CHAPTER 3 KEY CONCEPTUAL CHANGES WHICH HAVE STATISTICAL IMPLICATIONS FOR AUSTRALIA

INTRODUCTION

3.1 IMTS 2010 was developed after 2008 SNA and BPM6 so some of the new recommendations are intended to better meet the needs of national accounts and balance of payments compilers and promote consistency in the recording of these statistics by trading partners.

3.2 This chapter explains the conceptual recommendations included in IMTS 2010 which have implications for Australia's statistics. All these recommendations present some difficulties which are described and presented with the ABS position on implementation. Users are asked to comment on their use of the data and whether this may be impacted by the ABS position. The issues and ABS position described in this chapter only affect the statistics published in International Merchandise Imports, Australia (cat. no. 5439.0) and the merchandise exports and imports tables, spreadsheets and data cubes in International Trade in Goods and Services, Australia (cat. no. 5368.0). The data on a balance of payments basis are not affected.

3.3 IMTS 2010 also includes a number of new practices which countries are encouraged to adopt in the compilation of international merchandise trade statistics. These encouragements and the ABS position are explained at the end of the chapter.

3.4 Appendix 2 summarises Australia's compliance with all of the recommendations contained in IMTS 2010.


ECONOMIC TERRITORY

DESCRIPTION OF THE CHANGE

3.5 Many of the key conceptual changes in IMTS 2010 centre around the adoption of the BPM6 definition of economic territory 'as the area under the effective economic control of a single government.' This includes the land area, airspace, territorial waters, jurisdiction over fishing rights and rights to fuels or minerals, any islands that belong to the territory as well as the territorial enclaves in the rest of the world. IMTS 2010 also states that because the concept of economic territory has both physical location and legal jurisdiction dimensions, it also includes installations and apparatus, mobile or not, owned by the resident(s) of a country and operating under the jurisdiction of a country, for example, drilling rigs, ships, aircraft, satellites, communication cable and pipelines (IMTS 2010, paragraph 1.7).

3.6 Related to this is a recommendation to use the economic territory of the trading partner in the compilation of partner country statistics (IMTS 2010, paragraph 6.28).


ISSUES FROM AUSTRALIA'S PERSPECTIVE

3.7 The statistical territory is the territory which is covered by the statistics. Ideally, the statistical territory and economic territory should be the same, but Australia accepts the customs boundary for international merchandise trade statistics. The jurisdiction of Customs and Border Protection does not extend to goods exported and imported by Norfolk Island, Heard Island, McDonald Islands, Christmas Island, Cocos (Keeling) Islands, Ashmore and Cartier Islands, the Australian Antarctic Territory and the JPDA, see Box 3.1. Therefore, Customs and Border Protection do not require declarations for goods traded between these territories and foreign countries but does require declarations for goods traded between these territories and Australia.

Included in Australia's international merchandise trade statistical territory	the six states (New South Wales, Victoria, Queensland, South Australia, Western Australia, Tasmania), the mainland territories (Northern Territory, Australian Capital Territory, Jervis Bay Territory), and the associated coastal islands Lord Howe Island (New South Wales), Macquarie Island (Tasmania), and the Coral Sea Island Territory (Queensland) customs warehouses (note that Australia does not have industrial free or commercial free zones) Australia's territorial waters (to 12 nautical miles offshore) the contiguous zone which extends to a maximum of 24 nautical miles from the territorial baseline; and the Exclusive Economic Zone and the continental shelf lying in international waters over which Australia enjoys exclusive rights, or over which it has, or claims to have, jurisdiction in respect of the right to fish or to exploit fuels or minerals below the seabed. Australia's exclusive economic zone extends to a maximum distance of 200 nautical miles offshore but in some instances the continental shelf extends beyond this. It excludes the area in the Timor Sea known as the JPDA.
Excluded from Australia's international merchandise trade statistical territory	Norfolk Island, Heard Island, McDonald Islands, Christmas Island, Cocos (Keeling) Islands, Ashmore and Cartier Islands, and the Australian Antarctic Territory. While all are Australian territories, they are effectively treated as foreign countries in Australia's international merchandise trade statistics. While the ABS can provide information on Australia's exports to, and imports from, each of these territories, no information is available on their trade with other countries. Norfolk Island, Christmas Island, Cocos (Keeling) Islands and Ashmore and Cartier Islands are administered by the Commonwealth Department of Regional Australia, Local Government, Arts and Sport. Each has an administrator appointed by the Governor–General. The Australian Antarctic Territory and the sub–Antarctic territories of Heard Island and McDonald Islands are managed by the Australian Antarctic Division of the Commonwealth Department of Sustainability, Environment, Water, Population and Communities. Territorial enclaves abroad are also excluded. the JPDA, which is an area of seabed in the Timor Sea over which both Australia and East Timor claim 100% sovereign rights. Customs and Border Protection treat the JPDA as an external territory installations or apparatus (including satellites in outer space, ships, aircraft and other mobile equipment, pipelines and undersea communications cable), which involve a change of ownership between an Australian resident(s) and a non–resident while outside Australia's statistical territory. goods supplied to foreign government enclaves in Australia e.g. embassies and military bases; and goods supplied to Australia's enclaves abroad.

3.8 International merchandise trade statistics are compiled from a detailed transactions level dataset supplied by Customs and Border Protection. The dataset includes information on the commodity, quantity, value, gross weight, country, port, Australian state and mode of transport for each transaction. In the absence of customs declarations, information at the same level of detail is required to compile a complete and coherent international merchandise trade dataset.

3.9 It is highly likely that even if all the data are able to be collected and compiled, some aggregate statistics will not be releasable under the Census and Statistics Act 1905, The provisions of the Statistics Determination 1983 Reg 2 regarding identifiable data in international trade statistics, produced from Customs and Border Protection supplied data, do not apply to data collected from other sources.

3.10 The value of goods traded between Australia's external territories and foreign countries is included in balance of payments statistics.

3.11 The partner country information used in Australia's statistics is sourced from Customs and Border Protection which uses the Department of Foreign Affairs and Trade (DFAT) definition of Australia's trading partners. In most cases DFAT accept the trading partner's definition of economic territory.
ABS POSITION

3.12 The ABS agrees that the BPM6 definition of economic territory should be coherently applied across Australia's economic statistics. However, because of the difficulty collecting and compiling all the additional information in time to release a high quality, early indicator, and an expected increase in revisions and data confidentiality, it is not practical to apply these recommendations to Australia's international merchandise trade statistics.

3.13 The ABS agrees that countries should use the partner country definition of economic territory. In most cases Australia uses the partner country definition of economic territory so no change is necessary.


USER COMMENTS

3.14 Users are invited to comment on:

• whether there are any serious risks, gaps or major statistical implications for Australia's international merchandise trade statistics if the BPM6 definition of economic territory is not adopted.

CHANGE OF OWNERSHIP, MOBILE EQUIPMENT AND SATELLITES

DESCRIPTION OF THE RECOMMENDATIONS

3.15 IMTS 2010 includes the unchanged general guideline to 'record all goods which add to or subtract from the stock of material resources of a country by entering (imports) or leaving (exports) its economic territory' but also recommends that the change of ownership principle be used in exceptional cases when the general guideline does not apply or is insufficient e.g. to include certain mobile equipment and satellites. There are related new or updated recommendations regarding the inclusion of ships and aircraft; satellites and their launchers; and mobile equipment which changes ownership while outside (including temporarily) the country of ownership (see IMTS 2010, paragraphs: 1.4, 1.7, 1.29, and 1.39). Together these recommendations remove some of the main differences between merchandise trade statistics and goods on a balance of payments basis because it is made clear in IMTS 2010 that these goods are included whether or not they physically enter or leave the compiling country.


ISSUES FROM AUSTRALIA'S PERSPECTIVE

3.16 All mobile equipment which involves a change of ownership between an Australian resident and a non–resident adds to or subtracts from Australia's stock of material resources. However, there are practical data limitations when the goods do not enter or leave Australia as a customs declaration is not required.

3.17 Where a ship or aircraft is purchased by an Australian resident from a non–resident for use on overseas routes it is not declared to Customs and Border Protection because the goods do not enter Australia. Similarly, if an Australian resident purchases a satellite from a non–resident and it is launched in a separate country on behalf of Australia it would not be declared to Customs and Border Protection.

3.18 Mobile equipment for construction, disaster relief, offshore drilling etc which enters or leaves Australia on a temporary basis are usually declared to Customs and Border Protection. Because the goods are temporary they do not add to or subtract from Australia's material resources so they are not included in merchandise trade statistics. If the goods subsequently change ownership without crossing the customs border the goods will not be declared to Customs and Border Protection so it is highly unlikely that the ABS will become aware of these transactions in time to meet the publication release schedules. Under IMTS 2010 these transactions should be included.

3.19 Australia's merchandise trade statistics are compiled from a detailed transactions level dataset supplied by Customs and Border Protection. The dataset includes the Harmonized System (HS) commodity classification, goods description, quantity, value, gross weight, country, port, Australian state and mode of transport for each transaction. In the absence of customs declarations, information at the same level of detail is required to compile a complete and coherent international merchandise trade dataset.

3.20 These goods are high value single transactions so they are highly likely to be confidential under the Census and Statistics Act 1905.

3.21 The value of these goods is included in Australia's balance of payments.


ABS POSITION

3.22 The ABS agrees that the principle of change of ownership should be applied throughout economic statistics. However, because of the difficulty collecting and compiling all of the additional information in time to release a high quality, early indicator, and an expected increase in revisions and data confidentiality, it is not practical to apply these recommendations to Australia's international merchandise trade statistics.

3.23 Ships, aircraft, satellites and other mobile equipment which involve a change of ownership between a resident and a non–resident without crossing Australia's customs border will continue to be included in goods on a balance of payments basis, at the time ownership changes.


USER COMMENTS

3.24 Users are invited to comment on:

• any serious risks, gaps or major statistical implications associated with the ABS position to not apply the IMTS 2010 recommendations on change of ownership to Australia's international merchandise trade statistics given that the value of these goods will continue to be included in Australia's balance of payments.

POWER LINES, PIPELINES AND UNDERSEA COMMUNICATION CABLES

DESCRIPTION OF THE RECOMMENDATION

3.25 These goods and their parts are recommended for inclusion in international merchandise trade statistics when they are despatched from a country for installation in another country. Where the goods are to be installed in international waters they are included in international merchandise trade only if there is a change of ownership between a resident and a non–resident. (IMTS 2010, paragraph 1.36).


ISSUES FROM AUSTRALIA'S PERSPECTIVE

3.26 Pipelines and undersea communication cables and their parts are included in Australia's international merchandise trade statistics when the goods are entered on customs declarations.

3.27 Undersea communication cables laid in international waters are currently included in the country 'International Waters' whether or not there is a change of ownership.

3.28 The pipeline between the JPDA and the Northern Territory is the only pipeline which is at least partially installed outside Australia's customs territory. Components for this pipeline that arrived in Australia were included in import statistics. Components that were despatched from Australia for installation outside Australia's customs territory were included in export statistics.

3.29 The current treatment for pipelines and undersea communication cable was determined before guidance was provided in the international standards for compiling merchandise trade statistics (i.e. no guidance was provided in IMTS Rev.2).

3.30 Where transactions involving pipelines and undersea communication cable are declared to Customs and Border Protection, applying the principle of change of ownership will create consistency in the treatment of these transactions across the body of macroeconomic statistics.

3.31 Exports and imports of power lines are not expected as Australia is surrounded by sea.


ABS POSITION

3.32 The ABS agrees with the IMTS 2010 recommendation to include power lines, pipelines and undersea communication cables when despatched from a country for installation in another country. When the goods are installed in international waters, the goods are only be included when there is a change of ownership between a resident and a non–resident.

3.33 Adopting the IMTS 2010 treatment will improve the coherence between international merchandise trade statistics and goods on a balance of payments basis when the goods are identifiable in the information supplied to Customs and Border Protection.

3.34 These transactions are relatively rare. When the transactions are included in the information received from Customs and Border Protection, a delay in the release of the statistics is unlikely and a high quality, monthly macroeconomic indicator will be maintained. The ABS recommends adopting the IMTS 2010 treatment.


USER COMMENTS

3.35 Users are invited to comment on:

• whether users agree with the ABS proposal to include these goods when the transactions are included in the information supplied by Customs and Border Protection and a change of ownership between a resident and a non–resident is identifiable.

FISH CATCH, MINERALS FROM THE SEABED AND SALVAGE

DESCRIPTION OF THE RECOMMENDATION

3.36 IMTS 2010 recommends including fish catch, minerals from the seabed and salvage: traded between national vessels and foreign vessels; landed from foreign vessels in national ports; or landed from national vessels in foreign ports. The goods are to be included when they are economically significant.

3.37 IMTS 2010 recognises that capturing this information is challenging and will take some time to implement.

3.38 IMTS Rev.2 excluded fish catch, minerals from the seabed and salvage sold from national vessels to foreign vessels on the high seas and trade in these goods when landed from national vessels in foreign ports.


ISSUES FROM AUSTRALIA'S PERSPECTIVE

3.39 Because Australia's merchandise trade statistics are sourced from customs declarations these types of transactions are only included when the goods are declared to Customs and Border Protection. This approach provides economic and environmental coverage for most international trade in fish, minerals and salvage.

3.40 An adjustment for the value of fish sold from national vessels in foreign ports is included for goods in the balance of payments.

3.41 To be fully compliant with IMTS 2010 and to compile a complete and coherent international merchandise trade dataset the commodity, quantity, value, gross weight, country, port etc is required for each transaction.


ABS POSITION

3.42 The ABS agrees that when trade in these goods is economically significant it should be included in international merchandise trade statistics.

3.43 Many of the transactions in fish, minerals and salvage are included in international merchandise trade statistics because the goods are entered on customs declarations. For the remainder of the trade it is not practical to fully adopt the recommendation because of the significant costs to providers to supply the information and to the ABS to collect and compile the data.

3.44 The primary purpose of the statistics is being met by the inclusion of these goods when they are entered on customs export and import declarations.

3.45 The value of all economically significant trade in fish, minerals and salvage is included in goods on a balance of payments basis.


USER COMMENTS

3.46 Users are invited to comment on:

• any serious statistical implications associated with the ABS position to not fully apply the IMTS 2010 recommendations for fish catch, minerals from the seabed and salvage to international merchandise trade statistics.

BUNKERS, STORES, BALLAST AND DUNNAGE

DESCRIPTION OF THE RECOMMENDATION

3.47 IMTS 2010 recommends including all international trade in bunkers, stores, ballast and dunnage when they are economically significant. The following types of transactions are in–scope:

• acquired by national vessels or aircraft outside the economic territory of a country
• acquired by national vessels or aircraft from foreign vessels and aircraft inside the economic territory of a country
• landed in national ports from foreign vessels and aircraft
• supplied to foreign vessels and aircraft in the economic territory of a country
• supplied by national vessels or aircraft to foreign vessels or aircraft outside the economic territory of a country; and
• landed in foreign ports from national vessels or aircraft.

3.48 Under IMTS Rev.2 only the second, third and fourth types of transactions (above) were recommended for inclusion in international merchandise trade statistics.


ISSUES FROM AUSTRALIA'S PERSPECTIVE

3.49 In terms of Australia's statistics the first and fourth types of transactions are economically significant.

• The value of bunkers and stores acquired by Australian vessels and aircraft while outside Australia is collected by the ABS as part of the Survey of International Trade in Services. The value is included in the Goods debits (Goods procured in ports by carriers) component of the balance of payments.
• Bunkers, stores, ballast and dunnage supplied to foreign vessels or aircraft in Australia are included in Australia's export statistics. The value of bunkers is estimated as Customs export declarations are not required for these goods.

3.50 There is no existing source for the remaining trade and the transactions are not considered to be economically significant.


ABS POSITION

Economically significant trade

3.51 The trade which is economically significant is either included in international merchandise trade statistics (bunkers, stores etc supplied to foreign vessels or aircraft in Australia) or in the balance of payments (bunkers and stores supplied to Australian vessels and aircraft while outside Australia). Should a more detailed or improved data source become available in the future the ABS would include all economically significant trade in bunkers and stores in international merchandise trade statistics.

Trade which is not economically significant

3.52 This recommendation should not be adopted because:

• the trade is not economically significant
• there would be significant costs to providers and the ABS to supply and compile all the necessary information; and
• collecting and processing the additional information would cause a delay in the release of international merchandise trade statistics.

USER COMMENTS

3.53 Users are invited to comment on:

• any serious statistical implications associated with the ABS position to exclude non–economically significant international trade in bunkers, stores, ballast and dunnage.

ENCOURAGED PRACTICES

3.54 IMTS 2010 also includes a number of new practices which countries are encouraged to adopt. While desirable, these encouragements are not part of the international conceptual recommendations. Table 3.2 lists the new encouragements and explains the ABS position.

IMTS 2010 New Encouraged Practices	ABS Position
Estimate and include trade below the customs and statistical thresholds if economically significant	Estimates of trade below the Australian customs thresholds are included in the balance of payments. These estimates are periodically reviewed to ensure that they accurately represent the value of data below the threshold. While the ABS agrees that Australia's international merchandise trade statistics should include all economically significant exports and imports of goods, it is not feasible to include low value trade because the statistics require detailed data for all transactions and these transactions are not part of the Customs and Border Protection data.
Include goods for processing as well as goods resulting from such processing with or without change of ownership	The ABS includes goods for processing and goods resulting from processing in international merchandise trade statistics. When no change of ownership is identified in goods for processing transactions, the details are referred to the balance of payments compilers. These transactions are excluded from goods in the balance of payments but the related processing services are included in Manufacturing services on physical inputs owned by others.
Include and separately identify goods which cross borders as a result of transactions between related parties	While the ABS includes transactions between related parties in international merchandise trade statistics, the relationships are not usually fully identifiable. Australia's balance of payments exclude significant transactions which do not involve a change of ownership between a resident and non–resident.
Explore the possibility of publishing provisional estimates soon after the end of the reference period	Due to the timely monthly release of merchandise imports (i.e. 13 working days after the end of the reference month) and exports (i.e. 23 working days after the end of the reference month), the release of provisional estimates is neither feasible nor necessary.
Integrate the trade register with the business register and take steps towards an integrated system of economic statistics for data compilation and analysis	Australia's international merchandise trade statistics are compiled from a single source (declarations data supplied to Customs and Border Protection). Where necessary most data can be linked to Business Register units.

USER COMMENTS

3.55 Users are invited to comment on:

• any serious statistical implications associated with the ABS position on the encouraged practices described in Table 3.2.