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BEA Trade Statistics Revisions Coming
Jesse Richman, 6/3/2014

On June 4th the Bureau of Economic Analysis will release its revisions in the way trade statistics are collated.  This may mark the end (or beginning of the end) of meaningful trade statistics in goods that actually reflect the value of goods imported and exported by the United States' territory. From the BEA release (http://www.bea.gov/international/revision-2014.htm):

With this year’s annual revision, BEA will also introduce a new presentation of the ITAs, including a new presentation of services, as part of a comprehensive restructuring of BEA’s international economic accounts. This change in presentation, combined with the changes in definitions and classifications, will bring the statistics into closer alignment with international guidelines. Table templates of the new presentation are available on BEA’s Web site. Additional information on BEA’s comprehensive restructuring of the international accounts was presented in the March 2014 Survey of Current Business. Changes that will impact the “U.S. International Trade in Goods and Services” release are discussed below.

Goods on a BOP Basis

Net exports of goods under merchanting, which are currently included in trade in services under other private services, will be reclassified to goods through a new BOP adjustment. These net exports reflect the net value of goods that are purchased and subsequently sold abroad without entering the United States. Because these goods do not cross the U.S. customs frontier, their value is not recorded in the data for goods on a Census basis. BOP adjustments—adjustments that BEA applies to goods on a Census basis to convert them to a BOP basis—are combined and presented as net adjustments in this release.


This author is not persuaded that profits from merchanting necessarily belong in the trade statistics at all.  But assuming they do, it is furthermore not at all clear to me that they belong as Goods exports!  The goods never touched American soil.  How exactly are they goods exports? 

The claim that these changes bring US statistics into closer conformity with international norms simply is not true at all.  The IMF manual on balance of payments discusses merchanting in several places (see https://www.imf.org/external/pubs/ft/bopman/bopman.pdf).  I copy several paragraphs from this report below.  The money quote is on page 63.

"When goods are acquired from one
economy, relinquished again to that or some other
economy, and do not cross the frontier of the economy
in which the temporary owner is a resident, the activity
is considered a merchanting transaction rather than an
import and re-export of the goods. It is recommended
that the country of the temporary owner exclude such
goods from the goods component." (emphasis added.)


Rather than moving towards international norms, the United States is moving AWAY from them.  The political reasons for doing so are perhaps to obscure reality.  By counting merchanting as goods exports, it will no longer be so obvious that the United States is importing much more than it is exporting.    

On page 47:

166. Other business services provided by residents to
nonresidents and vice versa covers merchanting and
other trade-related services; operational leasing services;
and miscellaneous business, professional, and technical
services. (See the Selected Supplementary
Information table at the end of this chapter and
paragraphs 261 through 264 for details.)

On page 61:

199. Excluded from the category of goods for
processing are goods subject to on-site processing
involving an import not followed by an export (or vice
versa). These goods are included under general
merchandise. Two particular cases warrant mention.
The first concerns the treatment of goods that are sent
abroad for processing and subsequently sold to a
resident of the processing economy. Such goods are
included under exports of general merchandise. The
payment for processing is entered as a debit under
services, and an adjustment is made to the
merchandise export figure to include the value of
processing. The second case concerns the treatment of
goods that are sent abroad for processing in one
economy and then sold to another economy. A service
payment from the original economy to the processing
economy is entered under merchanting and other traderelated
services, and an export (including the value of
processing) from the original economy to the (third)
purchasing economy is recorded under general
merchandise. Included under processing (on practical
grounds, as noted in paragraph 198) are goods to
which some value (e.g., packaging, labeling, etc.) is
added. (This added value would be

On page 63:

207. In contrast, a change, between a resident and a
nonresident, in ownership of goods may occur when
goods do not physically cross the frontier of the
economy of the resident who acquires or relinquishes
ownership. When goods are acquired from one
economy, relinquished again to that or some other
economy, and do not cross the frontier of the economy
in which the temporary owner is a resident, the activity
is considered a merchanting transaction rather than an
import and re-export of the goods. It is recommended
that the country of the temporary owner exclude such
goods from the goods component unless the recording
periods in which the goods are acquired and
relinquished are not the same. (emphasis added)

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  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

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  • [Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....

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