CELEX: 51988PC0176
Language: en
Date: 1988-04-05
Title: Proposal for a COUNCIL DIRECTIVE (EEC) on the harmonization of definitions of Gross National Product at market prices (GNPmp) and improvements to the basic statistics needed to estimate it (submitted by the Commission)

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COM (88) 176
Vol. 1988/0057
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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                           COM(88 ) 176 final
                                           Brussels , 5 April 1988
                               Proposai for a
                         COUNCIL DIRECTIVE ( EEC )
   on the harmonization of definitions of Gross National Product at
    market prices
           prices (GNPmp) >-^and
                             and improvements to the basic statistics
                                x
             /            needed to estimate it
                          needed to estimate it
           / / r>             ^ X; \
           h           o           F
           \ :\ \ v                   _
            v--.:
                     ( submitted by the Commission )
 ---pagebreak---                         EXPLANATORY MEMORANDUM
 Introduction
The   Statistical  Office  of  the  European   Communities   ( SOEC ) collects
national accounts   data from the National   Statistical   Institutes of the
Member States compiled according to a common methodology :        the European
System of Integrated Economic Accounts ( ESA ).
The recent decisions of the European Council concerning the financing of
the Community budget and the internal market as well as the need for
coordination of the policies which stem from this , require that a basis
of appropriate Community legislation be provided for the calculation of
the main ESA aggregates in order to ensure that they are comparable and
reliable . This is important for three reasons :
1 . the creation by the Council decision of . 1988 of an additional own
    resource based on the GNP of Member States ;
2 . the completion of the internal market , which makes it all the more
    important to have a reliable system of Community statistics ;
3 . the coordination of the economic policies of the Member States .
GNP as a basis for calculating Community resources
The concept o f GNP
GNP is a statistical aggregate designed to measure overall economic
activity , taken to mean the sum of income accruing to the residents of
each country .
It covers market and non-market economic transactions by all transactors
in the economy , as defined by ESA, and makes it possible to quantify the
total value of final uses of goods and services , the total value added of
economic activities , and the total of the resulting income .         It is an
indicator of the economic efficiency , and thus it can be used as an
indicator of Member States' capacity to contribute .
GNP is a statistical aggregate which is methodologically comparable for
all Member States of the Community , which have adopted the definitions of
the European System of National Accounts ( ESA ) for compiling the data
submitted to Eurostat .
Eurostat and the Member States are in permanent consultation on the ESA
and its extensions via the working parties which meet several times a
year and through bilateral consultations .
 ---pagebreak---  Furthermore , the definitions of GNP according to the ESA ( applied in the
 Community ) and the SNA ( United Nations System of National Accounts ) are
 i denti ca l .
GNP has been recognized since the 1950s as a comparable basis for
 measuring the economic activity of countries with a market economy .    As
 such , it is also used by the UN , the IMF and the OECD .
 Representativity of GNP
Beyond this widely recognized comparability , the extent to which GNP
represents economic activity depends on the quality and comprehensiveness
of the basic statistical sources . This can be improved through increases
in the resources allocated by each country to its statistical information
system .
 Furthermore , in calculating the ESA aggregates the statisticians use
various procedures for reconciling statistics from a number of different
sources and these procedures vary depending on the basic statistic
available . The comparability of the results of these calculations can
also be improved with extra resources .
 Furthermore , improvements are constantly being made to the way in which
GNP is calculated .     The coverage of the hidden economy , which mainly
consists of market transactions and is thus in theory contained in the
ESA definition of economic activities , is extended with improvements in
statistical sources and their utilization .
Improved measurement of economic activity in the Community
The management of the large market - whether by the Community
institutions ,    national governments or businesses - will require
statistics which are comparable ,         complete ,  reliable and rapidly
avai lable .
The reinforcement by appropriate Community legislation of Community
statistical standards already accepted by Member States and their
adoption in other areas are important steps in this direction .
In addition to the obvious advantages of improved comparability ,      this
will mean that statistics will be produced more rapidly and resources
will be better used . These improvements are linked to the elimination of
work to transpose data made necessary at present by the differences
between Community provisions and the procedures applied by the Member
States .
Eurostat , in consultation with the Conference of Di rectors-General of the
National Statistical Institutes of the Member States , has already started
to move in this direction and will propose a number of Community legal
acts covering the main statistical fields .
 ---pagebreak---  In addition the Treaty as modified by the Single Act , stipulates that
 Member States shall pursue economc policies and shall coordinate them so
 as to promote harmonious development of the Community and reinforce
economic and social cohesion . To make coordination of economic policies
 as efficient as possible in the Community it is vital to have a
statistical system which makes it possible to compile national accounts ,
 both for the recent period and forecasts as rapidly , as reliably as
clearly and as comparable as possible .
The content of the Directive
On the whole , the ESA rules on the methodology for calculating GNP are at
present correctly applied on the basis of informal agreements with the
National Statistical Institutes of the Member States .        Taking account of
GNP in calculating own resources makes it more necessary to have a
Community directive to strengthen conformity with these rules .
This directive incorporates the ESA definitions of GNP and its main
components . It provides for action to improve the coverage of GNP and
hence the comparability of data among Member States .        In particular , it
will be necessary to analyse the statistical sources       used by the Member
States in order to check whether they are adequate for       compiling national
accounts with as broad a coverage of economic activity       as possible .
This work , carried out by Eurostat in close cooperation with the National
Statistical Institutes of the Member States , will lead to the setting up
of a system for verifying the comparability of the way in which the
accounts are calculated .     A follow-up to this verification process will
be organized in future years with a view to assessing the progress of
this comparability following the work carried out by the Member States to
improve the statistical base of national accounts .
Resources
The improvement of the    statistical bases and the methods for assessing
data on GNP and its       components requires the Member States and the
Commission to commit      additional resources .       As regards financial
resources , at Community  level a fund should be created to finance :
-   the extension in the     main sectoral   surveys  ( i.e.    the  industrial
    enquiry , particularly for small businesses , the surveys on production
    and trade in services , family budgets , consumer prices , etc .) of the
    information required for calculating GNP ;
    projects to pinpoint shortcomings and to propose ways of improving
    basic information .
The staff necessary for this work will be found by internal redeployment ,
or through the budgetary procedure ( 4A , 2B , 20 .
These   additional  human   and  financial  resources    and   the  statistical
projects which will be based on them will be included in the statistical
programme now being drawn up , so that they will dovetail with all the
activities planned by the Statistical Office in future years .
 ---pagebreak--- Proposal for a Council Directive ( EEC ) on the harmonization of definitions of
Gross National Product at market prices ( GNPmp ) and improvements to the basic
statistics needed to estimate it
The Council of the European Communities ,
Having regard to the Treaty establishing the European Economic Community ,
Having regard to the Treaty establishing the European Atomic Energy Community ,
Having regard to the Council Decision of . 1988 on the system of the
Communities' own resources C1 ), and in particular Article 8 paragraph 2
thereof ,
Having regard to the proposal from the Commission ,
Having regard to the opinion of the European Parliament ,
Whereas the creation of an additional own resource based on gross national
product at market prices ( GNPmp ) of the Member States makes it necessary to
reinforce the comparability and reliability of this aggregate ;
Whereas the completion of the internal market will require modifications in
 the method of the collection of statistical data .
Whereas these data are an analytical tool essential for the coordination of the
conomi c policies of the Member States ;
Whereas GNPmp data must be comparable and representative of the Member States'
economies ;
Whereas GNPmp can be methodologically comparable only if the standards of the
European System of Integrated Economic Accounts ( ESA) are complied with ;
Whereas the improvement of GNPmp coverage depends on the improvements to basic
statistics and assessment procedures ;
Whereas a system should be set up to verify and check the comparability and
representativi ty of GNP ;
Whereas financial resources will     have to be committed to improving basic
information underlying GNP ,
HAS ADOPTED THIS DIRECTIVE :
 ---pagebreak---                                             - 2 -
                                           TITLE I
                    Definition of Gross National Product at market prices
                                          Article 1
According to the European System of Integrated Economic Accounts ( ESA ), Gross
National Product at market prices ( GNPmp ) is calculated by adding to Gross
Domestic Product at market prices ( GDPmp , ESA code :             N1 ) the compensation of
employees ( RIO) and the property and entrepreneurial income ( R40 ) received from
the rest of the world less the corresponding flows paid to the rest of the
wo r l d .
                                          Art i c le 2
GDPmp ( N1 ) represents the final result of productive activity by resident
production units . It may be looked at from three points of view :
1.         The expenditure side
           GDPmp ( N1 ) is calculated as the sum of final consumption ( P30 ) on the
           economic territory by households and private non-profit institutions and
           general government , gross fixed capital formation ( P41 ), change in stocks
           ( P42 ), and the difference between exports ( P50) and imports ( P60 ).
2.         The income side
           GDPmp ( N1 ) is calculated as the sum of compensation of employees ( R10 ),
           gross operating surplus of the economy ( N2 ),            and taxes linked to
           production and imports ( R20 ) less subsidies ( R30 ) .
3.         The output side
           GDPmp ( N1 ) is calculated as the difference between output of goods and
           services ( P10) and intermediate consumption ( P20 ) plus VAT on products
           ( R21 ) and net taxes linked to imports ( other than VAT ) ( R29-R39 ) .
The definitions and codes of the above operations are taken from the ESA , which
serves as a reference basis for this Directive .
 ---pagebreak---                                          TITLE II
                          Provisions on the compilation of GNPmp
                                        Article 3
Member States shall compile data on GNPmp and its components according to the
ESA definitions referred to in Articles 1 and 2 .
                                        Article 4
Member States , in cooperation with the SOEC , shall provide , at the latest
within twelve months of the entry into force of this Directive , an inventory of
the methods and statistical bases used to calculate GNPmp and its components .
                                        Article 5
Member States shall inform the Commission of any significant changes to the
inventory referred to in Article 4 when they communicate the data provided for
i n Art i c le 6 be low .
                                        TITLE III
          Provisions on the communication by Member States of data on GNPmp
                                        Article 6
Before 1 October of each year ,           Member States shall communicate to the
Commission the previous year 's figures for GNPmp and its components as listed
in Articles 1 and 2 and also revised figures for earlier years .
                                         TITLE    IV
                Provisions concerning checks on the calculation of GNPmp
                                        Art i c le 7
1)     An Advisory Committee on GNP shall be set up , hereinafter referred
        to as " the Committee ".
2)     The Committee shall be composed of representatives of the Statistical
       Offices of the Member States and of the Commission ( SOEC ).
       A representative of the Commission shall chair the Committee .
       The Commission shall provide secretarial services for the Committee 's
       work .
3)      The Committee shall draw up its rules of procedure .
 ---pagebreak---                                          - 4 -
                                       Artide 8
The Committee shall examine questions raised by its Chairman , either on his
own initiative or at the request of the representative of a Member State ,
relating to the implementation of this Directive , in particular with - regard
to :
( a ) compliance each year with the definitions of GNPmp laid down in Articles 1
      and 2 ;
( b ) the examination each year of the information collected under the terms of
      Articles 4 and 5 concerning the statistical sources and the procedures for
      calculating GNPmp and its components .
It shall assess any adjustments made by Member States to the sources and
procedures in order to increase the coverage of economic activities in GNPmp .
It shall , if necessary , submit to the Commission suggestions for improvements .
                                        TITLE V
                      Financial provisions and human resources
                                       Article 9
Funds are to be made available in order to :
- enable     the Commission  to  contribute   towards   the  cost of   the work which
    Member States will have to undertake on improving the statistical bases of
    GNPmp ;
- fund the auditing and checking provided for in Article 8 .
                                        Title VI
                                   Final provisions
                                      Article 10
The Member States shall bring into force the measures necessary to comply with
this Directive within twelve months of its notification at the latest .
                                      Article 11
This Directive is addressed to the Member States .
Done at Brussels                                      For the Counci l
                                                      The President
                                                                                      8