## BPM7 Annex 5. Selected Issues on Cross-Border Trade: Annotated Outline

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### I. Introduction
- The annex covers cross-cutting issues related to trade in goods and services that are outside the core balance of payments accounts but are relevant for compilers and users of the balance of payments.
- Topics covered: classification (Section II), partner economy attribution (Section III), price and volume measures (Section IV), digital trade (Section V), and trade classified by currency (Section VI).
- See the Schematic Overview for details.

### II. Classification
- Purpose:
  - Describe different classification systems used for goods and services and “products” more generally (e.g., by commodity or type of service, by industry, by broad economic category, by mode of transport, services by mode of supply).
  - Provide appropriate references to relevant manuals/standards, such as International Merchandise Trade Statistics: Concepts and Definitions, Manual on Statistics of International Trade in Services, the International Standard Industrial Classification of All Economic Activities (ISIC).
- Usefulness:
  - A table can summarize the information to show how the BPM presentation of goods and services fits into the broader classification landscape.
  - Compilers face competing priorities when presenting cross-border trade statistics by various characteristics; the annex will present different possibilities and potential uses to inform compiler choices based on resources and policy needs.

### III. Price and Volume Measures
- Scope:
  - Expand the single paragraph in BPM6 Chapter 10 that describes price and volume measures as “useful for analysis and data validation.”
  - Move the discussion into this annex since it relates to both goods and services.
- References:
  - Add references to SNA Chapter 15 (paragraphs. 15.160–166).

### IV. Digital Trade
- Rationale:
  - Address the need to better reflect the importance of digital trade in the BPM.
  - BPM6 does not introduce the concept of digital trade; it contains only one paragraph, 10.10, that defines “e‑commerce” as “a method of ordering or delivering products at least partly by electronic means...” and explains that “charges for electronically delivered products are usually included in services, whereas products supplied across the border are usually classified as goods.”
- Content to be included:
  - Introduce the conceptual framework for digital trade from the Handbook on Measuring Digital Trade (currently being updated with an expected publication by the end of 2022).
  - Include a reference to Digital Supply Use and Tables (to be described in the updated SNA), which use a consistent underlying framework centered around whether goods and services are digitally ordered and/or digitally delivered (GN DZ.5).
- Linkages and emerging issues:
  - Emerging issues for BPM goods and services, including digital intermediation platforms, cloud computing, and intellectual property products, including computer software and artificial intelligence, will be discussed in Chapter 16, Digitalization.

### V. International Trade Classified by Currency
- Basis:
  - Following GN C.3, introduce a supplemental presentation of international trade classified by currency.
- Analytical uses:
  - Supports analysis of external sector vulnerabilities, sustainability analysis, regional integration, exchange rate pass-through, foreign exchange market development, and reserves adequacy.
- Presentation design:
  - Supplemental presentation will be presented in a table and include a disaggregation of gross totals of imports and exports for both goods and services by the currency of denomination.
  - Totals in the trade by currency composition table should equal the totals in the goods and services accounts to ensure consistency.
  - Currency breakdown order:
    - First domestic and foreign currencies.
    - Further breakdown of foreign currencies according to the SDR basket.
    - Then other currencies (depending on the importance of non‑SDR basket currencies to the international trade of each economy).
  - An unallocated item can be included to address currency allocation difficulties.

### Schematic Overview (structure and illustrative items)
- I Introduction
- II Classification
  - Table: Classifications for Trade Statistics
- III Price and Volume Measures
- IV Digital Trade
  - Figure: Conceptual Framework for Digital Trade (from Handbook on Measuring Digital Trade, Figure 2.1)
- V International Trade Classified by Currency
  - Table: Supplemental Presentation of International Trade by Currency
- References
  - GNs G.1, G.7, C.1–C.7, DZ.5, and DZ.7–DZ.9. These guidance notes are posted at Update of the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6) (imf.org).
  - International Merchandise Trade Statistics: Concepts and Definitions (IMTS 2010)
  - Manual on Statistics of International Trade in Services 2010 (MSITS 2010)
  - Handbook on Measuring Digital Trade
  - Export and Import Price Index Manual: Theory and Practice
  - UNECE Guide to Measuring Global Production

### Key stakeholders consulted
- System of National Account and Balance of Payments Manual editors
- CATT Secretariat

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_Source: https://www.imf.org/-/media/files/data/statistics/bmp7/final-annotated-outlines/bpm7-annex-5-selected-issues-on-crossborder-trade-annotated-outline.pdf_