The statistical treatment of the purchases of durable and valuable goods by travellers

Transcription

1 TFSITS (07) 30 The statistical treatment of the purchases of durable and valuable goods by travellers Note by the Eurostat Technical Group "Travel" 1 30 August Introduction The treatment of purchase of durable (e.g. cars and other vehicles) and valuable goods (e.g. paintings, sculptures, antiques, jewellery) by travellers for their own use, 2 is currently under review in the balance of payments (BOP), Foreign Trade Statistics, National Accounts (NA) and Tourism Statistics (TS) domains, in the occasion of the review of the reference manuals. The Eurostat Technical Group Travel (TGT) had already tackled this subject 3, by making an inventory of present definitions in BPM5 and National Accounts. The TGT, also noting the present lack of clear definitions, had provisionally concluded that durable and valuable goods should be included in Travel. The objective of the present paper is to try to contribute to the discussion underway summarising the present state of the problem and outlining the consequences on BOP data collection practices of the possible final outcome of the debate on definitions. 1. The present state of the problem Definitions in BPM5 and related texts In the Balance of Payments Manual, 5 th edition (BPM5, chapter XII, para. 242 and 251) it is defined that travel covers all goods and services acquired from an economy by non-residents during their visit, including articles purchased for traveller s own use and taken out of the economies visited. However, the treatment of the purchase of durable (cars, furniture, etc.) and valuable (jewellery, antiques, etc.) goods purchased by travellers is not clearly specified in the BOP Manual. Only the Balance of Payments Textbook ( 335 and 338) suggests the recording in the Travel item of cars purchased by travellers. In detail, 335 says "For example, an automobile purchased by a traveler during her stay in a host country and shipped to her home country for personal use should be included as part of the travel item."; nonetheless, an example presented in 338 can be narrowly (and incorrectly) interpreted that only car purchased for travel use (e.g. as an alternative to car leasing) should be presented in travel item. No specific indication is provided about the purchase of valuables. 1 The paper builds on an inital contribution from Brigitte Kombert-Engelhardt (Deutsche Bundesbank) and Ewa Bieniasz (National Bank of Poland), produced in the framework of the activity of the sub-group "Durable and valuable goods" of the Eurostat Technical Group "Travel" (TGT). It has been revised through the discussion within the TGT. A first version of the paper was issued, on 25 January 2007, as Annex B of the document Eurostat - BOP WG - Technical Group "Travel" Progress Report, BP/07/05. The paper should not be considered as reflecting the official views of individual countries' participating in the group or individual group members' positions. 2 The subject of the present paper are durable and valuable goods purchased by travellers for non-commercial purposes, irrespective of the fact that they are 'for their own use' or 'to give away'. 3 Eurostat Technical Group Travel: Progress report, 20 February 2006, BP/06/12.

2 Definitions in FTS According to the United Nations Manual on International Merchandise Trade Statistics (IMTS) 4, goods have to be included in Foreign Trade Statistics (FTS) if their value exceeds national legal requirements ( IMTS 25 and 48 ). In the European Union, in line with IMTS rules, these goods must be declared in customs declarations and thus they are automatically included in EU trade with non-member States (EXTRASTAT). Since households are not obliged to report in the statistics on foreign trade between Member States of the European Union (INTRASTAT), intra-eu purchases of this kind are generally not recorded; in some countries (e.g. Germany) additional estimates, based on the information available before the introduction of INTRASTAT, are used to account for this type of households' intra-community trade. Definition in NA and position of the Task Force RoW In the National Accounts manual ESA95, a general rule for the treatment of expenditure by non-resident tourists and business travellers is formulated. 5 This expenditure, irrespective of the product purchased (goods or services), by convention, should be classified as export or import of services (ESA 1995, j for exports and for imports). As a conclusion, since no distinction is made for durable and valuable goods, from NA it can be inferred that the purchases of both durable and valuable goods carried out by travellers during their trips abroad have to be included in BOP Travel. However, the ECB/Eurostat "Task Force on the Rest of the World account" (hereafter TF RoW), in the draft of the final report sent in January 2007 to the members of the National Account Working Group for comments, recommended that valuable goods bought by travellers should be recorded in the 'goods' item of both balance of payments and the RoW account, rather than in 'services'. 6 The TF RoW treats differently durable goods, supporting their inclusion in 'services' (BOP 'travel'). Position of TF BOP/FTS After discussing this issue, the members of the Eurostat Task Force on the Reconciliation between Balance of Payments and Foreign Trade Statistics (TF BOP/FTS) came to the conclusion that it would be preferable to give preference to IMTS definitions, i.e. to leave all durable and valuable goods bought by travellers within the scope of FTS if their value exceeds national requirements. 7 The main reason for this conclusion is of practical nature, i.e. that in most countries these goods are indistinguishably part of FTS exports and imports; in fact, although only a few countries in the EU are able to 4 Concepts and definitions, ESA95 treats durable and valuable goods also from a non-travel perspective, i.e in general terms, as follows. ESA95 treats in different ways sales of new means of transport and sales of valuable goods. Sales of vehicles to a household are contemplated as final consumption (ESA, 1995, d), whereas expenditure on valuables is considered as gross fixed capital formation (ESA, 1995, 3.77 (4)). ESA95 specifies that in case of transactions in existing valuables with the Rest of the World - referring here to 'normal' trade, i.e. without the physical displacement of the purchaser to the supplying economy - "the import or export of a good is recorded" (ESA, 1995, e). 6 European Central Bank - Eurostat, Task Force On The Rest-Of-The-World Account: Final Report, Draft 2, 9 January The basis for TF RoW's suggestion to include valuable goods (paintings, sculptures, antiques, jewellery) in 'goods' seems to be ESA e, mentioned in footnote 5 of this paper. TF Row, differently from what is stated here, seems not interpreting this ESA95 statement as only referring to 'normal' trade, and therefore not to travellers purchases. 7 Minutes of the 2nd meeting of the Task Force on the Reconciliation between Balance of Payments and Foreign Trade Statistics, September

3 identify such goods using a special transaction code, this is not generally the case. The TF suggests that "BOP rules should be changed accordingly, to avoid double reporting". Definition in draft BPM6 /International accounts Manual and position of the IMF BOP Committee The Draft BOP and International Accounts Manual (March 2007 edition), states in Goods for own use or to give away acquired by travelers in excess of customs thresholds are also included in general merchandise. For example, durable goods (such as cars and electronics) and valuable goods (such as jewelry) may be acquired in this way. In it is supplementarily pointed out that travel excludes acquisition of valuables, consumer durable goods ( ) and other consumer purchases that are included in general merchandise." Additionally, in it is noted that this treatment is consistent with international merchandise trade statistics, but care is needed to avoid double counting such goods by including them also under travel. The IMF Committee on Balance of Payments Statistics (hereafter IMF BOP Committee), agreed in its October 2006 meeting 8, prior to the release of the mentioned Draft BPM6, that "conceptually durable goods arising from travel should be in 'goods'. The Committee also noted that in practice such goods would be included in 'travel' in a number of countries due to a lack of detailed source information". Definition in draft International Recommendations on Tourism Statistics (IRTS) The approach of the mentioned BPM6 draft seems likely to be followed in the domain of tourism statistics. The last availabe draft, at the time this note is written, of the UN-UNWTO International Recommendations on Tourism Statistics (IRTS) 9, In par. 4.4, recommends "to exclude from tourism expenditure all expenditure on all goods, considered as valuables or consumer durables (e.g. computers, cars, caravans, etc.) which value exceeds the custom threshold, and that Balance of Payments statistics and National Accounts include as imports or exports of goods under general merchandise trade.". However, differently from BPM6, the same paragraph of the draft IRTS states "because of the importance of the purchase of these goods by visitors in certain countries, it is recommended to collect information on this item of expenditure, but to treat this information separately, as a memorandum item, that should not be included in international comparisons of tourism expenditure.". 8 See IMF - Statistics Department, Nineteenth Meeting of the IMF Committee on Balance of Payments Statistics - Frankfurt, October 23-26, 2006, Summary of Discussions, 9 United Nations - UN World Tourism Organization, International Recommendations on Tourism Statistics (IRTS) - Provisional draft, New York / Madrid, May

4 Summary Trying to summarise the present state of the problem, there is inconsistency between BPM5, even if the latter is not completely clear in this respect, and FTS definitions about the treatment of durable and valuable goods bought by travellers for their own use. ESA95 seems consistent with BPM5, but recently the ECB/Eurostat TF Row recommended the inclusion of valuable goods in the 'goods' item and durable goods in the 'services' item. The TF BOP/FTS expressed a preference for FTS definitions. Draft BPM6 (March 2007), directly addressing these issues, indicates in in combination with that travel excludes acquisition of valuables (such as jewelry), consumer durable goods (such as cars and electronic goods) and other consumer purchases if their value exceeds national legal requirements (thresholds), as these goods are included in general merchandise. TS definitions, in the draft International Recommendations on Tourism Statistics, follow closely the draft BPM6 apprach, but they also recommend a separate recording of durable/valuable goods purchased by visitors as a memorandum item. 2. Practical consequences of IMTS and draft BPM6 definitions According to IMTS, FTS should include all durable and valuable goods purchased by travellers, irrespective of the goods` use (for traveller's own use or for commercial purposes), if their value exceeds national legal requirements (custom thresholds). According to draft BPM6 (March 2007), BOP statistics on goods include all durable and valuable goods purchased by travellers, irrespective of the goods` use, if their value is above legal national requirements and BOP statistics on travel include all durable and valuable goods purchased by travellers, irrespective of the goods use, if their value falls below legal national requirements. These definitions imply a lack of clarity for BOP (and maybe also FTS) compilers in the European Union, in particular as regards durable/valuable goods bought by travellers resident in the EU in other countries of the EU, through their physical displacement in the country where the purchase is undertaken. This is explained in the following, by distinguishing Extra and Intra-EU purchases: a) if travellers resident in the EU purchase durable/valuable goods in countries outside the UE (Extrastat domain), the goods are automatically recorded in FTS, if their value exceed national thresholds, as they are necessarily accompanied by customs documents. It should be noted, in this respect, that the comparability of data across countries will be limited, because of the different nationally determined thresholds about the obligation for customs declarations. b) if travellers resident in the EU purchase durable/valuable goods in countries within the EU (Intrastat domain), they are not obliged to report these transactions in Intrastat declarations, irrespective of the goods value. Consequently, these purchases are not included in FTS. The statistical handling of intra-eu purchases by EU travellers, in point b) above, seems not clearly defined, since the expression "in excess of custom thresholds", used in draft BPM6, is not straightforward to interpret in relation to these transactions. 4

5 One approach could be to consider that the threshold is not existing in this case and, therefore, all transactions have to be included in travel; however, this would imply the cons that durable/valuable goods of identical value, "in excess of custom thresholds" for Extra-EU trade, would be treated differently if the purchase is Extra or Intra-EU (in goods in the former case, in travel in the latter). Alternatively, it could be agreed that the same threshold, presumably the one used for Extra-EU trade, is applied for both Intra and Extra-EU purchases of EU travellers. In this case, the two types of purchases would be homogeneously treated (in goods if above and in travel if below the threshold). However, this would require that Intra-EU purchases have to be estimated, with a split between purchases above the threshold (to be allocated to goods) and below it (to be allocated to travel). This uncertainty should be solved in order to avoid inconsistent handling and/or loss of comparability of EU countries statistics, also because of possible differencies in national interpretations of definitions. Hence, definitions should be more clearly formulated in the new FTS, BOP and NA manuals, adequately addressing the case under b) above and similar ones. This note is transmitted to the Task Force on the Reconciliation between Balance of payments and Foreign Trade Statistics", in order to gather ideas, comments and/or proposals about the statistical treatment of intra-eu purchases of durable/valuable goods by EU resident travellers. 5