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5422.0 - International Merchandise Trade, Australia, Sep 1996  
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Feature Article - Bilateral merchandise trade statistics reconciliation: Australia and United States of America, 1991 to 1994


(This article was published in the September quarter 1996 issue of International Merchandise Trade, Australia (ABS Catalogue Number 5422.0))

INTRODUCTION

The Australian Bureau of Statistics (ABS) has recently undertaken a series of bilateral reconciliation studies with the United States Bureau of the Census covering merchandise trade flows between Australia and the United States of America. The purpose of these studies was to quantify the causes of data discrepancies and to identify any major coverage or quality deficiencies in the statistics produced by each agency, after adjusting for conceptual and methodological differences.

Four reconciliation studies have been undertaken with the United States - for the 1991, 1992, 1993 and 1994 calendar years. This article presents an overview of the concepts behind reconciliation studies and a comparison of the results of these four studies. The 1991 study results were published in the December Quarter 1993 issue of International Merchandise Trade, Australia (Cat. No. 5422.0), and the 1992 study results were published in the September Quarter 1994 issue.

DATA SOURCE

Detailed merchandise trade statistics, based on Customs documentation, were exchanged between the ABS and the United States Bureau of the Census for the calendar years 1991, 1992, 1993 and 1994. Each agency also exchanged details of the conceptual and practical bases for compiling its statistics, including a comparison with the international recommendations contained in the United Nations (UN) publication, International Trade Statistics, Concepts and Definitions, Statistical Papers, Series M, No. 52, Rev. 1.


BILATERAL RECONCILIATION CONCEPTS

If identical concepts and definitions were applied by each country to both imports and exports, and if there was no time difference between the recording of the export by one country and the import by the other, Australian exports to the United States should be identical to United States' imports from Australia and vice versa. However, there are many reasons why merchandise trade statistics may not reconcile. The following possible causes of differences between the two sets of statistics were investigated.

a) Coverage

International trade statistics measure, in principle, all goods that add to (imports) or subtract from (exports) a nation's stock of material resources. In practice, both Australia and the United States rely on data collected by the national Customs agency as the source for their statistics, and some goods that fall within the scope of merchandise trade are omitted from merchandise trade statistics as customs entries are not required.

After comparing the goods excluded from each country's statistics, the following have been identified as possible causes for discrepancy:

  • In Australia, individual transaction lines within an export consignment where the value of the goods is less than $A500 are excluded. In the United States, Customs data exclude export shipments valued under $US2,501, but the United States' merchandise trade figures include estimates for all low value transactions using formulae based on historical data.
  • In Australia, import entries lodged on informal clearance documents for values not exceeding $A250 are excluded. In the United States, Customs data exclude import shipments valued under $US1,251 ($US251 for some quota items, primarily textiles), but the United States' merchandise trade figures include estimates for all low value transactions using formulae based on historical data.
  • In Australia, parcel post items valued under $2,000 for exports and $1,000 for imports are excluded. The United States treat exports and imports by parcel post in the same way as exports and imports by other modes of transport, so although low value limits are applied by Customs, the United States' merchandise trade figures include estimates for these transactions.
  • In Australia, certain materials under inter-governmental agreements for defence and similar projects are excluded. In the United States, all military sales are included.
  • In Australia, customs entries are not required for the sale or acquisition of certain ships intended for use on overseas routes. All sales and purchases of marine vessels are included in United States' merchandise trade figures.
  • Australian merchandise trade figures exclude repair trade. The United States excludes the value of the goods that are repaired from the statistics, but includes the value of repairs.
  • United States' Customs data exclude fish and salvage sold to foreign vessels from national vessels. Although in principle Australia includes these transactions, in practice they are very unlikely to occur, so are unlikely to be a significant source of discrepancy.

The most significant of these coverage differences are those due to the difference in treatment of low value trade, and the difference in treatment of repairs. Investigations have indicated that the discrepancy due to the remaining coverage differences would be minimal.

b) Valuation

The UN recommends that the value of exports be the 'free on board' (FOB) value at the frontier of the country of export. For imports, the UN recommends that the 'cost insurance and freight' (CIF) value at the frontier of the country of import be used, and that the FOB transaction value be collected when possible, as supplementary information.

Australia values its exports on an FOB transactions value basis, and its imports on a 'Customs value' basis. Customs value is the FOB transactions value adjusted for any transaction where the Australian Customs Service considers the FOB transactions value to be an artificially low price relative to the market value. The Customs value is applied at either the point of containerisation (most cases), the point of shipment or the customs frontier of the exporting country, whichever comes first.

The United States values its exports on a 'free alongside ship' (FAS) basis. The value includes all costs incurred in placing the goods alongside the carrier at the port of exportation. The United States values its imports on a 'Customs value' basis, which is generally equivalent to an FAS transactions value basis. The FOB value exceeds the FAS value by the cost of loading the merchandise onto the carrier. The United States Bureau of the Census advised that in practice there is little difference between values reported on FOB and FAS bases.

c) Country classification

The UN recommends that exports be classified by country of final destination, which is the country where the goods are going to be consumed. Both Australia and the United States adhere to the UN recommendation. However, this can be a difficult task as the exporter is sometimes not in a position to know whether the goods are to be further manufactured or otherwise consumed in the country to which they are consigned, or whether they will be traded with yet another country. When the country of final destination is not known at the time of exportation, the exporter declares the country of last shipment (country of consignment) in place of the country of final destination.

For imports the UN recommends that the country of origin, or production, be used to identify the trading partner supplying the goods. Production is defined to exclude minor operations, such as shelling, bottling or labelling that do not alter the essential nature of the goods. Both Australia and the United States adhere to this recommendation.

It is clear from the above definitions that, in concept at least, exports and imports statistics will only be symmetrical between trading partners when exports are shipped directly from the country of origin to the country of final destination. Discrepancies occur when third countries are involved, as with re-exports of merchandise and goods traded through intermediate countries.

Three cases where country attribution principles may require adjustments to be made are outlined below.

i) Re-exports of merchandise

When goods are exported to Australia and are subsequently re-exported to the United States, these goods will be recorded in Australia's exports to the United States but will not be included in United States' imports from Australia. Consequently, for data reconciliation purposes, the value of Australia's re-exports to the United States will need to be subtracted from Australia's export statistics. The same situation applies in the case of United States' exports and re-exports to Australia.

As an example, suppose Australia imports a commodity from a third country, and performs a minor operation such as bottling or labelling prior to exporting the commodity to the United States. Australia would classify the commodity as an import from the third country, and a re-export to the United States. However, the United States would not record the item as an import from Australia. Rather, the commodity would be recorded in United States' statistics as an import from the third country (the country of origin), with country of consignment Australia. For the purposes of the reconciliation, it would therefore be necessary to make an adjustment for the value of the re-exported item.

ii) Trade through intermediate countries

Trade through intermediate countries, or indirect trade, occurs when goods pass through a country other than the originating or destination country, remaining in that country for some length of time before shipment to the destination. Indirect trade can take two forms, namely retrading and trans-shipments.

          (i) Retrading

          Retrading occurs when Australia imports goods of United States origin from a country other than the United States, without the knowledge of the United States exporter. These goods will be included in Australian imports from the United States, but will not be included in the United States' exports to Australia. Consequently, the United States' export statistics will be lower than Australia's import statistics by the value of retrading. A similar situation operates for United States' imports of Australian goods.
          (ii) Trans-shipments

          Trans-shipment activity occurs where goods are not being retraded but are simply moving through intermediate countries en-route between trading partners. In the case of trans-shipments, the country of final destination is known to the original exporter. Therefore, the goods are recorded in the country of origin's merchandise exports to the partner, and in the partner's merchandise imports from the country of origin.

Ideally, an adjustment should be made for retrading activity, since it appears in the statistics of the importing country only. However, in Australia's import statistics it is not possible to differentiate between trans-shipment and retrading activity. In both cases Australia's import data will record the United States as the country of origin and the country of consignment as other than the United States.

iii) Re-imports

Re-imports are goods originally exported which are imported to the originating country in either the same condition in which they were exported or after undergoing repair or minor operations which leave them essentially unchanged.

Goods of United States origin that have been re-imported into the United States from Australia are recorded under a special commodity code in United States' statistics as imports from Australia. An adjustment needs to be made for these in the reconciliation. By contrast, goods of Australian origin that have been re-imported into Australia are included in Australia's published import figures as imports with country of origin Australia, and do not impact on the reconciliation.

d) Timing

The issue of timing can impact on the comparability of trade statistics. For example, due to the distance between Australia and the United States, there will be a time lag between a shipment departing from one country and arriving in the other country. A shipment departing by sea from the United States in mid December 1993 would be recorded by United States Customs in December and be included in 1993 statistics for the United States. However, the shipment would be likely to arrive in Australia in early January 1994, and be recorded in Australia's 1994 import statistics. To compensate for this, a shipping adjustment is needed in the reconciliation to cover goods exported at the end of one time period, but imported at the beginning of the next time period.

If there is a time lag between the arrival/departure of goods and their recording in a country's trade statistics, this will also impact on the comparability. For example, Australia's imports are recorded statistically in the calendar month in which the import entries are finalised by Customs, so goods included in a month's statistics may not always have arrived in that month. An adjustment can be made for the value of goods arriving in Australia outside the year in which they were recorded. No adjustment is necessary for Australia's exports or for United States exports and imports as these are recorded statistically according to the month of arrival (imports) or departure (exports).

e) Exchange rate

As analysis of bilateral merchandise trade data is carried out in a common currency, the conversion of data using an average annual exchange rate can contribute to data discrepancies. These discrepancies cannot easily be quantified, except in relation to large value transactions.

f) Domestic territory definition

As merchandise trade statistics are collected by the national Customs agency, it is important to know the definition of each Customs territory. For example, the United States' Customs boundary includes Puerto Rico and the US Virgin Islands. However, Australia treats these as separate countries for the purposes of identifying country of origin or final destination for goods. It is therefore necessary to make an adjustment to account for trade between Australia and both Puerto Rico and the US Virgin Islands.

g) Commodity classification

Both the United States and Australian data used in this analysis are classified under the Harmonised System. For particular transactions there may be some differences in classification between the two sets of data. As these differences do not affect the comparisons of total trade between the two countries, no adjustments are required.

h) Confidentiality

Both Australia and the United States protect confidential data by reclassifying the data from Chapters 1 to 97 of the Harmonised System to a dump code. Confidentiality does not, however, affect data comparability at the total trade level and therefore no adjustments are required.

i) Data errors

Reporting errors, data entry errors, and mistakes made during editing and processing of data are likely to occur with any merchandise trade statistics. However, their impact at the total trade level is believed to be relatively minor. Where errors are identified during a reconciliation, adjustments can be made.

j) Other differences

After conceptual adjustments have been made, discrepancies between the United States and Australian data may remain. Comparison of data at the commodity level can lead to the identification of further adjustments. These may include: goods that crossed one country's customs frontier but not the other's; differences in interpretation of the merchandise trade definition; and omissions from one country's statistics.


TABLE A. AUSTRALIA / US MERCHANDISE TRADE RECONCILIATION SOUTHBOUND TRADE
($A million)
1991
1992
1993
1994

      AUSTRALIA'S PUBLISHED IMPORTS
11,897
12,379
13,187
14,839
      Adjustments
      Coverage
      - Value of repairs and alterations
59
59
40
57
      - Low value trade
-275
-347
-349
-364
      Valuation
-
-8
-2
-7
      Country classification
      - US re-exports
270
300
374
516
      - Australia's indirect imports
-720
-907
-1,153
-1,320
      Timing
-423
-18
179
63
      Exchange rate
6
30
12
-14
      Domestic territory definition
      - Australia's imports from Puerto Rico and US Virgin Islands
241
195
225
234
      Other differences
      - US exports that did not cross the Australian customs frontier
37
519
124
96
      - Leased goods
35
138
-
155
      - Unreported US exports
-40
-32
-70
-109
      Residual discrepancy
-295
-87
-328
-711
      US PUBLISHED EXPORTS
10,792
12,221
12,239
13,435



TABLE B. AUSTRALIA / US MERCHANDISE TRADE RECONCILIATION NORTHBOUND TRADE
($A million)
1991
1992
1993
1994

      AUSTRALIA'S PUBLISHED EXPORTS
5,369
5,134
5,071
4,651
      Adjustments
      Coverage
      - Low value trade
-
-
6
10
      Country classification
      - Australian re-exports
-361
-409
-536
-423
      - US indirect imports
114
127
169
205
      - US re-imports
243
255
316
299
      Timing
97
80
46
-56
      Domestic territory definition
      - Australia's exports to Puerto Rico and US Virgin Islands
6
6
4
6
      Residual discrepancy
-226
-115
-200
-294
      US PUBLISHED IMPORTS
5,242
5,078
4,876
4,398




DATA ANALYSIS

Outcomes of the four reconciliation studies undertaken are shown in Tables A and B. These tables show the value of Australia's exports or imports, the value of adjustments made, and the value of the United States' imports or exports. Also shown is the residual discrepancy - this is the discrepancy that remains between the two sets of figures after all conceptual and practical adjustments have been made. All figures are in Australian dollars, converted using average annual exchange rates.

Broad Findings

In each of the four years studied, the value of United States recorded merchandise trade was less than the value of Australian recorded merchandise trade - both southbound (trade bound for Australia) and northbound (trade bound for the United States).

In 1991, Australia recorded imports from the United States of $11,897 million while the United States recorded exports to Australia of $10,792 million, a difference of $1,105 million. In the same year, Australia recorded exports of $5,369 million to the United States while the United States recorded imports from Australia totalling $5,242 million, a difference of $127 million.

In 1992, southbound trade increased, with Australia recording imports from the United States of $12,379 million and the United States recording exports to Australia of $12,221 million, a difference of $158 million. In the same year, northbound trade declined slightly. Australia recorded exports of $5,134 million while the United States recorded imports from Australia totalling $5,078 million, a difference of $56 million.

In 1993, southbound trade continued to rise. Australia recorded imports from the United States of $13,187 million while the United States recorded exports to Australia of $12,239 million, a difference of $948 million. By contrast, northbound trade further declined. Australia recorded exports of $5,071 million to the United States while the United States recorded imports from Australia totalling $4,876 million, a difference of $195 million.

Southbound trade rose again in 1994. Australia recorded imports from the United States of $14,839 million while the United States recorded exports to Australia of $13,435 million, a difference of $1,404 million. In the same year, Australia recorded exports of $4,651 million to the United States while the United States recorded imports from Australia totalling $4,398 million, a difference of $253 million.

The initial discrepancy (the difference between each country's statistics before adjustments have been made) has varied over the four years with the southbound discrepancy changing from 9.3 per cent of Australia's imports in 1991, to 1.3 per cent in 1992, 7.2 per cent in 1993 and 9.5 per cent in 1994. The northbound initial discrepancy changed from 2.4 per cent of Australia's exports in 1991, to 1.1 per cent in 1992, 3.8 per cent in 1993 and 5.4 per cent in 1994.

Analysis of Adjustments

As mentioned in the first part of this article, there are many reasons why Australia's statistics and the United States' statistics may not match. This section of the article quantifies these reasons and compares them over the four years.

Southbound Trade

These adjustments represent the changes needed to transform Australian published imports to the same basis as United States' published exports:
  • Coverage

Adjustments were made to account for the difference in treatment of the value of repairs and low value records.

-
          Value of repairs and alterations

          This adjustment represents the value of repairs and alterations included in United States' exports. As discussed above, Australia excludes both the value of the good for repair and the value of the repair from its merchandise trade statistics. The United States excludes the value of the good undergoing repair, but includes the value of the repair in its merchandise trade statistics. The value of repairs undertaken by the United States on Australian goods was relatively consistent in each of the four years studied. It was $59 million, $59 million, $40 million and $57 million in 1991, 1992, 1993 and 1994 respectively.
-
          Low value trade

          This adjustment is the difference between the value of Australian imports of shipments less than $US2,501 and the value of the United States' exports low value estimate. In each of the four years studied, the United States' estimate for low value exports was considerably lower than Australian low value imports, resulting in adjustments of -$275 million, -$347 million, -$349 million and -$364 million being made in 1991, 1992, 1993 and 1994 respectively.

          It should be noted that United States and Australian low value transactions are not necessarily identical as they are dependent on the amount of detail included in each country's classification. For areas where Australia has more detail than does the United States the approach taken will overstate the required adjustment. Conversely, for areas where the United States has more detail, this approach will understate the required adjustment.
  • Valuation

Adjustments for the difference between Australia's import value on an FOB basis and Australia's import value on a Customs value basis were made in three of the four years studied. In 1992, the FOB value was lower than the Customs value by $8 million, in 1993 the difference was $2 million and in 1994 the difference was $7 million.
  • Country classification

The following adjustments were applied to adjust for differences in country attribution principles.

-
          United States' re-exports

          This adjustment represents merchandise of non-United States origin exported from the United States to Australia. United States' re-exports of Australian and third country merchandise increased in dollar value terms, and as a percentage of total United States' exports, over the four years studied. United States' re-exports rose from $270 million in 1991, to $300 million in 1992, $374 million in 1993 and $516 million in 1994. This adjustment is based on the understanding that re-export transactions are included in United States' exports to Australia, but not in Australian imports from the United States. If in fact some of these transactions have been recorded in Australian import statistics as originating in the United States, this adjustment may be overstated.
-
          Australia's indirect imports

          This adjustment represents merchandise of United States origin imported by Australia from third countries. In most cases these shipments will be included in Australian imports from the United States but would be recorded in United States' exports against the third country. Australia's indirect imports of United States origin goods increased steadily both in terms of value and as a percentage of Australia's imports over the four years studied, rising from $720 million in 1991 (6.1 per cent of Australia's imports from the United States) to $907 million in 1992 (7.3 per cent), $1,153 million in 1993 (8.7 per cent) and $1,320 million in 1994 (8.9 per cent). In all four years this adjustment was the largest adjustment made to southbound trade.

          Some of the indirect imports may be recorded as exports to Australia in United States' trade statistics, so the adjustment may somewhat overstate the effect of trade via third countries. The value of United States' exports to Australia via third countries was examined with a view to subtracting these from Australia's indirect imports, but the commodity match between this and Australia's indirect imports data was not particularly good, so the extra adjustment was not made.
  • Timing

The timing adjustment accounts for merchandise which is likely to have been recorded in different years in the statistics of the exporting and importing countries. It is made up of adjustments for either end of the reference period. A negative adjustment indicates that the adjustment for the beginning of the reference period (for goods that were included in United States' statistics in the previous year, but in Australia's statistics in the reference year) is larger than the adjustment for the end of the reference period (for goods that were included in United States' statistics in the reference year, but in Australia's statistics in the following year).

Negative timing adjustments of $423 million and $18 million were made in 1991 and 1992 respectively, while positive adjustments of $179 million and $63 million were made in 1993 and 1994 respectively. Methodological changes, applied for the first time in the 1993 reconciliation, contributed to the differences in the southbound timing adjustments. These changes are described below.

When calculating the 1991 and 1992 southbound timing adjustments, it was assumed that it took, on average, 21 days to ship goods by sea from the United States to Australia. Further, it was assumed that approximately 60 per cent of Australia's January imports from the United States arrived by sea. For the purposes of calculating the 1993 and 1994 shipping adjustments, the average journey time between the United States and Australia was revised upwards from 21 days to 34 days, based on a detailed analysis of shipping schedules. Further, actual sea trade figures, rather than estimates, were used to calculate the shipping adjustment.

A processing adjustment, to account for the value of goods arriving in Australia outside the year in which they were recorded in Australia's trade statistics, was also made for the first time in the 1993 reconciliation, and then again in the 1994 reconciliation. Processing adjustments of $25 million and $23 million were included as part of the southbound timing adjustment in 1993 and 1994 respectively.

If the 1993 timing adjustment had been calculated using the 1992 methodology, the adjustment would have been $142 million compared with the $179 million calculated using the revised methodology.
  • Exchange rate

The exchange rates used in the reconciliation studies were $US = $A1.2842 for 1991, $US = $A1.3768 for 1992, $US = $A1.4789 for 1993 and $US = $A1.3736 for 1994. Discrepancies due to the conversion of data using an average exchange rate can be easily quantified only in relation to large value transactions. In the reconciliation studies, all transactions in aircraft that were included in both Australia's and United States' statistics were analysed. This adjustment represents the valuation difference attributable to the use of average annual exchange rates in these transactions. The adjustments amounted to $6 million, $30 million, $12 million and -$14 million in 1991, 1992, 1993 and 1994 respectively.
  • Domestic territory definition

This adjustment represents the value of Australia's published imports from Puerto Rico and the US Virgin Islands. This trade is included in United States' exports but not included in Australian imports from the United States. The adjustments made to 1991, 1992, 1993 and 1994 amount to $241 million, $195 million, $225 million and $234 million respectively.
  • Other differences

The following additional adjustments were made to account for other differences detected during the reconciliation.

-
          United States' exports that did not cross the Australian Customs frontier

          Investigation of large value transactions revealed several instances of goods which were recorded by the United States as exported to Australia, but which had not crossed the Australian Customs frontier, and which were therefore not recorded in Australia's import statistics. The adjustments made relate to aircraft and satellites and amount to $37 million, $519 million, $124 million and $96 million in 1991, 1992, 1993 and 1994 respectively.
-
          Leased goods

          Analysis of Australian data on aircraft imports and United States' aircraft export data revealed a difference in the treatment of some leased goods. In the period covered by the reconciliations, Australia excluded from merchandise imports any aircraft imported under an operational lease arrangement. Instead they were recorded separately as non-merchandise imports. These aircraft were, however, included in United States' merchandise exports. The resulting adjustments were $35 million, $138 million and $155 million in 1991, 1992 and 1994 respectively.
-
          Unreported United States' exports

          These adjustments relate to transactions that were not recorded in United States' exports to Australia, but were included in Australia's imports from the United States. Adjustments of $40 million, $32 million, $70 million and $109 million were made in 1991, 1992, 1993 and 1994 respectively to account for specific transactions not recorded in United States' exports to Australia.
  • Residual discrepancy

The residual discrepancy shown in Table A represents the difference remaining after the application of the adjustments described above. The discrepancy amounts to $295 million, $87 million, $328 million and $711 million in 1991, 1992, 1993 and 1994 respectively. For each of the four years studied the residual discrepancy is negative, indicating that the adjusted Australian merchandise imports figure is higher than the published United States' merchandise exports figure.

Possible reasons for the residual discrepancy include: imports through third countries of goods of United States origin not identified as such in Australia's imports; valuation differences; additional timing differences; minor coverage differences; currency conversion practices; and non-filing of export documents by some United States exporters.

Northbound Trade

These adjustments represent the changes needed to transform Australian published exports to the same basis as United States' published imports:
  • Coverage

The only adjustment made is for the difference in treatment of low value records, as the value of repairs was minimal.
    - Low value trade

    This adjustment represents the difference between the United States' estimate for trade below $US1,251 and the actual value of Australia's export transactions between $A500 and $US1,251. The effect of this is to remove the value of all transactions less than $US1,251 from the reconciliation. This adjustment was made for the first time in 1993 and the adjustments made were $6 million and $10 million in 1993 and 1994 respectively.
  • Country classification

The following adjustments were applied to adjust for differences in country attribution principles.

-
          Australian re-exports

          This adjustment represents merchandise of non-Australian origin exported from Australia to the United States. Australian re-exports of United States and third country merchandise totalled $361 million in 1991, $409 million in 1992, $535 million in 1993 and $422 million in 1994, and accounted for the largest adjustment in northbound trade. In 1991, re-exports accounted for 6.7 per cent of Australia's total exports to the United States. This increased in 1992 and 1993 to 8 per cent and 10.6 per cent respectively, before dropping to 9.1 per cent in 1994. This adjustment is based on the understanding that re-export transactions are included in Australia's exports to the United States, but not in United States' imports from Australia. If in fact some of these transactions have been recorded in United States' import statistics as originating in Australia, this adjustment may be overstated. It is also possible that some re-export transactions have not been recorded as such in Australian export statistics. In this case the adjustment shown may underestimate the actual value of adjustment needed.
-
          United States' indirect imports

          This adjustment represents merchandise of Australian origin imported by the United States from third countries. In most cases these shipments will be included in United States' imports from Australia but would be recorded in Australian exports against the third country. The United States' indirect imports of Australian origin goods increased over the four years studied, despite a decline in total United States' imports over the same period. United States' indirect imports rose from $114 million in 1991 to $127 million in 1992, $169 million in 1993 and $205 million in 1994.

          Some of the indirect imports may be recorded as exports to the United States in Australian trade statistics, so the adjustment may somewhat overstate the effect of trade via third countries. The value of Australian exports to the United States via third countries was examined with a view to subtracting these from the United States' indirect imports, but the commodity match between this and the United States' indirect imports data was not particularly good, so the extra adjustment was not made.
-
          United States' re-imports

          This adjustment represents the value of goods of United States origin that were re-imported into the United States from Australia. In Australian statistics they would be classified as re-exports to the United States, and therefore have been removed in the reconciliation as part of the re-export adjustment. However, these transactions are included in United States' imports from Australia, so need to be re-adjusted. United States' re-imports increased as a percentage of total United States' imports over the four years studied. Adjustments of $243 million, $255 million, $316 million and $299 million were made in 1991, 1992, 1993 and 1994 respectively.
  • Timing

This adjustment was calculated by the United States Bureau of the Census, and represents United States' imports in 1994 that were exported from Australia in 1993, less United States' imports in 1995 that were exported from Australia in 1994. Positive timing adjustments of $97 million, $80 million and $46 million were made in 1991, 1992 and 1993 respectively. In 1994 a negative timing adjustment of $56 million was made.
  • Domestic territory definition

This adjustment represents the value of Australia's published exports to Puerto Rico and the US Virgin Islands. The United States includes Puerto Rico and the US Virgin Islands as part of its domestic territory for the purposes of trade statistics, but Australia treats them as separate countries. Adjustments of $6 million, $6 million, $4 million and $6 million were made in 1991, 1992, 1993 and 1994 respectively.
  • Residual discrepancy

The residual discrepancy shown in Table B represents the difference remaining after the application of the adjustments described above. The discrepancy amounts to $226 million, $115 million, $200 million and $294 million in 1991, 1992, 1993 and 1994 respectively. For each of the four years studied the residual discrepancy is negative, indicating that the adjusted Australian exports is higher than the published United States' imports.

Problems associated with correct country attribution are a likely explanation for at least part of the discrepancy. For example, United States importers may not be able to correctly identify the country of consignment for either re-imports of United States origin goods, or imports of Australian origin goods from third countries. Similar difficulties may occur with regard to trans-shipment of goods of Australian origin, particularly via Canada. In addition, Australian exporters may not be able to correctly determine whether goods being exported are Australian produce or re-exports.

Other possible reasons for the residual discrepancy are: valuation differences; additional timing differences; minor coverage differences; and currency conversion practices.

Conclusion

This series of reconciliation studies has demonstrated that a significant part of the 'asymmetry' in United States-Australia bilateral merchandise trade data results from the conceptual factors underlying the compilation of the data. Actual data errors in the compilation process proved to be relatively insignificant in comparison. As previously indicated, the adjustments presented in the reconciliation do not represent revisions to the official published statistics of either country, nor do they imply, in general, errors in either country's published statistics.

For southbound trade the residual discrepancy is less than the initial discrepancy in each of the four years. In 1991 the initial discrepancy was 9.3 per cent of Australia's imports, and the residual discrepancy 2.5 per cent. The discrepancy in 1992 was reduced from 1.3 per cent to 0.7 per cent, in 1993 from 7.2 per cent to 2.5 per cent and in 1994 from 9.5 per cent to 4.8 per cent. The largest contributors to the narrowing of the gap were the adjustments for Australia's indirect imports of United States origin goods and the underestimation of low value trade by the United States.

For northbound trade the residual discrepancy is greater than the initial discrepancy in all four reconciliation studies. In 1991 the discrepancy rose significantly from 2.4 per cent to 4.2 per cent after application of the adjustments. In 1992 it rose from 1.1 per cent to 2.2 per cent. In 1993 and 1994 the northbound discrepancies showed less change, rising from initial discrepancies of 3.8 per cent and 5.4 per cent to discrepancies after adjustment of 3.9 per cent and 6.3 per cent respectively. The most significant factors contributing to the widening of the gap on northbound trade were the adjustments for United States' indirect imports of Australian origin goods and United States' re-imports. Over the four years studied, both indirect imports and re-imports rose, even though United States' total imports declined.

Further reconciliation studies with the United States are not planned at this stage. However, work has commenced on reconciliation studies with New Zealand, Japan, Indonesia and Korea. Results of these studies will be published in later issues of International Merchandise Trade, Australia (ABS Catalogue Number 5422.0).


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