5331.0 - Balance of Payments and International Investment Position, Australia: Concepts, Sources and Methods, 2011
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 08/03/2011
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GOODS UNDER MERCHANTING
10.42 Merchanting arrangements are used for wholesaling and retailing. They may also be used in commodity dealing and for the management and financing of global manufacturing processes. For example, an enterprise may contract the assembly of a good among one or more contractors, such that the goods are acquired by this enterprise and resold without passing through the territory of the owner.7 If the physical form of the goods is changed during the period the goods are owned, as a result of manufacturing services performed by other entities, then the goods transactions are recorded under general merchandise rather than merchanting. In other cases where the form of the goods does not change, the goods are included under merchanting, with the selling price reflecting minor processing costs as well as wholesale margins. In cases where the merchant is the organizer of a global manufacturing process, the selling price may also cover elements such as providing planning, management, patents and other know-how, marketing, and financing. Particularly for high-technology goods, these nonphysical contributions may be large in relation to the value of materials and assembly. 10.43 Goods under merchanting are recorded in the accounts of the owner in the same way as any other goods it owns. However, the goods are shown separately in international accounts statistics of the economy of the merchant because they are of interest in their own right and because they are not covered by the customs system of that economy. 10.44 The treatment of merchanting is as follows:
(b) The sale of goods is shown under goods sold under merchanting as a positive export of the economy of the merchant; (c) The difference between sales over purchases of goods for merchanting is shown as the item “net exports of goods under merchanting.” This item includes merchants’ margins, holding gains and losses, and changes in inventories of goods under merchanting. As a result of losses or increases in inventories, net exports of goods under merchanting may be negative in some cases; and (d) Merchanting entries are valued at transaction prices as agreed by the parties, not FOB. 10.45 Merchanting items appear only as exports in the accounts of the economy of the territory of the merchant. In the counterpart exporting and importing economies, export sales to merchants and import purchases from merchants are included under general merchandise. 10.46 Wholesaling, retailing, commodity dealing, and management of manufacturing may also be carried out under arrangements where the goods are present in the economy of the owner, in which case they are recorded as general merchandise, rather than as merchanting. In cases where the goods do not pass through the economy of the owner, but the physical form of the goods changes, because they are processed in another economy, international transactions are recorded under general merchandise, rather than merchanting. (The processing fee is recorded as a manufacturing service paid for by the owner, as discussed in paragraph 10.62.) 10.47 Sometimes a purchaser may be uncertain whether the goods will be resold to residents of the same economy or others. In this case, intentions can be used as an indicator, with subsequent adjustment if intentions are not realized. 10.48 When a merchant resells goods to a resident of the same economy as the merchant, this does not meet the definition of merchanting. Accordingly, the purchase of goods is shown as imports of general merchandise to the economy in that case. If the entity that purchased from a merchant in the same economy subsequently resells the goods to a resident of another economy, whether or not the goods enter the economy of the merchant, the sales of goods are recorded in exports of general merchandise from the economy of the merchant. (Although such a case is very similar to merchanting, it does not meet the definition given above. In addition, it is impractical for the first merchant to record the purchases as merchanting because that merchant may not know whether or not the second merchant will bring the goods into the economy.) 10.49 Merchanting of nonmonetary gold is included under the nonmonetary gold item, discussed in paragraphs 10.50–10.54. This treatment means that the nonmonetary gold item is comprehensive and conceptually symmetric. 7If there is no change of ownership of the goods, there is no merchanting transaction, but there may be manufacturing services on physical inputs owned by others for a fee, as discussed in paragraphs 10.62–10.64. Reference LINKED TO
SOURCE METHOD The net exports of goods under merchanting component is compiled by summing the two sub-components Goods acquired under merchanting (negative exports) and Goods sold under merchanting which are derived directly from SITS data.
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