Russian Federation: Estimating Volume of Merchandise Exports and Imports That Are Not Captured in the Customs Statistics
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Introduction
- The Bank of Russia has made ensuring reliability of data on external merchandise trade in external sector statistics a top priority since it started compiling BoP statistics.
- Data gaps in export-import transactions stem from:
- Methodological differences in systems used for customs and macroeconomic statistics compilation (such as BoP, SNA, input-output tables).
- Lack of directly reported data on some types of foreign trade in goods transactions.
- High thresholds for duty-free imports of goods by individuals:
- up to 10 000 Euro or 50 kilograms for air transport,
- up to 1 500 Euro or 50 kilograms for other modes of transport (sea, road and rail),
- up to 1 000 Euro or 31 kilograms a month for postal delivery.
- Regular concealment or understatement of value or amount of imported goods by Russian enterprises to avoid taxation or customs duties.
- These factors cause significant discrepancies with partner countries’ statistics, indicating weak points in foreign trade in goods statistics.
- To fully reflect export-import transactions in the Russian BoP, the Bank of Russia developed a system of estimates for foreign trade in goods volumes non-registered by customs statistics.
Scope of Coverage, Methodology, Compilation Methods and Data Sources
- The system developed and used in BoP compilation by the Bank of Russia since 1994 includes estimates for:
- Informal exports of goods.
- Hidden (“shadow”) imports and informal imports of goods.
- Informal exports of goods:
- Cover individuals’ transactions in frontier trade (goods purchased in Russia and carried by individuals to neighboring countries, including direct exports and re-exports).
- Are estimated based on data for the previous period adjusted by the change in real purchasing power of these countries’ currencies.
- Benchmarks are chosen by the Bank of Russia after consultation with the statistical agency and BoP compilers from neighboring countries.[2]
- Since 2015, the estimate is supplemented by value of exports in cross-border electronic trade (value of goods purchased by non-residents in Russian Internet stores).
- This cross-border e-commerce calculation is based on banks’ reports on online payments conducted using payment cards issued by nonresidents.
- Because banks’ routine reports do not break down non-resident card payments into goods and services, an annual sample survey is conducted among banks with the largest value of such transactions to estimate the share of goods.
- Hidden (“shadow”) imports:
- Definition: goods with value below the threshold of declaration for imports and goods with value understated by importing Russian enterprises.
- Estimated using a balance model comparing value of retail trade and value of trade resources supplying it.
- Aggregate resources are derived from national production in the current period and imports adjusted by intermediate consumption, exports, and balance of change in stocks of goods owned by producers and in retail trade.
- Values of components are calculated in consumer prices based on information from the statistical agency and the customs service, then converted into US dollars using average exchange rate of the Russian ruble for the period set by the Bank of Russia.
- Because calculation of domestic production resources includes an adjustment for unregistered economic activity, a stable excess of trade turnover over trade resources is treated as inflows from abroad (unobserved imports of consumer goods sold by trade enterprises, catering enterprises, and marketplaces).
- Transfer indices from consumer (retail) prices to imports (FOB) prices are calculated using:
- Price structure of final consumption of imported goods (from “input-output” tables).
- Price dynamics in foreign and domestic markets in the current period.
- With these indices and average exchange rates applied, value of unobserved imported goods for consumption sold in domestic markets is transformed to BoP format.
- Informal imports of goods:
- Include value of goods imported by individuals above duty-free thresholds; customs service collects these data but they are not included in totals of customs foreign trade statistics.
- Value of automobiles imported by individuals is calculated separately by summing customs service data.
- For EAEU member states (EAEU members are Russia, Armenia, Belarus, Kazakhstan and Kirgiz Republic) where no customs borders exist, the Bank of Russia estimates value of automobiles imported by individuals from EAEU countries based on customs administrative data on number of cars imported and average price level for the models estimated by the Bank of Russia.
- Informal imports include value of goods ordered via catalogues (Quelle, Otto, La Redoute, etc.), collected from banks’ reports on resident individuals’ remittances.
- Since 2011, estimates of informal imports were supplemented by value of goods imported by residents via cross-border electronic trade (purchases in foreign Internet stores).
- Initially calculated based on Russian Post data on number of incoming international postal deliveries and the Bank of Russia’s estimate of average value per delivery.
- Starting from 2013, imports via cross-border electronic trade are calculated using banks’ reports on transactions for goods via payment cards issued by residents and information from electronic money systems operators (PayPal, Qiwi etc.).
- Beyond calculating total foreign trade in goods, estimates of non-registered merchandise exports and imports are used in compilation of corresponding BoP aggregates of foreign and domestic currencies in circulation.
- Footnote specifics:
- [1] Starting from July 1st, 2018 according to new Customs Code of EAEU threshold for value of goods imported duty-free for personal consumption via postal delivery is set lower at 500 Euro. In a year, it is planned to lower it to 200 Euro.
- [2] Benchmarks are the basic values of informal direct exports and re-exports of goods, which are adjusted by the change in real purchasing power of the border countries’ national currencies (CIS member countries) related to the Russian ruble to obtain the corresponding reporting values.
Controls Over the Results, Current Challenges and Conclusions
- Main estimation issue: possible double counting, notably for goods purchased via cross-border electronic trade that may be resold domestically.
- If evidence exists that such goods are re-sold, the estimate of hidden imports is adjusted to avoid double counting.
- Estimates are integrated with other macroeconomic statistical systems (for example, GDP calculated using final consumption method in SNA and “input-output” tables).
- To maintain data quality, the Bank of Russia performs regular comparison of its data with “mirror” foreign merchandise trade statistics of partner countries.
References