Manual on Statistics of International Trade in Services

C. Statistical systems and classifications related 
to trade in services 
2.25. The 
Manual
seeks consistency with international 
standards related to trade in services. These standards 
are reviewed below. In particular, compatibility with the 
following systems and classifications is given the 
highest priority: BPM5, the 1993 SNA, ISIC, Rev.3 and 
CPC Version 1.0. 
2.26. The key standards on which the 
Manual
builds 
are noted below; fuller treatment of transactions between 
residents and non-residents and foreign affiliates 
systems appears in chapters III and IV, respectively. A 
brief summary of the relevant concepts contained in the 
standards is also given below. 
1. International 
(a) System of National Accounts, 1993 
2.27. The 
System of National Accounts 1993
is an 
integrated system of accounts related to the economic 
activities and sectors of the economy of a country. To 
capture the transactions between that economy and all 
others, the 1993 SNA provides an account called the 
“rest of the world”, which it also refers to as the 
“external transactions account”. Within this account is 

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13 
an “external account of goods and services”, in which 
trade in goods and trade in services are separately 
recorded. 
2.28. The 1993 SNA identifies “foreign-controlled 
corporations” as sub-sectors of the two institutional 
sectors - 
financial corporations
and 
non-financial 
corporations
. Foreign-controlled enterprises are defined 
more broadly in the 1993 SNA than are the majority-
owned foreign affiliates covered by FATS statistics and 
described in chapter IV below. The difference is that the 
1993 SNA suggests that countries may wish to treat 
some “associated enterprises”, which are enterprises in 
which the non-resident ownership is between 10 per cent 
and 50 per cent, as foreign-controlled. The foreign 
affiliates for which the core FATS statistics are to be 
compiled exclude associated enterprises and so are a 
subset of foreign-controlled enterprises as defined in the 
1993 SNA. However, the 
Manual
encourages countries 
that can do so to provide supplemental statistics 
covering other cases where foreign control may be 
deemed to exist, such as majority ownership by multiple 
foreign direct investors, ownership of exactly 50 per cent 
by a foreign direct investor, and cases where effective 
control is deemed to have been achieved through a 
minority stake in an enterprise. Thus, for countries that 
produce such supplemental statistics, the total coverage 
of FATS statistics may be identical to that of the 
statistics on foreign-controlled enterprises based on 1993 
SNA. 
2.29. 1993 SNA statistics on foreign-controlled 
enterprises relate to what is usually termed 
inward 
FATS
, i.e., to enterprises operating in the compiling 
country that are controlled by non-residents. The 1993 
SNA statistics for a given country do not provide 
information on 
outward FATS
, i.e., on enterprises 
established abroad that are controlled by residents of that 
country (though these enterprises would be covered by 
the 1993 SNA statistics of their respective host 
countries). 
2.30. The 1993 SNA provides the definitions of most 
of the economic variables that chapter IV recommends 
should be collected for FATS. These include the 
priority variables (gross output, employment and value 
added) as well as the lower priority items (financial and 
non-financial assets, net worth, operating surplus, gross 
fixed capital formation, taxes on income and 
compensation of employees). The 1993 SNA also 
provides the definition of an enterprise, which is 
required for compiling the priority variable 
number of 
enterprises
. 
(b) Fifth edition of the IMF Balance of Payments 
Manual 
2.31. BPM5 describes the conceptual framework that 
underlies balance of payments statistics. The balance of 
payments statement systematically summarizes, for a 
specific time period, transactions that take place between 
an economy and the rest of the world. Transactions, for 
the most part between residents and non-residents, 
consist of those involving goods, services and income; 
those involving financial claims on, and liabilities to, the 
rest of the world; and those (such as gifts) that are 
classified as transfers. A transaction itself is defined as 
an economic flow that reflects the creation, 
transformation, exchange, transfer or extinction of 
economic value and involves changes in ownership of 
goods and/or financial assets, the provision of services 
or the provision of labour or capital. 
2.32. The international transactions in trade in services 
that take place between residents and non-residents of an 
economy that are described in the present 
Manual
are 
based on the BPM5 classification and definition of 
services, but the detail recommended in chapter III of 
the present 
Manual
is greater than that of BPM5. 
2.33. The 1993 SNA and BPM5 have a common 
conceptual framework. The definitions of residence and 
time of recording and the principles of accrual 
accounting recommended in the present 
Manual
are the 
same as those in both BPM5 and the 1993 SNA. 
2.34. The scope of 
international trade in services
between residents and non-residents in the present 
Manual
is the same as that in BPM5. The one difference 
with respect to the 1993 SNA relates to the 
recommended treatment of financial intermediation 
services indirectly measured (FISIM), which for 
practical reasons is excluded from trade in services in 
BPM5. FISIM is discussed in some detail in paragraphs 
3.108-3.115 below. 
(c) Central Product Classification, Version 1.0 
2.35. The 
Central Product Classification, Version 1.0
is a part of the international system of interrelated 
classifications of economic activities and products (i.e., 
goods and services). It is the standard for all products 
that are an output of an economic activity, including 
transportable and non-transportable goods and services.
For the description of goods, CPC, Version 1.0 is fully 
harmonized with the 
Harmonized Commodity 

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14 
Description and Coding System
24
 
(HS) of the World 
Customs Organization. For services, CPC, Version 1.0 
is the first international classification covering the whole 
spectrum of outputs of the various industries, and it can 
serve the different analytical needs of statistical and 
other users. For example, the Provisional CPC was used 
for the elaboration of the categories of services that were 
used during the negotiations leading to GATS that were 
conducted during the Uruguay Round, and was also used 
to describe the balance of payments services components 
recommended in BPM5. The general service product 
classification of CPC, Version 1.0 will serve as a 
guideline for the elaboration of such classifications for 
specific areas of the economy, including international 
trade in services. 
(d) International Standard Industrial Classification 
of All Economic Activities, Revision 3 
2.36. The 
International Standard Industrial 
Classification of All Economic Activities, Revision 3
is a 
basic tool for fostering international comparability of 
data across a wide range of economic and social 
statistics, including production, value added, 
employment and other economic statistics. It is a 
standard classification of productive economic activities 
linked as far as possible with the way economic 
processes are organized in units. An industry is thus 
defined as the set of production units engaged primarily 
in the same or similar kinds of productive economic 
activity. Criteria relating to the economic transactors 
(e.g., financial institutions) and to types of transactions 
(intermediate and final consumption, capital formation 
etc.) reinforce the considerations for identifying stages 
of production. In line with the United Nations 
programme for the harmonization of international 
economic classifications, ISIC, Rev.3 categories are 
correlated with those of CPC, Version 1.0. A correlation 
table indicates the main kinds of activities that produce