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5422.0 - International Merchandise Trade, Australia, Sep 1997  
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Feature Article - Tracking Australia's International Trade


(This article was published in the September quarter 1997 issue of International Merchandise Trade, Australia (ABS Catalogue Number 5422.0))


INTRODUCTION

International merchandise trade statistics measure Australia's exports and imports of goods. They provide essential information about Australia's trading role within the global economy.

2. These statistics are integral to the compilation of Australia's Balance of Payments and National Accounts statistics. They are some of the most valuable decision-making tools available for analysing commodity and regional trading patterns and directions, formulating and reviewing trade policy, undertaking trade negotiations and evaluating the domestic market implications of import and export activity.

3. This article is aimed at providing users with an understanding of the processes involved in collecting, compiling and disseminating Australia's international merchandise trade statistics, and the extent of data that are available.


COLLECTION

4. International merchandise trade statistics are collected by the Australian Customs Service (ACS) as part of Customs' responsibility to administer government policy on tariffs and barrier control. Exporters, importers or their agents are required under the Customs Act to submit details of their transactions to ACS. The majority of transactions are completed electronically.

Exports

5. A formal entry for all goods intended for export must be lodged with the ACS where the goods are valued over $500 per commodity (for air and sea cargo) and over $2,000 per consignment (for postal cargo). The entry may be lodged by the exporter or their agent either electronically via the Customs Export Integration (EXIT) system, or manually by contacting the nearest ACS office.

6. Export entries may be lodged up to 12 months in advance but are usually lodged shortly prior to export. For each consignment the exporter or agent is required to enter details about the type of goods being exported, State of origin of the goods, mode of transport, Australian port of loading and overseas port of discharge, country of final destination, quantity and value of the goods, intended date of export and permit details if applicable. All exports must be classified according to the Australian Harmonized Export Commodity Classification (AHECC). This commodity classification is based on the international Harmonized Commodity Description and Coding System (HS), with extra detail to meet Australian statistical needs.

7. The EXIT system interrogates the data and issues an Export Clearance Number (ECN) to the exporter or agent. The data examination is aimed at ensuring that all necessary information has been included, that the codes used (for AHECC, country, etc) are valid, and that valid permit numbers are quoted where necessary. Where errors are detected, EXIT issues an error message and the exporter or agent must resubmit an amended entry which is then re-checked. 'Unit value' edits are also applied to all records classified to an AHECC where net quantity is required to be reported. These edits check that the unit value of each record is consistent with historical unit values for that commodity. If the unit value of a record is outside the normal range, EXIT notifies the exporter or agent that they must either confirm the entry by resubmitting it unchanged, or lodge a replacement entry.

8. An ECN free of errors (a 'clear' ECN) must be obtained prior to loading on a ship or aircraft for export. The exporter passes the ECN to the next link in the transport chain and this ECN is quoted by the international carrier when compiling manifests. The existence of a clear ECN is not evidence that an export has taken place, it merely signifies an intention to export. It is not until a clear ECN is reported on a manifest that it can be regarded as an export.

9. If the goods are not exported, the ECN should be withdrawn by the exporter or agent. The ACS monitors all ECNs to determine if the goods have been exported within 7 days of the intended date of export. ECNs of goods not exported within this time become 'idle' and the ACS contacts exporters/agents to confirm whether the goods have been exported. For varying reasons, ECNs are not always quoted on manifests. These are usually identified during the check of 'idle' ECNs.

10. The ACS recently completed a major review into the operation of the EXIT system and is presently examining the report's findings. Changes may result to the current policy and operation of the system as a result of the review.

Imports

11. An import entry must be lodged with the ACS for all import consignments valued over $250 (for air and sea cargo) and over $1,000 (for postal cargo). The entry may be created and lodged by the importer or their customs broker through a system called COMPILE (Customs Online Method for Producing from Invoices Lodgeable Entries). Import information must be lodged and finalised before access to the goods can be obtained, and may be lodged well in advance of the expected arrival of the goods. For each consignment the importer or agent is required to supply details about the type of goods being imported, the country of origin of the goods, mode of transport, overseas port of loading and Australian port of discharge, port of final destination, quantity and value of the goods and information to assist in determining the amount of duty to be paid. All imports must be classified according to the Harmonized Tariff Item Statistical Code (HTISC). This classification is based on the international HS, with extra detail to meet Australian Customs and statistical needs.

12. COMPILE edits and validates data, reporting any errors for immediate on-line correction. The edits are mainly aimed at ensuring all necessary information has been included and the reported codes are valid. Unit value checks have also been recently introduced. In addition, COMPILE handles currency and quantity conversions; determines the customs value of the goods and calculates any customs duty and sales tax payable; and adjusts quota/import credit balances where applicable. The recent introduction of EDIFICE (Electronic Data Interchange For Input of Customs Entries) has further streamlined the process. Where the information already exists electronically, it removes the need for manual keying. This creates entries faster and reduces keying errors.

Use of the information by ACS

13. The information collected from exporters, importers and their agents is used by the ACS to assess and collect Customs duty and other revenue payable on imported and exported goods and to facilitate the monitoring and control of the physical movement of goods into and out of Australia.

14. At present, greater attention is given by the ACS to accurate reporting of import transactions than export transactions because of the revenue implications of tariffs. For that reason, other things being equal, import data from ACS can be expected to have been checked more closely, and therefore be of better quality, than export data.

15. ACS compliance management activities have generally been conducted in a post-transaction environment where their main objective was to ensure the correct amount of duty was paid. More recently, the ACS has implemented a more co-ordinated approach to compliance management responsibilities, and is aiming to maximise compliance by seeking to achieve a continual improvement in the level of voluntary compliance. The focus is on ensuring future compliance rather than the correction of past errors, and ensuring that an appropriate balance exists between service and enforcement. Compliance improvement officers have an industry sector focus and are responsible for checking the compliance of companies in that industry across all activities of Customs interest.

16. Earlier this year the ACS launched its Cargo Management Strategy (CMS) which aims to facilitate the movement of cargo and streamline the flow of related information. One of the major initiatives of the CMS is the development of partnership arrangements between international traders, ACS and other relevant government agencies. These arrangements will enable more flexible reporting arrangements while still allowing ACS to manage associated risk effectively and collect the appropriate amount of government revenue. Authorised importers and exporters are intended to be permitted to account to Customs for their trading activities at the end of an accounting period. Eight companies have been selected to participate in a trial of the partnership concept and the Australian Bureau of Statistics (ABS) has been involved in the preliminary discussions that ACS has held with these companies. The implementation of partnerships is hoped to improve the quality of reporting, but could have an impact on the availability of some minor data items.

Passing to ABS

17. Once the entries have been lodged and cleared by ACS, they are copied electronically to the ABS for statistical processing and compilation.


COMPILATION

Conceptual framework

18. In principle, international merchandise trade statistics measure all moveable goods which add to or subtract from the stock of Australia's material resources, as a result of their movement into or out of Australia. In compiling these statistics, the ABS follows the international recommendations as set out in the United Nations publication International Trade Statistics, Concepts and Definitions, Statistical Papers, Series M, No. 52, Rev. 1 (1982). Some of the transactions that must be reported to Customs do not fall within the scope of international merchandise trade statistics and so are excluded by the ABS. Such goods are classified as 'non-merchandise trade' and primarily comprise goods imported or exported on a temporary basis (e.g. art work for temporary exhibition). In addition, the international recommendations recognise that the customs record will not be able to capture certain transactions that otherwise fall within the scope of merchandise trade. Details of the types of transactions which are excluded are shown in the explanatory notes at the back of this publication.

19. The UN has recently reviewed the concepts and definitions used for international trade statistics, and is preparing a publication which will outline the revised standards and supersede International Trade Statistics, Concepts and Definitions, Statistical Papers, Series M, No. 52, Rev. 1 (1982). The review does not recommend radical changes, and the implementation of the recommendations is expected to have a minimal impact on Australia's international merchandise trade statistics. Once the revised UN standards are finalised, the ABS intends to produce a publication outlining the concepts, sources and methods used in compiling Australia's international merchandise trade statistics.

Receipt of data

20. Data are received from ACS on a daily basis - on cartridge tape for imports, and by direct line transfer for exports. There are approximately 120,000 export entries and 650,000 import entries passed to the ABS each month. This equates to 1.4 million export and 7.8 million import transactions per year.

21. Imports data received from ACS can be loaded straight to the ABS' imports unit record database. Export data, however, undergoes a matching process prior to loading. This is because of the reliance of exports on two pieces of information, an 'intention to export' (ECN) and a confirmation of export (via the carrier's manifest). The ABS system stores the ECN and manifest information and creates export records where both ECN and manifest details exist. These export records are then loaded to the exports unit record database.

Editing procedures

22. Given the reliance of business and policy makers on international merchandise trade statistics, it is vital that they are as accurate as possible at all levels of aggregation. To achieve this, the ABS subjects trade data to a range of quality checking procedures designed to detect and correct significant inaccuracies before statistics are compiled and published.

23. The ABS maintains separate multistage exports and imports computer processing systems. These systems perform similar checks for both exports and imports data, including:

  • identification of all transactions with a value of $1 million or more. These are then thoroughly checked and details are confirmed with the exporter, importer or agent if necessary;
  • legality checks to ensure that valid and up-to-date codes are reported and all mandatory fields are completed;
  • internal consistency checks (e.g. if the mode of transport is reported as sea, the Australian and overseas ports should be sea ports);
  • unit value checks of all records in classifications for which unit of quantity is mandatory. A unit value range is calculated from the median 80% or 90% of transactions reported within the same classification during the preceding 6 months. Tolerance factors (calculated on a sliding scale and decreasing as the value of the transaction increases) are applied to these ranges and the unit value of each record is compared with this adjusted range. Those records which fall outside the range are flagged for investigation; and
  • tailored edits for specific commodities and/or countries and/or States (e.g. bulk raw sugar is generally only exported from Queensland or Western Australia, so any exports from other States are flagged for investigation).

24. On average, 6 per cent of exports records and 0.5 per cent of imports records generate error messages that require examination by editors. Other records are automatically adjusted by the system to correct obvious errors. Editors identify and resolve the problem signalled by the error message. This may involve contacting the exporter, importer or agent for clarification. Each editor concentrates on a series of chapters of the relevant commodity classification, and so builds up knowledge regarding the characteristics of the commodities they edit. Although the editing process is time consuming and clerically intensive, it is necessary in order to ensure that the statistics are as accurate as possible.

25. Some of the ABS edits duplicate similar checks that have already been performed on the records by the ACS system. However, the ACS checks are not as rigorous and involve sending system generated messages to the data supplier rather than personal contact. For example, although ACS apply unit value edits to both exports and imports, they are only warnings of possible errors and data suppliers can confirm their reported unit value by resubmitting the entry unchanged. If the record when it reaches the ABS fails the ABS unit value edits, the data supplier will be contacted to confirm their data. In many instances, although the records have been confirmed correct by resubmitting them unchanged to ACS, errors exist in either the quantity, the value or the commodity classification code. Approximately 4 per cent of export records and 0.3 per cent of import records are amended as a result of editing by ABS.

26. Further contact with exporters is necessary on a monthly basis. As outlined above, for exports ABS receives both ECN and manifest information and matches the two to form export records. Despite ongoing follow up of 'idle' ECNs by ACS, a significant number of these remain at the end of each month. Prior to producing preliminary results, ABS analyses all ECNs that may have departed Australia in the previous month but that have not yet been quoted on a manifest. At this stage, all exporters with 'idle' ECNs totalling over $500,000 are followed up by either ABS or ACS to determine whether the goods actually departed in that month. If departure is confirmed, ABS includes the ECN in the month's exports. The follow up of idle ECNs is a clerically intensive process which also places extra burden on those exporters and agents who are approached for confirmation of the export. However, if these large value 'idle' ECNs were not followed up, preliminary estimates of exports would be subject to significant revision as these shipments were eventually manifested and processed.

Aggregation and confidentiality

27. At the end of the month, when all entries have been processed, data are aggregated for release. During this process, concordances to other classifications are accessed, allowing international trade statistics to be produced not just according to the Harmonized System classifications, but also according to classifications such as the UN's Standard International Trade Classification Revision 3 (SITC R3), the UN's Classification by Broad Economic Categories (BEC), and the Australian and New Zealand Standard Industrial Classification (ANZSIC), which may be more appropriate than the HS classifications for some users.

28. Aggregate international trade statistics are available in great detail, although not all statistics are available for release. Where an exporter or importer considers that release of certain statistics would be likely to enable the identification of their organisation, the ABS investigates these cases and may place a restriction on the release of those statistics. Where there are no requests for restrictions, all data are available. These confidentiality restrictions are required to be applied in accordance with the Census and Statistics Act 1905 and the Statistics Determination in force under section 13 of that Act.

29. Where it is necessary to restrict the release of some international merchandise trade statistics, the ABS, in consultation with the person or organisation who may be identified, chooses a form of restriction which protects the interests of that person or organisation and still allows useful statistical information to be released. For example, for a particular commodity the exports from one State may be restricted, but total Australian exports of that commodity may still be able to be released.

30. Confidentiality restrictions do not affect total export and import data. If the severest form of restriction ('no commodity details') is applied, no data are shown for that particular commodity. However, data for all commodities covered by 'no commodity details' restrictions are aggregated into a 'dump' commodity code, so are still included in total exports and imports.

31. To assist users in the interpretation of trade statistics, a list of commodities which are subject to restrictions is available, together with an Information Paper - International Merchandise Trade and Shipping Statistics, Australia: Data Confidentiality (5487.0) - which contains further information on restrictions and how they may affect the data received. Both of these documents are free of charge and may be obtained by contacting Robynne Knowler, the Confidentiality Manager, on (02) 6252 5409.

Feedback from clients

32. Because of the sheer volume of export and import transactions, the limited resources available for quality control and the requirement to produce timely monthly statistics, it is inevitable that there will be some errors and misclassifications remaining in the statistics when they are first released. The ABS relies on feedback from users who are often able to use their knowledge and understanding of the market for products within their industry to identify inconsistencies in preliminary output. Client queries are investigated, and where errors are identified, the data are amended and the revisions incorporated in the next release of output. On average, 10 queries on exports data and 55 queries on imports data are received each month.

33. Most queries relate to unit value data and the most common field amended is quantity. Errors frequently occur when the goods exported or imported are recorded in a different unit of quantity from that specified in the classification. Common quantity errors are the recording of kilograms instead of tonnes and square feet instead of square metres.

34. Another common source of error is recording incorrect commodity classification codes. It would seem that exporters, importers or their brokers sometimes default to the easiest statistical code when there is doubt as to the correct classification. In many cases, data are misclassified to the 'other' category of a classification group. Generally the 'other' classification code should have relatively small amounts of trade reported against it, as goods in which there are significant trade would have their own specific classification.

35. While the ABS appreciates that determining the correct classification for a commodity can be difficult (due to the complexity of the classification, the inadequacy of the goods description in the supporting documentation or a lack of detailed knowledge about the commodity), misclassification errors are of very real concern to ABS clients. Misclassifications can also lead to incorrect unit values. When clients query the classification of statistics, it can be difficult for ABS staff to resolve the problem, as they do not have detailed product knowledge or access to supporting documentation such as invoices. The ABS, therefore, normally checks with brokers or the exporting/importing company for resolution.

36. Another area where errors are frequently detected is in the reported country of origin and/or destination. For imports, such errors are often found by the ACS if the duty rate is wrong, but for exports or for imports which incur no duty, the problem is not often identified until the ABS' clients query the statistics.

37. Information received when investigating client queries has been used to set up a system which enables the items queried to be monitored and allows persistent instances of misreporting to be identified and corrected prior to data release. This has resulted in reduced provider load and improved data quality as well as freeing up resources to concentrate on other areas of concern. The ACS are advised if persistent quality problems are detected in particular areas of the classification.

38. Any queries that clients may have in relation to the statistics received should be forwarded to the ABS as soon as possible after receipt of the data and include as much detail as possible. All queries should be directed to Denise Burton, the Exports Manager, on (02) 6252 5401, or Carol Ward, the Imports Manager, on (02) 6252 6142, or fax (02) 6252 7438.

Revisions

39. Revisions to published data can arise because an amending entry has been supplied to ACS (and passed to ABS) or because errors have been identified by the ABS in following up a client query or through other investigations.

40. Exports data for the most recent 18 months and imports data for the most recent 6 months are retained on the unit record database and revisions are made as errors are identified. Revisions beyond these periods are made only in exceptional circumstances. Because most revisions to export and import statistics are made within the first two or three months after the release of the initial estimate, this revisions policy is likely to have minimal effect on the quality of the statistics. Revisions to broad aggregates are not normally significant, but individual commodity statistics may register significant changes.

Other investigations

41. Other investigations are undertaken by ABS staff to assist in assessing and improving the quality of international trade statistics. These include:
  • Commodity investigations - which involve investigating records relating to specific commodities or chapters of the HS classification with particular data quality problems. They aim to determine reasons for inaccuracies, and can result in changes to the edit program to better detect these errors.
  • Bilateral reconciliation studies with Australia's trading partners - which involve comparing partner countries' estimates of their transactions with Australia with Australia's estimates of its transactions with those countries. Bilateral studies can alert statistical agencies to possible coverage or quality deficiencies in their statistics.
  • Analyses of internal processes and procedures to ensure they are efficient and effective.



DISSEMINATION

Frequency and timeliness

42. The ABS releases monthly, quarterly and annual international merchandise trade statistics. ABS policy is to release initial monthly estimates as soon as possible after the reference month. Export statistics are released 21 working days after the end of the reference month while import statistics are released 12 working days after the end of the reference month. More time is required to process exports data as it is necessary to follow up and match manifest information with the ECNs.

Classifications

43. ABS international merchandise trade statistics are compiled in accordance with several different classifications. The classification used for the collection of international trade data is the World Customs Organisation's Harmonized Commodity Description and Coding System (HS). Australia collects more detail by extending the 6-digit HS to 8-digit level for exports (AHECC) and to 10-digit level for imports (HTISC).

44. Australia disseminates international trade data according to the extended HS and according to a number of other classifications: the Standard International Trade Classification, Revision 3; the UN Classification by Broad Economic Categories; and by industry of origin according to the Australian and New Zealand Standard Industrial Classification.

Data items available

45. Statistics for reference periods commencing from July 1981 are retained in electronic form for retrieval. These data are available on an HS basis back to 1988 and earlier statistics may be supplied from publications or microfiche.

46. Statistics are available for exports, imports and import clearances.

.
          Exports reflect goods that leave the country and include both goods that have been produced or manufactured in Australia, and re-exports of foreign goods.
.
          Imports reflect goods that arrive in the country and include:
-
          goods brought into Australia directly for home comsumption following the payment of any duty;
          plus
-
          goods which are entered into the country but are not cleared for home consumption; the goods instead go into Customs (bonded) warehouses and duty is not paid at that time.
.
          Import clearances reflect goods that are cleared into the Australian market for home consumption and include:
-
          goods brought into Australia directly for home comsumption following the payment of any duty;
          plus
-
          goods cleared from a bonded warehouse following the payment of any duty.


47. The information available for both exports and imports includes:

.
          commodity information at various levels of detail;
.
          value of goods:
-
-
-
          customs value (imports and import clearances);
          free on board value (exports and imports);
          cost, insurance, freight value (imports);
.
          quantity of goods;
.
          gross weight of goods:
-
-
          by all other data fields for exports;
          by Australian and/or overseas port, by mode of transport, and at total level for imports (from July 1992 onwards);
.
          overseas countries:
-
-
          country of origin for imports and import clearances;
          country of final destination for exports;
.
          overseas ports (from 1 July 1992 onwards):
-
-
          port of loading for imports;
          port of discharge for exports;
.
          Australian States and ports:
-
-
          State and/or port of discharge for imports, and State of final destination, for both imports and import clearances;
          State of origin and State and/or port of loading for exports;
.
          country groups:
-
          Australia's trade with selected country groups such as ASEAN, OECD and the European Union;
.
          commodity groups:
-
          Australia's trade in commodities grouped in response to specific client needs;
.
          mode of transport;
.
          nature of entry (imports and import clearances):
-
          field used to distinguish between goods brought directly into Australia and those which involve the use of a bonded warehouse; and
.
          duty-related fields (import clearances):
-
          include duty rates, amount of duty paid, and various fields indicating whether special duty rates have been claimed.

Publications

48. Two international trade publications are produced by the ABS:

International Merchandise Imports, Australia (Cat. No. 5439.0). This monthly publication is available within 12 working days of the end of the month to which it refers and costs $13.50 per issue. It presents total imports (international trade basis) for the reference month only, together with commodity aggregates at the one digit level of the Standard International Trade Classification (Revision 3). No analysis is provided.

International Merchandise Trade, Australia (Cat. No. 5422.0). This quarterly publication is available within 35 working days of the end of the quarter to which it refers and costs $30.00 per issue. It provides commentary on the results and main findings arising from the current quarter's data, and includes tables presenting information on the value of merchandise exports and imports classified by country, commodity, country by commodity, State, broad economic category and industry of origin. It also includes articles analysing various aspects of Australia's trade (e.g. Australia's trade with particular countries or country groups; results of bilateral reconciliation studies with our major trading partners); or discussing statistical quality issues.

49. In addition, monthly data on merchandise exports and imports on a balance of payments basis are included in the monthly publication International Trade in Goods and Services, Australia (Cat. No. 5368.0). These data are adjusted for coverage, timing and (imports only) valuation to put them on a balance of payments basis.

50. Time series data in publication format are available from 1974/75 onwards. Publications covering earlier periods are available for consultation in ABS libraries.

51. There is also an international trade Information Kit available, free of charge, which outlines concepts and definitions, classifications, confidentiality, data availability, and products and services.

Consultancy Services

52. International merchandise trade statistical and related information is available through consultancy services operating in each ABS State or Territory office, and through Central Office in Canberra. Consultants develop tailored information solutions in response to individual client needs.

53. These solutions may take the form of ad hoc statistical reports accompanied by supporting information to assist in interpreting the data, or regularly delivered reports provided on a subscription basis and similarly accompanied by explanatory notes and annotations.

54. Consultancy prices are dependant upon the nature of the interrogation and the quantity of information retrieved. Quantities are determined by the number of commodities, countries, states and ports against which trade data sets are interrogated, and the number of time periods and data items (quantity, value, etc.) included. ABS client service staff will provide quotes for international trade consultancies upon request.

55. Clients wanting information more detailed than that published in standard products are required to pay for all costs incurred beyond the costs of collection and production of clean unit record files from which the information is produced. That is to say, they are required to cover dissemination rather than data costs.

56. Clients who have general enquiries about data formats and the availability of international merchandise trade data should contact Client Services in your local ABS Office.



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