United States Department of
COMMERCE
NEWS  Washington, D.C. 20230
ECONOMICS
AND
STATISTICS
ADMINISTRATION
------------
Bureau of the Census





This release contains sensitive economic
data not to be released before 8:30 a.m. Monday, October 1, 2001	
                              CB-01-161    Press Copy    


For information contact:
Bureau of the Census:
Kathy Puzzilla  (301) 457-3251


MERCHANDISE TRADE RECONCILIATION
UNITED STATES - MEXICO - CANADA
1998 - 1999


The Bureau of the Census announced today the results of a study into the differences between 
the official trade statistics released by the United States and Mexico, and Canada and Mexico 
during 1998 and 1999.  This is the second report on the ongoing study being conducted jointly 
by the relevant agencies in the three countries.  The first report, covering 1996 and 1997, 
was released in August of 2000.

The statistics produced by countries on their merchandise trade with the rest of the world 
frequently differ from the statistics published by their trading partners.  These differences 
reflect both legitimate conceptual differences between import and export statistics as well 
possible errors.  The reconciliation study was undertaken to identify and quantify the causes 
of the differences.  It is important to note that the results of this study do not constitute 
revisions to any country's official statistics; however, they do help improve the 
understanding of the trade statistics of the three countries.

The significance of commercial relations among the United States, Mexico, and Canada can be 
gauged in part by the size of their trade flows.  Roughly thirty percent of the total U.S. 
merchandise trade occurs with Canada and Mexico.  North American trade represents about 80 
percent of Mexico's total trade and a similar percent of Canada's total trade.  Therefore, it 
is important to understand the reasons behind the differences between the partners' 
statistics.

The participants in the project are: the U.S. Customs Service and the Foreign Trade Division 
of the U.S. Bureau of the Census; the International Trade Division of Statistics Canada; and 
the Mexican Working Group on Foreign Trade Statistics, which is comprised of the Secretariat 
of Treasury and Public Credit (SHCP), the Bank of Mexico, the Secretariat of the Economy (SE), 
and the National Institute of Statistics, Geography and Informatics (INEGI).  The U.S. Bureau 
of Census, Statistics Canada and INEGI have co-operated, not only in developing the 
reconciliation estimates, but also in jointly preparing this report.


Canada and the United States participate in a 'data exchange', in which the export statistics 
of each country are derived from the counterpart import data; therefore, there are no 
unexplained differences in their trade statistics.  However, differences in the official 
trade statistics of the United States and Mexico, and of Canada and Mexico are sizeable.  
According to the trade statistics of the partner countries, Mexico's import statistics 
exceeded exceeded the United States' exports to Mexico by $14.5 billion in 1998 and $18.4 
billion in 1999.  On the other side of the coin, Mexico's exports to the United 
States exceeded the United States import from Mexico by $8.5 billion in 1998 and $10.7 
billion in 1999.  In the case of trade between Canada and Mexico, Mexico's import from 
Canada exceed Canada's export to Mexico by $1.3 billion in 1998 and $1.9 billion in 1999.  On 
the other side of the coin, Mexico's exports to Canada fell below Canada's reported imports 
from Mexico by $3.6 billion in 1998 and $4.1 billion in 1999.

I. United States - Mexico trade reconciliation

As in 1996 and 1997, Mexico's trade statistics for 1998 and 1999 exceeded those of the United 
States for both directions of trade, with the southbound flow showing the larger discrepancy.  

				Southbound                           Northbound
                         U.S. exports, Mexican imports    U.S. imports, Mexican exports
                                         In  millions of U.S. dollars
			1998		1999			1998		1999
Mexican statistics	93,252		105,267			103,109		120,393
U.S. statistics		78,772		86,909			94,629		109,720
Difference		14,480		18,358			8,480		10,673

The reconciliation study initially focused on southbound trade because it showed the greater 
discrepancy.  

The reconciliation study on southbound trade identified the following main sources of 
discrepancy:

a)	Geographic Coverage.   The United States includes trade with Puerto Rico and the 
U.S. Virgin Islands in its merchandise trade statistics.  In contrast, Mexico treats them 
as separate trading partners.  This coverage difference resulted in a relatively minor 
difference in the trade statistics of the two countries,  accounting for  $157 and $186 
million dollars in 1998 and 1999, respectively.
b)	Partner Country Attribution.  The Mexican import entry form or pedimento only 
allows the reporting of one country of origin.  When more than one country of origin is 
involved, as is common with summary declarations filed by the maquiladoras, the 
country accounting for the largest value is credited with the total value.  Consequently, 
some imports are misattributed to the United States.  Mexico's survey of maquiladoras 
estimated the value of imports misattributed to the United States at $6.0 billion in 1998 
and $6.5 billion in 1999, accounting for 42 and 36 percent of the original differences, 
respectively.

	     Note: This situation changed on May 21, 2001 with the introduction of the new 
entry form or pedimento that allows for the reporting of more than one country of origin.          

c)	Nonfiling of U.S. exports.  U.S. export regulations require the reporting of all export 
transactions valued over $2,500, some companies however, do not submit all the 
required declarations, especially companies exporting out of  foreign trade zones.  The 
reconciliation was not able to quantify the total effect of nonfiling on U.S. exports to 
Mexico; however, it could account for a substantial part of the remaining unreconciled 
difference between the southbound trade statistics of the two countries. 
d)	Low value transactions.  The United States does not include transactions valued below 
$ 2,501 in its export trade statistics instead an estimate of  the total value of these 
transactions by country is included in the statistics.  In contrast, Mexico records all trade 
transactions, regardless of value.   

The U.S.- Mexico reconciliation decreased the discrepancy in southbound trade by almost 49  
percent in 1998 and 42 percent in 1999.  Although no specific analysis of northbound trade was 
conducted, a portion of the discrepancy was explained by geographical coverage, classification 
and methodological criteria in the examination of the information.  Reduction in the northbound 
discrepancy was more modest, roughly 16 percent in 1998 and 17 percent in 1999.

II.  Mexico - Canada trade reconciliation

The 1998 and 1999 published trade statistics of Mexico and Canada also showed a significant 
difference, with the import statistics of each country exceeding counterpart exports. 


				Southbound                       Northbound
                    Canadian exports, Mexican imports   Canadian imports, Mexican exports
                                       In  millions of U.S. dollars
			1998		1999			1998		1999
Mexican statistics	2,292		2,949			1,521		2,391
Canadian statistics	989		1,099			5,175		6,480
Difference		1,303		1,850			(3,654)		(4,089)

Source: Statistics Canada/INEGI
Totals may not add due to rounding
Negative numbers shown in brackets

The reconciliation study identified indirect trade as the main source of discrepancy between 
Canada and Mexico in both directions of trade.  The research has shown that record filers 
frequently treat the shipment as destined for the intermediate country rather than the country 
of final destination.  For example, Canadian goods shipped to Mexico via the United States may 
be recorded as exports to the United States in the Canadian trade statistics, while in Mexican 
statistics these imports are recorded as originating in Canada.  The estimation of this source 
of discrepancy was derived from Mexican import data.  In 1999, this estimation explained 54.4 
percent of the differences in the southbound trade statistics and 87.0 percent of the 
differences in the northbound trade statistics. 


III..	Steps to Improve the Quality of Trade Reporting

United States:

The United States has conducted extensive outreach and education efforts to improve the quality 
and thoroughness of trade reporting, with particular emphasis on trade with Mexico. In 
addition, during 1999 many companies began reporting through the new Automated Export System 
(AES), which eliminates the  logistical problems of collecting paper documents, and includes 
on-line edits to ensure complete and accurate data.  Educational efforts as well as increases 
in AES participation have continued into 2001.

Mexico:

In the case of Mexico, the results of the study have been taken into account in the design of a 
new Mexican Customs System .  The new system will improve recording of the country of origin 
and destination  for merchandise trade.  This new system tackles one of the main sources  of 
statistical discrepancy and remedies one of the main sources  of statistical discrepancy 
between Mexican statistics and those of the United States and Canada.

Canada:

This study reinforces the findings of the previous reconciliation work undertaken for the 1996-
1997 data years.  In both sets of studies, the major contributing factors to the discrepancies 
between the Canadian and Mexican published data are non-filing of export documents and 
differences in the way that indirect trade was reported.

On Canada's part, considerable work has been undertaken to improve the reporting of exports to 
non-U.S. destinations.  These activities involve not only Statistics Canada but also the Canada 
Customs and Revenue Agency (CCRA) and the U.S. Bureau of the Census.  For example, electronic 
filing of export documents is being actively promoted to ease the burden of reporting such 
transactions, CCRA is undertaking various administrative measures to improve document filing 
and Statistics Canada and the USBC are jointly reviewing methodologies to provide better 
estimates of indirect trade.  

Finally, the utility of this study in identifying reporting errors has resulted in the
agreement between all three countries to explore the possibility of undertaking further
reconciliation work, with the expectation that more detailed work may be possible.


IV.      Reconciliation Results

The following sections provide a more detailed presentation of the results of the study,
as well as explanatory notes and a description of the methodology used in the
reconciliation of the foreign trade statistics.

TABLE 1

Reconciliation of 1998-1999 Merchandise Trade Statistics
United States - Mexico 
Southbound Trade

In millions of $U.S.
Current Customs Basis

	                          	1998			1999
Mexican Published Imports		93,252 			105,267
Differences attributed to:
     Geographic Coverage		157			186
     Partner Country Attribution	(6,029)			(6,563)
     Low Value  Transactions		(1,113)			(1,265)
     Electricity			(47)			(29) 
Residual differences			(7,448)			(10,687) 
U.S. Published Exports 			78,772			86,909

Negative numbers are shown in brackets
Totals may not add due to rounding
Source: U.S. Bureau of the Census./INEGI 


UNITED STATES -MEXICO SOUTHBOUND EXPLANATORY NOTES


Geographic Coverage:

The United States includes the foreign trade of Puerto Rico and the U.S. Virgin Islands in its 
merchandise trade statistics.  In contrast, Mexico treats them as separate trading partners. 
For comparison purposes, add Mexico's reported imports from Puerto Rico and the Virgin Islands 
to the Mexican imports from United States.

Partner Country Attribution:

The Mexican pedimento (customs document) only allows the reporting of one country of origin. 
Summarised pedimentos filed by the maquiladoras often combine merchandise with more than one 
country of origin.   In these cases, the total value is attributed to the country accounting 
for the largest value.  Consequently, some imports are misattributed to the United States. 

The working group on foreign trade statistics in Mexico surveyed import firms to determine the 
proportion of goods attributed to the Unites States that were in fact of other countries' 
origin.  These proportions were used to obtain estimates of the annual value of misattributed 
trade and part of the  results were added to Mexico's imports of Canadian goods. 

Low Value Transactions:

The United States does not include transactions valued below  U.S. $2,501 in its export trade 
statistics.  Instead, an estimate of the total value of these transactions by country is 
included in the statistics.  In contrast, Mexico tabulates all transactions, regardless of 
value. The value of the difference attributed to low value transactions was calculated from 
the difference between the sum of Mexican transactions valued less than $2,501 and the U.S. 
low-value transactions total estimate.  This difference likely reflects both U.S. 
underestimation of low value transactions and differences in classification codes and reporting 
practices.

Electricity:

The United States does not include electricity in its U.S. and Mexico trade statistics.  The 
value shown reflects the value of electricity imported from the United States obtained in 
Mexico's southbound statistics.

Other: 

This is the remaining unexplained difference between U.S. and Mexican statistics.  The sources 
of this discrepancy may include, among others, treatment of goods re-exported from U.S. foreign 
trade zones, additional differences in the attribution of partner country, over or under-
estimations of the reconciliation estimates, revisions, and non-filling of U.S. export 
declarations. 

TABLE 2

Reconciliation of 1998-1999 Merchandise Trade Statistics
United States - Mexico
Northbound Trade

In millions of $U.S.
Current Customs Basis

				1998			1999
U.S. Published Imports 		94,629			109,721
Differences attributed to:
     Geographic Coverage 	(193)			(195)
     Re-exports			1,955			2,516
     Indirect Trade		(421)			(509)
     Electricity		3			2 
Residual Difference		7,136			8,858
Mexican Published Exports 	103,109			120,393

Negative numbers are shown in brackets
Totals may not add due to rounding
Source: U.S. Bureau of the Census/INEGI


UNITED STATES - MEXICO NORTHBOUND EXPLANATORY NOTES


Geographic Coverage:

The United States includes the foreign trade of Puerto Rico and the U.S. Virgin Islands in its 
merchandise trade statistics but Mexico treats them as separate trading partners.  They reduced 
Mexico's reported exports to Puerto Rico and the Virgin Islands from U.S. import totals for 
comparison purposes.




Re-Exports:

The U.S. import data are based on the principle of country of origin, whereas Mexico's export 
data include goods of national and foreign origin sold to the United States without any 
significant transformation. The U.S. customs documents show two countries, the country of 
origin and the country from which the goods were directly shipped to the United States.  The 
value of these transactions showing Mexico as the country of shipment, but not of origin, were 
used for the estimate of re-export value.

Indirect Trade:

These are goods of Mexican origin shipped to the United States from other countries.  This 
adjustment is based upon country of origin and country of shipment information reported by the 
U.S. importer. 

Electricity:

Mexico includes the movement of electricity in its trade statistics and the United States does 
not.  The value shown reflects the value of electricity imported from the United States 
obtained from Mexican northbound statistics.

Other:

This amount represents the remaining unexplained difference between U.S. and Mexican 
statistics. The sources of this discrepancy may include, among others: additional differences 
in valuation, attribution of partner country, over or under-estimations of the reconciliation 
estimates, or revisions.

TABLE 3

Reconciliation of 1998-1999 Merchandise Trade Statistics
Canada - Mexico
Southbound Trade

In millions of $U.S.
Current Customs basis

	                       		1998			1999
Mexican Published Imports 		2,292			2,949
Differences attributed to:
     Re-Exports				44			71
     Low Value Transactions		(43)			(46)
     Indirect Trade:
          Via United States		(716)			(940)
          Via Other Countries		(38)			(66)
     Partner Country Attribution	271			189
 Residual difference			(821)			(1,058)
Canadian Published Exports 		989			1,099

Source: Statistics Canada, INEGI
Total may not add due to rounding
Negative numbers are shown in brackets


CANADA-MEXICO SOUTHBOUND EXPLANATORY NOTES

Re-Exports:

Mexico's import data are based on the country of origin principle, in which only goods grown, 
extracted or produced in Canada are considered as merchandise trade with Canada.  However, the 
published Canadian export information includes both goods of Canadian origin and goods of 
foreign origin that have entered Canadian consumption and have been subsequently sold to Mexico 
without any substantial transformation occurring in Canada.  This type of transaction is 
recorded separately in Canadian statistics; consequently, the amount attributed to this 
difference has been obtained from Canadian export data.

Low Value Transactions:

Canadian exports to Mexico are not required to be reported if the total value of the shipment 
is less than $2,000 (Canadian funds).  However, the Mexican import statistics include all 
transactions regardless of value.  This estimate was obtained from Mexico's import data, which 
allows identification of the total value of small transactions.

Indirect Trade:

Frequently, Canadian exporters at the time of shipment are not aware of the final country of 
destination or consumption of goods shipped from Canada.  Research has shown that there is a 
tendency to record the intermediate country(ies) involved in the transportation of goods to the 
final destination as the country of final destination.  For example, in the case of Canadian 
goods moving through the United States en route to Mexico, the goods are frequently not 
recorded as Canadian exports to Mexico because of the perception that the United States is the 
final destination.  Therefore, the shipments continuing to Mexico cause a discrepancy between 
Canadian and Mexican statistics because Mexico records them as imports originating in Canada 
while Canada does not record them as exports to Mexico.

This estimated adjustment was derived from Mexican import data.  Mexico records both the 
country of origin and the country of seller (i.e. the country in which the goods were 
invoiced).  The comparison of these two data sets permitted the derivation of the amounts that, 
in all probability, have been recorded as Canada/other country trade rather than Canada/Mexico 
transactions.

Partner Country Attribution:

As previously noted, during the study period, Mexico's published import data were based on the 
principal country of origin concept.  The Mexican Pedimento (Customs document) did not 
provide for reporting imports from more than one country.  This caused some goods from other 
countries to be included in Mexico's reported imports from the United States.  The Working 
Group for Foreign Trade Statistics of Mexico surveyed import firms to determine the proportion 
of goods attributed to the United States that were in fact of Canadian origin.  These 
proportions were used to obtain estimates of the annual value of misattributed trade and the 
results were added to Mexico's imports of Canadian goods.


Other:

This is the remaining unexplained difference between Canadian and Mexican statistics.  The 
sources of this discrepancy may include, among others: additional differences in valuation, 
attribution of partner country, over or under-estimations of the reconciliation estimates, 
revisions or the non-filing of Canadian export declarations.

TABLE 4

Reconciliation of 1998-1999 Merchandise Trade Statistics
Canada - Mexico
Northbound Trade

In millions of $U.S.
Current Customs Basis

		                       	1998			1999
Canadian Published Imports 		5,175			6,480
Differences attributed to:
     Mexican Re-Exports:
          Canada Origin			15			15
          United States Origin		8			15
          Other Country Origin		54			27
     Indirect Trade:
          Via United States		(2,848)			(3,491)
          Via Other Countries		(5)			(47)
     Timing
Residual differences			(878)			(608)
Mexican Published Exports 		1,521			2,391

Source: Statistics Canada/INEGI
Totals may not add due to rounding
Negative numbers are shown in brackets


CANADA-MEXICO NORTHBOUND EXPLANATORY NOTES


 Re-Exports:

Canadian import data are based on the country of origin principle. Mexican published export 
trade data includes both goods of domestic origin and goods of foreign origin sold to Canada 
without any substantial transformation occurring in Mexico.

Canadian import documentation records two countries, the country of origin and the country 
from which the goods were shipped directly to Canada.  The values for transactions that showed 
Mexico as the country of shipment, but not of origin, were totaled and used as the basis for 
the re-export estimate.

Indirect Trade:

This estimate is based on Canadian import data using the country of origin/shipment 
information.  It reflects the value of the goods of Mexican origin that were shipped directly 
to Canada from a country other than Mexico.  That value is subtracted from the Canadian import 
data for comparison purposes.

Timing:

This estimate represents shipments of crude oil that were recorded in Mexican export statistics 
in one period but recorded in Canadian import data in another period.

Other:

This is the remaining unexplained difference between Canadian and Mexican statistics.  The 
sources of this discrepancy may include, among others: additional differences in valuation, 
the attribution of partner country, over or under-estimations of the reconciliation estimates, 
and any revisions made during the reconciliation study period.