## c2-goods-services-investment-income-accounts-enterprise-characteristics

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### Background and mandate
- The IMF Committee on Balance of Payments Statistics endorsed creation of a Working Group on Balance of Payments Statistics Relevant to Global Value Chain (GVC) Analysis at its 2017 meeting to identify balance of payments components relevant for GVC indicators and to better identify the role of multinational enterprises (MNEs) in current account transactions.  
- A final Working Group report—GVC (BOPCOM 19/04)—proposed development of a compilation framework for GVC and a supplementary data collection for MNEs; it was discussed by the Committee at its 2019 meeting.  
- The OECD and the IMF conducted a stocktaking survey among 76 member countries informing the report.  
- UNSD started global data collection on goods trade by enterprise characteristics (TEC) and services trade by enterprise characteristics (STEC), taking into account OECD and Eurostat initiatives, as reported to the UN Statistical Commission in 2020.  
- The Guidance Note (GN) proposes a framework to provide supplementary data highlighting the role of enterprises with different characteristics in the current account, building on prior work and focusing on operationalizing TEC and STEC data collection and recommendations for inclusion in the next Balance of Payments Manual (BPM).

### Rationale for TEC and STEC integration
- Conventional international trade statistics show trade flows by type of goods and services but do not identify the enterprise actors behind cross-border trade.  
- Policymakers and researchers need integrated data linking business statistics with IMTS and ITSS to assess effects of international trade on growth, employment, value added, and economic interdependency under globalization.  
- Microdata linking provides scope to better understand production arrangements in a globalized economy; new enterprise characteristics (notably foreign vs domestically-owned) have been added to TEC in many countries and STEC development is advancing.  
- TEC enables breakdowns by economic activity, enterprise size-class, ownership, trade concentration, geographical diversification, and products traded to evaluate companies’ roles in globalization and impacts on employment, production, and value added.  
- Increasing tradability of services (accelerated by digitalization) makes STEC alongside TEC essential to portray traders active in international goods and services markets.

### Quantitative findings from existing TEC/STEC work
- OECD TEC data highlight that large enterprises continue to dominate international trade in goods; top exporters often account for the majority of imports.  
- TEC data show that only a small percentage of enterprises are directly engaged in international trade in goods, typically below 10 percent in OECD countries, with exceptions in small economies such as Slovenia and Estonia.  
- TEC data provide information on SME participation, showing SMEs generally export to neighboring markets but import from a much wider geographical base.  
- Eurostat STEC experimental statistics indicate: "Domestically controlled enterprises account for around three quarters of services exports from Denmark, Iceland and Lithuania. Foreign controlled enterprises are responsible for most services exports from Luxembourg, Hungary and Ireland."

### Methodological considerations and issues for discussion
- Proposed annual supplementary data collection template covering balance of payments exports and imports of goods and services and receipts and expenditures of investment income by enterprise characteristics (industry, ownership (foreign-owned/domestically-owned), and size).  
- Aim to integrate TEC and STEC into the balance of payments framework as a step toward compilation by individual trading partner.  
- Definitional clarifications required:
  - Precise definitions of MNE and control (Ultimate Investing Country vs Immediate Investor Country) aligned with other Task Teams.  
  - Distinction between independent SME and SME as part of a group.  
  - Clear criteria for defining "SMEs" and "large" enterprises.  
  - The GN uses “ownership” and “control” interchangeably but follows DI definitions; definition of control should be consistent with direct investment (DI) statistics.  
- Employment-based size thresholds discussed:
  - Consider firms as large if they employ more than 250 employees.  
  - Noted international variation: 250 in EU, 200 in some countries, 500 in the United States.  
- Partner-country allocation concepts need clarification (origin/destination or country of consignment/dispatch) and alignment with GN C.4 on merchanting.  
- Data limitations and "Unknown" classification:
  - Enterprise-level characteristics cannot be obtained when underlying data are not collected at enterprise level, when linking with business registers fails, or when transactions are estimated (CIF/FOB adjustments and associated transport and insurance services). Such cases should be recorded as "Unknown."  
  - Increasing shares of goods and services purchased directly by individuals via e-commerce may be non-linkable; if distinguishable, these should be noted as an addendum item.  
- Practical impediments: availability and granularity of source data, data quality, compilation cost, confidentiality, and reporters’ burden.

### Implementation approach, staged rollout and compiler guidance
- GN proposes incorporating TEC and STEC disaggregation into trade in goods and services accounts and investment income accounts by nationality and size as a supplementary table; Annex I summarizes the proposed framework.  
- Apply the proposed framework at least to total exports and imports and total receipts and expenditures for investment income; encourage partner, product, and industry dimensions according to country capabilities.  
- For missing or non-linkable enterprise-level data, entries should be recorded as "Unknown."  
- Recommend staged implementation and clear compiler guidance for linking business registries with trade and investment income data—especially for services.  
- For countries with advanced systems, inclusion at the most aggregated level should be minimally intrusive; for others, compiler guides should provide techniques for linking business registries with trade and investment income data. Emphasis on linking services trade statistics and investment income data. Staged implementation might be considered.  
- Impact on standards: update BPM paragraphs and expand compiler guides drawing on Eurostat, ensuring consistency with IMTS, MSITS, and SNA updates.

### Questions for discussion posed by the Guidance Note
- Do members agree with the recommendation of an annual voluntary reporting template of the current account that includes enterprise characteristics, as presented in Annex I?  
- Shall the corresponding guidance include fixed thresholds for product, industry, size and ownership classifications, or should general criteria be provided, allowing countries to decide on thresholds?  
- Should IMTS and MSITS Compilers’ guides include clear guidance for compilation of TEC and STEC, drawing on Eurostat’s previous efforts and coordinated with related CATT Guidance Notes (C.1 and C.4), other Task Teams involved in BPM (DITT – D.5), and SNA updates, particularly the AEG Task Team on globalization statistics (GZTT)?

### Recommendations and expected benefits
- Recommendation: inclusion of enterprise characteristics as part of annual reporting of the current account on a voluntary basis, following the template presented in Annex I.  
- Build the balance of payments supplementary framework on existing TEC/STEC statistics (EU/OECD) and investment income by enterprise characteristics to improve trade in value added (TiVA) estimates and international integrated economic accounts and provide insights on fiscal optimization.  
- National TEC and STEC statistics based on IMTS and ITSS should serve as the main pillar for integration into the balance of payments.  
- Encourage staged implementation and provision of compiler guidance and techniques to handle confidentiality and resource constraints.

### Annex highlights: compilation methods, templates, and updates
- TEC compilation approach:
  - TEC breaks down IMTS by characteristics of the trading enterprise using linkage of customs transaction microdata with a centralized business register, possibly at establishment level when greater granularity is needed.  
  - Microdata linkage facilitated by common identifiers (e.g. tax identification number) enabling TEC compilation without additional respondent burden.  
- STEC compilation challenges:
  - Services trade is often compiled from multiple data sources, using models and estimations, making STEC compilation more challenging than TEC.  
  - STEC may be especially difficult for partner-country distributions and some services cannot be linked directly to enterprises; address non-linkable data in GN discussions.  
- Practical reallocation issues:
  - The reporting unit for customs transactions may differ from the production unit; statistical agencies may reallocate trade to the unit most likely responsible for production, which requires significant effort and resources.  
  - Consider staged implementation to manage reallocation and resource needs.  
- Manuals and guides identified for update include:
  - IMF (2009) Balance of Payments and International Investment Position Manual. Sixth Edition  
  - UN (2013) International Merchandise Trade Statistics: Compilers Manual, Revision 1  
  - UN (2016) Manual on Statistics of International Trade in Services 2010 Compiler’s Guide  
  - EUROSTAT (2020) Compilers guide on European statistics on international trade in goods by enterprise characteristics (TEC)  
  - EUROSTAT (2017) Compilers Guide for statistics on Services Trade by Enterprise Characteristics (STEC)
- Annex IV template highlights:
  - A—GOODS: Total Exports (credit) and Total Imports (debit) on a BOP basis with Top 5 Economy of Destination/Consignment, Top 5 Products, Top 5 Industrial Sector, and re-export breakdowns; merchanting and required/encouraged item flags.  
  - INDUSTRIES: Industrial Sector coding list enumerated 1 through 18 (e.g., "1 Agriculture, hunting, forestry and fishing" through "18 Manufacturing nec; recycling").  
  - B—SERVICES: Column layout for Credit, Debit, Value, Item, Total; service categories numbered 1 through 12 (including "1 Manufacturing services on physical inputs owned by others" to "12 Government goods and services n.i.e"), with Top 5 Economy breakdowns encouraged.  
  - C—Reconciliation between IMTS and Trade on Goods on a Balance of Payments Basis: parallel Exports (Credit) and Imports (Debit) columns with reconciliation components including CIF/FOB adjustments and numerous illustrative adjustment items; the table is not exhaustive.

*Guidance Note (SECTION I: THE ISSUE), IMF*

### SECTION I: THE ISSUE

### SECTION I: THE ISSUE

### Background and mandate
- The IMF Committee on Balance of Payments Statistics endorsed creation of a Working Group on Balance of Payments Statistics Relevant to Global Value Chain (GVC) Analysis at its 2017 meeting to identify balance of payments components relevant for GVC indicators and to better identify the role of multinational enterprises (MNEs) in current account transactions.  
- A final Working Group report—GVC (BOPCOM 19/04)—proposed development of a compilation framework for GVC and a supplementary data collection for MNEs; it was discussed by the Committee at its 2019 meeting.  
- The OECD and the IMF conducted a stocktaking survey among 76 member countries informing the report.  
- UNSD started global data collection on goods trade by enterprise characteristics (TEC) and services trade by enterprise characteristics (STEC), taking into account OECD and Eurostat initiatives, as reported to the UN Statistical Commission in 2020.  
- This Guidance Note (GN) proposes a framework to provide supplementary data highlighting the role of enterprises with different characteristics in the current account, building on prior work and focusing on operationalizing TEC and STEC data collection and recommendations for inclusion in the next Balance of Payments Manual (BPM).

### Rationale for TEC and STEC integration
- Conventional international trade statistics show trade flows by type of goods and services but do not identify the enterprise actors behind cross-border trade.  
- Policymakers and researchers need integrated data linking business statistics with IMTS and ITSS to assess effects of international trade on growth, employment, value added, and economic interdependency under globalization.  
- Microdata linking provides scope to better understand production arrangements in a globalized economy; new enterprise characteristics (notably foreign vs domestically-owned) have been added to TEC in many countries and STEC development is advancing.  
- TEC statistics enable breakdowns of trade in goods by economic activity, enterprise size-class, ownership, trade concentration, geographical diversification, and products traded to evaluate companies’ roles in globalization and impacts on employment, production, and value added.  
- Increasing tradability of services (accelerated by digitalization) makes STEC alongside TEC essential to portray traders active in international goods and services markets.

### Quantitative findings from existing TEC/STEC work
- OECD TEC data highlight that large enterprises continue to dominate international trade in goods; top exporters often account for the majority of imports.  
- TEC data show that only a small percentage of enterprises are directly engaged in international trade in goods, typically below 10 percent in OECD countries, with exceptions in small economies such as Slovenia and Estonia.  
- TEC data provide information on SME participation, showing SMEs generally export to neighboring markets but import from a much wider geographical base.  
- Eurostat STEC experimental statistics indicate: "Domestically controlled enterprises account for around three quarters of services exports from Denmark, Iceland and Lithuania. Foreign controlled enterprises are responsible for most services exports from Luxembourg, Hungary and Ireland."

### Current standards and guidance referenced
- UN (2013) International Merchandise Trade Statistics: Compilers Manual, Revision 1  
- UN (2016) Manual on Statistics of International Trade in Services 2010 Compiler’s Guide  
- EUROSTAT (2020) Compilers Guide on European Statistics on International Trade in Goods by Enterprise Characteristics (TEC)  
- EUROSTAT (2017) Compilers Guide for Statistics on Services Trade by Enterprise Characteristics (STEC)

### Issues for discussion and methodological considerations
- The GN proposes an annual data collection template providing supplementary breakdowns of balance of payments exports and imports of goods and services and receipts and expenditures of investment income by enterprise characteristics (industry, ownership (foreign-owned/domestically-owned), and size).  
- The integration of TEC and STEC into the balance of payments framework is seen as a step toward future compilation by individual trading partner.  
- Important definitional clarifications are required: precise definitions of MNE and control (Ultimate Investing Country vs Immediate Investor Country) aligned with other Task Teams; distinction between independent SME and SME as part of a group; clear criteria for defining "SMEs" and "large" enterprises.  
- The definition of control for ownership breakdown should be consistent with direct investment (DI) statistics; the GN uses “ownership” and “control” interchangeably but follows DI definitions.  
- Employment criteria for size should be prioritized, considering firms as large if they employ more than 250 employees, although thresholds vary internationally (examples: 250 in EU, 200 in some countries, 500 in the United States).  
- Partner-country allocation concepts need clarification (origin/destination or country of consignment/dispatch) and alignment with GN C.4 on merchanting.  
- Data limitations: enterprise-level characteristics cannot be obtained for total exports and imports of goods and services when the underlying data are not collected at enterprise level (e.g., private persons’ purchases), when linking with business registers fails, or when transactions are estimated (CIF/FOB adjustments and associated transport and insurance services). Such cases should be recorded as "Unknown." This applies also to increasing shares of goods and services purchased directly by individuals via e-commerce; if distinguishable, such cases should be noted as an addendum item.  
- Practical impediments: availability and granularity of source data, data quality, compilation cost, confidentiality, and reporters’ burden are main concerns for data collection.

### Linkages and potential benefits
- The activity could build on ongoing Eurostat-OECD TEC and STEC collections and the proposed GVC reporting template (Annex IV) developed by the IMF and OECD, improving trade in value added (TiVA) estimates and international integrated economic accounts and providing insights on fiscal optimization.  
- The balance of payments provides the overarching conceptual framework needed to analyze total effects of MNEs on an economy because trade in goods, trade in services, and investment income are substitutes in international production arrangements.  
- National TEC and STEC statistics based on IMTS and ITSS should serve as the main pillar for integration into the balance of payments.

### Proposed implementation approach and limitations
- The GN proposes incorporating TEC and STEC disaggregation into trade in goods and services accounts and investment income accounts by nationality and size as a supplementary table; Annex I summarizes the proposed framework.  
- The proposed framework should be applied at least to total exports and imports and total receipts and expenditures for investment income, with encouragement to include partner, product, and industry dimensions according to country capabilities.  
- Some countries may already compile some statistics at aggregated levels; others may produce partial breakdowns or be unable to include disaggregation because of confidentiality rules. The most economically relevant breakdown possible should be considered for publication.  
- For missing or non-linkable enterprise-level data, entries should be recorded as "Unknown."  
- Staged implementation and clear compiler guidance for linking business registries with trade and investment income data—especially for services—are recommended.

### Questions for discussion (as posed by the GN)
- Do members agree with the recommendation of an annual voluntary reporting template of the current account that includes enterprise characteristics, as presented in Annex I?  
- Shall the corresponding guidance include fixed thresholds for product, industry, size and ownership classifications, or should general criteria be provided, allowing countries to decide on thresholds?  
- The GN considers that IMTS and MSITS Compilers’ guides should include clear guidance for compilation of TEC and STEC and proposes drawing on Eurostat’s previous efforts. The proposal should be coordinated with related CATT Guidance Notes (C.1 and C.4), other Task Teams involved in BPM (DITT – D.5), and SNA updates, particularly the AEG Task Team on globalization statistics (GZTT), to avoid duplication and discrepancies.

### Outcomes and recommendation
- Recommendation: inclusion of enterprise characteristics as part of annual reporting of the current account on a voluntary basis, following the template presented in Annex I. The balance of payments framework could build on existing TEC/STEC statistics (EU/OECD) and investment income by enterprise characteristics to develop a supplementary framework for the balance of payments.  
- For countries with advanced systems, inclusion at the most aggregated level should be minimally intrusive; for others, compiler guides should provide techniques for linking business registries with trade and investment income data. Emphasis is placed on linking services trade statistics and investment income data. Staged implementation might be considered.  
- Impact on standards: update BPM paragraphs and expand compiler guides drawing on Eurostat, ensuring consistency with IMTS, MSITS, and SNA updates.

*Guidance Note (SECTION I: THE ISSUE), IMF*

### Annex II. Supplementary Information

### Annex II. Supplementary Information — Enterprise Characteristics

### Referenced documents
- Statistical Insights: Who’s Who in International Trade: A Spotlight on OECD Trade by Enterprise Characteristics Data. Apr 25, 2016.
- Compilers Guide on European Statistics on International Trade in Goods by Enterprise Characteristics (TEC).
- Final Report of The Working Group on Balance of Payments Statistics Relevant for the Analysis of Global Value Chains.
- Compilers Guide for Statistics on Services Trade by Enterprise Characteristics (STEC). 20/11/2017.

### Compilation methods and issues
- TEC compilation approach
  - TEC statistics break down international merchandise trade statistics (IMTS) by the characteristics of the trading enterprise.
  - Data are generally produced by national statistical authorities through linking microdata from the census of customs transactions (used for compiling IMTS) with a centralized business register containing both characteristics and reporting structure of all enterprises operating within that national boundary.
  - Where greater granularity is needed, linking at the level of individual business establishment may be necessary (e.g. for data by detailed industry or by subnational geography such as state, metropolitan region, or city).
  - Microdata linkage for TEC is facilitated by the possibility of using (or developing) common identifiers (e.g. a tax identification number) between the trade register and the business register, enabling TEC statistics to be compiled without imposing additional burden on respondents.

- STEC compilation challenges
  - Statistics on international trade in services are often compiled from multiple data sources, using models and estimations, unlike international trade in goods statistics that is often based on customs trade data.
  - STEC compilation might be a big challenge for several countries, especially in compiling partner-countries’ distribution for the few main types of services.
  - Due to the nature of some services, it might not be possible to link data directly to an enterprise; issues with non-linkable data should be addressed during the discussion of the Guidance Note.
  - Despite compilation challenges, the new STEC indicators will be invaluable for policy given the current state of globalization and integration.

- Practical reporting and reallocation issues
  - Inside the same enterprise, the unit responsible for reporting customs transactions might not be the unit producing the product.
  - Statistical agencies may reallocate trade to the unit most likely responsible for production; this reallocation requires significant effort and resources.
  - Consider staged implementation of proposals to account for reallocation and resource needs.

### Annex III — Chapters and manuals to update
- Manuals and guides identified for update:
  - IMF (2009) Balance of Payments and International Investment Position Manual. Sixth Edition
  - UN (2013) International Merchandise Trade Statistics: Compilers Manual, Revision 1
  - UN (2016) Manual on Statistics of International Trade in Services 2010 Compiler’s Guide
  - EUROSTAT (2020) Compilers guide on European statistics on international trade in goods by enterprise characteristics (TEC)
  - EUROSTAT (2017) Compilers Guide for statistics on Services Trade by Enterprise Characteristics (STEC)

### Annex IV — Balance of Payments Statistics Relevant for the Analysis of Global Value Chains: Template highlights
- A-GOODS (General merchandise on a BOP basis)
  - Total Exports (credit) on BOP basis
    - Top 5 Economy of Destination: 1- 2- 3- 4- 5-
    - Top 5 Products: a- b- c- d- e-
    - Top 5 Industrial Sector: a- b- c- d- e-
    - of which: Re-export (credit) — Top 5 Economy of Destination and Top 5 Products and Top 5 Industrial Sector
  - Total Imports (Debit) on BOP basis
    - Top 5 Economy of Consignment: 1- 2- 3- 4- 5-
    - Top 5 Products: a- b- c- d- e-
    - Top 5 Industrial Sector: a- b- c- d- e-
  - Net exports of goods under merchanting
    - Goods acquired under merchanting (negative credits): Top 5 Economy from which Goods were purchased and Top 5 Products and Top 5 Industrial Sector
    - Goods sold under merchanting (credit): Top 5 Economy to which Goods were sold and Top 5 Products and Top 5 Industrial Sector
  - Notes on required/encouraged items:
    - * items highlighted in black are required
    - ** items highlighted in red are encouraged
    - *** see Industrial Sector template for details on industrial sectors

- INDUSTRIES: Industrial Sector coding list (as template)
  - 1 Agriculture, hunting, forestry and fishing
  - 2 Mining and quarrying
  - 3 Food products, beverages and tobacco
  - 4 Textiles, textile products, leather and footwear
  - 5 Wood and products of wood and cork
  - 6 Pulp, paper, paper products, printing and publishing
  - 7 Refined petroleum products and nuclear fuel
  - 8 Chemicals and chemical products
  - 9 Rubber and plastics products
  - 10 Other non-metallic mineral products
  - 11 Basic metals
  - 12 Fabricated metal products
  - 13 Machinery and equipment
  - 14 Computer, Electronic and optical equipment
  - 15 Electrical machinery and apparatus
  - 16 Motor vehicles, trailers and semi-trailers
  - 17 Other transport equipment
  - 18 Manufacturing nec; recycling

- B-SERVICES template structure
  - Overall layout: columns for Credit, Debit, Value, Item, Total
  - For each service category, request Top 5 Economy breakdown and encourage full geographical breakdown if available:
    - Service categories listed include:
      - 1 Manufacturing services on physical inputs owned by others
      - 2 Maintenance and repair services n.i.e.
      - 3 Transport
      - 4 Travel
      - 5 Construction
      - 6 Insurance and pension services
      - 7 Financial services
      - 8 Charges for the use of intellectual property
      - 9 Telecommunications, computer, and information services
      - 10 Other business services
      - 11 Personal, cultural, and recreational services
      - 12 Government goods and services n.i.e
  - * items highlighted in black are required
  - ** items highlighted in red are encouraged

- C — Reconciliation between IMTS and Trade on Goods on a Balance of Payments Basis
  - Reconciliation layout structured as parallel Exports (Credit) and Imports (Debit) columns with Item and Value fields.
  - Reconciliation components include (but are not limited to):
    - Total Merchandise Trade as provided in source data
    - Total Adjustments***
    - Goods procured in ports by carriers (Top 5 Economy; Top 5 Products)
    - Goods changing ownership leaving territory informally and or illegally (Top 5 Economy; Top 5 Products)
    - Goods sold abroad after processing in other economies / Goods acquired from other economies for processing abroad (Top 5 Economy; Top 5 Products)
    - Goods sent abroad or returned after processing without change of ownership (Top 5 Economy; Top 5 Products)
    - Goods imported for construction projects by nonresident enterprises (Top 5 Economy; Top 5 Products)
    - High-value capital goods, if delivery differs from change of ownership (Top 5 Economy; Top 5 Products)
    - Goods lost or destroyed in transit (Top 5 Economy; Top 5 Products)
    - Goods changing ownership in customs warehouses or other zones (Top 5 Economy; Top 5 Products)
    - Migrants Personal effects (Top 5 Economy; Top 5 Products)
    - Goods for repair or storage without change of ownership (Top 5 Economy; Top 5 Products)
    - Returned goods (Top 5 Economy; Top 5 Products)
    - CIF/FOB adjustments (Top 5 Economy; Top 5 Products)
    - Final line: Total Trade on Goods, Balance of Payments Basis
  - Notes:
    - * items highlighted in black are required
    - ** items highlighted in red are encouraged
    - The table is not exhaustive; there are more possible adjustments for balance of payments purposes that are not listed (for example, corrections of IMTS concerning nonresident enterprises is missing).

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_Source: https://www.imf.org/-/media/files/data/statistics/bpm6/catt/c2-goods-services-investment-income-accounts-enterprise-characteristics.pdf_