Canada's International Transactions in Services

Canada's International Transactions in Services
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Detailed information for 2016

Status:

Active

Frequency:

Annual

Record number:

1536

This statistical program records Canada's annual exports and imports of services by type of service rendered and by partner country. Quarterly estimates of Canada's international trade in services are available through Canada's Balance of International Payments (record no. 1534). The quarterly estimates, however, contain far less details in terms of type of services rendered and partner countries.

Data release - October 12, 2017

Description

International transactions in services are a major component of the Current account of the Balance of payments. Services are grouped under four major categories: travel, transportation, commercial services and government services. Such services, together with goods, primary income (compensation of employees and investment income) and secondary income(current transfers) make up the Current account of the Balance of payments (BOP). The Balance of payments of Canada measures the economic transactions of Canadian residents with the residents of other countries.

Services cover a wide and complex variety of transactions on products that are generally intangible in nature.

Unlike goods, services are not separate entities over which ownership rights can be established. They cannot be traded separately from their production. Services are heterogeneous outputs produced to order and typically consist of changes in the conditions of the consuming units realized by the activities of producers at the demand of the consumers. By the time their production is completed they must have been provided to the consumers.

Since, by nature, most services are not traded separately from their production, these transactions usually require the simultaneous presence of the producer and the consumer of the services. This simultaneity is not easily realized between countries where distance and political boundaries separate the supplier and client. This largely explains the lower volume of trade in services when compared with goods, where both the seller and buyer of goods remain in their respective domestic economies, while the goods they trade move across the border.

Statistical activity

The Canadian System of Macroeconomic Accounts provides a conceptually integrated statistical framework for studying the state and behaviour of the Canadian economy. The accounts are centered on the measurement of activities associated with the production of goods and services, the sales of goods and services in final markets, the supporting financial transactions and the resulting wealth positions.

The Non-resident Sector Program is a component of the Canadian System of National Accounts (CSNA). The linkage is possible because the standards and conventions used to establish the Canadian residency of the transactors and to compile the transactions of Canadian residents with non-residents are identical to those used in the CSNA.

Reference period: Calendar year

Collection period: From April to November following the reference year.

Subjects

  • Balance of international payments
  • Economic accounts
  • International trade
  • Service exports
  • Service imports

Data sources and methodology

Target population

The universe for balance of payments purposes embraces all transactors who reside in Canada who engage in international transactions in services. The transactors can be businesses, governments, non-profit institutions, or households.

Instrument design

The following questionnaires are used to collect data for compiling Canada's international transactions in services:

BP17 - International transactions between insurance brokers in Canada and their foreign affiliates agents, and other companies or persons outside Canada (annual)
BP20 - Great Lakes - St. Lawrence Seaway shipping transactions (annual)
BP21S - International transactions in commercial services (annual)
BP24 - Report of cargo, revenues and expenses of ocean vessels operated by non-residents (annual)
BP25 - Report of cargo, revenues and expenses of ocean vessels operated by Canadian companies (annual)
BP26 - Report on imports of crude petroleum and petroleum products and other shipping operations (annual)
BP27 - Transactions between Canadian incorporated insurance companies and their foreign affiliates, agencies and bank accounts and other companies or persons outside Canada (annual)
BP28 - Transactions between Canadian branches and foreign insurance companies in Canada and head or other offices, companies or persons outside Canada (annual)
BP58 - Transactions of foreign airlines with residents of Canada (annual)

These questionnaires have been in use for several decades, but have been expanded over the years to cover more categories of services and/or provide a better geographical breakdown.

Sampling

The questionnaires providing direct input for Canada's international trade in services are sent to Canadian enterprises known to have or believed to have significant international trade in services activity.

Roughly 3,600 firms receive the international trade in services questionnaires, 2,700 of which are surveyed annually and 900 of which are surveyed once every 3 years. The surveys are believed to cover most of the large corporate importers and exporters of services. To reduce the response burden, some large transactors involved in specific economic activities may not be surveyed by international trade in services questionnaires if it is believed that their transactions are well covered by other sources of data.

Enterprises reporting moderate amounts of international transactions in commercial services are rotated in a three year cycle in the annual sample for the BP-21S (International transactions in commercial services), whereas enterprises reporting larger amounts are included in the sample each year. For those companies that are part of the three year cycle for sample rotation, the most recent reported values are carried forward during the two years a company is out of sample. Coverage, via questionnaire BP-21S, of businesses with smaller amounts of international transactions in services is not as good, due to difficulty identifying such units. There are, however, other data sources that help provide the desired coverage.

There are specialized questionnaires on commercial services (BP-17, BP-27, and BP-28) for enterprises involved mainly in insurance activities while questionnaires BP-20, BP-24, BP-25, BP-26, and BP-58 cover marine and air transportation services. These questionnaires are sent to all businesses known to have or believed to have significant international activity in these areas. These questionnaires are believed to cover close to 100% of their target population.

The questionnaires listed in the Instruments Design section above cover only the business sector. Data regarding households and governments are taken from other sources as indicated in the Data Sources section below.

For commercial services, population is separated in several strata based on the transaction sizes, the industrial sector (NAICS 2-digit), and the revenue sizes.

Sampling size is approximately 3,600 enterprises.

Data sources

Responding to this survey is mandatory.

Data are collected directly from survey respondents, extracted from administrative files and derived from other Statistics Canada surveys and/or other sources.

As shown in the Data Source Diagram (accessible through the "Additional documentation" link below), data are collected from a variety of sources and integrated together following a precise conceptual framework.

Questionnaires - Data are collected annually, in part via questionnaires; response is mandatory for the surveyed entities. The questionnaires are sent out in February of the year following the reference year. Respondents are instructed to send their completed questionnaires to the International Accounts and Trade Division within four weeks of receipt. A follow-up is done after an additional two weeks if no response is received. There are three additional follow-ups performed one month apart from each other. Data from these questionnaires account for approximately 25% of the service exports estimate and 27% of the service imports estimate. Travel and government services account for almost 30% of Canada's international trade in services, and these two items are derived from other sources. A very large share of transportation is obtained through a data exchange with the United States Bureau of Economic Analysis and from other Statistics Canada surveys.

Administrative data sources:
- Canada Revenue Agency (i.e. T106 Non-arm's length transactions with non-residents, GST, T2-Schedule 29 [Payments to non-residents], T4A-NR [Statement of fees, commissions, or other amounts paid to non-residents for services rendered in Canada] and NR-4 withholding taxes)
- Citizenship and Immigration Canada (Payments by non-residents for migrant permits);
- Bank of Canada (Fees received for gold stocking); and Office of the superintendent of Financial Institutions;
- Public Accounts of Canada and of Crown Corporations (federal and provincial), with supplementary data obtained directly from selected corporations;
- Film and tourism authorities (provincial); and
- Power utilities (provincial).
- Canadian Intellectual Property Office (Canadian patents)
Other Statistics Canada surveys -- see the Data Source Diagram (accessible through the "Additional documentation" link below).

Other sources:
- Regular correspondence with corporations engaged in international communications, air and rail transportation, consulting, and so on;
- U.S. Department of Commerce data (with data exchange and annual reconciliations of Canada - U.S. current account data);
- Foreign embassies;
- World Bank;
- Patent agents;
- International organizations operating in Canada;
- Canadian banks;
- Benchmark studies on sports and other entertainment;
- Annual reports of individual companies engaged in international transactions; and
- Public media.

View the Questionnaire(s) and reporting guide(s).

Error detection

Data received are compared with previous years' data, and large differences are further investigated. Respondents with no reported transactions are contacted for confirmation. Totals reported are compared with the sum of components and country codes are verified. When available, survey results are compared with data from other sources for validation.

Imputation

In the case of non-response, data are imputed by one of the following methods:
- applying the growth rate of a related variable for the same company if such information is available from another data source,
- applying an average growth rate for the variable of interest reported by other respondents in a similar line of business,
- applying results from the previous year to the current year.

Estimation

The data from the various sources are integrated to produce estimates of the value of the international transactions in services, then results of the double entry accounting system are confronted leading to estimate adjustments; finally the statistical discrepancy (net errors and omissions) is the net unobserved inflow or outflow needed to balance the accounts.

Aggregate level estimates from the balance of payments are compared to those of the Macroeconomic Accounts. When data at the macro level appear suspicious, micro components of the suspicious macro results are examined for possible entry errors or erroneous imputation. Respondents are contacted if necessary.

Quality evaluation

In addition to the confrontation of the results of the double entry accounting system the quality of the estimates produced is ascertained using time series consistency analysis, as well as analysis of the coherence of the estimates with well publicized economic events and with related data from other programs.

Canada and the United States, largely because of their extensive commercial ties, have been comparing the bilateral Current Account of their balance of payments since 1970. In a significant number of cases, the reconciliation has resulted in revisions of values and exchange of data.

The estimates of trade in goods and services are benchmarked annually to the Supply and Use Tables of the Canadian System of Macroeconomic Accounts.

Disclosure control

Statistics Canada is prohibited by law from releasing any information it collects that could identify any person, business, or organization, unless consent has been given by the respondent or as permitted by the Statistics Act. Various confidentiality rules are applied to all data that are released or published to prevent the publication or disclosure of any information deemed confidential. If necessary, data are suppressed to prevent direct or residual disclosure of identifiable data.

In order to prevent any data disclosure, confidentiality analysis is done using the Statistics Canada Generalized Disclosure Control System (G-Confid). G-Confid is used for primary suppression (direct disclosure) as well as for secondary suppression (residual disclosure). Direct disclosure occurs when the value in a tabulation cell is composed of or dominated by few enterprises while residual disclosure occurs when confidential information can be derived indirectly by piecing together information from different sources or data series.

Revisions and seasonal adjustment

At the time of publication, data for the three preceding years are subject to revision.

Seasonal adjustment is not applicable to annual data series.

Data accuracy

Non-response error is related to respondents that may refuse to answer, are unable to respond or are too late in reporting. In these cases, data are imputed. The extent of any imputation error decreases with increases in the response rate and attempts are therefore made to obtain as high a response rate as possible.

Processing error may occur at various stages of processing such as data entry, editing and tabulation. Measures have been taken to minimize these errors. Data entry and edit are performed simultaneously due to the spreadsheet design which allows errors to be quickly seen. Historical ratios also aid in eliminating outliers created by data entry. Tabulation is automated to eliminate human error.

Documentation

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