Vol. 475 No. 7
3 Mr. B. Ahern asked the Taoiseach if he has satisfied himself, after a few years' experience, that the new standardised method of collecting trade statistics is achieving the same degree of accuracy and timeliness as the old method up to 1993. [5811/97]
4 Mr. Molloy asked the Taoiseach the steps, if any, being taken to ensure compilation of accurate and reliable trade statistics in view of the removal of cross-Border customs requirements; and if he will make a statement on the matter. [6024/97]
I propose to take Questions Nos. 3 and 4 together.
When the Single Market was completed in January 1993, customs declarations were no longer required for the movement of goods within the EU. Since these declarations were the source of the intra-EU trade statistics, a new system was needed to collect the data. This new survey system called Intrastat was introduced in all EU countries in January 1993. It involves the monthly collection of statistical returns from about 6,900 of the largest traders.
Before 1993 trade statistics were more timely than most other economic statistics because traders had to complete customs documentation at the time of import-export in order to ensure the speedy movement of goods. As a result it was possible to produce detailed monthly statistics with a delay of no more than two months. The Intrastat data collection system has lost this advantage, since it is based on summary returns submitted after the reference month and is also subject to the non-response and timeliness difficulties that are common to all direct statistical inquiries.
As in all other EU states there were considerable problems in introducing the new system. The average timelag for 1993, the first year of the new system, was more than seven months. Much progress has, however, been made in improving the timeliness. The current timelag is three and a half months for the global figures — total imports and total exports — and four and a half months for the detailed figures. Further improvements are expected over the coming year, although it is unlikely that the former performance will be matched unless traders submit their monthly returns more quickly. Statistics on our trade with non-EU countries, which are still based on custom documentation, are published two months after the end of the reference period.
As regards the quality of the trade data, the CSO is happy that the overall quality is good. In 1994 after one full year's operation of the new system, the CSO conducted a comprehensive analysis of the quality of the results. This showed that the quality at the overall level was not affected to any significant extent by the introduction of Intrastat.
The quality of the detailed statistics was, however, affected because of the need to estimate figures for the many small traders who are below the survey threshold, and for the larger traders who did not respond to the survey. Every effort is being made to minimise the adverse impact on quality of these factors. The Revenue Commissioners, who collect the data, have adopted a range of measures to improve response while the CSO has improved its methodology of estimating for missing data.
Despite the difficulties I mentioned, I am satisfied that the new system provides reliable and comprehensive statistics on our international trade which, with the improving timeliness, meets the needs of most users.
This is an important question. Whatever about the arguments in the European Union about Intrastat figures and the changes made, they affect this country greatly. On the face of it, since the method of collecting figures was changed in 1993, we have had enormous trade surpluses, even though the unemployment figures have remained the same. We have had trade surpluses probably since the late 1980s which up until 1993 we were able to track, quantify and qualify. Is the Minister of State satisfied that the figures are accurate and can he give the House an estimate as to the extent of transfer pricing? This issue is being referred to more and more in international articles which I am sure the Minister of State has seen and from which it is clear that many people outside the country just do not believe some of the figures.
This raises the issue of the black hole and how we have enormous trade surpluses running into billions of pounds when the unemployment figures have remained the same since 1993 and when we have not been able to quantify the figures as well as we were able to do up to that date. What is the Minister of State's view on the matter? From experience, the CSO had great difficulty in standing over its figures when it used the old monthly records. It is a known fact that it regularly lowered the rate of national growth. Can the Minister of State reassure us on that point and give the House an estimate as to the extent of transfer pricing within the economy?
On the accuracy of the figures, they only relate to trade with EU member states. On trade with non-EU member states, the old system applies with precision accuracy. About 95 per cent of companies which trade with EU member states are covered by Intrastat which encompasses companies with imports worth more than £100,000 and exports worth more than £500,000. There is a mechanism in place of which VAT and other returns to the Revenue Commissioners from part to estimate the trade levels of smaller companies. These levels have to be estimated to compile comprehensive data.
To ensure data are as accurate as possible the CSO has introduced a number of measures to tighten the procedures. Larger traders are being pursued vigorously for their returns. There is also a prosecution system in place. Even though one does not like to have recourse to prosecutions, traders have been prosecuted for non-compliance. I hope this sends out a signal that they should submit returns by specific dates. Traders who submit paper returns are being persuaded to submit them electronically. Those traders who experience difficulty in completing the Intrastat return can contact the permanent Revenue help desk.
On whether there is an exaggeration of the trade figures, there is no basis for scepticism and cynicism on the part of Deputy Ahern and other commentators outside the House. All the information available — there has been a comprehensive analysis — shows conclusively that the introduction of Intrastat did not have an adverse impact on the accuracy of the export figures and had only marginal impact on the accuracy of the import figures. An adjustment of 1.7 per cent was made to ensure there was no distortion.
The issue of transfer pricing has been raised time and again in the House. All the indications are that it is of minimal proportions and does not distort our accounts in any way. As the Deputy is well aware, the change from GDP to GNP ensures there is a safety value whereby profits repatriated by foreign interprises are automatically factored out.
I am glad the Minister of State has given a detailed response in which he indicated a comprehensive analysis has been carried out. It should be easy for him, therefore, to give the House an estimate as to the extent of transfer pricing.
That is a separate question. In response to previous questions from Deputy Harney and Deputy Ahern I supplied a table indicating our assessment of the influence of transfer pricing. I will communicate with the Deputy but all the indications are that it is of minimal proportions.
Is the CSO in a position under the new system to provide a quarterly figure for cross-Border trade?
There is a problem in determining the level of cross-Border trade. The CSO is examining the issue. I will convey the Deputy's recommendations to it.
