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  United States Department of
  COMMERCE NEWS  
  Washington, D.C. 20230          

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  ECONOMICS
  AND
  STATISTICS
  ADMINISTRATION
  
  Bureau of the Census
                              
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  IMPORTANT: For release 8:30 a.m.
  Thursday, August 3, 2000


  CB-00-122      Press Copy 
                              
  For information contact:
  Kathleen J. Puzzilla  (301) 457-3251    
  Diane C. Oberg        (301) 457-2223
  
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              MERCHANDISE TRADE RECONCILIATION
              UNITED STATES - MEXICO - CANADA
                        1996   1997

  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 1996 and 1997.  This study was conducted jointly by the
  relevant agencies in the three countries.
  
  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 as errors.  This 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, the results
  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.  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 among the
  partners' statistics.
  
  The participants in the project were: 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 Commerce and Industrial Development (SECOFI), and the National
  Institute of Statistics, Geography and Informatics (INEGI).  The U.S. Bureau of Census,
  Statistics Canada and INEGI have co-operated in developing the reconciliation estimates
  and in 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 Canada and Mexico are
  sizeable. Mexico's trade statistics exceeded those of the United States by over $10
  billion southbound in 1996 and 1997 and over $6 billion and $8 billion northbound in
  1996 and 1997, respectively.  Discrepancies between Canadian and Mexican statistics
  were also significant.  Mexico's import trade statistics exceeded Canada's exports by
  over $0.8 billion in 1996 and over $1.0 billion in 1997.  The difference between
  Mexican exports and Canadian imports was over $2.3 billion in 1996 and over $2.9
  billion in 1997.
  
       

  I.   United States  -  Mexico trade reconciliation
  
  The 1996 and 1997 official trade statistics of the United States and Mexico showed
  significant differences, with both Mexico's published import and export statistics
  exceeding the corresponding export and import statistics of the United States. 
  
  --------------------------------------------------------
  
                    Southbound Trade      Northbound Trade
            
                        In millions of U.S. dollars
                                          
                        1996    1997         1996     1997
                          
  Mexican statistics  67,526  82,002       80,697   94,385
  U.S. statistics     56,792  71,378       74,297   85,938
  Difference          10,734  10,624        6,400    8,447
  
  --------------------------------------------------------
  
  The reconciliation study concentrated on southbound trade because this trade flow
  showed the greater discrepancy.  Although no specific research was conducted regarding
  northbound trade, it was possible to narrow the discrepancy through the examination of
  geographic coverage, classification, conceptual framework, etc.
  
  In order to help quantify the sources of discrepancy, the following field research was
  carried out: 
       
       a)         The Mexican working group surveyed Mexican maquiladoras to obtain an
       estimate of their imports that were misattributed to the United States.  Because
       the maquiladoras account for most of Mexico's trade with the United States, the
       effect was significant, accounting for close to half of the discrepancy between the
       statistics of the two countries in the study period.
  
       b)         U.S. and Mexican representatives made field visits to the Customs offices in Long
       Beach, San Diego, and Tijuana to investigate the documentation and Customs
       procedures at border crossings in both countries.  The investigation included
       interviews with Customs officials in both countries, U.S. foreign trade zone
       operators and several maquiladoras representatives.
  
  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 $180 and $192 million dollars in 1996 and 1997, respectively.
  
       b)   Partner Country Attribution.  The Mexican Customs import document or
       Pedimento only allows the reporting of one country of origin.  When more than
       one country of origin is involved, as is common on summary declarations filed by
       maquiladoras and certain other manufacturing or assembly plants, the country
       accounting for the largest value is credited with the total value.  Consequently,
       some Mexican imports are misattributed to the United States.  According to
       Mexico's survey, the estimated value of imports misattributed to the United
       States by maquiladoras was $4.8 billion in 1996 and $5.2 billion in 1997 or 45
       and 49 percent of the original differences between the southbound trade statistics
       of the two countries, respectively.
  
       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 those exporting out of foreign trade zones. 
       The reconciliation could not quantify the total effect of nonfiling on U.S. exports
       to Mexico; however, it could account for a large part of the residual differences
       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 study showed that the
       difference between the U.S. estimate of export shipments below $2501 and the
       sum of Mexican import shipments of the same value was just over $1 billion or
       roughly 11 percent of the original annual differences.
  
  

  II.   Mexico - Canada trade reconciliation
  
  The 1996 and 1997 published trade statistics of Mexico and Canada showed even more
  significant difference, with the import statistics of each country exceeding counterpart
  exports.  
  
  --------------------------------------------------------
  
                    Southbound Trade      Northbound Trade
            
                        In millions of U.S. dollars
                                          
                        1996    1997         1996     1997
  
  Mexican statistics   1,744   1,968        2,172    2,156
  Canadian statistics    923     959        4,426    5,069
  Difference             821   1,009      (2,254)  (2,913)
  
  --------------------------------------------------------
  
  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 these shipments 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.  This estimation obtained provides an explanation of the largest
  discrepancy in the period of the study.
  
  The results of the Canada   Mexico trade reconciliation study explained a large portion
  of the original statistical discrepancies.   
  


  III. Final Considerations
  
  The results of the reconciliation study have been useful to the three countries in the
  evaluation of their trade statistics and have allowed the identification of areas for further
  quality improvement.
  
  United States:
  
  The United States is pursuing several courses of action to improve the reporting of its
  export statistics. Special outreach and education programs at various Customs ports
  throughout the United States are being conducted to ensure that U.S. Customs officers,
  exporters, freight forwarders and foreign trade zone directors are aware of export
  reporting requirements and how to report correctly.  In addition, both the Census Bureau
  and the U.S. Customs Service are strongly marketing automated reporting of all export
  shipments, especially along the southern border.  Because of the edits and controls in the
  system, increased electronic filing is expected to significantly reduce the reporting errors
  and nonfiling associated with U.S. export statistics.
  
  Mexico:
  
  In the case of Mexico, the results of the study have been taken into account in the design
  of a new Customs System.  The new system will improve recording of the countries of
  origin and destination  for merchandise trade.  This new system tackles one of the main
  sources of statistical discrepancy between Mexican statistics and those of the United
  States and Canada.
  
  Canada:
  
  It has been previously noted that the main source of the difference between Canadian
  exports and Mexican import trade statistics has been the result of recording indirect
  shipments as trade with the intervening country.  In response to this phenomena,
  Statistics Canada has been working closely with the U.S. Bureau of the Census to explore
  possible solutions to this problem.
  
  This reconciliation project has also been useful in confirming that a certain portion of
  Canadian exports to Mexico are not reported correctly.  In conjunction with the Canada
  Customs and Revenue Agency (CCRA) and the U.S. Census Bureau, steps are being
  undertaken to explore various methods of correcting this problem.  In particular, a new
  method of electronically reporting exports to non-U.S. destinations is being actively
  promoted to the exporting community.
  
  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 studies, with the expectation that more detailed work may be possible.
  
  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 1996-1997 Merchandise Trade Statistics
                  United States - Mexico 
                      Southbound Trade
                              
                    In millions of $U.S.
                   Current Customs Basis   
  
                                   1996        1997
                                                           
Mexican Published Imports        67,526      82,002
Differences attributed to:
   Geographic Coverage              192         180
   Partner Country Attribution  (4,806)     (5,249)
   Low Value Transactions       (1,141)     (1,220)
   Electricity                     (56)        (51)
Residual differences            (4,923)     (4,284)
U.S. Published Exports           56,792      71,378
                                                           
Negative numbers are shown in brackets
Totals may not add due to rounding
The published data used at the commencement of this study may have been subsequently revised
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.  The value shown is Mexico's reported imports from Puerto Rico and the
  Virgin Islands. 
  
  Partner Country Attribution:
  
  The Mexican Pedimento (Customs document) only allows the reporting of one country of
  origin. Summarised Pedimentos 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 for foreign trade statistics in Mexico surveyed maquiladoras to
  determine the proportion of goods attributed to the Unites States that originated in
  countries other than the United States. The survey results  used the estimate the value of
  goods misattributed to the United States.  

  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 tabulates all transactions, regardless of
  value. The value of the difference attributed to low value transactions was calculated as
  the difference between the sum of Mexican transactions valued less than $2,501 and the
  U.S. low-value transactions estimate for Mexico.  However, reporting practices and
  levels of commodity detail collected by the two countries differ, so that, this calculation
  remains is only an estimation of low valued transactions.
  
  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 as shown in Mexico's southbound statistics.
  
  Residual Differences: 
  
  This is the remaining unexplained difference between U.S. and Mexican statistics.  The
  sources of this discrepancy may include, among others: additional differences in the
  attribution of partner country, over or under-estimations of the reconciliation estimates,
  revisions, and non-filing of U.S. export declarations, including those for exports out of
  foreign trade zones.
  
  --------------------------------------------------------

  TABLE 2
  
  Reconciliation of 1996-1997 Merchandise Trade Statistics
                   United States - Mexico
                      Northbound Trade
                              
                    In millions of $U.S.
                   Current Customs Basis
                              
                             
                                   1996       1997
                                                           
  U.S. Published Imports         74,297     85,938
  Differences attributed to:
     Geographic Coverage          (123)      (152)
     Re-exports                     848      1,142
     Indirect Trade               (245)      (302)
     Electricity                     47          2
  Residual differences            5,873      7,757
  Mexican Published Exports      80,697     94,385
                                                           
  Negative numbers are shown in brackets
  Totals may not add due to rounding
  The published data used at the commencement of this study may have been subsequently revised
  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. 
  The values shown are Mexico's reported exports to Puerto Rico and the Virgin Islands. 
  
  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 transactions showing Mexico as the country
  of shipment, but not of origin, was 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 as shown in Mexican northbound statistics.
  
  Residual Differences:
  
  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 attribution of partner country, over or under-estimations of the
  reconciliation estimates, or revisions.

  --------------------------------------------------------


  TABLE 3
  
  Reconciliation of 1996-1997 Merchandise Trade Statistics
                      Canada - Mexico
                      Southbound Trade
                              
                    In millions of $U.S.
                   Current Customs Basis
                              
                              
                                  1996           1997
                                                           
Mexican Published Imports        1,744          1,968
Differences attributed to:
   Re-Exports                       29             79
   Low Value Transactions         (26)           (35)
   Indirect Trade:
      Via United States          (464)          (731)
      Via Other Countries         (56)           (58)
   Partner Country Attribution     205            297
Residual difference              (509)          (561)
Canadian Published Exports         923            959
                                                           
  
  Negative numbers are shown in brackets
  The published data used at the commencement of this study may have been subsequently revised
  Source: Statistics Canada/INEGI
  
  --------------------------------------------------------



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 estimate 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.  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 or other country 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.
  
  Residual Differences:
  
  This is the remaining unexplained difference between Canadian and Mexican statistics. 
  The sources of this discrepancy may include, among others: additional differences in
  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 1996-1997 Merchandise Trade Statistics
                      Canada - Mexico
                      Northbound Trade
                              
                    In millions of $U.S.
                   Current Customs Basis
                              
                             
                                    1996          1997
                                                           
                                                           
Canadian Published Imports         4,426         5,069
Differences attributed to:
   Mexican Re-Exports:
      Canada Origin                   12            19
      United States Origin            10            12
      Other Country Origin            12            19
   Indirect Trade:
      Via United States          (1,723)       (2,211)
      Via Other Countries           (17)           (7)
   Timing                              7             0
Residual differences               (555)         (745)
Mexican Published Exports          2,172         2,156
                                                           
  Negative numbers are shown in brackets
  The published data used at the commencement of this study may have been subsequently revised
  Source: Statistics Canada/INEGI
  
  --------------------------------------------------------

  

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

  Merchandise Trade Reconciliation 
  United States-Mexico-Canada
  1996-1997

  Released on August 3, 2000
  Economics and Statistics Administration / Bureau of the Census
  
  For information contact:
  Kathleen J. Puzzilla  (301) 457-3251    
  Diane C. Oberg        (301) 457-2223

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