Manual on Statistics of International Trade in Services

A. Introduction
III. Services Transactions Between Residents and Non-residents
3.1. The present chapter describes in detail the
measurement of international trade in services in the
conventional balance of payments sense of transactions
between residents and non-residents of an economy. It
sets out the principles underlying the recording of such
trade. It discusses the concept of residence and its
practical application, valuation of transactions, and other
principles relating to recording of transactions. It then
describes the Extended Balance of Payments Services
Classification, the treatment of transactions between
related parties, and the recording of trade by trading
partner. Allocation by mode of supply is discussed, as is
the treatment of repairs. Finally, it describes each of the
components of EBOPS. A further detailed elaboration of
EBOPS components through the presentation of a
correspondence with CPC, Version 1.0 is set out in
annex III.
B. Principles of recording
3.2. The principles for the measurement of services
transactions between residents and non-residents in the
present <strong>Manual</strong> are the same as those prescribed in
BPM5 and the 1993 SNA. This is to ensure that
compilers may make use of the same data sources as for
compiling balance of payments statistics and that
statistics on international trade in services are compiled
on a basis consistent with that of other macroeconomic
statistics. This is important both within each country’s
statistical system and also for purposes of international
comparability. The main principles for recording these
transactions are described below, and if more detailed
guidance is needed, it may be obtained from BPM5 and
its companion volumes, the IMF Balance of Payments
Textbook and the IMF Balance of Payments Compilation
Guide. 38
1. Concept and definition of residence
3.3. The residence concept is central to the measurement
of transactions between residents and non-residents. The
concept of residence in the present <strong>Manual</strong> is identical to
38 Washington, D.C., 1996 and 1995, respectively.
26
that used in BPM5 and the 1993 SNA. It is not based on
nationality or legal criteria but on a transactor’s centre of
economic interest. Further, because territorial boundaries
recognized for political purposes may not always be
appropriate for economic purposes, the economic
territory of a country is used as the relevant
geographical area to which the concept of residence is
applied. An institutional unit is a resident unit of a
country or economy when it has a centre of economic
interest in the economic territory of a country.
3.4. The economic territory of a country consists of the
geographic territory administered by a government.
Persons, goods and capital circulate freely within this
territory. Included are islands that belong to the country,
airspace, territorial waters and the continental shelf lying
in international waters over which the country enjoys
exclusive rights or over which it has, or claims to have,
jurisdiction in respect of the right to fish or to exploit
fuels or minerals below the seabed. Also included are
territorial enclaves, such as embassies, consulates,
military bases, scientific stations, information or
immigration offices and aid agencies, located in other
economies and used by the Government for diplomatic,
military, scientific or other purposes, with the formal
political agreement of the Governments of the
economies where these enclaves are physically located.
Thus, while territorial enclaves used by foreign
Governments (or international organizations) may be
located within a country’s geographical boundaries, such
enclaves are not included in the host country’s economic
territory.
3.5. An enterprise has a centre of economic interest, and
thus residence, in an economy when it engages and
intends to continue to engage in economic activities on a
significant scale either indefinitely or over a long period
of time from one or more locations, not necessarily
fixed, within the economic territory of that economy. A
period of one year is suggested as a guideline for
determining residence, but this is not an inflexible rule.
3.6. Production undertaken outside the economic
territory of a resident enterprise by the personnel, plant
and equipment of that resident enterprise is treated as
part of host country production, and the enterprise is
treated as a resident unit (branch or subsidiary) of that