REGIONAL COOPERATION AND ECONOMIC INTEGRATION

SOME ASPECTS OF TRADE STATISTICS AND REPORTING
Economic Globalisation Indicators (2005) notes that FATS variables should be compiled
for all foreign affiliates, not only those affiliates in services. Although guidance in this
Handbook on collection of AMNE data extends to businesses outside the service sector, it
is fully consistent with the guidance in MSITS. OECD Benchmark Definition of Foreign
Direct Investment, 4 th edition (2008) draws from these existing guidelines in suggesting
basic data and methodology that may be used.
According to recommendations and guidelines in existing international publications, in the
following text it will be given the basics of FATS methodology. FATS may be developed
for both:
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affiliates of foreign firms in national economy, i.e. foreign-owned affiliates in the
compiling economy (inward FATS) and
affiliates of national firms located abroad, i.e. foreign affiliates of the compiling
economy (outward FATS).
Principles for recording FATS build on existing international statistical standards, in
particular the fifth edition of the International Monetary Fund’s Balance of Payments
Manual (BPM5) and the System of National Accounts 1993 (1993 SNA). FATS should
cover those affiliates in which the single direct investor (or an associated group of investors
acting in concert) has a majority ownership (more than 50%) of the ordinary shares or
voting power. Thus, the statistical population of FATS is a subset of the FDI universe
(which includes ownership criteria of 10% or more) and comprises subsidiaries (majorityowned
corporations) and branches (wholly or jointly owned unincorporated enterprises) but
excludes associates (corporations owned at 10-50%). However, countries are encourage to
provide supplemental statistics in cases where are majority ownership by multiple foreign
direct investors, ownership of exactly 50% by a foreign direct investor and in cases in
which a qualitative assessment has been made that effective control has been achieved
through a minority stake in an enterprise. FATS should cover all foreign affiliates, not only
producers in services but also producers in goods. However, the activity classification to
be used for reporting to international organizations provides more detail for services than
for goods.
FATS variables may be attributed or classified in two main ways: geographical (by
country) and by primary industrial activity of the producer. In addition, some variables
may be classified by product. The geographical breakdown indicates in which country the
production took place and where the owner of the producing affiliate is located. Attributing
variables by country differs between inward FATS and outward FATS.
For inward FATS, the question is whether to attribute FATS variables to the country of
the immediate investor (first foreign parent) or to that of the ultimate investor (ultimate
beneficial owner – UBO (term used in MSITS and closer to the concept of ownership than
to that of control) or unit of ultimate control (term used in OECD Handbook and closer
to the concept of control)). It is recommended that the primary principle be the country
of ultimate investor of the affiliate because that is the country that ultimately owns or
controls, and therefore derives the benefits from owning or controlling the direct investment
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