Categories of international trade in services statistics
International trade in services statistics are classified into 12 main service categories. These are each described below along with category exclusions and examples of corresponding trade activities.
Manufacturing services on physical inputs owned by others
Manufacturing services on physical inputs owned by others includes the processing, assembly, labelling and packing undertaken by a service provider that does not own the goods. The cost of the service, not the value or change in value of the good, is reported as the value of the manufacturing service.
Examples of manufacturing services on physical inputs owned by others include:
- Australian owned crude oil being processed into petroleum in Hong Kong (service debit).
- the Perth Mint transforming gold bars into coins for the USA (service credit).
This service category does not include:
- assembly of prefabricated construction (included in construction services); or
- labelling or packaging services associated with transport (included in transport services).
Maintenance and repair services not included elsewhere (n.i.e)
This service category includes maintenance and repair services performed by the service provider on goods that are owned by residents of a different economy. Only the value of repair work is included, not the gross value of the goods before or after the repairs.
Examples of maintenance and repair services n.i.e. include:
- an Australian airline contracting a Singaporean company to repair an aeroplane engine (service debit).
- a Danish shipping company contracting an Australian service provider to maintain vessels (service credit).
Maintenance and repair services n.i.e. does not include:
- cleaning of transport equipment (included in transport services);
- construction repairs or maintenance (included in construction services); or
- maintenance or repairs of computers (included in telecommunications, computer and information services).
Transport services refer to the carriage of people and objects across international borders. Transport is further split into four sub-categories:
- other transport and auxiliary services; and
- postal and courier services.
Passenger transport covers the international carriage of people (e.g. airfares for individuals) on an airline different to their residence, including services by non-resident carriers provided domestically (e.g. domestic flights by non-Australian airlines). This sub-category includes:
- the cost of package tours;
- fees payable by airlines, cruise companies, and other carriers to travel agencies; and
- other expenditure related to the carriage of passengers (e.g. excess baggage, package tours and food purchased while onboard carriers).
Freight refers to the carriage of objects (not passengers) and includes air mail services.
Other transport and auxiliary services measure transport related services not included elsewhere. These include activities such as warehousing, fees for loading or unloading cargo and airport or harbour fees.
The postal and courier sub-category includes the pick-up, transport and delivery of letters, newspapers, other printed materials, parcels and packages, including door-to-door and express delivery. It also includes services provided at post office counters, such as the sale of stamps and mailbox rental services.
Examples of transport services include:
- Australian residents being carried on a non-Australian aircraft flight (passenger transport service debit).
- an Australian ship transporting wood chips to China (freight service credit).
The value of transport services includes any labelling or packing incidental to transport. Excluded from transport services are:
- repair and maintenance of transport equipment (included in maintenance and repair n.i.e);
- repairs of harbour, rail, or airfield facilities (included in construction services);
- freight insurance (included in insurance services);
- the rental or charter of carriers without crew (included in other business services: operational leasing);
- services provided to individuals when they travel to a different economy (included in travel services e.g. a bus fare purchased by an Australian tourist in London);
- cruise fares (included in travel services); and
- rentals which are financial leases.
Travel differs from most of the other service categories in that it is the consumer that defines the service, not the type of product. Travel services includes the value of purchases of goods and services acquired by a person during a visit outside their own country.
Travel services is split into sub-categories distinguished by the main reason for an overseas trip:
- business-related travel (e.g. to attend a conference or meeting); and
- personal travel, which is further broken down into:
- education-related travel (i.e. undertaking a formal education program, physically in the providing economy); and
- other personal travel (e.g. holiday or visiting friends and relatives).
All expenditure for an individual is allocated to one category (based on a self-identified main reason for travel). Examples of travel services include:
- a Chinese resident who travels to Australia to attend university and while they are in Australia also attend a business conference. The total travel expenditure (including the business conference fee) is included in education-related travel credits as the individual’s main reason for travel is education.
- an Australian resident who travels to Spain for a holiday and decides to take a short course in Spanish while they are overseas. The total trip expenditure (including language course fees) is included in other personal travel debits.
Excluded from travel services are:
- the acquisition of goods or services by diplomats, consular staff or military personal (included in government goods and services n.i.e.); and
- education programs undertaken online from outside the providing economy (included in personal, cultural, and recreational services).
Compilation of travel services
At the most fundamental level, the value of travel services is calculated as the number of travellers multiplied by their spend on goods and services while overseas. This applies to each sub-type of travel but the compilation methods and data sources for each vary slightly. The broad methodology and key data sources for each sub-category of travel are described below.
For business travel the number of travellers is determined by the number of overseas arrivals and departures (ABS) who self-reported business as their reason for travel. This figure is multiplied by the average spend of business travellers (sourced from Tourism Research Australia).
For education-related travel the compilation differs for credits (international students in Australia) and debits (Australian students studying abroad).
Education-related travel debits are compiled in a similar manner to business and other personal travel. The number of travellers is sourced from the overseas arrivals and departures (ABS), while spend estimates come from Tourism Research Australia datasets using the average spend from Australian travellers who have self-identified education as their reason for travel.
For education-related travel credits, the number of students is determined by the number of people, in Australia, on a primary student visa (as reported by the Department of Home Affairs). The number of students is then multiplied by an average spend estimate from Tourism Research Australia (as per the other travel sub-categories). This estimate is supplemented by the addition of the total expenditure on course fees (of international students studying in Australia, sourced from the Department of Education, Skills, and Employment).
Other personal travel
For other personal travel the number of travellers is determined by the number of overseas arrivals and departures (ABS) who self-reported their reason for travel as neither business nor education. This figure is multiplied by the average spend of non-business, non-education, travellers (sourced from Tourism Research Australia).
Construction services refers to the creation, renovation or repair of construction projects such as buildings, roads, bridges and dams. This includes all aspects of the building process, such as (but not limited to) general construction, demolition, site preparation and associated project management services.
An example of a construction service is an Australian company contracted to repair buildings in New Zealand after the 2016 earthquakes (service credit).
Construction services excludes:
- the value of architectural drawings or engineering designs (included in other business services);
- any work provided by an enterprise which has established a base of in the economy of operations; and
- construction work on embassies or similar government owned facilities (included in government goods and services n.i.e).
Construction services debits are difficult to disaggregate for Australia. Foreign companies that undertake significant construction projects in Australia are usually required to establish a base in Australia (i.e. by registering an ABN and establishing an office), which then means they are out of scope for international trade in services. Furthermore, construction services are often bundled with other related services such as engineering and architectural services, increasing the difficulty of disaggregation.
Insurance and pension services
This category covers the provision of various types of insurance and pension services and is further divided into four sub-categories:
- direct insurance (including life insurance, freight insurance and other direct insurance);
- auxiliary insurance services; and
- pension services (including standardised guarantee services).
Insurers charge premiums, pay claims and invest funds. Similarly, pension funds receive contributions, pay benefits and invest funds. International transactions are particularly common in specialised areas involving reinsurance or for high-value items such as ships and aircraft. Cross-border life insurance and pension transactions can also occur on a significant scale.
A direct insurance transaction occurs between an insurance company and the public (an individual or organisation). Reinsurance occurs where both parties to the policy are providers of insurance services i.e. reinsurance allows insurance risk to be transferred from one insurer to another. Many insurers act as both direct insurers and reinsurers.
The value of insurance and pension services is computed from the service component of the total premiums paid.
Examples of insurance and pension services include:
- an Australian insurance company who re-insures an insurance company in New Zealand (service credit).
- an Australian company who insures the freight of their imports through a Danish insurance provider (service debit).
Financial services consist of financial intermediation and auxiliary services provided by institutions including banks, stock exchanges and credit card companies. Financial services also cover financial intermediation service charges indirectly measured (FISIM).
A broad range of activities are included in financial services and are listed below:
- commissions and fees associated with financial transactions;
- financial advice or financial asset management services;
- custody services for financial assets or bullion;
- corporate finance and venture capital services;
- credit card or other credit granting or credit rating services;
- foreign exchange;
- regulation or administration of financial markets; and
- service charges on purchases of International Monetary Fund resources.
FISIM is computed from the difference between the actual interest payable or earned and the amount that would be payable/earned if the reference rate was used.
Financial services exclude:
- the dividends or interest earned on any deposits, loans, financial leases, or debt securities;
- all insurance services (included in insurance and pension services); and
- non-financial advisory services provided by banks (included in other business services n.i.e).
Examples of financial services include:
- an Australian bank charging a service fee on a loan provided to a Dutch bank (service credit).
- an American firm charging a brokerage fee to an Australian company for buying shares on the NASDAQ (service debit).
Charges for the use of intellectual property not included elsewhere (n.i.e)
Charges for the use of intellectual property n.i.e. is further divided into five sub-categories:
- franchises and trademarks licensing fees;
- licenses for the reproduction or distribution of computer software;
- licenses for the reproduction or distribution of audiovisual and related products;
- outcomes of research and development; and
- other charges for the use of intellectual property.
Costs associated with the initial production of audio-visual content is included in personal, cultural and recreational services. Given the complexity of certain products or commercial arrangements, some of the payments for the use of intellectual property may be included with the services item (or goods) to which they relate.
Examples of charges for the use of intellectual property n.i.e. include:
- an American television network purchasing the licence to reproduce and distribute their own version of "Kath and Kim" (service credit).
- an Australian cinema chain purchasing the right to screen a Hollywood blockbuster film (service debit).
Telecommunications, computer, and information services
Telecommunications, computer, and information services is broken into two sub-categories:
- telecommunication services; and
- computer and information services.
Telecommunication services includes:
- broadcast or transmission of sounds, images, data or other information via any telecommunication mode (including telephone, radio, television and email); and
- services for mobile telecommunication, internet and online access.
Computer and information services includes:
- hardware and software consultancy;
- installation, implementation, maintenance and repair of hardware;
- data processing and recovery;
- data base services;
- provision of news, photographs and feature articles; and
- subscriptions to newspapers and periodicals.
Examples of telecommunications, computer and information services include:
- an Australian company developing customised project management software for a firm in New Zealand (service credit).
- an Australian telecommunications company paying to access an American mobile network to supply international roaming to its customers (service debit).
Telecommunications, computer and information services excludes computer training courses that are not designed for a specific user (included in personal, cultural and recreational services)
Other business services
Other business services contains a large number of activities under four sub-categories:
- research and development services (of or for new products and processes);
- professional and management consulting services (including legal, accounting and public relations services);
- technical and trade-related services (including architectural, engineering, scientific, waste treatment, de-pollution, agricultural, mining and operating leasing services); and
- other business services not included elsewhere (a residual category which includes utility distribution services, security, building cleaning and translation services).
Examples of other business services include:
- Australian engineers developing autonomous and electric vehicle technology for General Motors (service credit)
- an Australian company who employs a German architectural firm to design their Sydney office (service debit)
Personal, cultural, and recreational services
Personal, cultural, and recreational services consists of two sub-categories:
- audio-visual and related services; and
- other personal, cultural and recreational services.
Audio-visual and related services includes services and fees for the:
- production of motion pictures, radio and television programs and musical recordings;
- provision of service by performing artists, authors, composers and sculptors; or
- electronic delivery of audio-visual content (excluded if delivered on physical media).
Other personal, cultural and recreational services includes:
- health services;
- education services; and
- other personal, cultural and recreational services not included elsewhere.
Health and education services include services delivered on-site, or remotely, but not services provided to non-residents in the territory of the service provider (included in travel services).
Examples of personal, cultural and recreational services include:
- an Australian university offering an online (correspondence) course for international students who are not physically located in Australia (service credit).
- an American rock band touring Australia (service debit).
Government goods and services not included elsewhere (n.i.e)
This service category covers all transactions by government and international organisations that are not covered by the other service types. It includes expenditure by embassies and consulates, military units and agencies and international organisations.
Due to the nature of activities included in government goods and services n.i.e, data sources are often not timely and provide only broad aggregates or partial data. Therefore, data models are often used to extrapolate components of the service.
Examples of goods and services n.i.e. include:
- office supplies, purchased in Australia, for the United Nations Information Centre in Canberra (service credit).
- utilities to service Austrade’s Beijing office (service debit).
The expenditure for locally engaged staff (at embassies, military bases etc.) and staff of international institutions that stay in the host economy for more than twelve months are excluded as they are regarded as residents of the host economy.