RESTRICTEDWORLD TRADE
ORGANIZATIONWT/WGTI/W/24
26 February 1998
(98-0783)
Working Group on the Relationship
between Trade and Investment
AVAILABILITY OF STATISTICS ON FOREIGN DIRECT INVESTMENT AND
ON THE ACTIVITIES OF FOREIGN AFFILIATES
Note by the Secretariat
I. INTRODUCTI ON ................................................................................................... 1
II. CURRENTLY AVAILAB LE STATISTI CS .......................................................... 3
II.1 Foreign direct  investment .............................................................. 3
II.2 Activities of fore ign affili ates ........................................................ 5
III. ONGOING WORK AT THE INTERNATIONAL LEVEL FOR THE IMPROVEMENT
OF STATISTICS .................................................................................................... 6
III.1 Foreign direct  investment .............................................................. 6
III.2 Foreign affi liates tr ade ................................................................... 7
IV. CONCLUDING REMARKS .................................................................................. 10
_______________
I. INTRODUCTION
1. At its meeting of 8 December 1997, the Working Group on the Relationship between Trade
and Investment considered a Secretariat note examining various aspects of the interrelationship
between trade and foreign direct investment (WT/WGTI/W/7 and Corr.1).  One of the issues raised
for further consideration in the Working Group was the inadequacy of certain statistical information.
Specifically, attention was drawn to the lack of statistical information on sales, exports and imports of
foreign affiliates and the lack of disaggregated da ta on foreign direct investment flows to developing
countries.1  Pursuant to the request by the Working Group, the Secretariat prepared this note which
gives an overview of the available statistical data, discusses some of the related methodologicalissues, and describes ongoing work in various international fora.
2. Statisticians usually distinguish between statistics on foreign direct investment (FDI) and
those on the activities of foreign affiliates (FAT).
2   Foreign direct investment is a capital flow that is a
key element in the capital and financial account of the balance of payments (BOP).  Related to it is the
                                                     
1See WT/WGTI/M/3, paragraph 17.
2The name FAT is derived from foreign affiliates trade;  despite its name, it also covers non-trade
variables such as employment.WT/WGTI/W/24
Page 2
income on foreign direct investment recorded in the current account and the international investment
position, i.e. FDI stocks.  FAT statistics, on the ot her hand, are related to the activities of foreign
companies and cover a wide variety of different indicators on the domestic and foreign operations of
multinational companies.  Enterprises covered by FAT statistics are usually a subset of foreign direct
investment enterprises (see paragraph 34).
3. This note does not cover non-equity forms of investment such as licensing, franchising, or
subcontracting as these are not always clearly identifiable in statistical terms.  One would probably
find a reflection of such arrangements in royalty payments and business services that appear in the
current account of the BOP.  However, these paymen ts do not allow measurement of the actual extent
of these non-equity forms of investment.  The foll owing discussion is therefore limited to equity-
based FDI.
4. The conceptual basis for compiling FDI statistics has been defined in the 5th edition of the
Balance of Payments Manual (IMF 1993) and in more detail in the 3rd edition of the OECDBenchmark Definition of Foreign Direct Investme nt (OECD 1996).  According to these concepts,
foreign direct investment constitutes a capital flow from a ‘direct investor’ resident entity in one
country to a ‘direct investment enterprise’ resident in another country reflecting the objective of
obtaining a lasting interest of the direct investor in the direct investment enterprise.
3  This implies a
long-term relationship and a significant degree of influence on the management of the enterprise.  Asa cut-off rule, foreign ownership of 10 per cent or mo re of the ordinary shares or voting power has
been defined in the above-mentioned guidelines.  It needs to be distinguished from other financial
flows such as portfolio investments.  Although these concepts have been internationally accepted for
many years, their application still varies across countries mainly because the implementation of new
or revised guidelines sometimes requires signif icant institutional changes by national compiling
agencies.
4  It should be noted that the internationally agreed concepts cover only total FDI stocks,
flows and income (with a breakdow n in equity, re-invested earnings and other capital for flows and
income).  Statistics on FDI are collected in the context of the compilation of balance-of-payments
statistics, usually by the central banks of the reporting country.  In some countries, other institutions
with regulatory and/or supervisory functions may be involved in the monitoring of inward and
outward FDI and may also compile relevant statistical information.
5. In contrast to FDI statistics, there exist up to now no internationally agreed guidelines for
collecting FAT statistics.  Statistics on business structure and activity are usually collected via
enterprise surveys without any distinction regardin g the ownership of the establishments concerned.
In recent years, however, interest in compiling such  statistics has increased considerably due to the
introduction of ‘commercial presence’ as a possible mode of supplying services in the GATS and in
the context of analysing globalization (see paragraphs 34-37).  A comprehensive set of FAT statistics
would include data on employment, sales, value adde d, profits, investments, R&D expenditure, export
and imports, possibly with a geographical and product  breakdown.  It would also include information
on particular relationships with parent companies or with other affiliates as concerns financial, trade
and employment links.  It would cover all directly and indirectly owned subsidiaries, associates and
branches.  The activities of foreign affiliates in the domestic economy are referred to as inward FATand those of domestic enterprises abroad as outward FAT.
                                                     
3It involves the initial capital transactions between the two entities and all the subsequent capital
transactions between them and among affiliated enterprises.
4The adoption of a new concept usually marks the begi nning of implementation by countries, a process
that can take many years and may never be fully achieved by all countries.  The success of implementation alsodepends very much on the influence and authority of th e data collection agency, e.g., at the European level
statistical guidelines issued by EUROSTAT, the statisti cal agency of the European Union (EU), are binding for
its member countries whereas UN guidelines are only recommendations.WT/WGTI/W/24
Page 3
II. CURRENTLY AVAILABLE STATISTICS
II.1 Foreign direct investment
6. The most widely used source for statistics on FDI is the IMF, especially for the developing
countries.  The IMF requests regularly from all its member countries data on total FDI inflows and
outflows, stocks (International Investment Position) and income as part of its BOP statistics.  The
flows are broken down into equity, reinvested earnings5 and inter-company debt transactions.
Because not all countries can comply with the IMF st andards in providing all the detail, there are still
many gaps in reported FDI data.  Furthermore, the IMF does not request data on flows or stocks
disaggregated by activity of direct investor or direct investing enterprise nor does it collect any
bilateral data (i.e. by origin of inflows or destination of outflows).  The IMF has currently no intention
to extend its data- collecting activities to cover sectoral or bilateral data.  The IMF BOP statistics are
published annually in its BOP Yearbook (IMF 1997) and disseminated electronically on a monthly
basis to major data users.6
7. To get an overview of FDI flows to and from de veloping countries, it is also important to look
at data collected in the developed countries because their inflows and outflows to developing
countries can be used as ‘mirror’ statistics.7  The OECD and EUROSTAT collect data on FDI stocks
and flows through a joint questionnaire with a sectoral and bilateral breakdown.  The sectoral
breakdown is linked to the International Standard Industry Classification (ISIC) and contains about40 sectors, about half of which concern services.  For total FDI, a bilateral breakdown is available
separately only for major countries while others are included in regions and sub-regions.  A further
breakdown cross-classifies sectoral data with limited bilateral detail (the United States, Japan, the
European Union, and the rest of the world).  One has to keep in mind that, at this level of detail, i.e.
direction and activity sector of flows, national statistical agencies often cannot publish the full detailbecause of confidentiality constraints.
8. OECD data on FDI stocks and flows, broken  down by industry and country of origin and
destination, are published on an annual basis (OECD 1997b).  Not all of the 29 OECD member
countries report data in the full detail of the questionnaire.  The OECD does not adjust national data or
estimate missing values.  It is planned to extend this data collection in 1998 to cover also the countriesof the Commonwealth of Independent States (CIS ) through the "OECD Netw ork of Experts on FDI
Statistics".  This would be based on the same questionnaire used for compiling statistics from OECD
countries.
9. The Development Assistance Committee ( DAC) of the OECD publishes data on FDI to
developing countries and countries in transition (OECD-DAC 1997).  These data received from DACmember countries reporting their inflows from and outflows to those countries are only shown as net
                                                     
5Reinvested earnings are conceptually the most ch allenging indicator because unlike capital flows or
distribution of dividends there is no accompanying foreign exchange transaction that would flow through the
banking system.  In fact, in the overall balance of the BOP a financial flow of reinvested FDI is offset by a
counterpart item under FDI income in the current account.
6While the Yearbook contains only annual data, the magnetic tape includes also quarterly data.
7One should, however, be aware that these ‘mirror’ statistics often give quite different figures even
when looking at flows between OECD countries.  This is mainly due to differences in concepts and compilationmethods being used.WT/WGTI/W/24
Page 4
figures.8  They do not include flows originating in non-DAC countries or flows channelled via such
countries.
10. EUROSTAT data are also published annually including a breakdown into sectors and partner
country/region.  The flows are further broken down in to equity, reinvested earnings and other capital
(EUROSTAT 1997).  Since there is lack of coherence in some of the statistics coming from national
sources, EUROSTAT harmonizes national data and es timates missing values to calculate figures for
the EU as a whole.  It is planned to publish al so a geographical breakdown of FDI income for those
countries that have such data.9  The European Monetary Institute (EMI) does share data collection
activities with EUROSTAT, whereby the EMI concentrates on short-term global FDI figures for the
European Monetary Union (EMU) as a whole.
11. UNCTAD bases most of its empirical work concerning FDI on data supplied mainly by the
IMF and the OECD and, in addition, makes significant use of national sources.  More detailed and up-
to-date information is taken from national sources (publications and direct contacts) and other officialand unofficial material.  Instead of questionnaires, UNCTAD sends out requests stating its
requirements and asking government agencies to supply whatever information is available that would
be of relevance.  This usually yields more information than standard questionnaires but data are not
harmonized across countries.  It should be recognized that such harmonization is often a very difficult
if not impossible task that is best undertaken at the national level according to international conceptsand definitions.  UNCTAD publishes its data in  the World Investment Report (UNCTAD 1997) and
in its series of regional World Invest ment Directories ( UN 1992 - UN 1994, UNCTAD 1996a,
UNCTAD 1996b).
12. The World Bank publishes data on net FDI in its annual World Debt Tables (World
Bank 1997).  Most of these data are taken from  the IMF BOP statistics and from the OECD DAC
publication.
13. The success of all these data collection activities at the international and regional level
depends finally on the quality of the national data compilation methods.  The amount of detailed data
that can be collected at the national level depends very much on the legislative and institutional set-up
of each country.  For example, countries that must use banking statistics rather than surveys addressedto direct investors or their affiliates have more problems getting detailed FDI.  In other cases, only
data on FDI approvals are available.
14. A comprehensive overview of FDI statistics and methodologies will soon be available as a
result of the joint IMF/OECD survey on the ‘Imple mentation of Methodological Standards for Direct
Investment’.
10  Some preliminary results referring to th e geographical and industry breakdown of FDI
are presented in Table 1.  They show that some ge ographical or sectoral breakdown of FDI inflows is
available for more than half of all respondents.  A breakdown by geographical regions seems to be
more easily available than one by sectors and FDI flows are better covered than income or stocks.
The difficulty remains, however, that these data are often not standardized across countries and that at
the international level no systematic and regular data collection of detailed FDI statistics takes place
for countries outside the OECD.
                                                     
8Net FDI is defined as FDI in the reporting country minus FDI abroad.
9Data for some countries have already been collected and a publication is planned for 1999.  The
OECD also intends to publish income data as they become available.
10The results of the survey will be summarized in a joint report that will be presented at the OECD
Group of Financial Statisticians (see paragraph 24) in April 1998 and at the IMF Committee on Balance of
Payments Statistics in October 1998 (see paragraph 23).WT/WGTI/W/24
Page 5
Table 1
No. of countries FDI income FDI income FDI flows  FDI flows FDI stocks FDI stocks
Region that answered Inward Outward Inward Outward Inward Outward
question
Countries collecting data with a geographical breakdown
North America and
Western Europe 21 14 14 15 14 12 12Central and Eastern Europe,
CIS and Baltic States 12 4 4 9 6 7 6
Latin America 15 6 4 7 3 5 3A f r i c a 1 8 7 5 88 33
M i d d l e  E a s t 3 0 00 00 0
Asia 17 7 8 9 8 10 10W o r l d 8 6 3 8 3 54 8 3 93 7 3 4
Countries collecting data with an industry breakdown
North America and
Western Europe 20 10 10 14 13 13 13
Central and Eastern Europe,
CIS and Baltic States 12 4 3 7 5 6 5Latin America 15 6 1 9 3 5 1
A f r i c a 1 9 4 2 85 21
M i d d l e  E a s t 3 0 00 00 0A s i a 1 7 6 6 86 86
W o r l d 8 6 3 0 2 24 6 3 23 4 2 6
Source: Preliminary survey data provided by the IMF
15. A survey conducted by the OECD in 1997 among its member countries revealed that
14 countries had also cross-classified data broken down by industrial sector and by country of origin
and location for both inward and outward flows.11  Efforts are under way to collect available cross-
classified FDI data from OECD countri es for an ongoing research project.
II.2 Activities of foreign affiliates
16. In the past much attention had been focused ex clusively on FDI flows.  However, statistics on
FDI flows capture only very partially the behaviou r of multinational companies and their impact on
trade and economic development.  UNCTAD estimates that FDI flows measure only one fourth of
total investment of foreign affiliates.12   Because of the lack of an international framework for
collecting FAT statistics very few countries have so far done any systematic data collection.
17. The Bureau of Economic Analysis (BEA) of the US Department of Commerce maintains the
most comprehensive set of FAT statistics.13   Some other countries have collected more limited sets of
                                                     
11See Summary of country replies to the Secretariat's mini-survey on the data availability of foreign
direct investment, paper presented at the Session on Globalisation of the Statistical Working Party of theIndustrial Committee of the OECD, Paris, 23-24 October 1997.
12See UNCTAD 1997, page xvi.
13See Mataloni 1995 and WT/WGTI/W/14.WT/WGTI/W/24
Page 6
statistics.  For countries outside the OECD, it is very difficult to get a comprehensive picture because
there is no agency that currently collects such data on a systematic basis.
18. The OECD has collected data on FAT for its member countries covering the manufacturing
sector (OECD 1997a).  In a joint effort with EU ROSTAT, the data collection has now been extended
to cover also the services sectors.  In addition, EUROSTAT has recently started a pilot study to
compile inward FAT statistics for a range of detailed service sectors.  The work currently under wayin the OECD and EUROSTAT will significantly increase the availability of FAT statistics for their
member countries in the near future.
19. UNCTAD has collected and published in its World Investment Directories (UN 1992 -
 UN 1994, UNCTAD 1996a, UNCTAD 1996b) data on activities of foreign affiliates, both inward
and outward.  The data have been, however, sketchy and are often not comparable across countries.
For the World Investment Report, estimates are sometimes used to fill gaps.
14  UNCTAD intends to
increase the coverage of FAT statistics in the second round of publication of its directories and toinclude more variables, such as employment, sales, value added, profits, exports, imports, R&D and
royalty payments.  Special efforts are being undertaken to extract as much information as possible
from national data sources.  It remains to be seen how many developing countries will be able to
supply such detailed FAT data.  In addition to aggregated national data on foreign affiliates,
UNCTAD also collects data on major multinational enterprises by sector of activity, home, hostcountry and sales.
20. Up-to-date and comprehensive information on multinational enterprises has a certain market
value.  For that reason a couple of private compan ies have undertaken to screen systematically the
activity of major multinational enterprises and their various financial interlinkages.  The best known
of these companies is Dun and Bradstreet.
15  In some cases, also national statistical offices make use
of such commercial sources as a cost-effective way of getting certain information on multinational
enterprises.
21. In the field of FAT statistics, methodological concepts are still being elaborated and refined
(see section III.2) and many countries are still struggling to find the right approach to tackle this new
statistical domain.  Data coverage is still very poor and for countries outside the OECD it is difficultto get an overview of the availability of FAT statistics since at the global level there is currently no
institution that undertakes a systematic collection of such statistics.  The WTO does not undertake any
primary data collection but bases its statistical work on data received from other international
organizations and sometimes also from national sources.
III. ONGOING WORK AT THE INTERNATIONAL LEVEL FOR THE IMPROVEMENT OF
STATISTICS
III.1 Foreign direct investment
22. As a result of an international effort coordinated by IMF and OECD towards the improvement
and comparability of BOP and FDI statistics, international guidelines on FDI statistics have recently
been substantially revised and improved. These guidelines are now embodied in the 5th edition of the
Balance of Payments Manual (IMF 1993) and in more detail in the 3rd edition of the OECD
                                                     
14Thus, in order to calculate world sales of foreign affiliates, it has been assumed that relationship
between foreign affiliates sales and FDI stocks observed for developed countries with detailed data can beapplied to the rest of the world (UNCTAD 1997, page 17).
15See web site http://www.dunandbrad.co.uk.WT/WGTI/W/24
Page 7
Benchmark Definition of Foreign Direct Investme nt (OECD 1996).  Both the IMF and OECD monitor
the implementation of these standards in their respective member countries.
23. At the IMF, the Committee on Balance of Payments Statistics was established in 1992 to
advise the Fund on methodological and compilation issues in the context of balance of payments and
FDI statistics, and to foster coordination of data collection among countries.  Significant discrepancies
in bilateral FDI data have raised concerns about the quality of such data.  The main question iswhether methodological guidelines have been applied in a consistent manner in the compilation of
such statistics.  A joint IMF/OECD survey on FDI methodology, meant to clarify the situation, had a
very positive response from national compilers and will help to better understand country practices.
16
The findings of the survey will be integrated in a methodological database that will be updatedregularly.
24. At the OECD, the Group of Financial Statistici ans deals with issues related to FDI.  This
Group has been involved in the preparation of the above-mentioned FDI survey.
25. In the European Union, FDI methodological issues are addressed by the European Monetary
Institute, while statistical collection issues are tackled by the EUROSTAT's BOP Working Party.
26. FDI data collection activities may also result from regional cooperation agreements.  One
example is APEC, which established a Workin g Group on Trade and Investment Data Review.
17  The
objective of this Working Group is to improve the comparability of statistics for merchandise trade,trade in services, and international investment  among APEC member economies with a view to
allowing a clearer understanding of the process of economic progress within the region.  The Working
Group has developed a database on merchandise, trade in services and international investment.  So
far, only merchandise trade data are maintained in the database.
III.2 Foreign affiliates trade
27. As was noted in Section II.2, a number of countries have already included FAT statistics in
their regular statistical collection programmes.  However, it is only as a result of the services
negotiations during the Uruguay Round that international coverage and comparability across countries
have become priority issues, and that work on FAT statistical concepts and definitions at the
international level has really started.
28. Article I of the GATS defines trade in services  as supplied through four modes.  These modes
of supply are generally referred to as cross-border supply , consumption abroad , commercial presence
and movement of natural persons .  Country schedules of specific commitments are also defined
according to these modes of supply.  However, there are virtually no relevant statistics according to
these modes that would allow the monitoring of the GATS or would facilitate future negotiations.18
29. To remedy the situation, the GATT/WTO statisticians initiated a long-term strategy based on
two major components:  (i) the identification of GATS statistical requirements;  and (ii) the promotion
of international cooperation to fulfil those needs.
                                                     
16For some preliminary results, see paragraph 14.
17See WT/WGTI/W/9, page 5.
18The need for comprehensive and comparable servi ce statistics including information on "commercial
presence" has been stressed on many occasions .  See, for example Hoekman (1989), and S/C/W/5.WT/WGTI/W/24
Page 8
30. As part of the identification of GATS statistical needs, it was recognized that a new statistical
domain19 was needed to provide relevant and comparable information on commercial presence .  Work
began on the identification of the conceptual and methodological issues that needed to be addressed
before such a statistical domain, i.e. FAT statistics, could be set up.20   Among these issues are the
relationship with other  statistical domains such as BOP, FDI and production statistics, the
identification of the statistical population (FAT enterprises), their country of origin and the statisticalvariables to collect.  Some of these basic questions are listed in Annex I.
31. As part of its strategy towards the improvement of services statistics, the WTO Secretariat has
engaged in cooperation activities with other international agencies, mainly through the Inter-Agency
Task Force on Statistics of International Trade in Services .
21  The two main objectives of the Task
Force are to strengthen cooperation between international organizations and to promote the
development of international standards in the area of service statistics.
32. The Task Force is now focusing on the preparation of a manual on trade in services (Manual)
that would embody a standardized conceptual framew ork for trade in services statistics based on the
BOP and FAT building blocks.  With regard to FAT,  the Manual will draw heavily on the work being
carried out in EUROSTAT and OECD (see below).  It  will also benefit from the knowledge gained in
some countries, especially in the United States, which has a long experience in this area.  The first
complete draft of the Manual will be discussed at the next meeting of the Task Force that will takeplace at the WTO on 9-10 June 1998.
33. The Task Force has also influenced the work programmes of international agencies such as
the EUROSTAT and OECD on FAT statistics.  In this  context, considering that FAT statistics may be
derived from two different statistical domains, i.e. BOP/FDI  and enterprise statistics , EUROSTAT
has set up two task forces to look into the matter.
34. The EUROSTAT Task Force Foreign Affiliates Trade Statistics
22 carried out its work in the
BOP/FDI context, where FAT statistics are viewed as an extension of FDI statistics. Following this
approach, existing FDI surveys can be used, provided a number of supplementary questions are added
to the questionnaires, such as turnover, employment, and the level of foreign control.  The statistical
population is a subset of the whol e FDI population, as a minimum of 10 per cent of foreign ownership
                                                     
19The term Establishment Trade was already sometimes used, but no attempts had been made to define
it in precise statistical terms.
20The paper WTO (1995a) was prepared for the Task Force on International Trade in Services.  This
paper identifies and discusses some of the basic questions and options related to concepts, definitions and
classifications for FAT statistics.
21This Task Force was established by the United Na tions Statistical Commission at its Special Session
in April 1994, following the request of the GATT and UNCTAD representatives.  The OECD agreed to act as
Convenor of the Task Force.  The following institutions are regular members of the Task Force:  EUROSTAT,IMF, OECD, UNCTAD, United Nations Statistical Division, World Bank and WTO.  It was agreed from thestart that the Task Force would focus on the statistical  requirements of the GATS, with reference to trade in
services as defined in Article I, paragraph 2 of the Agreement.
22Seven countries participated in the Task Force:   B e l g i u m ,  D e n m a r k ,  G e r m a n y ,  F r a n c e ,  I r e l a n d ,
Netherlands, and the United Kingdom.WT/WGTI/W/24
Page 9
is the general practice for FDI, while a minimum of 50 per cent is used for FAT data collection.23
This approach provides consistency with FDI statis tics.  Typically, central banks are responsible for
data collection.
35. The Task Force concluded its work in January 1996 and the resulting "De Boeck's Report"
makes recommendations on many issues and options that were discussed in WTO (1995a).  In
parallel, EUROSTAT and OECD prepared a joint questionnaire on the activity of foreign affiliates inthe service sector.
24   EUROSTAT plans to publish the results for inward FAT by the end of 1998, and
outward FAT later on.  The major outcome of the above-mentioned work is that the BOP/FDI
approach  could provide information on both inward a nd outward FAT, although with limited detail as
to the sectoral coverage and the statistical variables that could be collected.
36. The EUROSTAT Task Force Pilot Study Inward FATS25  is investigating the enterprise
statistics approach .  Enterprises statistics (also called ‘structural business statistics’) use compilation
tools such as enterprise surveys and business registers rather than FDI surveys.  They cover allresident enterprises, without distinguishing between national and foreign-owned.  The idea is to use
existing compilation tools while covering only the subset of enterprises that are foreign-owned.  The
national statistical offices are typically responsible for such data collection.  The successful
completion of the first phase of the Pilot Study has shown the feasibility of inward FAT data
collection through the enterprise statistics approach,  and the need for a strict data collection
framework in order to obtain harmonized statistics.
37. At the OECD, the Special Sessions on Globalisation of the Statistical Working Party of the
Industry Committee address analytical and methodological issues related to the activities of foreign
affiliates.  The OECD has planned to prepare a manual on globalization indicators that would define
the statistical indicators needed to assess the effects of globalization.  In this context, the FATstatistics that have already been collected in the manufacturing sector (see paragraph 18) are being
extended to cover the services sector.
26
38. As may be seen from above, a number of initiatives have been taken for establishing FATstatistics.  Although it may be difficult to draw definitive conclusions yet, several points can be made
on the basis of the work being carried out.  First, business confidentiality will be an issue.
27  Second,
harmonization of concepts and collection methods is necessary to secure comparable FAT data across
                                                     
23There are many cases where foreigners effectively control an enterprise without majority-ownership.
Thus, FAT statistics may not provide information on all foreign-controlled enterprises.
24The questionnaire includes all economic activities broken down between 17 service sectors and five
non-service sectors.
25This Pilot study concerns only the service sectors. EUROSTAT has already published preliminary
statistical results in the December issue of Statistics in  Focus. Nine Member States  are participating: Denmark,
Finland, France, Ireland, Italy, Netherlands, Spain, Sweden and the United Kingdom.
26The Joint OECD/EUROSTA T Questionnaire on the Activity of Fore ign Affiliates in the Service Sector
covering both inward and outward FAT is being used for th is exercise.  The results are expected to be published
by the end of 1998.
27The EUROSTAT Pilot Study has disseminated the preliminary statistical results only for four
aggregated service sectors, i.e. "wholesale and retail trade", "hotels and restaurants", "transport, storage and
communication", and "real estate, renting and business activities".  The major reason is that too many data were
confidential at a lower level of detail.WT/WGTI/W/24
Page 10
countries, and such harmonization might take a long  time.  Third, although there are prospects for a
systematic data collection at the OECD level, there is no such initiative for other countries.
IV. CONCLUDING REMARKS
39. For FDI a fairly comprehensive set of statistics is available for total direct investment income
and flows.  Stock data and further cross-classification by sector and partner country are also available
for some of the major economies but statistics are not always comparable across countries.Conceptual issues are mostly resolved but coun try implementation of all the detailed conceptual
provisions remains a problem especially for many of the developing countries.
40. Although substantial efforts still have to be made before comprehensive, comparable and up-
to-date FAT statistics are available, the initiatives taken so far at national and international level have
had very positive outcomes.  Expected results in the short/medium term include the publication of a
manual on trade in services that would provide st atistical guidelines and recommendations based on
BOP and FAT building blocks, as well as the prog ressive availability of FAT statistics for OECD
countries.
41. Among the major outstanding issues are the following:  (i) no agency systematically collects
detailed FDI and FAT statistics for developing econom ies;  (ii) sectoral and geographical breakdown
needs to be improved;  and (iii) national statistics need to be harmonized to enable cross-country
comparability.  In addition, business confidentiality constraints may prevent the publication ofdetailed statistics.
42. The WTO Secretariat is deeply involved in the resolution of these issues through close
cooperation with other international institutions, and participates in the overall effort towards the
improvement of FDI and FAT statistics.WT/WGTI/W/24
Page 11
Annex 1
Selected Conceptual Questions on FAT statistics
What is a foreign company?
There is a need to distinguish between foreign and national companies in order to define the
FAT statistical population. Some of the possible options are:
(a) control by foreigners;
(b) majority ownership (e.g. defined as more than 50 per cent of voting shares owned by
foreigners);
(c) partial ownership (e.g. a conventional value between 50 per cent and the 10 per cent
used in FDI);
(d) majority ownership or control.
Recommendations:  The control concept may be diffic ult to apply in statistical collection.  Both the
draft Manual  of the Inter-Agency Task Force on Statistics of International Trade in Services  and the
De Boeck's Report  recommend the use of the majority ownership criterion (over 50 per cent) as a
proxy for control.  In cases where national regulations prevent foreign majority-ownership, other
criteria should be used.
What is the country of origin of a foreign company?
Some of the possible options are:
(a) the country of first foreign parent;
(b) the country of the Ultimate Beneficial Owner (UBO), if first foreign parent is in turn
owned by persons (or companies) in a third country, and so on.
Recommendations:  The draft Manual encourages the use of the UBO but recognizes that the use of
first foreign parent may be justified as a point of departure.  The De Boeck's Report  proposes that,
initially, data based on the first non-resident immediate owner be submitted;  it also recognizes that
the UBO concept is more significant.  EUROSTAT's Pilot Study  recommends the use of the UBO
concept.
How to assign statistical variables (e.g. turnover) to foreign countries?
The two major options are:
(a) assign statistical variables to foreign countries according to percentage of voting
stock held in these countries;
(b) fully assign statistical variables to the country of origin.
Recommendations:  Statistical variables are to be totally assigned to the country of origin even if not
full ownership.WT/WGTI/W/24
Page 12
What are the basic variables to collect?
FAT being a new statistical domain, priorities need to be assigned at the international level to
allow cross-country comparability.
Recommendations:  In a BOP/FDI approach , the priority is generally given to turnover, employment,
and value added by activity.  In an enterprise statistics approach , such as Pilot Study , a
comprehensive set of variables may be compiled, including turnover, value added, number ofemployees, personal cost, gross investment in tangible goods, and trade indicators.WT/WGTI/W/24
Page 13
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