5489.0 - International Merchandise Trade, Australia, Concepts, Sources and Methods, 2001

ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 30/05/2001

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Contents >> Chapter 2. Conceptual Framework >> Partner Country

2.40 International merchandise trade statistics classified by partner countries are of significant value. They are used to analyse trade patterns, trade shares and product markets. The information gained is used for business decisions and for government trade policy and negotiations. The statistics are also used for checking the accuracy and reliability of each country's trade data.

2.41 The UN recommends that countries follow the relevant provisions of the Kyoto Convention (2) for determining a good's country of origin. For attribution of partner country they recommend country of origin for imports, and country of last known destination for exports. Additionally for imports, it is recommended that the country of consignment be collected.

(2) In May 1973 the International Convention on the simplification and harmonisation of customs procedures (Kyoto Convention) was signed at Kyoto. The Kyoto Convention attempted to achieve universal harmonisation of customs procedures, other than classification and valuation.

2.42 In accordance with the UN recommendations, Australia classifies exports by country of final destination, to the extent that the exporter knows at the time of export where the goods will finally be delivered, and imports according to the country of origin of the goods. In the case of exports, where the country of final destination is not known at the time of lodgement of the export entry, the exporter declares the country as unknown until a final destination is determined.

Country of Origin

2.43 The country of origin of a good (for imports) is determined by Rules of Origin (ROO) established by each country. Generally these rules may be divided into three categories:

goods wholly the produce of the country (known as 'unmanufactured raw products')

goods wholly manufactured in the country from one or more of the following:

unmanufactured raw products;

materials wholly manufactured in the country;

materials determined to be raw materials of the country; and

goods partly manufactured in the country.

2.44 In Australia, the legislative basis for determining the country of origin is the Customs Act 1901 and Customs Regulations 1926 - Statutory Rules 1926 No. 203. Customs apply two criteria when goods are not wholly produced or manufactured in one country:

the last process of manufacture must be performed in the country claiming origin; and

the defined total factory costs (materials, labour and overhead) are not less than a specified percentage.

2.45 The recording of imports by country of origin has the advantage of showing the direct relationship between the producing country (the country in which the goods originate) and the importing country. This information is regarded as indispensable for matters of trade policy and negotiations, for administering import quotas or tariffs, and for related economic analyses.

2.46 There are, however, limitations to the use of data compiled on a country of origin basis. In principle, export and import statistics will only match between two countries when exports are shipped directly from the country of origin to the country of final destination. Discrepancies occur when third countries are involved, for example re-exports of merchandise traded through intermediate countries.

2.47 An example is if goods were produced in the United States, sold and shipped to Australia, and afterwards resold and dispatched to New Zealand. The United States statistics would most probably show these as exports to Australia, if at the time of export any destination after Australia is unknown or it is considered that goods will remain in Australia. Australia may then export the goods and record them as a direct transaction between Australia and New Zealand. New Zealand statistics would most likely not attribute the imports to Australia, but indicate that goods were imported from the United States (the country of origin). This complicates data comparability with partner countries.

2.48 The application of rules of origin may also differ between countries. This leads to discrepancies in country attribution when imports recorded by one country are reconciled with corresponding exports of a trading partner. This issue is discussed in more detail under bilateral reconciliation studies in Chapter 8.

Country of Final Destination

2.49 The country of final destination, is the last country - as far as it is known at the time of exportation - to which goods are to be delivered, irrespective of where they have been initially dispatched to, and whether or not, on their way to that last country, they are subject to any commercial transactions or other operations which change their legal status.