Canada - Current Account Balance

This activity is conducted to provide statistical information and analysis of the value, volume and price of Canada's merchandise exports and imports by commodity and by partner country. Information on imports and exports are inputs into the Canadian System of National Accounts, particularly in the Balance of Payments and Gross Domestic Product, and are used in the formulation of trade and budgetary policies. Governments, importers, exporters, manufacturers and shipping companies use trade statistics to monitor import penetration and export performance, monitor commodity price and volume changes and examine transport implications.

The source writes:

Data sources

Data are extracted from administrative files. Canadian trade statistics are compiled according to the "General" system of trade as defined by the United Nations Statistical Office. The general trade system, in principle, presents all goods entering the country (imports) and all goods leaving the country (exports). It differs from the "Special" system of trade in the treatment of imported goods into Customs bonded warehouses. Under the special trade system, these goods are counted only if and when they are withdrawn from Customs warehouses for home consumption. They are not counted in export statistics unless they have first cleared Customs. The closing of the statistical month for imports and exports is defined as the last calendar day of the month based as closely as practicable on the date of clearance from Customs. Import data are captured by the Canadian Border Services Agency (CBSA or Customs) from B3 forms and from electronic import transaction entries. Data for Canadian exports to countries other than United States are compiled by the International Trade Division from B-13A forms received via the CBSA and from Summary Reports and Canadian Automated Export Declarations (CAED) submitted directly to Statistics Canada. Canadian exports to the United States are compiled using United States import statistics (from the U.S. Customs Service via the U.S. Census Bureau) and account for over 75% of the value of Canada's export trade. This procedure is used for all Canadian exports to the United States except exports of natural gas and electricity. These two commodities are recorded directly from Canadian sources in both Canadian and U.S. customs data, as the Canadian sources are viewed as more accurate than U.S. import data for these series.

Error detection

Validation, combination, unit value and 'reasonableness' edits are performed on both imports and exports data during the edit and imputation process. Validation edits use a number of meta data tables which allow the comparison of a reported variable to a list of valid codes. Other validity checks ensure that a reported variable respects the characteristics it is supposed to, e.g., numeric variables are reported as numeric. Combination edits include commodity/country, commodity/trader and commodity/province. Unit value lows and highs are calculated for each Harmonized System1 (HS) code. Data that fall within this range are accepted while those that fail are rejected. The imports processing system of the International Trade Division (ITD) also performs a number of edits and imputations on imports from the United States on behalf of the United States Census Bureau (USBC).

Imputation

Both manual and automated imputations are performed on imports and exports data. Data that fail an edit and are beyond an established threshold are manually reviewed and corrected. The method of correction usually takes the form of telephone follow-up to the importer, exporter or their representative, the broker. Sometimes a link to the electronic invoice will suffice to obtain the necessary information to take corrective action. Data that fail the edits and are below a value threshold are automatically imputed. In the case of a unit value failure the quantity is the variable automatically imputed. Quantity is imputed by randomly selecting a unit value between a high and a low unit value range. Export documents received too late for incorporation in the current month are assigned to the month the transaction took place. If a monthly summary report from a high volume exporter is not received on time, the data are imputed for the current month and revised with the trade value in the following statistical month.

Estimation

Values and currency conversions - Data being disseminated in Canadian dollars do require conversion from foreign currencies. Imports - Foreign currencies are converted using the Bank of Canada daily exchange rate (noon average) for the date on which the goods were shipped to Canada. Exports to U.S. destinations - Since 1990, Canada and the United States have exchanged import data; the import data of one partner country are used to derive the export data of the other. Therefore, there are two currency conversion processes involved in Canadian export transactions to the U.S. Imports must be reported to the U.S. Customs agency in U.S. dollars for accounting In turn, these data (in U.S. dollars) are transmitted to the USCB which converts them to Canadian dollars prior to transmitting to Statistics Canada. Exports to non-U.S. destinations - In the case of electronic reporting, values not reported in Canadian dollars are converted using a daily Bank of Canada (noon) rate based on the date of export of the shipment. For non-electronic reporting, values declared in currencies other than Canadian dollars are converted using a monthly average based on the daily noon rates of the Bank of Canada.

Quality evaluation

Transaction-level data are aggregated and subjected to month over month and year over year analysis to detect errors and explain observed movements. Disclosure control Statistics Canada is prohibited by law from releasing any data which would divulge information obtained under the Statistics Act that relates to any identifiable person, business or organization without the prior knowledge or the consent in writing of that person, business or organization. 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. The International Trade Division (ITD) of Statistics Canada is similar to most other countries in its use of administrative data derived from customs sources to produce merchandise trade data and its use of the 'passive suppression' approach for confidentiality. Passive suppression is based on the principle that confidential data will not knowingly be released. It requires that appropriate measures be taken only at the request of importers or exporters who feel that their interests would be harmed by the dissemination of data. The onus of notifying ITD of suspected instances of the release of confidential data rests with the affected companies. On the other hand, 'active suppression' requires the review of data to determine the confidentiality status of data prior to dissemination. In ITD, the Exporter Register takes this approach. In ITD's general program importers and exporters do not have a company identification that is as complete or reliable as in a formal sample frame and therefore cannot provide an adequate basis for the application of active suppression mechanisms. However, in the case of the Exporter Register, a company's identification is obvious and is linked to the Statistics Canada Business Register, making the use of 'active suppression' appropriate. ITD can knowingly publish confidential data only if a 'waiver' is obtained from the company supplying the confidential data and/or companies that would be affected by residual disclosure. A waiver is an agreement between the division and the company involved that grants permission for the release of confidential data. Such permissions must also be supported by a Disclosure Order from the Chief Statistician.

Data accuracy

Every effort is made to ensure that administrative data are conceptually correct for the use to which they are put. Any anomalies or inconsistencies detected are verified with the source, and where necessary, adjustments are made to reconcile data with the conceptual framework of our series. The administrative agencies used are considered to be the best source available, and data received from them is judged to be of very good quality, even in those circumstances where adjustments have been made. Customs-based trade statistics more accurately measure imports than exports. This occurs because Customs agents are typically more vigilant with respect to goods entering the country than they are with those leaving the country. It is not unusual for the accuracy of export statistics to be adversely affected by undercoverage and/or country misallocation. Undercoverage occurs when the proper documentation is not filed with Customs. While Statistics Canada does not have a direct measure of undercoverage, a monthly estimated adjustment is included within BoP based data. Country misallocation occurs when the country of final destination is inaccurately reported on the Customs documentation. This occurs most frequently when goods are routed through an intermediary country before continuing to their final destination with the intermediary country being reported as the final destination of the goods. Statistics Canada also periodically conducts reconciliation exercises with its major trading partners other than the United States.

The source writes:

In general, merchandise trade data are revised on an ongoing basis for each month of the current year. Current year revisions are reflected in both the customs- and balance of payments-based data. Beginning with the January 2008 reference month, the previous year's customs and balance of payments data (i.e., 2007) will now be revised with the release of the January, February and March data months. Revisions to customs-based data for the previous year will continue to be released on a quarterly basis. Revisions to customs-based data for the three previous years will be available when the December reference month is released. Factors influencing revisions include late receipt of import and export documentation, incorrect information on customs forms, replacement of estimates with actual figures, changes in classification of merchandise based on more current information, and changes to seasonal adjustment factors. Seasonal Adjustment - Both export and import statistics show large monthly fluctuations. In order to isolate turning points or trends in the basic data, it is necessary to eliminate this effect of seasonal movement. Statistics Canada uses the X-11-ARIMA (Dagum, 1975 and 1979) method to remove seasonal fluctuations from time series. A full description on seasonal adjustment is provided in the attached document.

Attributions

Portions of the above information were quoted from Statistics Canada.

End User License Agreement

Distributed under license from Statistics Canada: usage subject to an End User License.

Further reading

At IMF (SDDS Plus):

• External debt
• International investment position
• Merchandise trade