proposed / 29

9 4. Objectives and Deliverables 4.1 Scope This project applies to NA and BOP statistics. It deals with the issues of integrated global accounts and global production and their possible implications to the accounting frameworks at EU and national levels. The project relates to initiatives at international level, namely to the work on the system of extended international and global accounts coordinated by the UNSD and on global production conducted by UNECE. It is linked to the OECD-WTO initiative on Trade in Value Added and the work of the OECD Expert Group on Extended Supply and Use tables, that catalysed the development of an integrated statistical approach to measuring Global Value Chains by combining (extended) Supply and Use Tables, international trade, and linked trade-business microdata (TEC, STEC, FATS and other statistics). Clearly, Eurostat s FIGARO project, which also explores the creation of extended Supply and Use Tables, is also closely linked to this work. Finally, the project addresses ways to improve the quality of the input data on globalization. First of all, this involves continued exchange of experiences with respect to the long-standing issue of asymmetries in international merchandise trade and international trade in services statistics, which need to be resolved when creating (extended) global accounts, see for example OECD (2016) 10 and OECD-WTO (2016) 11 for examples of such strategies at the international level. Secondly, the integration of different source statistics that is necessary to develop extended international and global accounts, highlights issues with respect to the consistency of these data sources. 4.2 Aims and Objectives The overall project aim is to improve the relevance of statistics provided by the accounting frameworks for analysis of globalisation. Specifically, the project has the following objectives: Ensure EU input to the international work on global accounts and global production Achieve common EU views on the related research items as far as possible Become aware about the implications of the global accounts at European and national levels and the feasibility of delivery of an EU input to these accounts 10 OECD (2016) Balanced International Merchandise Trade Statistcs: Version 1, guage=en 11 OECD-WTO (2016) Towards a Global Matrix for Trade in Services Statistics, guage=en 9 / 29

10 Raise awareness and facilitate the implementation of international recommendations on measuring global production at national level Improve quality of national accounts and balance of payments data of relevance to globalisation Enable the knowledge sharing on globalisation for NA and BOP Raise the awareness of stakeholders Elaborate a proposal to DMES on how to deal with the global accounts and global production after this project. 4.3 Deliverables and Key Milestones The deliverables of this project are: Those specified in Section 6.1, namely analysis papers, reports, meeting documents, a dedicated publication Progress reports and a final report to DMES An interim report and a final report to the DM. The project is scheduled for 28 months with an indicative start date in September 2016 and respectively an end date in December The availability of resources implies the actual start date. Financial support to Member States for project activities can be enabled only with the Eurostat s Financing Decision The Eurostat s team implementing the project also needs to be strengthened. To make a detailed project planning, it would be necessary to know more on the UNSD planning for the extended system. Sections 6.1 and 6.2 of the business case present the indicative timetable and explain the external factors which can impact the project schedule. Detailed project plan will be elaborated upon project start. The key project milestones according to this planning are as follows: Project initiation in September 2016 Detailed project plan by December 2016 Set-up of the project Task Force (initiated in March 2016) Launch of the web information page on globalisation by January 2017 Launch of call for tenders for grants by April 2017 and delivery of grant reports by October 2018 Defining the EU response to the global accounts by mid 2018 and the next steps by November 2018 The key issues related to global production are addressed either by implementation or by a common position by October 2018 Issuing the publication on globalisation by September 2018 and awareness raising of stakeholders by November 2018 Project closure in December / 29

11 4.4 Indicators The project can be considered successful if: Raised awareness on globalisation challenges at EU and national levels The project identifies issues of European relevance and translates them into proposals which are then accepted and acknowledged in the international publications Implementation of international recommendations regarding global production at national level brings more harmonised implementation of ESA 2010 and BPM6, including less discrepancies between NA and BOP The main research items related to globalisation are addressed and documented in common positions The international work on global accounts and GVC is followed up and necessary actions at EU and national levels are identified The links to primary statistics and satellite accounts are identified and issues articulated Data quality issues, especially related to international trade asymmetries and consistency across statistics, are addressed by data compilers Users and stakeholders response to the project achievements All deliverables are provided on time and with the necessary quality The project is kept within the budget The recommendations of the Project Steering Committee, DMES and the Eurostat s DM are followed. 4.5 What the project does not include To be manageable, this project will have a focus on the accounting frameworks (NA and BOP) and will explore only the linkages to satellite accounts and primary statistics. Thus, it will bridge to existing or new projects on these subjects (e.g. FRIBS) but will not deal with them extensively. This project will not address issues of productivity and growth accounts. FIGARO and IGA are related projects. In Eurostat s view, it won t be appropriate to make FIGARO a sub-set of IGA, since the FIGARO s focus is on the data while the IGA s emphasis is on the methodology and national implementation for the global production and on the strategy and methodology - for the integrated global accounts. 5. Impact Assessment 5.1 Stakeholder Analysis The project stakeholders listed in three main groups are presented on Fig. 1. Detailed presentation of the user needs is provided in Annex / 29

12 The external users need statistical data on globalisation to support the policy analysis and decision making. They would expect Eurostat and Member States to participate actively in the international cooperation on global accounts and global production and ensure that the European statistics remains relevant to the developments. Regarding possible global accounts, the stakeholders interest is expected to be high. They would probably need reassurance on way how these accounts portray the EU and its Member States and assessment of the impacts at EU and national levels. The project impact on the external users is positive since they would benefit from any improvement in NA and/or BOP and any additional information on globalisation. IGA stakeholders Figure 1 Stakeholders groups Member States, specifically the NSIs and the NCBs are main stakeholder of this project. Besides being key contributors, they will be directly exposed to its impacts. The project will create a favourable environment to explore deeper the NA and BOP from the point of view of globalisation, share information and improve some practices. The closer cooperation will enable to articulate better the EU needs at international level and anticipate the actions needed at EU and national levels. The project will also help to study the various impacts, in particular those related to the global accounts. For the participating Member States, the project costs will be largely covered by EU grants. The additional workload for national experts from the Member States already active in the area of globalisation will not be so high. Countries which 12 / 29

13 want to contribute but do not explore the subject presently would need to invest more. For them, however, the project will be an opportunity to cope. The international statistical agencies will expect Eurostat and the Member States to be active partners in the international projects. This project will be of interest to the OECD, UNSD and UNECE who are leading the work on global accounts and global production. The ECB is a natural Eurostat partner in this project and will be invited for participation. Complementarities with the work of ESF/CMFB will be sought as well. At its September 2015 meeting, the ESF decided to establish a high level reflection group on globalisation. The expected impacts on these partners are positive since the ECB as well as the ESF/CMFB share the view that macroeconomic statistics shall be relevant to the globalisation. Finally, several Eurostat units would be concerned. Firstly, the units where satellite accounts are produced. They would be interested in the outcomes of the work on the extended international and global accounts, in particular Eurostat s unit E2 because of the headline indicators on global impacts they produce with Input-Output Tables and foreign trade data and also because the UNSD project intends to address the environmental accounts. Secondly, the units dealing with primary statistics of relevance to globalisation would also need to know if any development in NA and/or BOP relates to the statistics of their competence and vice-versa. 5.2 Project Environment The project environment is presented below (projects in blue shades are Eurostat projects, projects in grey shades are international initiatives). Figure 2 Project environment 13 / 29

14 Information about the related international projects has been already provided in chapters 3 and 4 of the business case. 5.3 Cost-Benefit Analysis Scenario Benefits/Pros Costs/Cons Do nothing No need to set up and implement a project No engagement of resources Work on global accounts and global production is already ongoing at international level User needs unsatisfied European statistics (NA and BOP) loses relevance Cooperation of NA and BOP with business statistics which is advancing on globalisation is difficult Eurostat is lagging behind the international developments Reputational risk for Eurostat Set-up the proposed project Launch isolated activities on global accounts or global production Issues arising from globalisation addressed thoroughly by NA and BOP Knowledge and experience shared Common views articulating the EU needs and priorities achieved where possible Concrete developments planned or implemented Substantial and visible EU contribution to the international initiatives Certain issues arising from globalisation addressed by NA and BOP Contribution to the international initiatives ensured Need to set up and implement the project Engagement of substantial resources at national and EU levels Engagement of less substantial resources at national and EU levels Limited impact of actions, no coordinated response Any of the cons of the do nothing option may materialise 5.4 Risk Analysis In overall, this project is a low risk endeavour. If resources are mobilised at Eurostat and national level, interested participants should have to conditions to provide the deliverables and meet the objectives. Project timetable may be impacted by slow or unexpected development at international level. 14 / 29

15 6. Approach 6.1 General Description The project will consist of the following work packages and activities with their related deliverables: No Package/activity No Deliverable WP1 Integrated Global Accounts A1.1 Stocktaking of situation at EU level and follow up of the international work D1.1 Contributions to the international projects A1.2 Identifying the EU needs for economic policy D1.2 Paper on summary of findings analysis A1.3 Assessing the implications of possible global D1.3 Analysis paper accounts on European statistics A1.4 Assessing the feasibility of EU accounts or D1.4 Feasibility study paper another input to the global accounts A1.5 Global accounts and primary statistics D1.5 Analysis paper A1.6 Global accounts and satellite accounts D1.6 Analysis paper A1.7 National studies in relation to the global D1.7 National reports/grants accounts A1.8 Proposal for (dis)continuation of the work D1.8 Paper WP2 Global Production A2.1 Stocktaking of situation at EU level and follow up of the international work D2.1 Contributions to the international projects A2.2 Support to national implementation of D2.2 National reports/grants international recommendations A2.3 Multinational enterprises in the accounting frameworks D2.3 2 workshops/summary of discussions A2.4 Global production and trade in value added D2.4 Paper A2.5 Global production beyond trade in value D2.5 Paper added WP3 Improving quality of data on globalisation A3.1 Asymmetries issues D3.1 Workshop/summary of discussions A3.2 Consistency issues D3.2 Workshop/summary of discussions A3.3 Other constraints of data sources and methods, opportunities of using big data D3.3 Workshop/summary of discussions A3.3 National projects for improving the quality D3.4 National reports/grants of data WP4 Knowledge sharing for NA and BOP on globalisation A4.1 Set up and maintain an internet based D4.1 Web-page information page A4.2 Establish and run a task force with the D4.2 Task force, meeting documents Member States A4.3 European publication on how the accounting D4.3 Publication frameworks capture globalisation A4.4 Awareness event on globalisation D4.4 DMES seminar (or conference) 15 / 29

16 A4.5 Communication activity directed towards the policy level on what globalisation means for recording economic activity D4.5 Descriptive articles Work packages 1 and 2 are topic specific while work package 3 is horizontal and supporting for the implementation of the work packages 1 and 2. Within work package WP1 Integrated Global Accounts, Eurostat will ensure stocktaking of the situation at EU level and contribution to the UN Expert Group that develops the Handbook on extended international and global accounts. Consultations will be organised with key stakeholders to concretely specify their interest and needs in possible global accounts and further information on GVC. The implications of these accounts on European statistics will be regularly assessed with the progress of the UN work. Once the UN proposal is sufficiently shaped, a feasibility study will be launched to assess if what kind of EU input to the global accounts would be needed and viable (see also section on lead times). This feasibility study will look not only at the statistical aspects but also at the legal implications and the cost of such a statistical product. If seen feasible, the implementation of this statistical product will be a subject of a follow-up project. The links between the global accounts and primary statistics and the global accounts and satellite accounts of relevance to global value chains (e.g. environmental) will be explored. Furthermore, Eurostat will support through grants research activities at national level. At the end of the project a proposal on how to continue with the work on global accounts will be prepared. A possible continuation will strongly depend on the outcome of the UN work as well as the outcome of the feasibility study for EU input to the global accounts. The aspects of the satellite accounts and primary statistics will be also discussed in this proposal. Within work package WP2 Global Production, Eurostat will ensure Eurostat will ensure stocktaking of the situation at EU and national levels and contribution to the work on global production and support to Member States through grants for the implementation of the international recommendations. Selected subjects can be preconsulted at European level before international discussions. Eurostat in cooperation with Member States will organise two workshops to facilitate the sharing of practices on how multinational enterprises are dealt within the accounting frameworks nationally. Following up the recommendations of the Guide on Global Production, Eurostat and interested Member States will reflect on Global production and trade in value added and Global production beyond trade in value added. Position papers will be prepared. This discussion will be conducted in close cooperation with the international agencies and with the aim to support the better delivery of statistics on globalisation. Work package WP3 Improving the quality of data on globalisation will address existing quality issues in the accounting data. Data asymmetries and inconsistencies of accounts still persist. This work package may start with a stock taking exercise on work done on asymmetries and consistency issues and the results achieved. Workshops will offer the opportunity to share experiences on how these issues can 16 / 29

17 be addressed. Again through a workshop, other quality issues of relevance to globalisation will be discussed and the potential of using big data will be explored. The project will enable national projects for improving the data quality and support them by grants. Within work package WP4 Knowledge sharing for NA and BOP on globalisation, Eurostat will make available on its website an information page where useful information on globalisation of relevance for NA and BOP will collected. A dedicated Task Force with interested Member States will be set up. Its tasks will be to implement the joint activities outlined in packages 1 and 2, to prepare an ESS publication informing users on what the NA and BOP tell about globalisation and help with the preparation of an awareness event disseminating the results of the project. The type of this event will be selected upon the outcomes of work package 1. An indicative project timetable is presented in Annex Resources and Lead Times This project engages human and financial resources. The project governance structure is shown in Annex 6. At Eurostat level, the contributing units are C1, C2 (project manager), E2, F3, G1, G2 and G5. Further information about their involvement is provided in section 7.3. Two FTEs are requested in unit C2 to support the project implementation (one in 2016 and one in 2017). Other Eurostat units have already agreed to contribute to this project. All Member States as well as the EEA countries will be invited for participation through the BOP Working Group and the NA Working Group. Interested countries may wish to nominate experts on NA, BOP or both. 17 / 29

18 The project will be executed over 28 months. The project lead time depends on the development of the UNSD initiative as shown below and is 25 months: UNSD initiative on extended international and global accounts TOR available Concept elaborated Draft handbook available Please state if grants and/or procurements procedures will be used. To this end, you will find in the Annex 3 an overview of the specific features of ea D1.2 D1.3 D1.4 Feasibility of EU input In case procurement procedures are used, cost estimation should be provided. See EU needs Global accounts Annex 3. implications IGA project D1.5 Paper on the links to primary data D1.6 Paper on the links to satellite accounts D1.8 Proposal on next steps If the UNSD project slows down, the IGA timetable will be re-discussed by the DMES National reports and the Eurostat s DM. At this stage, it is difficult to identify any impact of a possible extension of the IGA timetable or of IGA s end before the end of the UNSD project. D Project Funding Financial resources necessary for Eurostat to implement the project will be foreseen in the Eurostat s Financing Decision Member States willing to receive grants would be required to contribute with national co-financing. 7. Project Organisation 7.1 Project Manager A project manager will be appointed from unit C5 upon allocation of resources to the team dealing with the Supply, Use and Input-Output Tables. 7.2 Reporting Structure The project owner for this project is DMES, respectively the Eurostat s Director of National Accounts, Prices and Key indicators. The reporting structure is the same as the governance structure (see Annex 5). 18 / 29

19 The Steering Committee will provide the guidance to the project. The committee will be composed as follows: Eurostat s Director of National Accounts, Prices and Key indicators - chair Project manager secretary Directors of Macro-Economic Statistics from Member States Representatives of interested Commission services (e.g. ECFIN, GROW, Trade) Representatives of international statistical agencies (e.g. ECB, UNECE, UNSD, OECD). The Steering Committee may convene meetings depending on the needs. It will have at least three meetings: at the start of the project, in mid-term and before the project closure. The Project Task force will be main body responsible for the implementation and will report to the Project Steering Committee. All countries willing to participate in the project will attend the Task Force. The international statistical agencies will be invited as well. The Task Force will be co-led by units C5 and C2 and all involved Eurostat units will participate. Five face-to-face meetings of the project Task Force are foreseen during the implementation period. Between those meetings, the work will be coordinated through electronic communication. Participation in relevant international meetings will be also necessary. 7.3 Project Team The project Task Force with Member States will constitute the project team. All Member States are invited to participate on a voluntary basis. Eurostat will allocate 9.6 FTEs. Unit C5 will provide the project management. 7.4 Project Documentation The project documentation will be organised by the project manager and will consist of meetings minutes, presentations, papers, reports, including grant reports. 19 / 29

20 Annex 1 Abbreviations BOP Balance of payments BPM6 6 th edition of the Balance of Payments and International Investment Positions Manual of the International Monetary Fund CMFB Committee on Monetary, Financial and Balance of Payments Statistics DM DMES ECB ESA ESF ESSC FRIBS GVC IARIW IGA NA OECD SNA 2008 TOR UN UNECE UNSD WP Director s meeting of Eurostat Directors of Macro-Economic Statistics European Central Bank European System of Accounts European Statistical Forum European Statistical System Committee Framework Regulation Integrating Business Statistics Global Value Chains International Association for Research in Income and Wealth Integrated global accounts National accounts Organisation for Economic Co-operation and Development System of National Accounts published in 2008 by UNSD Terms of reference United Nations United Nations Economic Commission for Europe United Nations Statistics Division Work package 20 / 29

21 Annex 2 Eurostat s background note on globalisation (extract) Challenges of globalisation to statistical producers The term globalisation has been increasingly used since the 1980s. Although globalisation is generally understood to represent increasing international interdependence, its precise definition usually depends on the context in which it is used. Frequently the term has a rather narrow focus and only refers to economic globalisation. Here we define globalisation in its broadest sense as the increasing interconnectedness, integration and interdependence of people and countries in economic, environmental, technological, social, cultural and political spheres 12. The following is a list of challenges identified during internal discussion. Other lists of challenges exist, e.g. the Sturgeon report on Global Value Chains and Economic Globalization Towards a New Measurement Framework, pp Challenges Globalisation poses a range of new challenges for statistics. Three types of challenges to Eurostat and other statistical producers have been identified: 1) New data needs. Users request information on the linkages between economic production, trade, jobs and unemployment, environment, labour income, migration flows, etc. across countries. Those interlinks are not new but globalisation has made these issues and impacts much bigger. Users want to know cause-effect relations across domains and countries: if my country lifts the import duties on a product (say clothes), how many jobs will be lost (in my country)? How many will be created abroad? Will the jobs lost in manufacture be compensated by job creation in trade? How will the gross value added in other related industries be affected? Will GDP increase or decrease? Which emissions of pollutants will be avoided in my country and created elsewhere? Delivering those data requires several things. Paramount is quantifying interdependence between supply and demand across countries and between production industries across countries. A solid starting point is provided by multi-country supply-use tables (SUT) and input-output tables (IOT). Presently such tables do not exist in Europe as official statistics. A research project called FIGARO is to be launched in 2015 with delivery in 2017 to produce a European SUT-IOT for the reference year Eurostat is driving this project in collaboration with the JRC. Moreover, this SUT-IOT can become the engine for providing users with information about globalisation. However it will not be 12 Insightful discussions of the terms are provided by the WHO: the European Union glossary: the Financial Times glossary: and Wikipedia maintains an extensive page on globalisation: The EU declaration on globalisation can be found here: 21 / 29

22 enough. The ultimate goal for this tool must be a timely (=recent), annual and sustainable (=not a one-off project), official data (=with status of official statistics) on the EU contribution to a global IOT (=not a EU table but a worldwide one). Steady improvement of quality (=assumptions in the models) must come too. The basic data needs for constructing a reasonable quality SUT/IOT structure must be discussed. This is closely connected to national data, covered below under challenge 3, but is an extension of it. Besides, that statistical tool, once available, is just a means to an end. Final users do not demand an IOT but indicators on the global context and analyses based on it. The IOT is the key allowing that information to be produced. For instance, a multi-country IOT can be used for environmental purposes to transpose supply into demand, i.e. identify which final users and where trigger the demand of certain products whose manufacture deplete natural resources (or create polluting emissions) and how changes in production or demand shift the strain on natural resources. The globalisation data users' requests have one or more of the following features: Statistics across countries. This is why Eurostat is better placed than individual countries. Statistics across domains. Globalisation is a cross-cutting issue, thus not naturally falling under the responsibility of any single Eurostat unit. Some Eurostat units do not feel concerned by globalisation when they focus on their domain abstracted from others. Globalisation demands analyses of interrelations (furthermore: causality) across domains. Eurostat produces little of that type of information. Eurostat strongly needs to extend its analytical capacity and standard, transparent calculations about interrelations across domains and model-based estimates. Who should do it? Which organisation setting is needed? Can it be done with the existing skills at Eurostat? There is the question of the scope and structure of the globalisation phenomenon. In principle everything affects everything everywhere. However this is not a useful approach to produce statistics; a complex problem is better split in smaller bits easier to handle. Distinguishing between methodological frameworks, primary statistics and accounting helps. This type of structuring must be sought. Besides, which are the domains most affected, those less affected and those in the middle between them? In some cases it is obvious (say international trade) in others it is not (say education). Where are the boundaries of globalisation drawn? Which units and projects have possible links with globalisation? This is not obvious and (somehow conventional) priorities must be set. Who will do that? Occasionally there are gaps between units, e.g. economic aspects of the labour market are not well covered by Directorate F or Directorate C. Communication of globalisation statistics and indicators to the public is not a small challenge. Publishing estimates based on semi-experimental tools (IOTs) and about interrelations across domains and countries requires a different communication approach than traditional official statistics. 2) Alignment of concepts. Globalisation requires reconsideration of some conceptual frameworks such as SNA/ESA, BoP, external trade statistics etc. to ensure that the information is consistent, relevant and accurate for users. These frameworks and the related data collection exercises were each developed to address issues, needs and questions pertaining to their own particular field. SNA 2008 and BPM6 brought the national accounts and balance of payments systems much closer together and also started to address such issues as goods sent abroad for reprocessing. 22 / 29

23 However further conceptual consideration is needed for better reflecting several issues such as global value chains, the complexities of goods sent abroad for processing, the manufacture of products fully delocalised from their design (so-called factoryless production ), etc. It is particularly important how some statistical collections, such as international trade statistics, relate to framework systems notably SNA and BPM thereby aligning concepts to allow a smooth exchange of data between the systems and present consistent data to users. Key points will be the definition of statistical units and the way in which transactions and balance sheet positions are represented. For the former, there remains a strong debate on how to define statistical units to best capture cross-border production processes and financial integration. It may also be noted that some statistics are in line with the residency principle (e.g. national accounts), others are by territory (e.g. air emission inventories), and foreign trade statistics are recorded following the ownership principle. Furthermore, there is also some observed divergence between national accounts and so-called satellite accounts, for example between the SNA and SEEA. For instance, in the case of goods sent for processing without change of ownership, SNA 2008 recommends to only record the processing fee as exports 13, whereas SEEA CF recommends recording the actual physical flows of goods 14. This disrupts the correspondence between monetary and physical flows. Classifications are also concerned by this work, to ensure that consistent classification systems are used across statistical domains, and that such classifications fully reflect the nature of the goods and services which are increasingly produced across borders. 3) Estimation of national data. Globalisation creates increasing challenges for practical estimation of statistics and accounts. Things as basic as identifying the market price for a transaction become blurred when the two counterparts are branches of the same bigger group. In those cases, allocation of output and value added to the national economies is harder and it gets increasingly difficult to ensure there is no double-counting and no missing parts. This situation undermines the quality of the estimates. Besides, before globalisation, individual NSIs produced their national estimates of production and imports in full autonomy (although using standards and rules agreed at European and international level). With globalisation it becomes necessary to balance international flows (of trade, migration, etc.). This is still an unresolved issue e.g. in external trade asymmetries persist in spite of big efforts over the years. Trade asymmetries consist of valuation differences, conceptual differences and recording convention differences. A long list of specific sources of discrepancies in both internal trade data and external trade data are described in the Statistics on the trading of goods User guide SNA 2008, paragraph 14.38, page SEEA CF, paragraph 1.46, page 7 15 European Commission (2006), Statistics on the trading of goods User guide, Luxembourg: Office for Official Publications of the European Communities. For a recent overview of these asymmetries see: Markhonko V. (2014) Asymmetries in official international trade statistics and analysis of globalization, paper for the 23 / 29