cy ■■■■■'*■■■■■ Fixed investment Nonresidential Structures Producers' durable equipment... Residential Nonfarm structures Farm structures /f f Producers' durable equipment 1983 3,304.8 2,155.9 279.8 801.' 2 \„ A. v r^&jsrjp. Change in business inventories >, ''/, ,;, V. ''■■. ''■-.. fy , %"*„* Nonfarm *V ^b^A. "'"■• '^ # , Fa - iVV „;■■■••••:■•-;•■■■■.:■ -.^•°, Net exports of goods and services &_ *> _0 a^ •*>, <*^^«? Exports v„. w "V impors::::::::::::::::::::::::::::::- m.%^ -% %, Government purchases of goods ar r, /^ % '<% /} e % ' • . Federal National defense National defense tfa^V^.^X'^ ^a^ 5 //' Nondefense WW^ S/ State and local.. . oA^t^X^^' ' %>£«X%S?»£- ^ METHODOLOGY PAPERS: US. National Income and Product Accounts / s ^ 0F ^ u. *^TES O* U.S. DEPARTMENT OF COMMERCE Bureau of Economic Analysis May 1987 BEA-MP-3 Digitized by the Internet Archive in 2013 http://archive.org/details/corporateprofitsOOpetr FOREIGN TRANSACTIONS METHODOLOGY PAPERS US. National Income and Product Accounts May 1987 U.S. DEPARTMENT OF COMMERCE Malcolm Baldrige, Secretary Robert Ortner Under Secretary for Economic Affairs BUREAU OF ECONOMIC ANALYSIS Allen H. Young, Director Carol S. Carson, Deputy Director Acknowledgments This paper was prepared by Helen Stone Tice using materials compiled by Louis J. Moczar, of the Office of the Director, and Leo M. Bernstein, of the National Income and Wealth Division. Teresa A. Williams provided secretarial assistance. The papers in this series on the methodology of the national income and product accounts were designed and planned by Helen Stone Tice with the assistance of Dannelet A. Teske. Carol S. Carson, Robert P. Parker, and Allan H. Young provided direction and guidance. Comments about the paper are invited. Com- ments, as well as questions about the material in the paper, should be directed to: National Income and Wealth Division, Bureau of Economic Analysis, U.S. Department of Commerce, Washington, DC 20230. Suggested Citation U.S. Department of Commerce. Bureau of Economic Analysis. Foreign Transactions. Methodology Paper Series MP-3. Washington, DC: U.S. Gov- ernment Printing Office, May 1987. n For sale by the Superintendent of Documents. U.S. Government Printing Office Washington. DC -.'(1402 Contents Page Introduction 1 Conceptual Basis and Framework 1 Recording of foreign transactions in the NIPA's 1 The NIP account 1 Personal income and outlay account 4 Government receipts and expenditures account 4 Foreign transactions account 4 Gross saving and investment account 4 Relation of the NIPA's to the balance of payments accounts 5 Gold 7 Capital gains and losses 8 Imputed interest 8 U.S. Government interest 8 Treatment of foreign transactions in aggregate NIPA measures 8 Definitions 10 Presentation of the Estimates 10 NIPA tables 10 Schedule 12 Overview of Estimating Procedure 12 Current-dollar estimates 12 Census Bureau merchandise trade statistics 13 BEA surveys 13 Treasury international capital reporting system 13 Directive No. 19 reports 13 Other source data 14 Constant-dollar estimates 14 Current-Dollar Estimates 15 Merchandise exports 15 Merchandise exports, BPA basis 15 Reconciliation items 15 Factor income receipts 18 Factor income receipts, BPA basis 18 Reconciliation items 18 Exports of other services 19 Exports of other services, BPA basis 19 Reconciliation items 20 Capital grants received by the United States (net) 20 Capital grants received by the United States (net), BPA basis 20 Reconciliation items 20 in Page Merchandise imports 21 Merchandise imports, BPA basis 21 Reconciliation items 21 Factor income payments 21 Factor income payments, BPA basis 21 Reconciliation items 22 Imports of other services 22 Imports of other services, BPA basis 22 Reconciliation items 24 Transfer payments to foreigners (net) 24 Transfer payments from persons (net), BPA basis 24 Reconciliation items, transfer payments from persons 24 Transfer payments from government (net) , BPA basis 24 Reconciliation items, transfer payments from government 24 Interest paid by government to foreigners 25 Reconciliation items 25 Net foreign investment 25 Net foreign investment, BPA basis 25 Reconciliation items 25 Addendum: Net exports of goods and services 25 Net exports, BPA basis 25 Reconciliation items 25 Constant -Dollar Estimates 26 Sources of price information 26 BLS export and import price indexes 26 Census Bureau unit-value indexes 26 Implicit price deflators 26 U.S. consumer price indexes 26 Foreign consumer price indexes 29 Other price indexes 29 Estimates by component 29 Merchandise exports 29 Factor income receipts 29 Exports of other services 29 Merchandise imports 30 Factor income payments 30 Imports of other services 31 Sources (Bracketed numbers refer to items in this list) 33 Appendix A. Major BPA Source Data 35 Appendix B. Selected BPA Tables 39 IV Tables Page 1. Summary National Income and Product Accounts, 1985 2 2. Foreign Production Account Derived from Two Production Accounts, 1985 5 3. Foreign Transactions in the Balance of Payments Accounts and in the National Income and Product Accounts, 1985 6 4. Foreign Transactions in NIPA Measures of Output and Expenditures, 1985 9 5. Location of Foreign Transactions in NIPA Tables 11 6. Foreign Transactions in the NIPA's: Sources of Estimates 16 7. Foreign Transactions in the National Income and Product Accounts 15 8. Price Indexes Used in the Deflation of Exports and Imports 27 A-l. Census Bureau Statistics on Merchandise Trade Used in Preparation of the Balance of Payments Accounts 36 A-2. BEA Balance of Payments Surveys 37 A-3. Treasury International Capital Reporting System Data Used in Preparation of the Balance of Payments Accounts 38 As this paper was being prepared, BEA was working to improve the coverage of international service transactions in the balance of payments accounts (BPA's) and the national income and product accounts (NIPA's). The revised BPA estimates to be released in June 1987 will include estimates for receipts from foreign patients in U.S. hospitals and receipts from, and payments to, foreigners for commissions on securities. These new estimates will be reflected in the revised NIPA estimates for 1984-86 to be presented in the July 1987 SURVEY OF CURRENT BUSINESS. In addition, BEA will conduct a new benchmark survey of international services transactions of U.S. business firms with unaffiliated foreigners during the summer of 1987. This survey will obtain information for the first time on purchases and sales of various types of services transactions, such as computer and data processing services, management of health care facilities, and accounting and legal services. It is expected that this information will be incorporated in the BPA and NIPA estimates in the coming years. Introduction _L HIS paper presents the conceptual basis and framework of foreign transactions in the U.S. national income and product accounts (NIPA's) and describes the presentation of the estimates and the sources and methods used to prepare them. This section dis- cusses the recording of foreign transactions in the NIPA's and the relationship between these accounts and the balance of payments accounts (BPA's), de- fines the foreign transactions measures that appear in the NIPA tables, indicates the tables in which they can be found, and provides an overview of the sources and methods. Conceptual Basis and Framework As described in "An Introduction to National Eco- nomic Accounting" in the March 1985 SURVEY OF CURRENT BUSINESS, the national economic ac- counts can be viewed as aggregations of accounts be- longing to the individual transactors in the economy. 1 The basic approach used in national economic ac- counting is to group economic transactors into sec- tors and to set up uniform types of accounts that show the broad categories of economic transactions in which the sectors engage. Four sectors are commonly distinguished: Business, household, government, and foreign. For each sector, a set of three accounts is created: A production account, which records the production attributable to that sector; an appropri- ation account, which records the sources of the sec- tor's income, its current outlays, and its saving; and a saving-investment account, which records the sector's gross saving, net increase in assets, and net increase in liabilities. Taken together, these sector accounts constitute a double-entry system in which an outlay recorded in one account for one sector is also recorded as a receipt in another account — either for the same sector or for another sector. The NIPA's, which are designed to display the value and composition of national output and the ^his article, by Allan H. Young and Helen Stone Tice, is reprinted as Methodology Paper Series MP-1 (Washington, DC: U.S. Government Printing Office, March 1985). distribution of incomes generated in its production, are a configuration of the sector accounts just de- scribed. In summary form, they consist of five ac- counts: (1) The national income and product (NIP) account, which is a consolidation of the four sector production accounts and the business appropriation account; (2) the personal income and outlay account, which is the household appropriation account; (3) the government receipts and expenditures account, which is the government appropriation account; (4) the foreign transactions account, which is a consoli- dation of the foreign appropriation account and the foreign saving-investment account; and (5) the gross saving and investment account, which is a consolida- tion of the saving-investment accounts of the busi- ness, household, and government sectors. The five accounts, with entries for 1985, are shown in table 1. (The NIPA estimates in tables 1, 2, 3, 4, 6, and 7 are those shown in the July 1986 issue of the SURVEY OF CURRENT BUSINESS. The balance of payments estimates in tables 3 and 6 and in appendix B are those shown in the June 1986 SURVEY.) Recording of foreign transactions in the NIPA's Each entry in the foreign transactions account, shown as account 4, has a counterentry in one of the other accounts. (The numbers in parentheses following the entries identify the counterentries in the other ac- counts.) The foreign transactions entries and their counterentries, which are shown in boldface in the discussion that follows, are defined later in the arti- cle. The NIP account. — Exports of goods and services and imports of goods and services — and their dif- ference, net exports of goods and services — enter the NIP account through the production accounts of the business and the foreign sectors. The business production account covers exports and imports of goods and nonfactor services; the foreign production account covers exports and imports of factor services. Business output is recorded in the business produc- tion account both in terms of goods and services (on NOTE. — Bracketed numbers in the text and tables refer to items in "Sources," beginning on page 33. 1 2 Foreign Transactions. May 1987 TABLE 1— SUMMARY NATIONAL INCOME AND PRODUCT ACCOUNTS, 1985 Account 1. — National Income and Product Account [Billions of dollars] Line Line Compensation of employees 2,368.2 Wages and salaries 1.965.8 Disbursements (2-7) 1,966.1 Wage accruals less disbursements (3-12) and (5-4) -.2 Supplements to wages and salaries 402.4 Employer contributions for social insurance (3-20) 205.5 Other labor income (2-8) 196.9 Proprietors' income with inventory valuation and capital consumption 254.4 adjustments (2-9). Rental income of persons with capital consumption adjustment (2-10) 7.6 Corporate profits with inventory valuation and capital consumption 280.7 adjustments. Profits before tax 223.2 Profits tax liability (3-17) 91.8 Profits after tax 131.4 Dividends (2-12) 81.6 Undistributed profits (5-6) 49.8 Inventory valuation adjustment (5-7) —.6 Capital consumption adjustment (5-8) 58.1 Net interest (2-15) S 311.4 National income 3,222.3 Business transfer payments (2-20) 20.9 Indirect business tax and nontax liability (3-18) 331.4 Less: Subsidies less current surplus of government enterprises (3-11) 8.2 Charges against net national product 3,566.5 Capital consumption allowances with capital consumption adjustment (5-9) 437.2 Charges against gross national product 4,003.7 Statistical discrepancy (5-12) - 5.5 GROSS NATIONAL PRODUCT 3.998.1 Personal consumption expenditures (2-3) 2,600.5 Durable goods 359.3 Nondurable goods 905.1 Services 1,336.1 Gross private domestic investment (5-1) 661.1 Fixed investment 650.0 Nonresidential 458.2 Structures 154.8 Producers' durable equipment 303.4 Residential 191.8 Change in business inventories 11.1 Net exports of goods and services —78.9 Exports (4-1) 369.8 Imports (4-3) 448.6 Government purchases of goods and services (3-1) 815.4 Federal 354.1 National defense 259.4 Nondefense 94.7 State and local 461.3 GROSS NATIONAL PRODUCT 3,998.1 Account 2. — Personal Income and Outlay Account [Billions of dollars] Line Line Personal tax and nontax payments (3-16) 486.5 Personal outlays 2,684.7 Personal consumption expenditures (1-27) 2,600.5 Interest paid by consumers to business (2-18) 82.6 Personal transfer payments to foreigners (net) (4-5) 1.6 Personal saving (5-3) 143.3 PERSONAL TAXES. OUTLAYS. AND SAVING 3.314.5 Wage and salary disbursements (1-3) 1,966.1 Other labor income (1-7) 196.9 Proprietors' income with inventory valuation and capital consumption 254.4 adjustments (1-8). Rental income of persons with capital consumption adjustment (1-9) 7.6 Personal dividend income 76.4 Dividends (1-14) 81.6 Less: dividends received by government (3-10) 5.2 Personal interest income 476.2 Net interest (1-18) 311.4 Interest paid by government to persons and business (3-7) 173.4 Less: Interest received by government (3-9) 91.1 Interest paid by consumers to business (2-4) 82.6 Transfer payments to persons 487.1 From business (1-20) 20.9 From government (3-3) 466.2 Less: Personal contributions for social insurance (3-21) 150.2 PERSONAL INCOME 3.314.5 Foreign Transactions- May 1987 TABLE 1.— SUMMARY NATIONAL INCOME AND PRODUCT ACCOUNTS, 1985— Continued Account 3. — Government Receipts and Expenditures Account [Billions of dollars] Line ? Purchases of goods and services (1-41) 815.4 Transfer payments 479.5 To persons (2-21) 466.2 To foreigners (net) (4-6) 13.4 Net interest paid 103.6 Interest paid 194.7 To persons and business (2-16) 173.4 To foreigners (4-7) 21.3 Less: Interest received by government (2-17) 91.1 Less: Dividends received by government (2-13) 5.2 Subsidies less current surplus of government enterprises (1-22) 8.2 Less: Wage accruals less disbursements (1-4) —.2 Surplus or deficit ( - ), national income and product accounts (5-10) —136.3 Federal -198.0 State and local 61.7 GOVERNMENT EXPENDITURES AND SURPLUS 1,265.4 Personal tax and nontax payments (2-1) 486.5 Corporate profits tax liability (1-12) 91 8 Indirect business tax and nontax liability (1-21) 331.4 Contributions for social insurance 355.7 Employer (1-6) 205.5 Personal (2-22) 150.2 GOVERNMENT RECEIPTS 1 ,265.4 Account 4. — Foreign Transactions Account [Billions of dollars] Line Exports of goods and services (1-39) 369.8 Capital grants received by the United States (net) (5-11) RECEIPTS FROM FOREIGNERS 369.8 Imports of goods and services (1-40) 448.6 Transfer payments to foreigners (net) 15.0 From persons (net) (2-5) 1.6 From government (net) (3-4) 13.4 Interest paid by government to foreigners (3-8) 21.3 Net foreign investment (5-2) — 115.2 PAYMENTS TO FOREIGNERS 369.8 Account 5. — Gross Saving and Investment Account [Billions of dollars] Line Gross private domestic investment (1-31). Net foreign investment (4-8) 661.1 -115.2 GROSS INVESTMENT 545.9 Personal saving (2-6) 143.3 Wage accruals less disbursements (1-4) Undistributed corporate profits with inventory valuation and capital 107.3 consumption adjustments. Undistributed corporate profits (1-15) 49.8 Inventory valuation adjustment (1-16) —.6 Capital consumption adjustment (1-17) 58.1 Capital consumption allowances with capital consumption adjustment (1-24) 437.2 Government surplus or deficit (-), national income and product account (3-13) -136.3 Capital grants received by the United States (net) (4-2) Statistical discrepancy (1-26) — 5.5 GROSS SAVING AND STATISTICAL DISCREPANCY 545.9 Note— Numbers in parentheses indicate accounts and items of counterentry in the accounts. For example, the counterentry for wage and salary disbursements, (2-7), is in account 2, line 7. 4 Foreign Transactions^ May 1987 the right side) and in terms of income payments and other costs arising from production (on the left side). Output in terms of goods and services is recorded as the sum of purchases by final users — business (on capital account), persons (households and the non- profit institutions serving them), government, and foreigners — plus the change in business inventories. Because the value of imports is reflected in purchases by final users and in inventory change, imports must be deducted to arrive at domestic output. This de- duction is accomplished by recording imports as a negative entry in the business production account. The foreign production account is shown in table 2 as the difference between two production accounts; one records output produced abroad by U.S. resi- dents, and the other records output produced within the United States by foreigners. In the first account, the sale to foreigners of factor services is entered on the right side; incomes arising from these sales, which are paid to U.S. residents by foreigners, are entered on the left side. These incomes are compensation of employees, dividends, undistributed profits retained abroad by foreign affiliates of U.S. corporations, and interest. In the second account, the purchase from foreigners of factor services is entered on the right side; incomes arising from these purchases, which are paid by U.S. residents to foreigners, are entered on the left side. These incomes are compensation of employees, dividends, undistributed corporate prof- its retained in the United States by foreign corpo- rations, and interest. The difference between these two accounts is the NIPA foreign production account. Gross foreign product, called either product or in- come originating in the rest of the world, is measured by U.S. receipts of factor income from foreigners less U.S. payments of factor income to foreigners. The consolidation of the foreign production ac- count with the production accounts of the domes- tic sectors — households and government, as well as business — yields a measure of total output. This measure — gross national product (GNP) — represents the output produced by factors of production sup- plied by residents of the United States; it includes output produced abroad by factors of production supplied by U.S. residents, and it excludes that part of domestic output produced by factors of production supplied by foreigners. On the right side of the NIP account, the consolidation of the foreign production account with the business production account yields measures of total exports and total imports that in- clude goods and both factor and nonfactor services. (In the presentation of the NIP account, the differ- ence between exports and imports is shown as "net exports.") On the left side, the consolidation places the income payments and other costs arising from production on a national basis. Each income type consists of income of U.S. residents only, wherever the income is earned — that is, both within the bound- aries of the United States and abroad. The imports recorded in the business production account include some items that do not enter into current U.S. production and thus are not required in establishing business output. They are included so that the expenditure components in the NIP account provide the correct basis for establishing outlays and saving in each sector. For example, expenditures in foreign countries by individuals traveling or working abroad are included in both imports and personal consumption expenditures so that the latter reflects the outlays of U.S. households wherever they occur. Likewise, expenditures in foreign countries by U.S. Government installations abroad are included in both imports and government purchases so that the latter reflects U.S. Government outlays wherever they oc- cur. For a similar reason, both imports and gross pri- vate domestic investment include sales of used equip- ment to the United States by foreigners. In addition, sales of used equipment to foreigners by the United States are included in both exports and, as a deduc- tion, in gross private domestic investment. Personal income and outlay account. — In this ac- count, personal transfer payments to foreigners (net), a component of personal outlays, are on the left side. Government receipts and expenditures account. — In this account, both transfer payments to foreign- ers (net) and interest paid to foreigners, compo- nents of government expenditures, are on the left side. Foreign transactions account. — This account re- cords the transactions of foreigners with U.S. resi- dents. Imports of goods and services, transfer pay- ments from persons and government to foreigners (net), interest paid by government to foreigners, and net foreign investment sum to payments to for- eigners, on the right side. Exports of goods and services and capital grants received by the United States (net) sum to receipts from foreigners, on the left side. Gross saving and investment account. — In this ac- count, net foreign investment, a component of gross investment, is on the left side. Net foreign investment — the increase in U.S. claims on foreigners less the increase in U.S. liabilities to them — appears in this account because these claims and liabilities do not cancel in consolidation as they do when both Foreign Transactions- May 1987 Table 2. — Foreign Production Account Derived From Two Production Accounts, 1985 [Billions of dollars] Production account for output produced abroad by factors of production owned by U.S. residents Production account for output produced domestically by uction owned by foreigners Foreign production account Less factors uf prod Equals Uses Uses Sources Uses Sources Sources Compensation of 0.6 Sales to foreigners of 91.2 Compensation of 0.6 Purchases from >0.1 Compensation of 0.6 Sales to foreigners of 91.2 employees paid by factor services. employees paid to foreigners of factor employees paid by factor services. foreigners. foreigners. services. foreigners. Dividends paid by 18.6 Dividends received by 6.4 Dividends paid by 18.6 Less: purchases from 50.1 foreigners. foreigners. foreigners. foreigners of factor Undistributed corporate 21.1 Undistributed corporate 1.5 Undistributed corporate 21.1 services. profits retained abroad by foreign affiliates of U.S. parents. profits retained in the profits retained abroad United States by U.S. by foreign affiliates of affiliates of foreign U.S. parents. Interest paid by 50.8 foreigners. parents. Interest received by foreigners. 41.5 Interest paid by foreigners. Less: Compensation of employees paid to foreigners. Dividends received by 50.8 .6 6.4 foreigners. Undistributed corporate profits retained in the United States by U.S. affiliates of foreign parents. Interest received by foreigners. 1.5 Charges against gross 91.2 Gross product 91.2 Charges against gross 50.1 Gross product 50.1 Charges against gross 41.2 Gross foreign product 41.2 product. product. foreign product. Note. — In the NIPA's. dividends and undistributed profits include earnings of unincorporated affiliates. parties are U.S. residents. Capital grants received by the United States (net), a component of gross saving, are on the right side. Relation of the NIPA's to the balance of payments accounts The NIPA foreign transactions account is essentially a condensed version of the balance of payments ac- counts for the United States, recast to show pay- ments and receipts in T-account form. The balance of payments accounts (BPA's) record international economic transactions, that is, economic transactions between residents of the United States and residents of the rest of the world. Except for a few definitional and statistical differences, the BPA's provide the ba- sis for the foreign transactions entries in the NIPA's. Most international economic transactions involve the exchange of one good, service, or financial asset for another; thus, two entries — of opposite sign — are required to record the transaction. In the BPA's, the United States can be viewed as paying for its imports with exports of goods and services, with increases in U.S. liabilities to foreigners, or with decreases in U.S. claims on foreigners. Similarly, the United States can be viewed as being paid for its exports with imports of goods and services, with increases in U.S. claims on foreigners, or with decreases in U.S. liabilities to foreigners. When the transaction does not represent the exchange of one good, service, or financial asset for another, but a transfer for which no payment is required, the actual transfer is recorded as one en- try and an imputed entry, of opposite sign, as an- other entry. These imputed entries, which are gener- ally called unilateral transfers, maintain the inherent double-entry accounting balance. Table 3, with entries for 1985, shows the derivation of the NIPA foreign transactions account from the BPA's. Panel A of table 3 shows international trans- actions in the summary BPA presentation, entitled "U.S. International Transactions." Positive entries record the transfers of real resources and financial assets from U.S. residents to foreign residents: (l) Exports of goods and services (line 1), (2) decreases in U.S. assets abroad (line 6), and (3) increases in foreign assets in the United States (line 7). Nega- tive entries record the transfer of real resources and financial assets from foreign residents to U.S. resi- dents: (1) Imports of goods and services (line 2), (2) increases in U.S. assets abroad (line 6), and (3) de- creases in foreign assets in the United States (line 7). Unilateral transfers (the imputed entries) are recorded on three lines in panel A. On line 4, U.S. Government grants are recorded with a negative sign as entries that offset positive entries for exports of goods and services or transfers of financial assets to foreigners (decreases in U.S. assets abroad or in- creases in foreign assets in the United States) for which no payment is required. These grants are shown net of similar transfers to the U.S. Govern- ment from foreigners; the latter are recorded with a positive sign as entries that offset negative entries for imports or transfers of financial assets from for- eigners (increases in U.S. assets abroad or decreases in foreign assets in the United States). In a simi- Foreign Transactions. May 1987 Table 3. — Foreign Transactions in the Balance of Payments Accounts and in the National Income and Product Accounts, 1985 [Billions of dollars] A. U.S. International Transactions 1 Exports of goods and services 2 Imports of goods and services 3. Unilateral transfers, net 4 US Government grants ^excluding military grants of goods and services), net . 5. Remittances, pensions, and other transfers, net 6. US assets abroad, net (increase/capital outflow ( — )) 7 Foreign assets in the United States, net (increase/capital inflow l + )i 8. Allocations of special drawing rights 9 Statistical discrepancy = — (1 + 2 + 3 + 6 + 7 + 8) Addendum: Balance on current account (1 + 2 + 3) or - (6 + 7 + 8 + 9).. 358,5 -461 2 -15.0 -11.2 -3.8 -32.4 127.1 23.0 -117.7 B. Foreign Transactions Account, BPA Basis Exports of goods and services Allocations of special drawing rights 358. : Imports of goods and services Unilateral transfers, net U.S. Government grants Remittances, pensions, and other transfers. U.S. assets abroad, net increase Less: Foreign assets in the United States, net increase Less: Statistical discrepancy 461.2 15.0 11.2 3.8 32.4 127.1 23.0 Receipts from foreigners. 358.5 Payments to foreigners . 358.5 (.'. Foreign Transactions Account, NIPA Basis Exports of goods and services, BPA's Plus. Reconciliation items Equals: Exports of goods and services, NIPA's.. 358 5 11.3 369 8 Allocations of special drawing rights, BPA's Plus: Reconciliation items Equals: Capital grants received by the United States, NIPA's Imports of goods and services, BPA's Plus: Reconciliation items: Payments of income Other ..... Equals: Imports of goods and services, NIPA's.. Unilateral transfers, net, BPA's Plus: Reconciliation items Equals: Transfer payments to foreigners, net, NIPA's Reconciliation item: Payments of income on U.S. Government liabilities. Equals: Interest paid by government to foreigners, NIPA's. Balance on current account, BPA's Plus: Reconciliation items Equals: Net foreign investment, NIPA's 461.2 -21.3 8.7 448.6 15.0 15.0 21.3 21.3 -117.7 2.5 -115.2 Receipts from foreigners, BPA's Plus: Reconciliation items Equals: Receipts from foreigners, NIPA's 358.5 11.3 369.8 Payments to foreigners, BPA's Plus: Reconciliation items Equals: Payments to foreigners, NIPA's 358.5 11.3 369.8 Foreign Transactions- May 1987 lar manner, on line 5, imputed entries are recorded for remittances, pensions, and other transfers from U.S. residents to foreigners, again on a net basis. On line 8, allocations of special drawing rights, which are reserve assets received by the United States from the International Monetary Fund (IMF), are recorded with a positive sign as imputed entries; they offset negative entries for increases in U.S. assets abroad arising from the IMF allocations. The last numbered line in panel A shows the statis- tical discrepancy (line 9). It is the sum of the other entries, with sign reversed, so that the total of all the entries in the account is zero; the statistical dis- crepancy is the sum of errors and omissions in the recorded transactions in the account. The addendum to the panel is the balance on cur- rent account, which can be derived either as the sum of entries for exports, imports, and unilateral trans- fers (net) or, with sign reversed, as the sum of the entries for the net increase in U.S. assets abroad, the net increase in foreign assets in the United States, al- locations of special drawing rights, and the statistical discrepancy. Panel B of table 3 shows the BPA entries from panel A rearranged in a configuration similar to the NIPA foreign transactions account. Exports and allo- cations of special drawing rights are shown as receipts from foreigners, on the left side; imports, U.S. Gov- ernment grants and other unilateral transfers (net) to foreigners, and increases in U.S. assets abroad (less the increase in foreign assets in the United States and less the statistical discrepancy) are shown as pay- ments to foreigners, on the right side. Panel C of table 3 shows how the NIPA foreign transactions account is constructed by modifying the BPA entries. The differences between the NIPA and BPA entries, called reconciliation items in the table, reflect different publication and revision schedules, different definitions of the United States, and — most importantly — different treatment of certain transac- tions. The first source of difference arises because the NIPA estimates incorporate BPA revisions with lags. The second arises because the NIPA's exclude Puerto Rico and U.S. territories from the definition of the United States, while the BPA's include them. The third arises because the two sets of accounts serve dif- ferent purposes and, therefore, treat certain types of transactions differently. The differences in the treat- ment of gold, capital gains (or losses) in direct in- vestment income, imputed interest paid to foreign- ers, and interest payments by the U.S. Government to foreigners are discussed here. Two "other items," each of which affects only a few years, are described as they arise in the next section on current-dollar es- timates. Gold. — In the BPA's, a distinction is made between monetary and nonmonetary gold. Monetary gold is gold held by the U.S. Treasury as part of official re- serve assets; movements in this gold between the U.S. Treasury and foreign official agencies are recorded as changes in U.S. official reserve assets in the capital account. Nonmonetary gold is all other gold; it is treated as a commodity, and movements in nonmon- etary gold between U.S. residents and foreign resi- dents are recorded as merchandise exports and im- ports. These movements include gold demonetized by official agencies. Beginning in 1975, gold sold to private foreigners by the U.S. Treasury is recorded in exports, and gold purchased by private U.S. residents from the International Monetary Fund and foreign official agencies is recorded in imports. Before 1975, private U.S. residents were not allowed to own gold except for industrial use. During this period, to re- flect the extraterritorial treatment of monetary gold, sales of demonetized gold by the U.S. Treasury to private U.S. residents for industrial use are recorded as imports. In the NIPA's, U.S. gold production is included in GNP, and transactions in nonmonetary gold held for industrial use are recorded as any other commodity in the expenditure components of GNP. Nonmonetary gold held for nonindustrial use, however, is treated as if it were in the foreign sector in the same man- ner as monetary gold owned. by the U.S. Treasury, because purchases of nonindustrial gold have an in- vestment aspect that would make their inclusion in the domestic expenditure components problematic for many types of analysis. The difference between domestic gold production and the sum of industrial consumption of gold and the change in holdings of industrial gold is recorded in net exports. The entry reflects both the movements of gold for industrial use between U.S. residents and foreigners and the shifts in gold holdings of U.S. residents between those for industrial and nonindustrial use, including additions to holdings for nonindustrial use from domestic gold production. (Because the statistical basis for adjust- ing exports and imports separately is lacking, NIPA exports of gold are set at zero, and net exports of gold as defined above are recorded (with sign reversed) as imports.) 2 2 The treatment of nonmonetary nonindustrial gold was adopted in 1975 following the legalization of gold onwership by U.S. residents and the increasing role of official agencies as suppliers of gold. The treatment is explained in greater detail in "Gold in the NIPA's," SURVEY, July 1979, pp. 4-7. It does 8 Foreign Transactions^ May 1987 Capital gains and losses. — In the BPA's, direct in- vestment income— that is, income from ownership of an affiliate in another country — includes capital gains and losses because they are considered to be part of the parent's return on its investment in the affiliate. Direct investment income is defined on an "all-inclusive" basis, similar to that used in preparing shareholders' reports. It includes both current oper- ating income and other types of income that have been recognized, primarily gains and losses, whether realized or unrealized. These gains and losses include realized gains and losses resulting from the sale or other disposition of assets and liabilities, unrealized gains and losses due to changes in exchange rates of foreign currencies in which the affiliates' assets and liabilities are measured or denominated, and unreal- ized gains and losses resulting from writeups or write- downs of the book value of assets and liabilities. In the NIPA's, capital gains and losses are not considered to be income from current production. They, therefore, are excluded both from U.S. factor income receipts (specifically, from undistributed cor- porate profits retained abroad by foreign affiliates of U.S. parents) and from U.S. factor income payments (specifically, from undistributed corporate profits re- tained in the United States by foreign parents). Imputed interest. — In the BPA's, only receipts and payments of actual — that is, monetary — interest are recorded. In the NIPA's, however, an "imputed" pay- ment is also included. It arises because depository in- stitutions resident in the United States — in NIPA ter- minology, financial intermediaries except life insur- ance carriers and private noninsured pension plans — provide services to foreigners for which the interme- diaries implicitly compensate themselves, by paying depositors less interest on their deposits than the in- terest that the intermediaries earn from lending or investing the funds. Thus, in the NIPA's, a service is imputed as "services furnished without payment by financial intermediaries except life insurance car- riers and private noninsured pension plans" and is included in exports of other services; an interest re- ceipt of equivalent amount is imputed and is included in imports as a payment of factor income. U.S. Government interest. — In the BPA's, imports include interest payments to foreigners by the U.S. Government. In the NIPA's, however, government interest payments are not considered to be payments for a factor service. These payments are not recorded not apply to transactions of U.S. residents in gold coins of do- mestic or foreign origin, which are recorded in the expenditure components of GNP, as are gold commemorative medals and other objects made from gold. as part of net interest or GNP in the NIP account. Thus imports, which are recorded in the NIP account, either must be defined to exclude government inter- est payments to foreigners, or must have an offset imputed in government purchases. Because the pur- chase imputation provides measures of government purchases that are misleading, NIPA imports are de- fined to exclude U.S. Government interest payments to foreigners. These payments are recorded as sepa- rate entries in both the foreign transactions account and the government receipts and expenditures ac- count. Treatment of foreign transactions in aggregate NIPA measures The definitions of several aggregate NIPA measures of output and of expenditures differ with respect to the treatment of foreign transactions. These aggre- gate measures are shown in table 4. GNP measures output on a national basis; that is, it includes the output produced in the foreign sec- tor. It is defined as the market value of the goods and services produced by labor and property supplied by U.S. residents, before deduction of allowances for consumption of fixed capital (depreciation). Output also can be measured on a domestic basis, that is, excluding the output produced in the foreign sector: Gross domestic product (GDP) measures the output of goods and services produced by labor and property located in the United States. Output can also be measured after deduction of al- lowances for the consumption of fixed capital — that is, on a net basis. Two such measures are net national product and net domestic product; these measures, like GNP and GDP, differ by the output produced in the foreign sector. All the above output measures are in terms of the market value of goods and ser- vices. Output can also be measured in terms of the factor cost of goods and services produced; two such measures are national income and domestic income, which also differ by the output produced in the for- eign sector. Gross domestic purchases and final sales to domes- tic purchasers differ from their counterparts — GNP and final sales — by net exports. These expenditures aggregates can be used to measure the demand by U.S. residents for goods and services wherever pro- duced. Command-basis GNP is a measure of what the United States could purchase with its current produc- tion. It is a variant of constant-dollar GNP, in which the net export component is adjusted for the terms of trade. In the NIPA's, the terms of trade is defined Foreign Transactions^ May 1987 Table 4. — Foreign Transactions in NIPA Measures of Output and Expenditures, 1985 [Billions of dollars) Aggregate Explanation Billions of dollars Output Measures National basis Equals: Domestic basis > ' Gross national product Net national product , National income Rest-of-the-world product ' Gross domestic product Net domestic product Domestic income Market value of goods and services produced by labor and property supplied by US residents before deduction of allowances for consumption of fixed capital Market value of goods and services produced by labor and property supplied by U.S. residents after deduction of allowances for consumption of fixed capital. Factor cost of goods and services produced by labor and property supplied by U.S. residents after deduction of allowances for consumption of fixed capital. Factor cost of services produced abroad by labor and property supplied by U.S. residents Less Factor cost of services produced within the United States by labor and property supplied by foreigners Market value of goods and services produced by labor and property located in the United States before deduction of allowances for consumption of fixed capital Market value of goods and services produced by labor and property located in the United States after deduction of allowances for consumption of fixed capital Factor cost of goods and services produced by labor and property located in the United States after deduction of allowances for consumption of fixed capital :i,998 1 3,560.9 3,222.3 91.2 50.1 :i,957.1 :i.r>i9.8 3,181.1 Expenditures Measures National basis I Gross national product I Final sales of GNP Net exports of goods and services [Gross domestic purchases I Final sales to domestic purchasers U.S. production, as measured by worldwide final sales and inventory investment in the United States :i,998.1 3,987.0 :i«9.8 Equals: Domestic basis Less Imports— Sales in the United States of foreign production Final sales and inventory investment in the United States of worldwide production. Final sales in the United States of worldwide production 448.6 4,077.0 4,065.9 10 Foreign Transactions. May 1987 as the ratio of the implicit price deflator for exports to the implicit price deflator for imports. Command- basis GNP reflects the fact that although a change in the price of imports relative to the price of exports does not directly change production, it does change the quantity of foreign goods and services that the United States could purchase with the proceeds from a given quantity of exports. The net export compo- nent of command-basis GNP is obtained by deflat- ing exports by the implicit price deflator for imports rather than by the specific export price deflators used in deriving the constant-dollar export component of GNP. Definitions In the NIPA's, the United States consists of the 50 States (before 1960, Alaska and Hawaii were not in- cluded), the District of Columbia, and U.S. military installations, embassies, and consulates abroad; U.S. territories and Puerto Rico are considered part of the rest of the world. (The BPA's, in contrast, in- clude U.S. territories and Puerto Rico in the United States.) In the NIPA's, U.S. residents are individuals, gov- ernments, business enterprises, trusts, associations, and similar institutions that are physically located in the United States and that have resided, or ex- pect to reside, in this country for 1 year or more. U.S. Government employees and military personnel abroad are considered to be residents of the United States, rather than of the foreign country (or U.S. territory or Puerto Rico) to which they are posted. In the case of employees of U.S. business, the gen- eral rule is that employees sent abroad are considered to be U.S. residents if their assignment is less than a year. Business enterprises resident in the United States include U.S. affiliates of foreign companies. The rest of the world consists of foreign residents who are transactors with U.S. residents. Foreign resi- dents include international institutions located in the United States, foreign nationals employed by their home governments in the United States, and foreign affiliates of U.S. companies. The definitions of the entries in the foreign trans- actions account follow: Exports. Exports are goods and services provided by U.S. residents to foreigners. Services include ser- vices of labor and capital, for which factor in- comes are paid. Capital grants received by the United States (net). Capital grants are transfers that are not con- sidered to affect the current income of either the recipient or the payer; capital grants received are shown net of capital grants made by the United States. Imports. Imports are goods and services provided by foreigners to U.S. residents. Services include ser- vices of labor and capital, for which factor in- comes are paid. Transfer payments to foreigners (net). Transfer pay- ments to foreigners are the sum of transfer pay- ments from persons (net) and transfer payments from government (net). Transfer payments from persons (net). Transfer payments to foreigners from persons (net) are personal remittances to abroad, in cash and in kind, less such remittances from abroad. Transfer payments from government (net). Transfer payments to foreigners from government (net) are U.S. Government nonmilitary grants, in cash and in kind, and U.S. Government transfer pay- ments, mainly retirement benefits to former resi- dents of the United States, less such remittances received from foreigners. Interest paid by government to foreigners. Interest paid by government to foreigners is interest paid by the U.S. Government to foreign businesses, governments, and persons. Net foreign investment. Net foreign investment is the sum of U.S. exports of goods and services and capital grants received by the United States (net), less the sum of imports of goods and ser- vices by the United States, transfer payments to foreigners (net), and interest paid by the U.S. Government to foreigners. It may also be viewed as the acquisition of foreign assets by U.S. resi- dents, less the acquisition of U.S. assets by for- eign residents. It includes the BPA statistical discrepancy. Presentation of the Estimates NIPA tables The estimates of foreign transactions are published in the NIPA tables, which appear in the SURVEY (and reference volumes cited therein). Table 5 indi- cates the location, by NIPA table number, of the var- ious annual and quarterly estimates of foreign trans- actions in current dollars, and, where applicable, of estimates in constant dollars and of the correspond- ing price indexes. Annual measures generally cover 1929 to the present; quarterly measures in current dollars generally cover the first quarter of 1946 to Foreign Transactions- May 1987 11 Table 5. — Location of Foreign Transactions in NIPA Tables [Entries are NIPA table numbers] Current dollars 1982 dollars Price indexes Net exports Exports of goods and services Merchandise Type of product and end-use category Factor income Compensation ' Wages and salaries Employer contributions for social insurance. Other labor income Interest Profits Profits tax liability 2 Profits after tax Dividends Undistributed corporate profits Other services Capital grants received by the United States (net). Imports of goods and services Merchandise Type of product and end-use category Factor income Compensation ' Wages and salaries Employer contributions for social insurance. Other labor income Interest Profits Profits tax liability z Profits after tax Dividends Undistributed corporate profits Other services Transfer payments to foreigners (net) From persons (net) From government (net) Interest paid by government to foreigners Net foreign investment GNP orginating in the rest of the world Net national product originating in the rest of the world National income originating in the rest of the world Corporate profits originating in the rest of the world. Net interest originating in the rest of the world Relation of BPA's: Net exports Foreign transactions Exports, command basis Net exports of new and used autos Exports Imports Sales of imported new autos Net exports of new trucks Exports Imports , Services furnished to foreigners without payment by financial intermediaries except life insurance carriers and private noninsured pension plans. Foreign travel and other, net (PCE) Foreign travel by US residents Expenditures abroad by US residents Expenditures in the United States by foreigners Personal remittances in kind to foreigners . 1.1, 4.5', 9 It 1.2, 111 1.1, 1.5, 4.1, 4.5*. 9.1t, 9.5t 1.2, 1.6, 1.11, 4.2 4.1, 4.3, 9.5t 4.2, 4.4 4.3 4.4 4.1. 9.5t 42 6.4B* n.a. 6.5B' n.a. 6.12* n.a. 6.13* n.a. 8.8* n.a. 619B' n.a 620B' n.a 6.21B- n.a. 6.22BV 8.7* n.a. 6.23B' n.a. 4.1, 9.5t 4.2 4.1, 5.1, 4.5*, 9.5T n.a. 1.1, 1.5, 4.1, 4.5', 9.1T, 9.5t 1.2, 1.6, 1.11, 4 2 4.1, 4.3, 9.5t 4.2, 4.4 4.3 44 4.1, 9.5t 4.2 6.4B* n.a. 6.5B' n.a. 6.12* n.a. 6.13* n.a. 8.8* n.a. 6.19B* n.a. 6.20B* n.a 6.21B* n.a. 6.22B*, 8.7' n.a. 623B* n.a. 4 1, 9.5t 4.2 4.1, 4.5*. 9.5t n.a. 2.1, 4.1, 9.5t n.a. 3.2, 4.1, 9.5t n.a. 3.2, 4.1, 4.5', 9.5t n.a. 4.1, 5.1, 4.5*. 9.5t n.a. 1.7,6.1* 1.8, 6.2* 1.12' 1.13* 6.3B, 1.12*. 1.15* 113* 6.18B, 1 15* n.a. 1.15*, 6.17B* n.a. Reconciliation and Other n.a Special Tables 4.5* n.a. n.a. 1.11 1.17 1.18 1.17 1.18 1.17 1.18 1.17 1.18 1.19 1.20 1.19 1.20 1.19 1.20 89' 2.5* n.a. n.a. n.a. n a 7.1, 7.3, 7.4* 7,8f 7 14 7.14 7.15 7.14 n.a. n.a. n.a n.a n.a. n a n.a n.a. n.a. n.a. 7.14 n.a. 7.1, 7.3. 7.4*7.8»7 14 7.14 715 7.14 n.a. n.a n.a n.a n.a. n.a n.a. n.a. n.a. n.a. 7.14 n.a n.a. n.a. n.a. n.a. 7.6* n.a. n a n.a. n.a. 7.8* n.a. n.a. n.a n.a n.a. n.a. n.a. 7.10* n.a. n.a. * Annual estimates only, published in the July issue of the Survey of Current Business. t Quarterly totals not seasonally adjusted, published in the July issue of the Survey. • Implicit price deflator n.a. Not available PCE Personal consumption expenditures 1 Exports and imports not shown separately for compensation and its components 2. Assumes that foreign tax credit equals tax liability on income earned abroad. Notes. — (1) Except as noted, these tables contain both annual estimates and quarterly estimates seasonally adjusted at annual rates. (2) Except as noted, price indexes are fixed-weighted price indexes with 1982 weights. (3) Tables 6.3, 6.4, 6.5, and 6.17-6.23 are published in two parts: 6.3A (for 1929-45), 6.4A, 6 ,5A, and 6 19A (for 1929-48). 6.17A, 6.18A, and 6.20A-6.23A (for 1929-47); and 6.3B (for 1946 and later years), 6 4B, 6 5B, and 6 17B-6 23B (for 1948 and later years) 12 Foreign Transactions. May 1987 the present; and quarterly measures in constant dol- lars generally cover the first quarter of 1947 to the present. Annual and seasonally adjusted quarterly esti- mates of the foreign transactions account are shown, in current dollars, in NIPA table 4.1. In this ta- ble, exports and imports are shown in the level of detail indicated below, where "merchandise" refers to goods and "other services" to nonfactor services (such as transportation, engineering services, and royalties and license fees): Exports of goods and services Merchandise Durable goods Nondurable goods Services Factor income Other Imports of goods and services Merchandise Durable goods Nondurable goods Services Factor income Other Annual and seasonally adjusted quarterly estimates of exports and imports, in constant dollars, are in NIPA table 4.2. Merchandise exports and imports by end-use category — essentially a market-category grouping — in current and constant dollars, are in NIPA tables 4.3 and 4.4, respectively; the associated fixed-weighted price indexes are shown in NIPA ta- bles 7.14 and 7.15, respectively. Quarterly current- dollar totals, not seasonally adjusted, for the foreign transactions account are shown in NIPA table 9.5. (Table 5 also indicates the location of the foreign transactions estimates in the NIPA tables that fea- ture total GNP and in those that feature accounts for the domestic sectors in which foreign transactions are counterentries.) Annual estimates of product and income originat- ing in the rest of the world, in current dollars, are in NIPA tables 1.7 and 6.1 for GNP; in NIPA table 1.12 for net national product; and in NIPA tables 1.12, 1.15, and 6.3B for national income. Constant-dollar estimates of product and income originating in the rest of the world are in NIPA tables 1.8 and 6.2 for GNP; in NIPA table 1.13 for net national product and for national income. (NIPA tables 1.7, 6.3B, and 1.8 also contain quarterly estimates.) Annual current- dollar estimates of the types of income originating in the rest of the world are in NIPA tables 1.15, 6.4B, 6.5B, 6.12, 6.13, and 6.17B-6.23B. Annual estimates of the reconciliation items and the relation, by component, of NIPA foreign transac- tions to the corresponding BPA entries are in NIPA table 4.5; quarterly estimates, for exports, imports, and net exports only, are also shown in the SURVEY — in the third month of each quarter — in Reconciliation and Other Special Tables. Annual and quarterly constant-dollar estimates of command-basis exports are in NIPA table 1.11; the associated implicit price deflator is shown in table 7.8. Annual and quarterly estimates of the export and import components of auto and truck output are in NIPA tables 1.17 and 1.19 in current dollars and in NIPA tables 1.18 and 1.20 in constant dollars. Annual estimates of services furnished to foreigners without payment by financial intermediaries except life insurance carriers and private noninsured pension plans are in NIPA table 8.9. Annual estimates of the items in personal con- sumption expenditures (PCE) for foreign travel and other, net, are shown in NIPA tables 2.4 and 2.5, in current and constant dollars, respectively. These items (1) include in PCE the expenditures by U.S. residents while traveling or working abroad and (2) exclude from PCE the expenditures by foreigners traveling or working in the United States and per- sonal remittances in kind to foreigners. Schedule Preliminary quarterly NIPA estimates of foreign transactions are prepared in the first month after the end of the quarter, revised a month later (the first revision) and revised again the following month (the second revision). No further revisions are made in the quarterly estimates until the annual revisions, which usually occur each July and cover the 3 most recent years. Following the third annual revision, no further revisions are made in the estimates until the comprehensive revisions, which usually occur every 5 years. Overview of Estimating Procedure Current-dollar estimates Except for a few reconciliation items prepared from other sources, the BPA's are the source of the current-dollar estimates beginning with the second Foreign Transactions^ May 1987 13 (quarterly) revision. The second revision of the NIPA estimates are based on the preliminary BPA esti- mates that are prepared in the third month after the end of a quarter. These preliminary BPA estimates are published quarterly in the "U.S. International Transactions" articles in the March, June, Septem- ber, and December issues of the SURVEY. (After the second revision, no further revisions are made in the NIPA estimates until the annual revision. There- fore, revised BPA estimates for the preceding quar- ter, which are also published in these issues of the SURVEY, are not incorporated.) Each June, revi- sions to the BPA estimates, generally covering the 4 most recent years, are published; these revisions re- flect the incorporation of new or revised source data, updated seasonal factors, and occasional changes in definitions and estimation procedures. The BPA re- visions for the 3 most recent years are incorporated into the NIPA's in July; those for earlier years, only during the comprehensive revisions of the NIPA's. The source data for foreign transactions available for the preliminary NIPA estimates and the first re- vision are incomplete. For merchandise exports and imports, the preliminary estimate is based on data for the first two months of the quarter and a judgmental estimate for the third month. In the case of exports and imports of services, the preliminary NIPA esti- mate and the first revision are largely judgmental. The BPA estimates are based on the following bod- ies of source data, which are summarized below: (1) Census Bureau tabulations of merchandise trade in- formation, (2) BEA surveys, (3) Treasury Depart- ment tabulations of reports on international capital movements, (4) reports by U.S. Government agencies to BEA, and (5) other sources. Census Bureau merchandise trade statistics. — Monthly Census Bureau tabulations of administra- tive documents that exporters and importers must file with the U.S. Customs Service are the basis of the annual and quarterly BPA estimates of merchandise exports and imports. The Census Bureau statistics also provide quantity indicators used in estimating freight and port expenditures (other transportation services) and unit-value indexes used in preparing some of the constant-dollar NIPA estimates of ex- ports and imports. The Census Bureau tabulations, which are de- scribed in appendix table A-l, require several adjust- ments for coverage and valuation to conform them to BPA requirements. Before 1983, the data also re- quired a timing adjustment, made by BEA, to ac- count for transfers of goods recorded in Census data in one period but actually shipped in another. Af- ter 1983, the Census Bureau provided retabulations that corrected for most of the timing problems in the initial tabulations. During 1987, the Census Bureau will replace the two tabulations with one tabulation, released 45 days after the end of the month, that will include the corrections for timing. BEA surveys. — BEA surveys are used in estimat- ing receipts and payments of income on direct invest- ment, other services receipts and payments, and pri- vate remittances and other transfers. (Direct invest- ment is defined as ownership of at least 10 percent of the voting stock of, or an equivalent interest in, an af- filiate located in another country.) Most of these sur- veys, summarized in appendix table A-2, collect data from private organizations, primarily businesses, that engage in transactions with foreign residents on their own behalf or on behalf of others; the major excep- tions are the travel surveys, which collect information from U.S. residents visiting Canada and Mexico. In- come on direct investment and services receipts from, and payments to, affiliated foreigners are obtained from quarterly surveys linked to periodic benchmark surveys (censuses). The other surveys, which are pri- marily either quarterly or annual, are not linked to benchmarks. Treasury international capital reporting system. — Data from the international capital reporting system are used, in combination with representative yields from other sources, in the BPA estimates of receipts and payments of income on other private investment and of payments of income to nonresident holders of U.S. Government securities. This system, which is administered by the Federal Reserve Bank of New York for the U.S. Department of the Treasury, pro- vides monthly and quarterly data on holdings of, and on transactions in, portfolio investment — investment in the form of debt instruments, equity positions of less than 10 percent, and other claims and liabilities. The system, which is summarized in appendix table A-3, covers (1) purchases and sales of long-term secu- rities and (2) amounts of outstanding claims and lia- bilities reported by banks and nonbanking concerns. Directive No. 19 reports. — All U.S. Government agencies engaged in international transactions are re- quired to report these transactions quarterly to BEA, under Statistical Policy Directive No. 19. 3 These 3 U.S. Department of Commerce, Office of Statistical Policy and Standards, Statistical Policy Directive No. 19 "Reports of the Department of Commerce on International Transactions," Federal Register 43, no. 87, May 4, 1978, 172-3. Effective August 23, 1981, statistical policy functions were transferred from the U.S. Department of Commerce, Office of Statistical 14 Foreign Transactions- May 1987 data are used in the estimates of foreign military sales and direct defense expenditures; receipts and payments for miscellaneous services; interest paid to, and received from, foreigners; and U.S. Government grants, pensions, and other transfers. Other source data. — A variety of published and unpublished source data are used in the BPA es- timates of other services. These data include in- formation from U.S. Government budgetary docu- ments; data from Federal Deposit Insurance Corpo- ration, the Federal Reserve Board, and other U.S. Government agencies; data from international orga- nizations and foreign central banks and statistical of- fices; and data from trade associations, banks, and various other international transactors. These other source data are also used in preparing estimates of the reconciliation items and in the constant-dollar estimates. Policy and Standards, to the Office of Management and Bud- get, Office of Information and Regulatory Affairs (Executive Order No. 12318: August 21, 1981). Constant-dollar estimates Most constant-dollar estimates of NIPA exports and imports are prepared by deflation of detailed current- dollar estimates; the others are prepared by extrap- olation of base-year values. The data used to deflate the NIPA current-dollar estimates include export and import price indexes prepared by the Bureau of Labor Statistics (BLS); monthly export and import unit-value indexes pre- pared by the Census Bureau; consumer price indexes prepared by BLS and by foreign statistical agencies; and implicit price deflators calculated from other NIPA estimates. For the first and second revisions of the NIPA estimates, the BLS export and import price indexes, which are for the third month of the quarter, are interpolated to obtain quarterly aver- ages. For the preliminary estimate, 1 month of the Census Bureau unit-value indexes is used to extrap- olate judgmentally the previous quarter of the BLS index. Current-Dollar Estimates JL HE derivation of the current-dollar NIPA entries is shown in table 6. For each component, table 6 shows both the underlying BPA items, by BPA table and line number, and the reconciliation items used in preparing the NIPA estimates. (All BPA tables cited are reproduced in appendix B of this paper, with annual estimates for the 3 or 4 years ending in 1985.) Table 6 also indicates the nature of the source data used for the various estimates; more informa- tion on the sources and methods underlying the BPA estimates is available in "Explanatory Notes" in part II of the June 1978 SURVEY [12]. A statement of BPA methodology, in which this information will be updated, is in preparation. The BPA estimates are published quarterly in the SURVEY [11]. The reconciliation items shown in table 6 are the detail underlying the aggregate reconciliation items presented in NIPA table 4.5. Table 6 does not show entries for the statistical reconciliation items, because the NIPA data for 1985 that are shown there incor- porate all the BPA revisions for that year. The or- der of table 6 and the subsequent discussion is that of NIPA table 4.1, the most detailed presentation of the foreign transactions account. NIPA table 4.1 is reproduced here as table 7, with annual estimates for the 4 years ending in 1985. Merchandise exports NIPA merchandise exports are goods that are trans- ferred from U.S. to foreign ownership. By convention, they include one service— electrical energy. Certain goods are excluded and are classified as service ex- ports: Goods under military agency sales contracts, certain nonmilitary goods delivered to foreigners by the U.S. Government, and goods purchased and used in the United States by foreigners, including travel- ers, transportation carriers, governments, and inter- national organizations. Merchandise exports, BPA basis. — The BPA item that is the starting point for the NIPA estimates of merchandise exports is merchandise, adjusted, ex- cluding military (BPA table 1, line 2). As shown in BPA table 3A, the estimates are based on the Cen- sus Bureau tabulations of merchandise exports and reflect adjustments for coverage, valuation, and tim- ing to conform them to BPA concepts. Merchandise exports are movable goods sold, given away, or otherwise transferred in ownership from U.S. residents to foreign residents. The merchandise is valued at market value at the Customs boundaries of the United States, and the export is recorded in the time period in which the transfer of ownership takes place. Reconciliation items. — BPA and NIPA estimates of merchandise exports differ by two items: Gold exports and an adjustment for U.S. territories and Puerto Rico. In the BPA's, gold exports are measured by the value of movements in gold from U.S. residents to Table 7. — Foreign Transactions in the National Income and Product Accounts [Billions of dollars] Receipts from foreigners . . . Exports of goods and services . Merchandise Durable goods Nondurable goods Services Factor income Other Capital grants received by the United States (net) Payments to foreigners .... Imports of goods and services . Merchandise Durable goods Nondurable goods Services Factor income Other Transfer payments (net) From persons (net) From government (net) Interest paid by government to foreigners Net foreign investment 1982 861.9 361.9 214.0 121.9 92.1 148.0 91.6 56.3 861.9 335.6 249.5 125.3 124.2 86.1 40.5 45.7 9.0 1.3 7.8 18.3 -1.0 1983 863.5 352.5 206.1 115.8 90.3 146.4 88.7 57.7 853.5 358.7 271.3 145.8 125.5 87.3 38.9 48.5 9.5 1.0 8.5 17.8 -33.5 1984 883.7 382.7 224.1 125.6 98.5 158.6 100.6 58.0 S83.T 441.4 334.4 191.1 143.3 107.0 53.1 53.9 12.2 1.5 10.7 19.8 -90.7 1985 869.8 369.8 219.6 128.2 91.4 150.2 91.2 58.9 869.8 448.6 341.7 202.6 139.1 106.9 50.1 56.9 15.0 1.6 13.4 21.3 115.2 15 16 Foreign Transactions- May 1987 Table 6. — Foreign Transactions in the NIPA's: Sources of Estimates Line number in NIPA table 4 1 Item i BPA entries are identified by BPA table and line number) 1985 estimates (billions of dollars) Merchandise exports, BPA basis: Merchandise adjusted, excluding military (Tl, L2) ' Reconciliation items: Less: Gold exports, nonmonetary (T3C, L17) Plus: Adjustment for U.S. territories and Puerto Rico. Equals: Merchandise exports, NIPA's Factor income receipts, BPA basis: Receipts of income on US direct investment abroad (Tl, L12) Plus: Other private receipts of income on U.S. assets abroad (Tl, L13) Plus: U.S. Government receipts of income on U.S. assets abroad (Tl, L14) Plus Compensation paid to U.S. workers employed abroad (Tl, L9, and L10, part) Reconciliation items: Less: Capital gains net of losses in U.S. receipts of direct investment income (T5, L3).. Plus: Adjustment for U.S. territories and Puerto Rico Equals: Factor income receipts, NIPA's Exports of other services, BPA basis: Transfers under U.S. military agency sales contracts (Tl, L3) . Plus. Travel (Tl, L4). Plus: Passenger fares (Tl, L5) Plus: Other transportation (Tl. L6) Plus: Royalties and license fees from affiliated foreigners (Tl, L7) Plus: Royalties and license fees from unaffiliated foreigners (Tl, L8l Plus: Other private services from affiliated foreigners (less compensation of U.S. workers abroad) (Tl, L9, part). Plus: Other private services from unaffiliated foreigners (less compensation of U.S workers abroad) (Tl, L10, part). Plus: U.S. Government miscellaneous services (Tl, LID Reconciliation items: Less: Other 2 Plus: Adjustment for U.S. territories and Puerto Rico Plus Services furnished without payment by financial intermediaries except life insurance carriers and private noninsured pension plans. Equals: Exports of other services, NIPA's Capital grants received by the United States ( net ), BP A basis: Allocations of special drawing rights (Tl, L64) Reconciliation item: Plus: Other 2 Equals: Capital grants received by the United States (net), NIPA's Merchandise imports, BPA basis: Merchandise, adjusted, excluding military (Tl, L17) ' Reconciliation items: Less. Gold imports, nonmonetary (T3C, L36) Plus: Gold, NIPA's: Gold in NIPA final sales and change in business inventories minus U.S. gold production. Plus: Adjustment for U.S. territories and Puerto Rico Equals: Merchandise imports. NIPA's Factor income payments, BPA basis: Payments of income on foreign direct investment in the United States (Tl, L27) Plus: Other private payments of income on foreign assets in the United States (Tl, L28) Plus: Other private services to unaffiliated foreigners (compensation paid to foreign workers in the United States) (Tl, L25, part). Plus: U.S. Government payments of income on foreign assets in the United States (Tl, L29) Reconciliation items: Less: Capital gains net of losses in U.S. payments of direct investment income (T5, L46) Less: U.S. Government payments of income on foreign assets in the United States (Tl, L29) Plus: Imputed interest paid to foreigners 2144 1.7 6.9 219.6 34.3 50.2 5.5 .6 4.9 5.5 91.2 9.0 11.7 3.0 14.0 4.1 1.7 2.3 6.8 .9 5.5 1 338.9 3.2 -.1 6.1 341.7 3 8.1 3 35.4 «-.4 ! 21.3 5.5 Census Bureau merchandise trade statistics. Census Bureau merchandise trade statistics. Other sources. BEA surveys. Treasury International Capital Reporting System. Directive No. 19 reports. Other sources BEA surveys. Other sources. Directive No. 19 reports. Other sources. BEA surveys; other sources. BEA surveys; Census Bureau merchandise trade statistics. BEA surveys. BEA surveys. BEA surveys. BEA surveys; other sources. Directive No. 19 reports. Directive No. 19 reports. Other sources. Other sources. U.S. Treasury. Directive No. 19 reports. Census Bureau merchandise trade statistics. Census Bureau merchandise trade statistics. Other sources. Other sources. BEA surveys. Treasury International Capital Reporting System. Other sources. Directive No. 19 reports; Treasury International Capital Reporting System. BEA surveys. Directive No. 19 reports; Treasury International Capital Reporting System. Other sources. Foreign Transactions. May 1987 17 Table 6. — Foreign Transactions in the NIPA's: Sources of Estimates — Continued Line number in NIPA table 4.1 Item IBPA entries are identified by BPA table and line number) 1985 estimates (billions of dollars) Sources Equals: Factor income payments. NIPA's Imports of other services, BPA basis: Direct defense expenditures (Tl, L18) P/us. Travel (Tl, L19) Plus: Passenger fares (Tl, L20) Plus. Other transportation (Tl, L21I Plus: Royalties and license fees to affiliated foreigners (Tl, L22) Plus: Royalties and license fees to unaffiliated foreigners (Tl, L23) Plus: Other private services to affiliated foreigners (Tl, L24) m Plus: Other private services to unaffiliated foreigners (less compensation of foreign workers in the United States) (Tl, L25, part). Plus: U.S. Government miscellaneous services (Tl, L26) Equals: Imports of other services, NIPA's Transfer payments from persons (net), BPA basis: Private remittances and other transfers (Tl, L34) Reconciliation item: Plus: Adjustment for U.S. territories and Puerto Rico Equal*. Transfer payments from persons (net), NIPA's Transfer payments from government (net), BPA basis: U.S. Government grants (excluding military grants of goods and services), net (Tl, L32) Plus: U.S. Government pensions and other transfers (Tl, L33) Reconciliation item: Less: Other 2 Equals: Transfer payments from government (net), NIPA's Reconciliation item: U.S. Government payments of income of foreign assets in the United States (Tl, L29) Equals: Interest paid by government to foreigners, NIPA's Net foreign investment, HI* A basis: Balance on current account (Tl, Lh'9l Reconciliation items: I*ss: BPA net exports of nonmonetary gold (T3C, L17-L36) /^es.s. NIPA gold imports I*ess: Net balance of capital gains in BPA direct investment income (T5, L3 + L46I I*ess: Other items 2 Plus: Allocations of special drawing rights (Tl, L(i4l Plus: Adjustment for US territories and Puerto Rico Equals: Net foreign investment. NIPA's Addendum: Net exports. KPA basis: Balance, on goods and services IT1, L(>7) Less: BPA net exports of nonmonetary gold (T3C, L17-L36) Less. NIPA gold imports Less' Net balance of capital gains in BPA direct investment income (T5, L3 + L46) Less: Other items 2 Plus: Payments of income on U.S. Government liabilities (Tl, L29) Plus: Adjustment for U.S. territories and Puerto Rico Equals: Net exports of goods and services, NIPA's 3 11.9 3 16.5 '7.3 3 15.9 3 .5 3 .4 3 -.7 3 3.3 3 1.7 56.9 1.6 1.6 3 11.2 3 2.2 13.4 3 21.3 21.3 -117.7 -1.5 ♦5.3 6.3 -115.2 -102.7 -1.5 5.3 21.3 6.3 -78.9 Directive No. 19 reports; other sources. BEA surveys; other sources. BEA surveys; other sources. BEA surveys; Census Bureau merchandise trade statistics. BEA surveys. BEA surveys. BEA surveys BEA surveys; other sources. Directive No. 19 reports; other sources BEA surveys; other sources. Other sources. Directive No. 19 reports; other sources Directive No. 19 reports; other sources. Directive No 19 reports; other sources Directive No. 19 reports; Treasury International Capital Reporting System. Calculated from detail above. Census Bureau merchandise trade statistics. Other sources. BEA surveys. Directive No. 19 reports. U.S. Treasury Other sources. Calculated from detail above. Census Bureau merchandise trade statistics. Other sources. BEA surveys. Directive No. 19 reports. Directive No. 19 reports; Treasury International Capital Recording System. Other sources. 1. BPA end-use category detail in BPA table 3C. 2. Estimates of this item are only for 1973 and 1974. Arms shipments to Israel in 1973 and 1974 financed under the Emergency Security Act of 1973 are classified in the NIPA's as military grants, which are included in the defense purchases component of GNP when they are acquired by the U.S. Government. Their transfer abroad is not reflected in NIPA exports, and the financ- ing provided under the Act is not included in NIPA transfer payments to foreigners. A payment to India in 1974 under the Agricultural Trade Development and Assistance Act is included in NIPA capital grants received by the United States, net, rather than in NIPA transfer payments to foreigners. 3. BPA sign reversed. 4. For 1985 only, differs from entry in BPA table 5, line 46 (with sign reversed) by statistical difference of $- 1 .0 billion; this revision will be reflected in the BPA's in June 1987. Note. — The sources shown are used for the annual and the second revision of the quarterly estimates. For the first revision and preliminary quarterly estimates, partial data are available For merchandise trade, the remainder of the estimates are largely judgmental. 18 Foreign Transactions. May 1987 foreigners and include gold sales by the U.S. Trea- sury. In the NIPA's, gold exports are set at zero. Therefore, gold exports (BPA table 3C, line 17) are removed from BPA exports. In the BPA's, exports include those from U.S. terri- tories and Puerto Rico and exclude exports from the 50 States and the District of Columbia to the U.S. territories and Puerto Rico. Thus, for the NIPA's, the first category of exports must be subtracted from the BPA totals and the second category of exports must be added. The adjustment is based on (1) data from Puerto Rico Balance of Payments, published by the Puerto Rico Planning Board [7], and (2) data for the U.S. Virgin Islands, from the Census Bureau publication U.S. Trade with Puerto Rico and U.S. Possessions [8]. Factor income receipts NIPA factor income receipts are primarily property income; they also include compensation of employees paid by foreigners to U.S. residents. Property income consists of interest, dividends, and other investment returns — other than capital gains — paid to U.S. resi- dents, including the U.S. Government, on both direct and portfolio investment abroad. Factor income receipts, BPA basis. — The BPA items that are the starting point for the NIPA esti- mates are: Receipts of income on U.S. direct invest- ment abroad (BPA table 1, line 12), other private re- ceipts of income on U.S. assets abroad (BPA table 1, line 13), U.S. Government receipts of income on U.S. assets abroad (BPA table 1, line 14), and compensa- tion of employees paid to U.S. residents (BPA table 1, parts of lines 9 and 10). The estimates are based on BEA surveys of U.S. direct investment abroad; data from the Treasury International Capital Report- ing System; reports under Statistical Policy Direc- tive No. 19; and data supplied by U.S. commercial banks, U.S. and foreign central banks, foreign statis- tical offices, and international organizations on yields on U.S. assets abroad and on compensation of em- ployees paid to U.S. residents by foreigners. Receipts of income on U.S. direct investment abroad — that is, income from foreign affiliates — consist of the following: (1) Dividends, other than stock or liquidating dividends (net of withhold- ing taxes), and distributed earnings of unincorpo- rated foreign affiliates (net of foreign income taxes); (2) U.S. direct investors' shares in the reinvested earnings of their incorporated and unincorporated foreign affiliates — that is, earnings, less dividends and other distributions net of withholding taxes on dividends; and (3) interest receipts of U.S. parents on intercompany accounts (net of interest payments by U.S. parents to foreign affiliates and net of with- holding taxes). Other private receipts of income on U.S. assets abroad — income on private portfolio investment — include (1) dividends and interest received by U.S. residents on holdings of foreign equity and debt se- curities; (2) interest received by U.S. residents on loans, deposits, and other claims on foreigners, re- ported by U.S. banks (including both their own and their U.S. customers' claims); (3) fee income of banks on international business; and (4) interest on finan- cial and commercial claims on unaffiliated foreigners, reported by U.S. nonbanking concerns. U.S. Government receipts of income on U.S. as- sets abroad include interest received by the U.S. Gov- ernment on outstanding U.S. Government short- and long-term credit to foreigners under various legisla- tive programs, official reserve assets held by U.S. monetary authorities, U.S. Government disbursing officers' deposits in foreign commercial banks, and advances under Exchange Stabilization Fund agree- ments. In addition to these interest receipts, this item also includes several related receipts, such as collections of commitment fees on foreign loans ex- tended by U.S. Government agencies, and net income (gains less losses) of the U.S. monetary authorities on investment of foreign currency holdings. Compensation of employees paid by foreigners to U.S. residents consists of that paid to U.S. residents employed in the United States by international or- ganizations and foreign governments and that paid to U.S. residents employed abroad. In principle, the latter includes payments to all U.S. residents work- ing abroad. In practice, the estimates consist of pay- ments to employees of foreign affiliates of U.S. busi- nesses and to employees in other capacities in Ger- many, Canada, and the United Kingdom. Reconciliation items. — BPA and NIPA estimates of factor income receipts differ by two items: Cap- ital gains net of losses in direct investment income receipts and an adjustment for U.S. territories and Puerto Rico. In the BPA's, direct investment income includes the U.S. parents' share of capital gains and losses. From 1978 forward, the NIPA estimates of U.S. fac- tor income receipts (specifically, undistributed cor- porate profits retained abroad by foreign affiliates of U.S. parents) are adjusted to exclude these gains and losses. The source of the data on capital gains and losses is the BEA direct investment surveys (BPA table 5, line 3); data for years before 1978 are not available. Foreign Transactions- May 1987 19 In the BPA's, factor income receipts include fac- tor income received by residents of U.S. territories and Puerto Rico and exclude factor income paid to them by residents of the 50 States and the District of Columbia. Thus, for the NIPA's, the first category of factor income must be subtracted from the BPA totals and the second category of factor income must be added. The adjustment is on a net basis — that is, it includes the adjustment for U.S. payments as well as that for U.S. receipts — because data are not available to estimate adjustments to receipts and pay- ments separately. The adjustment is based on data from Puerto Rico Balance of Payments, published by the Puerto Rico Planning Board [7]. Exports of other services NIPA exports of other services include U.S. receipts from foreigners for passenger fares, tourist expen- ditures in the United States, freight, fees, royal- ties, contractors' services, reinsurance, other miscel- laneous services, goods and services delivered by mil- itary and civilian agencies of the U.S. Government to foreigners in the United States or from U.S. instal- lations abroad, and services furnished without pay- ment by financial intermediaries except life insurance carriers and private noninsured pension plans. Exports of other services, BPA basis. — The BPA items that are the starting point for the NIPA esti- mates are: Transfers under U.S. military agency sales contracts (BPA table 1, line 3), travel (BPA table 1, line 4), passenger fares (BPA table 1, line 5), other transportation (BPA table 1, line 6), royalties and license fees (BPA table 1, lines 7 and 8), other pri- vate services (BPA table 1, parts of lines 9 and 10), and U.S. Government miscellaneous services (BPA table 1, line 11). The estimates are based on Statis- tical Policy Directive No. 19 reports; BEA surveys of travel, transportation, selected services, and di- rect investment; Census Bureau merchandise trade statistics; data from other U.S. Government agencies on freight and other transportation services and com- missions on commodity futures transactions, primar- ily; data from international organizations and for- eign central banks and statistical offices on expen- ditures in the United States (other than compensa- tion) by foreign governments and international or- ganizations; and data from trade associations and various other international transactors on freight re- ceipts. For travel, estimates of numbers of travelers, from the U.S. Immigration and Naturalization Ser- vice, are combined with estimates of average expen- ditures. The estimates of average expenditures have been from BEA surveys; in the future, those for over- seas travel will be from the U.S. Travel and Tourism Administration. Transfers under U.S. military agency sales con- tracts are: (1) Deliveries of goods and services by U.S. military agencies to foreign governments under foreign military sales programs contracts, (2) sales of excess property of military installations abroad and sales of petroleum products and other goods and ser- vices to foreign naval vessels and aircraft, and (3) lo- gistical support provided to U.S. allies and United Nations emergency forces. Delivery of goods refers to deliveries both from the United States and from U.S. military installations abroad; it also includes goods for which ownership is transferred to foreign govern- ments even though the goods physically remain in the United States, such as equipment used in the United States to train foreign personnel. Delivery of ser- vices refers to transportation, training, construction, maintenance, and other support in conjunction with or separate from the delivery of goods. Travel receipts are expenditures in the United States by foreign travelers for lodging, food, trans- portation within the United States, entertainment, personal purchases, gifts, and other outlays associ- ated with travel in the United States, including pas- senger fares received by U.S. carriers from Canadian and Mexican travelers visiting the United States. Passenger fares are the receipts of U.S. air and ocean carriers for the transportation of nonresidents between the United States and foreign countries or between two foreign points. Receipts for other transportation services are: (l) Freight revenues of U.S. -operated ocean, air, and other carriers (including rail, pipeline, and Great Lakes shipping) for international transport of U.S. exports and for transport of foreign freight between foreign points; (2) port expenditure receipts, repre- senting payments for goods and services purchased in the United States by foreign-operated carriers; and (3) receipts of U.S. owners from foreign operators for the charter of vessels and rental of freight cars and containers. Royalties and license fees received from affiliated and unaffiliated foreigners are receipts for the use or sale of intangible property or rights (includ- ing patents, trademarks, copyrights, manufacturing rights, and techniques). Receipts of U.S. direct in- vestors from their foreign affiliates are net of royalties and fees paid by U.S. direct investors to their foreign affiliates and net of withholding taxes. Receipts for other private services from affiliated foreigners — that is, receipts of U.S. parents — are fees for management, professional, and technical services 20 Foreign Transactions^ May 1987 and rental of tangible property, including motion pic- ture films and television tapes; lease payments under operating leases of 1 year or less; net rent on un- capitalized operating leases of more than 1 year; re- search and development assessments; and allocated expenses, that is, overhead expenses that are appor- tioned among the foreign affiliates of U.S. parents. Receipts for other private services from unaffiliated foreigners are receipts of U.S. private residents for services rendered to foreigners both in the United States and abroad. The estimates include: (1) For- eign contract operations of U.S. construction, engi- neering, consulting, and other technical services com- panies; (2) international cable, radio, telephone, and satellite services provided by U.S. communications companies; (3) international reinsurance transactions of U.S. companies; and (4) expenditures in the United States — other than compensation of employees — by foreign embassies, consulates, and registered agents of foreign governments and by international organi- zations. Also included are purchases in the United States by Mexican and West Indies border workers, film rentals, and various other receipts. Receipts for U.S. Government miscellaneous ser- vices are the receipts of nonmilitary U.S. Government agencies for goods and services delivered to foreign- ers in the United States or from U.S. installations abroad. Included are the value of services furnished under foreign assistance programs, fees received by the National Aeronautics and Space Administration for launching services, foreign receipts of the U.S. Postal Service, consular and visa fees, sales of prop- erties and rights, and miscellaneous receipts of other Government agencies. Reconciliation items. — BPA and NIPA estimates of exports of other services differ by three items: Arms shipments to Israel under the Emergency Se- curity Act of 1973 (in the fourth quarter of 1973 and first three quarters of 1974), an adjustment for U.S. territories and Puerto Rico, and services furnished without payment by financial intermediaries except life insurance carriers and private noninsured pension plans. In the BPA's, arms shipments to Israel financed under the Emergency Security Act of 1973 (and sub- sequent legislation) are treated as exports — transfers under the U.S. military agency sales contracts — with an offset in unilateral transfers. In the NIPA's, a dif- ferent treatment is used for these shipments in the fourth quarter of 1973 and the first three quarters of 1974. Because shipments to Israel during this pe- riod were made from existing stocks rather than from current production, the arms were included in gov- ernment purchases in the period in which they were acquired by the U.S. Government; in the period in which they are shipped, the arms are reflected nei- ther in government purchases (as a negative entry) nor in exports. The adjustment is based on reports filed under Statistical Policy Directive No. 19. In the BPA's, exports of other services include ser- vices rendered by residents of U.S. territories and Puerto Rico and exclude services rendered to them by residents of the 50 States and the District of Columbia. Thus, for the NIPA's, the first category of service exports must be subtracted from the BPA to- tals and the second category of service exports must be added. The adjustment is on a net basis — that is, it includes the adjustment for U.S. payments as well as that for U.S. receipts — because data are not available to estimate adjustments to receipts and pay- ments separately. The adjustment is based on data from Puerto Rico Balance of Payments, published by the Puerto Rico Planning Board [7]. In the BPA's, no entry is made for services fur- nished without payment by depository institutions. In the NIPA's, an imputed entry is recorded for such services provided to foreigners by depository insti- tutions resident in the United States. The annual estimate of these services is equal to payments of imputed interest to foreigners. The estimating pro- cedure is described below under factor income pay- ments. Capital grants received by the United States (net) In the NIPA's, allocations of special drawing rights, as well as certain other transfer payments, are clas- sified as capital grants received by the United States (net). They are considered to add to U.S. net foreign investment, although they are not considered to af- fect the current income of either the recipient or the payer. Capital grants received by the United States (net), BPA basis. — The BPA item that is the starting point for the NIPA estimate is allocation of special drawing rights (BPA table 1, line 64). Allocations of special drawing rights are net allocations of reserve assets to the United States by the IMF in the years 1970-72 and 1979-81. Reconciliation item. — The reconciliation item con- sists of one reclassified BPA component — a 1974 pay- ment to India under the Agricultural Trade De- velopment and Assistance Act (BPA table 1, part of line 32). This item is a unilateral transfer in the BPA's, but is considered a capital grant in the Foreign Transactions. .May 1987 21 NIPA's. The adjustment is based on data from re- ports filed under Statistical Policy Directive No. 19. Merchandise imports NIPA merchandise imports are movable goods, in- cluding nonmonetary gold, that are sold, given away, or otherwise transferred from foreign to U.S. own- ership. By convention, they include one service — electrical energy. Certain goods are excluded and are classified as service imports: Direct defense expendi- tures abroad for goods by U.S. military agencies, and goods purchased and used abroad by U.S. travelers, U.S. transportation carriers, and nonmilitary agen- cies of the U.S. Government. Merchandise imports, BPA basis. — The BPA item that is the starting point for the NIPA estimates of merchandise imports is merchandise, adjusted, ex- cluding military (BPA table 1, line 17). As shown in BPA table 3, part A, the estimates are based on the Census Bureau tabulations of merchandise imports and reflect adjustments for coverage, valuation, and timing to conform them to BPA concepts. Merchandise imports are movable goods sold, given away, or otherwise transferred in ownership from for- eign residents to U.S. residents. The merchandise is valued at the customs value, the price actually paid or payable for merchandise at the foreign port of ex- portation, excluding charges incurred in bringing the goods to the United States; the import is recorded in the time period in which the transfer of ownership takes place. Reconciliation items. — BPA and NIPA estimates of merchandise imports differ by two items: The dif- ference between NIPA and BPA measures of gold imports and an adjustment for U.S. territories and Puerto Rico. In the BPA's, gold imports are measured by the value of movements in gold from foreigners to U.S. residents, including transfers to private purchasers from holdings of foreign official agencies at the Fed- eral Reserve Bank of New York and the value of gold sales at IMF auctions. In the NIPA's, in order that changes in holdings of nonindustrial gold not be in- cluded in the domestic expenditure components of GNP, the BPA estimates of gold imports (BPA ta- ble 3C, line 36) are subtracted from the BPA totals and replaced by estimates that measure the value of imports of gold as the excess of gold in domes- tic industrial consumption of gold plus the change in industrial inventories of gold over the value of U.S. domestic gold production. The entry for NIPA gold imports is the product of the average Englehard In- dustries' price of gold bullion and a BEA estimate of the quantity of imported gold. The latter equals consumption in arts and industry (less secondary re- finery production and less small items for investment, such as fabricated bars, medallions, coins, etc.), plus change in industry stocks, and less mine production. All price and quantity data are from the Bureau of Mines [15]. In the BPA's, imports include those by U.S. territo- ries and Puerto Rico and exclude imports from U.S. territories and Puerto Rico into the 50 States and the District of Columbia. Thus, for the NIPA's, the first category of imports must be subtracted from the BPA totals and the second category of imports must be added. The adjustment is based on (1) data on Puerto Rico from Puerto Rico Balance of Payments, published by the Puerto Rico Planning Board [7], and (2) data for the U.S. Virgin Islands from the Cen- sus Bureau publication U.S. Trade with Puerto Rico and U.S. Possessions [8]. In addition, from 1946- 1959, imports are adjusted to include shipments to the United States from Alaska and Hawaii, which were granted statehood in late 1959. Factor income payments NIPA factor income payments are primarily property income; they also include compensation of employ- ees paid to foreigners by U.S. residents. Property income consists of interest (both monetary and im- puted), dividends, and other investment returns on both direct and portfolio investment in the United States (other than capital gains) that are paid to for- eigners by U.S. residents, other than the U.S. Gov- ernment. Factor income payments, BPA basis. — The BPA items that are the starting point for the NIPA esti- mates are: Payments of income on foreign direct in- vestment in the United States (BPA table 1, line 27); other private payments of income on foreign assets in the United States (BPA table 1, line 28); compensa- tion of employees paid to foreign residents (BPA table 1, part of line 25); and U.S. Government payments of income on foreign assets in the United States (BPA table 1, line 29). The estimates are based on BEA surveys of foreign direct investment in the United States; data from the Treasury International Capital Reporting System; reports under Statistical Policy Directive No. 19; and data supplied by U.S. com- mercial banks, U.S. and foreign central banks, foreign statistical offices, and international organizations on yiekls on foreign assets in the United States and on compensation of employees paid by U.S. residents to foreigners. 22 Foreign Transactions^ May 1987 Payments of income on foreign direct investment in the United States — that is, income from U.S. affili- ates of foreign direct investors — consist of the follow- ing: (l) Dividends, other than stock or liquidating dividends (net of withholding taxes), and distributed earnings of unincorporated U.S. affiliates (net of U.S. income taxes); (2) foreign direct investors' shares in the reinvested earnings of their incorporated and un- incorporated U.S. affiliates— that is, earnings less dividends and other distributions paid to foreign di- rect investors and less withholding taxes on divi- dends; and (3) interest payments to foreign parents on intercompany debt (net of interest payments by foreign parents to U.S. affiliates and net of U.S. with- holding taxes). Other private payments of income on foreign assets in the United States — that is income on foreign port- folio investment — include (1) dividends and interest paid by U.S. residents on foreign holdings of U.S. equity and private long-term debt securities; (2) in- terest paid to banks and other foreigners on deposits and other liabilities reported by U.S. banks (includ- ing both their own liabilities and those in their cus- tody); and (3) interest paid to unaffiliated foreigners on financial and commercial liabilities reported by U.S. nonbanking concerns. Compensation of employees paid by U.S. residents to foreigners working in the United States, in prin- ciple, includes payments to all foreign residents em- ployed in the United States. In practice, the esti- mates consist of wages (net of U.S. taxes, social in- surance contributions, and other deductions) paid to Canadian residents for work in the United States, the net earnings of West Indians, and the earnings of Mexicans in the United States; the estimates in- clude an allowance for the earnings of nonauthorized workers. U.S. Government payments of income on foreign assets in the United States are interest paid to foreign residents on their holdings of U.S. Government secu- rities (including U.S. agency obligations) and on their special deposits with the U.S. Treasury Department. Payments also include interest on advance payments for military equipment. Reconciliation items. — BPA and NIPA estimates of factor income payments differ by three items: Cap- ital gains net of losses in direct investment income payments, U.S. Government payments of income on foreign assets in the United States, and imputed in- terest paid to foreigners. In the BPA's, direct investment income includes the foreign parents' share of capital gains and losses. From 1978 forward, the NIPA estimates of U.S. fac- tor income payments (specifically, undistributed cor- porate profits retained in the United States by for- eign parents) are adjusted to exclude these gains and losses. The source of the data on capital gains and losses is the BEA direct investment surveys (BPA table 5, line 46); data for years before 1978 are not available. In the BPA's, interest payments to foreigners on U.S. Government obligations are included in imports of services, along with interest payments on private liabilities. In the NIPA's, government interest pay- ments are not considered to be payments for factor services. Thus, such payments to foreigners are re- moved from BPA imports (BPA table 1, line 29) in deriving NIPA imports and are shown in the NIPA's as a separate category of payments to foreigners and of government expenditures. In the BPA's, only receipts and payments of mone- tary interest are recorded. In the NIPA's, depository institutions resident in the United States are consid- ered to pay foreign depositors an imputed interest that the depositors use to purchase services not al- ready covered by monetary service charges. The an- nual estimate of imputed interest paid to foreigners is prepared along with estimates of imputed interest and associated service charges for the domestic sec- tors. It is limited to the foreign share of imputed interest paid by commercial banks. Their total pay- ments of imputed interest equal the sum of monetary interest received on depositor's funds, dividends re- ceived, income received on direct lease financing, and imputed interest received from Federal Reserve banks less interest paid on deposits. The foreign share of this total is equal to the share of foreign deposits in commercial bank deposit liabilities. Data on prop- erty income paid and received by commercial banks and on the ownership of deposits are from the Federal Deposit Insurance Corporation and the Federal Re- serve Board [2, 3, 4]. Quarterly estimates are derived by interpolation, using flow of funds account data on holdings as the indicator [3]. Imports of other services NIPA imports of other services include U.S. payments to foreign carriers for passenger fares, U.S. tourist expenditures abroad, fees, royalties, contractors' ser- vices, reinsurance, other miscellaneous services, and expenditures by U.S. military and civilian agencies for foreign goods and services that are purchased and used abroad. Imports of other services, BPA basis. — The BPA items that are the starting point for the NIPA esti- mates are: Direct defense expenditures (BPA table 1, Foreign Transactions^ May 1987 23 line 18), travel (BPA table 1, line 19), passenger fares (BPA table 1, line 20), other transportation (BPA ta- ble 1, line 21), royalties and license fees (BPA table 1, lines 22 and 23), private payments for other ser- vices (BPA table 1, line 24 and part of line 25), and U.S. Government payments for miscellaneous services (BPA table 1, line 26). The estimates are based on Statistical Policy Directive No. 19 reports; BEA sur- veys of travel, transportation, selected services, and direct investment; Census Bureau merchandise trade statistics; data from other U.S. Government agen- cies on freight and other transportation services and expenditures of U.S. residents working abroad, pri- marily; data from foreign central banks and statisti- cal offices on freight receipts, trade union dues and tourist expenditures; and data from trade associa- tions and various other international transactors on freight receipts, expenditures of U.S. film companies abroad, etc. For travel, estimates of numbers of trav- elers from the U.S. Immigration and Naturalization Service are combined with estimates of average ex- penditures. The estimates of average expenditures have been from BEA surveys; in the future, those for overseas travel will be from the U.S. Travel and Tourism Administration. Direct defense expenditures are expenditures by U.S. military agencies and the U.S. Coast Guard for foreign goods and services, including: (1) Personal expenditures abroad by U.S. military and civilian personnel employed abroad by the military agencies and their dependents; (2) outlays by the U.S. Depart- ment of Defense for foreign goods, such as military equipment, petroleum, and goods purchased for re- sale to U.S. personnel in overseas post exchanges and commissaries; (3) payments for hire of foreign per- sonnel, including contributions to foreign retirement programs; (4) overseas expenditures by U.S. and for- eign contractors employed for the construction, op- eration, and maintenance of U.S. foreign military in- stallations; (5) expenditures related to construction projects managed by U.S. military agencies at the re- quest of foreign governments; and (6) contributions related to U.S. participation in international military organizations. Travel payments are expenditures in foreign coun- tries by U.S. travelers for lodging, food, transporta- tion within foreign areas, entertainment, personal purchases, gifts, and other outlays associated with travel abroad, including fares paid to Canadian and Mexican carriers by U.S. travelers visiting Canada and Mexico. Passenger fares are payments to foreign-flag air and ocean carriers (cruise) for the transportation of U.S. residents. Included are passenger fares paid to foreign ocean and air carriers (other than Canadian and Mexican) by U.S. residents traveling between the United States and foreign countries and payments to foreign carriers for travel between two foreign points. Payments for other transportation services are: (1) Freight payments to foreign-operated ocean, air, and other carriers (including rail and Great Lakes shipping) for international transport of U.S. imports; (2) port expenditure payments, representing pur- chases of goods and services in foreign countries by U.S.-operated carriers; and (3) payments to foreign owners by U.S. operators for the charter of vessels and rental of freight cars and containers. Royalties and license fees paid to affiliated and unaffiliated foreigners are payments to foreign resi- dents by U.S. residents for the use or sale of intan- gible property or rights (including patents, trade- marks, copyrights, manufacturing rights and tech- niques). Amounts are reported net of U.S. taxes and other deductions. Payments for other private services to affiliated foreigners — that is, payments by U.S. affiliates — include fees for management, professional, and tech- nical services and rental of tangible property, includ- ing motion picture films and television tapes; lease payments under operating leases of 1 year or less; net rent on uncapitalized leases of more than 1 year; research and development assessments; and allocated expenses, that is, overhead expenses that are appor- tioned among the U.S. affiliates of foreign parents. Payments for other private services to unaffiliated foreigners are payments to foreign residents by U.S. private residents for services rendered in the United States or abroad. In the absence of comprehensive source data on these transactions, the estimates in- clude only a limited group of them. Included are: (1) International cable, radio, telephone, and satellite services provided by foreign communications com- panies; (2) international reinsurance transactions of U.S. companies; (3) film rentals; and (4) various other payments, including expenditures of U.S. residents working abroad, trade union dues, foreign expendi- tures of U.S. film companies working on location, consular fees paid for export privileges, and direct insurance. Payments for U.S. Government miscellaneous ser- vices are expenditures by nonmilitary U.S. Govern- ment agencies for foreign goods and services that are purchased and used abroad, such as expenditures for operation and maintenance of U.S. embassies and consulates. 24 Foreign Transactions^ May 1987 Reconciliation items. — BPA and NIPA estimates of imports of other services do not differ from one another. Transfer payments to foreigners (net) NIPA transfer payments to foreigners (net) from per- sons and from government are recorded when goods are delivered, services are performed, or cash is trans- ferred. The valuation of noncash transfers generally corresponds to the value of the goods and services transferred. Transfer payments from persons (net), BPA basis. — The BPA item that is the starting point for the NIPA estimates of transfer payments from per- sons (net) is private remittances and other transfers (BPA table 1, line 34). Estimates are based on BEA surveys of remittances and on data supplied by for- eign statistical organizations. Private remittances and other transfers are per- sonal and institutional transfers of goods, services, cash, and other financial claims between U.S. private residents and foreign residents. Transfers from U.S. individuals, nonprofit institutions, and businesses to foreigners are shown net of similar transfers received by U.S. private residents from foreign individuals, nonprofit institutions, and governments. The trans- fers include pensions, gifts and grants from individu- als and nonprofit institutions, inheritances, and emi- grants' and immigrants' transfers. These source data do not include pension payments to foreign residents by U.S. business. Reconciliation items, transfer payments from persons. — BPA and NIPA estimates of transfer pay- ments from persons differ by one item — an adjust- ment for U.S. territories and Puerto Rico. In the BPA's, private remittances and other trans- fers include transfer payments made by residents of U.S. territories and Puerto Rico and exclude trans- fer payments made by residents of the 50 States and the District of Columbia to residents of the U.S. territories and Puerto Rico. Thus, for the NIPA's, the first category of transfer payments must be sub- tracted from the BPA totals and the second category of transfer payments must be added. The adjustment is based on (l) data on Puerto Rico from Puerto Rico Balance of Payments, published by the Puerto Rico Planning Board [7], and (2) data on the Virgin Islands from the Census Bureau publication U.S. Trade with Puerto Rico and U.S. Possessions [8]. Transfer payments from government (net), BPA basis. — The BPA items that are the starting point for the NIPA estimates are: U.S. Government grants, nonmilitary (BPA table 1, line 32) and U.S. Gov- ernment pensions and other transfers (BPA table 1, line 33). Estimates are based on Statistical Policy Di- rective No. 19 reports and on a variety of published and unpublished sources. U.S. Government grants are transfers of real re- sources or financial assets to foreigners by the U.S. Government under foreign assistance programs for which no repayment is expected or for which repay- ment terms are indeterminate; the grants are net of grants received from foreigners. U.S. payments in- clude goods, services, and disbursements of cash de- livered by the U.S. Government. U.S. receipts are cash settlements for grants previously provided, re- turns of equipment previously transferred, goods and services provided to the U.S. Government under mu- tual assistance programs, and foreign currencies pro- vided as offsets for U.S. expenditures under U.S. for- eign assistance programs. U.S. Government pensions and other transfers in- clude Social Security payments and government em- ployee retirement and disability payments to annui- tants living abroad, the educational and cultural ex- change programs of the U.S. Department of State, re- search grants, damage claims paid by the U.S. armed services, cash payments of claims settled by interna- tional agreements, and payments to certain interna- tional organizations for membership assessments and special assessments other than those for foreign as- sistance. Reconciliation items, transfer payments from government. — BPA and NIPA estimates of transfer payments from government differ by two items: Fi- nancing provided to Israel under Emergency Security Act of 1973 and a special transfer payment to India in 1974. (There is no adjustment for U.S. territories and Puerto Rico. U.S. Government grants to these ar- eas are excluded from U.S. Government transfer pay- ments to foreigners by a geographical adjustment in the government receipts and expenditures account.) In the BPA's, arms shipments to Israel financed under the Emergency Security Act of 1973 (and sub- sequent legislation) are treated as exports — transfers under U.S. military agency sales contracts — with an offset in unilateral transfers. In the NIPA's, a dif- ferent treatment is used for these shipments in the fourth quarter of 1973 and the first three quarters of 1974. As explained earlier, shipments during this period were made from existing stocks rather than from current production, and NIPA exports do not include them. Therefore, in deriving NIPA exports, they must be subtracted from BPA transfer payments Foreign Transactions^ May 1987 25 from government (net). Estimates of this adjustment are based on reports filed under Statistical Policy Di- rective No. 19. In the BPA's, a 1974 payment to India under the Agricultural Trade Development and Assistance Act is classified as a unilateral transfer. In the NIPA's, the payment is reclassified from the BPA treatment to capital grants. Data are from reports filed under Statistical Policy Directive No. 19. Interest paid by government to foreigners In the NIPA's, government interest payments are not considered to be payments for factor services; there- fore, such payments to foreigners are excluded from imports and are shown as a separate category of pay- ments to foreigners. These payments are shown in table 6 as a reconciliation item. Reconciliation item. — U.S. Government payments of income on foreign assets in the United States (BPA table 1, line 29) are interest paid to foreign residents on their holdings of U.S. Government securities (in- cluding U.S. agency obligations) and on their special deposits with the U.S. Treasury Department. Pay- ments also include interest on advance payments for military equipment. Net foreign investment In the NIPA's, net foreign investment is the differ- ence between U.S. receipts from foreigners— exports and capital grants received (net) — and U.S. payments to them — imports, transfer payments to foreigners (net), and interest paid by government to foreigners. Net foreign investment, BPA basis. — The BPA item that is the starting point for the NIPA esti- mates is the balance on current account (BPA table 1, line 69). It is equal to exports (BPA table 1, line 1) less imports (BPA table 1, line 16) plus unilateral transfers (BPA table 1, line 31). Reconciliation items. — BPA and NIPA estimates of net foreign investment differ by five items, all of which have been discussed: The difference between BPA and NIPA estimates of net exports of gold, the net balance of capital gains in BPA receipts and payments of direct investment income, the category labeled other items, allocations of special drawing rights, and an adjustment for U.S. territories and Puerto Rico. Addendum: Net exports of goods and services In the NIPA's, net exports of goods and services are exports less imports of goods and services. Net exports, BPA basis. — The BPA item that is the starting point for the NIPA estimates is the bal- ance' on goods and services (BPA table 1, line 67). It equals exports (BPA table 1, line l) less imports (BPA table 1, line 16). Reconciliation items. — BPA and NIPA estimates of net exports of goods and services differ by five items, all of which already have been discussed: The differ- ence between BPA and NIPA estimates of net exports of gold, the net balance of capital gains in BPA re- ceipts and payments of direct investment income, the category labeled other items, payments of income on U.S. Government liabilities, and an adjustment for U.S. territories and Puerto Rico. Constant-Dollar Estimates _L HE constant-dollar estimates of exports and im- ports that appear in the NIPA tables are prepared primarily by deflation at a detailed level, that is, by dividing the detailed current-dollar estimates by ap- propriate price indexes. The estimates that are not prepared by deflation are prepared by extrapolating the base-year values by a quantity indicator. For both exports and imports, the constant-dollar merchandise components are prepared by deflation on a quarterly basis; the annual constant-dollar es- timates are the sums of the quarters. This proce- dure is also used for the constant-dollar estimates of the factor income components and for most compo- nents of other services. For the remaining compo- nents of exports and imports of other services, an- nual constant-dollar estimates are obtained first and historical quarterly estimates are derived by inter- polation; current quarterly estimates are judgmen- tal extrapolations. The export components handled in this manner are: Transfers under U.S. military agency sales contracts, passenger fares, and other transportation. The import components are: Di- rect defense expenditures, travel expenditures, pas- senger fares, other transportation, and U.S. Govern- ment payments for miscellaneous services. Sources of price information The price indexes used to deflate the detailed cat- egories of NIPA exports and imports are: Bureau of Labor Statistics (BLS) export and import price indexes, Census Bureau unit-value indexes (UVI's), NIPA implicit price deflators (IPD's), U.S. Consumer Price Indexes, foreign consumer price indexes, and other price indexes. These indexes and their charac- teristics are described below in general terms. The specific price indexes and the quantity extrapolators used are shown in table 8. BLS export and import price indexes. — The BLS export and import price indexes, published quarterly in BLS News [20], are based on actual transaction prices during 1 month — generally the third — of each quarter, for a group of specifically defined goods' ex- ported or imported by U.S. residents. Prices are col- lected from exporters and importers for samples of the goods that they export or import. The exporters and importers sampled are from the universe estab- 26 lished by the administrative documents used in com- piling the Census Bureau merchandise trade statis- tics. The export and import price indexes, which are used for the period beginning in 1981, are prepared by BLS for BEA from the price data, using fixed weights held constant for 5 years. To obtain a series representing quarterly averages rather than 1 month of the quarter, BEA interpolates the quarterly se- ries judgmentally to a monthly series, which then is averaged. The BLS indexes are used in the defla- tion of most components of merchandise exports and imports. For the current quarter, these indexes are available only for the first and second revisions of the NIPA estimates. Census Bureau unit-value indexes. — The Census Bureau UVI's are calculated monthly for detailed commodity categories from the value and quantity data appearing on the administrative documents used in compiling the Census Bureau merchandise trade statistics. The UVI's used in the deflation of the NIPA components are aggregations of the indexes for the detailed commodity categories, in which the weights are an average of current- and base-period quantities. The indexes do not employ specification pricing and thus are subject to bias stemming from changes in product mix within the detailed commod- ity categories. For the period beginning in 1981, UVI's are used in the deflation of merchandise ex- ports and imports for merchandise components for which the BLS export and import price indexes are judged less appropriate; they are also used in place of the BLS indexes for the preliminary estimates be- cause the BLS indexes are not available. In addition, UVI's are used for almost all merchandise compo- nents before 1981. Implicit price deflators. — Implicit price deflators, published in the SURVEY [13], are derived by dividing the current-dollar NIPA estimate by the correspond- ing constant-dollar estimate. They are used to deflate receipts and payments of factor income, a few compo- nents of merchandise exports and imports, and a few components of exports and imports of other services. U.S. Consumer Price Indexes. — The U.S. Con- sumer Price Indexes (CPI's), published monthly by BLS in CPI Detailed Report [17], are based on ac- Foreign Transactions- May 1987 27 Table 8. — Price Indexes Used in the Deflation of Exports and Imports Category Price index (or quantity extrapolation of base-year value) Category Price index (or quantity extrapolation of base-year value) Exports Merchandise Foods, feeds, and beverages Industrial supplies and materials ... Capital goods, except autos Generators, transformers, and accessories. Broadcasting and communication equipment. Telephonic and other electrical apparatus, n.e.c. Drilling and oilfield equipment ... Specialized mining and oil processing equipment. Excavating and paving machinery. Tractors, nonfarm, and parts Power generating machinery except aircraft and auto engines. Rolling mill machinery Machine tools and metalworking machinery. Industrial, textile, sewing, and shoe machinery. Other specialized industrial machinery. Air-conditioning, refrigerating, and central heating, equipment, n.e.c. Measuring, testing, and control instruments. Materials handling vehicles and equipment. Other nonelectric industrial machinery. Nuclear reactors and parts Tractors, farm and garden, and parts. Other agricultural machinery Computers Other business machines Measuring and control instruments. Scientific, professional, medical, and hospital instruments and equipment. Equipment and tools for photography and other service industries. Civilian aircraft, engines, and parts. Railway transportation equipment. Vessels (except military and pleasure craft) and miscellaneous vehicles. Autos Complete and assembled new passenger cars. Unassembled new passenger cars Used passenger cars Trucks, buses, and special purpose vehicles. IPD calculated from detail below IPD calculated from detail below. ' UVI for foods, feeds, and beverages. UVI for industrial supplies and materials IPD calculated from detail below. 2 Export PI for generators, transformers, and accessories. Export PI for broadcasting and communication equipment. Export PI for telephonic and other electrical apparatus, n.e.c. Export PI for drilling and oilfield equipment. Export PI for specialized mining and oil processing equipment. Export PI for excavating and paving machinery. Export PI for tractors, nonfarm, and parts. Export PI for power generating machinery except aircraft and auto engines. Export PI for other specialized industrial machinery. Export PI for machine tools and metalworking machinery. Export PI for industrial, textile, sewing, and shoe machinery. Export PI for other specialized industrial machinery. Export PI for air-conditioning, refrigerating, and central heating equipment, n.e.c. Export PI for measuring, testing, and control instruments Export PI for materials handling vehicles and equipment Export PI for other nonelectric industrial machinery Export PI for power generating machinery except aircraft and auto engines. Export PI for tractors, farm and garden, and parts. Export PI for other agricultural machinery. PDE IPD for office, computing, and accounting machinery. 3 PDE IPD for office, computing, and accounting machinery. 3 Export PI for laboratory testing and control instruments Export PI for scientific, professional, medical, and hospital instruments and equipment. Export PI for equipment and tools for photography and other service industries. PDE IPD for aircraft. PDE IPD for railroad equipment. PDE IPD for ships and boats. IPD calculated from detail below. 2 Export PI for complete and assembled new passenger cars. Export PI for complete and assembled new passenger cars. Export PI for complete and assembled new passenger cars. PDE IPD for trucks, buses, and truck trailers. Parts, engines, and bodies Automotive tires and tubes Consumer durable goods Consumer nondurable goods Other merchandise exports Factor income Other services Transfers under U.S. military agency sales contracts. Aircraft Ships Vehicles Missiles Weapons Ammunition Communications equipment Other equipment Construction Services , Travel Passenger fares Other transportation Freight receipts: U.S. ocean carrier— liner/ tramp. U.S. ocean carrier—tanker , U.S. Great Lakes carriers U.S. airlines U.S. railroads U.S. pipelines Port expenditures in United States: Foreign liner/tramp Foreign tanker Foreign Great Lakes carrier Foreign airlines Foreign railroads Vessel and freight car hire: Vessel charter Freight car rental Fees and royalties Other private services U.S. Government miscellaneous services. Services furnished without payment by financial intermediaries except life insurance carriers and private noninsured pension plans. Adjustment for U.S. territories and Puerto Rico. Export PI for parts, engines, and bodies except tires and tubes Export PI for automotive tires and tubes Export PI for consumer durable goods * Export PI for consumer nondurable goods. * IPD for sum of all above merchandise exports except computers and other office equipment. IPD for net domestic product. IPD calculated from detail below IPD calculated from detail below. & Government Government Government Government Government Government Government purchases purchases purchases purchases purchases purchases purchases IPD for IPD for IPD for IPD for IPD for IPD for IPD for military aircraft, military ships, military vehicles, military missiles, military small arms, military ammunition, military electronic equipment Government purchases IPD for other military equipment Government Government (excluding purchases IPD for purchases IPD for compensation). military construction, other defense services Composite of CPI's for meals, lodging, transportation, and miscellaneous (roods. * Index of passenger revenue per passenger revenue mile based on Department of Transportation data on international operations of U.S. air carriers. 7 IPD calculated from detail below. Base-year value extrapolated by Census Bureau export tonnage. Base-year value extrapolated by Census Bureau export tonnage. IPD for U.S. ocean carriers. Base-year value extrapolated by export freight ton- miles. PPI for railroad freight. IPD for gross product originating in pipelines. Base-year value extrapolated by export and import freight tonnage Base-year value extrapolated by export and import freight tonnage. IPD for foreign liner and tanker port expenditures. Base-year value extrapolated by export and import ton-miles. IPD for gross product originating in railroads. Index of charter hire prices from Maritime Research Incorporated. "JVice index based on Association of American Railroads data on daily boxcar rentals. IPD for gross domestic product. IPD for gross domestic product. IPD for government nondefense sales of services. Base-year value extrapolated by paid employee hours of relevant financial institutions. IPD for gross domestic product. 28 Foreign Transactions- May 1987 Table 8. — Price Indexes Used in the Deflation of Exports and Imports — Continued Category Price index (or quantity extrapolation of base-year value) Category Price index (or quantity extrapolation of base-year value) Imports Merchandise Foods, feeds, and beverages Gold Petroleum and products Industrial supplies and materials, except gold and petroleum Capita] goods, except autos Electrical machinery Machine tools and metalworking machinery. Construction, textile, and other specialized industry machinery Other nonelectric industrial machinery. Tractors, nonfarm, and parts Tractors, farm and garden, and parts. Other agricultural machinery and parts. Business machines...; Scientific equipment Trade tools and miscellaneous manufactures. Drilling and oilfield equipment... Civilian aircraft, engines, and parts Railway and other commercial transportation equipment. Autos Complete and assembled new passenger cars. Used passenger cars Complete trucks, buses, and special purpose vehicles Bodies and chassis for trucks, buses, and special purpose vehicles. Auto parts and engines, n.e.s Automotive tires and tubes. Consumer durable goods Rugs and floor coverings Woo"d products Glassware, porcelain, and chinaware. Metal household goods Household electrical appliances . Sewing machines Bicycles, motorcycles, and pleasure boats. Photographic and optical goods.. Toys, shooting, and sporting goods. Clocks, watches, and parts Other hard goods Numismatic coins Gem diamonds Other gemstones IPD calculated from detail below. l IPD calculated from detail below. UVI for foods, feeds, and beverages Englehard Industries gold prices. UVI for petroleum and products. 8 UVI for industrial supplies and materials (except gold and petroleum). IPD calculated from detail below. 2 Import PI for electrical machinery. Import PI for machine tools and metalworking machinery. Import PI for construction, textile, and other specialized industry machinery- Import PI for other nonelectric industrial machinery Import PI for complete and assembled new passenger cars. Import PI for complete and assembled new passenger cars. Import PI for other nonelectric industrial machinery PDE IPD for office, computing, and accounting machinery 3 Import PI for scientific equipment. Import PI for trade tools and miscellaneous manufactures. Import PI for drilling and oilfield equipment. PDE IPD for aircraft. PDE IPD for railroad equipment. IPD calculated from detail below. 2 Import PI for complete and assembled new passenger cars. Import PI for complete and assembled new passenger cars. Import PI for complete and assembled new passenger cars. Import PI for complete and assembled new passenger cars. Average of import PI for auto parts and engines, n.e.s., and export PI for auto parts, engines, and bodies except tires and tubes. Import PI for automotive tires and tubes. IPD calculated from detail below. 2 Import PI for apparel and household goods, wool. Import PI for wood furniture, etc. Import PI for glassware, porcelain, and chinaware. Import PI for metal household goods. Import PI for household electrical appliances. Import PI for home sewing machines and accessories. Import PI for complete and assembled new passenger cars. Import PI for photographic and optical goods. Import PI for toys, shooting, and sporting goods. Import PI for clocks, watches, and parts. Import PI for toys, shooting, and sporting goods. Englehard Industries gold price index. Import PI for gem diamonds. Import PI for gem diamonds. Consumer nondurable goods . Cotton textiles Wool textiles Other textiles Leather.. Rubber Medicinal and pharmaceutical preparations. Other nondurable goods Unmanufactured goods Other merchandise imports.. Factor income, BPA components Imputed interest paid to foreigners.. Other services Direct defense expenditures abroad. Petroleum „ Construction Compensation of foreign labor Other. Travel . Passenger fares . Airline Ocean Other transportation.. Freight receipts: Foreign ocean carrier — liner/ tramp. Foreign ocean carrier— tanker.. Foreign Great Lakes carriers.... Foreign airlines Foreign railroads Port expenditures abroad: U.S. liner/tramp U.S. tanker.. U.S. Great Lakes carrier.. U.S. airlines U.S. railroads.. Vessel and freight car hire: Vessel charter Freight car rentals . Fees and royalties Other private services ... U.S. Government payments for miscellaneous services. IPD calculated from detail below. 2 Import PI for apparel and household goods, cotton. Import PI for apparel and household goods, wool. Import PI for apparel and household goods, other textiles. Import PI for leather goods. Import PI for rubber goods. Import PI for medicinal and pharmaceutical preparations. Import PI for apparel and household goods, other textiles. Import PI for wood furniture, etc. IPD for sum of all above merchandise imports except computers, other office machines, gold, and petroleum. IPD for net domestic product. Base-year value extrapolated by paid employee hours of relevant financial institutions. IPD calculated from detail below. IPD calculated from detail below. 9 Government purchases IPD for military petroleum. Government purchases IPD for military construction. Government purchases IPD for compensation of foreign labor. Foreign-country CPI's (exchange rate adjusted) weighted by military spending. Foreign -country CPI's (exchange rate adjusted) weighted by travel. IPD calculated from detail below. Index of passenger revenue per passenger revenue mile based on Department of Transportation data on international operations of U.S. air carriers. 7 IPD prepared by BEA. IPD calculated from detail below. Base-year value extrapolated by Census Bureau import tonnage. Base-year value extrapolated by Census Bureau import tonnage. IPD for foreign ocean carriers. Base-year value extrapolated by Census Bureau import tonnage. PPI for railroad freight. Base-year value extrapolated by Census Bureau export ana import tonnage. Base-year value extrapolated by Census Bureau export and import tonnage. IPD for U.S. liner and tanker port expenditure. Base-year value extrapolated by Census Bureau export andimport tonnage. IPD for gross product originating in railroads. Index of charter hire prices from Maritime Research Incorporated. Price index based on Association of American Railroads data on daily boxcar rentals. IPD for gross domestic product. IPD for gross domestic product. Foreign country CPI's (exchange- rate adjusted) weighted by expenditures. CPI Consumer price index GDP Gross domestic product IPD Implicit price deflator ne.c Not elsewhere classified n.e.s. Not elsewhere specified PDE Producers' durable equipment PI BLS international price index PPI Producer price index UVI Unit value index 1 Before 1967, the deflation is done on an annual basis, using unit-value indexes by economic class; quarterly estimates are obtained by interpolation. 2. From 1981 forward (except as noted), BLS export and import price indexes are used to con- struct the IPD. with the weights based on current-dollar data by detailed end-use category on the Census basis. The IPD is used to deflate the aggregate on the BPA basis. For 1967-80, unit-value indexes are used instead of the BLS price indexes 8. Applies from 1964 forward. Before 1964, deflation by economic class at a higher level of ag- gregation. 4. Applies from 1984 forward. For 1967-83, deflation by unit-value index Before 1967, deflation by economic class at a higher level of aggregation. ."> Applies from 1972 forward. Before 1972, the IPD is constructed from the IPD's for national defense purchases of durable goods and services, with weights of 75 percent and 25 percent, re- spectively. 6 Applies from 1972 forward. Before 1972, deflation by CPI for services. 7 Applies from 1983 forward Before 1983. deflation by an index calculated from BEA travel survey data. 8. Applies from 1929 forward. 9. Applies from 1972 forward. Before 1972, deflation at the aggregate level only, by foreign CPI's (1959-71) and by IPD for merchandise imports (1929-58). Foreign Transactions- May 1987 29 tual transactions prices for the items in a fixed, or constant, "market basket" of consumer goods and services purchased by the population of urban con- sumers. The indexes are used for the travel compo- nent of exports of other services. Foreign consumer price indexes. — Similar in con- cept and construction to the U.S. CPI, consumer price indexes for the countries that are major U.S. trading partners are compiled by foreign central banks and statistical offices and are published by the International Monetary Fund [5]. They are used for the travel and the U.S. Government miscellaneous services components of imports of other services. Other price indexes. — Other price indexes include components of the BLS producer price index [21]; indexes of passenger revenue per passenger revenue mile constructed by BE A from U.S. Department of Transportation data on the international operations of U.S. air carriers [24]; indexes of prices of railroad car and vessel charter hire, from trade associations [l, 6]; and the Englehard Industries index of gold prices published by the Bureau of Mines [15]. Estimates by component Merchandise exports. — The deflation of merchandise exports is carried out separately for the following end-use categories: (1) Foods, feeds, and bever- ages; (2) industrial supplies and materials; (3) cap- ital goods, except autos; (4) autos; (5) consumer durable goods; (6) consumer nondurable goods; and (7) other merchandise exports, which consist of im- ported goods that are reexported and miscellaneous items unallocable to the above categories. For each of the first six categories, a deflator is obtained by de- flating the detailed current-dollar categories shown in table 8 on the Census Bureau basis — that is, with- out the BPA adjustments — by the price indexes also shown in table 8. The aggregate implicit price defla- tor then is applied to the category on the BPA basis. The last category is deflated by the implicit price deflator for the aggregate of the first six categories, excluding computers and other office equipment. From 1981 forward, as noted, the BLS export price indexes are used to deflate most components of mer- chandise exports. IPD's for components of produc- ers' durable equipment are used for exports of com- puters, other business machines, and certain types of transportation equipment. The IPD's for computers and other business machines are based on work done by BE A and IBM [10, 14]; the IPD's for commer- cial aircraft and ships and boats are based on data from the Department of Transportation [22] and the Maritime Administration [23]; the IPD for railroad equipment is based on components of the producers' price index [21]. UVI's are used for exports of foods, feeds, and beverages and of industrial supplies and materials. UVI's are used for these components be- cause, with observations for all months of the quar- ter, they are a better measure of volatile commodity prices than the BLS indexes, which have observations for only 1 month of the quarter. For 1967-80, UVI's are used to deflate almost all components; IPD's are used for the exceptions. Be- fore 1967, UVI's for end-use categories are not avail- able; thus, UVI's for economic class categories are used. The economic classes, which are essentially a state-of-fabrication classification, are: Crude foods, manufactured foods, crude materials, semimanufac- tures, and finished manufactures. Factor income receipts. — Factor income receipts are deflated by the IPD for net domestic product, a general price index for total U.S. production that is used as a proxy for a composite of industry pro- duction price indexes in all the countries in which the United States earns income. This deflation pro- cedure is based on the view that the appropriate price index to deflate a factor service is one that measures the price of value added in the foreign industry in which the factor service is used. Thus, given that the factor services represented by factor income re- ceipts are largely the services of capital, the appro- priate price index to deflate the total of U.S. factor income receipts from abroad is an aggregation of for- eign value-added (industry production) price indexes, with weights that reflect the geographic and indus- trial composition of U.S. investment abroad. How- ever, such an index is not readily available; thus, a proxy, the IPD for net domestic product in the United States, is used to deflate factor income re- ceipts. The IPD proxy will tend to move like the foreign price index to the extent that U.S. invest- ment abroad is widely distributed industrially and that foreign prices, when converted to dollars by ex- change rates, move like U.S. prices. 4 Exports of other services. — Transfers under U.S. military agency sales contracts for 1972 forward are deflated in product detail using IPD's for the de- flation of national defense purchases, developed in BEA's work on the measurement of prices of goods and services purchased by the military. Before 1972, transfers under U.S. military agency sales contracts are deflated in the aggregate by the IPD's for national 4 For further discussion, see Edward F. Denison, "Interna- tional Transactions in Measures of the Nation's Production," Survey of Current Business 61 (May 1981): 17-28. 30 Foreign Transactions. May 1987 defense purchases of durable goods and of services (generally based on wholesale prices) with weights of 75 percent and 25 percent, respectively. Travel exports (spending in the United States by foreign travelers) for 1972 forward are deflated by an average of indexes for the principal items that vis- itors buy, as measured by components of the CPI for restaurants, hotels, transportation, and miscella- neous goods [16, 17]. Before 1972, travel exports are deflated by the CPI for services. Passenger fares (passenger fares received by U.S. air and ocean carriers from foreign residents travel- ing between the United States and foreign countries and between two foreign points) for 1983 forward are deflated by an index, prepared by-BEA, of passenger revenue per passenger revenue mile, based on Depart- ment of Transportation data on the international op- erations of U.S. air carriers [24]. Before 1983, the deflator is an index calculated using data from BEA travel surveys. The constant-dollar estimates of U.S. air and wa- ter carrier freight receipts and port expenditures are obtained by extrapolating base-year values by indica- tors of the physical quantity of transport activity — Census Bureau tonnage data from merchandise trade reports and other quantity data from the Census Bu- reau [9] and Department of Transportation [24]. U.S. rail and pipeline carrier freight receipts and port ex- penditures and U.S. receipts for vessel charter and freight car rental are deflated by various price indexes from trade associations [1, 6]. Fees and royalties, other private services, and the adjustment for U.S. territories and Puerto Rico are deflated by the IPD for gross domestic product, be- cause these services closely resemble factor services. U.S. Government miscellaneous services are de- flated by the IPD for U.S. Government sales of non- defense services. The constant-dollar estimates of services furnished without payment by financial intermediaries except life insurance carriers and private noninsured pen- sion plans are obtained by extrapolating the base- year value by BEA estimates of the paid employee hours of the relevant financial institutions, based on BLS tabulations of employment and wages reported by employers covered by State unemployment insur- ance programs [18, 19]. Merchandise imports. — The deflation of merchan- dise imports is carried out separately for the following end-use categories: (1) Foods, feeds, and beverages; (2) petroleum; (3) other industrial supplies and ma- terials (including gold); (4) capital goods; (5) auto- motive goods; (6) consumer durable goods; (7) con- sumer nondurable goods; and (8) other merchandise imports, which are miscellaneous items unallocable to the above categories. For each of the first seven categories, a deflator is obtained by deflating the de- tailed current-dollar categories shown in table 8 on the Census Bureau basis — that is, without the BPA adjustments — by the price indexes also shown in ta- ble 8. The aggregate implicit price deflator then is applied to the category on the BPA basis. The last category is deflated by the implicit price deflator for the aggregate of the first seven categories, ex- cluding computers, other office machines, gold, and petroleum. From 1981 forward, as noted, the BLS import price indexes are used to deflate most components of mer- chandise imports. IPD's for components of produc- ers' durable equipment are used for imports of com- puters, other business machines, and certain types of transportation equipment. The IPD's for computers and other business machines are based on work done by BEA and IBM [10, 14]; the IPD for civilian air- craft is based on data from the U.S. Department of Transportation [22]; the IPD for railroad equipment is based on components of the producers' price index [21]. The Englehard Industries gold price index [15] is used for imports of gold and of numismatic coins. UVI's are used for imports of petroleum and prod- ucts; of foods, feeds, and beverages; and of industrial supplies and materials. UVI's are used for these com- ponents because, with observations for all months of the quarter, they are a better measure of volatile commodity prices than the BLS indexes, which have observations for only 1 month of the quarter. For 1967-80, UVI's are used to deflate almost all components; IPD's are used for the exceptions other than nonmonetary gold. UVI's for end-use categories are not available before 1967; UVI's for economic class categories are used. The economic classes, which are essentially a state-of-fabrication classification, are: Crude foods, manufactured foods, petroleum, other crude materials, semimanufactures, and finished manufactures. Factor income payments. — Factor income pay- ments are deflated in two parts: Factor income pay- ments, BPA basis, and imputed interest paid to for- eigners. As previously noted, the deflation procedure for factor income is based on the view that the appro- priate price index to deflate a factor service is one that measures the price of value added in the indus- try in which the factor service is used. Thus, given that the factor services represented by payments of factor income are largely those of capital and that Foreign Transactions^ May 1987 31 foreign investment in the United States is industri- ally diversified, an appropriately weighted price in- dex for foreign investment in the United States will move like a general price index for total U.S. produc- tion. Therefore, factor income payments are deflated by the IPD for net domestic product, a general price index for total U.S. production. Constant-dollar estimates of imputed interest paid to foreigners are prepared by extrapolating the constant-dollar base-year value by BEA estimates of the paid employee hours of the relevant financial in- stitutions, based on BLS tabulations of employment and wages reported by employers covered by State unemployment insurance programs [18, 19]. Imports of other services. — Direct defense expendi- tures abroad for 1972 forward are deflated by type of expenditure using the IPD's for the deflation of na- tional defense purchases, developed in BEA's work on the measurement of prices of goods and services pur- chased by the military and by foreign consumer price indexes [5], exchange-rate-adjusted by BEA. Before 1972, the deflation of direct defense expenditures is based on foreign consumer price indexes from 1959- 71 and by the IPD for merchandise imports from 1929-58. Travel imports (spending abroad by U.S. travelers) are deflated by country, using foreign consumer price indexes [5], exchange-rate-adjusted by BEA. Passenger fares (passenger fares paid to foreign air and ocean carriers by U.S. residents traveling be- tween the United States and foreign countries or and between two foreign points) for 1983 forward are de- flated by the index of passenger revenue per passen- ger revenue mile, prepared by BEA for exports, based on Department of Transportation data on the inter- national operations of U.S. air carriers [24] and by an IPD for ocean fares. Before 1983, the deflator is an index calculated using data from BEA travel surveys on carrier rates and expenditures. The constant-dollar estimates of U.S. payments to foreign air and water carriers for the international transportation of U.S. imports (freight receipts) are obtained by extrapolating base-year values primar- ily by foreign carrier freight tonnage data from the Census Bureau [9]. The constant-dollar estimates of purchase of goods and services in foreign countries by U.S. air and water carriers (port expenditures) are obtained by extrapolating base-year values, pri- marily by U.S. freight tonnage data from the Census Bureau and Department of Transportation [16]. U.S. payments to foreign rail carriers and for vessel charter and freight car rentals are deflated by various price indexes from trade associations [1, 6]. Fees and royalties and other private services are deflated by the IPD for gross domestic product, be- cause these services closely resemble factor services. U.S. Government payments for miscellaneous ser- vices are deflated by foreign consumer price indexes [5], exchange-rate-adjusted by BEA. Sources This is a list of publicly available information used in preparing the estimates of the reconciliation items in the foreign transactions account and the constant-dollar estimates of net exports. Wherever possible, a specific portion of a larger publication is cited — a chapter, a series, or table number/title. In some cases, the information used is more detailed than that available in the listed source, which is the publication deemed most accessible to the public. 1. Association of American Railroads. Transporta- tion Division. Data on boxcar rental rates in As- sociation of American Railroads Transportation Newsletter. Washington, DC: AAR, quarterly. 2. Board of Governors of the Federal Reserve Sys- tem. Annual Report. Washington, DC: Board of Governors, annually. 3. . Sector Tables, "Sector State- ments of Financial Assets and Liabilities." Flow of Funds Accounts. (Statistical Release Z.l.) Washington, DC: Board of Governors, quarterly. 4. Federal Deposit Insurance Corporation. Annual Report. Washington, DC: FDIC, annually. 5. International Monetary Fund. Table, "Con- sumer Prices." International Financial Statis- tics. Washington, DC: IMF, monthly. 6. Maritime Research Incorporated. Weekly Newsletter. Parlin, NJ: Maritime Research In- corporated, weekly. 7. Puerto Rico Planning Board. Puerto Rico Bal- ance of Payments. San Juan, PR: Puerto Rico Planning Board, annually. 8. U.S. Department of Commerce. Bureau of the Census. U.S. Trade with Puerto Rico and U.S. Possessions. Report FT 800. Washington, DC: U.S. Government Printing Office, monthly. 9. . Highlights of U.S. Export and Im- port Trade. Report FT 990. Washington, DC: U.S. Government Printing Office, monthly. 10. U.S. Department of Commerce. Bureau of Eco- nomic Analysis. "Improved Deflation of Pur- chases of Computers." SURVEY OF CURRENT BUSINESS 66 (March 1986): 7-10. 11. . "U.S. International Transac- tions." Quarterly in March, June, September, and December issues of SURVEY OF CURRENT BUSINESS. Washington, DC: U.S. Government Printing Office, monthly. 12. . "U.S. International Transactions: Explanatory Notes." SURVEY OF CURRENT BUSINESS 58 (June 1978, part II): 8-15, 48. 13. . "National Income and Product Accounts Tables." SURVEY OF CURRENT BUSINESS. Washington, DC: U.S. Government Printing Office, monthly. 14. . "Quality-Adjusted Price Indexes for Computer Processors and Selected Periph- eral Equipment." SURVEY OF CURRENT BUSINESS 66 (January 1986): 41-50. 15. U.S. Department of Interior. Bureau of Mines. Mineral Industry Surveys: Gold and Silver, Monthly and Quarterly. Washington, DC: U.S. Department of the Interior, monthly. 16. U.S. Department of Justice. Immigration and Naturalization Service. Table, "Nonimmigrants Admitted by Classes Under the Immigration Laws and Country or Region of Last Residence." Statistical Yearbook of the Immigration and Nat- uralization Service. Washington, DC: U.S. Gov- ernment Printing Office, annually. 17. U.S. Department of Labor. Bureau of Labor Statistics. CPI Detailed Report. Washington, DC: U.S. Government Printing Office, monthly. 18. . "Table C-2. Average hours and earnings of production or nonsupervisory work- ers on private nonagricultural payrolls by de- tailed industry." Employment and Earnings. Washington, DC: U.S. Government Printing Of- fice, monthly. 19. . "Table 2. Private industry by 4-digit SIC industry and government by level of government, 19 annual averages: Report- ing units, employment, and wages, change from, 19 ." Employment and Wages: Annual Aver- ages. Washington, DC: U.S. Government Print- ing Office, annually. 20. . News. Washington, DC: U.S. Government Printing Office, quarterly. 21. . Producer Prices and Price In- dexes. Washington, DC: U.S. Government Print- ing Office, monthly. 22. U.S. Department of Transportation. Office of Economics. "Price Index for Aircraft Pur- 33 34 Foreign Transactions- May 1987 chased by Domestic Trunk Carriers." Tabu- lations based on data from carrier reports on RSPA Form 41. Washington, DC: DOT Office of Economics, annually. 23. U.S. Department of Transportation. Maritime Administration. Index of Estimated Shipbuilding Costs in the United States. Washington, DC: DOT Office of Shipbuilding Costs, annually. 24. U.S. Department of Transportation. Trans- portation Systems Center. Center for Trans- portation Information. Table II, "Passenger Travel Between U.S. and Foreign Countries, Dis- tribution by U.S. and Foreign Flag Carriers." U.S. International Air Travel Statistics. Cam- bridge, MA: Center for Transportation Informa- tion, monthly. Appendix A Major BPA Source Data The three tables in this appendix provide a summary and overview of three major bodies of data used in the preparation of the BPA's and, thus, the NIPA's. These are the Census Bureau statistics on merchandise trade, BEA balance of payments surveys, and the Treasury international capital reporting system. 35 36 Foreign Transactions. May 1987 Table A-l. — Census Bureau Statistics on Merchandise Trade Used in Preparation of the Balance of Payments Accounts Exports Imports Merchandise coverage Valuation Commodity classification Shipper's Export Declaration (Commerce Form 7525) or equivalent, filed at point of export; direct Department of Defense reports to the Census Bureau on shipments under Military Assistance Program Grant-Aid. Shipments of domestic and foreign merchandise by U.S. persons, involving both commercial and noncommercial transactions. Exports of domestic merchandise include commodities grown, produced, or manufactured in the United States, and commodities of foreign origin that have been changed from the form in which they were imported. Exports of foreign merchandise consist of commodities of foreign origin that are substantially in the same condition as when imported. Transaction price f.a.s. (free alongside ship) at U.S. port of export. Transaction price includes inland freight, insurance, and other charges incurred in placing merchandise alongside the carrier. Commodity information is collected and published in terms of Schedule B, Statistical Classification of Domestic and Foreign Commodities Exported from the United States (January 1978 edition). Commodity data published in terms of the end-use classification system are used in the BPA's. Import entry (Customs Form 7501) and warehouse withdrawal (Customs Form 7502), filed at the point of entry. Foreign merchandise imported by U.S. persons, involving both commercial and noncommercial transactions. General imports are items for immediate consumption and entries into Customs bonded warehouses and foreign trade zones. Customs value. Customs value is the price actually paid or payable for merchandise at foreign port of exportation, excluding import duties, freight, insurance, and other charges incurred in bringing the merchandise to the United States. Commodity information is collected and published in terms of Tariff Schedules of the United States Annotated (TSUSA). Commodity data published in terms of the end-use classification system are used in the BPA's. Types of information Commodity data are published in terms of value, shipping weight, and method of transportation. Unit-value indexes are calculated for export and import totals, major end-use categories, and selected commodities. Geographic coverage US. Customs territory (50 States, District of Columbia, and Puerto Rico), the U.S. Virgin Islands, and U.S. foreign trade zones. Exclusions Merchandise in transit through the United States from one foreign country to another; Shipments (a) between the United States and Puerto Rico, U.S. Virgin Islands, Guam, American Samoa, and other U.S. possessions; (b) between any of these outlying areas; (c) between Guam, American Samoa, and other U.S. possessions and foreign countries; Temporary exports or imports, defined as merchandise shipped for a period of less than 1 year; U.S. merchandise returned by U.S. Armed Forces for their own use and shipments to U.S. Armed Forces and other government units abroad for use abroad; Purchases of vessels; Purchases of bunker fuels and other supplies and equipment by U.S. carriers abroad and by foreign carriers in the United States; Other: Electrical energy; personal and household effects of travelers; gift parcels; issued monetary coins. Publication schedule Data are published about 45 days after the end of the month. Revised monthly data are compiled annually. Publication of data Highlights of U.S. Export and Import Trade, issued monthly by the Census Bureau. Other sources of detailed commodity and country data are listed in the Guide to Foreign Trade Statistics, issued periodically by the Census Bureau. Foreign Transactions^ May 1987 37 Table A-2.— BEA Balance of Payments Surveys Survey title and number Types of information Collection procedures BPA table 1 line number Direct Transactions of U.S. Reporter With Foreign Affiliate (BE-577) Transactions of U.S. Affiliate. Except an Unincorporated Bank, with Foreign Parent (BE-6051; Transactions of U.S. Banking Branch or Agency with Foreign Parent (BE- 606B) Benchmark Survey of U.S. Direct Investment Abroad (BE-10A. BE-10B) Benchmark Survey of Foreign Direct Investment in the United States (BE-12) International Transactions in Royalties. Licensing Fees, Film Rentals, Management Fees, etc., with Unaffiliated Foreign Residents (BE-93) Foreign Contract Operations of U.S. Construction, Engineering and Related Consulting and Technical Service Firms (BE-47) Reinsurance Transactions with Insurance Companies Resident Abroad (BE-48) U.S. Airline Operators' Foreign Revenues and Expenses (BE-37) Ocean Freight Revenues and Foreign Expenses of US- Carriers (BE-30) Foreign Ocean Carriers' Expenses in the United States (BE-29) Foreign Airline Operators' Revenues and Expenses in the United States (BE-36) Survey of U.S. Travelers Visiting Canada (BE-536) Expenditures of United States Travelers in Mexico (BE-575) Foreign Personal Remittances (B&579) Institutional Remittances to Foreign Countries (BE-40) U.S. direct investors' share of net income, distributed earnings, capital gains and losses, and undistributed earnings of foreign affiliates; interest; royalties and license fees; rentals, management fees, allocated expenses and other service charges; changes in U.S. direct investors' equity in their foreign affiliates; intercompany debt transactions between foreign affiliates and U.S. direct investors; U.S. direct investors' equity and debt position in their foreign affiliates. Foreign direct investors' share of net income, distributed earnings, capital gains and losses, and undistributed earnings of their U.S. affiliates; interest; royalties and license fees; rentals, management fees, allocated expenses, and other service charges; changes in foreign direct investors' equity in their U.S. affiliates; intercompany debt transactions between U.S. affiliates and foreign direct investors; foreign direct investors' equity and debt position in their U.S. affiliates. Complete financial and operating data for U.S. persons who are direct investors abroad (BE-10A) and for each foreign affiliate (BE-10B) including data on investment position and transactions between each foreign affiliate and U.S. direct investors. Complete financial and operating data for each U.S. affiliate of foreign direct investors; data on investment position and transactions between U.S. affiliates and foreign direct investors. Sale and use of patents, techniques, processes, formulas, designs, know-how, trademarks, copyrights, franchises, manufacturing rights, other intangible and proprietary rights, and rentals of motion pictures and of television films and tapes. General contracting and construction; supervision of construction; procurement services; consulting engineering; management engineering; oil well exploration and drilling; aerial surveys; research, training, and technical assistance; and similar services. Reinsurance premiums ceded and assumed, and reinsurance losses paid to and recovered from insurance companies resident abroad. Revenues of U.S. airlines from transporting U.S. exports to foreign countries and from transporting freight and passengers between foreign points. Expenditures abroad of U.S. air carriers for fuels and oils loaded aboard aircraft; maintenance of bases, freight and passenger facilities, and offices abroad; landing fees; wages paid to crew members abroad; and similar expenses. Revenues of U.S. carriers from transporting U.S. exports to foreign countries, from transporting freight between foreign points, and from transporting imports into the United States; shipping weight on U.S. exports; charter hire received and paid; expenses in foreign countries for fuel, stores, repairs, stevedoring, harbor fees, agents' commissions; and similar expenses. Expenditures related to loading, unloading, and storing cargo at U.S. ports such as stevedoring; container, barge, and warehouse rentals; expenditures for fuels and oils loaded aboard in U.S. ports; expenditures for pilotage, towing, documentation, harbor fees; and similar services. Revenues of foreign airlines from transporting freight to the United States; shipping weight on such freight; expenditures in the United States for fuels and oils; wages and salaries paid to employees; agents' and brokers' fees and commissions; aircraft handling and terminal services; aircraft leasing; and similar expenses. Total expenditures of U.S. residents visiting Canada for food, lodging, entertainment, gifts, local transportation, etc.; length of visit; provinces visited and number of days spent in each; number in party; method of transportation; and purpose of visit. Total expenditures of U.S. residents visiting Mexico for food, lodging, entertainment, gifts, local transportation, etc.; place of currency exchange (United States or Mexico), if any length of visit and principal cities visited number in party; and purpose of visit.. Noncommercial payments by individuals in the United States to individuals abroad by means of bank drafts, checks, and other instruments. Funds remitted to foreign residents, including outright grants; payments abroad for procurement of goods to be used abroad; expenditures for salaries and administrative expenses abroad; and shipments of purchased or privately donated goods and supplies. Mandatory quarterly survey of U.S. persons who hold 10 percent or more of voting stock or equivalent interest in a foreign business enterprise (affiliate), when the affiliate's total assets, annual sales, or annual net income exceeds $15 million. In 1985, 11,000 reports for foreign affiliates were filed quarterly. Mandatory quarterly survey of U.S. business enterprises (affiliates) in which a foreign person holds 10 percent or more of voting stock or equivalent interest, when the affiliate's assets, annual sales, or annual net income exceeds $10 million. In 1985, 3,300 reports were filed quarterly. Mandatory benchmark survey (taken every 5 years) of all U.S. persons who hold 10 percent or more of voting stock or equivalent interest in a foreign business enterprise, and of foreign affiliates of U.S. direct investors, when the affiliate's assets, sales, or net income exceeds $3 million. In 1982, U.S. parents filed 3,657 reports in the BE-10A and 18,339 reports for their foreign affiliates in the BE- 10B. Mandatory benchmark survey (taken every 5 years) of each U.S. business enterprise (affiliate) in which one foreign person holds 10 percent or more of voting stock or equivalent interest, when the U.S. affiliate's total assets, sales, or net income exceeds $1 million or if the affiliate owns 200 or more acres of U.S. land. In 1980, 12,510 reports were filed. Mandatory annual survey of U.S. persons (enterprises and individuals) whose foreign receipts or payments amount to at least $500,000. List of U.S. persons with reportable transactions is maintained by BEA. In 1985, 500 reports were filed. Mandatory annual survey of U.S. contractors known to have foreign contracts whose operating revenue is $1 million or more. List of U.S. contractors is maintained by BEA. In 1985, 130 reports were filed. Mandatory annual survey of U.S. insurance companies whose reinsurance premium receipts, payments, or losses are $1 million or more. List of U.S. insurance companies is maintained by BEA. In 1985, 200 reports were filed. Mandatory quarterly survey of U.S. airline operators with covered revenues or expenses of $500,000 or more. In 1985, 14 reports were filed quarterly. Mandatory quarterly survey of U.S. operators of dry cargo, passenger (including combination), and tanker vessels with covered revenues or expenses of $500,000 or more. In 1985, 40 reports were filed quarterly. Mandatory annual survey of foreign ocean carriers with covered expenses of $500,000 or more. In 1985, 130 reports were filed by U.S. agents of foreign ocean carriers. Mandatory annual survey of foreign airlines with covered revenues or expenses of $500,000 or more. In 1985, 60 reports were filed. Voluntary survey (distributed continuously at border points) of U.S. residents visiting Canada. In 1985, 30,000 questionnaires were returned. Voluntary survey (distributed continuously at border points) of U.S. residents visiting Mexico. In 1985, 5.000 questionnaires were returned. Voluntary monthly (or quarterly) survey of U.S. banks and agencies engaged in handling remittances. In 1985, 48 questionnaires were submitted. Voluntary annual survey of U.S. religious, charitable, educational, scientific, and similar nonprofit organizations with total remittances of $25,000 or more. If annual remittances total $1 million or more, the organizations are requested to report quarterly. In 1985, 90 questionnaires were submitted quarterly and 360 annually. Line 12 (Receipts of income on U.S. direct investment abroad) Line 7 (Royalties and license fees from affiliated foreigners). Line 9 (Other private services from affiliated foreigners). Line 27 (Payments of income on foreign direct investment in the United States) Line 22 (Royalties and license fees to affiliated foreigners). Line 24 (Other private services to affiliated foreigners). Line 12 (Receipts of income on U.S. direct investment abroad). Line 7 (Royalties and license fees from affiliated foreigners). Line 9 (Other private services from affiliated foreigners). Line 27 (Payments of income on foreign direct investment in the United States). Line 22 (Royalties and license fees to affiliated foreigners). Line 24 (Other private services to affiliated foreigners). Lines 8 and 23 (Royalties and license fees from, and to, unaffiliated foreigners). Part of lines 10 and 25 (Other private services from, and to, unaffiliated foreigners). Part of line 10 (Other private services from unaffiliated foreigners). Part of lines 10 and 25 (Other private services from, and to, unaffiliated foreigners). Part of lines 5 (Passenger fares) and 6 and 21 (Other transportation). Part of lines 6 and 21 (Other transportation). Part of line 6 (Other transportation). Part of lines 6 and 21 (Other transportation). Part of line 19 (Travel). Part of line 19 (Travel). Part of line 34 (Private remittances and other transfers). Part of line 34 (Private remittances and other transfers). 38 Foreign Transactions. May 1987 Table A-3. — Treasury International Capital Reporting System Data Used in Preparation of the Balance of Payments Accounts Reports Reporters Types of information Reporting coverage Frequency International Capital Banking (B) Forms. International Capital Nonbanking (C) Forms International Capital jS) Forms— Purchases and Sales of Long-term' Securities by 'Foreigners'. Banks and banking institutions, including the U.S. affiliates of foreign banks and banking institutions, brokers, and dealers who for their own account or the account of others have liabilities to, or claims on, foreign residents. Nonbanking business enterprises, including exporters, importers, industrial and commercial concerns, and nonbanking financial institutions (e.g., insurance companies and savings and loan associations), who for their own account or for the account of other U.S. persons have liabilities to, or claims on, unaffiliated foreign residents. Banks, banking institutions, brokers, dealers, and other U.S. persons who on their own behalf or on behalf of their customers engage in transactions in long- term securities directly with foreign residents. Liabilities outstanding: (1) Banks', brokers', and dealers' own liabilities to foreign residents, (including demand, time, and savings deposits. Federal funds borrowings, ana repurchase agreements.) payable in dollars or foreign currency. (2) Custody liabilities of banks, brokers, and dealers to foreign residents, i.e., financial claims on persons in the United States, other than long-term securities, held by or through the reporting institution payable in dollars for the account of foreign residents "Claims outstanding: (1) Banks' own claims on foreign residents, i.e., assets owned by reporting banks and banking institutions which represent claims on foreign residents (2) Claims of domestic customers, i.e., assets owned by U.S. customers of the reporting bank which represent claims on foreign residents held here or abroad by the reporting bank for the account of its domestic customers Commercial liabilities and claims outstanding: Liabilities and claims arising from the purchase and sale of goods and services in regular business operations Financial liabilities and claims outstanding: Liabilities and claims arising from the borrowing and investment activities of an enterprise, excluding long-term securities Transactions in long-term securities executed in the United States for the account of foreign residents, and transactions executed abroad for the reporters' own account or for the account of their domestic customers. Long-term securities are those having no contractual maturity (e.g., stocks) or a maturity of more than 1 year from date of issue (eg . bonds) Mandatory survey of banks, banking institutions, brokers, and dealers whose end-of-month outstanding liabilities to, or claims on, foreign residents amount to $15 million or more. Monthly, quarterly, and semiannually. Mandatory survey of nonbanking concerns whose end-of-month outstanding liabilities to, or claims on, foreign residents are $10 million or more. Mandatory survey of U.S. persons whose purchases of securities from, or sales of securities to, foreign residents are $500,000 or more in a given month. Monthly and quarterly Monthly Note— Data are published in the Treasury Bulletin, issued quarterly by the Department of the Treasury Appendix B This appendix reproduces three BPA tables from the June 1986 SUR- VEY: (1) Table 1.— U.S. International Transactions, (2) Table 3.— U.S. Mer- chandise Trade, and (3) Table 5. — Direct Investment: Income, Capital, Roy- alties and License Fees, and Other Private Services. 39 40 Foreign Transactions- May 1987 Table 1.— U.S. International Transactions (Millions of dollars] Line (Credits +; debits -)' Ref. lines (table 1- 2, March 1986 Survey) 1982 1983 1984 1985 Exports of goods and services * Merchandise, adjusted, excluding military - 1 Transfers under U.S. military agency sales contracts.. Travel Passenger fares Other transportation.. Royalties and license fees from affiliated foreigners * ... Royalties and license fees from unaffiliated foreigners.. Other private services from affiliated foreigners Other private services from unaffiliated foreigners U.S. Government miscellaneous services Receipts of income on U.S. assets abroad: Direct investment Other private receipts U.S. Government receipts Transfers of goods and services under U.S. military grant programs, net.. Imports of goods and services Merchandise, adjusted, excluding military ■„ Direct defense expenditures Travel Passenger fares Other transportation.. Royalties and license fees to affiliated foreigners *.... Royalties and license fees to unaffiliated foreigners.. Other private services to affiliated foreigners Other private services to unaffiliated foreigners U.S. Government miscellaneous services Payments of income on foreign assets in the United States: Direct investment Other private payments U.S. Government payments U.S. military grants of goods and services, net Unilateral transfers (excluding military grants of goods and services), net.. U.S. Government grants (excluding military grants of goods and services) . U.S. Government pensions and other transfers Private remittances and other transfers U.S. assets abroad, net (increase/capital outflow (-)) U.S. official reserve assets, net * Gold Special drawing rights Reserve position in the International Monetary Fund. Foreign currencies U.S. Government assets, other than official reserve assets, net U.S. credits and other long-term assets Repayments on U.S. credits and other long-term assets * U.S. foreign currency holdings and U.S. short-term assets, net U.S. private assets, net Direct investment Foreign securities U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns. U.S. claims reported by U.S. banks, not included elsewhere Foreign assets in the United States, net (increase/capital inflow ( + )) . Foreign official assets in the United States, net U.S. Government securities U.S. Treasury securities ' Other 8 Other U.S. Government liabilities • U.S. liabilities reported by U.S. banks, not included elsewhere Other foreign official assets ,0 Other foreign assets in the United States, net Direct investment U.S. Treasury securities U.S. securities other than U.S. Treasury securities U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns. U.S. liabilities reported by U.S. banks, not included elsewhere Allocations of special drawing rights Statistical discrepancy (sum of above items with sign reversed) Memoranda: Balance on merchandise trade (lines 2 and 17) Balance on goods and services (lines 1 and 16) " Balance on goods, services, and remittances (lines 67, 33, and 34) Balance on current account (lines 67 and 31) " Transactions in U.S. official reserve assets and in foreign official assets in the United States: Increase ( — I in U.S. official reserve assets, net (line 36) Increase ( + ) in foreign official assets in the United States (line 51 less line 55). 211,198 11,986 12,393 3,174 12,317 3,507 1,669 1,816 6,522 533 21,381 58,050 4,118 -247,642 - 12,260 - 12,394 -4,772 -11,710 -326 -292 403 -3,543 -1,460 -3,155 -33,443 - 18,285 -5,501 -2,251 -1,165 121,273 -4,965 -1,371 -2,552 -1,041 -6,131 - 10,063 4,292 -360 -110,177 2,369 -8,102 6,626 -111,070 94.078 3,593 5,085 5,779 -694 605 - 1,747 -350 90,486 13,792 '* 7,052 6,392 -2,383 65,633 36.325 -36,444 -214 -3,630 -9,131 -4,965 2,988 333,257 201,820 12,221 11,408 3,037 12,590 3,597 1,625 2,532 6,547 630 20,499 51,920 4,832 194 -370,380 -268,900 -12,590 - 13,556 - 5,484 - 12,222 -405 -315 471 -3,404 -1,567 -5.598 -28,987 - 17,825 -194 -9,481 -6,286 -2,207 -987 -1.196 -66 -4,434 3,304 -5,005 -9,966 5,012 -51 -43,821 -373 -7,007 -6,513 -29,928 85.496 5,968 6,496 6,972 -476 725 545 -1,798 79,527 11,946 >« 8,721 8,636 -118 50,342 11.130 -67,080 -37,123 -40,317 -46,604 -1,196 5,243 219,900 10,103 11,353 3,028 13,812 3,923 1,619 2,437 7,086 629 21,509 59,483 5,229 190 454,420 -332,422 -11,930 - 15,449 -6,502 - 14,835 -597 -362 478 -3,801 -1,531 -9,229 -38,471 - 19,769 -190 -8,536 -2,194 -1,427 -23.639 -3,131 -979 -995 -1,156 -5,523 -9,640 4,499 -382 - 14,986 -3,858 -5,082 5,081 -11,127 102,767 3,037 4,703 4,690 13 436 555 -2,657 99,730 25,359 23,059 12,759 4,704 33,849 27.338 112,522 -94,308 -97,929 ■ 106,466 -3,131 2,601 358.498 214,424 9,001 11,663 2,989 13,972 4,123 1,700 2,526 7,235 874 34,320 50,180 5,491 64 -338,863 -11,918 - 16,502 -7,322 -15,928 -467 -380 694 -3,965 -1,737 -8,068 -35,429 -21,306 -64 -14,983 -11,196 -2,171 -1,616 32.436 -3,858 -897 908 -3,869 -2,824 -7,579 4,644 111 -25,754 -18,752 -7,977 1,665 -691 127.106 -1.324 -841 -546 -295 483 522 -1,488 128,430 17,856 20,500 50,859 -1,172 40,387 23.006 124,439 102,694 106,481 117,677 -3,858 -1,807 See footnotes on page 44 . Foreign Transactions- May 1987 41 Table 3.— U.S. Merchandise Trade [Millions of dollars) Line 1982 1983 1984 1985 Balance of payment adjustments to Census trade data: EXPORTS Merchandise exports. Census basis ' Including reexports and excluding military grant shipments. Adjustments: Private gift parcel remittances Gold exports, nonmonetary Inland U.S. freight to Canada U.S. -Canadian reconciliation adjustments, n.e.c, net* Merchandise exports transferred under U.S. military agency sales contracts identified in Census documents '. Other adjustments, net 4 Equals: Merchandise exports, adjusted to balance of payments basis excluding "military" (table 1, line 2). IMPORTS Merchandise imports. Census basis ' (general imports) Adjustments: Electric energy Gold imports, nonmonetary Inland freight in Canada US -Canadian reconciliation adjustment, n.e.c, net 2 Merchandise imports of U.S. military agencies identified in Census documents 3 Other adjustments, net 5 Equals: Merchandise imports, adjusted to balance of payments basis, excluding "military" (table 1, line 17). Merchandise trade, by area and country, adjusted to balance of payments basis, excluding military: 6 EXPORTS Total, all countries. Western Europe European Communities .-^ Belgium and Luxembourg France Germany, Federal Republic of.. Italy Netherlands United Kingdom Other Western Europe, excluding EC .... Canada 2 _. Japan Australia, New Zealand, and South Africa.. Eastern Europe Latin America and Other Western Hemisphere . Brazil Mexico Venezuela Other Other countries in Asia and Africa.. Members olffflW.Z~Z.ZZZZ" China Hong Kong Korea, Republic of Singapore Taiwan Africa Members of OPEC International organizations and unallocated.. Memoranda: Industrial countries ■.. Members of OPEC • ... Other countries * 212,193 163 883 967 4,485 -7,369 -124 211,198 243,941 910 1,462 1,118 115 -427 523 247,642 211.198 59,701 46,905 5,153 7,194 9,213 4.641 7,455 10,694 2.419 12,796 39.203 20,694 7,656 3,749 33,152 3,446 11,736 5,192 12,779 46,978 39,817 12.000 2,920 2,450 5,286 3,206 4,006 6,933 2,647 65 127,254 20,651 63,228 201,656 166 350 1,164 5,014 -6,546 16 201.820 261.724 999 290 1,325 1.292 -446 3.716 268,900 201.820 55,448 43,776 5,055 6,029 8,641 3,947 7,286 10,572 2,246 11,672 44.512 21,789 6,604 2,976 25,641 2,556 9,094 2,707 11,284 44,785 38,639 10.217 2,228 2,572 5,732 3,715 4,291 5,876 1,733 65 128,353 15.256 58,146 218,722 330 1,373 6,164 -5.719 -139 219.900 330.514 1,067 474 1,504 -841 -774 478 332,422 219,900 56,867 46,380 5.194 6,055 8,775 4,310 7,486 12.201 2,359 10,487 53,037 23,241 7,849 4,290 29,766 2,746 12,020 3.386 11,614 44,817 39,065 8,419 3,017 3,118 5,887 3,687 4,765 5.526 1.316 33 140,991 13.771 65,106 212.606 251 406 1.345 5.202 -5,461 75 214,424 336,228 1.030 559 1,438 -1,005 613 338363 214,424 56,015 45,191 4,805 6,097 8,939 4,557 7,241 11,087 2,465 10,824 53,879 22,145 6,967 3.258 30,788 3,311 13,386 3.063 11,028 41,180 35,265 6.203 3,853 2,754 5,728 3,444 4,274 5.618 1,557 192 139,008 11,409 63,815 See footnotes on page 44 . 42 Foreign 7>ansactions_ May 1987 Table 3.— U.S. Merchandise Trade— Continued [Millions of dollars] Line 1982 1983 1984 Merchandise trade, by area and country, adjusted to balance of payments basis, excluding military '—Continued: IMPORTS Total, all countries.. Western Europe European Communities Belgium and Luxembourg France Germany, Federal Republic of.. Italy Netherlands United Kingdom Other Western Europe, excluding EC Canada ' Japan Australia, New Zealand, and South Africa.. Eastern Europe Latin America and Other Western Hemisphere . Brazil Mexico Venezuela Other Other countries in Asia and Africa.. MemteBofOTic"!"!"""""!"!""] China Hong Kong Korea, Republic of Singapore Taiwan Africa Members of OPEC 65 International organizations and unallocated.. Memoranda: Industrial countries " .. Members of OPEC « .... Other countries " BALANCE (EXCESS OF EXPORTS + ) Total, all countries Western Europe European Communities Belgium and Luxembourg France Germany, Federal Republic of.. Italy Netherlands United Kingdom Other Western Europe, excluding EC Canada 2 Japan Australia. New Zealand, and South Africa.. Eastern Europe Latin America and Other Western Hemisphere . Brazil Mexico Venezuela Other Other countries in Asia and Africa.. Members of OPEC ''.'".!"!"!"!!"!."! China Hong Kong Korea, Republic of Singapore Taiwan Africa Members of OPEC International organizations and unallocated.. Memoranda: 100 { Industrial countries e . 101 Members of OPEC • ... 102 ! Other countries ■ _L 247,642 52,900 42,342 2,386 5,531 11,902 5,289 2,476 13,042 1,696 10,558 48,523 37,683 5,033 1,066 38,554 4,808 15,556 4,761 13,434 63,860 47,894 14,784 2,284 5,531 5,667 2,193 8,892 15,941 10,840 23 144,139 31,517 71,963 -36,444 6,801 4,563 2,767 1,663 -2,689 -648 4,979 -2,348 723 2.238 -9,320 - 16,989 2,623 2,683 -5,402 -1,362 -3,820 431 -655 - 16,882 -8,077 -2,784 636 -3,081 -381 1,013 -4,886 -9,008 -8,193 42 - 16,885 - 10,866 -8,735 268.900 55,623 45.161 2,502 6,185 13,163 5,695 3,029 12,660 1,927 10,462 55,982 42,844 5,443 1,413 . 42,836 5,132 17,243 5,011 15,450 64,758 52,200 10,933 2,314 6,615 7,475 3,032 11,611 12,472 7,894 1 159,893 25,282 83,724 -67,080 -175 -1,385 2,553 -156 -4,522 -1,748 4,257 -2,088 319 1,210 -11,470 -21,055 1,161 1,563 -17,195 -2,576 -8,149 -2,304 -4,166 - 19,973 -13,561 -716 -86 -4,043 -1,743 683 -7,320 -6,596 -6,161 64 -31,540 - 10,026 -25,578 332.422 72,054 57,774 3,089 7,957 17,426 8,056 4,126 14,418 2,702 14,280 67,630 60,210 5,632 2,217 48,364 7,754 18,076 6,660 15,874 76,315 64,423 11,629 3,114 8,357 9.857 3,959 15,429 11,793 6,801 205,526 26,852 100,044 -112,522 -15,187 -11,394 2,105 -1,902 -8,651 -3,746 3,360 -2,217 -343 -3,793 - 14,593 -36,969 2,217 2,073 - 18,598 -5,008 -6,056 -3,274 -4,260 -31,498 -25,417 -3,210 -97 -5,239 -3,970 -273 - 10,663 -6,267 -5,485 33 -64,535 - 13,081 -34,939 338,863 77,454 62.591 3,269 8,908 19,535 9,355 4,111 14,474 2,939 14,863 71,173 65,653 5,601 1,847 46,110 7,194 19,104 6,521 13,291 71,025 60,776 8,460 3,830 7,936 9,978 4,126 15,480 9,891 5,945 219,881 22,680 96,302 124,439 -21,439 -17,400 1,536 -2,811 - 10,596 -4,798 3,129 -3,387 -474 -4,039 - 17,294 -43,508 1,366 1,411 - 15.322 -3,883 -5,719 -3,458 - 2,262 -29,845 -25,511 -2,256 22 -5,182 -4,251 -683 -11,206 -4,272 -4,388 191 -80,873 -11,271 -32,487 See footnotes on page 44. Foreign Transactions. May 1987 43 Table 3.— U.S. Merchandise Trade— Continued [Millions of dollars] Line 1982 1983 1984 1985 28 29 HO 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 4fi 47 Merchandise trade, by principal end use category, adjusted to balance of payments basis, excluding military: 2 EXPORTS Total (A-9) Agricultural products Nonagricultural products Foods, feeds, and beverages Foods, feeds, and beverages— agricultural Grains Soybeans Other agricultural foods, feeds, and beverages Nonagricultural foods, feeds, and beverages Industrial supplies and materials Agricultural Nonagricultural Energy products Fuels and lubricants Petroleum and products Other nonagricultural Nonmonetary gold Capital goods, except automotive Machinery, except consumer-type Civilian aircraft, complete — all types Parts and engines for civilian aircraft Other transportation equipment Automotive vehicles, parts and engines To Canada To all other areas Consumer goods (nonfood), except automotive All other, including balance of payments adjustments not included in lines C 4-26. IMPORTS Total (A-18) Petroleum and products Nonpetroleum products Foods, feeds, and beverages Industrial supplies and materials Energy products Fuels and lubricants Nonenergy products Nonmonetary gold Capital goods, except automotive Machinery, except consumer-type Civilian aircraft, engines and parts Other transportation equipment Automotive vehicles, parts and engines From Canada Passenger cars, new and used From all other areas Passenger cars, new and used Consumer goods (nonfood) except automotive All other, including balance of payments adjustments not included in lines C 31-46. 211,198 37,230 173,968 31,620 30,454 17,169 6,251 7,034 1,166 63,620 6,357 57,263 13,294 13,289 6,465 43,969 1,999 73,675 61,606 4,883 4,939 2,248 17,393 10,741 6,651 14,723 10,167 61,269 186,374 17,108 111,311 67,960 67,050 43,352 3,403 38,338 34,517 3,439 383 34,083 13,071 5,805 21,013 14,475 39,660 7,142 201,820 37,140 164,681 31,598 30,498 18,222 5,817 6,459 1,100 58,446 6,256 52,190 9,770 9,767 4,903 42,421 1,704 68,887 56,067 5,818 5,206 1,795 18,657 13,895 4,761 14,039 10,194 268.900 54,988 213,912 18,485 109,706 60,704 59,705 49,002 2,411 43,064 39,443 3,083 538 43,501 17,733 7,267 25,768 16,623 46,969 7,175 38,398 181,502 31,625 30,600 18,202 5,299 7,098 1,025 63,362 7,353 56,008 9,704 9,693 4,710 46,304 2,210 74,115 62,532 4,143 5,734 1,706 22,508 17,131 5,377 13,751 14,539 332,422 57,315 275,107 21,303 123,885 63,314 62,246 60,571 3,411 61,061 56,412 3,783 866 56,577 22,781 10,116 33,796 20,601 61,262 8,334 214.424 29,595 184,829 24,043 22,840 12,713 3,751 6.375 1,203 60,056 6,357 53,700 10,153 10,144 4,996 43,546 1,740 75,645 60,754 6,742 6,393 1,755 24,538 18,899 5,640 12,952 17,190 338.863 50,525 288,338 21,317 113,471 56,022 54,992 57,449 3,179 64,022 56,811 5,973 1,238 65,105 24,624 11,168 40,480 24,897 65,158 9,790 See footnotes on page 44 . 44 Foreign Transactions. May 1987 Table 3.— U.S. Merchandise Trade— Continued [Millions >of dollars] Line Merchandise trade, by end-use category, Census basis, ' including military grant shipments: Merchandise exports, Census basis, including military grant shipments. Agricultural products Nonagricultural products Excluding military grant shipments Foods, feeds, and beverages Agricultural Grains and preparations . Wheat.. Soybeans . oyl Other agricultural goods, feeds and beverages.. Nonagricultural (fish, distilled beverages, etc.).. Industrial supplies and materials Agricultural Raw cotton, including linters Tobacco, unmanufactured Other agricultural industrial supplies (hides, tallow, etc.) . Nonagricultural Fuels and lubricants ' Coal and related fuels Petroleum and products Paper and paper base stocks Textile supplies and materials Chemicals, excluding medicinals Other nonmetals (minerals, wood, rubber, tires, etc.) Steel making materials Iron and steel products Other metals, primary and advanced, including advanced steel Precious metals (gold, silver, platinum) Capital goods, except automotive.. Machinery, except consumer-type Electrical and electronic, including parts and attachments. Generators, transformers and accessories Broadcasting and communications equipment Telephonic and other electrical apparatus Nonelectrical, including parts and attachments Construction machinery and nonfarm tractors Textile and other specialized industry machinery Other industrial machinery, n.e.c Agricultural machinery and farm tractors Business and office machines, computers, etc Electronic computers and parts Scientific, professional, and service industry equipment... Civilian aircraft, engines, parts Civilian aircraft, complete, all types Other transportation equipment Automotive vehicles, parts and engines To Canada To all other areas .-. Passenger cars, new and used Trucks, buses, and special vehicles Bodies, engines, parts and accessories, n.e.c. Consumer goods (nonfood), except automotive. Consumer durables, manufactured Consumer nondurable^, manufactured Unmanufactured consumer goods (gem stones) Special category (military-type goods).. Exports, n.e.c, and reexports Domestic (low-value, miscellaneous). Foreign (reexports) 1982 212,275 37,012 175,263 175,182 31,352 30,235 17,087 6,921 6,218 6,930 1,117 61,483 6,357 1,980 1,547 2,830 55,126 13,008 6,080 6,217 4,341 2,800 16,960 8,206 779 2,459 6,573 1,516 72,678 60,781 12,939 2,049 5,967 4,923 47,842 10,306 3,704 15,666 1,795 11,008 9,324 5,364 9,683 4,825 2,214 15,914 9,263 6,651 2,930 2,468 10,517 14,307 5,950 7,971 386 6,540 10,001 4,898 5,103 201,708 36,858 164,850 164,798 31,310 30,274 18,006 6,652 5,936 6,332 1,035 56,730 6,198 1,845 1,465 2,887 50,532 9,829 4,138 4,940 4,278 2,342 16,518 8,181 862 1,832 6,692 2,101 67,602 55,080 13,284 1,667 6,672 4,945 41,796 6,460 3,105 13,235 1,476 12,592 11,082 4,928 10,774 5,721 1,749 17,061 12,300 4,761 4,256 1,983 10,821 13,496 5,330 7,695 471 5,844 9,665 5,039 4,626 1984 38,145 180,599 180,577 31,353 30,397 18,050 6,672 5,420 6,926 957 61,761 7,303 2,488 1,541 3,274 54,458 9,718 4,239 4,735 4,597 2,521 18,834 8,558 1,174 1,769 7,287 2,294 72,484 61,072 14,985 1,685 7,762 5,538 46,087 6,436 3,799 13,210 1,602 15,984 14,347 5,056 9,738 4,098 1,674 20,869 15,492 5,377 4,922 2,443 13,504 13,411 5,057 7,908 446 5,019 13,847 8,012 5,836 1985 212,619 29,469 183,150 183,134 23,898 22,764 12,677 3,863 3,884 6,203 1,134 58,376 6,306 1,612 1,499 3,196 52,070 10,167 4,543 5,019 4,072 2,479 18,044 8,179 1,184 1,537 6,408 1,649 73,680 59,195 13,462 1,520 6,500 5,442 45,733 6,310 3,660 12,910 1,888 15,930 14,460 5,034 12,991 6,693 1,494 22,873 17,234 5,640 6,072 2,745 14,056 12,611 4,498 7,636 477 5,366 15,815 9,571 6,244 Footnotes to U.S. International Transactions Tables General notes for all tables: "Preliminary. * Less than $500,000 ( ± ) n.a. Not available. Table 1: 1. Credits, +: Exports of goods and services; unilateral transfers to United States; capital in- flows (increase in foreign assets (U.S. liabilities) or decrease in U.S. assets); decrease in US. offi- cial reserve assets; increase in foreign official assets in the United States. Debits, - : Imports of goods and services, unilateral transfers to foreigners; capital outflows (decrease in foreign assets (U.S. liabilities) or increase in U.S. assets); increase in U.S. official re- serve assets; decrease in foreign office! assets in the United States. 2. Excludes transfers of goods and services under U.S. military grant programs (see line 14). 3. Excludes exports of goods under U.S. military agency sales contracts identified in Census export documents, excludes imports of goods under direct defense expenditures identified in Census import documents, and reflects various other adjustments (for valuation, coverage, and timing) of Census statistics to balance of payments basis; see table 3. 4. Beginning in 1982, line 7 and line 22 are redefined to include only net receipts and payments for the use or sale of intangible property rights, including patents, industrial processes, trade- marks, copyrights, franchises, designs, know-how, formulas, techniques, and manufacturing rights. Other direct investment services, net, which include fees for management, professional, and technical services, charges for the use of tangible property, film and television tape rentals, 5. For all areas, amounts outstanding March 31, 1985, were as follows in millions of dollars: Line 36, 44.918; line 37. 11,090; line 38, 7,839; line 39, 12,025; line 40, 13,965. 6 Includes sales of foreign obligations to foreigners. 7. Consists of bills, certificates, marketable bonds and notes, and nonmarketable covertible and nonconvertible bonds and notes. 8. Consists of U.S. Treasury and Export-Import Bank obligations, not included elsewhere, and of debt securities of U.S. Government corporations and agencies. 9. Includes, primarily, U.S. Government liabilities associated with military agency sales con- tracts and other transactions arranged with or through foreign official agencies; see table 4. 10. Consists of investments in U.S. corporate stocks and in debt securities of private corpora- tions and State and local governments. 11. Conceptually, the sum of lines 67 and 62 is equal to "net foreign investment" in the nation- al income and product accounts (NIPA's). However, the foreign transactions account in the NIPA's (a) includes adjustments to the international transactions accounts for the treatment of gold, (b) excludes capital gains and losses of foreign affiliates of U.S. parent companies from the NIPA's measure of income receipts from direct investment abroad, and from the corresponding income payments on direct investment in the United States, and (c) includes an adjustment for the different geographical treatment of transactions with U.S. territories and Puerto Rico, and (d) includes an adjustment for services furnished without payment by financial intermediaries, except life insurance carriers. In addition, for NIPA purposes, U.S. Government interest pay- ments to foreigners are excluded from "net exports of goods and services" but incNH ' transfers in "net foreign investment." A reconciliation table of the internationo' Foreign Transactions- May 1987 45 Line 60 99 100 101 102 104 105 106 107 108 109 110 Table 3.— U.S. Merchandise Trade— Continued [Millions of dollars] Merchandise trade, by end-use category. Census basis, ' including military grant shipments — Continued: Merchandise imports. Census basis Foods, feeds, and beverages Coffee, cocoa, and sugar Green coffee Cane sugar Other foods, feeds, and beverages...- Meat products and poultry Fish and shellfish Vegetables, fruits, nuts and preparations . Whiskey and other alcoholic beverages Industrial supplies and materials. Fuels and lubricants 7 Petroleum and products.. Paper and paper base stocks Materials associated with nondurable goods and farm output, n.e.s. Textile supplies and materials Tobacco, unmanufactured Chemicals, excluding medicinal Other (hides, copra, materials for making photos, drugs, dyes) . Building materials, except metals Materials associated with durable goods output, n.e.s Steelmaking materials Iron and steel products Other metals, primary and advanced, including advanced steel . Precious metals (gold, silver, platinum) Nonmetals (oils, gums, resins, minerals, rubber, tires, etc.) Capital goods, except automotive Machinery, except consumer-type Electrical and electronic, and parts and attachments Nonelectrical, and parts and attachments Construction, textile and other specialized industry machinery and nonfarm tractors. Other industrial machinery, n.e.s Agricultural machinery and farm tractors Business and office machines, computer, etc Scientific, professional, and service industry equipment . Transportation equipment, except automotive Civilian aircraft, engines, parts Civilian aircraft, complete, all types Automotive vehicles, parts, and engines From Canada From all other areas.. Passenger cars, new and used Trucks, buses, and special vehicles.. 1982 Bodies, engines, parts and accessories, n.e.s. Consumer goods (nonfood), except automotive Consumer durables, manufactured Electric household appliances, radio, television Consumer nondurables, manufactured Textile products, except rugs Unmanufactured consumer goods (gems, nursery stock) Imports, n.e.s. (low value, U.S. goods returned, military aircraft, movies, exhibits). the NIPA foreign transactions account appears in the "Reconciliation and Other Special Tables" section in this issue of the Survey of Current Business. n, 12 I . n ^! des ." ! . turn "PPPI* "ito the United States, at a depreciated value of $21 million in 1972- IV and $22 million in 1973-11, of aircraft originally reported in 1970-III in line 3 as a long-term lease to Australia. 13. Includes extraordinary U.S. Government transactions with India. See "Special U S Govern- ment Transactions, June 1974 Survey, p. 27. i- 14 I nc ' udes foreign currency denominated notes sold to private residents abroad. See table 9 line B5, footnote 4. Table 3: 1. Exports, Census basis, represent transaction values, f.a.s. U.S. port of exportation, for all years; imports. Census basis, represent transactions values, f.a.s. foreign port of exportation for 1974-81. For all prior years and beginning in 1982, imports reflect Customs values (see Technical Notes, June 1982 Survey). From 1983 forward, both unadjusted and seasonally adjusted data have been prepared by BEA from "actual" and "revised statistical" month data supplied by the Census Bureau (see Technical Notes, December 1985 Survey). The seasonally adjusted data are the summation of seasonally adjusted 4-digit end-use categories (see Technical Notes in the June 1980 Survey). Prior to 1983, annual data are published by the Census Bureau, except that for 1975-1980 published Census data adjusted to include trade between the U.S. Virgin Islands and foreign countries. 2. Adjustments in lines A5 and A13, B12, B46, and B80 reflect the Census Bureau's reconcilia- tion of discrepancies between the merchandise trade statistics published by the United States and the counterpart statistics published in Canada. These adjustments are distributed to the affected end-use categories in section C. 3. Exports of military equipment under U.S. military agency sales contracts with foreign gov- ernments (line A6), and direct imports by the Department of Defense and the Coast Guard (line A14), to the extent such trade is identifiable from Customs declarations. These exports are includ- ed in tables 1, 2, and 10, line 3 (transfers under U.S. military agency sales contracts); imports are included in tables 1, 2, and 10, line 18 (direct defense expenditures). 4. Addition of electrical energy; deduction of exposed motion picture film for rental rather than sale; deduction of exports to the Panama Canal Zone before October 1, 1979; net change in stock of U.S.-owned grains in storage in Canada; for 1975-1982, net timing adjustments for goods re- 243,941 17,118 3,917 2,730 863 13,201 2,125 3,132 2,448 2,513 108,202 66,365 60,835 5,271 11,361 2,269 740 5,711 2,641 3,176 22,029 1,369 7,269 10,073 3,486 3,317 38,153 34,529 10,548 23,982 5,845 7,424 1,278 6,165 3,270 3,624 3,432 1,132 34,304 13,292 21,013 20,280 5,212 8,812 39,658 20,868 5,575 16,164 8,409 2,626 6,505 1983 261.724 18,178 3,982 2,593 1,068 14,196 2,046 3,601 2,567 2,624 106,108 58,348 53,686 5,593 12,953 2,675 591 6,714 2,973 4,588 24,625 1,279 7,058 12,552 4,974 3,735 42,478 39,024 13,487 25,537 3,785 6,776 1,452 9,486 4,037 3,454 3,024 1,004 42,324 16,885 25,439 23,569 5,916 12,838 46,355 23,575 7,007 19,479 10,060 3,300 6,281 330,514 21,345 4,859 3,098 1,291 16,487 2,119 3,694 3,009 2,874 122,582 62,259 57,323 7,341 16,234 3,573 641 8,441 3,579 5,250 31,499 1,679 10,551 14,515 4,889 4,754 60,757 56,561 19,032 37,528 6,166 9,966 1,893 14,028 5,475 4,197 3,799 1,310 56,789 22,993 33,796 30,717 8,200 17,872 61,299 31,249 10,762 26,273 13,847 3,777 7,742 1985 336,228 21,317 4,424 3,079 16,894 2,279 3,891 3,240 2,880 111,900 55,009 50,543 7,179 16,104 3,476 549 8,526 3,554 5,764 27,844 1,510 9,043 12,782 4,611 4,509 63,282 56,948 18,311 38,636 6,780 10,956 1,671 13,142 6,088 6,335 5,972 1,889 65,149 24,624 40,525 36,110 9,430 19,609 65,158 33,118 11,261 28,066 14,870 3,974 9,422 corded in Census data in one period but found to have been shippped in another, and coverage adjustments for special situations in which shipments were omitted from Census data 5. Addition of understatement of inland freight in f.a.s. values of U.S. merchandise imports trom Canada in 1974-1981; deduction of foreign charges for repair of U.S. vessels abroad, which are included in tables 1, 2, and 10, line 21 (other transportation); deduction of imports from Panama Canal Zone before October 1, 1979; for 1975-1982, net timing adjustments for goods re- corded in Census data in one period but found to have been shipped in another; and coverage adjustments for special situations in which shipments were omitted from Census data 6. Annual and unadjusted quarterly data shown in this table correspond to country and area data in table 10 lines 2 and 17. Trade with international organizations includes purchases of non- monetary gold from the IMF, transfers of tin to the International Tin Council (ITC), and sales of satellites to Intelsat. The memoranda are defined as follows: Industrial countries Western Europe, Canada, Japan, and Australia, New Zealand, and South Africa; Members of OPEC. Ven- ezuela, Ecuador, Iraq, Iran, Kuwait, Saudi Arabia, Qatar, United Arab Emirates, Indonesia, Alge- ria, Libya^ Nigeria, Gabon; Other countries: Eastern Europe, Latin American Republics, other Western Hemisphere, and other countries in Asia and Africa, less OPEC. Before 1984, complete geographic area detail was not available for some balance of payments adjustments Therefore the detail shown does not always sum to the values shown for the area aggregates For all years Asia and "Africa" exclude certain Pacific Islands and unidentified countries included in "Other countries in Asia and Africa." 7 Includes nuclear fuel materials and fuels. Table 5: 1. Also included in line 4. 2. Acquisition of equity holdings in existing and newly established companies, capital contribu- tions, capitalization of intercompany debt, and other equity contributions. 3. Sales, liquidations, and other dispositions of equity holdings, total and partial. 4. Petroleum includes, and Manufacturing and "Other" industries exclude, the exploration, de- velopment, and production of crude oil and gas, and the transportation, refining, and marketing of petroleum products, exclusive of petrochemicals. "Other" industries includes wholesale trade; banking; finance (except banking), insurance, and real estate; services; and other industries — ag- riculture, forestry, and fishing; mining; construction; transportation, communication, and public utilities; and retail trade. 5. Also included in line 47. 46 Foreign Transactions. —May 1987 Table 5.— Direct Investment: Income, Capital, Royalties and License Fees, and Other Services [Millions of dollars) (Credits + ; Debits - ) U.S. direct investment abroad: Income (table 1. line 12) Income before capital gains/losses Capital gains/losses (gains +; losses — ) ' Earnings (net of withholding taxes) Distributed earnings Reinvested earnings Interest (net of withholding taxes) U.S. parents' receipts U.S. parents' payments Capital (table 1. line 46) Equity capital Increases in equity capital 2 .. Decreases in equity capital 3 . Reinvested earnings Intercompany debt U.S. parents' receivables U.S. parents' payables Royalties and license fees (table 1, line 7) . U.S. parents' receipts U.S. parents' payments Other private services (table 1, line 9) U.S. parents' receipts U.S. parents' payments By industry of affiliate: * Income (line 1 ) Petroleum Manufacturing Other Income before capital gains/losses (line 2) Petroleum .^. Manufacturing Other Capital: Equity capital (line 11) Petroleum Manufacturing Other Reinvested earnings (line 14. or line 6 with sign reversed) Petroleum Manufacturing Other Intercompany debt (line 15) Petroleum Manufacturing Other Foreign direct investment in the United States: Income (table 1. line 27) Income before capital gains/losses Capital gains/losses (gains — ; losses +) ' Earnings (net of withholding taxes) Distributed earnings Reinvested earnings Interest (net of withholding taxes) U.S. affiliates' payments U.S. affiliates' receipts Capital (table 1, line 59) Equity capital Increases in equity capital 2 .. Decreases in equity capital 3 . Reinvested earnings Intercompany debt U.S. affiliates' payables U.S. affiliates' receivables Royalties and license fees (table 1, line 22). U.S. affiliates' payments U.S. affiliates' receipts Other private services (table 1, line 24).. U.S. affiliates' payments U.S. affiliates' receipts By industry of affiliate: Income (line 44) Petroleum Manufacturing Other Income before capital gains/losses (line 45) Petroleum Manufacturing Other Capital: Equity capital (line 54) Petroleum Manufacturing Other Reinvested earnings (line 57. or line 49 with sign reversed) Petroleum Manufacturing Other Intercompany debt (line 58> Petroleum Manufacturing Other 20,499 26,813 -6,314 24,107 16,967 7,139 -3,608 1,787 -5,395 -373 -4,903 -9,900 4,997 -7,139 11,669 5,916 5,753 3,597 3,718 -121 2,532 4,544 -2,012 20,499 9,441 4,585 6,473 26.813 10,612 8,158 8,043 -4,903 -1.680 -389 -2,833 -7,139 -1,567 -458 -5,114 11,669 3,945 1,623 6,102 -5.598 -5,169 -429 -3,316 -3,227 -89 -2,282 -2,812 530 11,946 8,699 10,200 -1,501 89 3.159 5,222 -2,063 -405 -465 60 471 -1,163 1,634 - 5.598 -1.657 -819 -3,122 -5,169 -1,658 -962 -2,549 8,699 495 2.136 6,067 89 565 -578 102 3,159 -552 1,984 1,727 21,509 30,192 -8,683 25,897 16,771 9,126 -4,388 1,707 -6,095 -3,858 -1,680 -8,882 7,202 -9,126 6,948 -1,036 7,984 3,923 4,018 -95 2,437 4,465 -2,028 21,509 9,729 5,912 5,868 30,192 10,995 10,887 8,309 -1,680 67 -512 -1,235 -9,126 -3,429 -964 -4,732 6,948 3,358 -623 4,214 -9,229 -9,437 209 -6,279 -3,383 -2,896 -2,950 -3,553 603 25,359 15,044 17.378 -2.333 2.896 7,418 8.658 -1,240 -597 -665 478 -1.351 1,829 -9,229 -2,788 -2,444 -3,996 -9.437 -2,694 -2,815 -3,928 15,044 644 3,169 11,231 2.896 1,628 860 408 7,418 4,937 -37 2,517 34,320 29,420 4,899 38,582 17,918 20,664 -4,262 1,618 -5,880 - 18,752 2,280 -6,675 8,956 -20,664 -368 -455 87 4,123 4,235 -112 2,526 4,811 -2,285 34,320 9,204 14,954 10,162 29,420 9,664 11,863 7,893 2,280 2,604 -1.119 795 -20,664 -2,434 -10,514 -7,716 -368 1,464 1,176 -3,008 -8,068 -7,453 -615 -5,040 -3,934 -1,106 -3,028 -3,713 685 17,856 11,902 14,949 -3,046 1,106 4,848 7,336 -2.488 -467 -570 103 694 -1.330 2,023 -8,068 -2,425 -1,116 -4,528 -7,453 -2.548 - 1,537 -3.368 11,902 833 4.705 6,364 1,106 883 -456 679 4,848 1.002 4,373 -527 See footnotes on page 44. AU.S. Governnent Printing Office : 1987 - 181-100/6 25 09 ■nun A00D0130t,SfiSD