Concepts and definitions of Statistics of International Trade in Services

The trade in services statistics have been compiled by national statistical authorities or central banks largely complying with the Manual on Statistics of International Trade in Services 2010 (MSITS 2010).[1] In particular, MSITS 2010 recommends that the Sixth Edition of the Balance of Payments and International Investment Position Manual (BPM6)  recommendations on the principles of recording (regarding residence, valuation, time of recording, currency of recording, and conversion) should be followed for compiling international trade in services statistics.[2]

The main elements of the concepts and definitions of MSITS 2010 are:

  1. Definitions:  In general, MSITS 2010 respects the 2008 SNA use of the term services, which is defined as follows (2008 SNA, para. 6.17):
    • Services are the result of a production activity that changes the conditions of the consuming units, or facilitates the exchange of products or financial assets. These types of service may be described as change-effecting services and margin services, respectively. Change-effecting services are outputs produced to order and typically consist of changes in the conditions of the consuming units realized by the activities of producers at the demand of the consumers. They can also be referred to as “transformation services”. Change-effecting services are not separate entities over which ownership rights can be established. They cannot be traded separately from their production. By the time their production is completed, they must have been provided to the consumers.
    • MSITS 2010 defines “international trade in services” as trade in services between residents and non-residents of an economy, as well as the supply of services through foreign affiliates established abroad and the supply of services through the presence of foreign individuals, either as foreign service suppliers themselves or as employees of a foreign service supplier.
  2. Coverage:  The coverage in this Yearbook only include trade in services between resident and non-resident institutional units. The residence of an institutional unit is the economic territory with which it has the strongest connection, constituting its centre of predominant economic interest. Each institutional unit is a resident of one and only one economic territory, as determined by its centre of predominant economic interest. An institutional unit is resident in an economic territory when there exists, within the economic territory, some location, dwelling, place of production, or other premises on which or from which the unit engages and intends to continue engaging, either indefinitely or over a finite but long period of time, in economic activities and transactions on a significant scale. The location need not be fixed as long as it remains within the economic territory. Actual or intended location for one year or more is used as an operational criterion. While choosing one year as a specific period is somewhat arbitrary, it is adopted to eliminate uncertainty and facilitate international consistency. More specific criteria for determining residence are given in the MSITS 2010.
  3. Time of recording of transactions:  The appropriate time for recording transactions in services is when they are delivered or received (the “accruals basis”). Some services, such as particular transport or hotel services are provided within a discrete period, in which case there is no problem in determining the time of recording. Other services are supplied or take place on a continuous basis, for example, construction, operating leasing and insurance services. When construction takes place with a prior contract of sale, the ownership of the structure is effectively transferred progressively as the work proceeds. When services are provided over a period of time (such as freight, insurance and construction), there may be advance payments or settlements at later dates for such services. The provision of services should be recorded on an accrual basis in each accounting period, that is to say it should be recorded when the service is rendered and not when the payment occurs.
  4. Classifications: All trade in services statistics in this Yearbook are presented according to the EBOPS 2010 classification.

The 12 main EBOPS 2010 standard services components (as presented in the MSITS 2010) are:[3]

  1. Manufacturing services on physical inputs owned by others: includes activities such as processing, assembly, labelling and packing that are undertaken by enterprises that do not own the goods. Examples include oil refining, liquefaction of natural gas and assembly of clothing and electronics. Excluded are the assembly of prefabricated construction (included in construction) and labelling, and packing incidental to transport (included in transport services).
  2. Maintenance and repair services n.i.e.: includes maintenance and repair work by residents on goods that are owned by non-residents (and vice versa). The repairs may be performed at the site of the repairer or elsewhere. Maintenance and repairs on ships, aircraft and other transport equipment are included in this item. Cleaning of transport equipment is included in transport services. Construction repairs and maintenance are included under construction. Maintenance and repairs of computers are included under computer services.
  3. Transport: covers all transportation services that are performed by residents of one economy for those of another and that involve the carriage of passengers, the movement of goods (freight), rentals (charters) of carriers with crew, and related supporting and auxiliary services. Some related items that are excluded from transportation services are freight insurance (included in insurance services); goods procured in ports by non-resident carriers and repairs of transportation equipment (both are treated as goods, not services); repairs of railway facilities, harbours and airfield facilities (included in construction services); and rentals or charters of carriers without crew (included in operational leasing services).
  4. Travel: covers primarily the goods and services acquired from an economy by travelers during visits of less than one year to that economy. Includes business and personal travel, which includes health-related expenditure (total expenditure by those travelling for medical reasons), education-related expenditure (i.e., total expenditure by students), and all other personal travel expenditure.
  5. Construction: covers work performed on construction projects and installation by employees of an enterprise in locations outside the territory of an enterprise.
  6. Insurance and pension services: covers the provision of various types of insurance to non-residents by resident insurance enterprises, and vice versa. These services are estimated or valued by the service charges included in total premiums rather than by the total value of the premiums.
  7. Financial services: covers financial intermediation and auxiliary services, except those of life insurance enterprises and pension funds (which are included in life insurance and pension funding) and other insurance services that are conducted between residents and non-residents. Such services may be provided by banks, stock exchanges, factoring enterprises, credit card enterprises and other enterprises.
  8. Charges for the use of intellectual property n.i.e.: covers international payments and receipts of franchising fees and the royalties paid for the use of registered trademarks and international payments and receipts for the authorised use of intangible, non-produced, non-financial assets and proprietary rights (such as patents, copyrights and industrial processes and designs) and with the use, through licensing agreements, of produced originals or prototypes (such as manuscripts, computer programs, and cinematographic works and sound recordings).
  9. Telecommunications, computer, and information services: covers hardware and software-related services and data-processing services; news agency services include the provision of news, photographs, and feature articles to the media; and database services and web search portals (search engine services that find internet addresses for clients who input keyword queries).
  10. Other business services: covers merchanting, other trade-related services, operational leasing services, legal services, accounting, auditing, bookkeeping and tax consulting services, business and management consulting and public relations services, advertising, market research and public opinion polling, research and development, architectural, engineering and other technical services, waste treatment and de-pollution, agricultural, mining, and other on-site processing services, other business services, and services between related enterprises, not included elsewhere (n.i.e.).
  11. Personal, cultural, and recreational services: covers services and associated fees related to the production of motion pictures (on film or videotape), radio and television programmes (live or on tape) and musical recordings services, as well as those services associated with museums, libraries, archives and other cultural, sporting and recreational activities.
  12. Government goods and services n.i.e.: covers government transactions (including those of international organizations) not contained in the other components of EBOPS as defined above. Included are all transactions (in both goods and services) by embassies, consulates, military units and defence agencies with residents of economies in which the embassies, consulates, military units and defence agencies are located and all transactions with other economies. Excluded are transactions with residents of the home economies represented by the embassies, consulates, military units and defence agencies, and transactions in the commissaries, post exchanges and these embassies and consulates.
  13. Valuation:  The market price is used as the basis for valuation of transactions in international trade in services. Market prices for transactions are defined as amounts of money that willing buyers pay to acquire something from willing sellers. The exchanges are made between independent parties and based on commercial considerations only and are sometimes called “at arm’s length” transactions. These transactions will generally be valued at the actual price agreed between the supplier and the consumer.
  14. Partner country:  It is recommended that the breakdown by partner economy for services transactions between residents and non-residents be recorded, the aim being to report partner detail, first, at the level of services trade as a whole and, second, for each of the main types of services in EBOPS and (as a longer-term goal) for the more detailed EBOPS items. Partner country information for trade in services is not included in this publication, as most countries do not currently compile these statistics by partner country.

[1] At its forty-first session, held from 23 to 26 February 2010, the Statistical Commission adopted the revised “Manual on Statistics of International Trade in Services” (MSITS 2010), which sets out an internationally agreed framework for the compilation and reporting of statistics of international trade in services and align with the revisions of well-established revised international statistical standards. The publication is available under Statistical Papers, Series M No. 86, Rev.1 (United Nations publication, Sales No.E.10.XVII.14) and electronically at https://unstats.un.org/unsd/trade.

[2] International Monetary Fund.  Sixth Edition of the Balance of Payments Manual (BPM6). 2009. http://www.imf.org/external/pubs/ft/bop/2007/pdf/bpm6.pdf. The previous edition of this manual was the Fifth Edition of the Balance of Payments Manual (BPM5), which was published in 1992.

[3] The full detailed EBOPS 2010 classification is available as an on-line annex to the MSITS 2010.  https://unstats.un.org/unsd/classifications/Econ/Download/In%20Text/EBOPS2010_english.pdf