## GZTT Meeting (November 11, 2020)—Summary of Discussions

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### INTRODUCTION
- The Globalization Task Team (GZTT) welcomed the recently appointed co-chair Mr. Branko Vitas (Australian Bureau of Statistics).
- New members with Government Finance Statistics (GFS) expertise joined: Mr. Martim Assunção, Mr. Floris Jansen, Ms. Laura Wahrig (all Eurostat), and Mr. Philip Stokoe (IMF).

### OVERVIEW OF THE GZTT WORK
- Good progress reported on three guidance notes (GN) drafted by the GZTT.
- GNs on Multinational Enterprises (MNEs) and Special Purpose Entities (SPEs):
  - Completed a second round of GZTT consultation, and consultation rounds by the Direct Investment Task Team (DITT) and the Advisory Expert Group on National Accounts (AEG).
  - General support for recommendations; nearly final after slight updates to incorporate clarifications and comments.
- GN on Valuation of imports and exports of goods (CIF to FOB adjustment):
  - Completed a second round of GZTT consultation and consultations by the Current Account Task Team (CATT), AEG, and IMF Balance of Payments Committee (BOPCOM).
  - Additional testing required to finalize the GN.

### GUIDANCE NOTE ON VALUATION OF IMPORTS AND EXPORTS (CIF TO FOB ADJUSTMENT)
- Conceptual preference:
  - Feedback from AEG and BOPCOM (October 2020) indicates transaction values appear to be the preferred option conceptually for valuation of imports and exports of goods, though not a consensus.
  - Concerns raised about practical feasibility of adopting transaction values and the importance of harmonization between the System of National Accounts (SNA) and the Balance of Payments Manual (BPM).
  - Further country consultation and testing requested to assess practical feasibility and cost–benefit tradeoffs.
- Testing strategy and timeline:
  - A testing strategy on current compilation practices and availability and access to invoice values was presented.
  - Timeline proposed seeks to receive results from national agencies by mid-June 2021, and to finalize incorporation of results in the GN by end-August 2021.
- Tour de Table main discussion points:
  - Testing may require additional time to include detailed results and input from customs trade data collectors based on the International Merchandise Trade Statistics (IMTS).
  - Coordination with customs trade collectors and IMTS needs consideration, but initial results within the proposed timeline are desirable to respect the GN completion deadline.
  - Detailed directions for testing requirements are needed; comparison of invoice and statistical values by delivery terms recommended.
  - Proposal to circulate a template illustrating present recording and proposed recording using an empirical example to facilitate consultation.
  - The GZTT Secretariat will circulate the testing questionnaire and template to GZTT members for comments shortly after the meeting.
  - Germany will share testing results to be presented to the OECD Working Party on International Trade in Goods and Services Statistics.
  - GN testing and consultation will be extended to a wide set of economies across several regions and stages of statistical development, including national accounts and balance of payments compiling agencies.
  - Initial stage: agencies asked to provide feedback on interest in participating so targeted contacts can obtain results from a diverse group.

### GUIDANCE NOTE ON SPECIAL PURPOSE ENTITIES (SPES)
- Preferred conceptual approach:
  - Consultation preference to leave the core SNA and BPM framework unchanged but consider supplemental information on SPEs as an encouraged breakdown of foreign controlled SPEs within the institutional sector accounts for countries where SPEs are significant.
- Conceptual alignment and definition:
  - AEG and DITT consultations revealed general agreement to align the definition of SPEs based on direct or indirect foreign control, with consideration of different terms to distinguish SPEs with resident parents.
  - Support for integrating a proposed breakdown of foreign controlled SPEs within institutional sector accounts where SPEs are significant.
  - Use of the same definition of SPEs as proposed in the context of ESS in the SNA for separate identification of SPEs within institutional sector accounts was supported, but a more clear-cut and precise guideline is needed to operationalize the definition.
- Practical implementation points:
  - From a user-needs perspective, members agreed SPE cross-border transactions or positions that have immediate resident parents should be identified separately within cross-border statistics and not consolidated with the non-SPE resident, to the extent possible, though practical implementation may be challenging.
  - Considering a nationality-based presentation as an alternative concept (without departing from current SNA and BPM) is viewed as a supplemental option only for countries where SPEs are important.
    - DITT and AEG supported this presentation conceptually as an extension to the core framework, but practical implementation would involve major implications and challenges for compilers and may require international cooperation.
  - Timeline: public consultation for this GN targets start mid-December 2020.
- Tour de Table main discussion points:
  - Additional written comments—mainly concerning the definition of SPE—will be sent by recently joined GFS experts from Eurostat.
  - The GN on SPEs will be updated regarding treatment of SPEs owned by government once recommendations from DITT Guidance Note D.5 “Eliminate the Imputations for an Entity Owned or Controlled by General Government that is Used for Fiscal Purposes Note” are shared with the GZTT.
  - Members supported the use of the BOPCOM definition for SPEs, emphasized harmonization between BPM and SNA, and recommended a progressive approach.
  - Importance of clarity in concepts (control and ownership) and names (e.g., to distinguish SPEs with resident parents) was noted.
  - Need for clear operational guidance and highlighting data sources to support option 2 in the GN was emphasized.
  - Members supported the next steps for the GN.

### GUIDANCE NOTE ON MULTINATIONAL ENTERPRISES (MNES)
- Consultation outcomes:
  - Feedback from GZTT, DITT, and AEG showed general consensus to increase communication and user education around existing indicators (not to create superior indicators).
  - Alternative measures (such as adjusted gross national income (GNI*) in Ireland) should be left to countries based on their own needs and not included in the SNA.
  - Further work may be necessary to help countries improve estimation of CFC.
- Definition and control:
  - General consensus on definition of MNEs emphasizing “control” as defined by BD4 and BPM6.
  - Issues raised around residency and “ownership versus control”; need for a clear framework to determine control to facilitate data collection.
- Approaches to highlight MNEs in national accounts:
  - Institutional sector accounts and gross value added were preferred by most members; less preference for extended supply and use tables.
  - AEG and GZTT recommend that the choice of breakdown depends on national statistical production processes and users’ analytical and policy needs.
- Next steps and timeline:
  - GN to clearly define what is meant by MNEs and to further discuss the control principle.
  - GN will discuss implications of three approaches to highlight MNE activities and emphasize that countries decide which approach to implement.
  - GN expected to be circulated for global consultation by mid-December 2020.
- Tour de Table main discussion points:
  - GZTT members agreed that the MNE definition needs further refinement; the Secretariat will send the updated definition for comments.
  - Importance of units considered in compilation to achieve harmonization between national accounts and balance of payments estimates was noted.

### NEW AND REMAINING ISSUES OF GZTT
- Conclusions of the 2020 AEG Meeting include additional topics to be addressed by GZTT; GZTT work will build on existing guidance for most topics.
- Secretariat will seek additional coordination with the CATT on overlapping topics.
- Topics previously addressed by the Task Team on Intellectual Property Products will be included back in the GZTT.
- Secretariat will update the GZTT Terms of Reference document and the member list.

### ACTIONS
- GZTT members to:
  - Provide feedback on the valuation of imports and exports testing questionnaire and template.
  - Provide feedback on the updated MNE guidance note.
- GZTT Secretariat to:
  - Update the GZTT Terms of Reference document, and the member list.
  - Circulate the valuation of imports and exports testing questionnaire and template to the GZTT members for their comments.
  - Send the updated MNE guidance note with definition to the GZTT members for their comments.

### ATTENDEES
- Co-chairs:
  - Mr. Michael Connolly (Ireland Central Statistics Office)
  - Mr. Branko Vitas (Australian Bureau of Statistics)
- Participants from countries:
  - Ms. María Lourdes Erro Azcarate (Central Bank of Uruguay – Retired)
  - Mr. Dirk Van den Bergen (Statistics Netherlands)
  - Ms. Ann Lisbet Brathaug (Statistics Norway)
  - Mr. Paul Feuvrier (Central Bank of Luxembourg)
  - Mr. Satoru Hagino (Fukuyama University, Japan)
  - Ms. Grace Kim (Australian Bureau of Statistics)
  - Mr. Sanjiv Mahajan (Office of National Statistics, United Kingdom)
  - Ms. Norhayati Razi (Bank Negara, Malaysia)
  - Mr. Jens Walter (Deutsche Bundesbank)
- International agencies:
  - Mr. Martim Assunção (Eurostat)
  - Ms. Francien Berry (IMF)
  - Mr. Celestino Giron (ECB)
  - Mr. Daniel Iscru (Eurostat)
  - Mr. Floris Jansen (Eurostat)
  - Mr. Rami Peltola (UNECE)
  - Ms. Tihomira Dimova Rodde (UNECE)
  - Mr. Herman Smith (UNSD)
  - Mr. Steinar Todsen (Eurostat)
  - Mr. Philip Stokoe (IMF)
  - Ms. Laura Wahrig (Eurostat)
- Secretariat (IMF):
  - Ms. Jennifer Ribarsky
  - Ms. Padma Sandhya Hurree Gobin
  - Ms. Margarida Martins
- Unable to attend:
  - Mr. Nadim Ahmad (OECD)
  - Ms. Yang Can (State Administration of Foreign Exchange (SAFE), China)
  - Ms. Lamia Laabar (Haut-Commisariat au Plan, Morocco)
  - Mr. Roberto Ramos (Getúlio Vargas Foundation, Brazil)
  - Mr. Dylan Rassier (Bureau of Economic Analysis, United States)
  - Mr. Andrey Tatarinov (ROSSTAT, Russia)
  - Mr. Themba Munalula (Common Market for Eastern and Southern Africa (COMESA))
  - Ms. Jennifer Withington (Statistics Canada)

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_Source: https://www.imf.org/-/media/files/data/statistics/bpm6/gztt/gztt-meeting-minutes-november-11-2020.pdf_