Goods for processing: A pragmatic approach

Article type: Research Article

Authors: Hobbs, David

Affiliations: Designing Sources Division, Office for National Statistics, Cardiff Road, Newport, South Wales, NP10 8XG, UK. Tel.: +44 1633 819001; Fax: +44 1633 819190; E-mail: david.hobbs@ons.gov.uk

Abstract: ‘Goods for processing’ (‘toll processing’) has the potential to cause mismeasurement of key economic statistics. This paper outlines practical, economic and taxation aspects of the issue and describes the pragmatic approach adopted by the UK's Office for National Statistics (ONS). This paper concludes that it is clear that ‘goods for processing’/toll processing presents a range of practical and statistical problems that need to be addressed via international agreement on the definition, treatment and measurement of such activity. As part of the deliberations towards the revision of the System of National Accounts 1993, some progress has been made towards deciding upon a common treatment but there remains a degree of disagreement and some unease about the practical implications of the recommended revised approach. The ONS pragmatic approach, described within the paper, is put forward as an example of how one country's NSI has dealt with the issue to date.

Keywords: Balance of payments, contract manufacturing, goods for processing, international trade, outsourcing, processing services, stripped-risk manufacturers, toll processing, transfer pricing

DOI: 10.3233/SJU-2006-232-306

Journal: Statistical Journal of the United Nations Economic Commission for Europe, vol. 23, no. 2-3, pp. 155-165, 2006