PRESS RELEASE 7 JUNE 1998

EXPORT STATISTICS NEEDS MORE BACKGROUND RESEARCH

In recent months, the Statistics Department of Eesti Pank has concluded an in-depth study of foreign trade data in order to establish possible under/over declaration of exports and imports. The research project was initiated on the basis of numerous signals from businesses using foreign trade statistics. Several exporters had informed the central bank that export figures of their corporation alone had been higher than the consolidated figures of the respective group of goods for the whole Estonia.

In case of imports the investigation showed that the evaluation used so-far in the balance of payments coincides with the evaluations given by the Customs Board and also by the press. In case of exports, however, there is confirmation of significant misinterpretation of data.

The results of the study conducted by the Statistics Department of Eesti Pank have been forwarded to the Statistical Office, Customs Board, Ministry of Finance, Ministry of Economy and Ministry of Foreign Affairs.

In a meeting at Eesti Pank on 5 June, the issue was discussed by the representatives of all the relevant authorities mentioned above. The participants in the meeting unanimously agreed that in the future Eesti Pank has to pay attention to the problem when publishing its foreign trade analyses. The representatives of the Statistical Office agreed to include comments on the issue in their future foreign trade surveys.

The misinterpretation of foreign trade data is largely due to the practice of using of customs warehouses in 1997 and 1998, partly also in the second half of 1996. In 1995 export from customs warehouses (customs procedure 1072) was only EEK 3.6 million and in 1996 EEK 317.1 million, while in 1997 the respective figure reached EEK 1.5 billion and in the first quarter of 1998 nearly EEK 441.7 million.

From the middle of 1996 the exporters have used the following scheme. The goods are exported into a customs warehouse with their real price. The goods are then sold to a non-resident (often the company's own off-shore affiliate) with a price several times lower. On entry to the final destination country the documents of a new owner company are presented with the value of the goods significantly lower. This means lower customs duties and higher competitiveness of the product.

Customs procedure 7200 is applied if the goods are placed into customs warehouses, i.e. goods coming from Estonia for export are placed into customs warehouses. Internationally, this is an exceptional phenomenon. Usually, only goods coming from outside the country's border, i.e. imported goods, are held in customs warehouses. Customs warehouses are not used for exports since this would only rise the price of goods. According to international practice and a decree by the National Customs Board, in case of customs procedure 7200, an import declaration form is used. In case of procedure 7200, the prices of goods should be correct. Procedure 1072, i.e. export of goods previously placed in customs warehouses often shows prices that are significantly lower.

According to the principles adopted by the Estonian Statistical Office, the Estonian export statistics include procedure 1072. The recent study of the Eesti Pank Statistics Department has shown that the quantity of goods moved under procedures 7200 and 1072 coincide by 90-98%, but the prices differ by 3-4 times. The biggest differences occur in foodstuff. It is highly improbable that differences expressed in money would be due to differences in inflows to and outflows from customs warehouses; e.g. dairy products are not kept long in warehouses.