CHAPTER 1 THE PURPOSE AND USE OF AUSTRALIA'S INTERNATIONAL MERCHANDISE TRADE STATISTICS

INTRODUCTION

1.1 Australia's international merchandise trade statistics record goods which add to, or subtract from, the stock of material resources of Australia by entering (imports) or leaving (exports) its territory. Goods, as defined by the 2008 SNA, are 'physical, produced objects for which a demand exists, over which ownership rights can be established and whose ownership can be transferred from one institutional unit to another by engaging in transactions on markets' (2008 SNA, paragraph 6.15). International merchandise trade statistics form a significant part of the goods component of Australia's balance of payments.

1.2 Goods simply transported through Australia (goods in transit), and goods entering or leaving Australia on a temporary basis e.g. for repair or for exhibition, do not add to or subtract from Australia's stock of material resources and are not included in Australia's international merchandise trade. Where such goods are entered on a customs export and import declaration they are included in Australia's international non–merchandise trade.

1.3 Australia also compiles exports and imports of services. Services are not physical objects; they are the result of a production activity that changes the conditions of the consuming units, or facilitates the exchange of products or financial assets. Services are included in Australia's balance of payments but they are not included in international merchandise trade statistics.

1.4 The issues, ABS position and treatments described in this paper only cover international merchandise trade statistics i.e. not goods on a balance of payments basis or services statistics.


PURPOSE

1.5 The ABS considers the primary purpose of international merchandise trade statistics is to provide:

• a high quality essential input to Australia's balance of payments and other macroeconomic statistics; and
• an early indicator of Australia's economic and international trade performance.
  

1.6 In addition to the primary purpose of the statistics as a high quality, monthly, macroeconomic indicator, there is ongoing demand for, and use of, detailed statistics for regulatory and policy purposes, monitoring commodity trade flows and market research.

1.7 The international standards (both the 1998 and 2010 versions) support these purposes.


COVERAGE

1.8 Australia's economic territory is the geographic area under the effective economic control of the government. This includes:

• the land area, airspace, territorial waters, and continental shelf lying in international waters over which Australia enjoys exclusive rights or over which it has, or claims to have, jurisdiction over fishing rights and rights to fuels or minerals
• any islands belonging to Australia which are subject to the same fiscal and monetary authorities as the mainland; and
• Australia's territorial enclaves in the rest of the world including embassies or consulates, military bases, scientific stations etc but not the territorial enclaves used by foreign governments which are physically located within Australia.

1.9 International merchandise trade statistics are primarily sourced from export and import declarations provided to Customs and Border Protection so that the goods can be cleared for entry to, or export from, Australia. The jurisdiction of Australia's customs does not extend to goods exported and imported by Norfolk Island, Heard Island, McDonald Islands, Christmas Island, Cocos (Keeling) Islands, Ashmore and Cartier Islands, the Australian Antarctic Territory, the Joint Petroleum Development Area (JPDA) or Australia's territorial enclaves abroad. Trade between these territories and Australia are included in international merchandise trade statistics while trade between these territories and other countries are excluded from international merchandise trade statistics.


VALUE THRESHOLDS FOR CUSTOMS DECLARATIONS

1.10 In principle, the scope of international merchandise trade statistics covers all goods which add to or subtract from Australia's stock of material resources. In practice, however, coverage is limited to those goods which pass the customs frontier and for which a full customs declaration is required.

1.11 The value thresholds applied by Customs and Border Protection for a full goods declaration are:

• imports – goods with a value exceeding $1000; and
• exports – consignments of goods with a total value exceeding $1999. This value threshold does not apply to goods requiring an export permit – an export declaration is required for these goods.

1.12 To fully meet the purpose of the statistics, all goods entering or leaving Australia's economic territory, including goods valued below the declaration thresholds should be included.
DATA COMPOSITION

1.13 Australia's international merchandise trade statistics are compiled from a detailed transactions level dataset supplied by Customs and Border Protection. The dataset includes information on the Harmonized System (HS) commodity classification, goods description, quantity, value, gross weight, country, port, Australian state and mode of transport for each transaction. The ABS aggregates the transactions and releases statistics on the value (and where appropriate quantity and gross weight) of goods exported from or imported into Australia by commodity, country, Australian state, port, mode of transport and industry. For full details see Appendix 1 International Merchandise Trade Statistics Data Composition.


RELATIONSHIP BETWEEN CUSTOMS DECLARATIONS AND INTERNATIONAL MERCHANDISE TRADE STATISTICS

1.14 Customs and Border Protection use the declarations to assess and collect duty and other revenue payable on imported goods, and to monitor and control the physical movement of goods into and out of Australia. In performing these roles they apply various logical and legality checks and are able to audit business records, but they operate in a self regulation environment which mainly targets declarations with perceived customs risk. Customs and Border Protection supply the declaration information to the ABS but they do not publicly release international merchandise trade statistics.

1.15 Once the information is passed to the ABS, a range of quality checks are applied to ensure the quality of the data for statistical purposes. These checks ensure that the data align with the concepts and definitions being measured. For example, goods which enter Australia on a temporary basis (e.g. art work for exhibition) are reclassified to non–merchandise trade because they do not add to Australia's stock of material resources. Also, goods brought to Australia for foreign diplomats stationed here, and customised software, are not included in Australia's merchandise trade. Customised software, however are included in services in the balance of payments. The ABS closely examines all transactions with values over a high value threshold (generally $3 million to $5 million). These checks may identify further non–merchandise trade or errors in the value or quantity information provided to Customs and Border Protection.

1.16 On a monthly basis, the ABS releases aggregate statistics based on the individual transactions data supplied by Customs and Border Protection. The statistics are released under the Census and Statistics Act 1905 and the Statistics Determination 1983 Reg 2 which enables the ABS to release certain aggregate statistics in a form that may enable the identification of a provider (i.e. a person, business or organisation), without seeking the approval of that provider, except if the provider has shown that such disclosure would enable their identification.

1.17 While the export and import declarations are required by Customs and Border Protection for regulatory purposes, they are also a good administrative data source for measuring Australia's international merchandise trade and satisfying the purpose of the statistics.


HOW THE DATA ARE USED AND THE FREQUENCY OF USE

1.18 Australia's international merchandise trade statistics in conjunction with other related economic statistics, are used to analyse Australia's external performance, formulate and evaluate macroeconomic policy (including trade policy, trade treaties and foreign investment policy), analyse trends in income, capital flows and patterns of investment into and out of the economy, and to undertake international comparisons.

1.19 One of the primary uses of international merchandise trade statistics is as an input to other ABS macroeconomic statistics, namely the balance of payments, the national accounts and international trade price indexes. The frequency and level of data supplied for this use are:

• Monthly, broad level (value x two–digit Standard International Trade Classification (SITC)) exports and imports data are supplied to the balance of payments a few days after the end of the reference month
• Quarterly detailed (value and quantity x eight–digit Australian Harmonized Export Commodity Classification (AHECC) and value and quantity x ten–digit Harmonized Tariff Item Statistical Code (HTISC)) data are provided for inclusion in, and validation of, the international trade price indexes; and
• Annual, financial year detailed data (value x eight–digit AHECC and value x ten–digit HTISC) are supplied to the national accounts for the annual supply–use tables.

1.20 The statistics are also used by a wide variety of organisations (governments, businesses, national and international organisations) and individuals. Their data use varies from information about a single commodity to access to the complete aggregate (but confidentialised) dataset. While some statistical users access the data on an ad–hoc basis, many users of international merchandise trade statistics subscribe to and use monthly data on a regular basis.

1.21 Merchandise import statistics are released in International Merchandise Imports, Australia (cat. no. 5439.0) 13 working days after the end of the reference month. Merchandise exports are released in International Trade in Goods and Services, Australia (cat. no. 5368.0) 23 working days after the end of the reference month. This later publication also includes goods credits (exports) and goods debits (imports) on a balance of payments basis. These statistics are closely related to merchandise exports and imports but have been adjusted to take account of the principles of economic ownership and residence.

1.22 The broad relationship between customs declarations, international merchandise trade and balance of payments statistics is presented in Diagram 1.




USER COMMENTS

1.23 Users are invited to comment on:

• Whether the purpose of international merchandise trade statistics reflects the primary need for monthly broad level data for macroeconomic purposes and secondary use of detailed monthly statistics for trade and economic policy and market research. Do users agree with the purpose statement?
• The coverage of the statistics and whether this has implications for the stated purpose.