;P ^7 THE BALANCE OF PAYMENTS OF THE UNITED STATES Concepts, Data Sources, and Estimating Procedures U.S. DEPARTMENT OF COMMERCE Bureau of Economic Analysis PENNSYLVANIA STATE UNIVERSITY SEP 10 1390 DOCUMENTS COLLECTION U.S. Depository Copy Digitized by the Internet Archive in 2013 http://archive.org/details/balanceofpaymentOOunit THE BALANCE OF PAYMENTS OF THE UNITED STATES Concepts, Data Sources, and Estimating Procedures May 1990 U.S. DEPARTMENT OF COMMERCE Robert A. Mosbacher, Secretary Michael R. Darby, Under Secretary for Economic Affairs BUREAU OF ECONOMIC ANALYSIS Allan H. Young, Director Carol S. Carson, Deputy Director / W % ' states &* For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402 Suggested Citation U.S. Department of Commerce. Bureau of Economic Analysis. The Bal- ance of Payments of the United States: Concepts, Data Sources, and Estimating Procedures. Washington, DC: U.S. Government Printing Office, May 1990. Acknowledgments This volume on the methodology of the U.S. balance of payments was prepared by Louis J. Moczar, under the general direction of Jack J. Bame, formerly Associate Director for International Economics at BEA. Major contributions in the form of providing basic material on procedures used in esti- mating the U.S. balance of payments and of offering comments on successive drafts were made by the staff of the Balance of Payments Division and the International Investment Di- vision. Christopher L. Bach, Chief of the Balance of Payments Division, was closely involved at several stages of the preparation of this volume, both in coordinating submissions of basic material from the Balance of Payments Division and in reviewing the drafts for consistency and accuracy. In the Balance of Payments Division, major contributions were made by An- thony J. DiLullo, Assistant Chief; E. Seymour Kerber, former Chief of the Government Grants and Capital Branch; Gregory M.G. Thomas, Acting Chief, Government Grants and Capital Branch; Russell B. Scholl, Chief, Private Capital Branch; Howard Murad, Chief, Merchandise Trade Branch; and Walter G. Kealy, Chief, Current Account Services Branch. Betty L. Barker, Chief of the International Investment Division, and Ralph Kozlo w, Chief, Special Surveys Branch, contributed significantly to the preparation of this volume by pro- viding material on the methodology used in estimating direct investment income and capital flows and by offering comments and suggestions as the draft evolved. Dannelet A. Teske provided editorial assistance. Ruby G. Chandler typed the manuscript and provided secretarial assistance. Rose M. Janifer typed the tables in final form. Production coordination and typesetting services were provided by Leland L. Scott, Chief, Publication Services Branch, Current Business Analysis Division. Contents List of Tables xi Introduction xiii Parti: CONCEPTS AND STRUCTURE Concepts, Definitions, and Principles 3 1 Concept of Economy 3 2 Concept of Resident 3 2.1 Individuals 3 2.2 Business enterprises and nonprofit organizations 3 2.3 Governments 4 2.4 International organizations 4 3 Double-Entry Principle 4 4 Net and Gross Recording 4 5 Time of Recording 4 6 Valuation 5 Classification of Transactions 6 1 Current Account 6 2 Capital Account 6 3 Correspondence With IMF Manual 7 Statistical Discrepancy 9 Legal Authority 11 Data Sources 14 1 Census Bureau Merchandise Trade Statistics 14 2 BEA Surveys 14 3 U.S. Treasury International Capital Reporting System 14 4 Data From Other U.S. Government Agencies 14 5 Data From Other Sources 15 Seasonal Adjustment 16 Summary Measures 17 Publication of Estimates 19 1 Geographic Allocation 19 2 Historical Data 20 International Investment Position 21 1 U.S. Assets Abroad 21 1.1 U.S. official reserve assets 21 1.2 U.S. Government assets, other than official reserve assets 21 1.3 U.S. private assets 21 2 Foreign Assets in the United States 22 2.1 Foreign official assets 22 2.2 Other foreign assets 22 Balance of Payments and the National Accounts 25 1 U.S. Government Interest 25 2 Gold Transactions 25 3 Capital Gains and Losses in Direct Investment Income 26 4 Imputed Interest 27 Part II: THE CURRENT ACCOUNT Merchandise Trade 31 Commodity classification 31 Geographic attribution 33 1 Merchandise Exports, Excluding Military (line 2) 33 2 Merchandise Imports, Excluding Military (line 17) 34 Military Transactions 36 1 U.S. Receipts — Transfers Under U.S. Military Agency Sales Contracts (line 4) 36 2 U.S. Payments — Direct Defense Expenditures (line 19) 37 2.1 Expenditures by U.S. personnel abroad 37 2.2 Payments of wages to foreign residents 38 2.3 Construction expenditures abroad 38 2.4 Payments for foreign contractual services 38 2.5 Procurement of foreign goods 38 2.6 Military assistance programs 38 2.7 NATO infrastructure projects 39 2.8 Coast Guard expenditures 39 Travel 40 1 U.S. Receipts (line 5) 40 1 .1 Overseas 41 1.2 Canada 41 1.3 Mexico 41 Interior travel 41 Border travel 41 2 U.S. Payments (line 20) 42 2.1 Overseas 42 2.2 Canada 42 2.3 Mexico 43 Interior travel 43 Border travel 43 VI Passenger Fares 44 1 U.S. Receipts (line 6) 44 1 .1 Overseas 44 1.2 Canada 45 1.3 Mexico 45 1.4 Two foreign points 45 2 U.S. Payments (line 21) 45 2.1 Air 45 2.2 Cruise 45 Transportation 46 1 U.S. Receipts (line 7) 46 1 .1 Freight receipts 46 Ocean 46 Air 47 Pipeline 47 Rail 47 Great Lakes 47 1 .2 Port services receipts 47 Ocean 47 Air 47 Rail 47 Great Lakes 48 1 .3 Charter hire and rentals 48 2 U.S. Payments (line 22) 48 2.1 Freight payments 48 Ocean 48 Air 48 Rail 48 Great Lakes 48 2.2 Port services payments 48 Ocean 48 Air 49 Rail 49 Great Lakes 49 2.3 Charter hire and rentals 49 Royalties and License Fees 50 Transactions With Affiliated Foreigners 50 1 U.S. Receipts (part of line 8) 50 2 U.S. Payments (part of line 23) 50 Transactions With Unaffiliated Foreigners 51 3 U.S. Receipts (part of line 8) 51 4 U.S. Payments (part of line 23) 51 Other Private Services 52 Transactions With Affiliated Foreigners 52 1 U.S. Receipts (part of line 9) 52 2 U.S. Payments (part of line 24) 53 Transactions With Unaffiliated Foreigners 53 3 U.S. Receipts (part of line 9) 53 3.1 Education 54 vii 3.2 Financial services 54 3.3 Insurance 54 3.4 Telecommunications 55 3.5 Business, professional, and technical services 55 U.S. contractors 55 Medical services 55 3.6 Other services 56 Expenditures by foreign governments in the United States 56 Expenditures by international organizations in the United States 56 Film and tape rentals 56 Earnings of U.S. residents employed temporarily abroad 56 Expenditures of foreign residents employed temporarily in the United States 56 Trade union receipts 57 4 U.S. Payments (part of line 24) 57 4.1 Education 57 4.2 Financial services 57 4.3 Insurance 57 4.4 Telecommunications 58 4.5 Business, professional, and technical services 58 4.6 Other services 58 Earnings of foreign residents employed temporarily in the United States . 58 Expenditures of U.S. residents employed temporarily abroad 58 Film and tape rentals 58 Trade union payments 58 U.S. Government Miscellaneous Services 59 1 U.S. Receipts (line 10) 59 2 U.S. Payments (line 25) 60 2.1 Payments to foreign entities 60 2.2 Expenditures of U.S. Government personnel and dependents abroad 60 2.3 Payments to U.S. contractors for work abroad 60 Income on Direct Investment 61 1 U.S. Receipts (line 12) 61 2 U.S. Payments (line 27) 62 Income on Other Investments 64 1 Other Private Receipts of Income on U.S. Assets Abroad (line 13) 66 1.1 Income on claims reported by U.S. banks 66 1 .2 Income on foreign securities 67 1.3 Income on claims reported by U.S. nonbanking concerns 67 2 Income Receipts on U.S. Government Assets Abroad (line 14) 68 2.1 Income on credits 68 2.2 Income on other U.S. Government assets, net 68 3 Other Private Payments of Income on Foreign Assets in the United States (line 28) 68 3.1 Income on liabilities reported by U.S. banks 68 3.2 Income on U.S. securities 69 3.3 Income on liabilities reported by U.S. nonbanking concerns 70 4 U.S. Government Income Payments (line 29) 70 Unilateral Transfers 71 1 U.S. Military Grants of Goods and Services, Net (line 30) 71 2 U.S. Government Grants, Excluding Military Grants of Goods and Services (line 32) 71 viii 3 U.S. Government Pensions and Other Transfers (line 33) 72 4 Private Remittances and Other Transfers (line 34) 73 4.1 U.S. transfers to foreign residents 73 Institutional remittances 73 Personal remittances 73 Parcel post shipments 73 Inheritance, emigrant, and other transfers 74 Contributions to UNICEF 74 Transfers for medical services 74 Transfers to foreign students 74 4.2 Foreign transfers to U.S. residents 74 Inheritance, immigrant, and other transfers 74 Indemnification transfers 74 Personal remittances 74 Part III: THE CAPITAL ACCOUNT U.S. Official Reserve Assets 77 1 Gold (line 37) 77 2 Special Drawing Rights (line 38) 78 3 Reserve Position in the IMF (line 39) 78 4 Foreign Currencies (line 40) 78 Allocations of Special Drawing Rights (Line 64) 80 U.S. Government Assets, Other Than Official Reserve Assets 81 1 U.S. Credits and Other Long-Term Assets (line 42) 81 2 Repayments on U.S. Credits and Other Long-Term Assets (line 43) 82 3 U.S. Foreign Currency Holdings and U.S. Short-Term Assets, Net (line 44) 82 Direct Investment 84 Overview 84 Basic Concepts and Definitions 84 Direct investment 84 Direct investor 85 Affiliate 85 Reporting System 86 Legal authority 86 Reporters 86 Surveys 86 Adjustments for fiscal year reporting 87 Accounting principles 88 Reporting by bank affiliates 88 Classification Methods 88 Country classification 88 Industry classification 88 Estimating Procedures 89 Direct Investment Capital Flows 90 1 U.S Direct Investment Abroad (line 46) 90 1.1 Equity capital 90 1.2 Reinvested earnings 91 ix 1.3 Intercompany debt 91 Financial and operational leases 91 Netherlands Antilles finance affiliates 92 1 .4 Reverse investment 92 1 .5 Classification and presentation 92 1 .6 Estimating methods 93 2 Foreign Direct Investment in the United States (fine 59) 93 2.1 Equity capital 93 2.2 Reinvested earnings 94 2.3 Intercompany debt 94 Financial and operational leases 94 2.4 Reverse investment 94 2.5 Transactions with foreign parent groups 95 2.6 Basis of recording 95 2.7 Classification and presentation 95 2.8 Estimating methods 95 Transactions in Securities Other Than U.S. Treasury Securities 97 1 Foreign Securities — Net U.S. Purchases (line 47) 98 2 U.S. Securities Other Than U.S. Treasury Securities — Net Foreign Purchases (line 61) 99 Transactions in U.S. Treasury Securities — Net Foreign Purchases (Line 60) 101 Transactions Reported by U.S. Banks 102 1 Claims on Foreigners (line 49) 102 2 Liabilities to Foreigners (line 63) 103 Transactions Reported by U.S. Nonbanking Concerns 106 1 Claims on Unaffiliated Foreigners (line 48) 106 2 Liabilities to Unaffiliated Foreigners (line 62) 107 Transactions With Foreign Official Agencies 108 1 U.S. Treasury Securities (line 53) 108 1.1 Bills and certificates 108 1.2 Marketable bonds and notes 108 1.3 Nonmarketable bonds and notes 109 2 Other U.S. Government Securities (line 54) 109 3 Other U.S. Government Liabilities (line 55) 109 4 U.S. Liabilities Reported by U.S. Banks (line 56) 110 5 Other Foreign Official Assets (line 57) 110 Sources Ill Appendix 115 List of Tables Part I: CONCEPTS AND STRUCTURE 1-1. Summary of U.S. International Transactions, 1988 6 1-2. U.S. International Transactions, 1988 7 1-3. BEA Balance of Payments Surveys 11 1-4. International Investment Position of the United States at Yearend, 1988 22 1-5. International Investment Position of the United States at Yearend, 1987 and 1988 . 23 1-6. Relation of Foreign Transactions in the National Income and Product Accounts to the Corresponding Items in the Balance of Payments Accounts, 1988 26 Part II: THE CURRENT ACCOUNT II-l . Census Bureau Statistics on Merchandise Trade Used in Preparing the Balance of Payments 32 II-2. Derivation of U.S. Merchandise Exports, Balance of Payments Basis, Excluding Military, 1988 (Line 2) 33 II-3. Derivation of U.S. Merchandise Imports, Balance of Payments Basis, Excluding Military, 1988 (Line 17) 34 II-4. Transfers Under U.S. Military Agency Sales Contracts, 1988 (Line 4) 36 II-5. U.S. Direct Defense Expenditures, 1988 (Line 19) 37 II-6. U.S. Travel Receipts, by Area, 1988 (Line 5) 40 II-7. Overseas Visitors to the United States, by Area, 1988 41 II-8. Canadian Visitors to the United States, by Method of Transportation, 1988 41 II-9. U.S. Travel Payments, by Area, 1988 (Line 20) 42 11-10. U.S. Travelers to Overseas Areas, by Destination, 1988 42 11-11. U.S. Travelers to Canada, 1988 42 11-12. U.S. Passenger Fare Receipts, 1988 (Line 6) 44 11-13. U.S. Passenger Fare Payments, 1988 (Line 21) 45 11-14. U.S. Transportation Receipts, 1988 (Line 7) 46 11-15. U.S. Transportation Payments, 1988 (Line 22) 48 11-16. U.S. Receipts of Royalties and License Fees From Affiliated Foreigners, 1988 (Part of Line 8) 50 11-17. U.S. Payments of Royalties and License Fees to Affiliated Foreigners, 1988 (Part of Line 23) 50 11-18. U.S. Receipts of Royalties and License Fees From Unaffiliated Foreigners, by Type of Intangible Property, 1988 (Part of Line 8) 51 11-19. U.S. Payments of Royalties and License Fees to Unaffiliated Foreigners, by Type of Intangible Property, 1988 (Part of Line 23) 51 11-20. U.S. Receipts for Other Private Services From Affiliated Foreigners, 1988 (Part of Line 9) 52 11-21. U.S. Payments for Other Private Services to Affiliated Foreigners, 1988 (Part of Line 24) 53 11-22. U.S. Receipts for Other Private Services From Unaffiliated Foreigners, 1988 (Part of Line 9) 54 11-23. U.S. Payments for Other Private Services to Unaffiliated Foreigners, 1988 (Part of Line 24) 57 11-24. Receipts of U.S. Government for Miscellaneous Services, 1988 (Line 10) 59 11-25. Payments by U.S. Government for Miscellaneous Services, 1988 (Line 25) 59 11-26. Receipts of Income on U.S. Direct Investment Abroad, 1988 (Line 12) 62 11-27. Payments of Income on Foreign Direct Investment in the United States, 1988 (Line 27) 62 11-28. U.S. Treasury Department International Capital Reporting System Data Used in Preparing the Balance of Payments 65 11-29. Other Private Receipts of Income on U.S. Assets Abroad, 1988 (Line 13) 66 11-30. Income Receipts by U.S. Government on Assets Abroad, 1988 (Line 14) 68 11-31. Other Private Payments of Income on Foreign Assets in the United States, 1988 (Line 28) 68 11-32. Income Payments by U.S. Government on Foreign Assets in the United States, 1988 (Line 29) 70 11-33. U.S. Government Grants, Excluding Military Grants of Goods and Services, 1988 (Line 32) 72 11-34. U.S. Government Pensions and Other Transfers, 1988 (Line 33) 72 11-35. Private Remittances and Other Transfers, 1988 (Line 34) 73 Part III: THE CAPITAL ACCOUNT III-l. Changes in U.S. Official Reserve Assets, 1988 (Lines 37^0) 77 III-2. U.S. Government Credits and Other Long-Term Assets, 1988 (Line 42) 81 III-3. Repayments on U.S. Government Credits and Other Long-Term Assets, 1988 (Line 43) 82 III-4. U.S. Government Foreign Currency Holdings and U.S. Short-Term Assets, Net, 1988 (Line 44) 82 III-5. U.S. Direct Investment Abroad, Capital, 1988 (Line 46) 90 III-6. Foreign Direct Investment in the United States, Capital, 1988 (Line 59) 93 III-7. Foreign Securities, Net U.S. Purchases, 1988 (Line 47) 98 III-8. U.S. Securities, Other Than U.S. Treasury Securities, Net Foreign Purchases, 1988 (Line 61) 99 III-9. U.S. Treasury Securities, Net Foreign Purchases, 1988 (Line 60) 101 111-10. U.S. Claims on Foreigners Reported by U.S. Banks, 1988 (Line 49) 103 III-l 1. U.S. Liabilities to Private Foreigners and International Financial Institutions Reported by U.S. Banks, 1988 (Line 63) 104 111-12. U.S. Claims on Unaffiliated Foreigners Reported by U.S. Nonbanking Concerns, 1988 (Line 48) 106 111-13. U.S. Liabilities to Unaffiliated Foreigners Reported by U.S. Nonbanking Concerns, 1988 (Line 62) 107 111-14. U.S. Treasury Securities, Net Transactions by Foreign Official Agencies, 1988 (Line 53) 108 III-l 5. U.S. Government Securities, Excluding U.S. Treasury Securities, Net Transactions by Foreign Official Agencies, 1988 (Lines 54 and 57) 109 111-16. U.S. Government Liabilities to Foreign Official Agencies Other Than U.S. Government Securities, 1988 (Line 55) 109 III-l 7. U.S. Liabilities to Foreign Official Agencies Reported by U.S. Banks, Not Included Elsewhere, 1988 (Line 56) 110 Xll Introduction The balance of payments is a statistical summary of international transactions. These transactions are de- fined as the transfer of ownership of something that has an economic value measurable in monetary terms from residents of one country to residents of another. The transfer may involve (1) goods, which consist of tan- gible and visible commodities or products, (2) services, which consist of intangible commodities that are pro- duced, transferred, and consumed at the same time, (3) income (which is sometimes classified in "services"), and (4) financial claims on, and liabilities to, the rest of the world, including changes in a country's reserve assets held by the central monetary authorities. Generally, a transaction is the exchange of one asset for another — or one asset for several assets — but it may also involve a gift, which is the provision by one party of something of economic value to another party without something of economic value being received in return. International transactions are recorded in the balance of payments on the basis of the double-entry principle used in business accounting, in which each transaction gives rise to two offsetting entries of equal value so that, in principle, the resulting credit and debit entries always balance. Transactions are generally valued at market prices and are, to the extent possible, recorded when a change of ownership occurs. Transactions in goods, services, and unilateral transfers constitute the current account, and transactions in financial assets and liabilities constitute the capital account. The International Monetary Fund, which strives for international comparability, defines the balance of pay- ments as "a statistical statement for a given period showing (1) transactions in goods, services, and income between an economy and the rest of the world, (2) changes of ownership and other changes in that econ- omy's monetary gold, special drawing rights (SDR's), and claims on and liabilities to the rest of the world, and (3) unrequited transfers and counterpart entries that are needed to balance, in the accounting sense, any entries for the foregoing transactions and changes which are not mutually offsetting" [16]. Balance of payments estimates for the United States are prepared by the Bureau of Economic Analysis (BEA), U.S. Department of Commerce, on a quarterly basis. The methodology used by BEA in constructing the balance of payments statement is described in this volume, which is divided into three parts. Part I provides detailed ex- Note. — Bracketed numbers in the text refer to items in the "Sources," at the end of the publication. planations of the basic concepts, definitions, and general methodological issues and includes brief discussions of how the balance of payments estimates are used in con- structing the statement on the international investment position of the United States and how the balance of pay- ments estimates are incorporated into the U.S. national income and product accounts. The underlying concepts, data sources, and estimating procedures pertaining to the balance of payments transactions that constitute the current and capital accounts are discussed in parts II and III, respectively. Changes Introduced in June 1990 As this volume went to press, BEA introduced several changes in estimation procedures and the presentation of data. The major changes are noted below. 1. Capital gains and losses associated with currency trans- lation adjustments have been removed from receipts of income on U.S. direct investment abroad and from the reinvested earnings component of U.S. direct investment capital flows. These gains and losses arise because of changes, from the end of one accounting period to the next, in exchange rates applied in translation of foreign affil- iates' assets and liabilities from foreign currencies into dollars. This redefinition recognizes that these gains and losses are more appropriately classified as valuation ad- justments to the direct investment position than as income and capital flows in the international accounts. 2. The term "services" has been redefined to exclude in- vestment income. Receipts and payments of investment income are now shown in a position of importance equal to services in the presentation of estimates. Services are defined to include only services such as travel, other transportation, and business, professional and technical services. Corresponding changes have been made to the partial balances published by BEA to emphasize that the basic building blocks of the current account are merchan- dise trade, services, investment income, and unilateral transfers. The balance on goods, services, and income is equivalent to the previous balance on goods and serv- ices. This redefinition aligns the terms more closely with general usage and with concepts employed in the Interna- tional Monetary Fund's Balance of Payments Manual and the United Nation's System of National Accounts. 3. U.S. military grants of goods and services (line 30) have been combined with other U.S. Government grants (line 32). Transfers of goods and services under U.S. military grants (line 15) have been combined with transfers under U.S. military agency sales contracts (line 4). For more details on these and other changes introduced in June 1990, see the technical notes in "U.S. International Trans- actions, First Quarter 1990" in the June 1990 Survey of Current Business. Parti CONCEPTS AND STRUCTURE Concepts, Definitions, and Principles 1 Concept of Economy An economy consists of economic entities that have a closer degree of association with a given territory than with any other. For the U.S. balance of payments, the economy consists of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, American Samoa, Guam, Midway Island, the Virgin Islands, Wake Island, and all other U.S. territories and possessions. U.S. Government military, diplomatic, consular, and other nonmilitary installations abroad are considered to be within the U.S. economy, and their operations are regarded as an extension of U.S. Government domestic operations. 2 Concept of Resident There are two criteria for drawing the distinction be- tween residents and nonresidents: (1) The person has a center of economic interest (i.e., consumes, produces, or otherwise participates in economic activities) in a given country and (2) resides, or expects to reside, for 1 year or more iri that country. As mentioned below, there are a few exceptions to these criteria; they involve cases where a person resides outside his or her country of residence, but remains subject to that country's jurisdiction (e.g., military and diplomatic personnel). Thus, U.S. residents are those persons residing and pursuing economic interests in the United States; non- residents are those residing and pursuing economic inter- ests outside the United States. The term "U.S. resident" (or "U.S. person") is interpreted broadly to include (1) individuals residing permanently in the United States, (2) business enterprises and nonprofit organizations es- tablished under U.S. laws, including proprietorships, partnerships, and corporations, and (3) Federal, State, and local governments, together with their agencies and subdivisions. International organizations are treated as a separate category and are not considered residents of any country. 2.1 Individuals In general, individuals are considered residents of the country in which they ordinarily live. Thus, U.S. individ- uals who reside outside the United States for less than 1 year are considered U.S. residents, but those who reside outside the United States for 1 year or more are, with three exceptions, considered nonresidents. One excep- tion is that of an owner or employee of a U.S. business enterprise who is residing outside the United States in order to further the enterprise's business, but who in- tends to return in a reasonable period of time. Another exception is that of individuals and members of their im- mediate families who reside outside the United States as a result of employment by the U.S. Government, such as diplomats, consular officials, and members of the armed forces; they are considered U.S. residents, regardless of their length of stay elsewhere. The third exception is that of American students who are enrolled in a course of study at foreign educational institutions; they are con- sidered U.S. residents, regardless of how long they study abroad. Similarly, an owner or employee of a foreign business enterprise who is residing temporarily in the United States in order to further the enterprise's busi- ness is not considered a U.S. resident. Aliens who work in the United States for foreign embassies, consulates, or other missions, and foreign students enrolled at Ameri- can educational institutions are also not considered U.S. residents, regardless of how long they stay in the United States. 2.2 Business enterprises and nonprofit organizations Business enterprises and nonprofit organizations are considered residents of the country in which they are located, operated, organized, incorporated, or controlled financially. U.S. resident organizations consist of all profit-making and nonprofit organizations established under local U.S. laws; their foreign branches, sub- sidiaries, and agencies are considered residents of the countries in which they are located. Similarly, all branches, subsidiaries, and agencies of foreign profit- making and nonprofit organizations that operate in the United States are considered U.S. residents. A foreign branch is an unincorporated business affiliate estab- lished in a foreign country to conduct the business of the parent company in the parent's name; it is not a separate legal entity. A foreign subsidiary is a business affiliate established and incorporated in a foreign country under local laws; it is a separate legal entity from the par- ent company. Transactions between parent companies and their unincorporated and incorporated affiliates are recorded in the U.S. balance of payments as transactions between residents and nonresidents. In some cases, business firms, although organized in the United States, are foreign owned and operate entirely abroad. These firms are treated as residents of the coun- tries of operations, not as U.S residents. In other cases, the firms may be organized in the United States and con- trolled by U.S. interests, but operate abroad. Because of Concepts and Structure control by U.S. interests, these firms are treated as U.S. residents. 2.3 Governments Federal, State, and local governments and their agen- cies and subdivisions, operating at home and abroad, are considered residents of their home country. 2.4 International organizations International organizations, such as the United Nations, the International Monetary Fund, and the International Bank for Reconstruction and Development (IBRD), are considered residents of an international area beyond na- tional boundaries, rather than residents of the countries in which they are located or in which they operate. U.S. transactions with these organizations are recorded under a separate geographic classification, "international and unallocated." Transactions include, for example, the ad- ministrative expenditures of these organizations in the United States and the sale of bonds to U.S. residents and the payment of interest thereon by the IBRD. 3 Double-Entry Principle In the balance of payments, in accordance with the gen- eral principle of double-entry business accounting, every increase in an asset must be offset by a decrease in an- other asset or by an increase in a liability, and a decrease in an asset must be offset by an increase in another asset or by a decrease in a liability. The converse is true, of course, for changes in liabilities. The same rules of debit and credit that are applied in business accounting are applied in recording inter- national transactions; namely, increases in assets and decreases in liabilities are entered as debits, and de- creases in assets and increases in liabilities are entered as credits. By convention, a debit entry is represented by a negative (-) sign and a credit entry by a positive (+) sign. An export of merchandise is recorded as a credit be- cause it reduces the exporting country's assets; the same is true for the rendering of services to nonresidents. If the export is paid for from foreign-owned holdings of the exporting country's currency, there is an offsetting re- duction in liabilities to foreigners, a debit entry. If the export is financed on credit, or by accepting payments in the currency of the importing or another foreign country, the offsetting entry is an increase in the exporting coun- try's assets, that is, its claims on foreigners, which is also a debit entry. An import of merchandise is recorded as a debit because it increases the importing country's assets; the payment for the import is recorded as a credit because it reduces the importing country's assets. Similar treat- ment is accorded to the exchange of financial assets. For example, if a domestic security is sold to a nonresident, the country's assets are reduced and the sale is recorded as a credit; the payment for the security is recorded as a debit because it increases the country's assets. Unilateral transfers, such as gifts, are also recorded using the double-entry principle, although there is no ex- change of assets. In recording these transfers, which may be goods, services, or financial items, the country making the gift debits unilateral transfers and, in equal amount, credits merchandise exports, or services, or the capital accounts, depending on the nature of the gift. When a gift is received, unilateral transfers are credited and merchandise imports, services, or the capital accounts debited. As a practical matter, the credit and debit entries required for each specific transaction in double-entry ac- counting are seldom separately identifiable either in the basic data reported to BEA or in the published balance of payments statement. For example, when merchandise is shipped to a nonresident, an individual export document is filed with the U.S. Customs Service at the point of ex- portation; the offsetting debit entry, which represents the payment for that export, is contained indistinguishably in the aggregate data on foreign claims and liabilities re- ported to the U.S. Treasury Department by U.S. banks or nonbanking concerns. For a loan to a nonresident, neither the extension of the loan, which is a debit entry, nor the offsetting credit entry can be readily identified explicitly. 4 Net and Gross Recording In summary presentations, international transactions may be shown either on a net or gross basis. The net basis is used for most financial items and for unilat- eral transfers. For financial transactions, increases and decreases in assets during a period are usually consoli- dated into single entries and are recorded either as a net increase (debit) or a net decrease (credit); similarly, in- creases and decreases in liabilities are consolidated, and the net amount is recorded with the appropriate sign. This practice reflects the fact that banks and other re- porters generally report their financial transactions in terms of net outstanding amounts as of the end of a particular time period. For unilateral transfers, trans- fers to and from nonresidents are consolidated into single entries. For goods and most services, transactions are recorded on a gross basis, with exports and imports shown separately. 5 Time of Recording To provide for the uniform recording of international transactions in the balance of payments, the timing prin- ciple employed in the accounts specifies that transactions are to be recorded when the change of ownership occurs in real or financial assets. This principle is the same as that employed throughout the U.S. national economic ac- counts. The change of ownership is generally understood to refer to the time when the parties to the transaction record the relinquishment and the acquisition of assets on their books. Consistency among the balance of pay- ments accounts requires that, for example, an export of Concepts, Definitions, and Principles merchandise or service and its corresponding financing entry be recorded in the same time period. As a practical matter, the application of the change- of-ownership rule varies according to the nature of the transaction. First, merchandise trade is recorded in the balance of payments on the basis of the physical movement of goods across the U.S. customs frontier, as evidenced by the export and import documents filed with the U.S. Customs Service. However, it is not clear that a legal change of ownership always occurs at that time; in lieu of other evidence, the physical movement is taken as the best available indication of ownership change. Second, services — such as travel, transportation, and in- surance (which are produced, transferred, and consumed at the same time) — are recorded when performed. Third, investment income is generally recorded on an accrual basis, regardless of when the income is paid or received. If funds are not actually transferred at that time, an off- setting entry is made in the appropriate capital account. Fourth, reinvested earnings of direct investment enter- prises are recorded as income when earned, with offsets of opposite sign in the direct investment capital account. (Direct investment is denned as ownership of at least 10 percent of the voting stock of, or an equivalent interest in, an affiliate located in another country.) Fifth, uni- lateral transfers are recorded when the assets — real or financial — change ownership. The change in ownership of financial items is presumed to occur when the parties to the transaction enter the claim or liability on their books. In the special case of shipments between a parent company and its unincorporated foreign affiliate, no le- gal change of ownership can occur in the strict sense because the parent and foreign affiliate are one legal entity. Nevertheless, the shipments are between resi- dents and nonresidents and are treated in the balance of payments as if ownership had changed, in the same way that shipments between a parent company and its incorporated foreign affiliate — which is a separate le- gal entity — are treated. Goods shipped under leasing arrangements where most of the original cost of the equipment is recovered (financial leases) are treated as having changed ownership and are included in the appro- priate merchandise trade account. Goods shipped under leasing arrangement for periods of less than 1 year (oper- ational leases) are considered temporary shipments and thus are omitted from the merchandise trade accounts; the lease payments are included in the services accounts. tional transactions occur between parties affiliated in a business relationship, and noncommercial considerations often enter into the determination of the price. Neverthe- less, adjustments in the reported values are made only in unusual cases. For merchandise trade, the reported transactions are generally assumed to represent market prices, even for shipments between affiliated enterprises. This approach is largely dictated by pragmatic considerations, because there is no feasible way to construct market price equiv- alents in most cases; moreover, there is the strong likeli- hood that the same valuation is reflected in the financial counterparts of these transactions. For services, trans- actions are generally estimated from sample surveys in which reporters are asked to report transactions at mar- ket values. For income on direct investment, including reinvested earnings, transactions are actual amounts reported by direct investment enterprises; income on portfolio investment, even when related financial insti- tutions are involved, is estimated using market prices. For unilateral transfers, transactions are usually val- ued on the basis of the actual cost incurred in providing real and financial assets. Transactions in financial as- sets and liabilities are recorded at acquisition or sales values. Market prices for traded securities are usually established in organized markets; claims and liabilities reported by banks and nonbanks are recorded at face value. When real or financial assets are acquired at one price and sold at another, both transactions are recorded at their market values. Thus, realized capital gains and losses, including those due to exchange rate changes, are reflected in the balance of payments statement. Ex- cept for direct investment income and its related capital flows, unrealized gains and losses are not reflected in the balance of payments. 1 Transactions denominated in foreign currencies are re- ported at their dollar equivalents, generally converted at exchange rates prevailing at the time of the transaction. 6 Valuation Transactions in real and financial assets must be valued uniformly if the balance of payments accounts are to be consistent. In conformity with the valuation concept em- ployed throughout the U.S. national economic accounts, international transactions are usually valued at market prices. In theory, this is the price that a willing buyer pays to a willing seller in a purely commercial transac- tion when the parties are not related and when there are no noncommercial considerations. In practice, these conditions do not always exist, because many interna- 1. Beginning in June 1990, capital gains and losses associated with transla- tion adjustments — that is, gains and losses that arise because of changes in the exchange rates applied in the translation of affiliates' assets and liabilities from foreign currencies into dollars — are removed from receipts and payments of direct investment income. The translation adjustments are also removed from the rein- vested earnings component of the direct investment capital accounts, where they are entered with the opposite sign from that in the current account. In the inter- national investment position, the translation adjustments are removed from the direct investment capital flow accounts and reclassified as valuation (exchange rate) adjustments. This change does not affect either the direct investment positions or the net international investment position. The inclusion of other capital gains and losses in the direct investment accounts is under review. Classification of Transactions In general, the balance of payments classification system is designed to group together transactions that respond to similar economic influences and that show similar pat- terns of behavior. International transactions are grouped into four major categories: Goods, services (including in- come), unilateral transfers, and capital flows. Goods, services, and unilateral transfers constitute the current account. Capital flows, which consist of changes in U.S. assets abroad and foreign assets in the United States, constitute the capital account. Table 1-1 presents a summary of the U.S. balance of payments classification system for 1988. The presentation of the U.S. balance of payments accounts is shown in table 1-2, and the complete set is shown in the appendix. 1 Current Account The current account measures transactions in goods, services, and unilateral transfers between residents and nonresidents. Transactions in goods and services involve real resources, which may be denned as capable of sat- isfying an economic need or want in and by themselves. The term "goods" refers to all tangible and visible com- modities, which may be in the form of raw materials or intermediate or final products. The term "services" refers to economic output of intangible commodities that may be produced, transferred, and consumed at the same time. The distinction between goods and services is sometimes blurred because items classified as services may include goods; examples are gifts purchased by travelers, which are included in the travel account, and fuel and other supplies purchased by carriers, which are included in the Table 1-1. — Summary of U.S. International Transactions, 1988 [Millions of dollars: credits +, debits -] Exports of goods and services Merchandise, excluding military Other goods and services Imports of goods and services Merchandise, excluding military Other goods and services U.S. Government grants (excluding military grants of goods and services) Remittances, pensions, and other transfers U.S. assets abroad, net (increase/capital outflow (-)) U.S. official reserve assets, net U.S. Government assets, other than official reserve assets, net U.S. private assets, net Foreign assets in the United States, net (increase/capital inflow (+)) Foreign official assets, net Other foreign assets, net Allocations of special drawing rights Statistical discrepancy 529,806 319.251 210,555 -641 ,698 -446,466 -195,232 -10,377 -4,279 -82,110 -3,566 2,999 -81,543 219,299 38,882 180,418 -10,641 transportation account. (In some cases, items classified as goods include services.) Services, in the broad sense, include receipts and payments of income on international investments, which are considered to be returns for the use of capital, a factor of production. Returns on nonfi- nancial assets — such as leased equipment, patents, and copyrights — are also services. Transactions included in unilateral transfers measure transfers of real resources or financial assets without a quid pro quo; the country receiving the transfer neither provides nor promises to provide anything of economic value measurable in monetary terms in return. A distinction is made between government grants, other government transfers, and private transfers. Included in other government transfers and private transfers are grants, donations in kind, gifts, and pension payments, with transfers by U.S. residents being netted against transfers from nonresidents in the presentation of the accounts. U.S. military grants of goods and services, although conceptually equivalent to unilateral transfers, are not included in unilateral transfers. Rather, they are shown in a separate account and are offset by entries in a coun- terpart account in which the physical transfers of goods and services are recorded. 2 Capital Account The capital account measures transactions in financial assets between residents and nonresidents. These assets may be exchanged for real resources or other financial assets, or they may represent the offsets to unilat- eral transfers. Financial assets encompass international claims payable in money, such as loans, bank deposits, drafts, acceptances, notes, government and private debt and equity securities, and intercompany accounts. In the case of direct investment abroad by U.S. residents or in the United States by foreign residents, the physical or real assets held for the production of income are consid- ered financial claims on the country in which the asset is located. The major organizing principle employed in classifying the capital account is the distinction between U.S. assets abroad (claims) and foreign assets in the United States (liabilities). The sector identification for the accounts is that of the domestic creditor for assets and the domestic debtor for liabilities. The functional breakdown of U.S. assets abroad distinguishes among U.S. official reserve assets, U.S. Government assets other than official re- serve assets, and private U.S. assets. Private U.S. assets Classification of Transactions Table 1-2. — U.S. International Transactions, 1988 [Millions of dollars; credits +. debits — '] Exports of goods and services 2 Merchandise, adjusted, excluding military >.. Services 4 Transfers under U.S. military agency sales contracts.. Travel Passenger fares Other transportation . Royalties and license fees Other private services U.S. Government miscellaneous services .... Receipts of income on U.S. assets abroad.. Direct investment Other private receipts U.S. Government receipts Transfers of goods and services under U.S. military grant programs, net. Imports of goods and services Merchandise, adjusted, excluding military '.. Services ' Direct defense expenditures . Travel Passenger fares Other transportation Royalties and license fees Other private services U.S. Government miscellaneous services Payments of income on foreign assets in the United States- Direct investment Other private payments U.S. Government payments U.S. military grants of goods and services, net Unilateral transfers (excluding military grants of goods and services), net. U.S. Government grants (excluding military grants of goods and services). U.S. Government pensions and other transfers Private remittances and other transfers 529,806 319,251 210,555 10,050 29,202 8,860 18,930 10,735 24,331 672 107,775 48,264 52,840 6,672 92 -641,698 -446,466 -195,232 -14,656 -32,112 -7,872 -19,641 -2,048 -1 1 ,400 -1,955 -105,548 -16,748 -59,746 -29,054 -92 -14,656 -10.377 -2,491 -1 ,788 U.S. assets abroad, net (increase/capital outflow (-)) U.S. official reserve assets, net' Gold Special drawing rights Reserve position in the International Monetary Fund . Foreign currencies U.S. Government assets, other than official reserve assets, net U.S. credits and other long-term assets Repayments on U.S. credits and other long-term assets 6 U.S. foreign currency holdings and U.S. short-term assets, net U.S. private assets, net Direct investment Foreign securities U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns. U.S. claims reported by U.S. banks, not included elsewhere Foreign assets In the United States, net (Increase/capital Inflow (+))., Foreign official assets in the United States, net U.S. Government securities U.S. Treasury securities ' Other" Other U.S. Government liabilities' U.S. liabilities reported by U.S. banks, not included elsewhere Other foreign official assets '° Other foreign assets in the United States, net Direct investment US Treasury securities U.S. securities other than U.S. Treasury securities U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns. U.S. liabilities reported by U.S. banks, not included elsewhere Allocations of special drawing rights Statistical discrepancy (sum of above Items with sign reversed) Memoranda: Balance on merchandise trade (lines 2 and 17) Balance on services (lines 3 and 18) Balance on goods and services (lines 66 and 67) " Balance on goods, services, and remittances (lines 68, 33, and 34) Balance on current account (lines 68 and 31) " Transactions in U.S. official reserve assets and in foreign official assets In the United States: Increase (-) in U.S. official reserve assets, net (line 36) Increase (+) in foreign official assets in the United States (line 51 less line 55). -82,110 -3,566 474 1,025 -5,064 2,999 -7,579 10,313 265 -81,543 -17,533 -7,846 -1,684 -54,481 219,299 38,882 42,992 41,683 1,309 -1 ,284 -331 -2,495 180,418 58,436 20,144 26,448 6,558 68,832 -10,641 -127,215 15,323 -111,892 -116,171 -126,548 -3,566 40,166 1. Credits, +: Exports of goods and services; unilateral transfers to United States; capital inflows (increase in foreign assets (U.S. liabilities) or decrease in U.S. assets); decrease in U.S. official reserve assets; increase in foreign official assets in the United States. Debits, -: Imports of goods and services; unilateral transfers to foreigners; capital outflows (decrease in foreign assets (U.S. liabilities) or increase in U.S. assets); increase in U.S. official reserve assets; decrease in foreign offical assets in the United States. 2. Excludes transfers of goods and services under U.S. military grant programs (see line 15). 3. Excludes exports of goods under U.S. military agency sales contracts identified in Census export documents, excludes imports of goods under direct defense expenditures identified in Census import documents, and reflects various other adjustments (for valuation, coverage, and timing) of Census statistics to balance of payments basis. 4. Includes some goods: Mainly military equipment in line 4; major equipment, other materials, supplies, and petroleum products purchased abroad by U.S. military agencies in line 19; and fuels purchased by airline and steamship operators in lines 7 and 22. 5. For all areas, amounts outstanding March 31, 1989, were as follows in millions of dollars: Line 36, 49,854; line 37, 11,061; line 38, 9,443; line 39, 9,052; line 40, 20,298. Data are preliminary. 6. Includes sales of foreign obligations to foreigners. 7. Consists of bills, certificates, marketable bonds and notes, and nonmarketable convertible and nonconvertible bonds and notes. 8. Consists of U.S. Treasury and Export-Import Bank obligations, not included elsewhere, and of debt securities of U.S. Government corporations and agencies. 9. Includes, primarily, U.S. Government liabilities associated with military agency sales contracts and other transactions arranged with or through foreign official agencies. 10. Consists of investments in U.S. corporate stocks and in debt securities of private corporations and State and local governments. 11. Conceptually, the sum of lines 70 and 64 is equal to "net foreign investment" in the national income and product accounts (NIPA's). However, the foreign transactions account in the NIPA's (a) includes adjustments to the international transactions accounts for the treatment of gold, (b) excludes capital gains and losses of foreign affiliates of U.S. parent companies from the NIPA's measure of income receipts from direct investment abroad, and from the corresponding income payments on direct investment in the United States, (c) includes an adjustment for the different geographical treatment of transactions with U.S. territories and Puerto Rico, and (d) includes services furnished without payment by financial intermediaries, except life insurance carriers and private noninsured pension plans. In addition, for NIPA purposes, U.S. Government interest payments to foreigners are excluded from "net exports of goods and services" but included with transfers in "net foreign investment." A reconciliation of the international accounts and the NIPA's appears in table I-6. are classified into direct investment, foreign securities, nonbank-reported claims, and bank-reported claims. The functional breakdown for foreign assets in the United States distinguishes between assets held by for- eign official agencies and those held by other foreigners. (For the definition of a foreign official agency, see the section "Transactions With Foreign Official Agencies.") Foreign official assets are subdivided into U.S. Treas- ury securities, other U.S. Government securities, other U.S. Government liabilities, bank-reported liabilities, and other foreign official assets. "Other" foreigners include private residents, international organizations, and foreign government owned or sponsored corpora- tions and other organizations that are not regarded as official agencies. The accounts covering "other" foreign- ers are classified into direct investment, U.S. Treasury securities, U.S. securities other than Treasury secu- rities, nonbank-reported liabilities, and bank-reported liabilities. Included among the capital accounts is a counterpart account established to record the allocations to the United States of special drawing rights (SDR's) by the International Monetary Fund (IMF). Entries in this account offset changes in U.S. official reserve assets resulting from the allocations. 3 Correspondence With IMF Manual The classification of accounts used in the U.S. balance of payments statement generally corresponds with that recommended as an international standard in the IMF Concepts and Structure Balance of Payments Manual (fourth edition) [16]. 1 With one significant exception noted below, the differences between the individual accounts shown in the U.S. pres- entation and the standard components listed in the Manual are relatively minor, apart from some variation in terminology and arrangement. The one significant exception in the U.S. presentation concerns capital gains and losses in direct investment income. In the U.S. balance of payments, direct invest- ment income is defined on an "all-inclusive" basis, that is, both ordinary and other types of income, including both realized and unrealized capital gains and losses. The Manual, on the other hand, recommends that only or- dinary income be included in direct investment income and that capital gains and losses be excluded. (As noted earlier, BEA's treatment of capital gains and losses has been changed; see footnote 1, page 5.) There are three minor differences. The first concerns international reserve assets. The Manual recommends that the total change in holdings be recorded, not just changes resulting from transactions. Thus, the Man- ual includes counterpart accounts for the monetizations and demonetizations of gold, allocations and cancella- tions of SDR's, and valuation changes in all reserve items, in order to provide the necessary offsets to changes in holdings, as required by the double-entry accounting principle. The U.S. balance of payments, as mentioned earlier, includes only one counterpart account for re- serves, that for SDR allocations; otherwise, only the changes arising from transactions are recorded. The second difference concerns capital subscriptions to in- ternational organizations. The Manual recommends that they be recorded when due; the U.S. balance of payments records them on a cash basis, that is, when dis- bursed. The third difference is the treatment of income distributed to shareholders in the form of stock divi- dends. The Manual recommends that these dividends be included in direct investment income, offset by a counter- entry in the direct investment capital account. The U.S. balance of payments omits stock dividends because they are treated as a capitalization of retained earnings — a substitution of one type of equity for another — rather than as a remittance of earnings. 1. The fifth edition of the Manual is in preparation. Statistical Discrepancy From the earlier discussion of the double-entry account- ing principle, it is apparent that if all international transactions that take place in a given time period were estimated correctly and recorded in that period, credits would equal debits and the algebraic sum of the two — counting credits as positive and debits as negative — would be zero. However, because the data are collected from many different sources, there are inevitable dis- crepancies between credits and debits in any given time period. These discrepancies reflect many factors, includ- ing inaccurate valuation, timing differences, incomplete reporting, and errors from estimating procedures. The entry necessary to balance recorded credits and debits is termed the "statistical discrepancy" — formerly "errors and omissions"; it represents the sum of credits and debits in the balance of payments statement with the sign reversed. A negative sign for this item indicates one of the following situations: Total credits have been overestimated; total debits have been underestimated; a combination of the two has occurred; or both credits and debits have been overestimated, but credits by a larger amount than debits. A positive sign for the statistical discrepancy indicates the converse. Because errors and omissions in the various accounts may be offsetting, their gross sum cannot be determined; it is probably much larger than the net figure. Neither is it possible to determine how much each account con- tributes to the statistical discrepancy on a net or gross basis. However, some general observations can be made concerning the likely sources of error in broad groups of accounts. The merchandise trade accounts may be sub- ject to inaccurate valuation on both the export and import sides. Export values shown on the individual export doc- uments that are used as source data may not include the cost of inland transportation, or the import documents may erroneously include the cost of transportation and insurance beyond the port of export. Another difference between the credit and debit entries may occur when merchandise shipped and recorded in one period is not offset by a corresponding payment entry in the same time period. In contrast to merchandise exports and imports, there are no individual documents or equivalent reporting mechanism for most services transactions. Here, the largest source of error is probably one of coverage. Error may result from a partial omission because of inadequate sample data, or it may result from a complete omis- sion because certain transactions are not reported at all. Examples of the latter include such items as real es- tate commissions, certain financial services provided by banks and nonbanks, and foreign participation in U.S. limited partnerships. 3 Estimates of U.S. Government transactions may also be subject to errors. For example, there is no informa- tion on the amount of funds transferred to and received from the United States through private channels by U.S. military personnel stationed abroad, which may affect estimates of U.S. direct defense expenditures abroad. Difficulties may also arise in obtaining accurate report- ing on foreign expenditures of U.S. agencies working on projects abroad under long-term contracts (for example, the U.S. Army Corps of Engineers). Estimates of transactions in U.S. official reserve assets and transactions with foreign official agencies are gener- ally well documented and are not likely to be a significant source of errors and omissions. Private capital transac- tions, on the other hand, may contribute substantially to the size and fluctuations in the statistical discrepancy. Capital transactions, particularly in periods of economic or political uncertainties, may be partly unreported, par- ticularly if the funds are transferred via nontraditional channels outside the reporting system, or if the transac- tors desire to conceal the ownership or location of funds. Transactions undertaken by foreigners with U.S. resi- dents through foreign-owned subsidiaries, bank agencies, or trusts located in the United States may also give rise to errors, because the ultimate beneficial owners often are not known and because the parties involved may con- sider the transactions to be domestic and, therefore, not reportable. In addition, short-term lending or borrowing between residents and nonresidents may utilize interme- diaries that have not yet been identified or that have not yet been adequately covered by reporting requirements. If both the credit and debit entries for a transac- tion have been omitted, no statistical discrepancy arises. However, in most cases, data representing the two sides of a transaction are derived independently from sepa- rate statistical sources, with the consequent possibility of timing and other differences. For example, the financ- ing of an export may be recorded earlier or later than the change of ownership, especially when currency val- ues fluctuate. If the exporter's currency is expected to strengthen against other currencies, importers may seek to prepay for deliveries in order to avoid less favorable exchange rates later; if a weakening in the value of the exporter's currency is anticipated, payments may be post- poned to take advantage of more favorable rates. These leads and lags in flows may result in a statistical dis- crepancy between recorded credits and debits in a given time period. In addition to exchange rate expectations, 3. Work is underway to develop estimates for some of these items. 10 Concepts and Structure timing differences may also reflect the usual lag between payments for and the arrival of merchandise. If the flow of goods is relatively stable, the differences cancel out. In periods of rising or falling trade volumes, the offsetting credit or debit entries may not be recorded in the same time period; however, they will still cancel out over time. In the geographic breakdown of the balance of pay- ments, the statistical discrepancy reflects not only errors and omissions in reporting and estimating, but other fac- tors as well. The statistical discrepancy for individual countries and areas includes the net effect of multilat- eral settlements, which occur when dollar funds move between foreign countries; therefore, changes in dollar balances held by one country cannot be accounted for by U.S. transactions with that country. For example, a positive statistical discrepancy for a country may indicate either that it has transferred dollars to a third country or that some of its transactions with the United States were settled in currencies other than the dollar. Because the dollar is used extensively in settling international transactions and forms a large part of foreign currency reserves of many countries, the statistical discrepancies included in table 10 of the appendix cannot be interpreted as a measure of area distribution of the global statistical discrepancy. Legal Authority 'he legal authority for the collection of U.S. balance f payments data derives from section 8 of the Bretton Voods Agreements Act of 1945 (Public Law 79-171, as mended), implemented by Executive Order No. 10033, /hich directed the U.S. Government to collect and pub- ish complete balance of payments information and to ornish this information to international organizations, 'he Bretton Woods Agreements Act is supplemented by he International Investment and Trade in Services Sur- ey Act (Public Law 94-472, as amended). Except for ersonal and institutional remittances to foreign coun- tries and expenditures of travelers, the reporting of U.S. international transactions specified in the act is now mandatory; certain exemption levels apply, as specified in table 1-3. Overall responsibility for approving U.S. balance of payments surveys rests with the Office of Management and Budget (OMB). Proposals for changes in coverage of existing reporting forms and requests for authority to conduct new surveys must be submitted to OMB for approval. Table 1-3. — BEA Balance of Payments Surveys Survey title and number Types of information Collection procedures BPA table 1 line number Direct Investment Direct Transactions of U.S. Reporter With Foreign Affiliate (BE-577). Transactions of U.S. Affiliate, Except an Unincorporated Bank, With Foreign Parent (BE- 605); Transactions of U.S. Banking Branch or Agency With Foreign Parent (BE-606B). Benchmark Survey of U.S. Direct Investment Abroad (BE-10A, BE-10ABank, BE-1 OB, BE-10BBank). U.S. direct investors' share of net income, distributed earnings, capital gains and losses, and undistributed earnings of foreign affiliates; interest; royalties and license fees; rentals, management fees, allocated expenses and other service charges; changes in U.S. direct investors' equity in their foreign affiliates; intercompany debt transactions between foreign affiliates and U.S. direct investors; U.S. direct investors' equity and debt position in their foreign affiliates. Foreign direct investors' share of net income, distributed earnings, capital gains and losses, and undistributed earnings of their U.S. affiliates; interest; royalties and license fees; rentals, management fees, allocated expenses, and other service charges; changes in foreign direct investors' equity in their U.S. affiliates; intercompany debt transactions between U.S. affiliates and foreign direct investors; foreign direct investors' equity and debt position in their U.S. affiliates. Complete financial and operating data for U.S. persons who are direct investors abroad (BE-10A, and BE-10A Bank) and for each foreign affiliate (BE-10B and BE-1 OB Bank); data on investment position and transactions between foreign affiliates and U.S. direct investors. Mandatory quarterly survey of U.S. persons who hold 1 percent or more of voting stock or equivalent interest in a foreign business enterprise (affiliate), when the affiliate's total assets, annual sales, or annual net income exceeds $15 million. In 1988, 9,100 reports for foreign affiliates were filed each quarter. Mandatory quarterly survey of U.S. business enterprises (affiliates) in which a foreign person holds 10 percent or more of voting stock or equivalent interest, when the affiliate's assets, annual sales, or annual net income exceeds $20 million. In 1988, 3,400 reports were filed quarterly. Mandatory benchmark survey (usually taken every 5 years) of all U.S. persons who hold 1 percent or more of voting stock or equivalent interest in a foreign business enterprise, and of foreign affiliates of U.S. direct investors, when the affiliate's assets, sales, or net income exceeds $3 million. In 1982, U.S. parents filed 2,245 BE-10A or BE-10A Bank reports and 18,339 BE-1 0B or BE-1 0B Bank reports for their foreign affiliates. Line 12 (Receipts of income on U.S. direct investment abroad). Line 8 (Royalties and license fees). Line 9 (Other private services). Line 46 (U.S. direct investment abroad). Line 27 (Payments of income on foreign direct investment in the United States). Line 23 (Royalties and license fees). Line 24 (Other private services). Line 59 (Foreign direct investment in the United States). Line 12 (Receipts of income on U.S. direct investment abroad). Line 8 (Royalties and license fees). Line 9 (Other private services). Line 46 (U.S. direct investment abroad). 11 12 Concepts and Structure Table 1-3. — BEA Balance of Payments Surveys — Continued Survey title and number Types of information Collection procedures BPA table 1 line number Direct Investment — Continued Benchmark Survey of Foreign Direct Investment in the U.S. (BE-12). Complete financial and operating data for each U.S. affiliate of foreign direct investors; data on investment position and transactions between U.S. affiliates and foreign direct investors. Mandatory benchmark survey (taken every 5 years) of each U.S. business enterprise (affiliate) in which one foreign person holds 10 percent or more of voting stock or equivalent interest, when the U.S. affiliate's total assets, sales, or net income exceeds $1 million. In 1987, 7,700 reports were filed.. Line 27 (Payments of income on foreign direct investment in the United States). Line 23 (Royalties and license fees). Line 24 (Other private services). Line 59 (Foreign direct investment in the United States). Travel Survey of U.S. Travelers Total expenditures of U.S. residents Voluntary survey (distributed continuously Part of line 20 Visiting Canada (BE-536). visiting Canada for food, lodging, at border points) of U.S. residents (Travel). entertainment, gifts, local visiting Canada. In 1988, 30,000 transportation, etc.; length of visit; questionnaires were returned. provinces visited and number of days spent in each; number in party; method of transportation; and purpose of visit. Expenditures of United States Travelers in Total expenditures of U.S. residents Voluntary survey (distributed continuously Part of line 20 visiting Mexico for food, lodging, at border points) of U.S. residents (Travel). Mexico (BE-575). entertainment, gifts, local visiting Mexico. In 1988, 5,000 transportation, etc.; place of currency questionnaires were returned. exchange (United States or Mexico), if any; length of visit and principal cities visited; number in party; and purpose of visit. Transportation Ocean Freight Revenues Revenues of U.S. carriers from Mandatory quarterly survey of U.S. Part of lines 7 and 22 and Foreign Expenses of transporting U.S. exports to foreign operators of dry cargo, passenger (Other transportation). U.S. Carriers (BE-30). countries, from transporting freight (including combination), and tanker between foreign points, and from vessels with covered revenues or transporting imports into the United expenses of $500,000 or more. In States; shipping weight on U.S. 1988, 40 reports were filed quarterly. exports; charter hire received and paid; expenses in foreign countries for fuel, stores, repairs, stevedoring, harbor fees, agents' commissions and similar expenses. U.S. Airline Operators' Revenues of U.S. airlines from Mandatory quarterly survey of U.S. airline Part of line 6 Foreign Revenues and transporting U.S. exports to foreign operators with covered revenues or (Passenger fares) and part of Expenses (BE-37). countries and from transporting freight expenses of $500,000 or more. In lines 7 and 22 (Other and passengers between foreign 1988, 14 reports were filed quarterly. transportation). points. Expenditures abroad of U.S. air carriers for fuels and oils loaded aboard aircraft; maintenance of bases, freight and passenger facilities, and offices abroad; landing fees; wages paid to crew members abroad; and similar expanses. Foreign Ocean Carriers' Expenditures related to loading, unloading, and storing cargo at U.S. Mandatory annual survey of foreign Part of line 7 Expenses in the United ocean carriers with covered expenses (Other transportation). States (BE-29). ports, such as stevedoring; container, barge, and warehouse rentals; of $500,000 or more. In 1988, 130 reports were filed by U.S. agents of expenditures for fuels and oils loaded foreign ocean carriers. aboard in U.S. ports; expenditures for pilotage, towing, documentation, harbor fees; and similar services. Foreign Airline Operators' Revenues of foreign airlines from Mandatory annual survey of foreign Part of lines 7 and 22 Revenues and Expenses transporting freight to the United airlines with covered revenues or (Other transportation). in the United States (BE- States; shipping weight on such freight; expenses of $500,000 or more. In 36). expenditures in the United States for fuels and oils; wages and salaries paid to employees; agents' and brokers' fees and commissions; aircraft handling and terminal services; aircraft leasing and similar expenses. 1988, 60 reports were filed. l&gal Authority 13 Table 1-3. — BEA Balance of Payments Surveys — Continued Survey title and number Types of information Collection procedures BPA table 1 line number Other Services Jenchmark Survey of Selected Services Transactions With Unaffiliated Foreign Persons (BE-20). Annual Survey of Selected Services Transactions With Unaffiliated Foreign Persons (BE-22). annual Survey of Royalties, License Fees, and Other Receipts and Payments for Intangible Rights Between U.S. and Unaffiliated Foreign Persons (BE-93). annual Survey of Construction, Engineering, Architectural, and Mining Services Provided by U.S. Firms to Unaffiliated Foreign Persons (BE-47). annual Survey of Reinsurance and Other Insurance Transactions by U.S. Insurance Companies With Foreign Persons (BE-48). Payments and receipts relating to advertising; computer and data processing; telecommunications; agriculture; research, development, and testing; accounting; legal; industrial engineering; performing arts; direct insurance (payments only); construction, engineering, and mining services (payments only); and similar services. Payments and receipts relating to advertising; computer and data processing; telecommunications; agriculture; research, development, and testing; accounting; legal; industrial engineering; performing arts; direct insurance (payments only); construction, engineering, and mining services payments only); and similar services. Data are reported in less detail than in benchmark surveys. Sale and purchase of rights relating to industrial processes and products; books, records, audio tapes; trademarks; motion picture and TV tapes; broadcast and recording of live performances and events; business format franchising; and other intangibles. General contracting and construction; supervision of construction; procurement; consulting engineering; management engineering; metal and coal mining services; oil and gas field services; architectural and surveying; and similar services. Reinsurance premiums ceded and assumed, and reinsurance losses paid to and recovered from insurance companies resident abroad; primary insurance sold to foreign persons. Mandatory benchmark survey (usually taken every 5 years) of all U.S. persons who have one or more individual sale or purchase transaction in excess of $250,000 with an unaffiliated foreign person in any of the covered services. In 1986, 900 reports were filed. Mandatory annual survey (follow-on to the BE-20) of all U.S. persons who have one or more individual sale or purchase transactions in excess of $250,000 with an unaffiliated foreign person in any of the covered services. In 1988, 900 reports were filed. Mandatory annual survey of U.S. persons (enterprises and individuals) whose foreign receipts or payments amount to at least $500,000. List of U.S. persons with reportable transactions is maintained by BEA. In 1988, 500 reports were filed. Mandatory annual survey of U.S. contractors known to have foreign contracts whose gross operating revenue is $1 million or more or who receive foreign contracts with a gross value of $1 million or more. List of U.S. contractors is maintained by BEA. In 1988, 130 reports were filed. Mandatory annual survey of U.S. insurance companies whose insurance premium receipts, payments, or losses is $1 million or more. List of U.S. insurance companies is maintained by BEA. In 1988, 200 reports were filed. Part of lines 9 and 24 (Other private services). Part of lines 9 and 24 (Other private services). Lines 8 and 23 (Royalties and license fees). Part of lines 9 and 24 (Other private) services). Part of line 9 (Other private services). Part of lines 9 and 24 (Other private services). Unilateral Transfers nstitutional Remittances to Foreign Countries (BE- 40). : oreign Personal Remittances (BE-579). Funds remitted to foreign residents, including outright grants; payments abroad for procurement of goods to be used abroad; expenditures for salaries and administrative expenses abroad; and shipments of purchased or privately donated goods and supplies. Noncommercial payments by individuals in the United States to individuals abroad by means of bank drafts, checks, and other instruments. Voluntary annual survey of U.S. religious, charitable, educational, scientific, and similar nonprofit organizations with total remittances of $25,000 or more. If annual remittances total $1 million or more, the organizations are requested to report quarterly. In 1988, 90 questionnaires were submitted quarterly and 360 annually. Voluntary monthly (or quarterly) survey of U.S. banks and agencies engaged in handling remittances. In 1988, 2 questionnaires were submitted monthly and 6 quarterly (24 monthly reports from 2 reporters, and 24 quarterly reports from 6 reporters). Part of line 34 (Private remittances and other transfers). Part of line 34 (Private remittances and other transfers). Data Sources Balance of payments transactions are estimated on the basis of data obtained from a variety of sources, including the Commerce Department's Bureau of the Census, the Department of the Treasury, BEA, other U.S. Govern- ment agencies, international organizations, and industry and trade associations. Only an overview of the bal- ance of payments data sources is given here; detailed descriptions of the reporting forms, frequency of report- ing, and some information on the number and type of reporters pertaining to individual accounts are included in the sections that follow. Sources of data for the balance of payments evolved in a pragmatic manner over a period of years, in line with the expansion and growing complexity of international transactions. To avoid placing an unnecessary report- ing burden on private transactors, efforts are made to utilize data already available to BEA or other U.S. Gov- ernment agencies. Reporting procedures are modified to account for changes in institutional settings or prac- tices. The major sources utilized in preparing balance of payments estimates are (1 ) Census Bureau merchandise trade statistics, (2) BEA surveys, (3) U.S. Treasury De- partment data on international capital movements, (4) data from other U.S. Government agencies, and (5) data from other sources. 1 Census Bureau Merchandise Trade Statistics Monthly Census Bureau tabulations of shipping docu- ments that exporters and importers must file with the U.S. Customs Service are the basis of the monthly and quarterly estimates of merchandise exports and imports. These tabulations, which are described in table II-l, require several adjustments by BEA for coverage, tim- ing, and valuation to make them conform to balance of payments concepts and definitions. 2 BEA Surveys BEA surveys (designated by the letters "BE") are the basis of the estimates of receipts and payments of in- come and capital flows relating to direct investment, receipts and payments for selected services, and private remittances and other transfers. The mandatory surveys, described in table 1-3, collect data from private organizations, primarily businesses, that engage in transactions with foreign residents on their own behalf or on behalf of others. The surveys of income on direct investment and related capital flows and of services receipts from, and payments to, affiliated foreigners are quarterly and are linked to periodic bench- marks. Many annual and quarterly surveys of services transactions are also linked to benchmarks. Other, voluntary, surveys collect travel information from U.S. residents visiting Canada and Mexico. Data obtained from the BEA surveys are, in some cases, combined with information from other U.S. Gov- ernment agencies, such as data on the number of trav- elers from the U.S. Immigration and Naturalization Service and data on shipping tonnage from the Census Bureau. 3 U.S. Treasury International Capital Reporting System The Treasury Department collects data on international capital movements within the framework of the Treas- ury International Capital (TIC) reporting system. These data are used by BEA, in combination with representa- tive yields from other sources, to estimate receipts and payments of income on portfolio investment. The TIC system, which is administered by the Federal Reserve Bank of New York for the Treasury Department, pro- vides monthly and quarterly data on holdings of, and on transactions in, portfolio investment — investment in the form of debt instruments between unaffiliated parties, equity positions of less than 10 percent, and other claims and liabilities. The data cover (1) purchases and sales of securities and (2) amounts of outstanding claims and liabilities reported by banks and nonbanking concerns; the system is summarized in table 11-28. Reports are filed by banks, bank holding companies, and securities brokers and dealers with the Federal Re- serve bank of the district in which they are located; nonbanking enterprises file directly with the Federal Re- serve Bank of New York. All reports are consolidated by the Federal Reserve Bank of New York and transmitted to the Treasury Department for publication in the Treas- ury Bulletin [75]; the Treasury, in turn, provides the data to BEA. 4 Data From Other U.S. Government Agencies All U.S. Government agencies engaged in international transactions are required to report these transactions quarterly to BEA, under Office of Management and Budget Statistical Policy Directive No. 19. These data 14 Data Sources 15 are the basis of the estimates of foreign military sales and direct defense expenditures, receipts and payments for U.S. Government miscellaneous services, interest paid to and received from foreigners, U.S. Government grants and pensions and other transfers, U.S. official reserve assets, other U.S. Government assets abroad, and certain U.S. Government liabilities. Reporting requirements under Directive No. 19 apply to all U.S. Government agencies (executive departments and establishments) where one or more of the following conditions prevail: (1) Reportable international trans- actions total $1,000,000 or more per year, (2) balances of foreign assets and liabilities total $500,000 or more, (3) transactions involving foreign grants or credits to- tal $100,000 or more per year, or (4) balances of foreign credits total $100,000 or more. 5 Data From Other Sources BEA estimates services transactions between U.S. and foreign residents on the basis of a variety of published and unpublished source data, in addition to BEA surveys and Directive No. 19 reports. These include information from U.S. Government budgetary documents, as well as data from the Federal Reserve Board, other U.S. Gov- ernment agencies, international organizations, foreign central banks and statistical offices, trade associations, banks, and various other international transactors. Seasonal Adjustment The quarterly time series on international transactions are seasonally adjusted if they exhibit statistically sig- nificant seasonal variation. The concept of seasonal adjustment is based on the premise that the intrayear seasonal pattern — which is repeated constantly or in an evolving manner from year to year — can be identified, measured, and separated from the trend, cyclical, and ir- regular fluctuations in a time series. The main technique for seasonal adjustment in the U.S. balance of payments is the ratio-to-moving-average method; the variant in use is the Census Bureau's X-ll program, with options for multiplicative and additive adjustments. This program is sometimes combined with the Autoregressive Integrated Moving Average (ARIMA) model, developed by Statistics Canada; the resulting X-ll ARIMA program provides improved estimates of seasonal factors near the ends of some original time series. (For a detailed explanation of seasonal adjustment concepts and procedures, see the Census Bureau publication [42] and subsequent technical bulletins.) The application of seasonal adjustment to quarterly balance of payments estimates is limited because many series do not exhibit discernible seasonal patterns. The quarterly series on individual accounts are tested each year — using a historical time period with the addition of the latest year — to determine if statistically significant seasonal patterns are present. If an item no longer meets the requirements, seasonal adjustment is discontinued. On the other hand, seasonal adjustment may be initiated or resumed if there is new evidence of seasonality. In the current account, about one-half of the individual accounts are seasonally adjusted. The X-ll ARIMA pro- gram is used to adjust merchandise exports and imports. The X-ll program is used to adjust the following services accounts: Travel, passenger fares, other transportation, and U.S. Government services (receipts and payments); and direct investment income and related services, and U.S. Government income (receipts). The X-ll program is also used to seasonally adjust U.S. Government pensions and other transfers and private remittances. In the capital account, only the accounts covering repayments on U.S. Government credits and other long- term assets, and the reinvested earnings portion of capital outflows on U.S. direct investment abroad, are seasonally adjusted. Until 1973, changes in U.S. private assets abroad and in foreign assets in the United States were seasonally adjusted; however, beginning in 1973, seasonal patterns were severely disrupted as a result of changes in the international monetary system, the re- moval of U.S. controls on capital outflows, and the impact of the extraordinary rise in petroleum prices. 16 Summary Measures The U.S. balance of payments presentation does not con- tain a specific number that indicates an overall "balance," although partial balances are published. In an account- ing sense, an overall balance is not possible, because, as discussed earlier, the net sum of credit and debit en- tries in the balance of payments accounts is conceptually zero, in accordance with the principles of double-entry accounting. If the entries do not balance exactly, the net amount of missing credits or debits is entered as a sta- tistical discrepancy in order to bring the two parts of the statement into equilibrium. In an analytical sense, a summary measure of inter- national transactions may be obtained by dividing the balance of payments statement horizontally, to produce two groups of transactions — one above the line and the other below it. The net sum of the transactions in each group will be numerically equal, but one will be a net credit and the other a net debit; the net credit is conventionally termed a "surplus" and the net debit a "deficit." Further subdivision of the transactions will produce additional balances, with the net sums always numerically equal, but with opposite signs. The lower the line is drawn, the more inclusive the balance becomes. However, as stated in the report of a review commit- tee examining the U.S. balance of payments statistics in 1965 [10]: No single number can adequately describe the international position of the United States during any given period. The definition of an international surplus or deficit is an an- alytical problem rather than an accounting problem. The appropriate focus of analysis will change with changing cir- cumstances and with the nature of the particular problem being analyzed. Data must therefore be compiled and pres- ented in a form that facilitates a wide variety of analyses. Furthermore, useful analysis of the international position is rarely possible on the basis of balance of payments data alone; internal developments and policy objectives here and abroad need also to be taken into account. Before 1976, the quarterly presentation of U.S. in- ternational transactions included a number of balances. The intent was to provide a focus for the accompanying analysis and to assist users with the interpretation of the estimates. Some of the balances were partial in that they covered only a limited number of transactions; oth- ers were more inclusive and known as overall balances, measuring balance of payments surpluses or deficits. The balances presented have changed over time in order to keep pace with changes in the economic environment. (For a historical review of the balance of payments sum- mary measures, see the report mentioned above. Overall balances have not been published since March 1976, as is discussed more fully in the June 1976 Survey of Current Business (Survey.) Partial balances continue to be published. The four partial balances that are shown in the quarterly pres- entation of U.S. international transactions are those on (1) merchandise trade, (2) goods and services, (3) goods, services, and remittances, and (4) the current account. The balance on merchandise trade measures the dif- ference between merchandise exports and imports. It differs from the trade balance published monthly by the Bureau of the Census not only in the frequency of its publication (quarterly), but also in its conformity to bal- ance of payments concepts, as explained in part II, in "Merchandise Trade." The balance on goods and services measures the net transfer of merchandise plus services, including the "services" of capital in the form of income on direct and portfolio investments. In the broad sense, this balance is conceptually equal to net exports of goods and services included in GNP. A reconciliation is presented later in "Balance of Payments and the National Accounts." 4 The balance on goods, services, and remittances includes, in addition to merchandise and services, uni- lateral transfers in the form of net U.S. Government and private remittances and other transfers to private foreign residents. This balance is used by the International Mon- etary Fund and others in international comparisons of the positions of industrial countries and developing coun- tries. In drawing this balance, Government grants — the official portion of unilateral transfers — are placed "be- low the line" along with official and all private capital, because they can be viewed as part of the "financing element" in international transactions, particularly for developing countries. The balance on current account, the most inclusive of the four partial balances, measures net receipts or pay- ments on goods and services and all unilateral transfers, that is, including net U.S. Government grants to foreign countries. It is widely used internationally for analysis and forecasting. It is generally more feasible to forecast the impact of economic activities and exchange rate and policy changes on the current account than on the more volatile capital account, because some current account transactions are relatively stable (for example, merchan- dise trade) and usually cannot be reversed in the short run. In addition, balance of payments objectives are often expressed in terms of current account balances. Despite its widespread use, the current account balance is a par- tial measure and retains its limitations as such; in both analysis and forecasting, it must be regarded as only 4. Beginning in June 1990, the service accounts are redefined to exclude receipts and payments of income on direct and portfolio investments. 17 18 Concepts and Structure one of the indicators to be used in evaluating a country's international economic position. The current account balance plus capital grants re- ceived by the United States — mainly allocations of spe- cial drawing rights — serves as a measure of net foreign investment in the United States in the national economic accounts. When the United States records a current ac- count deficit — net payments to foreigners on transfers of goods, services, and unilateral transfers — the deficit is reflected in the net sum of capital transactions recorded in accounts below that balance, including the statisti- cal discrepancy. The current account deficit may be "financed" by drawing down U.S. monetary reserves or by borrowing from foreigners. In either case, foreign- ers acquire net claims on U.S. residents; that is, net foreign investment in the United States is increased. Conversely, when the current account is in surplus, U.S. residents transfer to foreigners an equal amount of capital, which enables foreigners to "finance" their deficit with the United States. In this case, U.S. resi- dents acquire net claims on foreigners; that is, net U.S. investment abroad is increased. Publication of Estimates Balance of payments estimates are prepared and re- leased to the public on a quarterly basis. Summary estimates are issued in a news release about 10 weeks after the close of the quarter to which they refer, and a full set of preliminary estimates is published in the March, June, September, and December issues of the Survey. In addition to a summary table, nine tables present additional detail by type of transaction (see the appendix). The Survey for these months includes an article that analyzes current developments in U.S. inter- national transactions, changes in the foreign exchange value of the U.S. dollar, and current economic and fi- nancial trends in the United States and abroad insofar as they affect U.S. international transactions. Revised estimates for each quarter are released 3 months later. Estimates for the 4 most recent years are revised on the basis of more complete information and are pub- lished each year in the June Survey. The summary tables presented in this issue include a historical time series, generally 25—28 years of annual data and 6-8 years of quarterly data. Annual bilateral estimates for a number of individual countries are presented in the June Survey and, for members of the Organization of Petroleum Ex- porting Countries, in the March Survey. Detailed data relating to U.S. direct investment abroad and foreign di- rect investment in the United States are presented in the August Survey. In addition to the Survey, balance of payments esti- mates prepared by BEA are available in other publica- tions. Summary balance of payments tables are included in the monthly Federal Reserve Bulletin, the monthly Economic Indicators, prepared for the Joint Economic Committee of Congress, the annual Economic Report of the President, and other U.S. Government publications. The format of presentation varies somewhat from BEA's format. Other sources of international financial data include the Federal Reserve Bulletin, which presents, in its "In- ternational Statistics" section, additional detailed data from U.S. banking and nonbanking enterprises on claims on, and liabilities to, foreigners and on transactions of securities brokers and dealers. The U.S. Treasury De- partment's quarterly Treasury Bulletin publishes other international financial data, arranged under the head- ings "International Financial Statistics" and "Capital Movements." BEA estimates of U.S. foreign assistance and historical data series on U.S. Government grants, credits, and other assistance are included in the annual reports of the National Advisory Council on International Monetary and Financial Policies. These annual reports continue the series formerly published by BEA in For- eign Grants and Credits by the United States Government [54]; a special volume, Foreign Aid by the United States Government 1940-1951 [52], presents data for earlier years. The Census Bureau publishes monthly, quarterly, and annual reports on merchandise exports and imports; a complete listing of these publications is available in Guide to Foreign Trade Statistics [33]. A presentation of the U.S. balance of payments is also available in the International Monetary Fund (IMF) Balance of Payments Yearbook, which contains complete balance of payments statements for member countries. The U.S. data are derived from BEA estimates published in the Survey and from supplementary details supplied by BEA to the IMF. The U.S. data are rearranged to fit the format specified in the IMF Balance of Payments Manual; they are denominated in terms of special draw- ing rights in order to achieve intercountry comparability in the Yearbook. 1 Geographic Allocation The quarterly presentations of U.S. international trans- actions contain complete bilateral balance of payments estimates for three countries, seven regions, and "in- ternational organizations and unallocated," as shown in table 10 in the appendix. Once a year, bilateral estimates are prepared and published for additional countries and regions. Although the basic data on many transac- tions are available on a country basis, the preparation of additional bilateral estimates is not generally feasi- ble because the sample coverage for many countries or transactions is inadequate. Additional country details for a few accounts are made available in special articles, and detailed country data are published regularly for the direct investment accounts. Balance of payments statements for individual coun- tries or regions do not necessarily indicate that the trans- actions measured in the accounts were in fact between U.S. residents and residents of that particular country or region. For example, U.S. export statistics generally reflect the first country of reported destination, but, in many cases, the merchandise is transshipped to third countries. Transshipments frequently occur from coun- tries that have extensive port and distribution facilities, such as Germany and the Netherlands. Transactions in securities also present problems of country attribu- tion, because residents in countries with well-developed financial markets — such as the United Kingdom and Switzerland — often act as intermediaries on behalf of res- idents of other countries. Thus, the geographic allocation of securities transactions reflects the country with which the transaction occurred, but does not necessarily re- 19 20 Concepts and Structure fleet the ultimate source of foreign funds or the ultimate destination of U.S. funds. These problems of geographic attribution add to the statistical discrepancy shown for individual countries or regions. For this reason, the statistical discrepancy in- cluded in geographic balance of payments statements is termed "statistical discrepancy, and transfers of funds between foreign areas, net." Reference to some of these and other difficulties in assessing the significance of geo- graphic statistical discrepancies is included in the section "Statistical Discrepancy." 2 Historical Data As mentioned earlier, the June issues of the Survey not only present data for the most recent period, but include a limited historical time series on U.S. international transactions as well. For example, the June 1989 Survey includes annual estimates of the summary balance of payments accounts for 1960-88 and quarterly estimates for 1982-88. The quarterly series are presented both seasonally adjusted and unadjusted. Balance of payments data for the period before 1960 are available in back issues of the Survey, with two issues carrying the series back to 1946. The June 1973 Survey presents annual data for 1948-59; annual data for 1946— 47 are available in the June 1970 Survey. For a number of accounts, there is a relative degree of consistency over the years; for others, the comparability of data has been impaired by changes in concepts, data availability, and statistical procedures. Extensive historical data are presented in a 1963 Bal- ance of Payments Statistical Supplement to the Survey [53]. The coverage of the Supplement begins in 1870; it presents fragmentary balance of payments data for 1870-1918 by periods, more complete annual data for 1919-61, and quarterly data for 1945-61. This issue also presents geographic balance of payments tables for 1946- 61 annually and for 1948-61 quarterly. Also included are detailed tables containing data on the major compo- nents of the individual accounts; the time periods vary, depending on data availability. Related publications and articles providing additional references to sources of historical data are listed at the end of the Supplement. International Investment Position The balance of payments is a record of transactions be- tween U.S. residents and residents of the rest of the world during a given time period; it is analogous to an income statement in business accounting in that it mea- sures flows. The international investment position, on the other hand, is a measure of the value of accumulated stocks of U.S. assets abroad and of foreign assets in the United States at the end of a given time period; it is analogous to a balance sheet in that it measures stocks. An annual statement of the international investment position is compiled and published by BEA; it shows the value of outstanding U.S. assets abroad and foreign as- sets in the United States as well as the net international investment position of the United States at the end of each calendar year (see table 1-4). The statement, by providing information on the composition of U.S. assets abroad and of foreign assets in the United States, facili- tates analyses of the economic effects of such lending and investment. The international investment position summarizes two effects on the stocks of assets; one is the net change at- tributable to international capital transactions; the other is valuation adjustments attributable to market price changes, exchange rate changes, and other factors (see table 1-5). The net capital flow is the mirror image of the balance on current account, plus entries for the allocation of special drawing rights (SDR's) by the International Monetary Fund (IMF) and for the statistical discrepancy in the accounts. Assets are recorded in the international investment po- sition statement at market, book, or face values. Market values are the basis for holdings of equity and long-term marketable debt securities; book values are the basis for direct investment; and face values are the basis for most other types of assets, especially short-term instruments and nonmarketable forms of indebtedness. The international investment position should be inter- preted with caution because it is only a rough indicator, not a precise measure. On the one hand, U.S. assets abroad probably are understated because direct invest- ment is carried at book values and because U.S. reserve holdings of gold are carried at the official monetization value of $42.2222 per ounce, compared with the mar- ket price of about 9 times that amount (as of mid-1990). On the other hand, foreign assets in the United States are also understated because foreign direct investment in the United States is carried at book values and because a large part of unrecorded inflows in recent years — as indicated by the statistical discrepancy in the balance of payments — may have been accounted for by capital inflows. 1 U.S. Assets Abroad 1.1 U.S. official reserve assets The stock of U.S. official reserve assets consists of as- sets held by the U.S. Treasury Department and the Federal Reserve System, reported in terms of outstand- ing amounts. In addition to international transactions, changes in the value of holdings reflect exchange rate adjustments for three of the four asset categories not de- nominated in U.S. dollars, that is, U.S. holdings of SDR's, the U.S. reserve position in the IMF, and official reserve holdings of foreign currencies. These three types of re- serve assets are revalued at current exchange rates in order to reflect any unrealized gain or loss resulting from exchange rate fluctuations. The fourth category, mone- tary gold holdings, is valued at $42.2222 per troy ounce; most changes in this category result from monetizations and demonetizations of gold, when the U.S. Treasury pur- chases or sells gold either as bullion or as a numismatic product. 1.2 U.S. Government assets, other than official reserve assets Data on U.S. Government assets, other than official re- serve assets, are generally reported to BEA by U.S. Government agencies in terms of outstanding amounts. The value of foreign-currency-denominated U.S. loans and other long- and short-term assets and foreign cur- rency holdings of U.S. Government disbursing officers are adjusted to reflect exchange rate changes in each quarter. Other valuation adjustments are made as appropriate. 1 .3 U.S. private assets These assets consist of U.S. direct investment abroad, holdings of foreign securities, and claims on unaffiliated foreigners reported by U.S. banks and nonbanking con- cerns. Data on U.S. private assets are reported to BEA by private transactors. The accumulated stock of direct investment is carried forward from the latest benchmark survey by adding the net capital outflows — which con- sist of equity capital flows, intercompany debt flows, and reinvested earnings — and valuation adjustments to the previous year's position. The direct investment position is equal to the U.S. parents' contribution to the total as- sets of their foreign affiliates in the form of debt and equity; that is, the position measures the U.S. parents' share of the affiliates' assets, not the affiliates' total as- sets. Direct investment assets are valued according to the books of the foreign affiliates. Valuation adjustments 21 22 Concepts and Structure primarily reflect differences between values on the books of U.S. parent companies, which are used to record eq- uity capital and intercompany debt outflows, and values on the books of affiliates, which are used to record the direct position. Data on transactions in foreign securities are cumu- lated from periodic benchmark surveys and adjusted for price changes to derive outstanding holdings. Price ad- justments are made annually. The price adjustment for dollar-denominated foreign bonds is based on informa- tion gathered by BEA. The price adjustment for foreign stocks is made by utilizing indexes of stock prices in in- dividual foreign countries, as published by the IMF and the Organisation for Economic Co-operation and Devel- opment. Exchange rate adjustments are also applied to foreign stocks. The application of price and exchange rate Table 1-4. — International investment Position of the United States at Yearend, 1988" [Millions of dollars] Net International Investment position of the United States (line 2 less line 20). U.S. assets abroad U.S. official reserve assets' Gold 1 Special drawing rights ' Reserve position in the International Monetary Fund' Foreign currencies ' U.S. Government assets, other than official reserve assets U.S. loans and other long-term assets 1 Repayable in dollars Other' U.S. foreign currency holdings and U.S. short-term assets U.S. private assets Direct investment abroad 4 Foreign securities Bonds Corporate stocks U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns. U.S. claims reported by U.S. banks, not included elsewhere Foreign assets in the United States.. Foreign official assets in the United States U.S. Government securities U.S. Treasury securities 5 Other 5 Other U.S. Government liabilities 6 U.S. liabilities reported by U.S. banks, not included elsewhere. Other foreign official assets' Other foreign assets in the United States Direct investment in the United States' U.S. Treasury securities 5 U.S. securities other than U.S. Treasury securities 5 Corporate and other bonds 5 Corporate stocks 5 U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns. U.S. liabilities reported by U.S. banks, not included elsewhere. -532,534 1,253,671 47,802 1 1 ,057 9,637 9,745 17,363 85,484 84,880 83,403 1,477 604 1,120,385 326,900 1 56,758 94,027 62,731 32,900 603,828 1,786,205 322,103 259,249 250,287 8,962 14,187 31,507 17,160 1,464,103 328,851 96,626 393,623 195,186 198,437 35,532 609,471 ' Preliminary. 1 . Total reserve assets include increases from changes in the par value of the dollar: On May 8, 1972, the increase totaled $1,016 million, consisting of $828 million gold stock, $155 million special drawing rights (SDR's), and $33 million U.S. reserve position in the International Monetary Fund (IMF); on October 18, 1973, the increase totaled $1,436 million, consisting of $1,165 million gold stock, $217 million SDR's, and $54 million reserve position in the IMF. The gold stock is valued at $35 per fine troy ounce until May 8, 1972; thereafter, at $38 per fine troy ounce until October 18, 1973, pursuant to the Par Value Modification Act (P.L 92-268); and, thereafter, at $42-2/9 per fine troy ounce pursuant to an amendment (in P.L. 93-110) to the Par Value Modification Act. Beginning in 1974, the value of the SDR, in which U.S. holdings of f'DR's and the reserve position in the IMF are denominated, fluctuates based on the weighted average of exchange rates for the currencies of principal IMF members. Foreign currency reserves are valued at exchange rates at time of purchase through 1973 and at current exchange rates thereafter. 2. Also includes paid-in capital subscription to international financial institutions and outstand- ing amounts of miscellaneous claims that have been settled through international agreements to be payable to the U.S. Government over periods in excess of 1 year. Excludes World War I debts that are not being serviced. 3. Includes indebtedness that the borrower may contractually, or at its option, repay with its currency, with a third country's currency, or by delivery of materials or transfer of services. 4. Estimates are linked to the U.S. Department of Commerce 1982 benchmark survey. 5. Estimates are linked to U.S. Department of the Treasury 1978 benchmark survey. Marketable Treasury bonds are valued at market price. 6. Primarily U.S. Government liabilities associated with military sales contracts and other transactions arranged with or through foreign official agencies. 7. Estimates are linked to the U.S. Department of Commerce 1980 benchmark survey. adjustments is limited to the securities of a few countries that account for the major portion of U.S. holdings. Bank and nonbank claims on unaffiliated foreign res- idents are reported in terms of outstanding amounts. These claims are generally reported at face value; most are denominated in U.S. dollars, although claims denom- inated in foreign currencies have grown in importance in recent years. Valuation adjustments are not available. 2 Foreign Assets in the United States 2.1 Foreign official assets Foreign official assets in the United States consist of (1) foreign official agency holdings of U.S. Treasury and other Government securities, (2) other U.S. Government liabilities, (3) bank-reported liabilities, and (4) other for- eign official assets, that is, debt and equity securities of U.S. corporations. The largest category of foreign offi- cial assets consists of U.S. Treasury securities, including marketable and nonmarketable bonds, notes, bills, and certificates. Outstanding holdings, based on a Treas- ury benchmark survey, are carried forward by adding transactions obtained from the Treasury International Capital (TIC) reporting system to the benchmark. Trans- actions are recorded at face values. Price adjustments are applied to marketable Treasury bonds and notes to derive outstanding amounts at current market val- ues. No adjustments are applied to the face value of nonmarketable bonds and notes. For foreign-currency- denominated Treasury notes held by foreign monetary authorities, adjustments are limited to exchange rate changes. Outstanding holdings of securities of U.S. corporations and federally sponsored agencies, based on U.S. Treas- ury benchmark surveys, are carried forward by adding transactions to the benchmark amounts. The value of outstanding stocks, bonds, notes, and other obligations is adjusted for price changes, based on indexes for securities traded in the U.S. market. Liabilities to foreign official agencies reported by U.S. banks are obtained from the TIC reporting system in terms of outstanding amounts; they are recorded at face values. 2.2 Other foreign assets Other foreign assets in the United States consist of (1) foreign direct investment in the United States, (2) foreign holdings of U.S. Treasury, other U.S. Government, and corporate securities, and (3) liabilities reported by U.S. banks and nonbanking concerns. Assets are held by pri- vate foreign residents, international organizations, and foreign government owned or sponsored corporations and other organizations that are not considered official agen- cies. The stock of foreign direct investment in the United States is carried forward from the latest benchmark sur- vey by adding net capital inflows — consisting of equity capital flows, intercompany debt flows, and reinvested earnings of U.S. affiliates — and valuation adjustments to the previous year's position. The direct investment po- sition is equal to the foreign parents' contribution to the International Investment Position 23 Table 1-5. — International Investment Position of the United States at Yearend, 1987 and 1988 [Millions of dollars] Type of investment Position 1987' Changes in position in 1988 (decrease (-)) Position 1988' Position, by area Attributable to: Total (a+b+ c+d) Westerr Europe Canada Japan Latin America and Other Western Hemisphere Other countries, international organizations, and unallocated f Line Capital flows (a) Valuation adjustments 1987 1988 1987 1988 1987 1988 Price changes (b) Ex- change rate changes ' (c) Other changes 1 (d) 1987 1988 1987 1988 1 2 Net International Investment position ol the United States (line 2 less line 20). -378,300 1,169,679 45.797 11.078 10,283 11.349 13,086 88.513 87,638 86,024 1,614 875 1 .035.369 307.983 146.713 92,044 54,669 31.216 549.457 1,547,979 283.552 218,929 211.078 7,851 15,471 31.838 17,314 1,264,427 271 ,788 78.339 344.257 170,831 173,426 29.404 540.639 -137,189 82,110 3,566 -14,190 8,507 -5,900 -7,863 -1,539 3,041 1,238 -21 '-21 -154,234 83,992 2,005 -21 -646 -1 ,604 4,277 -3,029 -2,758 -2,621 -137 -271 85,016 18,917 10,045 1.983 8.062 1,684 54,371 238,226 38.551 40,320 39.209 1,111 -1 ,284 -331 -154 199,676 57,063 18,287 49,366 24,355 25.011 6.128 68,832 -532,534 1,253,671 47,802 1 1 ,057 9,637 9,745 17,363 85,484 84,880 83.403 1.477 604 1.120.385 326.900 156,758 94,027 62,731 32,900 603,828 1,786,205 322,103 259.249 250,287 8,962 14,187 31 .507 17,160 1,464,103 328,851 96.626 393,623 195,186 198,437 35.532 609,471 -390,425 402,668 12,073 -436,855 431,037 14.970 53,381 151,980 C) 53,498 154,940 C) -84,317 113,402 982 -128,489 156,291 2,345 28,852 298,838 31 -23,556 303,486 48 14,207 202,790 32,710 1 1 ,078 10,283 11,349 2,867 207,917 3 30 439 4 Gold 1 1 .057 5 -474 -1.025 5,064 -2,999 -2,733 -2,667 -67 -265 81,543 17,533 7,846 6,937 909 1,684 54,481 219,299 38.882 42.992 41.683 1,309 -1,284 -331 -2.495 180,418 58,436 20,144 26.448 26,925 -477 6.558 68,832 -173 -580 -787 -16 -11 9,637 6 Reserve position in the International Monetary Fund 9 745 7 12,073 9,925 9,871 9,698 173 54 380,670 146.243 80.111 48.218 31 .893 13,693 140.623 793,093 128.168 i M 4,424 (') (') 664,925 186,076 238,778 134,090 104,688 14,543 (') 14,970 9,037 8,984 8,825 159 53 407.030 152,232 84,888 47,362 37.526 15,125 154,785 867,892 127,052 R M 4,030 (') (') 740.840 216.418 (') 265,317 149,170 116,147 18,920 (') C) 396 370 370 C) 317 320 320 982 36 4 4 2,345 29 31 18.347 18,050 17,660 390 297 280.460 44,905 1,182 O 1,182 8,927 225.446 269,986 8,843 a 627 (') (*) 261,143 12.671 (') 20.150 4,383 15,767 1.928 (') 48 18.580 18,243 17,883 360 337 284.858 49.283 1.070 1,07(5 9,196 225,309 327,042 10.997 f) CI 565 (') (') 316,045 17,019 (') 25,446 6,174 19,272 2.322 (') 8 U.S. Government assets, other than official reserve assets. -15 -14 45 -59 -1 1,274 1,384 59,809 59.343 58.292 1,051 466 110,271 •43,787 '6,848 '5.213 '1.635 2.916 56,720 188,583 C) 8 c) 8,672 C) (') 13.876 3 15.213 5.788 9.425 6.391 C) 57,520 9 57,332 10 56,374 11 Other' -11 -5 -6,308 958 12 U.S. foreign currency holdings and U.S. short-term assets. 26 151,584 58,377 58,572 38,613 19,959 3.913 30,722 98,599 5,266 i 322 C) 93.333 24.013 (') 32,206 3,384 28,824 1.834 (') -3 154.623 61,244 65,489 42,926 22,563 3,624 24.266 101,442 9.764 8 306 (') (*) 91 ,678 27,361 (') 38.124 4.054 34,070 2,047 (*) 32 112,384 14.671 1,767 95,946 197,719 C) 1,425 (') 35,151 <•> 37,910 23.186 14,724 4,708 (') 29 153.917 16,868 O a 1.540 135,509 284,780 S3 C) 1,644 (*) 53,354 S3 48,768 30,072 18,696 5,387 187 13 8,507 119 957 14 ■ 47 273 15 8,507 -375 8.882 -6,308 ^1.579 -1,729 '5310 16 '3,739 17 '1,571 1ft U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns. U.S. claims reported by U.S. banks, not included elsewhere. Foreign assets In the United States 3.415 19 -110 -1,803 63,959 ?n 22,697 -331 -2.672 -2.474 -198 -1567 205,050 21 (*) 22 (') 23 (■! 24 Other 25 7,642 26 U.S. liabilities reported by U.S. banks, not included elsewhere. O 27 2,341 23,028 28 -1,967 -1 ,803 -1,373 (') 29 14.698 -m -1 ,857 24,885 -603 25 488 (') 31 U.S. securities other than U.S. Treasury securities -1 ,967 -1.967 15.968 32 5.716 33 10.252 34 U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns. U.S. liabilities reported by U.S. banks, not included elsewhere. ^»30 6.856 35 W ■ Revised. ' Preliminary. t Includes U.S. gold stock. • Less than $500,000 (). 1 . Represents gains or losses on foreign currency-denominated assets due to their revaluation at current exchange rates. 2. Includes changes in coverage, statistical discrepancies, and other adjustments to the value of assets. 3. Reflects changes in gold stock rrom U.S. Treasury sales of gold medallions and commemorative and bullion coins; also reflects replenishment through open market purchases. These demonetizationsmionetizations are not Included In International transactions capital flows. 4. Also includes paid-in capital subscription to international financial institutions and outstanding amounts of miscellaneous claims that have been settled through international agreements to be payable to the U.S. Government over periods in excess ol 1 year. Excludes World War I debts that are not being serviced. 5. Includes Indebtedness that the borrower may contractually, or at Its option, repay with its currency, with a third country's currency, or by delivery of materials or transfer of services. 6. Includes, as part of international and unallocated, the estimated direct investment in foreign affiliates engaged in international snipping, in operating oil and gas drilling equipment that is moved from country to country during the year, and in petroleum trading. 7. U.S. holdings of foreign securities in some areas may be understated. This understatement Is in part due to the recording of security transactions by area of transactor rather than by area of Issuer. 8. Details not shown separately are included in line 20. 9. Details not shown separately are Included in totals In lines 21 and 28. 10. Primarily U.S. Government liabilities associated with military sales contracts and other transactions arranged with or through foreign official agencies. total assets of their U.S. affiliates in the form of debt and equity; that is, the position measures the foreign parents' share of the affiliates' assets, not the affiliates' total as- sets. Direct investment assets are valued according to the books of the foreign affiliates. Valuation adjustments primarily reflect differences between transaction values, which are used to record equity capital and intercompany debt inflows, and book values, which are used to record the position. Holdings of U.S. Treasury securities are derived from the same source and in the same manner as those held by foreign official agencies, described earlier. Price ad- justments are applied to bonds and notes using an index developed by BEA. An exchange rate adjustment is ap- plied to outstanding foreign-currency-denominated U.S. Treasury notes issued to foreign official institutions. Holdings of U.S. securities other than Treasury securi- ties, based on an early benchmark figure, are adjusted for price movements. For U.S. corporate and federally spon- sored agency bonds, the previous yearend value is first revalued to reflect current market values; the procedure is to adjust outstanding amounts of corporate Eurobonds by a price index of Eurobonds developed by BEA, and out- standing amounts of federally sponsored agency bonds by another index developed by BEA. Net transactions for the current year are then added, and total holdings are revalued by the change in the price index between the annual average and the yearend figure. For U.S. stocks, the procedure is similar. The meas- ure of price change is the Standard & Poor's Index of 500 stocks. First, the previous yearend estimate is reval- ued to reflect the change in market prices from yearend to the first quarter's average, before adding net transac- tions in the first quarter. Next, holdings are revalued to reflect changes in average market prices in the sec- ond quarter before adding net transactions in the second quarter. These steps are repeated through the fourth quarter, when the holdings are revalued to reflect the 24 Concepts and Structure change in market prices from the fourth-quarter aver- Bank and nonbank liabilities to private foreign res- age to the end of the year. Other adjustments are made idents and international organizations are reported in as necessary to reflect changes in classification between terms of outstanding amounts, and are generally at face portfolio holdings and direct investment. values; most are denominated in dollars. Balance of Payments and the National Accounts The national income and products accounts (NIPA's) measure the production, distribution, and use of out- put in the United States in terms of the transactions of four major economic groups — persons, business, gov- ernment, and the rest of the world. In summary form, the NIPA's consist of five accounts. Total output of goods and services (GNP) is measured in the national income and product (NIP) account both in terms of in- comes generated in production and in terms of final sales to the four groups plus the change in business inventories. The distribution and use of output are meas- ured in the three receipts and expenditures accounts established for persons, government, and foreigners; the remaining account measures the saving and investment transactions of the domestic groups. (For a summary explanation of the NIPA's, see "Introduction to National Income Accounting" in the March 1985 Survey.) The NIPA's incorporate components of the balance of payments accounts. The NIP account includes exports of goods and services — sales to foreigners — in addition to sales of goods and services to consumers, business (for domestic capital formation), and government. The sum of purchases of the four groups equals national out- put of goods and services plus imports. Because GNP is the market value of goods and services produced by labor and property supplied by residents of the United States, imports must be removed. This is accomplished by including only net exports (that is, exports minus im- ports) in the NIP account because it is not feasible to eliminate the import component from purchases of the domestic groups. The receipts and expenditures accounts for persons and government include transactions with foreigners. The gross saving and investment account in- cludes net foreign investment and capital grants received by the United States. The foreign transactions account in the NIPA's is es- sentially a condensed and modified version of the balance of payments current account. The adjustments needed to derive the appropriate NIPA entries from the balance of payments accounts are published in a reconciliation ta- ble in the March, June, September, and December issues of the Survey; table 1-6 presents estimates for 1988. The current account balance from the balance of payments ac- counts and the reconciliation items between the balance of payments accounts and the NIPA's provide the frame- work for deriving the net foreign investment entry in the NIPA's. Net foreign investment may also be viewed as the acquisition of assets abroad by U.S. residents, less the acquisition of assets in the United States by foreign residents, plus the statistical discrepancy in the balance of payments accounts. More complete discussions of the relationship between the balance of payments and the NIPA's are contained in Foreign Transactions, BEA Methodology Paper No. 3 [44], and in an article entitled "Foreign Transac- tions in the National Income and Product Accounts: An Overview" in the November 1986 issue of the Survey. Both sources present the conceptual basis and framework of foreign transactions in the NIPA's, describe the pres- entations of the estimates, and summarize the sources and methods used to prepare them. The differences, or reconciliation items, between the NIPA and balance of payments entries reflect (1) dif- ferent publication and revision schedules, (2) different treatment of Puerto Rico and U.S. territories and posses- sions, and (3) different treatment of certain transactions. The first source of difference arises because revisions in the balance of payments are entered in the NIPA's with time lags. The second arises because the balance of payments accounts include Puerto Rico and U.S. ter- ritories and possessions in the definition of the United States, whereas the NIPA's exclude them. The third, and most important difference, arises because the two sets of accounts serve different purposes and, therefore, treat certain types of transactions differently. The main differences involve U.S. Government interest payments to foreigners, gold transactions, capital gains and losses in direct investment income, and imputed interest paid to foreigners. These differences are described, below, in terms of the adjustments that are made to the balance of payments estimates to put them on the basis needed in foreign transactions in the NIPA's. 1 U.S. Government Interest In the balance of payments accounts, imports include in- terest payments to foreigners by the U.S. Government because they represent payments on foreign assets in the United States. In the NIPA's, however, government in- terest payments are not considered payments for a factor service; government production is defined as the value of services rendered by government employees. There- fore, U.S. Government interest payments to foreigners are excluded from imports. These interest payments are recorded as separate entries in the foreign transactions account and the government receipts and expenditures account. 2 Gold Transactions In the balance of payments accounts, a distinction is made between monetary and nonmonetary gold. Mon- 25 26 Concepts and Structure Table 1-6. — Relation of Foreign Transactions in the National Income and Product Accounts to the Corresponding Items in the Balance of Payments Accounts, 1 988 [Billions of dollars] Exports of goods and services, BPA's Less: Gold, BPA's ' Capital gains net of losses in direct investment income receipts, BPA's 2 . Statistical differences' Other items Plus: Adjustment for U.S. territories and Puerto Rico" Services furnished without payment by financial intermediaries except life insurance carriers and private noninsured pension plans. Equals: Exports of goods and services, NIPA's 5 Imports of goods and services, BPA's Less: Payments of income on U.S. Government liabilities 5 Gold, BPA's 1 Capital gains net of losses in direct investment income payments BPA's 2 . Statistical differences 1 Other items Plus: Gold, NIPA's ' Adjustment for U.S. territories and Puerto Rico 4 Imputed interest paid to foreigners Equals: Imports of goods and services, NIPA's 7 Balance on goods and services, BPA's (1-9) Less: Gold (2-11+15) Capital gains net of losses in direct investment income, BPA's (3-12). Statistical differences (4-1 3) Other items (5-14) Plus: Payments of income on U.S. Government liabilities (10) Adjustment for U.S. territories and Puerto Rico(6-16) Equals: Net exports of goods and services, NIPA's (818) Allocations of special drawing rights, BPA's Plus: Other items Equals: Capital grants received by the United States, net, NIPA's ... Unilateral transfers (excluding military grants of goods and services), net, BPA's. Less: Statistical differences 3 Other items Plus: Adjustment for U.S. territories and Puerto Rico 4 Equals: Transfer payments to foreigners, net, NIPA's Payments of Income on U.S. Government liabilities, BPA's Equals: Interest paid by government to foreigners, NIPA's Balance on current account, BPA's (19-30) Less: Gold (20) Capital gains net of losses in direct investment income, BPA's (21) Statistical differences (22-31 ) Other items (23-32) Plus: Capital grants received by the United States, net, NIPA's (29) Adjustment for U.S. territories and Puerto Rico (25-33) Equals: Net foreign Investment, NIPA's (26+29-34-36) 529.8 5.9 -.1 16.6 7.0 547.7 641.7 29.1 4.9 .9 -1.8 9.2 7.0 621.3 -111.9 -.7 -1.0 29.1 7.4 -73.7 14.7 .1 14.7 29.1 -126.5 -.7 -1.0 7.3 -117.5 BPA Balance of payments accounts. NIPA National income and product accounts. 1 . The treatment of net exports of gold in the NIPA's differs from that in the BPA's. BPA gold exports (line 2) and imports (line 11) are removed from the NIPA's. Imports of gold in the NIPA's (line 15) is the excess of the value of gold in domestic final sales plus the change in business inventories over the value of U.S. production of gold. 2. BPA capital gains and losses included in U.S. direct investment income abroad (line 3) and in foreign direct investment income in the U.S. (line 12) are removed from the NIPA's. 3. Consists of statistical revisions in the BPA's that have not yet been incorporated in the NIPA's. 4. Consists of transactions between the United States and its territories and Puerto Rico. The treatment of U.S. territories and Puerto Rico in the NIPA's differs from that in the BPA's. In the NIPA's they are included in the rest of the world; in the BPA's, they are treated as part of the United States. The adjustments to exports and imports of goods and services are shown in lines 6 and 16 respectively; however, because data are not available to adjust service exports and imports separately, line 6 includes the net of exports and imports of services by U.S. territories and Puerto Rico. The adjustment to unilateial transfers, net (line 33) consists only of transfer Payments from persons because transfer payments, subsidies, and grants-in-aid from the ederal Government to residents of U.S. territories and Puerto Rico are excluded from NIPA transfer payments to foreigners. 5. Estimates cover many business, professional, and technical services and incorporate improved measurement of telecommunications services and insurance services; incorporate new source data on travel and passenger fares; and cover foreign students' expenditures in the United States. See the box on page 21 in the July 1989 Survey of Current Business. 6. Represents interest paid by government to foreigners. This item is treated as an import of services in the BPA's. In the NIPA's, it is excluded from government purchases and, thus, also from imports. 7. Estimates cover many business, professional, and technical services and incorporate improved measurement of telecommunications services and insurance services; incorporate new source data on travel and passenger fares; and cover U.S. students' expenditures abroad. See the box on page 21 in the July 1989 Survey of Current Business. etary gold is gold held by the Treasury Department as part of U.S. official reserve assets; transactions be- tween U.S. Government agencies (including the Treasury Department's Exchange Stabilization Fund) and foreign official agencies and international monetary institutions are recorded as changes in U.S. official reserve assets, offset by entries in the appropriate capital accounts. All other gold is nonmonetary gold, and transactions between U.S. and foreign residents are recorded as mer- chandise exports or imports. Nonmonetary gold includes gold sold by the Treasury at public auctions; in effect, this gold, which is removed from official monetary holdings, is demonetized. No transaction is recorded for the de- monetization itself, but the stock of U.S. official reserve assets is reduced. If the gold is subsequently exported, a merchandise export entry is recorded. The basic data on nonmonetary gold exports and imports are provided by the Census Bureau and the Federal Reserve Bank of New York; the adjustments to these data to make them conform to balance of payments concepts are discussed in the section "Merchandise Trade" in part II. In the NIPA's, net exports of nonmonetary gold are equal to the difference between domestic gold produc- tion and the sum of industrial gold consumption plus the change in gold business inventories. The inclusion in net exports of all changes in inventories of gold held in the United States other than for industrial use is equivalent to placing the gold stocks in the foreign sector. Thus, both gold exports and imports included in the balance of payments accounts are removed before incor- porating the estimates into the NIPA's and replaced by a single entry in the net exports component of GNP. Because U.S. production historically has fallen short of industrial use, exports are set at zero, and the estimate is entered as an import. This methodology is explained more fully in the July 1979 Survey. 3 Capital Gains and Losses in Direct Investment Income In the balance of payments accounts, direct investment income receipts and payments are estimated on an "all- inclusive" basis; that is, direct investment income is intended to reflect all the benefits that parents receive from their investment in affiliates, whether in the form of ordinary income, extraordinary income, or other types of income. Extraordinary income and other types of in- come consist primarily of capital gains and losses, such as gains and losses resulting from the sale or other dis- position of assets and liabilities, gains and losses due to changes in exchange rates of foreign currencies in which the affiliates' assets and liabilities are measured or de- nominated, and gains and losses resulting from writeups or writedowns of the book values of assets and liabilities. (See footnote on capital gains and losses in "Concepts, Definitions, and Principles.") In the NIPA's, capital gains and losses are not con- sidered income from current production. Realized and unrealized gains and losses are not reflected in corporate profits because there are no offsetting entries included Balance of Payments and the National Accounts 27 in measuring the business sector's contribution to pro- duction. Accordingly, realized and unrealized capital gains and losses included in the balance of payments are removed before incorporating the estimates into net exports in the NIPA's. 4 Imputed Interest In the balance of payments accounts, only receipts and payments of monetary interest are recorded. In the NIPA's, depository institutions resident in the United States — in NIPA terminology, "financial intermediaries other than life insurance carriers and private noninsured pension plans" — provide services to foreigners for which the intermediaries "compensate" themselves, not with an actual service charge, but implicitly, by paying de- positors less interest on their deposits than the interest that the intermediaries earn from lending or investing the funds. Thus, in the NIPA's, a service is imputed as "services furnished without payment by financial in- termediaries except life insurance carriers and private noninsured pension plans" and included in exports, and an equivalent amount of interest is imputed and included in imports. Part II THE CURRENT ACCOUNT Merchandise Trade Conceptually, the merchandise exports and imports ac- counts (lines 2 and 17) cover all movable goods sold, given away, or otherwise transferred from U.S. to for- eign ownership and vice versa. The goods are valued at transaction prices — exports at the customs boundaries of the United States and imports at the foreign port of export. Transfers are recorded at the time of change of ownership. In practice, BEA estimates the merchandise trade ac- counts from data compiled by the Census Bureau, U.S. Department of Commerce. The data record the physical movement of goods across U.S. customs boundaries, but not always the change of ownership. In using the data for the balance of payments, the assumption is made that goods moving across U.S. customs boundaries change ownership, so that physical possession indicates actual ownership. Goods shipped between affiliated firms in the United States and abroad are assumed to change ownership as well, even though the change-of-ownership rule may not strictly apply in a legal sense for some transactions — as in the case of shipments to an unincor- porated foreign affiliate, which may not be a separate legal entity from its parent company. A similar as- sumption of ownership change is made for shipments of goods under leasing agreements if the leases are for periods exceeding 1 year, irrespective of whether the leases are financial or operational. 5 Shipments under leases for periods of less than 1 year are excluded from Census Bureau data, as are other temporary shipments, that is, shipments to be returned in less than 1 year. The basic data that BEA uses are the seasonally unad- justed monthly data on exports (including reexports and military grant-aid) and on imports (general imports at customs values). The main features of the trade data — sources, coverage, valuation, commodity classification, exclusions, and so on — are presented in table II-l. Fur- ther information is available in the Highlights of U.S. Note. — The line numbers refer to table 1-2, and correspond to those used in table 1 in the U.S. international transactions articles published in the March, June, September, and December issues of the Survey of Current Business (Survey). Table 1 from the June 1989 Survey is shown in the appendix. 5. A financial — or capital — lease is a financial arrangement in which (1) the leasing term is close to the expected useful life of the equipment; (2) the present value of the lease payments approximates the market value of the equipment; and (3) the ownership of the equipment transfers, or may transfer, to the lessee at the termination of the lease. Payments by the lessee are assumed to be large enough to allow the lessor to recover the original cost of the equipment plus interest. An operational lease does not meet any of the above three conditions, and the lessor generally expects to lease the equipment several times. Payments by the lessee cover depreciation, profit, and administrative expenses. Export and Import Trade [34] and other Census Bureau publications. First, BEA retabulates the Census Bureau export and import data to correct for timing discrepancies, which arise when exports or imports of goods are reported by the Census Bureau in one period, but are actually shipped or received in another. This retabulation is based on information provided by the Census Bureau. Then, BEA adjusts the data for coverage and valuation to bring them into conformity with balance of payments concepts, and for seasonal variation. Seasonally adjusted quarterly totals are derived by summing the seasonally adjusted monthly data. Commodity classification. — The Census Bureau com- modity classification of exports and imports is based on the physical nature of commodities and their stage of processing or on the industry categories associated with their production. In balance of payments presentations, BEA classifies commodity data in broad commodity cat- egories based on the concept of end-use demand. This end-use commodity classification system was developed by BEA in the mid-1 950's to make it easier to relate changes in merchandise trade to production and income data. For example, the end-use categories "automo- tive vehicles, parts, and engines," "consumer goods," and "capital goods" are related to their counterparts in the national income and product accounts (NIPA's) and to the individual production indexes of the Federal Re- serve Board; the category "foods, feeds, and beverages" is related to NIPA farm production and income; and the cat- egory "industrial supplies and materials" reflects changes in the total industrial production index. The end-use commodity classification system has un- dergone a number of changes since its introduction. The system currently in use incorporates the Harmonized System (HS), which, for the United States, comprises nearly 8,000 10-digit export codes (product designations) and 14,000 10-digit import codes. The HS was devel- oped under the auspices of the International Customs Cooperation Council, which sought to establish an in- ternationally accepted standard for the classification of internationally traded goods, in order to eliminate one source of nontariff trade barriers. (A complete outline of the current end-use system is presented in the June 1988 Survey.) Export and import data classified by end-use categories are prepared quarterly and are published in the interna- tional transactions articles in the Survey. End-use data were first published by BEA in 1963 [53]. More compre- hensive data were published in 1970 [49], and further details were made available in 1977 [51]. A time series for recent years is available from BEA [50]. 31 32 The Current Account Table 11-1.— Census Bureau Statistics on Merchandise Trade Used in Preparing the Balance of Payments Exports Imports Source Shipper's Export Declaration (Commerce Department Form 7525) or equivalent, filed at point of export; direct Department of Defense reports to the Census Bureau on shipments under military assistance program grant-aid. Shipments of domestic and foreign merchandise by U.S. persons, involving both commercial and noncommercial transactions. Domestic merchandise consists of commodities grown, produced, or manufactured in the United States, and commodities of foreign origin that have been changed from the form in which they were imported. Foreign merchandise consists of commodities of foreign origin that are substantially in the same condition as when imported. Transaction price f.a.s. at U.S. port of export. Transaction price includes inland freight, insurance, and other charges incurred in placing merchandise alongside the carrier. Commodity information is collected and published in terms of the HS Codes introduced by the United States in January 1989; the HS is an internationally used classification system of goods designed to facilitate comparability between exports and imports. U.S. exports are classified under 8,000 HS Codes. Import entry (Customs Form 7501) and warehouse withdrawal (Customs Form 7502), filed at the point of entry. Foreign merchandise imported by U.S. persons, involving both commercial and noncommercial transactions. General imports are items for immediate consumption and entries into Customs bonded warehouses and foreign trade zones. Customs value. Customs value is the price actually paid or payable for merchandise at foreign port of exportation, excluding import duties, freight, insurance, and other charges incurred in bringing the merchandise to the United States. Commodity information is collected and published in terms of the HS Codes introduced by the United States in January 1989; the HS is an internationally used classification system of goods designed to facilitate comparability between exports and imports. U.S. imports are classified under 14,000 HS Codes. Merchandise coverage. Valuation Commodity classification. Types of information. Geographic coverage. Exclusions Commodity data are published in terms of value, shipping weight, and method of transportation. U.S. Customs territory (50 States, District of Columbia, and Puerto Rico), the U.S. Virgin Islands, and U.S. foreign trade zones. Merchandise in transit through the United States from one foreign country to another; Shipments (a) between the United States and Puerto Rico, U.S. Virgin Islands, Guam, American Samoa, and other U.S. possessions; (b) between any of these outlying areas; (c) between Guam, American Samoa, and other U.S. possessions and foreign countries; Temporary exports or imports, defined as merchandise shipped for a period of less than 1 year; U.S. merchandise returned by U.S. Armed Forces for their own use and shipments to U.S. Armed Forces and other U.S. Government units abroad for use abroad; Purchases of vessels; Purchases of bunker fuels and other supplies and equipment by U.S. carriers abroad and by foreign carriers in the United States; Other: Electrical energy; personal and household effects of travelers; gift parcels; issued monetary coins. Monthly export and import data are published by the Census Bureau with a 45-day lag. Highlights of U.S. Export and Import Trade, issued monthly by the Census Bureau. Other sources of detailed commodity and country data are listed in the Guide to Foreign Trade Statistics, issued periodically by the Census Bureau. Publication schedule. Publication of data.... f.a.s. Free alongside HS Harmonized Syst ship, em. Merchandise Trade 33 Geographic attribution. — A problem of geographic clas- sification of export shipments in the Census Bureau data may arise when the country of destination shown on the Shipper's Export Declaration form is not the ulti- mate destination. For example, some shipments shown as exports to the Netherlands may in fact be destined for buyers in other European countries, but, because they are unloaded from vessels at Netherlands ports and transshipped via various modes of transportation to buy- ers elsewhere, the geographic attribution is incorrect. In the case of agricultural exports, BEA adjusts Census Bureau data for transshipments from Netherlands, Bel- gian, and West German ports, based on data from the U.S. Department of Agriculture. BEA has no data to make similar adjustments for nonagricultural products. Similar problems arise for imports when the country in which the merchandise was grown, mined, or manufac- tured cannot be determined. It is the usual procedure for the Census Bureau to attribute the transactions to the country of shipment. Again, BEA has no basis on which to make any adjustment. Another type of geographic problem may arise from in- ternational leasing transactions. For example, when a foreign resident purchases aircraft in the United States, but leases it to an airline in another country, the country of destination shown on the Shipper's Export Declaration form is that of the lessee, not that of the lessor (the owner of the equipment). If the foreign owner leases the air- craft to a U.S. airline, no export document is filed because the aircraft does not physically leave the United States. Because the transaction is omitted from the trade data, there is a statistical discrepancy in the balance of pay- ments because the capital account may include an entry Table 11-2. — Derivation of U.S. Merchandise Exports, Balance of Payments Basis, Excluding Military, 1988 (Line 2) [Millions of dollars] Merchandise exports, Census basis, Including reexports and military grant-aid shipments Adjustments: Exports to Canada Inland U.S. freight (valuation) Electric energy Grain exports: For storage in Canada Via Canada Miscellaneous FMS identified in Census documents Military grant-aid identified in Census documents Private gift parcels Nonmonetary gold Vessels omitted from Census data Electric energy to Mexico Exposed motion picture film Sales of fish Repair of equipment Errata Merchandise exports, balance ot payments basis, excluding military.. FMS Foreign military sales. 322,471 1,927 1,845 47 -240 273 2 -5,221 -8 245 592 31 5 -49 205 -859 -86 319,251 for the financing of this transaction vis-a-vis the country of the lessor. 1 Merchandise Exports, Excluding Military (line 2) This account measures the value of domestic and for- eign merchandise (reexports) exported from the United States. As described earlier, the balance of payments es- timates are based on export data compiled and published by the Census Bureau. Definitions of domestic and for- eign merchandise and other characteristics of the Census Bureau export data, such as sources, coverage, valuation, and commodity classification, are presented in table II-l . The procedures used in making the coverage, valua- tion, and other adjustments to the Census Bureau export data needed to bring them into conformity with balance of payments concepts are described below. The adjust- ments fall into eight major categories. Table II-2 shows the derivation of merchandise exports on a balance of payments basis for 1988. The largest adjustments are (1) a net addition to cor- rect the value of exports to Canada and (2) a deduction for the value of transfers under foreign military sales (FMS) contracts. (1) The net addition to adjust the value of exports to Canada is based primarily on annual reconciliations of United States-Canadian trade data by the Cen- sus Bureau and Statistics Canada [28]. The major components are: (a) Addition for U.S. inland freight valuation to correct for the omission in the Census Bureau export data of certain inland transportation and insurance charges to U.S. border points. The adjustment factor is based on a special Census Bureau sample study [35]. (b) Addition for the value of electric energy sup- plied to Canada, based on Canadian and U.S. Department of Energy data [59]. (c) Deduction for U.S. grain shipped for storage in Canada and addition for subsequent delivery of U.S.-owned grain from Canadian warehouses. Adjustments are based on data from the U.S. Department of Agriculture [30] and the Census Bureau [35]. (d) Miscellaneous valuation, error, definition, and timing adjustments, as identified in the annual reconciliations of the United States-Canadian current account data by BEA and Statistics Canada [46]. 6 6. Changes introduced in 1989 and 1990 eliminated the need for most of these adjustments. Beginning in 1989, with the introduction of the harmonized clas- sification system, electric energy to Canada (b) is included in Census published data. (BEA still makes an adjustment for exports and imports of electric energy to and from Mexico.) Beginning in 1990, the United States and Canada exchange import data so that each can use the other country's import data for its exports. This exchange eliminated the need for the inland freight adjustment (a) and the miscellaneous valuation, error, definition, and timing adjustments (d). The only adjustment still being made is the grain adjustment (c) for storage in Canada and subsequent shipment from Canada to third countries. 34 The Current Account (2) The deduction for the value of transfers under U.S. military agency sales contracts is made because the Census Bureau includes transfers under FMS con- tracts in the merchandise data, but BEA includes them in transfers under U.S. military agency sales contracts (line 4). The adjustment is based on data obtained from regular BEA reviews of unpublished Census Bureau tabulations of shipments valued over $100,000, augmented by special information provided by the U.S. Department of Defense. (3) A deduction is made for military grant-aid ship- ments because the Census Bureau includes them in merchandise exports, but BEA includes them in transfers of goods and services under U.S. military grant programs (line 15). The adjustment is based on Census Bureau documents. (4) An addition is made for private gift parcels mailed through the U.S. Postal Service because Census Bu- reau data do not cover these items. The adjustment is based on a BEA survey of postal operations. For details, see "Private Remittances and Other Trans- fers," where the financial counterpart of this item is included. (5) An addition is made for nonmonetary gold not in- cluded in Census Bureau data. This involves gold that is received at the Federal Reserve Bank of New York and held in custody for foreign official accounts; no export documents are filed for this gold. The ad- justment is based on the monthly average of daily fixings of London gold prices (data on the morning and afternoon fixings of gold prices in London are reported daily in the financial press) and on unpub- lished data provided by the Federal Reserve Bank of New York. Effective with data for January 1978, most exports of nonmonetary gold (ore, scrap and base bullion, refined bullion, etc.) are included in Census Bureau data. (6) An addition is made for exports of vessels omitted from Census Bureau data, particularly "sail away" exports and sales overseas, for which no export documents are filed. The adjustment is based on unpublished data from the Department of Trans- portation and on data from media reports [13, 19, 22] and the United Nations [27]. (7) An addition is made for electric energy supplied to Mexico. The adjustment is based on U.S. Department of Energy data [59]. (8) A deduction is made for exposed motion picture film for sale or rent [37] because, in the balance of pay- ments, these exports are included in receipts for other private services (line 9). (9) An addition is made for exports offish caught within the 200-mile limit established as U.S. territorial wa- ters, based on data provided by the National Oceanic and Atmospheric Administration. (10) A deduction is made for the value of repairs and alterations included in the Census data for equip- ment exported from the United States. This item is included in other private services (line 9). 2 Merchandise Imports, Excluding Military (line 17) This account measures the value of foreign merchandise imported into the United States. As described earlier, the balance of payments estimates are based on import data compiled and published by the Census Bureau. Def- initions of foreign merchandise and other characteristics of the Census Bureau data, such as sources, coverage, valuation, and commodity classification, are presented in table II-l. The procedures used in making the coverage, valua- tion, and other adjustments to the Census Bureau import data needed to bring them into conformity with balance of payments concepts are described below. The adjust- ments fall into five major categories. Table II-3 shows the derivation of merchandise imports on a balance of payments basis for 1988. The largest adjustments are (1) an addition for im- ports from Canada and (2) a deduction for imports of U.S. military agencies. (1) The addition for imports from Canada is based on the quarterly reconciliations of United States- Canadian trade data by the Census Bureau and Statistics Canada [28] and on the annual reconcil- iations of United States-Canadian current account data by BEA and Statistics Canada [46]. The major components are: (a) Addition to imports at the Canadian border to reflect inland freight costs [5]. (b) Addition for the value of electric energy im- ported from Canada, based on Canadian [6] and U.S. Department of Energy data [59]. (After 1990, this adjustment is no longer made.) (c) Miscellaneous valuation, error, definition, and timing adjustments, as identified in the United States-Canadian reconciliations of merchandise trade and current account data. Table 11-3. — Derivation of U.S. Merchandise Imports, Balance of Payments Basis, Excluding Military, 1988 (Line 17) [Millions of dollars] Merchandise imports, Census basis (general Imports). Adjustments: Imports from Canada Inland Canadian freight (valuation).. Electric energy Miscellaneous Military imports identified in Census documents.. Nonmonetary gold Vessels omitted from Census data Electric energy from Mexico Repair of equipment Other.. Guam Exposed movie film Repair of U.S. vessels abroad . Errata. Merchandise imports, balance of payments basis, excluding military.. 441,351 3,003 2,254 749 -1,686 3,576 100 95 -515 -75 -61 -14 617 446,466 Merchandise Trade 35 (2) The deduction for imports by U.S. military agencies is made because BEA includes these imports in di- rect defense expenditures (line 19). The adjustment is based on data obtained from regular BEA reviews of Census Bureau import documents. (3) An addition is made for nonmonetary gold not in- cluded in Census Bureau statistics. This involves gold sold by foreign official agencies to private pur- chasers out of stock held at the Federal Reserve Bank of New York; no import documents are filed for this gold. The adjustment is based on the average of daily fixings of London gold prices and on unpub- lished data provided by the Federal Reserve Bank of New York. For 1980 and some prior years, the adjustment also included the value of gold sold at International Monetary Fund auctions out of stocks held in the United States, regardless of whether the purchaser was a U.S. or foreign resident; the valua- tion was the average bid price. Purchases by foreign official agencies taking immediate delivery were ex- cluded. Effective with data for January 1978, most imports of nonmonetary gold (ore, scrap and base bullion, refined bullion, etc.) Census Bureau data. are included in the (4) An addition is made for the conversion and subse- quent import of vessels for commercial use omitted from the Census Bureau data. Information is ob- tained from media reports [13, 19, 22] and the United Nations [27]. (5) An addition is made for the value of electric energy imported from Mexico. The adjustment is based on U.S. Department of Energy data [59]. (6) A deduction is made for the value of repairs and alterations included in the Census data for equip- ment imported into the United States. This item is included in other private services (line 24). (7) Additions or deductions are made for other types of imports, including deductions for imports of ex- posed movie film (included in payments for other private services, line 24) and for repairs of U.S. ves- sels abroad (included in other transportation, line 22). These adjustments are based on Census Bureau data [39]. Military Transactions The military accounts (lines 4 and 19) cover international transactions in which U.S. Government military agen- cies participate. Commercial transactions between U.S. private firms, on the one hand, and foreign firms and governments, on the other, involving military types of goods or services without military agency participation are not included here. Thus, the transactor is the basis for classification, because it is impossible to distinguish between military and commercial transactions on the ba- sis of the nature of the goods; for example, truck engines or radar equipment can be used for both military and civilian purposes. The military accounts exclude exports and imports of goods and services procured outside military agency channels; these goods are included in merchandise trade (lines 2 and 17), and services are included either in other private services (lines 9 and 24) or U.S. Government miscellaneous services (lines 10 and 25). The military accounts also exclude transfers of goods and services to foreign governments under U.S. military grant programs; these are included in transfers of goods and services under U.S. military grant programs (line 15). In the military accounts, transfers of goods and serv- ices to foreign governments are recorded as receipts, and direct defense expenditures abroad are recorded as payments. Because military installations abroad are considered within the U.S. economy, receipts include de- liveries of military equipment to foreign governments from U.S. installations abroad, and payments include purchases of goods and services from foreigners for use at U.S. installations abroad. Estimates are based primarily on data submitted quarterly by U.S. military agencies to BEA as required by Office of Management and Budget (OMB) Directive No. 19. This directive is supplemented by detailed U.S. Department of Defense (DOD) instruc- tions to its various agencies, especially DOD Instruction 7060.2 [55]. DOD reimbursable contractual activities abroad (mostly construction and related services) are recorded in both receipts and payments. When a foreign govern- ment or an international organization contracts for DOD services, the foreign entity's provision of funds to DOD creates a U.S. liability. DOD, acting as a prime con- tractor, draws on these funds to pay its agencies, U.S. contractors, and foreign contractors for the delivery of goods and the rendering of services. Delivered goods and services are recorded as transfers under U.S. military agency sales contracts and the liability is liquidated. To the extent that foreign goods and services are procured (including those purchased by U.S. contractors) to ful- fill DOD contractual obligations, purchases are recorded as direct defense expenditures abroad. Net receipts or payments from these reimbursable contractual activities overseas are the difference between total DOD deliver- ies to fulfill the contracts (transfers) and expenditures for foreign goods and services used in these contracts (direct defense expenditures). If foreign contractors pur- chase U.S.-origin goods and services, these purchases are recorded (but not identified) in the merchandise trade account. Direct defense expenditures abroad do not measure the cost of conducting U.S. military operations abroad. On the one hand, costs incurred in the United States for re- pair, maintenance, and the procurement of equipment, materials, and supplies for U.S. troops and installations abroad are not included. On the other hand, direct de- fense expenditures abroad include payments to foreign suppliers utilized for construction undertaken abroad for foreign governments. 1 U.S. Receipts — Transfers Under U.S. Military Agency Sales Contracts (line 4) This account measures transfers of goods and services by U.S. Government military agencies to foreign gov- ernments under foreign military sales (FMS) program contracts and some non-FMS transfers (see table II-4). The FMS program is authorized under the provisions of the Arms Export Control Act of 1976 (Public Law 90- 629, as amended) and predecessor legislation. Deliveries may be financed by cash, grants, or credits under various foreign assistance programs. In most cases, U.S. mili- Table 11-4.— Transfers Under U.S. Military Agency Sales Contracts, 1988 (Line 4) [Millions of dollars] Total Transfers under FMS contracts Goods Aircraft Ships Vehicles and weapons Ammunition Missiles Communications equipment Other equipment Services Construction Repair and rehabilitation of equipment Supply operations Training Other services ' Non-FMS transfers 1 . Contains nonspecific FMS deliveries. FMS Foreign military sales. 10,050 9,795 7,413 4,481 121 854 150 1,157 405 244 2,383 485 197 441 400 860 255 36 Military Transactions 37 tary agencies transfer the goods or services directly to foreign governments; the transfer may be made abroad or in the United States for immediate shipment abroad or for use in the United States. In the latter case, although the goods physically remain in the United States (for ex- ample, equipment to train foreign personnel), ownership is transferred to a foreign government. Transfers may also be made from stocks at U.S. military installations abroad. The quarterly reports submitted under OMB Directive No. 19 contain details of FMS deliveries by broad prod- uct category, by country of destination, and by military service (Army, Navy, Air Force, etc.). The distinction be- tween receipts for goods and services is not precise for some categories, particularly "construction" and "repair and rehabilitation of equipment." Receipts arising from non-FMS transfers are relatively small. They include sales abroad of surplus equipment that would be too costly to return to the United States (such as used vehicles and office equipment); sales of material and services to foreign countries or interna- tional organizations under logistical support programs (such as sales of goods and services to Israel for construc- tion in the Sinai Desert); sales of petroleum products and other goods and services to foreign naval vessels and aircraft; and receipts for services provided to United Nations peacekeeping forces in Cyprus. Returns to for- eign governments of military equipment borrowed by the United States are also included in receipts. In general, non-FMS deliveries are recorded on the basis of receipt of funds by the U.S. Government, which is presumed to occur within 30 days following delivery. U.S. Payments — Direct Defense Expenditures (line 19) miscellaneous services (line 25); and (5) military pen- sion payments to persons residing outside the United States, included in U.S. Government pensions and other transfers (line 33). Direct defense expenditures are generally recorded on a cash disbursement basis. Payments are presumed to occur within 30 days following receipt of the goods or services. In addition to data reported under OMB Directive No. 19, estimates of direct defense expenditures are based on data from supplementary sources of information, in- cluding reports by the individual military services on their operating strength in foreign locations [57] and DOD reports submitted for a NATO defense expenditure questionnaire [56]. 2.1 Expenditures by U.S. personnel abroad This item consists of (1) personal expenditures by U.S. civilian and military personnel stationed abroad, (2) personal expenditures abroad by U.S. naval personnel homeported in the United States, and (3) expenditures by military exchanges and similar facilities abroad. The estimates for personal expenditures abroad by mil- itary and civilian personnel are based on the amount paid — in the form of checks, cash, and electronic transfers — to U.S. military personnel and civilian per- sonnel and their dependents stationed abroad. These payments include allowances, claim payments, and allot- ments mailed to foreign addresses. The following items are added to derive an estimate of funds available for spending abroad: (1 ) Paychecks mailed by DOD to banks or financial institutions, foreign or domestic, for credit to the individual accounts of these personnel, (2) money orders cashed by individuals in military postal facilities This account primarily measures direct defense expend- itures incurred abroad by military agencies (see table II-5). The account covers (1) expenditures by U.S. person- nel abroad, (2) payments of wages to foreign residents, (3) construction expenditures abroad, (4) payments for foreign contractual services, (5) procurement of foreign goods, (6) purchases of foreign goods and services for military assistance programs, (7) North Atlantic Treaty Organization (NATO) support project payments, and (8) purchases of foreign goods and services by the U.S. Coast Guard. The account also includes returns of leased military equipment to the United States from foreign governments. The account excludes (1) overseas procurement and im- port into the United States of goods by U.S. private firms in fulfillment of defense contracts, which are included in merchandise imports (line 17); (2) procurement of crude oil by DOD on behalf of the U.S. Department of Energy for the Strategic Petroleum Reserve, which is also in- cluded in merchandise imports; (3) expenditures abroad incurred by U.S. transportation companies for their own account on cargoes carried for DOD, included in other transportation (line 22); (4) expenditures abroad by DOD for certain civil functions, included in U.S. Government Table 11-5.— U.S. Direct Defense Expenditures, 1988 (Line 19) [Millions of dollars] Total Expenditures by U.S. personnel abroad Personal expenditures by military and civilian personnel Personal expenditures by naval personnel homeported in the United States Expenditures by military exchanges and similar facilities Payments of wages to foreign residents Direct hire Contract hire Construction expenditures abroad Direct DOD use Reimbursable from foreign governments Payments for foreign contractual services and other transactions Direct DOD use Reimbursable from foreign governments Procurement of foreign goods Direct DOD use Major equipment Petroleum (excluding the Strategic Petroleum Reserve) Other materials and supplies Reimbursable from foreign governments Military assistance programs , NATO infrastructure projects Coast Guard expenditures DOD U.S. Department of Defense. NATO North Atlantic Treaty Organization. 14,656 3,708 1,950 187 1,571 2,369 536 1,832 690 472 218 5,391 5,338 53 2,148 2,097 727 612 758 51 37 301 38 The Current Account abroad, and (3) reimbursable expenditures by personnel on temporary duty abroad. Because many personal expenditures are made at U.S. installations abroad, the following items are deducted: (1) Sales by foreign-based military exchanges, commis- saries, and similar facilities of foreign and U.S. goods and services to military and civilian personnel of U.S. mili- tary and nonmilitary agencies, (2) sales of money orders and stamps, fees collected by military postal facilities, sales of bank money orders, and fees collected by base exchanges, and (3) other DOD sales to individuals, in- cluding clothing store cash sales, and DOD receipts for drycleaning, laundry, and other services. A deduction is also made for one-half of the amount of paychecks mailed to addresses in the United States by disbursing officers on behalf of personnel located abroad." After these deductions are made, the remainder is assumed to represent the net amount of funds spent di- rectly in the local economy of each foreign country by U.S. military and civilian personnel and their dependents stationed abroad. No information is available on the amount of funds returned to the United States through private channels by DOD personnel or their dependents stationed abroad, or on the amount of funds received by them from the United States through private channels. The estimates for personal expenditures abroad of naval personnel homeported in the United States are based on the number of port calls, average length of stay, and average per capita amount spent directly in the local economy of each foreign country. The basic information is obtained by DOD from surveys of personnel returning from port leave in various countries. The estimates for expenditures by military exchanges and similar facilities abroad are based on data on known purchases of foreign goods and services by military ex- changes and other nonappropriated fund activities, such as officers' clubs and movie facilities located abroad. This measure of expenditures in local economies is used in lieu of an expenditure figure obtained directly from U.S. military and civilian personnel and their depen- dents. Expenditures abroad for foreign products by commissaries are included in the category "procurement of foreign goods," discussed below. If military exchanges purchase goods and services in one foreign country, but sell them in another, the pur- chases are reported for the country where the goods and services are bought and the sales are recorded for the country where they are later sold. For example, goods purchased in Japan for sale in Korea are recorded as expenditures in Japan when purchased, and as sales in Korea when sold. 2.2 Payments of wages to foreign residents This item consists of direct payroll expenditures for for- eign employees and payments for the hire of foreign res- idents under government-to-government contracts. Pay- 7. The assumption regarding paychecks reflects the fact that subsistence and living quarters are generally provided by U.S. military agencies to their personnel abroad and that, in many cases, dependents live in the United States. ments include U.S. Government contributions to foreign retirement programs and separation allowances. 2.3 Construction expenditures abroad This item consists of foreign expenditures of U.S. prime contractors and their U.S. and foreign subcontractors, including the U.S. contractors' and subcontractors' per- sonnel, for foreign goods and services in connection with both the construction of installations abroad for DOD use and the reimbursable construction undertaken for foreign governments. Payments to U.S. contractors for work abroad are net of expenditures in the United States for U.S. products and services. Data are classified pri- marily by the country where the installation is located. Payments to foreign prime contractors for construction abroad are also included and are classified by the country where the foreign contractor is incorporated. 2.4 Payments for foreign contractual services This item consists of DOD payments for services per- formed at U.S. installations abroad by foreigners, such as real property maintenance and repair, and payments for utilities, communications, and transportation. Also included are DOD payments for services under reim- bursable contracts. Payments to U.S. contractors for work abroad are net of expenditures in the United States for U.S. products and services. 2.5 Procurement of foreign goods This item consists of (1) direct DOD expenditures for major equipment, petroleum, and other materials and supplies and (2) DOD payments to foreign suppliers under reimbursable contracts. Major equipment expenditures abroad are made un- der appropriations for the procurement of items such as aircraft and missiles and for the repair, transporta- tion, and other services related to major equipment. Included are purchases of (1) foreign products to be used or stockpiled abroad and (2) foreign products imported into the United States by U.S. military agencies on military or commercial carriers. Expenditures for petro- leum and other materials and supplies, including foreign food products purchased by U.S. commissaries abroad, are made from both appropriated and nonappropriated funds. Payments by DOD to foreign suppliers under re- imbursable contracts with foreign governments are also included. Payments made to U.S. contractors are net of expenditures in the United States for U.S. products and services. 2.6 Military assistance programs This item consists of U.S. payments to defray interna- tional military headquarters expenses and certain other outlays related to the administration of the Military Assistance Program (MAP), including its Offshore Pro- curement Program. MAP was originally established to develop the military capacity of U.S. allies by transfers Military Transactions 39 of grant-aid. The offshore program was established to enhance the military productive capacity of the allies by buying abroad some of the equipment that was previously delivered under grant programs from U.S. production. 2.7 NATO infrastructure projects This item consists of payments by the United States for its share of multinational construction costs for air- fields, pipelines, and communications and naval facilities under the NATO infrastructure program; the installa- tions are utilized by the forces of all NATO countries. Also included are U.S. contributions to the multinational acquisition fund for the Airborne Early Warning and Control System; this fund is used by NATO to acquire special aircraft and ground facilities to monitor, coordi- nate, and support activities of NATO forces in European airspace. 2.8 Coast Guard expenditures This item consists mainly of payments to maintain Coast Guard installations abroad that provide navigational assistance to the U.S. military and to U.S. maritime com- merce. Expenditures abroad by Coast Guard personnel are also included. Travel The travel accounts (lines 5 and 20) cover purchases of goods and services by U.S. travelers abroad and by for- eign visitors to the United States. A traveler is denned as a person who stays for a period of less than 1 year in a country of which he is not a resident. Military and other government personnel and their dependents stationed outside their country of residence are not considered trav- elers, regardless of the length of their stay abroad; they are considered to have remained within the economy of their home country. The definition of travelers also ex- cludes owners or employees of business enterprises who temporarily work abroad in order to further the enter- prise's business, but intend to return to their country of residence in a reasonable period of time. Purchases of goods and services by U.S. travelers abroad, and by foreign visitors to the United States, con- sist of expenditures for food, lodging, recreation, gifts, and other items incidental to a foreign visit. Also in- cluded is local transportation purchased in the country of travel. Passenger fares for travel between the United States and overseas countries, Canada, or Mexico, when paid by U.S. travelers to foreign carriers or paid by foreign visitors to U.S. carriers are excluded; they are covered in the passenger fares accounts (lines 6 and 21). The travel accounts also exclude expenditures abroad by employees and their dependents of U.S. Government nonmilitary agencies (included in U.S. Government mis- cellaneous services, line 25), expenditures abroad by U.S. military personnel and their dependents stationed abroad (included in direct defense expenditures, line 19), and expenditures in the United States of foreign govern- ments and international organizations, expenditures of U.S business employees who temporarily work abroad, and expenditures of Mexican workers who commute to jobs in the U.S. border area (all included in other private services, lines 9 and 24). The method of estimating the travel accounts involves, in general, combining data on numbers of travelers, provided by U.S. and foreign immigration authorities, with estimates of average expenditures, obtained from three U.S. surveys of travelers (see table 1-3). If av- erage expenditures are not available, data on numbers of travelers are combined with changes in a relevant price index. Expenditures of U.S. travelers overseas and of foreign visitors to the United States are esti- mated on the basis of a survey administered by the U.S. Travel and Tourism Administration (USTTA), U.S. De- partment of Commerce, and designed in part to meet balance of payments estimation needs. The survey is conducted aboard a sample of scheduled flights depart- ing the United States; it covers about 70 percent of U.S. carriers and 35 percent of foreign carriers, who voluntar- ily choose to participate. Sample results are expanded to universe estimates to account for nonresponse of passen- gers on each sampled flight, for coverage of all flights on each major airline route, and for all international routes. The basis for the expansion is the number of passengers departing the United States, obtained from the Immigra- tion and Naturalization Service (INS), U.S. Department of Justice. Coverage of individual areas or countries in the USTTA survey is highly uneven in quality. The unevenness is partly due to the voluntary participation of air carriers and cannot be compensated for fully in the estimation procedure. The unevenness is reflected in the overseas totals, which are the sum of the individual area and country estimates. Expenditures of U.S. travelers in Canada and Mexico are estimated on the basis of data from BEA surveys, as described below. Response to the travel questionnaires is voluntary. 1 U.S. Receipts (line 5) This account measures foreign visitors' expenditures in the United States, as defined earlier (see table II-6). Re- ceipts are estimated separately for overseas, Canada, and Mexico. Table 11-6.— U.S. Travel Receipts, by Area, 1988 (Line 5) [Millions of dollars] Total Overseas Western Europe United Kingdom Belgium-Luxembourg France Germany, Federal Republic of Italy Netherlands Denmark, Ireland, Greece, Spain, and Portugal Other Western Europe Eastern Europe Caribbean, Central and South America Japan Australia Other countries in Asia and Africa Canada Mexico U.S. border area 29,202 22,574 9,795 2,643 173 942 1,950 634 322 913 2,218 179 3,636 4,926 702 3,336 3,976 2,652 2,092 40 Travel 41 1.1 Overseas The estimating procedure starts with data obtained from INS [63] on the number of nonimmigrant aliens admitted to the United States. Foreign residents arriving to take up employment with international organizations or pri- vate business concerns are excluded. Data are grouped according to balance of payments estimating areas and countries, as shown in table II-7. Average travel expenditures of foreign travelers in the United States from each major area or country are devel- oped from data in the USTTA survey described earlier. These averages are multiplied by the number of visitors from the same areas or countries obtained from INS data. The sum of all major areas and countries is the estimate for overseas travel receipts. For those who travel on a tour package, only expenditures on land are included as travel receipts; the airfare paid to U.S. carriers is included in passenger fare receipts. Because results of the USTTA survey are only available with a lag, BEA uses a simplified methodology to develop estimates for the most recent quarters. First, the per- cent change between the current quarter and the same quarter of the previous year in the number of visitors from each area is calculated from the INS data. Next, the percent change in the U.S. Consumer Price Index [18] is computed in a similar manner. Then, these two percent changes for each area or country are added and applied to the estimate of travel receipts for the same quarter of the previous year to obtain an estimate of expenditures by overseas visitors to the United States for the most recent quarter. 1.2 Canada Since 1939, BEA has collaborated with Statistics Canada in estimating travel transactions between the two coun- tries. BEA uses Statistics Canada estimates of Canadian travel expenditures in the United States as a measure of U.S. travel receipts from Canada. The Canadian es- timates are derived from questionnaires distributed to returning Canadians (see table II-8), from which average expenditures are developed and applied to the number of Canadians returning. Data provided by Statistics Table 11-7.— Overseas Visitors to the United States, by Area, 1988 [Thousands] Total Western Europe United Kingdom Belgium-Luxembourg France Germany, Federal Republic of Italy Netherlands Denmark, Ireland, Greece, Spain, and Portugal Other Western Europe Eastern Europe Caribbean, Central and South America Japan Australia Other countries in Asia and Africa Canada [8] on the number of travelers are grouped by method of transportation, length of stay, and other factors, as shown in table II-8. 1.3 Mexico U.S. travel receipts from Mexico are estimated separately for expenditures of Mexican travelers in the interior of the United States and in the U.S. border area. The major sources of information are INS and the Bank of Mexico. Estimating the travel account with Mexico is particularly difficult because the two-way traffic across the border is enormous; many travelers cross the border for short pe- riods and remain only in the border area. Detailed data on traffic, comparable to those for the United States- Canadian border, are not collected either by Mexico or by the United States, although data by point of entry are available. Interior travel. — The estimate of the number of Mexican visitors to the U.S. interior is based on monthly INS data [63] on the number of nonimmigrant Mexicans admitted beyond the U.S. border area: All Mexican air travelers and 60 percent of land and sea travelers are considered by BEA to be visitors to the U.S. interior. The estimate of the average expenditure of Mexican visitors in the U.S. interior is made by adjusting the av- erage expenditure figure estimated for the same quarter of the previous year by the change in the U.S. Consumer Price Index. The resulting figure is then multiplied by the number of Mexican visitors to estimate U.S. receipts from interior travel. Border travel. — U.S. receipts in the border area are based on data from Bank of Mexico surveys of Mexicans returning from the United States. The Bank of Mexico uses counts of citizen and alien border crossers by the INS to corroborate its own traffic estimates. The data are published by the Bank of Mexico [20]. Table 11-8.— Canadian Visitors to the United States, by Method of Transportation, 1988 [Thousands] Total 12,494 Au, ° Same day 5,651 One night 1,818 Two or more nights 123 618 Bus 1,153 Same day 357 One or more nights 24 8 475 Ral 859 Other land 111 Air 2,367 Commercial Private 2,534 Sea 336 Commercial Private 1 ,495 — — Source: Statistics Canada 51,308 45.500 36,185 1,406 7,909 1.416 845 571 30 435 3,555 3,497 58 372 243 129 42 The Current Account 2 U.S. Payments (line 20) This account measures expenditures abroad by U.S. trav- elers, as denned earlier (see table II-9). Expenditures for local transportation abroad are included. Expenditures are estimated for overseas, Canada, and Mexico. 2.1 Overseas Overseas expenditures of U.S. travelers are estimated by combining U.S. Department of Transportation data [70], which incorporate INS data on the number of U.S. citizens departing the United States by country or region of debarkation, with average expenditures of travelers, developed from the USTTA survey described earlier (see table 11-10). Average expenditures for each major area or country are multiplied by the number of travelers to each ma- jor area or country, obtained from INS data and the results summed. Information on single and multiple des- tinations of travelers, also developed from the survey, Table 11-9.— U.S. Travel Payments, by Area, 1988 (Line 20) [Millions of dollars] Total Overseas Western Europe United Kingdom Belgium-Luxembourg France Germany, Federal Republic of Italy Netherlands Denmark, Ireland. Greece, Spain, and Portugal Other Western Europe Eastern Europe Caribbean, Central and South America Japan Australia Other countries in Asia and Africa Canada Mexico Mexican border area Note. — Data include shore expenditures of cruise travelers Table 11-10. — U.S. Travelers to Overseas Areas, by Destination, 1988 [Thousands] 32,112 24,151 1 1 ,004 3,324 166 1,187 2,413 1,700 186 994 1,034 244 4,486 1,793 781 5,843 3,241 4,720 2,748 Total Western Europe United Kingdom Belgium-Luxembourg France Germany, Federal Republic of Italy Netherlands Denmark, Ireland, Greece, Spain, and Portugal Other Western Europe Eastern Europe Caribbean, Central and South America Japan Australia Other countries in Asia and Africa Note. — Because some travelers visit more than one country, components do not serves as the basis for the allocation of expenditures abroad. For tours, an estimate of commissions paid to U.S. travel agents and tour operators is deducted before travel payments are computed, and tour package airfares that are paid to foreign carriers are removed and placed in passenger fare payments. The survey questionnaire for payments asks travel- ers departing the United States how much they intend to spend while abroad; thus, it is a survey of intended rather than of actual expenditures. The relationship between intended and actual expenditures is unknown. Consequently, for balance of payments purposes, the es- timates of payments may be less reliable than those of receipts. Because results of the USTTA survey are available only with a lag, BEA uses a simplified methodology to develop estimates for the most recent quarters. First, the per- cent change between the current quarter and the same quarter of the previous year in the number of U.S. trav- elers to each area or country is calculated from INS data. Next, the percent change in the consumer price index in the appropriate area or country, adjusted for changes in exchange rates, is computed in a similar manner. Then, these two percent changes for each area or country are added and applied to estimates of travel payments for the same quarter of the previous year to obtain estimates of U.S. travel expenditures abroad for the most recent quarter. 2.2 Canada BEA collaborates with Statistics Canada in estimating U.S. travel expenditures in that country. Monthly data on the number of U.S. residents visiting Canada are sup- plied by Statistics Canada by port of entry and by type of transportation [7], based on actual count by Canadian immigration officials at border points (see table 11-11). The data are combined with average expenditure figures, developed from BEA sample data in the BE-536, "Survey of U.S. Travelers Visiting Canada." The BE-536 is dis- tributed continuously at border points by INS and U.S. Customs Service inspectors to returning U.S. residents. Table 11-11.— U.S. Travelers to Canada, 1988 [Thousands] Total 21,280 Auto 1 1 ,308 Same day 3,252 One night 332 Two or more nights 1,435 1,846 Bus 1,523 Same day 407 One or mors nights 1,199 1,314 Rail 245 Other land 5,383 Air Commercial 1 .023 Private 477 Sea Commercial 2,844 Private add to totals. Source: Statistics Canada. 36,147 30.380 21 ,465 1,835 7,080 1,542 711 831 61 629 2,513 2,404 109 1,022 704 318 Travel 43 Recipients are instructed to complete the form and mail it to BEA. 8 Estimates of U.S. travelers' expenditures in Canada are developed by port, means of transportation, and length of stay (auto, bus, and boat travelers only). The number of travelers in each category is multiplied by the estimated average expenditure for each group. 2.3 Mexico U.S. travel payments to Mexico are estimated on the basis of data from the Bank of Mexico [21], the BE- 575 survey, "Expenditures of United States Travelers in Mexico," and, for air travelers, the last available sample data from a discontinued BEA survey of travelers. The BE-575 is distributed continuously at border points by INS and U.S. Customs Service inspectors to returning U.S. residents. Separate estimates are prepared for U.S. travel expenditures in the interior and the border area. Interior travel. — The number of U.S. travelers are ob- tained from the Bank of Mexico [21], which bases the estimate on counts by Mexican immigration officials of total alien arrivals by air and land. Studies by the Bank of Mexico indicate that 80 percent of persons arriving by air and 90 percent of persons arriving by land in the interior of Mexico are U.S. residents. Quarterly expenditures are estimated by multiplying the number of U.S. travelers to the interior of Mexico by the average expenditure. For U.S. air travelers, the average expenditure is based on the last available sam- ple data from a discontinued BEA survey of travelers, adjusted for changes in exchange rates and the Mexi- can Consumer Price Index [18]. For land travelers, the average expenditure is based on the BE-575. Border travel. — Data on the number of U.S. residents visiting the border area of Mexico are provided by INS [63] by point of entry. The number of border crossers is combined with average expenditures developed from BE- 575 data; average expenditures are calculated for each of seven major points of entry (others are combined) and multiplied by the appropriate traffic. 8. Beginning in January 1990, Statistics Canada administers the survey of U.S. travelers visiting Canada. The survey is distributed 1 week per quarter and returned to Statistics Canada for processing. Passenger Fares The passenger fare accounts (lines 6 and 21) cover in- ternational transactions in fares paid by residents of one country to carriers resident in other countries. Receipts consist of fares received by U.S. air carriers from for- eign residents for travel between the United States and foreign countries and between two foreign points. Pay- ments consist of fares paid by U.S. residents to foreign carriers for travel between the United States and foreign countries. The passenger fare accounts exclude expenditures for local transportation abroad. The accounts also exclude fares paid by U.S. Government personnel to foreign carriers and fares paid by foreign governments and inter- national organizations to U.S. carriers; these items are included in U.S. Government miscellaneous services (line 25) and in other private services (line 9). The method of estimating the passenger fare accounts involves, in general, combining data on numbers of travelers, provided by the Immigration and Naturaliza- tion Service (INS), U.S. Department of Justice, with estimates of average passenger fares developed from the travel survey administered by the U.S. Travel and Tourism Administration (USTTA), U.S. Department of Commerce. The survey is conducted aboard a randomly chosen sample of scheduled nights departing the United States; it covers about 70 percent of U.S. carriers and 35 percent of foreign-flag carriers, who voluntarily choose to participate. Sample results are expanded to universe es- timates to account for nonresponse of passengers on each sampled flight, for coverage of all flights on each major airline route, and for all international routes. The basis for the expansion is the number of passengers departing the United States obtained from INS. Data from the U.S. Department of Transportation (DOT) and data from a BEA survey of U.S. airlines are also utilized in estimating U.S. passenger fare receipts and payments. 1 U.S. Receipts (line 6) This account measures fares paid by foreign travelers to U.S. air carriers (see table 11-12). Because of the virtual disappearance of scheduled U.S. passenger lin- ers, ocean transportation has not been included in this account since 1972. Passenger fares received by U.S. air carriers from foreign travelers are estimated separately for travel be- tween the United States and overseas, the United States and Canada, and the United States and Mexico, and for travel between two foreign points. 1 .1 Overseas The number of foreign visitors to the United States ar- riving on U.S. carriers is estimated from two sources The total number of foreign visitors, by country of resi- dence, is estimated from a count of INS entry documents [61], but these data are not available by flag of carrier Therefore, the proportion of foreign visitors arriving on U.S. carriers is estimated from the DOT report U.S. In- ternational Air Travel Statistics [70], which incorporates data from other INS reports [63] on the number of alien and U.S. citizen arrivals on U.S. carriers. The U.S. carri j ers' share of total traffic is developed for each major area or country, and is then applied to the total number oi foreign visitors from the appropriate area or country tc estimate the number traveling to the United States on U.S. carriers. Average passenger fares are developed from the USTTA survey described earlier; the averages are mul- tiplied by the number of foreign visitors on U.S. carriers from each major area or country, and the results are summed to derive U.S. receipts of passenger fares for travel between the United States and overseas. To de- velop an adequate measure of average passenger fares, the average fares on both U.S. and foreign carriers must be combined, even though, in principle, only the average fare on U.S. carriers should be used in the estimates. Because results of the USTTA survey are only avail- able with a lag, BEA uses a simplified methodology tc develop estimates for the most recent quarters. First, Table 11-12.— U.S. Passenger Fare Receipts, 1988 (Line 6) [Millions of dollars] Total Overseas Western Europe United Kingdom Belgium- Luxembourg France Germany, Federal Republic of Italy Netherlands Denmark, Ireland, Greece, Spain, and Portugal Other Western Europe Eastern Europe Caribbean, Central and South America Japan Australia Other countries in Asia and Africa Canada Mexico 8,86 8,01 3,68 1,21 3 56 65 38 3 28 49 1,21 1,86 48 78 66 18 44 Passenger Fares 45 the percent change between the current quarter and the same quarter of the previous year in the number of for- eign visitors using U.S. carriers is calculated from INS data, as described above. Next, the percent change in average air fares is computed in a similar manner. Av- erage air fares are calculated for selected city pairs (U.S. and foreign cities) published in the Official Airline Guide 9], weighted by the number of passengers for these city pairs. Then, these two percent changes for each area or country are added and applied to the estimates of passen- ger fare receipts for the same quarter of the previous year to obtain current quarterly estimates of the passenger Fare receipts of U.S. air carriers from foreign visitors. L.2 Canada BEA uses Statistics Canada estimates of Canadian pay- ments for passenger fares for travel to the United States as a measure of U.S. passenger fare receipts Erom Canada. The Canadian estimates are derived from questionnaires distributed to returning Canadians, from which average passenger fares are developed and applied ;o the number of Canadians returning. L.3 Mexico Receipts are estimated by applying weighted average ? ares of Mexican residents flying on U.S. air carriers to ;he number of travelers. Weighted average fares are Dased on data for representative published air fares be- ;ween certain major U.S. and Mexican cities. Data on ;he number of travelers are obtained from INS and DOT. L.4 Two foreign points Estimates of fare receipts of U.S. air carriers for trans- porting passengers between two foreign points are based m BEA data obtained from the quarterly BE-37 sur- rey, "U.S. Airline Operators' Foreign Revenues and Expenses." Table 11-13.— U.S. Passenger Fare Payments, 1988 (Line 21) [Millions of dollars] Total Jverseas Western Europe United Kingdom Belgium-Luxembourg France Germany, Federal Republic of Italy Netherlands Denmark, Ireland, Greece, Spain, and Portugal Other Western Europe Eastern Europe Caribbean, Central and South America Japan Australia Other countries in Asia and Africa Canada Vlexico 7,872 7,165 3,736 1,075 82 301 549 214 350 556 609 1,078 465 331 1,555 241 466 2 U.S. Payments (line 21) This account measures fares paid by U.S. residents to foreign air carriers and foreign cruise operators (see table 11-13). Passenger fares for travel on regularly scheduled foreign-operated ocean liners have not been tabulated since 1975, when the INS discontinued publishing ocean passenger traffic statistics; by that time, nearly all U.S. ocean passenger liners had been taken out of service. 2.1 Air Data on the number of U.S. travelers by flag of carrier are based on INS form 1-92 [62], as published in the DOT report U.S. International Air Travel Statistics [71]. The estimation method for passenger fare payments is similar to that for passenger fare receipts for travel to overseas destinations and Mexico. For overseas travel, the number of U.S. travelers on foreign-flag air carriers to each major area or country is multiplied by average passenger fares developed from the USTTA survey for the appropriate area or country, and the results are summed. In developing estimates for average fares, fares on both U.S. and foreign air carriers are combined, even though, in principle, only the average fare on foreign-flag carriers should be used in the estimates. Use of only the average fare for foreign-flag carriers would result in a substantial understatement of passenger fare payments. For travel to Mexico, weighted average fares of U.S. residents are applied to the number of travelers. Weighted average fares are based on representative pub- lished air fares between certain major U.S. and Mexican cities. For travel to Canada, passenger fare payments are estimated on the basis of sample data obtained in the BE-536, "Survey of U.S. Travelers Visiting Canada." 9 2.2 Cruise Cruise passenger fare payments are estimated by adjust- ing the latest available payments estimate by the change in cruise package prices; data for the latter are obtained mainly from the Official Steamship Guide International [24]. Before 1976, the estimate of cruise payments was based on INS data [64] on the number of U.S. cruise travelers and on BEA data on average fares. 9. Beginning in January 1990, Statistics Canada administers the survey of U.S. travelers visiting Canada. Transportation The transportation accounts (lines 7 and 22) cover U.S. international transactions arising from the transporta- tion of goods by ocean, air, waterway, and rail carriers to and from the United States; pipeline transportation is also covered. The accounts cover freight charges, op- erating expenses that transportation companies incur in foreign ports, and payments for vessel charters and aircraft and freight car rentals. The accounts exclude passenger fares, which are covered in lines 6 and 21. Freight charges are recorded in the U.S. balance of payments when shipping services are performed by the residents of one country for residents of other countries. A key convention in estimating U.S. freight receipts and payments is the assumption that shipping services per- formed on a country's merchandise exports beyond its borders are services performed for the importing country. Thus, freight charges for transporting U.S. exports are included in the U.S. balance of payments if the carriers are U.S. residents; if the carriers are foreign residents, the charges are excluded because the transactions are between foreign residents. Similarly, freight charges for transporting U.S. imports are included in the U.S. bal- ance of payments if the carriers are foreign residents; if the carriers are U.S. residents, the freight charges are excluded because the transactions are between U.S. residents. In estimating transportation receipts and payments, the residency of the vessel operator must be determined because it may differ from the country of registry of the vessel. For example, many tankers are registered in flag- of-convenience countries (for example, Panama, Liberia, Honduras), but are operated by U.S. companies either directly or through foreign shipping subsidiaries. For direct operation, the U.S. operators of foreign-flag vessels are treated as U.S. residents. For indirect operation, the shipping subsidiaries are treated as foreign residents. The main sources of information for the transportation accounts are four mandatory BEA surveys and the Cen- sus Bureau, U.S. Department of Commerce, tabulations of U.S. exports and imports by method of transporta- tion, type of service (liner, tramp, and tanker), shipping weight of cargo, freight and insurance charges on im- ports, and flag of vessel. Two of the BEA surveys are quarterly (U.S. ocean and air carriers), and two are annual (foreign ocean and air carriers). The Census tabulations are monthly. 1 U.S. Receipts (line 7) This account primarily measures (1) freight receipts aris- ing from foreign residents' expenditures on ocean, air, and other methods of transportation provided by U.S. residents, and (2) receipts arising from foreign-operated carriers' expenditures in U.S. ports (see table 11-14). This account also includes receipts from foreigners for vessel charters, aircraft rentals, freight car rentals, and trans- portation by pipeline of Canadian gas and oil in transit through the United States. 1.1 Freight receipts Ocean. — These receipts measure the earnings of U.S. vessel operators for carrying U.S. merchandise exports from the United States to foreign ports and for carry- ing freight between foreign ports. The basic sources of information are the Census Bureau monthly tabulation SM 704, U.S. Waterborne Exports, Domestic and Foreign Merchandise [40], and the BEA quarterly survey BE-30, "Ocean Freight Revenues and Foreign Expenses of U.S. Carriers." Receipts of U.S. operators for carrying U.S. exports are estimated in four steps. First, the data on waterborne export tonnage carried by U.S. -flag vessels are obtained from the SM 704. Second, this figure is increased by an estimate of the share of export tonnage carried by U.S. operators of foreign-flag vessels. Since the SM 704 does not provide the residency of operators, the U.S. operators' share of foreign-flag shipping for U.S. exports is assumed to be the same as that for U.S. imports, which is provided by the Census Bureau tabulation SM 304, U.S. Water- borne Imports [41] and the Customs Bureau form 1400, "Record of Vessels Engaged in Foreign Trade and Entered or Arrived Under Permit to Proceed" [76]. Third, the Table 11-14.— U.S. Transportation Receipts, 1988 (Line 7) [Millions of dollars] Total Freight receipts Ocean Exports trom the United States... Shipments between foreign ports Air Exports from the United States... Shipments between foreign ports Pipeline Rail Great Lakes Port services receipts Ocean Air Rail Great Lakes Charter hire and rentals Vessel charter Aircraft rental Freight car rental 18,930 5,345 3.648 2.959 689 1,385 963 422 259 43 10 12,830 7,315 5,407 94 14 755 153 500 102 46 Transportation 47 resulting total export tonnage carried by U.S. -operated vessels is multiplied by an average freight rate per ton, estimated from the quarterly BEA survey of U.S. carriers (the BE-30). Reported data include receipts on intransit and transshipment cargoes, but exclude receipts on car- goes carried for the U.S. Department of Defense. Finally, estimates of receipts are adjusted to include subsidies paid by the U.S. Government to U.S. vessel operators on grain shipments under foreign aid programs, and to reflect negotiated rates on grain shipments to Eastern Europe. The adjustments are based on data from the U.S. Department of Agriculture [30]. Receipts for carrying freight between foreign ports are estimated by applying the year-to-year percent change in revenue on cross-trade cargoes, reported in the BE- 30, to receipts estimated for the corresponding quarter of the preceding year. The estimate includes an allowance for some unreported freight receipts of U.S. -operated tankers, based on past observations that reported data do not fully cover receipts on cargoes between foreign points. Air. — These receipts measure the earnings of U.S. air carriers for transporting U.S. exports from the United States to foreign countries and for transporting freight between foreign points. The basic source of informa- tion is the BEA quarterly BE-37 survey, "U.S. Airline Operators' Foreign Revenues and Expenses." Reported earnings (revenue) are increased 5 percent to allow for small carriers that are exempt from reporting. The ex- pansion factor is derived by comparing export freight tonnage carried by BE-37 reporters — 17 U.S. carriers in 1988 — with tonnage data included in the Census Bureau tabulation AM 754, U.S. Exports by Air [36]. Pipeline. — These receipts measure earnings of Un- incorporated affiliates of Canadian pipeline companies for transporting oil and gas, unloaded from tankers at Portland, ME, to Canadian destinations. Trans- portation of oil enroute from one Canadian point to another through pipelines across the northeast region of the United States is also included. Data are obtained each quarter from the four U.S. affiliates of Canadian companies that provide such services. Rail. — These receipts measure earnings of U.S. rail carriers for transporting (1) Canadian exports to, and im- ports from, third countries through the United States, (2) U.S. exports from the U.S. customs frontier to their in- terior destination or to other rail connections in Canada, and (3) goods within Canada transported on the U.S. rail carriers' leased trackage in Canada. Quarterly estimates of these receipts are based on annual submissions of rev- enue data to BEA by the four U.S. rail carriers operating in Canada. Great Lakes. — These receipts measure the earnings of U.S. ship operators for transporting goods between U.S. and Canadian Great Lakes ports. Data on export ton- nage are obtained by type of shipping service from the Census Bureau SM 704. Total receipts are derived by multiplying export tonnage by estimates of average freight rates, obtained from the BE-30. 1 .2 Port services receipts Ocean. — These receipts measure foreign ship operators' expenditures in the United States. Expenditures in- clude port call expenses (pilotage, towing, tugboat), cargo expenses (stevedoring, container, barge rentals, ware- house), fuel, and other expenses (stores, supplies, wages paid to crew members in U.S. ports, agents' and brokers' fees, maintenance of offices). The main sources of in- formation are the BEA annual BE-29 survey, "Foreign Ocean Carriers' Expenses in the United States" and data from the Census Bureau SM 704 for exports and the SM 304 for imports. The shipping weight of U.S. exports and imports carried by foreign-flag vessels, adjusted to exclude tonnage carried by U.S. operators of foreign-flag vessels, is multiplied by an average per ton rate of port expenditures, obtained from the BE-29, in which both the expenditures and shipping weights are reported. Quar- terly estimates are derived by distributing the annual total according to the shipping weights of exports and imports reported in Census Bureau tabulations. Until results of the annual survey become available, current quarterly estimates are based on quarterly es- timates of the volume of exports and imports carried by foreign ship operators and the average of port ex- penditures for the comparable quarter a year earlier, adjusted for the change in the U.S. Producer Price In- dex for services, and for the change in fuel prices paid by ship operators from the Census tabulation FT 810, Bunker Fuels [32]. Estimates are made separately by type of service (liner, tramp, tanker). Air. — These receipts measure foreign air carriers' ex- penditures in the United States for fuel, wages paid to employees in the United States, agents' and brokers' fees, aircraft repair and maintenance, terminal services and maintenance, and other expenses, such as landing fees, catering, and administrative and other office expenses. The source of information is the BEA annual BE-36 sur- vey, "Foreign Airline Operators' Revenues and Expenses in the United States." Annual estimates include the addition of 5 percent to the total of expenses incurred in the United States, re- ported in the BE-36, to allow for small carriers that are exempt from reporting. This expansion factor is based on a comparison of the tonnage transported by report- ing carriers and the data on total tonnage contained in the Census Bureau tabulation AM 354, U.S. General Im- ports by Air [38]. Quarterly estimates are derived by distributing the annual estimate by the quarterly pattern of total number of foreign flights to the United States and shipping weights from the AM 354. Until results of the annual survey become available, current quarterly estimates are made by multiplying the total estimate for the comparable quarter a year earlier by the weighted average of (1) the percent change in the volume of freight carried by foreign air carriers reported in the Census AM 354 and (2) the percent change in passenger traffic on foreign airlines. Rail. — These receipts measure Canadian rail carriers' expenditures in the United States for maintenance, re- 48 The Current Account pair, fuel, and other supplies. Quarterly estimates are obtained from Statistics Canada [5]. Great Lakes. — These receipts measure expenditures of Canadian carriers in U.S. Great Lakes ports. Quarterly estimates are obtained from Statistics Canada [5]. 1.3 Charter hire and rentals This item measures receipts of U.S. vessel operators for the charter of vessels to foreigners, reported in the BE- 30, and receipts from foreign airline operators for aircraft leasing expenses, reported in the BE-36 (for operating leases that have not been capitalized). Also included are U.S. receipts from Canada and Mexico for rentals of freight cars owned by U.S. rail lines to transport freight to a point in Canada or Mexico or between two points in either of the two countries. Estimates for Canada are based on data from Statistics Canada [5]; estimates for Mexico are extrapolated from data provided by the Association of American Railroads in the past. 2 U.S. Payments (line 22) This account primarily measures (1) freight payments to foreign residents for ocean, air, and other methods of transportation, and (2) expenditures abroad of U.S.- operated carriers (see table 11-15). This account also includes payments to foreigners for vessel charters and for aircraft and freight car rentals. 2.1 Freight payments Ocean. — These payments measure the earnings of for- eign ship operators for carrying U.S. merchandise im- ports from foreign ports to U.S. ports. The basic source of information is the Census Bureau SM 304, which provides data on import charges (freight and insurance combined), shipping weights, and the f.a.s. (free along- side ship) value of imports by type of service (liner, tramp, and tanker) and by flag of vessel. To estimate total charges by residency of operator, BEA obtains a sample of vessel names, shipping weights, and import charges, by the flag of vessel, from the SM 304. The residency of operator of each vessel in the sample is determined by examining Customs forms 1400, "Records of Vessels Engaged in Foreign Trade and Entered or Arrived Under Permit to Proceed," which contain infor- mation on owners, operators, and agents. The sample provides the basis for redistributing import charges from a fiag-of-vessel basis to a residency-of-operator basis. The redistribution mostly involves identifying U.S. operators of tramp and tanker service vessels registered in flag-of- convenience countries. An estimate of insurance charges is subtracted from import charges because insurance is not part of the transportation account. Air. — These payments measure the earnings of foreign air carriers for transporting U.S. imports from foreign countries to U.S. destinations. The basic source of infor- mation is the annual BE-36 survey. Annual estimates include the addition of 5 percent to the total of reported Table 11-15.— U.S. Transportation Payments, 1988 (Line 22) [Millions of dollars] Total Freight payments Ocean Air Rail Great Lakes Port services payments. Ocean Air Rail Great Lakes Charter hire and rentals Vessel charter Aircraft rental Freight car rental 19,641 11,841 9,505 2,226 63 47 7,058 2,244 4,755 54 5 742 564 78 100 earnings to account for small carriers that are exempt from reporting. Quarterly estimates are derived by dis- tributing the annual estimate according to the shipping weight of imports, as reported in the Census Bureau tabulation AM 354. Until results of the annual survey become available, current quarterly estimates are made by multiplying the shipping weight of U.S. imports carried by foreign air car- riers by an average freight rate. Data on shipping weight are obtained from the Census AM 354, which includes in- formation on the residency of carrier. The average freight rate is derived from data on import charges and shipping weights by method of transportation as reported in the AM 354. Rail. — These payments measure the earnings of Cana- dian rail carriers for transporting U.S. imports in transit through Canada and U.S. goods through Canada enroute from one U.S. point to another. Quarterly estimates are obtained from Statistics Canada [5]. Great Lakes. — These payments measure the earnings of Canadian carriers from transporting goods from Cana- dian to U.S. Great Lakes ports. Estimates are obtained each quarter from data on import charges in the Census SM 304. 2.2 Port services payments Ocean. — These payments measure U.S. ship operators' expenditures in foreign ports. Expenditures include port call expenses (pilotage, towing, tugboat), cargo expenses (stevedoring, container, barge rentals, warehouse), fuel, and other expenses (stores, supplies, wages paid to crew members in foreign ports, agents' and brokers' fees, maintenance of offices). Expenditures incurred abroad, but paid for in the United States, are also included, for example, fuel laden abroad for which payment is made to oil companies in the United States. Sources of in- formation are the Census SM 704 and SM 304 and the quarterly BE-30 survey. Quarterly estimates are derived by multiplying the ex- port and import tonnage carried by U.S. ship operators, by type of service, by an average per ton rate of port ex- penditures. Export and import tonnages include tonnage carried on U.S.-flag vessels and on U.S.-operated foreign- Transportation 49 flag vessels. Average port expenditure rates per ton are calculated on the basis of data provided in the BE-30. Air. — These payments measure U.S. air carriers' expend- itures abroad for fuel, wages paid to crew members abroad, agents' and brokers' fees, aircraft repair and maintenance, terminal services and maintenance, and other expenses, such as landing fees, catering, and ad- ministrative and other office expenses. Expenditures incurred outside the United States are included regard- less of whether paid in the United States or not. The source of information is the quarterly BE-37 survey. Es- timates include the addition of 5 percent to the reported total for expenses incurred outside the United States, to allow for small carriers that are exempt from reporting. Rail. — These payments measure U.S. rail carriers' ex- penditures in Canada for maintenance, repair, fuel, and other supplies. Annual estimates are based on re- ports voluntarily submitted to BEA by three of the four U.S. rail carriers operating in Canada; quarterly esti- mates are derived by distributing the annual total evenly across quarters. Until results of the annual reports become available, current quarterly estimates are BEA projections. Great Lakes. — These payments measure U.S. ship op- erators' expenditures in Canadian Great Lakes ports. Estimates are based on the tonnage of U.S. exports and imports carried on U.S. -operated vessels, obtained from the Census SM 704 and SM 304, multiplied by an aver- age rate of port expenditures per ton, obtained from the BE-30. 2.3 Charter hire and rentals This item measures payments by U.S. vessel operators for the charter of vessels from foreign owners, reported in the BE-30, and payments by U.S. airline operators for aircraft leasing expenses reported in the BE-37 (for oper- ating leases that have not been capitalized). Payments to Canadian and Mexican rail carriers for freight car rentals are also included. Estimates for Canada are based on data from Statistics Canada [5]; estimates for Mexico are extrapolated from data provided by the Association of American Railroads in the past. Royalties and License Fees The royalties and license fees accounts (lines 8 and 23) cover transactions with foreign residents involving intangible assets and proprietary rights, such as the use of patents, techniques, processes, formulas, designs, know-how, trademarks, copyrights, franchises, and man- ufacturing rights. The term "royalties" generally refers to payments for the utilization of copyrights or trade- marks, and the term "license fees" generally refers to payments for the use of patents or industrial processes. Transactions with both affiliated and unaffiliated for- eign residents are covered. Because of differences in the nature of transactors and, thus, in the data collec- tion procedures and estimating methodology necessary for each, the transactions are described separately. Transactions With Affiliated Foreigners Table 11-16. — U.S. Receipts of Royalties and License Fees From Affiliated Foreigners, 1988 (Part of Line 8) [Millions of dollars) These transactions consist of net receipts of U.S. parent companies from their foreign affiliates and net payments by U.S. affiliates to their foreign parents, or other members of their foreign parent group, of royalties and license fees. The term "affiliated" refers to a direct investment rela- tionship, which exists when a U.S. person has ownership or control, directly or indirectly, of 10 percent or more of a foreign business enterprise's voting securities or the equivalent, or when a foreign person has a similar inter- est in a U.S. business enterprise. (A detailed discussion of the basic concepts and definitions of direct investment and of the reporting system and estimating procedures is presented in "Direct Investment" in part III.) Receipts and payments of royalties and license fees are net of U.S. or foreign withholding taxes and are re- ported when received or accrued. When funds are not actually transferred, offsetting entries are made in the intercompany debt component of the direct investment capital accounts. Data for the accounts covered in this section are ob- tained from a series of BEA benchmark and sample surveys of U.S. direct investors and U.S. -based affiliates of foreign direct investors. For a detailed description of data sources, see "Direct Investment" in part III. 1 U.S. Receipts (part of line 8) This account measures net receipts of royalties and li- cense fees, received or accrued, by U.S. parents from Total, net U.S. parents' receipts Less; U.S. parents' payments 8,31 8,43 11 their foreign affiliates for the sale and use of the pro- prietary rights and intangible assets listed earlier (see table 11-16). Net receipts are calculated by subtracting payments by U.S. parents to their foreign affiliates from receipts by U.S. parents from their foreign affiliates, af- ter deduction of U.S. and foreign withholding taxes. The estimates are based on the books of the U.S. parents and are reported as of the date the royalties and license fees are either received from, or paid to, foreign affili- ates or entered into intercompany accounts with foreigr affiliates, whichever occurs first. 2 U.S. Payments (part of line 23) This account measures net payments of royalties and li- cense fees by U.S. affiliates to their foreign parents anc other members of the foreign parent group for the sale and use of the proprietary rights and intangible assets listed earlier (see table 11-17). Net payments are calcu- lated by subtracting receipts of U.S. affiliates from the foreign parent group from payments by U.S. affiliates to the foreign parent group, after deduction of foreigr and U.S. withholding taxes. Estimates are based or the books of the U.S. affiliates and are reported as ol the date the royalties and license fees are either paid tc (or received from) foreign parents or other members ol the foreign parent group, or entered into intercompany accounts with foreign parents or other members of the foreign parent group, whichever occurs first. Table 11-17. — U.S. Payments of Royalties and License Fees to Affiliated Foreigners, 1988 (Part of Line 23) [Millions ot dollars] Total, net U.S. affiliates' payments Less: U.S. affiliates' receipts 96 1,20 23 50 Royalties and License Fees 51 Transactions With Unaffiliated Foreigners Estimates of transactions in royalties and license fees between unaffiliated U.S. and foreign residents are based on BEA data obtained from the BE-93 survey, "Annual Survey of Royalties, License Fees, and Other Receipts and Payments for Intangible Rights Between U.S. and Unaffiliated Foreign Persons." 10 The survey is manda- tory for U.S. persons having receipts and payments for the use, sale, or purchase of intangible assets and pro- prietary rights. The list of reporters is developed from industry directories and includes persons that reported transactions with unaffiliated foreigners in previous benchmark surveys of U.S. direct investment abroad, and from a list of potential reporters developed from the BE- 20 benchmark survey and the follow-on BE-22 annual surveys. 11 Beginning with 1987, reported data are disaggregated by royalties and license fees for (1) industrial pro- cesses and products, (2) books, records, and audio tapes, (3) trademarks, (4) broadcasting and recording of live events, (5) business format franchising fees, and (6) other intangibles. Quarterly estimates are interpolations of the annual estimates. Country detail reported in the BE-93 survey is summarized by balance of payments geographic areas and by industry, based on the U.S. reporter's industry classification. 3 U.S. Receipts (part of line 8) This account measures total receipts of royalties and li- cense fees by U.S. residents for the sale and use of U.S. proprietary rights and intangible assets listed earlier (see table 11-18). Amounts are reported net of foreign taxes and other deductions. 4 U.S. Payments (part of line 23) This account measures total payments of royalties and license fees to nonresidents for the purchase and use of nonresidents' proprietary rights and intangible assets listed earlier (see table 11-19). Amounts are reported net of U.S. taxes and other deductions. Table 11-18.— U.S. Receipts of Royalties and License Fees From Unaffiliated Foreigners, by Type of Intangible Property, 1988 (Part of Line 8) [Millions of dollars] Total Industrial processes Books, records, and tapes Trademarks Broadcasting and recording of live events . Franchises Other 2,416 1,799 135 317 42 123 Table 11-19.— U.S. Payments of Royalties and License Fees to Unaf- filiated Foreigners, by Type of Intangible Property, 1988 (Part of Line 23) [Millions of dollars] Total Industrial processes Books, records, and tapes Trademarks Broadcasting and recording of live events Franchises Other D Data suppressed to avoid disclosure of data of individual companies 1,080 445 51 72 451 ( D ) n 10. The BE-93 survey is also used to obtain data on the rental and sale of motion picture and television films and tapes. These transactions are included in other private services (lines 9 and 24). 11. The BE-20 benchmark survey and the BE-22 annual surveys are discussed in "Other Private Services." Other Private Services The other private services accounts (lines 9 and 24) cover transactions with foreign residents in a number of services not specifically covered in the travel, passen- ger fares, other transportation, or royalties and license fees accounts. Transactions with both affiliated and unaffiliated foreign residents are covered. Because of dif- ferences in the nature of transactors and, thus, in the data collection procedures and estimating methodologies necessary for each, the transactions with affiliated and with unaffiliated foreigners are described separately. Table 11-20.— U.S. Receipts for Other Private Services From Affiliated Foreigners, 1988 (Part of Line 9) [Millions of dollars: credits +, debits -] Total, net U.S. parents' receipts U.S. parents' payments Service charges and rentals, net Film and television tape rentals, net 2,858 6,168 -3,310 2,541 317 Transections With Affiliated Foreigners These transactions consist of net receipts of U.S. parent companies from their foreign affiliates and net payments by U.S. affiliates to their foreign parents, or other members of their foreign parent group, of service charges, charges for the use of tangible property, and film and tape rentals. The term "affiliated" refers to a direct investment rela- tionship, which exists when a U.S. person has ownership or control, directly or indirectly, of 10 percent or more of a foreign business enterprise's voting securities or the equivalent, or when a foreign person has a similar inter- est in a U.S. business enterprise. (A detailed discussion of the basic concepts and definitions of direct investment and of the reporting system and estimating procedures is presented in "Direct Investment" in part III.) Receipts and payments for other private services are net of U.S. or foreign withholding taxes and are reported when received or accrued. When funds are not actually transferred, offsetting entries are made in the intercom- pany debt component of the direct investment capital accounts. 1 U.S. Receipts (part of line 9) This account measures net receipts by U.S. parents from their foreign affiliates of service charges, charges for the use of tangible property, and film and television tape rentals (see table 11-20). Receipts are measured on a net basis, after subtracting similar payments by U.S. par- ents to their foreign affiliates. The data are based on the books of the U.S. parents and are reported as of the date the funds are either received from, or paid to, foreign affiliates or entered into intercompany accounts with foreign affiliates, whichever occurs first. Service charges are fees for services — such as man- agement, professional, or technical services — and include the sales of, and reimbursements for, services rendered to foreign affiliates. Sales of services are receipts for services rendered that are normally included in sales in the income statement of the U.S. seller because the performance of the service is a primary activity of the enterprise. For example, if a U.S. management consult- ing firm provides management consulting services to its foreign affiliates, the resulting revenues would normally be included in its sales. Reimbursements are receipts for services rendered that are normally included in "other income," rather than in sales, in the income statement of the service provider because performance of the service is not a primary activ- ity of the enterprise, although it may facilitate or support the conduct of the enterprise's primary activities. This would be the case, for example, if a U.S. manufactur- ing firm occasionally provides management, professional, technical, or other services to its foreign affiliates on a fee basis. Reimbursements may take the form of allocated expenses or direct charges for the services rendered. Al- located expenses are types of overhead expenses that are apportioned among the various divisions or parts of an enterprise, such as assessments on a foreign affiliate for research and development work that the parent performs and shares with its affiliate. Charges for the use of tangible property are total lease payments under operational leases of 1 year or less and net rent on operational leases of more than 1 year (for a definition of an operational lease, see "Merchandise Trade"). From the lessor's viewpoint, total lease pay- ments for operational leases consist of two components: (1) Net rent, which covers interest, administrative ex- penses, and profit, and (2) depreciation, which is a return of capital. For operational leases of 1 year or less, to- tal lease payments — both net rent and depreciation — are included in the account. Depreciation is included here, rather than in the direct investment capital account, because it is considered part of rentals — a receipt for services rendered by, rather than a return of capital to, 52 Other Private Services 53 the lessor. For operational leases of more than 1 year, only net rent is included in the account; depreciation is included as an intercompany debt flow in the direct investment capital account. Film and tape rentals are rentals received by U.S. par- ents from, less rentals paid by U.S. parents to, their foreign affiliates for the use or sale of film and tapes. When film and tapes are shipped by U.S. parents to foreign affiliates, receipts for the use or sale of the tapes are considered receipts for services, rather than receipts for merchandise, because the cost of the physi- cal tapes themselves is usually incidental to the value of the services — entertainment, education, and so on — that they provide. Thus, film and tape rentals are excluded from U.S. merchandise trade. 2 U.S. Payments (part of line 24) This account measures net payments by U.S. affiliates to their foreign parents, and other members of the for- eign parent group, of service charges, charges for the use Df tangible property, and film and tape rentals (see ta- ble 11-21). Payments are measured on a net basis, after subtracting similar receipts by U.S. affiliates from the foreign parent group. The data are based on the books Df the U.S. affiliate and are reported as of the date the funds are either paid to, or received from, foreign parents Dr other members of the foreign parent group, or entered into intercompany accounts with foreign parents or other members of the foreign parent group, whichever occurs first. The definitions of the components of other private services between U.S. affiliates and their foreign parent groups are exactly parallel to those for the components Df U.S. receipts on the transactions between U.S. parents and their foreign affiliates. Transactions With Unaffiliated Foreigners Table 11-21.— U.S. Payments for Other Private Services to Affiliated Foreigners, 1988 (Part of Line 24) [Millions of dollars; credits +, debits -] These transactions consist of receipts and payments for education, financial and insurance services, busi- ness, professional, and technical services, and a variety Df other services transactions, such as expenditures in the United States by foreign governments and interna- tional organizations, and expenditures and earnings in the United States of foreign workers. Estimates of receipts and payments are based on data Dbtained from various sources. These include four annual mandatory BEA surveys, data provided directly to BEA by U.S. Government agencies, private organizations, and foreign governments, and publications of foreign governments and international organizations. Where Dnly annual data are available, quarterly estimates are interpolations of annual estimates. Beginning with estimates published in June 1989, these accounts incorporate data from the 1986 BE-20 Total, net U.S. affiliates' payments U.S. affiliates' receipts Service charges and rentals, net Film and television tape rentals, net 694 -2,334 3,028 691 3 "Benchmark Survey of Selected Services Transactions With Unaffiliated Foreign Persons." This benchmark survey was conducted to obtain data on services trans- actions not covered in existing surveys and to obtain improved data on others. The BE-20 covered advertis- ing, computer and data processing services; database and other information services; telecommunications; agricul- tural services; research and development, commercial testing, and laboratory services; management, consult- ing, and public relations services; management of health care facilities; accounting, auditing, and bookkeeping services; legal services; primary insurance; educational and training services; mailing, reproduction, and com- mercial art; employment agencies and temporary help supply services; industrial engineering services; indus- trial maintenance and repair, installation, and training services; performing arts, sports, and other live per- formances, presentations, and events; and construction, engineering, architectural, and mining services. Data on services transactions collected in the BE-20 benchmark survey for 1986 continue to be collected by BEA for subsequent years in a follow-on survey, the BE-22, "Annual Survey of Selected Services Transac- tions With Unaffiliated Foreign Persons." The BE-22 is required of U.S. persons who had one or more individ- ual sale or purchase transaction in excess of $250,000 with an unaffiliated foreign person in any of the covered services. The BE-22 survey has made possible a signifi- cant broadening of the coverage of international services transactions on a current basis. Other surveys used by BEA in estimating services transactions with unaffiliated foreigners are the BE-47, BE-48, and the BE-93. The BE-22, BE-47, BE-48, and BE-93 survey forms are sent at the beginning of each year to U.S. persons with re- portable transactions for the preceding year. The mailing list is derived from industry directories, trade journals, and the list developed for the 1986 BE-20 benchmark survey. Estimates of private services transactions with unaffiliated foreigners included in the U.S. balance of payments are the sum of reported data in the four sur- veys, BEA estimates, and of data obtained from sources listed in the appropriate sections below. 3 U.S. Receipts (part of line 9) This account measures receipts for services rendered to unaffiliated foreigners in the United States and abroad, as represented by receipts for education; financial serv- ices; insurance; telecommunications; business, profes- 54 The Current Account sional, and technical services; and other services (see table 11-22). 3.1 Education This item measures foreign students' expenditures in the United States. Foreign students are defined as individ- uals enrolled in institutions of higher education in the United States who are not U.S. citizens, immigrants, or refugees. Data on the number of students is ob- tained from an annual survey of about 2,900 accredited U.S. institutions, conducted by the Institute for Interna- tional Education (HE) [15]; the response rate is about 95 percent. Characteristics of the population used in the es- timates include the geographic area of origin (residence), type of institution (public or private), enrollment status (part time or full time), and academic level of institution (2 year, 4 year, or university). Estimates of average expenditures for tuition and for room and board are developed from annual surveys of most U.S. accredited institutions; the survey is conducted by the College Board and adjusted by the National Center for Education Statistics, U.S. Department of Education, and matched by BEA to the characteristics of the student population. Data on living expenses are based on Bureau of Labor Statistics, U.S. Department of Labor, estimates of low-income-level family budgets in metropolitan and nonmetropolitan areas, reduced to a single person, and adjusted for inflation. Estimates of foreign students' expenditures are made by multiplying the number of students by average expenditures. Other transactions in the current account partly offset these receipts. Surveys of the foreign student pop- ulation by HE indicate that most of their education is financed from sources abroad. A small amount of Table 11-22. — U.S. Receipts for Other Private Services From Unaffiliated Foreigners, 1988 (Part of Line 9) [Millions of dollars] Total Education Financial services Insurance ' Primary insurance, net Reinsurance, net Telecommunications Business, professional, and technical services Accounting, auditing, and bookkeeping Advertising Computer and data processing Database and other information Engineering, architectural, construction, and mining, net Installation, maintenance, and repair of equipment Legal services Management, consulting, and public relations Medical services Research and development, commercial testing, and laboratory services... Other Other Expenditures of foreign governments and international organizations in the United States Film and tape rentals Earnings of U.S. residents employed temporarily abroad Other n a Details not yet available. 1 . Net of losses paid. 21,471 4,111 3,835 1,564 1,311 253 2,357 4,787 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n. 541 4,817 3,504 776 129 408 their education, however, is financed from sources within the United States — through scholarships from colleges, universities, private corporations, or other nonprofit in- stitutions. These payments to foreigners are entered in private remittances and other transfers (line 34). Finan- cial contributions (grants) from the U.S. Government are already included in U.S. Government grants, excluding military grants of goods and services (line 32), and are not separately identifiable. In addition, wages earned from employment, also developed from the HE survey, are entered in other private service payments (line 24). 3.2 Financial services This item measures (1) commissions and other transac- tions fees associated with the purchase and sale of U.S. securities paid by foreign residents to U.S. securities and commodities brokers, and (2) noninterest income of U.S. banks. Estimates of commissions and fees paid are made by multiplying the reported value of securities transactions by estimated average rates for commissions and adding other fees. Sources for the estimates consist of data on gross foreign purchases and sales of U.S. securities con- tained in the U.S. Treasury Department International Capital reporting system, BEA estimates of new securi- ties issues and redemptions, and information provided by the Federal Reserve Bank of New York. Average rates for commissions and other fees, which include underwriting and redemption fees, are based on average commission rates estimated from Securities and Exchange Commission data for the United States and from information provided by securities dealers. The geographic breakdown of securities, and associated com- missions, transactions reflects the country with which the transaction occurred, but may not reflect the ultimate source of foreign funds. This item also includes commission receipts of U.S. commodity futures traders; these receipts are estimated by applying average commissions charged, derived from the commission schedules of major brokerage firms, to the number of contracts closed with foreign residents. Estimates of noninterest income of U.S. banks (includ- ing the branches, subsidiaries, and other affiliates of foreign banks located in the United States) are made by applying appropriate fee rates to an estimated volume of transactions. Fee rates, ranging from 10 to 50 basis points, are applied to bankers acceptances, commercial letters of credit, standby letters of credit, undrawn funds under commitment, and items for collection [2, 3]. The coverage of the estimates is incomplete in that it does not include all types of fees, largely because source data that can be organized into a framework appropriate for the international accounts are not available. 3.3 Insurance This item measures net receipts of U.S. insurance com- panies from reinsurance assumed from insurance com- panies resident abroad and from primary insurance sold to foreign persons. Net receipts consist of net premi- Other Private Services 55 urns received, less losses paid to the ceding companies or individuals abroad; net premiums are derived after deducting cancellations and commissions charged by the ceding companies abroad. Estimates are the sum of reported data. Data on the international operations of U.S. insurance companies are obtained from the BE-48 survey, "Annual Survey of Reinsurance and Other Insurance Transactions by U.S. Insurance Companies With Foreign Persons." This survey covers reinsurance receipts and payments and primary insurance receipts of U.S. insurance com- panies, both affiliated and unaffiliated, on a country-by- country basis. Primary insurance transactions were not included in the survey before 1987. 3.4 Telecommunications This item measures gross U.S. receipts for international telecommunications services. Included are receipts for message telephone services; private leased channel serv- ices; telex, telegram, and other jointly provided (basic) services; value-added services (such as electronic mail, management of data networks, facsimile, and video con- ferencing); and support services (such as repair, ground station services, and the launching of communications satellites). Estimates are based on data reported in the BE-22 annual survey. 3.5 Business, professional, and technical services This item measures U.S. receipts for the following serv- ices: Accounting, auditing, and bookkeeping; advertis- ing; agricultural services; computer and data processing, database, and other information services; employment services; engineering, architectural, construction, and mining services; industrial engineering; installation, maintenance, and repair of equipment; legal services; mailing, reproduction, and commercial art; manage- ment, consulting, and public relations; management of health care facilities; medical services; research and development, commercial testing, and laboratory serv- ices; training; and fees for performing arts and sports events. Except for receipts of U.S. contractors for engi- neering, architectural, construction, and mining services, and receipts for medical services, estimates are based on data reported in the BE-20 and BE-22 annual sur- veys. Receipts for installation, maintenance, and repair of equipment includes estimates on the alteration and repair of equipment that have been reclassified from the merchandise trade account. U.S. contractors. — These receipts are obtained from the BE-47 survey, "Annual Survey of Construction, Engi- neering, Architectural, and Mining Services Provided by U.S. Firms to Unaffiliated Foreign Persons." In- cluded are services performed by U.S. contractors under foreign contracts, retainer-fee types of contracts, and con- tracts of a continuing nature where no definite contract termination date is stipulated. The following types of services are covered: General contracting construction; supervision of construction; procurement and consulting engineering; seismographic and geological services; oil well drilling and petroleum and mining exploration and construction; hydroelectric and other power consulting and construction; marine and salvage operations, dredg- ing, aerial survey, dusting, and spraying; and similar service operations. U.S. firms' contracts with the following parties are covered: (1) An unaffiliated foreign individual, corporation, or government, regardless of whether the Services are performed in the United States or abroad; interna- tional organizations, whether or not domiciled in the United States; and foreign governments or corpora- tions, whether the contracts are financed by private U.S. entities, U.S. Government agency grants or loans, or international organizations. (2) A U.S. Government nonmilitary agency, if (a) the contract project is located or is to be located in a foreign country, or (b) if the project is part of an aid or technical cooperation program with a foreign entity, whether the project is located in the United States or abroad. Con- tracts may be carried out wholly or partly in the United States. Contracts with the U.S. Department of Defense or any of its agencies, such as the U.S. Army Corps of Engineers or Air Force, are not included; these contracts are included in transfers under military sales contracts (line 4). (3) An unaffiliated U.S. corporation if the project is lo- cated, or is to be located, in a foreign country. This type of contract is generally related to investment in plants and installations abroad by U.S. corporations in establishing or expanding foreign affiliates. Net receipts are derived by deducting foreign expenses from gross receipts as reported on the BE-47. Gross re- ceipts are gross operating revenues (sales) for the value of services sold or construction completed during the re- porting period. Also deducted from gross receipts is the value of goods exported from the United States that are part of the contract, because those goods are already in- cluded in U.S. merchandise exports (line 2.) Estimates are the sum of reported data. The U.S. home office and its foreign project (jobsite) offices and temporary branches or subsidiaries are considered a single U.S. entity, and thus file a consolidated report. 12 For long-term contracts, U.S. companies report the por- tion of the contract completed each year, rather than the entire contract amount in the year of contract comple- tion. Thus, companies reporting on long-term contracts may sometimes show negative amounts on a net basis, if expenses are larger than revenues in the initial stages of foreign contract operations. Medical services. — This item covers receipts for serv- ices provided to foreign residents at U.S. nonprofit and State and local government hospitals. Receipts meas- ure only hospital in-patient expenditures and associated physicians' fees; expenditures for outpatient and am- 12. For contracts entered into by permanently established branches or sub- sidiaries abroad, the reporting company, as a parent, reports the intercompany transactions to BEA on the BE-577, "Direct Transactions of U.S. Reporter With Foreign Affiliate." These transactions are included in direct investment (lines 12 and 46). 56 The Current Account bulatory treatment, and for outpatient prescription and nonprescription drugs, are not included. Estimates are prepared by extrapolating the 1985 es- timate forward by means of price indexes for hospital and physicians' services in the U.S. Consumer Price In- dex. For 1985, data were collected by BEA from hospital administrators, primarily at major medical centers and university hospitals and hospitals in major foreign visitor destinations. Estimates of admissions were multiplied by an estimated average hospital cost to obtain total hospital expenditures. This figure was increased by an estimate of associated physicians' fees, which generally were 30 to 40 percent of the total for hospital expend- itures. Both estimates were expanded to cover medical treatment provided at other U.S. hospitals, where a much lower incidence of treatment of foreigners was assumed. 3.6 Other services This item measures U.S. receipts arising from expendi- tures by foreign governments in the United States; ex- penditures by international organizations in the United States; film and tape rentals; earnings of U.S. residents employed temporarily abroad; expenditures of foreign residents employed temporarily in the United States; and trade union receipts. Expenditures by foreign governments in the United States. — This item consists of (1) expenditures associated with diplomatic activities, (2) expenditures by agents of foreign governments, or quasi-government agencies, pro- viding legal, public relations, news dissemination, travel, and trade promotion services, and (3) expenditures for construction of embassy buildings and related facilities. Estimates of expenditures associated with diplomatic activities cover the cost of operating embassies in Wash- ington, DC, consular offices, and missions to the United States and to the United Nations, that is, wages, salaries rents, utilities, and other expenditures. These expend- itures are estimated by applying an average dollar- per-person figure to the number of each government's diplomatic personnel in the United States. Data on personnel levels are obtained from the U.S. State Depart- ment's Diplomatic List [67] and Foreign Consular Offices in the United States [68]. A United Nations document, Permanent Missions to the United Nations [26], is also used. The average dollar-per-person figure is constructed on the basis of limited information made available by some foreign governments; this figure is adjusted by the change in the U.S. Consumer Price Index each year. Estimates of foreign agents' expenditures in the United States are based on BEA reviews of published reports filed annually with the U.S. Justice Department under the Foreign Agents Registration Act of 1938. Data on ex- penditures in the United States by Canadian Provincial governments for travel and trade promotion are provided to BEA by Statistics Canada [5] on a quarterly basis. Estimates of construction expenditures are based on partial information on construction plans obtained on an ad hoc basis from the Census Bureau, U.S. Department of Commerce, and the U.S. Department of State. Quarterly estimates are derived from a general construction pat- tern schedule for projects of various sizes, provided by the Census Bureau. Beginning in 1986, these transactions are reportable on the BE-47 survey of U.S. contractors. Expenditures by international organizations in the United States. — This item measures their operational and administrative expenditures — wages, salaries, rents, travel in the United States, office equipment and main- tenance, construction, etc. Data are obtained from an analysis of annual reports published by the various or- ganizations and, in some cases, through direct BEA contact with their fiscal officers. These sources generally provide estimates of expenses anticipated in the current year. Where possible, data are adjusted to exclude ex- penditures of international organizations' staff outside the United States and deductions from wages and em- ployer contributions for retirement plans. Construction expenditures are estimated from data reported in the BE-47 survey. Film and tape rentals. — This item measures receipts from unaffiliated foreigners for the sale and rental of U.S. motion picture and television films and tapes distributed or exhibited abroad. Sales are included with rentals as services transactions because receipts primarily measure earnings from distribution and exhibition rights; the cost of the physical films and tapes is usually very small and is excluded from U.S. merchandise exports. Data are obtained from the BE-93, "Annual Survey of Royalties, License Fees, and Other Receipts and Payments for In- tangible Rights Between U.S. and Unaffiliated Foreign Persons." Earnings of U.S. residents employed temporarily abroad. — This item measures the earnings of U.S. res- idents employed temporarily in Germany, Canada, and the United Kingdom; information on U.S. workers' earn- ings in other countries is not available. Estimates are provided to BEA by the Deutsche Bundesbank [14] and Statistics Canada [5] on a quarterly basis, and by the Central Statistical Office of the United Kingdom [25] on an annual basis. Expenditures of foreign residents employed temporar- ily in the United States. — This item measures the ex- penditures of Mexican and West Indies workers employed temporarily in the United States. The estimates of ex- penditures are based on these workers' earnings in the United States. (For estimating procedures for these earnings, see "Earnings of foreign residents employed temporarily in the United States," below.) For Mex- ican workers, it is assumed that 40 percent of their earnings are spent on U.S. goods and services and that one-fourth of these goods and services are consumed in the United States; the remainder represents purchases of goods taken to Mexico for consumption. This assumed spending pattern is based on BEA consultations with local authorities, U.S. Immigration and Naturalization Service and U.S. Customs Service personnel, bankers, retailers, and employers in the United States-Mexican border area. For West Indies workers, it is assumed that 82 per- cent of their earnings are spent on goods and services in the United States. This assumption reflects the fact Other Private Services 57 that 18 percent of total earnings are channelled through the British West Indies Central Labour Organisation for compulsory remittance to home countries, as reported by that organization. Trade union receipts. — This item measures dues paid by affiliated Canadian local unions to U.S. national trade unions, mainly in the automotive industry. Estimates are provided to BEA by Statistics Canada [5] on a quarterly basis. 4 U.S. Payments (part of line 24) This account measures the value of services rendered by foreigners to unaffiliated U.S. residents in the United States and abroad, as represented by payments for education; financial services; insurance; telecommunica- tions; business, professional, and technical services; and other services (see table 11-23). 4.1 Education This item measures U.S. students' expenditures abroad. A student is denned as anyone who receives academic credit for studying abroad from an accredited institution of higher education in the United States. Data on the number of students are obtained from a biennial survey of about 2,900 U.S. institutions conducted by the Insti- tute of International Education [15]; the response rate is about 65 percent. BEA includes an estimate for nonre- sponse to the survey. Characteristics of the population used in the estimates include country of study, type of institution (public or private), and academic level of insti- tution in the United States (2 year, 4 year, or university). The total of U.S. students' expenditures abroad is the Table 11-23.- -U.S. Payments for Other Private Services to Unaffiliated Foreigners, 1988 (Part of Line 24) [Millions of dollars] Total Education Financial services- Insurance 1 Primary insurance, net . Reinsurance, net Telecommunications.. Business, professional, and technical services Accounting, auditing, and bookkeeping Advertising Computer and data processing Database and other information services Engineering, architectural, construction, and mining, net 2 Installation, maintenance, and repair of equipment Legal services Management, consulting, and public relations Research and development, commercial testing, and laboratory services . Other Other Earnings of foreign residents employed temporarily in the United States . Film rentals Other 12,094 555 1,656 2.781 603 2,179 4,264 1,646 n.a n.a, n.a. n.a n.a n.a n.a n.a n.a n.a 1,192 950 50 192 n.a. Details not yet available. 1 . Net of losses recovered. 2. Engineering, architectural, construction, and mining receipts are published net of merchan- dise exports, which are included in the merchandise trade account, and net of outlays abroad for wages, services, materials, and other expenses. sum of estimates for two groups of students; the esti- mates are made by multiplying the number of students by average expenditures. The first group consists of students who earn aca- demic credit abroad through a U.S. institution that has established a formal study program with foreign insti- tutions of higher education. (Estimates do not include noncredit programs.) Student payments to U.S. colleges and universities for tuition and room and board are as- sumed to be forwarded to foreign institutions. Estimates of average expenditures for tuition and room and board are developed from an annual survey of most accredited U.S. institutions; the survey is conducted by the College Board, and the data are adjusted by the National Center for Education Statistics, U.S. Department of Education [58]. The second, much smaller, group consists of students who make their own arrangements with foreign institu- tions, but who still receive credit from a U.S. institution. These students are assumed to pay the same average tuition as those enrolled in a formal program of a U.S. institution; their average living expenses are estimated by applying a ratio of U.S. -to-foreign living costs [69] to the low-income-level family budget series developed for foreign students who study in the United States. 4.2 Financial services This item measures U.S. payments to foreign residents of commissions and other transactions fees associated with the purchase and sale of foreign securities. Estimates are made by multiplying the reported value of securities transactions by estimated average rates for commissions and adding other fees. Sources for the esti- mates consist of data on gross U.S. purchases and sales of foreign securities contained in the U.S. Treasury De- partment International Capital reporting system, BEA estimates of new issues abroad by U.S. corporations and municipalities, and information provided by the Federal Reserve Bank of New York. Average rates for commis- sions and other fees, which include underwriting fees and transfer taxes, are based on published commission sched- ules of foreign securities exchanges [23] and discussions with securities dealers. Commission rates are adjusted to reflect the impact of off-exchange trading and negotiated rates. Different rates are applied to various types of secu- rities; these rates vary by country and major geographic area. The geographic breakdown of securities and asso- ciated commission transactions reflects the country with which the transaction occurred, but may not reflect the ultimate destination of U.S. funds. 4.3 Insurance This item measures net payments of U.S. insurance com- panies for reinsurance ceded to insurance companies resident abroad and net payments for primary insur- ance. Net payments consist of net premiums paid, less losses recovered. Net premiums are derived after deduct- ing cancellations and commissions charged to the ceding companies abroad. 58 The Current Account Estimates of international reinsurance transactions are based on the BE-48 survey. Transactions between affiliated and unaffiliated U.S. and foreign insurance companies are covered. Estimates of payments by U.S. residents for primary insurance placed directly with foreign companies — that is, not through an American company (reinsurance) and not with a U.S. branch or sub- sidiary of a foreign company (a domestic transaction) — are derived from data reported in the BE-22 survey. Only premiums paid are reported; losses paid are estimated by BEA based on industry reports. 4.4 Telecommunications This item measures gross U.S. payments for interna- tional telecommunications services. Included are pay- ments for message telephone services; private leased channel services; telex, telegram, and other jointly pro- vided (basic) services; value-added services (such as electronic mail, management of data networks, facsim- ile, and video conferencing); and support services (such as repair, ground station services, and the launching of communications satellites). Estimates are based on data reported in the BE-22 annual survey. 4.5 Business, professional, and technical services This item measures U.S. payments for the following serv- ices: Accounting, auditing, and bookkeeping; advertis- ing; agricultural services; computer and data processing; database and other information services; employment services; engineering, architectural, construction, and mining services; industrial engineering; installation, maintenance, and repair of equipment; legal services; mailing, reproduction, and commercial art; management, consulting, and public relations; management of health care facilities; research and development, commercial testing, and laboratory services; training; and fees for performing arts and sports events. Estimates are based on data reported in the BE-20 and BE-22 annual sur- veys. Payments for installation, maintenance, and repair of equipment include estimates on the alteration and re- pair of equipment that have been reclassified from the merchandise trade account. 4.6 Other services This item measures earnings of foreign residents em- ployed temporarily in the United States; expenditures of U.S. residents employed temporarily abroad; film and tape rentals; and trade union payments. Earnings of foreign residents employed temporarily in the United States. — This item measures earnings of Mexican and Canadian residents who commute to jobs in the United States, and West Indies residents employed temporarily in the United States. Also included is an es- timate for wages earned by foreign students studying in the United States. Earnings of Mexican workers are estimated by combin- ing data on the number of Mexican workers in the United States with their estimated average annual earnings. Both legal and nonauthorized workers are included. 13 The number of legal workers (that is, those who have em- ployment permits) is tabulated by the U.S. Immigration and Naturalization Service (INS) and is obtained by BEA from an unpublished INS report, "Permanent Resident Alien Commuters and Seasonal Workers." Since 1985, the number of nonauthorized workers has been based on an estimate of 20,000, adjusted for the rate of change in total employment levels in border area States (Califor- nia, Texas, Arizona, and New Mexico). Before 1985, the number of nonauthorized workers was held constant at 20,000, an estimate based on discussions in earlier years with INS officials in the border area. Information on wage rates in the U.S. border area is published annually by the U.S. Labor Department [66] and quarterly by the U.S. Department of Agriculture [31]. Estimates of earn- ings of nonauthorized workers are based on border area minimum wage rates. Estimates of the earnings of West Indies workers are based on information on cash remittances, pro- vided to BEA by the British West Indies Central Labour Organisation on a quarterly basis. Estimates of earnings of Canadian residents working in the United States are provided to BEA by Statistics Canada [5] on a quarterly basis. Earnings are net of U.S. taxes, social security contributions, and other deductions. Estimates of wages earned by foreign students study- ing in the United States are made on the basis of data taken from the HE survey of foreign students; the sur- vey is described earlier in this section in connection with U.S. receipts for education services. Expenditures of U.S. residents employed temporarily abroad. — This item is estimated by BEA on the basis of social security and corporate tax records. Informa- tion on geographic distribution is not available; it is assumed that expenditures of U.S. residents working abroad follow the geographic distribution of receipts for other private services from affiliated foreigners (part of line 9). Film and tape rentals. — This item measures payments by U.S. film distributors to unaffiliated foreign residents for the purchase or rental of motion picture and tele- vision films and tapes to be exhibited in the United States. Estimates are obtained from the BE-93 survey. Purchases are included with rentals as services trans- actions because payments are primarily for distribution and exhibition rights; the cost of the physical films and tapes is usually very small and is excluded from U.S. merchandise imports. Trade union payments. — This item measures the fi- nancial benefits, including strike benefits, paid by U.S. national trade unions to Canadian local unions. Esti- mates are provided to BEA by Statistics Canada [5] on a quarterly basis. 13. Estimates of nonauthorized workers are limited to those who commute to jobs in the United States-Mexican border area. No estimate is available on the number of permanent nonauthorized workers elsewhere because they are de facto residents. U.S. Government Miscellaneous Services The U.S. Government miscellaneous services accounts (lines 10 and 25) cover transactions of U.S. Govern- ment nonmilitary agencies with foreign residents. Most of these transactions involve provision of services to, or purchases of services from, foreigners; transfers of some goods are also included. Transactions between U.S. Government nonmilitary facilities abroad and foreign en- tities are included, because the operations are regarded as extensions of U.S. Government domestic operations. Estimates are based on data submitted to BEA quar- terly by U.S. Government agencies under Office of Man- agement and Budget Directive No. 19. Transactions are generally reported at the time the service is performed or, for the few miscellaneous transactions involving goods, at the time of transfer of possession. The data are ad- justed to conform to balance of payments concepts, based on supplementary information from the U.S. Department of State and U.S. diplomatic posts abroad, the appendix to the Budget of the United States Government [12], and consultations with reporting agencies. 1 U.S. Receipts (line 10) This account measures receipts for services rendered to foreigners by the U.S. Government nonmilitary agencies listed in table 11-24, including the value of services ren- dered under foreign assistance programs and the value of certain goods transferred to foreigners by U.S. agencies from U.S. installations abroad. Receipts for services cover (1) receipts of the U.S. Postal Service for services provided to nonresidents, in- cluding terminal charges on parcel post, (2) the value of services provided directly by U.S. Government non- military agencies under foreign assistance programs, (3) receipts of the National Aeronautics and Space Adminis- tration for placing communications, weather, and other Table 11-24.— Receipts of U.S. Government for Miscellaneous Services, 1988 (Line 10) [Millions of dollars] Total U.S. Postal Service Peace Corps ' U.S. Department of State Agency for International Development ■ National Aeronautics and Space Administration Other U.S. Government agencies 1. Represents services provided directly under foreign assistance programs 672 218 123 107 156 7 61 satellites into orbit (the value of the launch vehicle is also included), and (4) miscellaneous receipts of other U.S. Government agencies, including (a) the U.S. share of re- ceipts from foreigners for tolls and other collections by the St. Lawrence Seaway Development Corporation, (b) receipts from sales, primarily by the National Technical Information Service, U.S. Department of Commerce, of publicly available technical information and processes, and (c) consular and visa fees collected by the U.S. Department of State. The main agencies providing services included in item (2) above are the Peace Corps and the Agency for Interna- tional Development. The value of these services includes, in general, all costs chargeable to foreign aid appropria- tions for overhead and administrative expenses, training, technical services, and similar service items, whether in- curred in the United States or abroad. These receipts are offsets to the corresponding entries for unilateral transfers in U.S. Government grants (line 32) and for U.S. credits disbursed in U.S. credits and other long-term assets (line 42). Also included in receipts are the value of goods that U.S. nonmilitary agencies transfer from U.S. Government-owned stocks abroad, such as office equip- ment or vehicles deemed surplus to U.S. requirements, and the sale or lease of foreign real estate, such as embassy and consulate buildings. Through the third quarter of 1979, receipts also in- cluded the revenues of the Panama Canal Company from tolls, receipts of harbor and terminal fees, freight charges, and receipts from sales of certain supplies to foreign-owned vessels. However, by the treaty with Table 11-25. — Payments by U.S. Government for Miscellaneous Services, 1988 (Line 25) [Millions of dollars) Total U.S. Department of State U.S. Postal Service Agency for International Development Peace Corps U.S. Department of Justice U.S. Department of Agriculture Other U.S. Government agencies Memoranda: Payments to foreign entities Expenditures of U.S. Government personnel abroad Payments to U.S. contractors abroad Other 1,955 1,239 341 111 51 41 31 141 1,482 466 2 5 59 60 The Current Account Panama and supporting legislation enacted by the U.S. Congress and approved September 27, 1979 (Public Law 96-70), the Canal Zone reverted to Panama. The leg- islation transferred the assets of the Panama Canal Company to the Panama Canal Commission, which is considered a U.S. Government enterprise operating in Panama and thus is treated as a foreign resident; that is, the assets of the Commission represent a direct investment in Panama by the U.S. Government. 2 U.S. Payments (line 25) This account measures (a) payments by U.S. Government nonmilitary agencies to foreign entities for services, pur- chases of land and leaseholds, and for foreign goods that are purchased abroad and used or stockpiled abroad, (b) expenditures of U.S. Government nonmilitary personnel and their dependents, and (c) U.S. Government payments to U.S. contractors for nonmilitary work abroad (see ta- ble 11-25). Most transactions covered in this account are undertaken by the U.S. Department of State. 2.1 Payments to foreign entities This item measures the value of services provided abroad by foreign entities. Included are wage payments to foreign residents employed both under contracts with foreign governments and with U.S. Government non- military agencies; payments include amounts withheld from wages and paid to foreign governments for taxes and U.S. social security. Amounts are net of U.S. withholdings — for example, retirement deductions from foreign residents who are covered under the U.S. Civil Service Retirement System. Also included are pay- ments by the U.S. Postal Service to foreigners for postal services, including terminal dues and payments to for- eign carriers for transporting U.S. mail; U.S. payments abroad for utilities, rent, and property maintenance; purchases of land, buildings, and leaseholds; and sup- plies, material, and equipment purchased abroad, but not imported into the United States. 2.2 Expenditures of U.S. Government personnel and dependents abroad This item measures expenditures abroad by U.S. Gov- ernment nonmilitary personnel and their dependents for foreign goods and services. Estimates are based on payments, net of withholdings for U.S. income taxes, for retirement, and for other employee benefits by the U.S. Government to U.S. residents employed or stationed abroad and their dependents, including living quarters and other allowances. Net payments are a part of gross pay that is given or mailed directly to individuals, includ- ing paychecks deposited by overseas disbursing officers in U.S. banks for credit to individual accounts. No infor- mation is available on the amount of funds subsequently returned to the United States by the personnel or their dependents through private channels, or on the amount of funds received by them from the United States through private channels. Also included in this item are reimbursements or net advances to persons officially traveling abroad, but not stationed there, for per diem and other expenses. Re- imbursements for purchases in the United States of transportation on U.S. carriers are excluded. 2.3 Payments to U.S. contractors for work abroad This item measures the value of services provided abroad by U.S. contractors to nonmilitary agencies under U.S. Government contracts. Payments are recorded gross, and the returns to the United States are included as receipts in other private services (line 9). (Services provided abroad by U.S. contractors to U.S. military agencies are recorded, net of returns to the United States, as direct defense expenditures (line 19).) Through the third quarter of 1979, this account in- cluded payments for services related to the operation and maintenance of the Panama Canal, such as wages paid to residents of Panama and payments to private foreign contractors for maintenance and construction projects. As noted in the discussion of U.S. receipts, these transactions are no longer included in Government mis- cellaneous services because of the change in the status of the Canal Zone. Income on Direct Investment The direct investment income accounts (lines 12 and 27) cover international transactions involving income on U.S. direct investment abroad and on foreign direct in- vestment in the United States. Income measures the return that direct investors receive on their investment in affiliates abroad or in the United States; it consists of earnings of the affiliates, less withholding taxes on distributed earnings, plus interest on intercompany ac- counts. Income includes earnings distributed to parent companies and the share of earnings reinvested in the affiliate; the inclusion of reinvested earnings in direct investment income recognizes that the earnings of an af- filiate (less withholding taxes on distributed earnings) are income to the parent, whether or not a portion is reinvested. Both income and earnings include the di- rect investors' share of capital gains and losses of their affiliates, including those arising from foreign currency translations into U.S. dollars. 14 (A detailed discussion of the basic concepts and definitions of direct investment and of the reporting system and estimating procedures is presented in "Direct Investment" in part III.) 1 U.S. Receipts (line 12) This account measures the return on the U.S. direct in- vestment position abroad — that is, it is the U.S. parents' return on their equity and debt investment in their for- eign affiliates (see table 11-26). As shown in the table, direct investment income receipts consist of earnings, less foreign withholding taxes on distributed earnings re- ceived by U.S. parents from their foreign affiliates, plus interest (net of withholding taxes) on intercompany ac- counts. (Interest is defined as interest received by U.S. parents from their foreign affiliates, net of interest paid by U.S. parents to their foreign affiliates.) Earnings — the major component of direct investment income receipts — are U.S. parents' shares in the net in- come of their foreign affiliates, after provision for foreign income taxes, plus their shares of any capital gains or losses not included in the affiliates' net income. Net in- come and, therefore, earnings are based on the books of the foreign affiliate. A U.S. parent's share in net income is based on its directly held equity interest in the foreign affiliate. Direct investment income differs from earnings be- cause it is from the perspective of the U.S. parent — that is, income is the return the U.S. parent receives on its in- vestment. Earnings, in contrast, are from the perspective of the affiliate — that is, they are the U.S. parent's share of what the affiliate earns from its business. Thus, to de- rive direct investment income, foreign withholding taxes on distributed earnings are subtracted from the affiliate's earnings because they reduce the U.S. parent's return, and interest (net of withholding taxes) on intercompany accounts is added to earnings because it increases the U.S. parent's return. Earnings (less withholding taxes on distributed earnings) are the parent's return on equity investment, and interest (net of withholding taxes) is the U.S. parent's return on debt investment in the foreign affiliate. Both direct investment income and earnings are de- fined on an "all-inclusive basis." This basis includes both ordinary and all other types of income that have been recognized. The latter includes U.S. parents' shares of capital gains and losses of affiliates, such as realized or unrealized gains and losses that result from the sale or other disposition of affiliates' assets and liabilities, from writeups or writedowns of the book value of as- sets and liabilities, and from changes in the dollar value of foreign-currency-denominated assets and liabilities or from the translation of the affiliates' financial state- ments from local currencies into dollars due to changes in exchange rates. These capital gains and losses, like ordinary income, are considered part of the U.S. parents' return on investment in their affiliates. 15 The two major components of earnings are distributed earnings and reinvested earnings. For incorporated for- eign affiliates, distributed earnings are dividends on common and preferred stock held by U.S. parents, be- fore deduction of foreign withholding taxes, whether paid out of current or past earnings. Dividends exclude stock and liquidating dividends. Stock dividends are excluded because they are not considered to be a remit- tance of earnings, but rather a capitalization of retained earnings and thus a substitution of one type of equity (capital stock) for another (retained earnings). Liquida- ting dividends are excluded because they are a return of capital, rather than a remittance of earnings. For unincorporated affiliates, distributed earnings are earn- ings distributed to U.S. parents, whether paid out of current or past earnings. Reinvested earnings of foreign affiliates, whether incorporated or unincorporated, are earnings less distributed earnings. Foreign withholding taxes on distributed earnings are taxes withheld by foreign governments on income dis- tributed or remitted to U.S. parents. As noted earlier, earnings are before, but direct investment income is after, deduction of foreign withholding taxes. 14. See footnote 1 , page 5. 15. See footnote 1, page 5. 61 62 The Current Account Table 11-26.— Receipts of Income on U.S. Direct Investment Abroad, 1988 (Line 12) [Millions of dollars; credits +, debits -] Total Earnings Of which: Capital gains/losses (gains +; losses -) Distributed earnings Reinvested earnings Interest (net of withholding taxes) on intercompany accounts U.S. parents' receipts U.S. parents' payments Memorandum: Withholding taxes on distributed earnings 48,264 49,860 -144 34,690 15,170 -1 ,596 2,052 -3,648 2,475 Interest is interest received by, or credited to, U.S. par- ents on debt owed to them by their foreign affiliates, less interest paid or credited by U.S. parents on debt owed by them to their foreign affiliates, both after deduction of (foreign or U.S.) withholding taxes. For foreign affili- ates that are banks, interest includes only receipts on the U.S. parents' permanent invested debt capital. Interest includes net interest on capitalized leases between U.S. parents and foreign affiliates. Interest and distributed earnings are based on the U.S. parents' books. They are included whether they are paid in cash, through debt creation, or in kind. When funds are not actually transferred to U.S. parents, an offsetting entry is made in the direct investment capital account (line 46). 2 U.S. Payments (line 27) This account measures the return on the foreign direct investment position in the United States — that is, it is the foreign parents' return on their equity and debt in- vestment in their U.S. affiliates, plus the return of other members of the foreign parent group on their debt invest- ment in U.S. affiliates (see table 11-27). (By definition, only foreign parents can have direct equity investment in U.S. affiliates; the other members of the foreign parent group can have only direct debt, not direct equity, invest- ment. Because the direct debt investment of the other members is included in the foreign direct investment po- sition, interest, which is the return on that investment, Table 11-27. — Payments of Income on Foreign Direct Investment in the United States, 1988 (Line 27) [Millions of dollars; credits +, debits -] Total Earnings Of which: Capital gains/losses (gains -; losses +) Distributed earnings Reinvested earnings Interest (net of withholding taxes) on intercompany accounts U.S. affiliates' payments U.S. affiliates' receipts Memorandum: Withholding taxes on distributed earnings -16,748 -1 1 ,830 -866 -5,270 -6,560 -4,918 -6,240 1,321 232 is included in income.) For the definition of a foreign parent group, see "Direct Investment" in part III. As shown in table 11-27, direct investment income pay- ments consist of earnings, less U.S. withholding taxes on distributed earnings paid to foreign parents by their U.S. affiliates, plus interest (net of withholding taxes) on in- tercompany accounts of U.S. affiliates with their foreign parents and other members of the foreign parent group. (Interest is defined as interest paid by U.S. affiliates to their foreign parent group, net of interest received by U.S. affiliates from their foreign parent group.) Earnings are the foreign parents' shares in the net income of their U.S. affiliates, after provision for U.S. income taxes, plus their shares of any capital gains or losses not included in the affiliates' net income. Net in- come and, therefore, earnings are based on the books of the U.S. affiliate. A foreign parent's share in net income is based on its directly held equity interest in the U.S. affiliate. Direct investment income differs from earnings be- cause it is from the perspective of the foreign parent group — that is, income is the return the foreign parent and other members of the group receive on their invest- ment. Earnings, in contrast, are from the perspective of the affiliate — that is, they are the foreign parent's share of what the affiliate earns from its business. Thus, to derive direct investment income, U.S. withholding taxes on distributed earnings are subtracted from the affiliate's earnings because they reduce the foreign parent's return, and interest net of withholding taxes on intercompany accounts is added to earnings because it increases the return of the foreign parent and other members of the foreign parent group. Earnings (less withholding taxes on distributed earnings) are the foreign parent's return on equity investment, and interest (net of withholding taxes) is the return of the foreign parent and other mem- bers of the foreign parent group on debt investment in their U.S. affiliate. Both direct investment income and earnings are de- fined to include the foreign parents' shares of capital gains and losses of affiliates. Included are realized or unrealized gains and losses that result from currency translations, the sale or other disposition of affiliates' as- sets and liabilities, and from writeups and writedowns of the book value of assets and liabilities. 16 The two major components of earnings are distributed earnings and reinvested earnings. For incorporated U.S. affiliates, distributed earnings are dividends on com- mon and preferred stock held by foreign parents, before deduction of U.S. withholding taxes, whether paid out of current or past earnings. Dividends exclude stock and liquidating dividends. Stock dividends are excluded because they are not considered to be a remittance of earnings, but rather a capitalization of retained earn- ings and thus a substitution of one type of equity (capital stock) for another (retained earnings). Liquidating divi- dends are excluded because they are a return of capital, rather than a remittance of earnings. For unincorporated U.S. affiliates, distributed earnings are earnings dis- tributed to foreign parents, whether paid out of current 16. See footnote 1, page 5. Income on Direct Investment 63 or past earnings. Reinvested earnings of U.S. affiliates, whether incorporated or unincorporated, are earnings less distributed earnings. U.S. withholding taxes on distributed earnings are taxes withheld by the U.S. Federal, State, and local gov- ernments on income distributed or remitted to foreign parents. As noted earlier, earnings are before, but direct investment income is after, deduction of U.S. withholding taxes. Interest is interest paid or credited to foreign parents and other members of the foreign parent group on debt owed to them by their U.S. affiliates, less interest re- ceived from, or credited by, foreign parents and other members of the foreign parent group on debt owed by them to their U.S. affiliates, both after deduction of (U.S. or foreign) withholding taxes. For U.S. affiliates that are banks, interest includes only payments on the for- eign parents' permanent invested debt capital. Interest includes net interest on capitalized leases between U.S. affiliates and foreign parents or other members of the foreign parent group. Interest and distributed earnings are based on the U.S. affiliates' books. They are included whether paid in cash, through debt creation, or in kind. When funds are not actually transferred to foreign parents, an offsetting en- try is made in the direct investment capital account (line 59). Income on Other Investments The other private and U.S. Government income accounts (lines 13, 14, 28, and 29) cover receipts of income on U.S. private and U.S. Government assets abroad and pay- ments of income on foreign private assets in the United States and on U.S. Government liabilities. Transac- tions covered in these accounts are between unaffiliated residents, except for international banking transactions; income on the latter transactions covers receipts and payments on the banks' international banking business with affiliated as well as unaffiliated foreign residents. (Banks' income on their equity and permanent debt in- vestment in foreign or U.S. banking affiliates is recorded in direct investment income (lines 12 and 27).) The ac- counts also include dividends on stocks, interest on debt securities, income on assets and liabilities of nonbanking business enterprises, and income on U.S. Government assets and liabilities. Income generated on these investments is sometimes referred to as "portfolio investment income" to distin- guish it from direct investment income. Portfolio invest- ment often presents the opportunity to realize short-term income or capital gains and to shift funds between var- ious types of financial market instruments or between countries. Portfolio investment differs from direct in- vestment in that the latter involves some degree of management influence and lasting interest in a business enterprise located in another country; according to the U.S. definition, equity ownership of 10 percent or more is considered evidence that this management influence ex- ists. Income generated on these investments is covered in direct investment income (lines 12 and 27). The two accounts covering receipts are distinguished on the basis of ownership of assets abroad by U.S. private or U.S. Government entities. The two accounts covering payments are distinguished on the basis of the types of assets held by foreign residents in the United States — securities issued by U.S. private or by U.S. Government entities. Quarterly estimates of receipts and payments are pre- pared by BEA for major types of investments. Income on banking and on certain nonbanking concerns' activi- ties are prepared by multiplying outstanding amounts of particular assets and liabilities by representative yields. Income on securities is based on a cumulative income stream formed by adjusting income in a base period for changes in subsequent periods. The base-period in- come is established by the U.S. Treasury Department from periodic comprehensive surveys of holdings of secu- rities and their yields; subsequent changes in income are estimated from transactions. Representative yields, developed by BEA, reflect insti- tutional market practices, relationships between trans- actors, various maturities, and cross-border risks appro- priate to the specific categories of assets and liabilities. In general, publicly available interest rates [1, 4], for example, federal funds rate, bankers acceptance rates, certificate of deposit rates, Eurodollar rates, and face rates on newly issued bonds, are adjusted to approximate yields that reflect the cost or return on funds. In some cases, lag structures are employed to reflect different payment cycles, and several interest rates are combined on a weighted basis to approximate average maturities for certain types of assets and liabilities. Allowances are made for differing country risks. Estimation procedures are revised by BEA on the ba- sis of information obtained in periodic consultations with industry participants, and adjustments are incorporated when underlying conditions change significantly. For example, in 1978, a more precise breakdown of assets and liabilities became available from the Treasury Inter- national Capital reporting system (TIC), enabling BEA to refine its income estimates. In addition, BEA de- veloped separate estimates of selected components on banks' noninterest income, based on transactions volume data and representative fee rates; beginning with 1986, these estimates are included in receipts for other private services (line 9). BEA began to use Eurodollar interest rates more extensively when international banking fa- cilities (IBF's) were introduced in the United States in late 1981. In 1982, BEA introduced changes to reflect the banking industry's shift from all-inclusive pricing to separate factor pricing, and to place more emphasis on market-determined and cost-of-funds interest rates, thus reducing the emphasis on administered rates. In 1987, BEA introduced separate estimates for commissions and fees on securities transactions, and, in mid-1990, BEA was trying to obtain more complete information on noninterest income of financial institutions. Receipts of income on U.S. private assets abroad (line 13) and payments of income on foreign assets in the United States (line 28) are estimated from data on outstanding amounts of assets and liabilities and on se- curities transactions, obtained from the TIC reporting system. The TIC reporting system (see table 11-28) con- sists of a series of mandatory monthly and quarterly report forms filed by U.S. banks and other depository institutions, bank holding companies, securities brokers and dealers, investment banks and other intermediaries, nonbank concerns, and certain other persons, as defined in the instructions. In addition to reporting for their own account, many reporters, acting as market intermedi- aries, also report their customers' accounts. Reporting by type of asset or liability covers only broad categories, for example, deposits, negotiable instruments, bonds, and 64 Income on Other Investments 65 Table 11-28.— U.S. Treasury Department International Capital Reporting System Data Used in Preparing the Balance of Payments Reports Reporter Type of information Reporting coverage Frequency International capital banking forms (B series). International capital nonbanking forms (C series). International capital form S (purchases and sales of long-term securities by foreigners). Banks, other depository institutions, bank holding companies, international banking facilities, brokers and dealers, including U.S. affiliates of foreign banks, such as U.S. branches, agencies, and subsidiaries, who for their own account, or the account of other U.S. persons, have liabilities to or claims on foreign residents. Nonbanking business enterprises, including exporters, importers, industrial and commercial concerns, and nonbanking financial institutions (e.g., insurance companies), who for their own account, or the account of other U.S. persons, have liabilities to or claims on unaffiliated foreign residents. Securities brokers and dealers, investment bankers, other banking institutions, and other U.S. persons, who on their own behalf, or on behalf of their customers, engage in transactions in long-term marketable securities directly with foreign residents. Liabilities outstanding: 1 . Banks' and other reporters' own liabilities to foreign residents, including demand, time, and savings deposits, federal funds borrowings, repurchase agreements, and designated borrowings from foreign affiliates, payable in dollars or foreign currency. 2. Custody liabilities from the reporters' records: Foreign claims on persons in the United States, other than long-term securities, held by or through the reporting institution, payable in dollars for the account of foreign residents. Included are short-term U.S. Treasury obligations, U.S.-issued commercial paper, bankers acceptances, and other U.S. snort-term indebtedness held in custody as a foreign-owned asset in the United States. Claims outstanding: 1 . Banks' and other reporters' own claims on foreign residents, i.e., assets owned by reporting institutions that represent claims on foreign residents, e.g., loans, acceptances, overdrafts, overseas deposits, advances, and certain lending to foreign affiliates. 2. Domestic customers' claims on foreigners held by the reporting institutions. They represent claims on foreign residents held here or abroad by the reporting institution for the account of its domestic customers, including overseas deposits, foreign-issued commercial paper, and foreign governments' short-term obligations. Commercial liabilities and claims outstanding: Liabilities and claims arising from the purchase and sale of goods and services in regular business operations, covering trade receivables and payables, advance payments and receipts, accrued claims and liabilities, and claims and liabilities arising from deferred payments for exported or imported goods. Financial liabilities and claims outstanding: Liabilities and claims arising from the borrowing and investment activities of an enterprise (such as mortgages, loan balances, bills and notes, and any negotiable and readily transferable short-term instruments not covered in bank reporting). Long-term securities and claims and liabilities related to direct investment are excluded. Transactions in long-term marketable securities executed in the United States for the account of foreign residents, and transactions executed abroad for reporter's own account or for the account of its domestic customers. Long-term securities are those having no contractual maturity (e.g., stocks) or a maturity of more than 1 year from date of issue (e.g., bonds, debentures), whether publicly issued or privately placed. Mandatory survey of institutions whose end- of-month outstanding liabilities to, or claims on, foreign residents are $15 million or more. Monthly, quarterly, and semiannually. Mandatory survey of nonbanking concerns whose end-of-month outstanding liabilities to, or claims on, foreign residents are $10 million or more. Quarterly. Mandatory survey of U.S. persons, who for their own account, or the account of other U.S. persons, purchase from or sell to foreigners, long-term securities amounting to at least $500,000 in a given month. Monthly. Note.— Data are published in the Treasury Bulletin, issued quarterly by the U.S. Treasury Department. 66 The Current Account stocks; these categories serve as the basis for BEA's estimating procedures. U.S. Government receipts and payments of income (lines 14 and 29) are based mostly on data reported to BE A by U.S. Government agencies as required by Of- fice of Management and Budget (OMB) Directive No. 19. U.S. Government income payments to foreigners, provided by the U.S. Treasury Department's Office of Government Finance and Market Analysis, are aug- mented by BEA estimates of income paid to private foreign residents on their holdings of U.S. Government securities, based partly on TIC reports. Income receipts and payments are estimated and recorded on an accrual basis, except for income on U.S. Government assets abroad, which is reported on a col- lection basis. Accrued income flows may at times differ from the receipt of cash that is recorded in the capital accounts. In estimating income receipts and payments, BEA does not adjust for interest rate swaps. 1 Other Private Receipts of Income on U.S. Assets Abroad (line 13) This account measures income received by private U.S. residents on their investments abroad, excluding direct investment. Estimates are prepared for income on claims reported by U.S. banks, income on foreign securities, and income on claims reported by U.S. nonbanking concerns (see table 11-29). 1.1 Income on claims reported by U.S. banks This item measures income receipts for the major cat- egories of U.S. assets abroad reported by U.S. banks (including the branches, agencies, subsidiaries, and other affiliates of foreign banks located in the United States), other depository institutions, bank holding companies, and brokers and dealers (when they conduct banking types of transactions). Income received by reporters for their own account and for the account of their domestic customers are covered. Estimates of income on assets of IBF's are developed separately because pricing of their assets is unique. Three major income components, classified by type of foreign borrower are distinguished in table 11-29. The first, interest on U.S. banks' own claims on foreign banks, includes banks' own foreign offices and unaffil- iated banks abroad. Interest on claims on banks' own foreign offices represents principally income on intra- company banking, that is, transactions between U.S.- owned banks and their foreign branches and majority- owned subsidiaries abroad, and transactions between foreign-owned banks in the United States (U.S. agen- cies, branches, and majority-owned subsidiaries) and their related offices abroad, including overseas home of- fices. Although most income receipts are associated with interbank activity, some U.S. reporters are not bank- ing institutions — for example, bank holding companies, brokers, and dealers. The second major component, interest on U.S. banks' own claims on other foreigners, covers loans, accept- Table 11-29. — Other Private Receipts of Income on U.S. Assets Abroad, 1988 (Line 13) [Millions of dollars] Total. Income on claims reported by U.S. banks 1 Interest on banks' own claims on foreign banks 2 Interest on banks' own claims on other foreigners' Interest on banks' domestic customers' claims on foreigners.. Income on foreign securities Interest on bonds Dividends on stocks Income on claims reported by U.S. nonbanking concerns . Financial Commercial 52,840 40,187 27,650 10,346 2,191 9,532 8,702 830 3,121 2,118 1,003 1 . Excludes noninterest income receipts. 2. Includes interest received from the banks' own foreign offices. 3. Includes interest received from foreign public borrowers and private foreigners other than banks. ances, overdrafts, and other lending to private nonbank and foreign public borrowers. The third component, interest on banks' domestic customers' claims on for- eigners, covers income earned on U.S. holdings of over- seas deposits, foreign-issued negotiable certificates of deposit, and other short-term financial paper held by U.S. banks for their domestic customers. Quarterly estimates of interest receipts are prepared by applying representative yields to each type of asset or to a group of similarly yielding assets reported on the TIC B forms— BC, BQ-1, and BQ-2: BC: Reporting Bank's Own Claims, and Selected Claims of Broker or Dealer, on Foreigners, Payable in Dollars. (Monthly.) BQ-1: Part 1. — Reporting Bank's Own Claims, and Selected Claims of Broker or Dealer, on Foreigners. (Quarterly.) Part 2. — Domestic Customers' Claims on For- eigners Held by Reporting Bank, Broker, or Dealer, Payable in Dollars. (Quarterly.) BQ-2: Part 1. — Liabilities to, and Claims on, For- eigners of Reporting Bank, Broker, or Dealer. (Quarterly.) Part 2. — Domestic Customers' Claims on For- eigners Held by Reporting Bank, Broker, or Dealer, Payable in Foreign Currencies. (Quarterly.) Yields applied to interbank claims are derived from combinations of U.S. and Eurodollar interest rates, mostly rates on deposits of 30 days and under. Yields ap- plied to banks' own claims on other foreigners are based on the U.S. bankers acceptance rate, the U.S. prime rate, and the London Interbank Offered Rate (LIBOR). Rates for 90- to 180-day maturities are averaged, and an addition of 50-150 basis points is made to account for dif- ferent country risks. The size of the addition is estimated from data in Organisation for Economic Co-operation and Development (OECD) publications and financial press re- ports. Yields applied to the banks' domestic customers' claims are based on Eurodollar interest rates and rep- resentative rates on medium-maturity finance paper in a few major countries. For all three major components, Income on Other Investments 67 data on outstanding assets represent the average of re- ported amounts at the beginning and end of each month or, if only quarterly data are available, at the beginning and end of the quarter. Estimating procedures for interest receipts are modi- fied periodically to reflect changes in institutional prac- tices. Three examples illustrate the process. First, U.S. bank-reported items for collection are now considered to be fee-earning assets, and are included in other private services (line 9). Previously, they were considered to be interest-earning assets, and were included in income on bank claims. Second, no estimate of interest income is made on foreign currency balances — except banks' own nondeposit claims — because they are considered to be working balances rather than interest-earning assets; this treatment is being reexamined, however, because the nature and size of the foreign currency transactions of U.S. banks have expanded markedly in recent years. Third, an adjustment for interest arrears was incorpo- rated when, in the wake of concerns about problem loans to some developing countries, banks were required by U.S. regulatory agencies to place nonaccruing loans on a cash basis after 90 days. 1.2 Income on foreign securities This item measures income receipts on foreign securities, estimated separately for bonds and stocks reported on the TIC S form, "Purchases and Sales of Long-Term Secu- rities by Foreigners," by U.S. banks and other depository institutions, brokers, dealers, nonbanking enterprises, and other persons, who on their own behalf, or on behalf of their customers, engage in transactions in long-term securities directly with foreigners. Data by transactor are not available; thus, the ultimate U.S. beneficiary or economic sector cannot be identified. In estimating income receipts, BEA applies representative yields to transaction amounts to derive current receipts; receipts are then added to the cumulative income stream associ- ated with outstanding holdings of foreign securities. The income stream is based on data on U.S. holdings of var- ious types of foreign securities, and their representative yields, obtained in the census of American-owned as- sets in foreign countries, conducted by the U.S. Treasury Department in the past. Dependence on this out-of- date benchmark survey introduces the possibility of significant cumulative errors in the position figures. For foreign bonds newly issued in the United States, changes in income receipts for the current quarter reflect interest received from new issues, less the interest on is- sues redeemed or amortized two quarters earlier, added to the cumulative income stream. The two-quarter lag re- flects the semiannual interest payment cycle. Additions to income are derived by applying face interest rates to the amount of bonds newly issued in the United States. Deductions are derived by applying an estimated histor- ical average yield to the amount redeemed or amortized. Data for the face rate of interest on new issues, for the yields on bonds previously issued, and for the dollar vol- ume of bonds newly issued, redeemed, or amortized, are based on records maintained by BEA. These records con- tain information both from publicly available sources and from information developed by BEA, the U.S. Treasury Department, and the Federal Reserve Bank of New York. Information on trading in these bonds is not available; therefore, it is assumed that bonds initially placed in the U.S. market are held by U.S. residents until maturity, unless redeemed or amortized earlier. For transactions in outstanding foreign bonds, changes in income receipts for the current quarter are based on the income stream four quarters earlier, adjusted for changes in interest due to net trading two quarters earlier; the adjustment is calculated by applying an ap- proximate average bond yield, based on yields in major countries, to net U.S. purchases or sales of outstanding foreign bonds. For U.S. holdings of foreign corporate stocks, a one- quarter lag is used to reflect the usual quarterly dividend payment cycle. Receipts for the current quarter are based on the preceding quarter's income stream, adjusted for the net change in dividends due to net trading in the preceding quarter. The net change in dividends is de- rived by applying appropriate foreign yields to net U.S. purchases or sales of foreign stocks. Foreign stock yields are applied on a country basis to net trading for Canada and Japan and on a weighted-average area basis for Western Europe and other areas. Data on foreign yields are obtained from the International Financial Statistics [17]. Yields on foreign stocks are assumed to remain con- stant during the time the stocks are held by U.S. resi- dents. No allowance is made for stocks that do not pay dividends. No adjustment is made for foreign withhold- ing taxes because foreign securities are not identified by country of issue. 1.3 Income on claims reported by U.S. nonbanking concerns This item measures income on financial and commer- cial claims on unaffiliated foreigners reported by U.S. nonbanking concerns on TIC form C. The nonbanking concerns are exporters, importers, industrial and com- mercial concerns, and nonbanking financial institutions. U.S. affiliates of foreign business enterprises are included to the extent that they have claims on unaffiliated for- eign residents. Quarterly estimates are derived for long- and short-term components of overseas deposits (mainly Eurodollars) and other financial assets and commercial assets, reported on part 2 of TIC forms CQ-1 and CQ-2: CQ-1: Part 2. — Financial Claims on Unaffiliated Foreigners. CQ-2: Part 2. — Commercial Claims on Unaffiliated Foreigners. Quarterly estimates of receipts are made by apply- ing representative yields — a 15-month moving average of the U.S. prime rate for long-term claims and a 6-month moving average of the U.S. prime rate and the bankers acceptance rate for short-term claims — to average bal- ances reported outstanding at the beginning and end of 68 The Current Account a quarter, risk. Yields are adjusted upward for cross-border 2.2 Income on other U.S. Government assets, net 2 Income Receipts on U.S. Government Assets Abroad (line 14) This account primarily measures interest receipts on long- and short-term credits extended by the U.S. Government (see table 11-30). It also includes inter- est receipts on other U.S. Government assets abroad, such as net earnings on U.S. reserve assets with the International Monetary Fund (IMF). Estimates of interest receipts are based on data sub- mitted quarterly by U.S. Government agencies under OMB Directive No. 19. The data are summarized by country and by type of credit or asset. Gains and losses realized by U.S. monetary authorities from acquisitions or borrowings of foreign currencies and from sales or re- payments of these currencies at varying exchange rates are excluded, as are gains and losses due to changes in exchange rates on foreign currency balances held by disbursing officers abroad. 2.1 Income on credits This item measures interest receipts on outstanding U.S. Government credits, classified according to the legisla- tive program under which the credits were extended to foreigners. Interest receipts include capitalized interest, which is reported as having been realized through the recording of an additional credit utilization, which, in turn, increases principal indebtedness outstanding. Ex- cept for capitalized interest, receipts are recorded on a cash collection basis or when the debtor delivers goods or services to U.S. agencies. Collections of commitment fees for credits extended by U.S. Government agencies are in- cluded. Most of the income on "other credits" shown in table 11-30 involves interest receipts on a 1946 loan to the United Kingdom. Table 11-30.— Income Receipts by U.S. Government on Assets Abroad, 1988 (Line 14) [Millions of dollars] Total Income on credits Under Export-Import Bank Act Under Foreign Assistance Act and related programs: Financing military sales Country program loans Social Progress Trust Fund Investment incentive loans Under Agricultural Trade Development and Assistance Act: Long-term dollar credits Foreign currency loans Under Commodity Credit Corporation Charter Act On other credits Income on other U.S. Government assets, net Earnings on reserve assets, net On other assets 6,672 5,478 936 3,587 461 4 4 301 7 128 50 1,194 1,158 36 The main item in this category is receipts of interest on U.S. reserve assets, consisting of (1) interest on U.S. hold- ings of special drawing rights (SDR's) with the IMF and on U.S. lending to IMF credit facilities, less IMF charges on SDR allocations, and (2) interest on the investment of foreign currency holdings of the U.S. Treasury Depart- ment's Exchange Stabilization Fund and of the Federal Reserve System. Receipts are recorded on a collection basis. Interest collected on U.S. Government disburs- ing officers' deposits and other assets abroad are also included. 3 Other Private Payments of Income on Foreign Assets in the United States (line 28) This account measures income paid by U.S. residents to foreigners on their investments in the United States, ex- cluding direct investment (see table 11-31). Estimates are prepared for interest on bank-reported liabilities to for- eigners, interest and dividends on U.S. debt and equity securities held by unaffiliated foreigners, and interest on financial and commercial liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns. 3.1 Income on liabilities reported by U.S. banks This item measures income payments for the major cat- egories of foreign assets in the United States reported by U.S. banks (including foreign banks' branches, agencies, subsidiaries, and other affiliates in the United States), other depository institutions, bank holding companies, and brokers and dealers (for banking types of transac- tions). Income paid by reporters for their own account and income paid for accounts placed in their custody are covered. Estimates of income on IBF liabilities are de- veloped separately because pricing of their liabilities is unique. Four major income components, classified by type of U.S. borrower, are distinguished in table 11-31. The first, Table 11-31. — Other Private Payments of Income on Foreign Assets In the United States, 1988 (Line 28) [Millions of dollars] Total. Income on liabilities reported by U.S. banks' Interest on banks' own liabilities to foreign banks 21 Interest on banks' own liabilities to other private foreigners ! 3 Interest on banks' custody liabilities 14 Interest on liabilities to foreign official agencies 2 * Income on U.S. securities.. Interest on bonds Dividends on stocks Income on liabilities reported by U.S. nonbanking concerns. Financial Commercial 59,746 38,249 27,625 5,011 3,374 2,239 19,393 15,548 3,845 2,104 1,146 958 1. Excludes noninterest income payments. 2. Includes interest paid on negotiable and nonnegotiable certificates of deposit, time and savings deposits, and other U.S. borrowing. 3. Excludes interest on liabilities to foreign official agencies. 4. Includes interest paid on short-term obligations of U.S. Government corporations and federally sponsored agencies. Income on Other Investments 69 interest payments on banks' own liabilities to foreign banks, includes the banks' own foreign offices and un- affiliated banks abroad. Interest on liabilities to banks' own foreign offices represents income on intracompany banking — transactions between U.S. -owned banks and their foreign branches and majority-owned subsidiaries abroad, and transactions between foreign-owned banks in the United States (U.S. agencies, branches, and majority-owned subsidiaries) and their related offices abroad, including overseas home offices. Although most income payments are associated with interbank activity, some payments are made to overseas offices that are not banking institutions. The second major component, interest on banks' own liabilities to other private foreigners, includes other than official foreign government entities and interna- tional financial institutions, for example, the Interna- tional Bank for Reconstruction and Development. The third component, interest on banks' custody liabilities to other than foreign official agencies, excludes short- term U.S. Treasury obligations. The fourth component covers interest on liabilities to foreign official agencies that are principally monetary authorities, for example, treasuries, ministries of finance, and central banks. Quarterly estimates of interest payments are prepared by applying representative yields to each type of liability or to a group of similarly yielding liabilities reported on the TIC B forms— BL-1, BL-2, and BL-3: BL-1 : Reporting Bank's Own Liabilities, and Selected Liabilities of Broker or Dealer, to Foreigners, Payable in Dollars. (Monthly.) BL-2: Custody Liabilities of Reporting Banks, Bro- kers, and Dealers, to Foreigners, Payable in Dollars. (Monthly.) BL-3: Intermediary's Notification of Foreign Borrow- ing Denominated in U.S. Dollars. (Monthly.) Yields applied to interbank liabilities are based on an average of short-term Eurodollar rates (30 days and less). Yields applied to deposit liabilities — time and savings de- posits and negotiable certificates of deposit — represent a weighted average of rates extending to 180 days. Yields applied to other nondeposit forms of borrowing — deferred credits, repurchase agreements, federal funds borrowings — are based on a weighted combination of the U.S. federal funds rate and several Eurodollar deposit rates extending up to 90 days. Interest rates for bankers acceptances and commercial paper are applied to banks' custody liabilities (other than negotiable certificates of deposit, mentioned above, and short-term U.S. Treas- ury obligations, covered in U.S. Government payments, line 29). Short-term instruments of U.S. Government corporations and agencies are covered in this account, rather than in U.S. Government income payments, be- cause these instruments are not separately identifiable in bank custody reporting, as are other instruments of the U.S. Treasury. Recent changes in estimating proce- dures include the adoption of a separate treatment for transactions handled through IBF's and an allowance for greater emphasis placed by banks on market-determined pricing. No estimate is made, however, for fees and com- missions paid by U.S. banking institutions to foreigners, because the amounts are presumed to be insignificant. No estimate of payments is made for demand deposits denominated in dollars or for liabilities denominated in foreign currencies because they are, for the most part, working balances of a non-interest-earning status. 3.2 Income on U.S. securities This item measures income payments on U.S. securi- ties, estimated separately for bonds and stocks reported on TIC form S. Because reporters commingle their own and client accounts, data by transactor are not available; thus, the ultimate economic sector cannot be identified. In estimating income payments, BEA applies represen- tative yields to transaction amounts to derive current payments; payments are then added to the cumulative income stream associated with outstanding foreign hold- ings of U.S. securities. The income stream is based on a 1978 Treasury Department benchmark survey of foreign holdings of U.S. securities outstanding and of applica- ble yields [74]. The Treasury Department conducted a similar comprehensive survey for yearend 1984; partial survey results were released in mid-August 1989 and will be incorporated into the accounts in 1990. For bonds newly issued abroad by U.S. corporations, payments in any given quarter represent the income stream four quarters earlier, adjusted for the addition of interest paid on new issues and the deduction of interest on issues redeemed or amortized two quarters earlier. The two-quarter lag reflects the usual semiannual inter- est payment cycle. Additions to income are derived by applying the face rate of interest on the bonds to the amount of new U.S. bonds issued abroad. Deductions are derived by applying a weighted average of interest rates on previous holdings to the amount of U.S. bonds redeemed or amortized. Data for the face rate of in- terest on new issues, for the yields on bonds previously issued, and for the volume of bonds newly issued, re- deemed, or amortized are based on information obtained by BEA from financial publications and public notices by U.S. borrowers. Information on trading in these bonds is not available; therefore, it is assumed that bonds ini- tially placed abroad are held by foreign residents until maturity, unless redeemed or amortized earlier. For transactions in outstanding U.S. bonds, changes in income payments for the current quarter are based on the income stream four quarters earlier, adjusted for changes in interest paid due to net trading two quarters earlier; the adjustment is calculated by applying an average of U.S. corporate bond yields to net foreign purchases or sales of outstanding U.S. bonds. Moody's domestic AA corporate bond yield is used as a representative interest rate [43]. For foreign holdings of U.S. corporate stocks, a one- quarter lag is used to reflect the usual quarterly dividend payment cycle. Payments for the current quarter are based on the preceding quarter's income stream, adjusted for the net change in dividends due to net trading in the preceding quarter. The net change in dividends is de- 70 The Current Account rived by applying the Standard & Poor's composite yield on 500 stocks [43] to net foreign purchases or sales of U.S. stocks. 17 Yields on U.S. stocks are assumed to re- main constant during the time the stocks are held by foreign residents. No allowance is made for stocks that do not pay dividends. Dividend payments are adjusted to exclude U.S. withholding taxes, estimated at 15 percent. 3.3 Income on liabilities reported by U.S. nonbanking concerns This item measures income payments on financial and commercial liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns on TIC form C. The non- banking concerns are exporters, importers, industrial and commercial concerns, and other nonbanking finan- cial institutions in the United States. Quarterly esti- mates are derived for long- and short-term components of financial and commercial liabilities reported on part 1 of the C forms— CQ-1 and CQ-2: CQ-1: Part 1. — Financial Liabilities to Unaffiliated Foreigners. CQ-2: Part 1. — Commercial Liabilities to Unaffiliated Foreigners. Quarterly estimates of income payments are made by applying representative rates to average balances re- ported outstanding at the beginning and end of a quarter. Payments on U.S. financial liabilities primarily repre- sent interest payments on Eurodollar borrowings from overseas banks; estimates are made by applying a short- term Eurodollar rate to short-term liabilities, and the U.S. prime rate to long-term liabilities. Representa- tive rates for each quarter are calculated by averaging rates over several preceding months to reflect the varied maturities of liabilities. Estimates of income payments on U.S. commercial liabilities are adjusted to exclude progress payments made by foreigners on their purchases of aircraft from U.S. manufacturers and to exclude cer- tain account payables relating to petroleum trade; both of these items are considered non-interest-earning U.S. liabilities. Import Bank, Federal Housing Administration, and the Government National Mortgage Association — and of U.S. federally sponsored agencies, including the Federal home loan banks and Federal land banks. (Short-term obli- gations of U.S. Government corporations and federally sponsored agencies are not included here because these obligations are commingled among the custody liabilities reported by U.S. banking institutions.) (3) Interest on U.S. Government nonmarketable bonds and notes, pri- marily U.S. Treasury "foreign series" bonds and notes payable in dollars or foreign currencies. (4) Interest on other U.S. Government liabilities. Treasury "foreign series" issues are short- and long- term nonmarketable securities, payable in dollars or foreign currencies, specifically designed for sale to foreign official agencies or to other foreign residents. An estimate of interest paid on most U.S. Government securities held by foreign residents is reported quarterly to BEA, under OMB Directive No. 19, by the U.S. Treas- ury Department's Office of Government Finance and Market Analysis. That office estimates payments to for- eign official agencies based on amounts outstanding, face interest rates, and maturities of issues held in custody at the Federal Reserve Bank of New York. An estimate of payments to private foreigners is also included in this account; the estimate is based on amounts outstanding multiplied by appropriate yields. BEA augments the Treasury data by including an estimate of interest paid to private foreign holders of U.S. federally sponsored agency issues and of U.S. Government corporation bonds; aver- age market yields are applied to estimated amounts held. Also, BEA modifies the yield applied by the Treasury to private holdings of U.S. Government securities to re- flect the high-yielding, long-term maturities preferred by some foreign institutional investors. BEA also prepares estimates for interest accrued on Treasury foreign series issues of zero coupon bonds. Estimates of income pay- ments on other U.S. Government liabilities are reported to BEA by U.S. Government agencies. These include pay- ments of interest on various foreign deposits with the U.S. Treasury Department that are prepayments against future deliveries of materials. 4 U.S. Government Income Payments (line 29) This account measures accrued interest payments by the U.S. Government to foreign official agencies and other foreign residents holding U.S. Government obligations. Four major components are distinguished in table II- 32. (1) Interest on short-term U.S. Treasury obligations, such as bills and certificates of indebtedness, including "foreign series" issues. (2) Interest on U.S. Government marketable bonds and notes, and on bonds and notes of U.S. Government corporations — such as the Export- Table 11-32.— Income Payments by U.S. Government on Foreign Assets In the United States, 1988 (Line 29) [Millions of dollars] Total Foreign official agen- cies Other foreign resi- dents Total 29,054 7,019 21,982 47 6 19,171 6,224 12,894 47 6 9,883 795 9,088 n.a. n.a. 17. Beginning in June 1990, yields are applied directly to amounts outstanding. n.a. Not applicable. 1. Includes income payments on bonds and notes of the U.S. Treasury, U.S. Government corporations, and federally sponsored agencies. 2. Consists of income payments on U.S. Treasury foreign series bonds. 3. Consists of income payments on foreign deposits with the U.S. Treasury Department and other U.S. Government liabilities. Unilateral Transfers The unilateral transfers accounts (lines 30, 32, 33, and 34) cover international transactions in which goods, serv- ices, or financial assets are transferred between U.S. resi- dents and residents of other countries without something of economic value being received in return. In most international transactions, both sides of the transaction have measurable economic values; for exam- ple, the provision of real resources to foreign residents is offset by payment for them, as financial claims on foreign residents are acquired or as financial liabilities to foreign residents are reduced. Hence, the principle of quid pro quo — something for something — is embodied in balance of payments accounting. However, certain international transactions — for example, a government donation of food products to alleviate famine in another country or a cash gift sent by an individual to another individual abroad — take place without a quid pro quo. These transactions are termed "unilateral transfers" in the U.S. balance of payments (and "unrequited trans- fers" in the International Monetary Fund's Balance of Payments Manual). Entries in the accounts discussed in this section offset transfers of real resources or financial assets to foreign residents recorded in the appropriate merchandise, services, or capital accounts. In general, transfers are recorded as of the time of de- livery of goods, performance of services, or disbursement of cash; the valuation of noncash transfers generally cor- responds to the value of the goods or services to which they are offsets. Transfers also include funds transferred by immigrants or emigrants as they enter or leave the United States, although, in a strict sense, no transaction has occurred between residents and nonresidents. Esti- mates of unilateral transfers are published on a net basis, with U.S. transfers to foreign residents (debits) netted against foreign transfers to U.S. residents (credits). Unilateral transfers are recorded in the following accounts: (1) Transfers under U.S. military grant pro- grams, net (line 30); (2) U.S. Government grants, exclud- ing military grants of goods and services (line 32); (3) U.S. Government pensions and other transfers (line 33); and (4) private remittances and other transfers (line 34). The first three accounts are estimated on the basis of data submitted quarterly by U.S. Government oper- ating agencies under Office of Management and Budget Directive No. 19. Where necessary, the reported data are adjusted for timing; the adjustments are based on supplementary information, including published state- ments, congressional submissions, and the financial and operating records of Government agencies. For trans- actions that are reported only partially or not at all by the operating agencies, BEA prepares estimates using supplementary information. The fourth account, private remittances and other transfers, is estimated from a wide variety of data sources. 1 U.S. Military Grants of Goods and Services, Net (line 30) This account measures net transfers of goods delivered and services rendered by U.S. military services to foreign countries under programs enacted by the U.S. Congress to authorize the provision of military assistance for which no repayment is expected or for which repayment terms are indeterminate. Gross transfers include goods and services purchased with dollar funds appropriated or with foreign curren- cies owned by the U.S. Government and authorized by legislation for that use (valued on the basis of the U.S. Government financial records reflecting the expenditure of authorized funds). Gross transfers also include trans- fers of goods under authorizations to deliver to foreign nations the equipment and material deemed excess to U.S. requirements (valued according to the legislative authorization under which the transfer is made). Transactions netted against gross transfers — reverse grants — include returns of equipment previously trans- ferred and supplies and services provided to the U.S. Government as part of a mutual assistance program. The value of transfers of goods and services under U.S. military grant programs is offset by an identical credit entry in line 15. 18 2 U.S. Government Grants, Excluding Military Grants of Goods and Services (line 32) This account measures the utilization of U.S. Govern- ment financing to transfer real resources or financial assets to foreigners under programs enacted by the U.S. Congress for the provision of nonmilitary foreign as- sistance (grants) for which no repayment is expected. These grants are classified in table 11-33 according to the legislative programs under which they were extended. Utilized assistance represents the goods delivered or shipped, services rendered, or cash disbursed by the U.S. Government to, or for the account of, a foreign govern- ment or other foreign entity. Grants are measured on a net basis, with the amount of gross grants netted against 18. Beginning in June 1990, U.S. military grants of goods and services are com- bined with other U.S. Government grants. Transfers of goods and services under U.S. military grant programs are combined with transfers under U.S. military agency sales contracts. 71 72 The Current Account cash settlements for grants previously provided, for re- turns of equipment previously transferred, for foreign currencies provided to offset U.S. expenditures under for- eign assistance programs, and for goods and services provided under mutual assistance programs that require the receiver to extend assistance to the United States or other countries to achieve a common objective. Cor- responding entries representing the actual shipment of goods, performance of services, or disbursement of cash are included in the appropriate merchandise, services, or capital accounts. Also included in U.S. Government grants are transfers under assistance programs for which repayment terms are indeterminate at the time of the transfer, subject to future settlement. These types of assistance are included with grants in the period rendered. Subsequently, when settlement for the assistance is agreed upon, the terms may call for a cash settlement or may establish a long- term credit. Cash settlements are included as reverse grants. Amounts of newly established long-term credits are not included in the balance of payments estimates, but are added as an adjustment to outstanding long- term credits in the international investment position, discussed in part I. U.S. Government grants include contributions and special grants to international agencies carrying out hu- manitarian activities — such as the United Nations Relief and Works Agency for Palestine Refugees, United Na- tions Children's Emergency Fund (UNICEF), and United Nations High Commissioner for Refugees. Contributions to the economic development and subsidies for the Pacific Ocean islands that the United States holds in trustee- ship for the United Nations are also included, as are Peace Corps expenditures and Agency for International Development (AID) expenditures, including their admin- istrative overhead in the United States and abroad and their payments to other U.S. Government agencies for services in support of AID programs. The offsetting en- tries to the expenditures by the Peace Corps and AID are included in receipts for U.S. Government miscella- neous services (line 10) or in other private services (line Table 11-33.— U.S. Government Grants, Excluding Military Grants of Goods and Services, 1988 (Line 32) [Millions of dollars] Total, net . Grants, gross Under Foreign Assistance Act and related programs: Financing military purchases ' Other grants Under authorizations for farm product disposals: From foreign currencies under the Agricultural Trade Development and Assistance Act For famine, other urgent and extraordinary relief, for economic development, and through private welfare agencies Freight donations Food for development loan forgiveness For international refugee assistance For trust territory development For Peace Corps Less: Reverse grants and returns . 10,377 10,377 3,185 5,778 1 509 212 115 224 202 151 9), where they represent the "export" of U.S. Govern- ment services, or private services, respectively, to the aid-receiving countries. When services are obtained and paid for abroad, an entry is also made for payments under U.S. Government miscellaneous services (line 25). (It should be noted that the amount of foreign assist- ance included in the U.S. Government grants account does not provide a comprehensive measure of the foreign aid activity of the U.S. Government. For a detailed dis- cussion of the different concepts and measures of foreign assistance and historical data series on foreign assistance extended by the United States under various programs, reference should be made to the annual reports of the U.S. Treasury Department's National Advisory Council on International Monetary and Financial Policies [72]. These reports continue the series published by BEA in Foreign Aid by the United States Government, 1940- 1951, a supplement to the Survey of Current Business [52], and in the periodic reports Foreign Grants and Credits by the United States Government [54].) 3 U.S. Government Pensions and Other Transfers (line 33) This account measures (1) payments of social security, railroad retirement, and other social insurance benefits to eligible persons residing abroad, (2) payments under retirement and compensation programs for former U.S. Government civilian employees, military personnel, and veterans residing abroad, including the cost of providing medical services abroad under Veterans' Administration programs, (3) payments under U.S. educational, cultural exchange, and research programs, (4) membership con- tributions to international nonflnancial organizations, (5) damage claims paid by the U.S. armed services in countries where they have installations, and (6) other transfers (see table 11-34). Other transfers include receipts from foreign residents on U.S. claims arising from damage to, or nationalization of, U.S. property abroad settled by intergovernmental agreements. Generally, these are one-time transactions involving receipts of funds by the United States. If funds received from foreign governments are distributed to U.S. owners residing abroad, the transfers are recorded in this account as payments. When foreign payments for dam- age or nationalization are made in installments over a Table 11-34.— U.S. Government Pensions and Other Transfers, 1988 (Line 33) [Millions of dollars] 1. Includes funds advanced to finance military sales to foreign governments and to release foreign governments from their contractual liabilities to pay for defense articles and services purchased under the Arms Export Control Act. Total Transfers of annuities and other benefits: Under social security and related programs Under retirement and compensation programs for Federal Government service.... Transfers under educational, cultural exchange, and research programs Membership contributions to international nonfinancial organizations Damage claims paid by U.S. armed services Less: Receipts (including fishing fees) , 2,491 1,382 485 14 670 3 61 Unilateral Transfers 73 period of time, they are recorded as U.S. receipts in re- payments on U.S. credits and other long-term assets (line 42). U.S. Government pensions and other transfers also include a credit entry for receipts of fees from foreign vessels for fishing in U.S. territorial waters. 4 Private Remittances and Other Transfers (line 34) This account measures net private unilateral transfers of goods, services, and cash and other financial assets be- tween U.S. private residents and foreign residents (see table 11-35). Published estimates are on a net basis; transfers by private U.S. residents to foreign residents (debits) are netted against transfers by foreign residents to private U.S. residents (credits). Data sources for this account include BEA surveys of charitable institutions, banks, and agencies engaged in handling personal remittances, the U.S. Postal Serv- ice, and the published balance of payments data of a few major countries. These sources provide only limited coverage, however, because the flow of cash, personal checks, and other nonpostal money order remittances sent directly to foreign residents is unrecorded. Likewise, receipts by U.S. individuals, universities, hospitals, and religious institutions are mostly unrecorded. 4.1 U.S. transfers to foreign residents Unilateral transfers by private U.S. residents to foreign residents, as shown in table 11-35, consist of (1) institu- tional remittances, (2) personal remittances, (3) parcel post shipments, (4) inheritance, emigrant, and other transfers, (5) contributions to UNICEF, (6) transfers for medical services, and (7) transfers to foreign students studying in the United States. Institutional remittances. — This item measures insti- tutional remittances, based on data reported to BEA by U.S. religious, charitable, educational, scientific, and similar nonprofit organizations in the BE-40 survey, "In- stitutional Remittances to Foreign Countries." Data are reported on a country basis, with funds remitted and goods shipped shown separately. Funds transferred to foreign residents include outright grants, payments abroad for procurement of goods to be used abroad, payments for contract services abroad, administrative expenses abroad, and transfers to foreign banks or to for- eign accounts at U.S. banks. The value of goods shipped abroad includes transportation expenses if the transfer covers them. In 1988, approximately 90 BE-40 reports were sub- mitted quarterly and 360 annually. Quarterly reporters accounted for about 70 percent of the annual value; this ratio serves as the basis for expanding the quarterly data to universe estimates. Personal remittances. — This item measures personal remittances in cash, based on data submitted to BEA by selected U.S. banks, the U.S. Postal Service, and other reporters. Banks report on the annual BE-579 survey, Table 11-35.— Private Remittances and Other Transfers, 1988 (Line 34) [Millions of dollars] Total U.S. transfers to foreign residents Institutional remittances Cash Goods Personal remittances Parcel post shipments by Individuals Inheritance, emigrant, and other transfers Contributions to United Nations Childrens' Emergency Fund Transfers to foreign students Transfers for medical services Less: Foreign transfers to U.S. residents Inheritance, immigrant, and other transfers Indemnification transfers Personal remittances 1,788 4,218 2,087 1.815 272 993 244 198 12 630 54 2,430 2,088 235 107 "Foreign Personal Remittances," for specific countries or groups of countries. Banks may report either the actual totals of all daily remittances in a given month or quar- ter or for certain sampling days. Banks are instructed to report the total of all noncommercial payments from U.S. individuals to individuals residing abroad; these payments include funds transferred by special "foreign remittance" instruments and by customary foreign bank drafts. The U.S. Postal Service provides quarterly data to BEA on the total value of postal money orders sent abroad, listed by country. In addition, selected private companies provide quarterly data to BEA on the total value of tele- graphic money orders sent to certain foreign countries. The reported total of money orders is assumed to cover personal remittances rather than commercial payments. Personal remittances include gift transfers to residents in Eastern Europe through private business agencies lo- cated in the United States; data are obtained from the annual reports of these agencies [60] to the U.S. Jus- tice Department under the Foreign Agents Registration Act of 1938; the summary of the reports is published annually [65]. Also included are transfers of medi- cal supplies and other essential commodities to Cuba and Vietnam; these transfers are estimated by BEA from records of the Office of Export Licensing, U.S. Department of Commerce. Parcel post shipments. — This item measures parcel post shipments by individuals, based on data provided quar- terly to BEA by the U.S. Postal Service on the weight (in pounds) of parcel post shipped overseas by country and by surface and air transportation [77]. Data on shipping weights are combined with estimates of average dollar- value per pound, developed by BEA in a special survey of parcel post shipments at a bulk mail center in New Jersey and at postal facilities at Kennedy Airport in New York. For a random sample of packages, information was collected on the weight and value of each parcel, whether or not the parcel was insured, the country of destination, and the nature of both sender and receiver (commer- cial or personal). The data were taken from the U.S. Customs Service declaration forms affixed to the parcels and from the address and return address labels. The average values per pound of parcel post initially calcu- lated are adjusted by BEA each year for changes in the 74 The Current Account consumer price index for nondurable products, prepared by the Bureau of Labor Statistics, U.S. Department of Labor. The value of parcel post shipments estimated for in- clusion in unilateral transfers is offset by an equal credit entry in merchandise exports (line 2), to compensate for the omission of personal parcel post shipments from Cen- sus Bureau export data. It is one of the balance of payments adjustments to the Census Bureau data, as described in "Merchandise Trade." Inheritance, emigrant, and other transfers. — This item measures transfers associated with inheritance pay- ments to persons residing in Canada, transfers of funds to Canada by U.S. residents emigrating to that country, and pension payments by U.S. trade unions to retired members of Canadian local unions. Data are provided by Statistics Canada [5] on a quarterly basis. Data for other countries are not available. Contributions to UNICEF. — This item measures contri- butions by private U.S. residents to the U.S. Committee for UNICEF, which then transfers the contributions to UNICEF. Data are provided by the U.S. Committee for UNICEF [29]. (U.S. Government contributions to UNICEF are included in U.S. Government grants (line 32).) Transfers for medical services. — This item measures the value of U.S. transfers of medical services to foreign residents, including charity cases, for which no payments are made by the recipients or other foreign residents. The transfers are estimated by hospital administrators at 10 percent of the total value of medical services provided; the total value of services provided by U.S. residents to foreign residents is included in other private services (line 9). Transfers to foreign students. — This item measures the value of assistance provided by U.S. sources to foreign students studying in the United States through schol- arships from colleges, universities, private corporations, and other nonprofit institutions. Estimates are made on the basis of data from a survey by the Institute for In- ternational Education, described in connection with U.S. receipts for education services (included in other private services). 4.2 Foreign transfers to U.S. residents Unilateral transfers by foreign residents to private U.S. residents consist of (1) inheritance, immigrant, and other transfers, (2) indemnification transfers, and (3) personal remittances. Inheritance, immigrant, and other transfers. — This item measures inheritance and pension receipts by U.S. residents from Canada, the United Kingdom, and the Federal Republic of Germany. Data are provided quar- terly by Statistics Canada [5], and annually by the Central Statistical Office of the United Kingdom [25] and the Deutsche Bundesbank [14]. Data for other countries are not available. Indemnification transfers. — This item measures trans- fers from the Federal Republic of Germany, associ- ated with World War II indemnification claims of U.S. residents. Annual data, taken from publications of the Deutsche Bundesbank [14], are distributed quar- terly on the basis of the quarterly pattern of German indemnification payments worldwide. Personal remittances. — This item measures personal remittances in the form of postal money orders received from abroad. Data are provided quarterly to BEA by the U.S. Postal Service on a country-by-country basis. Part III THE CAPITAL ACCOUNT U.S. Official Reserve Assets transactions in U.S. official reserve assets are measured n the following accounts: (1) Gold (line 37); (2) special irawing rights (SDR's) (line 38); (3) reserve position in ;he International Monetary Fund (IMF) (line 39); and (4) breign currencies (line 40) (see table III-l). Transactions ;onsist of sales and purchases by U.S. monetary author- ties of monetary gold (that is, gold held by the U.S. treasury as a financial asset); IMF allocations of SDR's to ;he United States, acquisitions of outstanding SDR's, and sales of U.S. -owned SDR's for foreign currencies; changes n IMF holdings of dollars, resulting from transactions setween the IMF and member countries; and exchange narket interventions by U.S. monetary authorities, ac- juisitions of foreign currencies from the IMF or foreign governments, and net earnings on U.S. official reserve issets. Transactions with private foreign residents are ncluded in these accounts only if they result in changes n U.S. official reserve holdings of foreign currencies. BEA estimates quarterly transactions on the basis of lata provided — generally under Office of Management ind Budget (OMB) Directive No. 19— by the U.S. Treas- lry Department, the Federal Reserve System, and the MF. Data on U.S. reserve assets are published by the treasury Department in terms of holdings (outstanding unounts) as of the end of each month; changes in hold- ngs reflect both transactions and other changes. Thus, Table 111-1 . — Changes in U.S. Official Reserve Assets, 1988 (Lines 37-40) [Millions of dollars] (Credits +; decrease in U.S. assets. Debits • assets.) increase in U.S. Total, net.. Sold U.S. Treasury sales ' ... IMF restitution Valuation adjustments.. pecial drawing rights Allocations Other transactions Exchange rate adjustments. teserve position in IMF Transactions Exchange rate adjustments . oreign currencies Transactions Exchange rate adjustments. Based on U.S. Treasury data in outstand- ing amounts -2,002 646 474 173 1,604 1,025 580 -4,274 -5,064 790 Based on transactions data in the U.S. balance of payments -3,566 n.a. n.a. 474 474 n.a. 1,025 1,025 n.a. -5,064 -5,064 n.a. n.a. Not applicable. 1. Reflects changes in gold stock from U.S. Treasury sales of gold medallions and ammemorative and bullion coins; also reflects replenishment through open market purchases. IMF International Monetary Fund. BEA makes adjustments to exclude changes in holdings that do not reflect international transactions. For ex- ample, in the case of gold, BEA adjusts the U.S. gold stock data to exclude from transactions the public sales of gold to private U.S. residents at market prices — either as bullion or, since 1976, as medallions and commem- orative and bullion coins. These sales — equivalent to demonetizations — are between U.S. residents and are not international transactions. If the sale is to a nonresident, it is recorded as an export of merchandise (nonmonetary gold), offset by a debit in the capital account. Other BEA adjustments that affect the gold account as well as the other official U.S. reserve assets accounts are those that exclude changes in the par value of the dollar (such as those in 1972 and 1973) and that exclude changes in the exchange market value of the dollar vis-a-vis other currencies. Table III-l shows, for 1988, the adjustments in U.S. reserve assets for U.S. Treasury end-of-period position data and for BEA balance of payments transactions data. 1 Gold (line 37) This account measures transactions in monetary gold between U.S. Government agencies and foreign govern- ments or international monetary institutions. Transac- tions in nonmonetary gold — gold exported or imported in forms such as ore, scrap and base bullion, refined bul- lion, and coins and medallions — are not included here, but rather in merchandise trade (lines 2 and 17). The U.S. Government gold stock, including that in the Exchange Stabilization Fund (ESF), is held by the Treasury Department. 19 The stock and monetary gold transactions with foreign governments are valued at the official U.S. Treasury par value of gold, $42.2222 per fine troy ounce. Between May 1972 and October 1973, U.S. gold was valued at $38 per fine troy ounce. From January 1934 until May 1972, the valuation was $35. Official valuations of U.S. gold are made pursuant to the Par Value Modification Act (Public Law 92-268) and its amendment (Public Law 93-110). Gold transactions with the IMF — including the return of gold contributed by the United States (restitutions) — are valued at the U.S. dol- lar equivalent of the established price of gold in terms of SDR's. 19. The ESF was established in the Treasury Department, by section 10 of the Gold Reserve Act of 1934, to stabilize the exchange value of the dollar through the purchase and sale of foreign currencies and gold in the open market. 77 78 The Capital Account BEA estimates quarterly U.S. Government gold trans- actions on the basis of U.S. Treasury data on changes in amounts outstanding at the beginning and end of the pe- riod. BEA adjusts the data to exclude (1 ) revaluations of the gold stock due to changes in the par value of gold, (2) Treasury public sales of gold (which have occurred since 1976, when the United States allowed private residents to own gold), and (3) the consumption and replacement of the gold stock used for medallions and commemorative and bullion coins. 2 Special Drawing Rights (line 38) This account, which measures transactions in U.S. hold- ings of SDR's in the IMF Special Drawing Rights Department, reflects SDR allocations, cancellations, acquisitions, and sales. The SDR was created in 1969 — through an amendment to the IMF Articles of Agreement — to supplement exist- ing international reserve assets. The first SDR allocation to IMF member countries was made in 1970; five subse- quent allocations were made, the last one in 1981. The valuation of the SDR has changed over the years, from the equivalent of 0.888671 grams of fine gold in 1970 (equal to the U.S. dollar at the dollar's par value of $35 per troy ounce of fine gold) to the current valuation that is based on a weighted average of exchange rates for the currencies of five major countries. Beginning January 1, 1986, the relative weights are: Percent United States 42 West Germany 19 Japan 15 France 12 United Kingdom 12 BEA estimates quarterly SDR transactions on the ba- sis of U.S. Treasury and IMF data on transactions and on amounts outstanding at the beginning and end of period. BEA records transactions in U.S. dollar equivalents. Val- uation changes in U.S. holdings of SDR's, resulting from changes in the par value of the U.S. dollar and from changes in the exchange market value of the dollar vis-a- vis other SDR basket currencies, are not included in the transactions estimates. 3 Reserve Position in the IMF (line 39) This account measures transactions affecting the U.S. re- serve position in the IMF; it reflects IMF transactions in U.S. dollars with both the United States and foreign countries. IMF transactions with the United States con- sist of (1) IMF acquisitions of dollars resulting from net sales of gold to the United States for use in IMF oper- ations, (2) U.S. purchases from the IMF of SDR's and foreign currencies in exchange for dollars, and U.S. re- purchases of dollars, (3) net U.S. dollar loans to the IMF under the General Agreements to Borrow and under the Supplementary Financing Facility, (4) U.S. payments of dollars to the IMF as charges against the United States, and IMF payments of dollars to the United States as interest on IMF borrowings, and (5) IMF payments of dollars for its administrative operations in the United States. IMF transactions in dollars with other countries consist of (1) IMF sales of dollars for foreign curren- cies and SDR's and repurchases of those currencies for dollars, (2) IMF sales of gold for dollars, (3) IMF dol- lar borrowings and relendings, (4) IMF payments on its borrowings, and (5) IMF payments of dollars for its administrative operations outside the United States. The U.S. reserve position in the IMF is equal to the U.S. quota in the IMF minus IMF holdings of dollars (excluding dollar holdings in IMF administrative and subsidiary accounts) — the "U.S. reserve tranche" — plus net U.S. loans to the IMF. The reserve position repre- sents the amount of foreign exchange that the United States can unconditionally draw from the IMF, up to the full amount of its quota. Under appropriate conditions, the United States can draw additional amounts based on its quota. The initial U.S. quota in the IMF in 1946 was $2,750 million. It was subsequently increased in a number of steps — including revaluations in 1972 and 1973 as a re- sult of changes in the par value of the dollar — to SDR 17,918 million in December 1983, and has remained at that level. BEA estimates the net change in the U.S. reserve po- sition in the IMF on the basis of U.S. Treasury and IMF data on transactions and on amounts outstanding at the beginning and end of the period. Estimates do not include valuation changes in the reserve position that re- sult from changes in the par value of the U.S. dollar and from changes in the exchange market value of the dollar in terms of the SDR. 4 Foreign Currencies (line 40) This account measures the net transactions that affect U.S. Treasury Department and Federal Reserve Sys- tem holdings of the foreign currencies that are included in the U.S. official international reserves. Changes in these holdings result from (1) transactions associated with U.S. exchange market intervention through the ESF and the Federal Reserve System, (2) transactions un- der reciprocal currency arrangements of the ESF and Federal Reserve System with foreign monetary author- ities, (3) foreign currency transactions with the IMF, and (4) transactions arising from U.S. Treasury Depart- ment borrowings of foreign currencies in foreign capital markets. ESF transactions consist of (1) drawings and repay- ments of foreign currencies against the U.S. reserve position in the IMF, (2) sales of SDR's to other countries for foreign currencies, and (3) acquisitions, sales, and re- payments of foreign currencies associated with the sale, in foreign capital markets, of U.S. Treasury obligations denominated in foreign currencies. The ESF also en- gages (since 1962) in reciprocal currency arrangements, carried out by the Federal Reserve Bank of New York acting as agent on behalf of the Treasury, to enable the U.S. Federal Reserve System and major foreign central U.S. Official Reserve Assets 79 banks to obtain immediate access to each other's cur- data on transactions, on the amounts of foreign curren- rencies in order to deal with temporary pressures in cies outstanding at the beginning and end of the period, exchange markets. and on the realized gains or losses from transactions con- BEA estimates quarterly transactions on the basis of summated. Unrealized gains and losses are not reflected U.S. Treasury and Federal Reserve Bank of New York in the estimates. Allocations of Special Drawing Rights (Line 64) This account measures net allocations of special drawing rights (SDR's) to the United States by the International Monetary Fund (IMF) (see table III-l). Entries in this account are the counterparts to the allocations and can- cellations of SDR's in the special drawing rights account (line 38); counterpart entries for acquisitions and sales of outstanding SDR's are recorded in other official reserve assets accounts or in other capital accounts. Provision for SDR allocations and cancellations was made in the amendments to the IMF Articles of Agree- ment in July 1969. The initial allocation was made on January 1, 1970, valued at $867 million. The latest allo- cation was made in 1981, valued at $1,093 million. These allocations were based on a percentage of the U.S. quota in the IMF at the time of each allocation. 80 U.S. Government Assets, Other Than Official Reserve Assets J.S. Government assets, other than official reserve as- ets, consist of U.S. Government credits extended to jreign residents, capital subscriptions in, or contribu- tons to, international financial institutions, repayments f credits by foreign residents, and net changes in other J.S. Government assets. Credits extended are disburse- lents of cash (loans), or deliveries on sales made on redit, to foreign governments and other foreign enti- les. Loans may be disbursed in dollars or in foreign urrencies. Repayments may be in dollars, foreign cur- encies, services, property, or the assumption of claims. )ther U.S. Government assets consist mainly of holdings f foreign currencies, other than those held by the U.S. Veasury Department and the Federal Reserve System as eserves, and of assets acquired, including those from the J.S. private sector, in performance of U.S. Government uarantee and insurance programs. Changes in U.S. Government assets, other than official eserve assets, are recorded in the following accounts: L) U.S. credits and other long-term assets (line 42); (2) epayments on U.S. credits and other long-term assets line 43); and (3) U.S. foreign currency holdings and U.S. hort-term assets, net (line 44). Quarterly estimates are made by BEA from data sub- mitted by U.S Government operating agencies under )ffice of Management and Budget Directive No. 19; ata are summarized by country, by agency, and by type f asset. BEA supplements these data with informa- ion from quarterly statements of receipts, expenditures, nd balances of foreign currency holdings, provided by he U.S. Treasury Department, published financial state- ments, annual reports and other submissions to the U.S. Congress, and the financial and operating records of ther U.S. Government agencies. U.S. Credits and Other Long-Term Assets (line 42) 'his account measures utilization of U.S. Government redits (including loans) and other long-term assets by he transfer of resources to foreigners under programs nacted by the U.S. Congress for the provision of foreign issistance requiring repayment over a period of years, isually with interest (see table III-2). Transfers of re- ources represent the dollars disbursed and the dollar quivalents of goods transferred, services performed, or breign currencies disbursed by the U.S. Government to, >r for the account of, a foreign government or other for- dgn entity. Transfers are valued on the basis of the obligation assumed by the debtor under the contractual agreement for repayment. Also included in this account are U.S. Government credits to U.S. private entities for specific projects abroad; investments by the U.S. Government in productive fa- cilities and installations abroad; acquisitions of equity holdings of "public enterprise" accounts of U.S. Govern- ment agencies; and capital subscriptions in, or contribu- tions to, international financial institutions that provide development and other long-term economic assistance to foreign countries. An exception is U.S. transactions with the International Monetary Fund (IMF), which are not included in this account, but are included in the reserve position of the United States in the IMF (line 39). U.S. Government credits are classified in table III-2 by the legislative program under which they were extended to foreigners; the amounts include capitalized interest. It should be noted that data on transactions in this account provide only a partial measure of the foreign as- sistance activity of the U.S. Government; other foreign assistance activity is recorded in lines 30, 32, 43, and 44. For a detailed discussion of the concepts, the differ- ent measures of foreign assistance, and a historical data series on the assistance extended by the U.S. Govern- ment under various programs, reference should be made Table 111-2.— U.S. Government Credits and Other Long-Term Assets, 1988 (Line 42) [Millions of dollars] Total Credits Under Export-Import Bank Act Under Foreign Assistance Act and related programs: Financing military sales Country program loans Social Progress Trust Fund Investment incentive loans Under Agricultural Trade Development and Assistance Act Long-term dollar credits Foreign currency loans Under Commodity Credit Corporation Charter Act , Other U.S. Government assets Investments in international financial institutions: International Development Association Inter-American Development Bank International Bank for Reconstruction and Development. International Finance Corporation Asian Development Bank African Development Fund African Development Bank Multilateral Investment Guaranty Agency , Other 7,579 5.808 971 2.992 474 -4 11 948 3 414 1.771 374 137 95 25 112 40 9 22 457 81 82 The Capital Account to the annual reports of the Treasury Department's Na- tional Advisory Council on International Monetary and Financial Policies [72]. These reports continue the series formerly published by BEA in a supplement to the Survey of Current Business [52] and in the Foreign Grants and Credits hy the United States Government [54]. Repayments on U.S. Credits and Other Long-Term Assets (line 43) This account measures collections of principal on credits and recoveries against other long-term assets (see ta- ble III-3). Also included are (1) principal collections in liquidation of outstanding indebtedness, which are for- malized by intergovernmental agreements in settlement of assistance that was originally provided under indeter- minate terms and recorded in U.S. Government grants at the time the assistance was provided (line 32); (2) collections on claims settled by intergovernmental agree- ments requiring payment in installments over a period of years (including funds for distribution to U.S. private residents); 20 (3) recoveries of U.S. Government invest- ments, whether debt or equity, in productive facilities and installations abroad; and (4) sales of promissory notes (or other evidences of indebtedness) owned by the U.S. Government to third-party foreign participants, either in the country of the borrower or in third countries. Excluded from this account are principal charged off as uncollectible and exchange rate gains or losses (in dol- lar equivalents) on indebtedness denominated in foreign currencies. As shown in table III-3, collections are classi- fied by the legislative programs under which credits and other long-term assets were extended. 20. Collections of claims settled by intergovernmental agreements requiring only one-time payments are recorded in U.S. Government pensions and other transfers (line 33). 3 U.S. Foreign Currency Holdings and U.S. Short-Term Assets, Net (line 44) This account (see table III-4) measures (1) financing of U.S. farm product exports by acceptance of foreign currencies under the Agricultural Trade Development and Assistance Act (Public Law 83-480) and under the Commodity Credit Corporation Charter Act, less the U.S. Government's disbursements of these currencies as grants, credits, or for purchases; (2) financing, net of re- payments, of U.S. farm exports by purchase of exporters' receivables with original maturities of 12 months or less under the Commodity Credit Corporation short-term ex- port credit sales program; (3) transactions affecting U.S. Government holdings of foreign currencies collected as interest, principal, reverse grants, or under other assist- ance programs; (4) changes in foreign currency holdings of U.S. Government disbursing officers; (5) acquisitions (less dispositions) of assets acquired by the U.S. Gov- ernment in performance of guarantee and insurance obligations for private sector investments abroad; (6) changes in accounts receivable of U.S. Government agen- cies that report their current transactions on an accrual basis rather than on a cash basis; and (7) any advances of the Exchange Stabilization Fund that are not identified as reserve assets. Changes in foreign currency holdings and other as- sets are recorded net. The changes reflect transfers of resources, which represent the dollars disbursed and the dollar equivalents of goods transferred, services per- formed, or foreign currencies disbursed by the U.S. Government to, or for the account of, a foreign govern- ment or other foreign entity. Transfers are valued on the basis of the obligation assumed by the debtor un- der the contractual agreement for repayment. Farm product sales are recorded when the U.S. Government transfers commodities from its stocks or disburses dol- lars for the financing of agricultural exports; the amounts include the value of ocean transportation when it is fi- nanced by the U.S. Government under arrangements Table II1-3. — Repayments on U.S. Government Credits and Other Long-Term Assets, 1988 (Line 43) [Millions of dollars] Total Repayments of principal on U.S. long-term credits Under Export-Import Bank Act Under Foreign Assistance Act and related programs: Financing military sales Country program loans Social Progress Trust Fund Investment incentive loans Under Agricultural Trade Development and Assistance Act Long-term dollar credits Foreign currency loans Under Commodity Credit Corporation Charter Act British loan Other Repayments on other U.S. Government assets 10,313 9,855 1,440 7,197 497 15 7 412 39 126 92 30 458 Table 118-4. — U.S. Government Foreign Currency Holdings and U.S. Short-Term Assets, Net, 1988 (Line 44) [Millions of dollars; credits +, decrease in U.S. assets; debits -, increase in U.S. assets.] Total . Foreign currency holdings (excluding administrative cash holdings), net- Receipts from: Sales of agricultural commodities Interest Repayments of principal Reverse grants Other sources Less disbursements for: Grants and credits in recipient's currency.. Other grants and credits Other U.S. Government expenditures Assets acquired in performance of U.S. Government guarantee and insurance obligations, net Other assets held under Commodity Credit Corporation Charter Act, net Other short-term assets (including changes in administrative cash holdings), net . 26! 7i -31 -31 -61 211 17! (' 1! Less than $500,000 (±). U.S. Government Assets, Other Than Official Reserve Assets 88 for reimbursement by foreign governments in foreign currencies. Excluded from this account are gains or losses on for- eign currency balances due to fluctuations in exchange rates, and changes in foreign currencies held as official reserve assets by U.S. monetary authorities. Table III-4 lists the sources and uses of foreign curren- cies, together with changes in other short-term assets. For more detailed information on U.S. Government for- eign assistance through net accumulations of foreign currency claims, reference should be made to the annual reports of the National Advisory Council on International Monetary and Financial Policies [72]. Direct Investment The direct investment section of this methodology is di- vided into two parts. The first discusses, in an overview, the basic concepts and definitions, the reporting system, country and industry classification of data, and proce- dures used by BEA to estimate the direct investment accounts. The second details the direct investment capi- tal flows recorded in U.S. direct investment abroad (line 46) and foreign direct investment in the United States (line 59). Discussions of receipts and payments of income, royal- ties and license fees generated by direct investment, and transactions in other services between affiliated parties are included in the relevant accounts in part II. Overview Basic Concepts and Definitions Direct investment International investment is customarily divided into two categories — direct and portfolio. Direct investment im- plies that a person in one country has a lasting interest in, and a degree of influence over the management of, a business enterprise in another country. This interest — in some instances, control — generally makes direct invest- ment a long-term relationship, in which the operation of the enterprise is linked with the real output of the coun- try in which it operates. Portfolio investment, on the other hand, primarily reflects short-term activity in fi- nancial markets, where the ability to shift funds between countries or financial investments is a major considera- tion. The criteria used to distinguish direct investment from portfolio investment are necessarily somewhat ar- bitrary. In the U.S. balance of payments, the criterion presently used to define direct investment is ownership or control of 10 percent or more of an enterprise's voting securities or the equivalent. Thus, U.S. direct investment abroad (outward invest- ment) is defined as the ownership or control, directly or indirectly, by one U.S. person of 10 percent or more of the voting securities of an incorporated foreign business en- terprise, or an equivalent interest in an unincorporated foreign business enterprise. Foreign direct investment in the United States (inward investment) is defined as the ownership or control, directly or indirectly, by one foreign person of 10 percent or more of the voting se- curities of an incorporated U.S. business enterprise, or an equivalent interest in an unincorporated U.S. busi- ness enterprise. In the U.S. balance of payments, any international investment that is not direct investment by these definitions is considered portfolio investment. Data on direct investment are collected by BEA; data on portfolio investment are collected by the U.S. Treasury Department and the Federal Reserve Bank of New York. Direct investment refers to ownership by a single per- son, not to the combined ownership of all persons in a country. A "person" is broadly defined to include any individual, branch, partnership, associated group, association, estate, trust, corporation or other organiza- tion (whether or not organized under the laws of any State), and any government, including a foreign gov- ernment, the U.S. Government, a State or local govern- ment, and any agency, corporation, financial institution, or other entity or instrumentality thereof, including a government-sponsored agency. However, in the case of direct investment by the U.S. Government in a foreign business enterprise, any positions or transactions of the U.S. Government with such an enterprise are excluded from the outward direct investment accounts and are included, instead, in the appropriate Government or mil- itary accounts. In contrast, direct investment by foreign governments (including any of their agencies and corpo- rations) in U.S. business enterprises is included in the inward direct investment account. An associated group is treated as if it were a single per- son. An associated group consists of two or more persons who, by the appearance of their actions, by agreement, or by an understanding, exercise their voting privileges in a concerted manner to influence the management of a business enterprise. The following are deemed to be an associated group: (1) Members of the same family, (2) a business enterprise and one or more of its officers or di- rectors, (3) members of a syndicate or joint venture, or (4) a corporation and its domestic subsidiaries. Even if each member of an associated group owns less than 10 percent of a business enterprise, as long as all members combined own at least 10 percent, direct investment is considered to exist. The members of the group are considered to in- fluence management in a manner comparable to that of a single person with the same ownership interest. Because direct investment is defined from a single- owner viewpoint, it excludes investment in companies in which ownership is so dispersed that no one person in an- other country has an interest of 10 percent or more and the owners do not, or cannot, act in concert to influence management. (Before 1974 for inward investment and 1977 for outward, investment was considered direct if the combined interests of all owners in a country exceeded 84 Direct Investment 85 50 percent. Combined interests in excess of 50 percent were viewed as being sufficient, potentially or in fact, to affect management even without concerted action.) The use of the single-owner viewpoint means that in- vestment by a person of less than 10 percent in an enterprise is not considered direct investment, even if another person in the same country has an interest of at least 10 percent, unless both persons are members of an associated group. Thus, if one person owns 11 percent and another owns 9 percent, the 11 -percent interest is included, but the 9-percent interest is excluded. A direct investment ownership in a business enterprise may be held either directly or indirectly. For outward investment, it is directly held if the U.S. person itself holds the ownership interest in a foreign business enter- prise. It is indirectly held if the U.S. person holds the ownership interest in another foreign business enterprise that, in turn, directly or indirectly owns the given for- eign business enterprise. There may be any number of intervening tiers of ownership between a direct investor and an indirectly owned enterprise. A U.S. person's per- centage of indirect voting ownership in a given foreign business enterprise is equal to the direct voting owner- ship percentage in the first foreign business enterprise in the chain, multiplied by the first enterprise's direct ownership percentage in the second foreign enterprise in the chain, and so on, finally multiplied by the last enterprise's direct ownership percentage in the given for- eign business enterprise. If more than one ownership chain between a U.S. person and a given foreign business enterprise exists, the percentages of direct and indirect ownership in all chains are summed to determine the direct investment ownership percentage. For inward in- vestment, the ownership percentage of a foreign person in a given U.S. business enterprise is calculated in a parallel manner. Direct investor The direct investor is the person who has a 10-percent or more direct or indirect ownership interest in a busi- ness enterprise located in another country. For outward investment, the direct investor is referred to as the "U.S. parent" (or "U.S. reporter," for BEA reporting purposes). If incorporated, the U.S. parent is the fully consolidated domestic U.S. enterprise that consists of (1) the U.S. corporation whose voting securities are not owned more than 50 percent by another U.S. corporation, and (2) proceeding down each ownership chain from that U.S. corporation, any U.S. corporation whose voting securities are more than 50 percent owned by the U.S. corporation above it in the chain. All other U.S. corporations and all foreign business enterprises owned by the U.S. parent are excluded from the full consolidation. For inward investment, the direct investor is referred to as the "foreign parent," but the concept is defined much more narrowly than that of "U.S. parent" for out- ward investment. The foreign parent is the first foreign person outside the United States in a U.S. affiliate's ownership chain that has direct investment in the af- filiate. Thus, while for outward investment the parent includes all members of the fully consolidated U.S. en- terprise, for inward investment it includes only the first foreign person outside the United States and excludes all other affiliated foreign persons. However, the direct investment accounts include direct transactions of U.S. business enterprises with all of the affiliated foreign per- sons that, together with the foreign parent, constitute the "foreign parent group." The foreign parent group, which is conceptually analogous to the U.S. parent for outward investment, consists of (1) the foreign parent, (2) any foreign person, proceeding up the foreign parent's ownership chain, that owns more than 50 percent of the person below it up to and including the ultimate benefi- cial owner (the person that is not owned more than 50 percent by another foreign person), and (3) any foreign person, proceeding down the ownership chain of each of these members, that is owned more than 50 percent by the person above it. Because the members of the for- eign parent group may be located in different countries, transactions of a U.S. business enterprise with members of the foreign parent group are classified in the U.S. bal- ance of payments accounts by the respective country of each member. Affiliate An affiliate is a business enterprise in which there is direct investment — that is, it is a business enterprise lo- cated in one country that is directly or indirectly owned or controlled by a person in another country to the ex- tent of 10 percent or more of its voting stock for an incorporated business, or an equivalent interest for an unincorporated business. For outward investment, the affiliate is referred to as a "foreign affiliate"; for inward investment, it is referred to as a "U.S. affiliate." A busi- ness enterprise is any organization, association, branch, or venture that exists for profit-making purposes or to otherwise secure economic advantage, including owner- ship of real estate (see below). A business enterprise, and therefore an affiliate, may be either incorporated or unin- corporated. Unincorporated business enterprises include branches, partnerships, and sole proprietorships. A branch consists of operations or activities conducted by a person in another country in its own name, rather than through an entity incorporated in that country. By definition, a branch is wholly owned. In some cases, an affiliate is formally organized as a branch, such as a foreign sales office of a U.S. manufacturing company or a U.S. branch of a foreign bank. In other cases, the branch may merely represent fixed or movable assets — such as a warehouse, an oil drilling rig, a pipeline, or other assets — held in another country and used by the parent to conduct its business there. Also, if a parent is incorporated in one country, but carries out essentially all of its operations in another country, its operations in the other country are treated as a branch (and there- fore as an affiliate) even though the parent corporation itself may consider the operations to be an integral part of, and would normally consolidate them with, its own operations and accounts. 86 The Capital Account Ownership of real estate, as previously stated, is de- fined to be a business enterprise. However, real estate held for personal use and not for profit-making purposes is exempt from being reported to BEA and, therefore, is excluded from direct investment. A residence that is leased to others by an owner who intends to reoccupy it is considered real estate held for personal use. Foreign stations, ticket offices, and terminal or port facilities of U.S. airlines and ship operators — and U.S. stations, ticket offices, and terminal or port facilities of foreign airlines and ship operators — that provide services only to the airlines' and ship operators' own operations are not considered affiliates and are therefore excluded from direct investment. The exclusion is based on the fact that most of the revenues — such as passenger fares and freight charges — collected by these facilities are gen- erated by the travel and transportation services rendered by the airline or ship operator of which they are a part, not by the activities of these facilities per se. How- ever, if these facilities provide services to unaffiliated persons, rather than solely to the airline or ship operator that owns them, they are considered affiliates and are included in direct investment. For outward investment, each foreign affiliate must be reported separately, unless the recordkeeping system of the affiliate makes this impossible or extremely difficult. In that case, an affiliate may be consolidated with other foreign affiliates in the same country, if the affiliates are also in the same industry or are integral parts of the same business operation. For inward investment, a much higher degree of con- solidation is required because there is no need to classify affiliates by country of location. The U.S. affiliate files its reports with BEA on a fully consolidated basis, including in the full consolidation all other U.S. affiliates of its for- eign parent in which it directly or indirectly owns more than 50 percent of the outstanding voting interest. Any U.S. subsidiaries of a given affiliate that are not U.S. affiliates of its foreign parent are excluded from the con- solidation, even if they are owned more than 50 percent by the given affiliate. Reporting System Legal authority From 11950 to 1976, all mandatory direct investment sur- veys, except the 1974 benchmark survey of foreign direct investment in the United Sates, were conducted under authority of the Bretton Woods Agreements Act of 1945. In that act, the United States agreed to furnish balance of payments data, including data on direct investment, to the International Monetary Fund. In the early 1970's, increased emphasis was placed on inward investment, which began to grow rapidly. Con- cern about this rapid growth, and the need to obtain additional information on the amount, types, and fi- nancial and operating characteristics of the investment, prompted the passage of the Foreign Investment Study Act of 1974. The act provided authority to conduct a one-time, mandatory benchmark survey of foreign di- rect investment in the United States, covering the year 1974. Increased interest in the operations of multina- tional companies beyond the balance of payments aspects covered by the Bretton Woods Agreements Act led to the passage of the International Investment Survey Act of 1976 (Public Law 94-472; 90 Stat. 2059; 22 U.S.C. 3101 through 3108), which provided the legal authority for the collection of direct investment and related data. That act was amended by the Trade and Tariff Act of 1984 (Public Law 98-573). It was renamed the International Investment and Trade in Services Survey Act, and its coverage was extended to include the collection of data on international services transactions. The legislation requires that benchmark surveys of di- rect investment be taken at least once every 5 years and that a regular data collection program be conducted to secure current information on international investment. It also provides for other surveys on specific aspects of international investment that may have significant implications for U.S. economic welfare and national se- curity. Information collected on direct investment covers not only data related to the balance of payments, but items such as production, sales, trade, employment, fi- nancial statements, technology, and external financing. Response to the surveys is mandatory. Reporters For outward investment, each U.S. parent (U.S. reporter) as consolidated must report for itself and for each of its foreign affiliates, unless specifically exempt. For in- ward investment, each U.S. affiliate as consolidated must report for itself, unless specifically exempt. (Foreign parents are not required to report.) Exemption levels are based on specified levels (whether positive or negative) of the affiliate's total assets, net sales or gross operating revenues (excluding sales taxes), and net income after income taxes. If, for a given affil- iate, all of these items are below the specified level for the year, the affiliate is exempt from being reported. 21 If any one item is above that level, the affiliate must be reported. Direct investment data collected by BEA from individ- ual reporters are confidential. Data are published only in aggregates so that an individual reporter's data are not revealed. Any tabulations released by BEA are first subjected to a suppression analysis to determine which data cells must be suppressed to avoid disclosure of an individual reporter's data. In general, a data cell is sup- pressed if one or two reporters account for a dominant share of the data in the cell. Surveys Data on direct investment are presently collected by BEA by means of a series of mandatory surveys. Separate sur- veys are conducted for outward and inward investment; for a summary description of these surveys, see table 1-3. 21. There are exceptions to this general rule. For example, in the outward investment surveys, a large, indirectly owned foreign affiliate does not have to report if its quarterly intercompany transactions and fees and royalties receipts and payments are less than $1 million. Direct Investment 87 The benchmark surveys (censuses) of both outward and inward direct investment are comprehensive surveys that cover virtually the entire universe; exemption levels are minimal. These surveys collect detailed informa- tion on transactions and positions between parents and affiliates and on the financial structure and operations of parent companies and affiliates, including balance sheets and income statements, composition of external fi- nancing, sales, employment and employee compensation, trade, technology, and property, plant, and equipment. For outward investment, the most recently completed benchmark survey covered the year 1982. Reports were required from each U.S. parent for itself and, separately, for each of its foreign affiliates that had assets, sales, or net income greater than $3 million (positive or negative). The most detailed data had to be reported for nonbank foreign affiliates that were majority owned — that is, in which the combined direct and indirect ownership inter- est of all U.S. parents exceeded 50 percent — and that had assets, sales, or net income greater than $3 million. The survey covered 2,245 U.S. parents and 18,339 foreign affiliates. The next benchmark survey will cover 1989. For inward investment, the most recent benchmark survey covered the year 1987. Depending on their size, all U.S. affiliates of foreign persons were required to file either a complete or a partial report. Complete reports, covering financial, operating, balance of payments, and direct investment position data, had to be filed if the U.S. affiliate's total assets, sales, or net income were at least $1 million or if the affiliate owned 200 or more acres of U.S. land. Partial reports were to be filed if the U.S. af- filiate's total assets, sales, and net income were less than $1 million; for these affiliates, the information required was limited to data on total assets, sales, net income, and acres of land owned. Of the approximately 7,700 reports that were filed, 2,600 were complete and 5,100 were partial. BEA's other direct investment surveys are less com- prehensive and cover only a sample of companies. Data from the sample surveys, which are quarterly, are linked to data from the most recent benchmark survey and, for some data items, are expanded to universe levels based on the benchmark survey data. (See discussion of the estimating procedures below.) The quarterly surveys of outward and inward invest- ment are sample surveys that cover transactions between parents and affiliates and transactions between parents and other persons that change the parents' equity or debt position in their affiliates. (For inward investment, they also cover transactions of other members of the for- eign parent group with U.S. affiliates.) Data from these surveys provide estimates of items such as equity cap- ital flows, intercompany debt flows, income, earnings, distributed earnings, reinvested earnings, interest, roy- alties and license fees, charges for other services, and the direct investment position. Reports are due 30 days af- ter the close of each quarter, except for the last quarter of a reporter's calendar or fiscal year, when 45 days are allowed. For outward investment in 1988, separate reports were required from U.S. parent companies for each affiliate whose total assets, annual net sales, or annual net income exceeded $15 million (positive or negative). Quar- terly reports were received from approximately 1,300 U.S. parents for their 9,100 foreign affiliates. The quar- terly report form is the "BE 577: Direct Transactions of U.S. Reporter With Foreign Affiliate." For inward investment in 1988, reports were required from each U.S. affiliate whose assets, annual net sales, or annual net income exceeded $20 million (positive or negative). Quarterly reports were received from ap- proximately 3,400 U.S. affiliates, as consolidated. The following report forms are used: BE-605: Transactions of U.S. Affiliate, Except an Unincorporated Bank, With Foreign Parent. BE-606B: Transactions of U.S. Banking Branch or Agency With Foreign Parent. Adjustments for fiscal year reporting In the most recent benchmark surveys, to ease the re- porting burden on respondents, data could be reported to BEA either on a calendar or fiscal year basis. For presentations of the U.S. balance of payments and the international investment position, data were adjusted to a calendar year basis when necessary. In the benchmark surveys, an affiliate's fiscal year is defined as its financial reporting year that had an end- ing date in the year of the benchmark. Most affiliates had fiscal years that coincided with the calendar year; data for these affiliates required no adjustment. For the remaining affiliates, the specific adjustment procedure depended upon whether or not the affiliate reported in BEA's regular quarterly sample surveys. For affiliates that reported in the quarterly surveys, the first step was to isolate the benchmark survey data for the quarters of the fiscal year that also fell in the benchmark years. Second, these data were then added to data from the quarterly survey for any remaining quarters of the calendar year to obtain estimates for the calendar year as a whole. For affiliates that did not report in the quarterly sur- veys, the procedure differed depending on the item being estimated. For income and its components, except capital gains and losses, and for royalties and license fees and charges for other services, benchmark survey data for the fiscal years were used as the estimates for the calen- dar year. For equity capital and intercompany debt — two components of total capital flows — and for capital gains and losses, the calendar year estimates consisted only of the amounts for the quarters of the affiliates' fiscal year that were also in the year of the benchmark. For any re- maining quarters of the calendar year, the amounts were assumed to be zero. The treatment of the latter items is consistent with that in nonbenchmark periods, in which data for the items are not expanded to universe levels, but are in- cluded in the estimates only as actually reported in the quarterly sample surveys. These items tend to be volatile, with frequent sign reversals; thus, the reported sample data do not provide a reliable basis for estimating unreported data. 88 The Capital Account Accounting principles In the direct investment surveys, data usually are re- ported as they are for purposes of preparing stockholders' reports, rather than for tax or other purposes. Thus, U.S. generally accepted accounting principles (GAAP) are followed unless a departure from GAAP would result in conceptually or analytically more useful data. For both outward and inward investment, data are re- ported to BEA in U.S. dollars. When an enterprise's assets, liabilities, revenues, and expenses are denomin- ated or measured in a foreign currency, reporters must translate them into dollars using GAAP, as set forth in the currently applicable standard (as of 1990, the Fi- nancial Accounting Standards Board Statement No. 52 (FASB-52)). Reporting by bank affiliates The direct investment position in bank affiliates is de- fined to include only their parents' permanent debt and equity investment in them; thus, the direct investment flows for these affiliates include only transactions related to the permanent investment. All other transactions and positions — mainly claims and liabilities arising from the parents' and affiliates' normal banking business — are excluded from the direct investment accounts and are in- cluded with other banking claims and liabilities in the portfolio investment accounts. Bank affiliates are instructed to report data on per- manent investment and related transactions (such as interest on permanent debt) to BEA and to report data on all other transactions to the U.S. Treasury Department. Classification Methods Country classification For outward investment, each foreign affiliate is gen- erally classified by its country of location, that is, the country in which the affiliate's physical assets are located or where its primary activity is carried out. In most cases, the country of location of a business enterprise is the same as its country of organization or incorporation. However, in some cases, a business enterprise is organ- ized or incorporated in one country, but has part or all of its physical assets, or its activities, in a second country. If all its physical assets or operations are located out- side its country of organization, the enterprise is treated as an incorporated foreign affiliate in the country where its physical assets and operations are located. No for- eign affiliate is considered to exist in the country of organization, because the entity there is only a shell or paper company, and transactions would not normally oc- cur with it. If, however, an enterprise has some physical assets or operations in each country, it is considered two separate affiliates — an incorporated affiliate located in the country of organization and an unincorporated affil- iate (a branch) located in the other country. An affiliate is deemed to exist in the country of organization if the enterprise has any of the following there: (1) Bank ac- count, (2) personnel, (3) property, plant, or equipment, or (4) sales. There are two exceptions. First, if a business enter- prise incorporated in one foreign country has physical assets or operations in more than one other foreign coun- try, an incorporated foreign affiliate is deemed to exist in the country of incorporation, even though the enterprise has none of the four items listed above in that country. Unincorporated foreign affiliates (branches) are deemed to exist in each of the other foreign countries. In effect, the affiliate in the country of incorporation is considered a holding company whose assets are the equity it holds in the unincorporated affiliates in the other countries. Second, if a business enterprise incorporated abroad has physical assets or operations in the United States, an incorporated foreign affiliate is deemed to exist in the country of incorporation, even though the enterprise has no physical assets or operations there. Balance of payments transactions involving a given affiliate are classified in the affiliate's country of loca- tion, even when they are with a third-country transactor rather than with the affiliate itself— as when a U.S. par- ent purchases an affiliate's capital stock from a person in a country other than the affiliate's country of loca- tion. The direct investment capital flows resulting from the transaction are classified in the country of the affili- ate because the flows change the U.S. direct investment position in that country. (However, the financial entry, which is included in the portfolio investment accounts of the U.S. balance of payments, is likely to be classified in the country of the foreign transactor.) For inward investment, transactions of U.S. affiliates are classified by country of each member of the for- eign parent group, rather than strictly by country of the foreign parent, because a U.S. affiliate may have trans- actions and direct positions with members of the group other than its foreign parent. For example, the affiliate may borrow funds from, or lend funds to, another mem- ber of the group located in a country that is different from that of the foreign parent. Industry classification Each U.S. parent or foreign affiliate in the case of out- ward investment, or U.S. affiliate in the case of inward investment, is classified by industry using a three- stage procedure based on sales (total income for holding companies). The industry classification system used by BEA is adapted from the Standard Industrial Classification Manual, 1987 [11], which classifies individual estab- lishments within an enterprise. The BEA adaptation was necessary because the direct investment surveys collect data at the enterprise, not the establishment level. The classifications used by BEA are found in its Guide to Industry and Foreign Trade Classifications for International Surveys (ISI) [45]. The three stages of classification are: (1) A given parent or affiliate is first classified in the major industry group that accounts for the largest Direct Investment 89 percentage of its sales. The major industry groups used for this purpose are agriculture, forestry, and fishing; mining; petroleum; construction; manufac- turing; transportation, communication, and pub- lic utilities; wholesale trade; retail trade; finance, insurance, and real estate; and services. (2) Within the major industry group, the parent or affili- ate is then classified in the industry (at the two-digit ISI classification level) in which its sales are largest. (3) Within its two-digit industry, the parent or affiliate is then classified in the three-digit ISI subindustry in which its sales are largest. If, at any of these three stages, two or more categories account for the same percentage of sales, classification is based on judgment. This procedure ensures that the parent or affiliate is not assigned to a three-digit subindustry that is outside its major industry even if its sales in that subindustry exceed its sales in the largest three-digit subindustry within its major industry. It also ensures that the af- filiate is not assigned to a three-digit subindustry that is outside its two-digit industry, even if its sales in that subindustry exceed its sales in the largest subindustry within its two-digit industry. Affiliates must disaggregate their sales by industry in the benchmark and the annual surveys and, in some cases, in the "Industry Classification Questionnaire," BE- 507 (for outward investment) and BE-607 (for inward investment). The questionnaire must be filed for new af- filiates or for existing affiliates whose major industry has changed. For outward investment, it must also be filed for new U.S. parents or for existing U.S. parents whose industry classification has changed. Estimates of the direct investment position, capital flows, and income are published annually for all in- dustries in which there was investment. Country by industry estimates of the position and transactions that enter the U.S. balance of payments accounts are pub- lished annually for 13 industries for outward investment and 14 for inward investment. Estimating Procedures In a benchmark survey year, data for the universe of all affiliates are available. As mentioned earlier, some data are collected on a fiscal year basis in the bench- mark surveys; these data are adjusted to a calendar year basis for use in the balance of payments. In non- benchmark years, quarterly data are available only for a sample of affiliates. To construct consistent time series, the data actually reported in nonbenchmark periods for some of the components are combined with estimates for the remaining components, which are derived from an expansion of sample data to universe levels. Specifically, for equity capital, intercompany debt, and capital gains and losses, the estimates for 1983 forward for outward investment and 1981 forward for inward investment con- sist only of the sample data reported in the quarterly surveys; no estimates are made for affiliates that do not report. In contrast, for income and its components, ex- cept capital gains and losses, for royalties and license fees, and for charges for other services, the estimates are expanded to universe levels. For the items that are expanded to universe levels, the estimation procedure used is designed to ensure cover- age as complete as that in the benchmark surveys. Thus, estimates are made for affiliates that filed complete re- ports in the benchmark surveys, but that did not report in the quarterly sample survey, either because they were exempt from the quarterly survey or should have re- ported, but did not. The estimates for affiliates that did not report in the quarterly survey are then added to the data for affiliates that reported to obtain the universe estimates. For most nonreporting affiliates, the estimate for the current period is the product of two factors: (1) The prior-period estimate for the affiliate, and (2) the ra- tio of current-to-prior-period data for a matched sample of affiliates — that is, affiliates that reported in both the prior and current periods — that are in the same indus- try (and, for outward investment, the same area) as the affiliate for which data are being estimated. The multiplication of the first factor by the ratio essentially assumes that, in the given industry (and area), data for each nonreporting affiliate change at the same rate as data for affiliates in the matched sample. This procedure for expanding sample data to universe levels involves the following: (1) For all items except distributed earnings, the "prior period" is defined as the immediately preceding quar- ter; for distributed earnings, it is the same quarter of the preceding year. The reason for the different treatment is that current-period data for all items except distributed earnings tend to be estimated more accurately using data for the immediately pre- ceding quarter than for the same quarter of the pre- ceding year, despite seasonal variations. (Seasonal variations are reflected in the ratio of current-to- prior-period data for affiliates that reported in both periods; thus, they are reflected in the estimates.) For distributed earnings, in contrast, data for the current quarter bear a much stronger relationship to those for the same quarter of the preceding year, because affiliates often make earnings distributions only once a year and usually in the same quarter each year. (2) The ratios of current-to-prior-period data for affil- iates in the matched sample are calculated for 14 industries for inward investment, and for 3 indus- tries by 8 countries for outward investment. The use of these aggregated levels reduces the likelihood that the ratios will be unrepresentative because they are based on data for only a few affiliates. Ratios are not computed by country of the foreign direct investor, because an affiliate's industry and the eco- nomic conditions in the United States have been found to be more important factors than the country of the affiliate's foreign parent in explaining changes in income, royalties and license fees, and charges for other services. 90 The Capital Account (3) In a given industry, a separate current-period es- timate for each nonreporting affiliate is obtained by applying a ratio to the prior-period estimate for each nonreporting affiliate. The ratio is determined judgmentally, but is heavily influenced by the ra- tio of current-to-prior-period data for affiliates in the matched sample. (4) As noted earlier, data for capital gains and losses are included in the estimates of earnings and income only to the extent they are actually reported in the quarterly sample survey. (5) Separate estimates are derived for payments and receipts of interest on intercompany debt and on pay- ments and receipts for royalties, license fees, and other services. (6) To deal with cases in which the ratio of current- to-prior-period earnings of affiliates in the matched sample is derived from numbers that are of the same sign, but the ratio is to be applied to an individual affiliate's earnings that are of the opposite sign, the ratio is inverted before it is applied. The inverted ratio yields an estimate that moves in the correct direction and that usually shows an appropriate degree of change. Direct Investment Capital Flows 1 U.S. Direct Investment Abroad (line 46) Capital flows for U.S. direct investment abroad consist of equity capital flows, reinvested earnings, and inter- company debt flows of U.S. direct investors to both their incorporated and unincorporated foreign affiliates (see table III-5). The identical treatment of the two types of affiliates has been in effect since the 1982 benchmark survey, when reporting for unincorporated affiliates was changed to make it comparable with that for incorporated af- filiates. Unincorporated affiliates' payables to, and re- ceivables from, their U.S. parents are included in the affiliates' intercompany accounts; previously, the net amount of these payables and receivables, together with the U.S. parents' equity position in the affiliates, was reported as a single summary account. Also, earnings of unincorporated affiliates are disaggregated into the portion distributed to U.S. parents and the portion rein- vested in the affiliates; previously, these earnings were reported as a single item and the entire amount was treated as if it were distributed. 1.1 Equity capital U.S. parents' equity in incorporated foreign affiliates con- sists of the U.S. parents' holdings of capital stock in, and other capital contributions to, their affiliates and the U.S. parents' equity in the retained earnings of their affiliates. Capital stock consists of all stock of affili- ates, whether common or preferred, voting or nonvoting. Other capital contributions by U.S. parents, also referred to as the "U.S. parents' equity in additional paid-in cap- ital," consist of (1) capital, invested or contributed, that is not included in capital stock (such as amounts paid for stock in excess of its par or stated value), and (2) capi- talizations of intercompany accounts (conversions of debt to equity) that do not result in the issuance of capital stock. U.S. parents' equity in retained earnings is the U.S. parents' share of the undistributed earnings of their incorporated foreign affiliates. U.S. parents' equity in unincorporated affiliates con- sists of the U.S. parents' share of the affiliates' total owners' equity. No breakdown of owners' equity is available for these affiliates. Increases in U.S. parents' equity in their foreign affil- iates that give rise to equity capital outflows result from the U.S. parents' establishment of new foreign affiliates, initial acquisitions of a 10-percent-or-more ownership interest in existing foreign business enterprises, and ac- quisitions of additional ownership interests in existing foreign affiliates. Decreases in equity that give rise to equity capital inflows result from liquidations of foreign affiliates, sales of ownership interests in foreign affili- ates, and the return of capital contributions. Included are liquidating dividends, which are a return of capi- tal to U.S. parents upon the liquidation of affiliates or the sale of affiliates' assets. Decreases in equity capital are recorded as inflows to U.S. parents and are netted against increases in equity to derive net equity capital outflows for U.S. direct investment abroad. Equity capital outflows are recorded at transactions values, based on the books of U.S. parents. These out- flows may differ from those based on the books of foreign affiliates. For example, when a U.S. parent purchases or sells capital stock of an affiliate from or to an unaffili- ated third party, the transaction is recorded only on the Table 111-5.— U.S. Direct Investment Abroad, Capital, 1988 (Line 46) [Millions of dollars; credits +, debits -] Total Equity capital Increases in equity capital . Decreases in equity capital Reinvested earnings Intercompany debt U.S. parents' receivables... U.S. parents' payables By industry of affiliate: Equity capital Petroleum Manufacturing Other Reinvested earnings Petroleum Manufacturing Other Intercompany debt , Petroleum Manufacturing Other -17,533 5,469 -8,655 14,124 -15,170 -7,831 -2,357 -5,474 5,469 3,381 797 1,290 -15,170 -45 -7,266 -7,859 -7,831 -1 ,584 1,163 -7,410 Direct Investment 91 parent's books, not on the affiliate's books. Also, trans- actions values on U.S. parents' books reflect the actual cost of ownership interests in affiliates that are acquired or sold by U.S. parents, including any premium or dis- count; the values may differ from those values recorded on affiliates' books. 1.2 Reinvested earnings Reinvested earnings of foreign affiliates are total earn- ings, including capital gains and losses, less distributed earnings. 22 Earnings are U.S. parents' shares in the net income of their foreign affiliates, after provision for foreign income taxes. Net income and, therefore, earn- ings are taken from the books of the foreign affiliates. A U.S. parent's share in net income is based on its directly held equity interest in the foreign affiliate. Reinvested earnings of incorporated affiliates have been included in the U.S. balance of payments accounts since June 1978, at which time they were included retroactively to 1960 on an annual basis and to 1970 on a quarterly ba- sis. (See part II of the June 1978 issue of the Survey of Current Business (Survey).) Reinvested earnings of unincorporated affiliates have been included since 1982. Reinvested earnings are shown as a separate component of direct investment income, in recognition of the fact that the earnings of an affiliate (less withholding taxes on distributed earnings) are income to the U.S. parent, whether they are reinvested or remitted to the parent. Because reinvested earnings increase the parent's invest- ment in its affiliate, an entry of equal magnitude, but opposite sign, is made in the direct investment capital account, offsetting the entry made in direct investment income (line 12). 1.3 Intercompany debt Intercompany debt flows consist of the increase in U.S. parents' net intercompany account receivables from their foreign affiliates during the year. The annual increase can be derived by subtracting the net outstanding in- tercompany account balance at the end of the previous year from the net outstanding balance at the end of the current year. The net balance at the end of a year can be calculated as U.S. parents' receivables less U.S. par- ents' payables. For example, when a U.S. parent lends funds to its foreign affiliate, the parent's receivables (amounts due) from the affiliate increase; subsequently, when the affiliate repays the principal owed to its U.S. parent, the U.S. parent's receivables from the affiliate are reduced. When a U.S. parent borrows funds from its foreign affiliate, its payables (amounts owed) to the affiliate increase; subsequently, when the U.S. parent repays the principal owed to its affiliate, the U.S. par- ent's payables to the affiliate are reduced. Increases in U.S. parents' receivables from their affiliates or reduc- tions in U.S. parents' payables to their affiliates give rise to outflows on the intercompany account. Reductions in U.S. parents' receivables from their affiliates, or in- 22. See footnote 1 , page 5. creases in U.S. parents' payables to their affiliates, give rise to inflows. Intercompany debt consists of trade accounts and trade notes payable, other current liabilities, and long-term debt owed by the affiliates to their U.S. parents, net of similar items due to the affiliates from their U.S. parents. Intercompany debt outflows, like equity capital out- flows, are recorded at transactions values. They are based on the books of U.S. parents and may differ from values based on the books of foreign affiliates. For ex- ample, a U.S. parent's receivables from its affiliate, as recorded on the parent's books, may not necessarily be equal to the affiliate's payables to its parent, as recorded on the affiliate's books, due to differences in the time the debt transaction is recorded on each set of books or to differences in accounting or valuation. Not all intercompany account transactions reflect ac- tual flows of funds. For example, when distributed earnings, interest, royalties and license fees, or charges for other services accrue to a U.S. parent from a for- eign affiliate, the full amount (net of foreign withholding taxes) is included in the U.S. balance of payments as a re- ceipt of income, royalties and license fees, or charges for other services. If all or part of that amount is not actually transferred to the U.S. parent, the amount not trans- ferred is entered into the intercompany account as an increase in the U.S. parent's receivables from its affiliate. Financial and operational leases. — Intercompany ac- counts include the net book value of all financial (capital) leases and operational leases of more than 1 year be- tween U.S. parents and their foreign affiliates. Financial leases recognize that title to the leased property will be transferred to the lessee at the termination of the lease (similar to an installment sale on credit). Operational leases have a term that is significantly shorter than the expected useful life of the tangible property being leased, and there is usually the expectation that the leased prop- erty will be returned to the lessor at the termination of the lease. Under a financial lease, the transaction may be re- ported differently by lessees and lessors. For example, if the U.S. reporter is a lessee, it would generally report the present value of its expected future lease payments as an increase in intercompany payables at the incep- tion of the lease. Subsequent payments pursuant to the lease would consist of payments of principal and interest; the payment of principal is recorded as a reduction in intercompany payables (an intercompany debt outflow), and interest is recorded as a debit entry in direct invest- ment income (line 12). If the U.S. reporter is a lessor, the sum — not the present value — of future expected lease receipts is reported as an increase in intercompany re- ceivables at the inception of the lease. All subsequent receipts made pursuant to the lease are reported as a re- duction in that receivable. No receipts of interest income under a financial lease are reported by the lessor. For operational leases of more than 1 year, the net book value of the leased property is the original cost of the property less accumulated depreciation. The net book value of the leased property is recorded as an in- tercompany account flow. Total lease payments on these 92 The Capital Account (more than 1 year) operational leases consist of depreci- ation and net rent. Depreciation is a return of capital and is recorded as a reduction in intercompany accounts because it reduces the net book value of the leased prop- erty. Net rent is included in rental receipts for the use of tangible property, which is a part of other private serv- ices (line 9). For operational leases of 1 year or less, total lease receipts — both net rent and depreciation — are included in other private services (line 9) because de- preciation is considered part of rentals — a payment for services rendered by, rather than a return of capital to, U.S. parents. Netherlands Antilles finance affiliates. — Beginning with the 1977 benchmark survey of direct investment abroad, the direct investment intercompany accounts in- clude funds that are borrowed from unaffiliated foreign- ers and then transferred to U.S. parents by Netherlands Antilles finance affiliates. Previously, this borrowing was treated as direct borrowing abroad (mostly in the Euromarket) by the U.S. parents and recorded in the balance of payments accounts as portfolio investment in- flows from unaffiliated foreigners. Most of the Antilles affiliates were initially established by U.S. companies in response to U.S. mandatory controls on direct investment abroad, in effect from 1968 to 1974. The controls encour- aged U.S. companies to finance their direct investments with foreign, rather than U.S., source funds. Typically, Netherlands Antilles affiliates were established to pro- vide U.S. parents with a means of raising funds abroad without having the associated interest payments sub- ject to a 30-percent U.S. withholding tax. Almost all of the proceeds of the affiliates' borrowing were in fact transferred to their U.S. parents for further disposition, usually to other foreign affiliates. After the dismantling of the direct investment controls in 1974, new borrowing by Netherlands Antilles affili- ates declined and a smaller proportion of the proceeds were transferred to U.S. parents. Because of this de- velopment and BEA's ability to obtain more complete coverage of transactions through the direct investment reporting system, the treatment was changed to include such borrowing in the direct investment intercompany accounts. After a period of resurgence, borrowing by these affiliates declined again in 1984, when the 30- percent withholding tax on interest payments to foreign residents was abolished. BEA continues to publish sep- arate data on transactions with Netherlands Antilles finance affiliates to enable users to treat, for analyt- ical purposes, the transactions as portfolio flows with unaffiliated foreigners. 1.4 Reverse investment A U.S. parent may have investment in a foreign affili- ate that, in turn, has investment in the U.S. parent as a result of the affiliate's lending funds to, or acquiring vot- ing securities or other equity interest in, the U.S. parent ("reverse investment"). Before 1977, affiliates' invest- ments in their U.S. parents were netted against their parents' investments in them. Because it resulted in double-counting among some of the components of the capital account in the balance of payments, this treat- ment was changed; reverse investment is now recorded as an inflow on foreign direct investment in the United States if the equity ownership interest is 1 percent or more, or as an inflow on portfolio investment if the eq- uity ownership is less than 10 percent. Reverse debt flows from foreign affiliates to U.S. parents continue to be netted in the intercompany debt accounts, except in the rare case in which a foreign affiliate and its U.S. par- ent own 10 percent or more of each other; in that case, the debt flows are included in foreign direct investment in the United States or in U.S. direct investment abroad, as appropriate. 1.5 Classification and presentation In the geographic classification of capital outflows, the country of the foreign affiliate is used, even if the foreign affiliate is not itself a party to the transaction. For exam- ple, if a U.S. parent purchases an affiliate's capital stock from a third-country transactor, the transaction is clas- sified in the country of the affiliate because the resulting outflows change the U.S. direct investment position in that country. (However, the financial entry, which is in- cluded in the portfolio investment accounts, is likely to be classified in the country of the foreign transactor.) Capital outflows are disaggregated into several compo- nents in the quarterly presentations of U.S. international transactions. Certain transactions may affect two or more of these components simultaneously and by offset- ting amounts. These transactions are "grossed up" — that is, the outflows and the offsetting inflows resulting from the transactions are recorded separately rather than be- ing netted to zero. Because the gross flows are offsetting, they have no net effect on capital outflows as a whole. An example is the capitalization of intercompany debt (which gives rise to an inflow for intercompany debt and an outflow for (increase in) capital stock and additional paid-in capital). In general, transactions that have an effect on capital outflows and a simultaneous effect of the same amount on another account are also "grossed up." For example, if dividends are declared, but not actually remitted to U.S. parents, the amount is included both in dividends and, with opposite sign, in intercompany debt outflows (as an increase in U.S. parents' receivables from affili- ates). Exceptions to this general rule on "grossing up" are the reclassifications from portfolio to direct invest- ment and transactions associated with the distribution of stock dividends. Table III-5 shows the major components of capital out- flows for U.S. direct investment abroad in 1988; current quarterly and annual estimates are published in the Survey. Additional details, such as area-by-industry de- tail or detail by type of affiliate or account cross-classified by area and industry, are available after estimates for the fourth quarter of a given year are revised. At that time, revised estimates of capital outflows, both total and by type of affiliate and account, are made for all quarters of the year. The standard table format level consists of 13 industries by 63 countries or areas, excluding subto- Direct Investment 93 tals and addenda; these detailed estimates are published annually in the August issue of the Survey. were reported as a single item and the entire amount was treated as if it were distributed. 1.6 Estimating methods In nonbenchmark years, the estimates of equity capital and intercompany debt outflows are the sum of reported sample data. No estimates of unreported transactions are made, because the procedure (described earlier) used to expand some sample data series to universe levels does not produce reliable estimates for series where the data tend to be highly volatile and characterized by rel- atively frequent sign reversals (from outflows to inflows or vice versa). Use of the reported sample data assumes, in effect, that unreported transactions net to zero — that is, outflows to some affiliates are offset by inflows from others. Estimates of reinvested earnings are derived by subtracting universe estimates of gross distributed earn- ings (distributed earnings plus foreign withholding taxes) from universe estimates of total earnings. (The proce- dure for obtaining universe estimates of total earnings of affiliates, distributed earnings, and foreign withholding taxes on distributed earnings is described in the section on U.S. receipts of direct investment income. That sec- tion also describes the level of country-by-industry detail for which quarterly and annual estimates of reinvested earnings are available.) In benchmark years, equity capital and intercompany debt outflows include data reported in the benchmark survey only for affiliates that were also reported in the quarterly sample surveys for the year. This is done so that the data for benchmark years are consistent with the data for nonbenchmark years, which, as discussed above, are the sum of reported sample data. Universe data on equity capital and intercompany debt outflows for a benchmark year are published with other universe data from the benchmark survey in a separate publication. (For a detailed report on the 1982 benchmark year, see [47].) 2.1 Equity capital Foreign parents' equity in incorporated U.S. affiliates consists of the foreign parents' holdings of capital stock in, and other capital contributions to, their affiliates and the foreign parents' equity in the retained earnings share of the undistributed earnings of their incorporated U.S. affiliates. Foreign parents' equity in unincorporated af- filiates consists of foreign parents' shares of the affiliates' total owners' equity. No breakdown of owners' equity is available for these affiliates. Increases in foreign parents' equity in their U.S. affil- iates that give rise to equity capital inflows result from the foreign parents' establishment of new U.S. affiliates, initial acquisitions of a 10-percent-or-more ownership interest in existing U.S. business enterprises, and acqui- sitions of additional ownership interests in existing U.S. affiliates. Decreases in equity that give rise to equity capital outflows result from liquidations of U.S. affiliates, sales of ownership interests in U.S. affiliates, and the return of capital contributions. Included are liquidating dividends, which are a return of capital to foreign parents upon the liquidation of affiliates or the sale of affiliates' assets. Decreases in equity are recorded as outflows to foreign parents and are netted against increases in eq- uity to derive the net change in foreign parents' equity capital flows for foreign direct investment in the United States. Equity capital inflows are recorded at transactions val- ues, and except in the situation discussed in section 2.6 below, are based on the books of U.S. affiliates. These in- flows may differ from those based on the books of foreign parents. For example, when a foreign parent purchases or sells capital stock of an affiliate from or to an unaffili- 2 Foreign Direct Investment in the United States (line 59) Capital flows for foreign direct investment in the United States consist of equity capital flows, reinvested earn- ings, and intercompany debt flows from foreign direct investors to both their incorporated and unincorporated U.S. affiliates (see table III-6.) The identical treatment of the two types of affiliates has been in effect since the 1980 benchmark survey, when reporting for unincorporated U.S. affiliates was changed to make it comparable with that for incorporated affiliates. Unincorporated affiliates' receivables from, and payables to, their foreign parents are now included in the affiliates' intercompany accounts; previously, the net amount of these receivables and payables, together with the foreign parents' equity position in the affiliates, was reported as a single summary account. Also, earn- ings of unincorporated affiliates are disaggregated into the portion distributed to foreign parents and the portion reinvested in the affiliates; previously, these earnings Table 111-6.— Foreign Direct Investment In the United States, Capital, 1988 (Line 59) [Millions of dollars; credits +. debits -] Total Equity capital Increases in equity capital . Decreases in equity capital Reinvested earnings Intercompany debt U.S. affiliates' payables U.S. affiliates' receivables.. By industry of affiliate: Equity capital Petroleum , Manufacturing Other Reinvested earnings Petroleum Manufacturing Other Intercompany debt Petroleum Manufacturing Other 58,435 40,362 43.644 -3.282 6,560 11,513 17,747 -6,234 40,362 866 17.573 21,923 6.560 696 4,030 1,834 11.513 -2,426 6,629 7,310 94 The Capital Account ated third party, the transaction is recorded only on the parent's books, not on the affiliate's books. 2.2 Reinvested earnings Reinvested earnings of U.S. affiliates are total earn- ings, including capital gains and losses, less distributed earnings. 23 Earnings are foreign parents' shares in the net income of their U.S. affiliates, after provision for U.S. income taxes. Net income and, therefore, earnings are taken from the books of the U.S. affiliate. A foreign par- ent's share in net income is based on its directly held equity interest in the U.S. affiliate. Reinvested earnings of incorporated affiliates have been included in the U.S. balance of payments accounts since June 1978, at which time they were included retroactively to 1960 on an annual basis and to 1970 on a quarterly basis. (See part II of the June 1978 issue of the Survey.) Reinvested earnings of unincorporated affiliates have been included since 1980. Reinvested earnings are shown as a separate component of direct investment in- come, in recognition of the fact that the earnings of an affiliate (less withholding taxes on dividends) are income to the foreign parent, whether they are reinvested or remitted to the parent. Because reinvested earnings in- crease the parent's investment in its affiliate, an entry of equal magnitude, but opposite sign, is made in the direct investment capital account, offsetting the entry made in direct investment income (line 27). 2.3 Intercompany debt Intercompany debt flows consist of the increase in U.S. affiliates' net intercompany account payables to their for- eign parents during the year. The annual increase can be derived by subtracting the net outstanding intercompany account balance at the end of the previous year from the net outstanding balance at the end of the current year. The net balance at the end of a year can be calculated as U.S. affiliate payables less U.S. affiliate receivables. For example, when a member of a foreign parent group lends funds to a U.S. affiliate, the affiliate's payables to the foreign parent group increase; subsequently, when the affiliate repays the principal owed to a member of the foreign parent group, the affiliate's payables to the group are reduced. When a member of the foreign parent group borrows funds from a U.S. affiliate, the affiliate's receiv- ables from the group increase; subsequently, when the member of the foreign parent group repays the principal owed to the affiliate, the affiliate's receivables from the group are reduced. Increases in affiliates' payables to, or reductions in affiliates' receivables from, their foreign parent groups give rise to inflows on the intercompany account. Increases in affiliates' receivables from, or re- ductions in affiliates' payables to, their foreign parent groups give rise to outflows. Intercompany debt consists of trade accounts and trade notes payable, other current liabilities, and long-term debt owed by the affiliates to their foreign parents, net 23. See footnote 1 , page 5. of similar items due to the affiliates from their foreign parents. Not all intercompany account transactions reflect ac- tual flows of funds. For example, when distributed earnings, interest, royalties and license fees, or charges for other services accrue to a foreign parent group from a U.S. affiliate, the full amount (net of U.S. withhold- ing taxes) is included in the U.S. balance of payments as a payment of income, royalties and license fees, or charges for other services. If all or part of that amount is not actually transferred to the foreign parent group, the amount not transferred is entered into the intercompany account as an increase in the U.S. affiliate's payables to its foreign parent group. Financial and operational leases. — Intercompany ac- counts include the net book value of all financial (capital) leases and of operational leases of more than 1 year be- tween U.S. affiliates and their foreign parents. Financial leases recognize that title to the leased property will be transferred to the lessee at the termination of the lease (similar to an installment sale on credit). Operational leases have a term that is significantly shorter than the expected useful life of the tangible property being leased, and there is usually the expectation that the leased prop- erty will be returned to the lessor at the termination of the lease. Under a financial lease, when property is leased by a U.S. affiliate from its foreign parent, the present value of the future lease payments, but not more than the net book value of the leased property, is recorded as an intercompany account inflow. For lessees, total lease payments on financial leases consist of payments of prin- cipal and interest. The payment of principal is a return of capital and is recorded as an intercompany account outflow because it reduces the net book value of the cap- ital lease. Interest is included in payments of direct investment income (line 27). For operational leases of more than 1 year, the net book value of the leased property is the original cost of the property less accumulated depreciation. The net book value of the leased property is recorded as an intercom- pany account flow. Total lease payments on these (more than 1 year) operational leases consist of depreciation and net rent. Depreciation is a return of capital and is recorded as a reduction in intercompany accounts be- cause it reduces the net book value of the leased property. Net rent is included in rental payments for the use of tangible property, which is a part of other private serv- ices (line 24). For operational leases of 1 year or less, total lease payments — both net rent and depreciation — are included in other private services (line 24) because depreciation is considered part of rentals — a payment for services rendered by, rather than a return of capital to, the foreign parent group. 2.4 Reverse investment A foreign parent may have investment in a U.S. affiliate that, in turn, has investment in the foreign parent as a result of the affiliate's lending funds to, or acquiring voting securities or other equity interest in, the foreign Direct Investment 95 parent ("reverse investment"). Before 1974, affiliates' in- vestments in their foreign parents were netted against their parents' investments in them. Because it resulted in double-counting among some of the components of the capital account in the balance of payments, this treat- ment was changed; reverse investment is recorded as an outflow on U.S. direct investment abroad if the equity ownership interest is 10 percent or more, or as an out- flow on portfolio investment if equity ownership is less than 10 percent. Reverse debt flows from U.S. affiliates to foreign parents and other members of the foreign par- ent group continue to be netted in the intercompany debt account, except in the rare case in which a U.S. affiliate and its foreign parent own 10 percent or more of each other; in that case, the debt flows are included in U.S. direct investment abroad or in foreign direct investment in the United States, as appropriate. 2.5 Transactions with foreign parent groups All intercompany debt outflows result from transactions between foreign parent groups and U.S. affiliates. Eq- uity capital flows, however, may result from transactions between foreign parents and either the U.S. affiliate or unaffiliated U.S. persons. An example of the latter is a foreign parent's purchase of an affiliate's capital stock from an unaffiliated U.S. person, rather than from the affiliate itself. Equity capital and intercompany debt flows exclude transactions among members of a foreign parent group or between the members of the group and other foreigners because foreign-to-foreign transactions are not reflected in U.S. international transactions. Thus, if a foreign par- ent purchases additional capital stock in a U.S. affiliate from another foreign person, the foreign parent's own- ership interest in the U.S. affiliate will increase, but no equity capital inflow is recorded. This transaction occurs entirely outside the United States. In addition, there is no net increase in foreign claims on the United States; rather, the foreign parent's claims have merely been substituted for the claims of the other foreign person. Equity capital and intercompany debt inflows also ex- clude transactions between a U.S. affiliate and foreign persons other than the members of its own foreign par- ent group. Excluded, for example, are loans by a foreign bank to a U.S. affiliate in which the bank does not have a direct investment ownership interest, and loans by one foreign parent to another foreign parent's U.S. affiliate in which the first-mentioned foreign parent does not have a direct investment ownership interest. 2.6 Basis of recording Generally, equity capital and intercompany debt flows are based on the books of U.S. affiliates. An exception is for changes in equity that do not involve transactions with the U.S. affiliate. For example, if the foreign parent purchases or sells a U.S. affiliate's capital stock from or to an unaffiliated U.S. person, rather than from or to the U.S. affiliate itself, the transaction would not be recorded on the U.S. affiliate's books at all. For these transactions to be reported to BEA and included in equity capital in- flows, data on the market value of the transaction from the parent's books must be used. 2.7 Classification and presentation Capital inflows are disaggregated into several compo- nents in the quarterly presentations of U.S. international transactions. Certain transactions may affect two or more of these components simultaneously and by offset- ting amounts. The transactions are "grossed-up" — that is, the inflows and the offsetting outflows resulting from the transactions are recorded separately rather than being netted to zero. Because these gross flows are offset- ting, they have no net effect on capital inflows as a whole. An example is the capitalization of intercompany debt (which gives rise to an outflow on intercompany debt and an inflow for (increase in) capital stock and additional paid-in capital). In general, transactions that have an effect on capital inflows and a simultaneous effect of the same amount on another balance of payments account are also "grossed up." For example, if dividends are declared, but not actu- ally remitted to foreign parents, the amount is included both in dividends and, with opposite sign, in inter- company debt inflows (as an increase in U.S. affiliates' payables to foreign parents). Exceptions to this general rule on "grossing up" are the reclassifications from portfo- lio to direct investment and transactions associated with the distribution of stock dividends. Table III-6 shows the major components of capital in- flows for foreign direct investment in the United States in 1988; current quarterly and annual estimates are published in the Survey. Additional details, such as area- by-industry detail, or detail by type of affiliate or account cross-classified by area and industry, are available after estimates for the fourth quarter of a given year are re- vised. At that time, revised estimates of capital inflows, both total and by type of affiliate and account, are made for all quarters of the year. The calculations are made for 14 industries; these estimates are published annually in the August issue of the Survey. 2.8 Estimating methods In nonbenchmark years, the estimates of equity capital and intercompany debt inflows are the sum of reported sample data. No estimates of unreported transactions are made because the procedure (described earlier) used to expand some sample data series to universe levels does not produce reliable estimates for series where the data tend to be highly volatile and characterized by rel- atively frequent sign reversals (from outflows to inflows and or vice versa). Use of the reported sample data assumes, in effect, that unreported transactions net to zero — that is, outflows to some affiliates are offset by in- flows from others. Estimates of reinvested earnings are derived by subtracting universe estimates of distributed earnings from universe estimates of total earnings. (The procedure for obtaining universe estimates of 96 The Capital Account earnings of affiliates, distributed earnings, and U.S. quarterly sample surveys for the year. This is done so withholding taxes on distributed earnings is described that the data for benchmark years are consistent with in the section on U.S. payments of direct investment in- the data for nonbenchmark years, which, as discussed come. That section also describes the level of country-by- above, are the sum of reported sample data. Universe industry detail at which quarterly and annual estimates data on equity capital and intercompany debt inflows for of reinvested earnings are available.) a benchmark year are published with other universe data In benchmark years, equity capital and intercompany from the benchmark survey in a separate publication, debt inflows include data reported in the benchmark sur- (For a detailed report on the 1980 benchmark year, see vey only for affiliates that were also reported in the [48].) Transactions in Securities Other Than U.S. Treasury Securities Securities transactions between U.S. and unaffiliated foreign residents other than foreign official agencies are measured in the following accounts: (1) Foreign securities — net U.S. purchases (line 47); and (2) U.S. se- curities other than U.S. Treasury securities — net foreign purchases (line 61). Securities covered are long-term securities of foreign governments and their political sub- divisions, of U.S. and foreign private corporations, and of international and regional financial institutions. Long- term securities are those with no contractual maturity (for example, stocks) and those with an original maturity of more than 1 year. The term "securities" is inter- preted broadly to include marketable issues of rights, warrants, options, and script, as well as stocks (both com- mon and preferred), straight bonds, notes, floating-rate notes, continually offered medium-term notes, deben- tures, collateralized mortgage obligations, zero coupon bonds, equipment trust certificates, and similar debt obligations — both publicly offered and privately placed. The securities may be denominated in U.S. dollars, foreign currencies, or other units of account. The accounts cover securities newly issued in the United States and abroad and trading in, and re- demptions of, outstanding U.S. and foreign securities; they exclude transactions under repurchase agreements and transactions in participations in loans of U.S. Government-sponsored agencies and international lend- ing institutions, and trading in U.S. securities by foreign official agencies. However, transactions undertaken by private entities for foreign official accounts may be included here if the transactions are not specifically iden- tified as official in the reported data. Interest rate and foreign currency swaps are also excluded from these accounts. The accounts also exclude transactions be- tween U.S. and foreign residents that establish a direct investment relationship through the acquisition of a 10-percent-or-more ownership equity in a business en- terprise in the United States or abroad; however, the accounts include purchases and sales by an affiliate of its parent company's securities if the affiliate itself is not a direct investor in its parent. If the affiliate's ownership interest in its parent is 10 percent or more, a "reverse" di- rect investment relationship exists, with the result that transactions in the parent company's securities would be included in the direct investment accounts. Net U.S. purchases of foreign securities and net foreign purchases of U.S. securities are estimated by BE A on the basis of data from the U.S. Department of the Treas- ury International Capital reporting system, specifically the monthly S form, "Purchases and Sales of Long-term Securities by Foreigners." Filing of S forms is required for all banks, banking in- stitutions (including bank holding companies), brokers, dealers, and other persons in the United States, who on their own behalf, or on the behalf of their customers, engage in transactions in long-term securities with for- eigners. Reports are required if the total of purchases or sales amounts to $500,000 or more during a given month. A report from a large institution generally contains a con- solidation of many transactions and transactors that deal through the reporting institution. Because of this consol- idation and the concentration of activity in the securities industry, a small number of reporters account for a large share of the reported total. In 1988, approximately 275 reporters filed regular monthly reports. Data are reported on a transactions basis, that is, the total amount of money debited or credited as of the payment or settlement date. The reported amounts rep- resent the cost of purchases plus commissions and other charges or the proceeds of sales less commissions, taxes, and other charges incurred in the transactions. Transactions in foreign currencies are reported in terms of their dollar equivalents; foreign currencies are converted at the rate of exchange prevailing either at the time the transactions were executed or at the close of the last business day of the reporting month. In general, data are classified by the foreign country or geographical area in which the foreign transactor or in- termediary is domiciled, as shown on the records of the U.S. reporting institutions. The geographic distribution of the reported data may not necessarily reflect the na- tionality of the ultimate foreign owner or the country of issue of foreign securities traded. Thus, securities trans- actions between U.S. and foreign residents effected in countries with well-developed financial markets — such as the United Kingdom, Switzerland, the Netherlands, and Hong Kong — are recorded for those countries, irrespec- tive of the country of issue of the foreign security or of the ultimate foreign owners' locations. Moreover, esti- mates of net transactions between the United States and individual countries or areas may, in certain instances, represent transactions between residents of different countries. For instance, such transactions can arise in the United States if both parties are foreign residents, but are domiciled in different countries; a gross sale would be recorded for one country and a gross purchase for the other. Thus, data on the geographic pattern of 97 98 The Capital Account U.S. securities transactions with foreign residents must be interpreted with caution. Data reported on the S form are adjusted by BEA to bring them into conformity with balance of payments concepts. Estimates of commissions, taxes, and other charges are deducted from reported purchases, and es- timates of commissions and other charges are added to reported sales in order to derive the actual value of transactions. These charges are included as receipts or payments for other private services (lines 9 and 24). Other adjustments are estimated by BEA on the basis of information provided by U.S. Government agencies and the Federal Reserve Bank of New York to BEA, direct investment reports submitted to BEA, and information from financial journals, other business periodicals, and newspapers. For balance of payments estimation pur- poses, the total of reported foreign purchases corresponds to U.S. sales and the total of reported foreign sales corresponds to U.S. purchases. However, for reasons stated earlier, gross foreign purchases (sales) of securi- ties recorded for a country may not correspond to gross U.S. sales to (purchases from) residents of that country. 1 Foreign Securities — Net U.S. Purchases (line 47) This account measures net U.S. purchases of foreign se- curities classified as foreign stocks and bonds (see table III-7). Foreign securities consist of securities of for- eign central governments and their political subdivisions, of corporations and similar organizations chartered in foreign countries, and of international and regional organizations — whether located in the United States or abroad. The securities may be payable in U.S. dollars, foreign currencies, or other units of account. Included are purchases of foreign securities newly issued in the United States and trading in, and redemptions of, outstanding securities. The procedure for estimating net U.S. purchases of foreign stocks is as follows: (1 ) Data on gross sales and gross purchases of foreign stocks in the United States by foreigners are based on the monthly S reports. BEA adjusts the data to exclude estimates of commissions, taxes, and other charges from reported gross foreign purchases and to include estimates of charges in reported gross for- eign sales. The net adjusted figure on foreign sales or purchases is used as the equivalent of net U.S. purchases or sales, respectively. (2) The value of stocks representing U.S. direct in- vestment abroad, recorded in line 46, is deducted from the net figure. This adjustment is made if transactions reported on the S form include direct investment, as in the case of takeovers conducted in the open market through securities dealers. (In most cases, direct investment transactions bypass the open market, and are effected through private dealings between participants.) BEA estimates the adjustment on the basis of information on publicly known takeover bids reported in financial journals, Table 111-7. — Foreign Securities, Net U.S. Purchases, 1988 (Line 47) [Millions of dollars; credits +, net U.S. sales; debits -, net U.S. purchases.] Total Stocks New issues in the United States Transactions in outstanding stocks, net Bonds New issues in the United States By issuer: Central governments and their agencies and corporations Other governments and their agencies and corporations .. Private corporations International financial institutions Redemptions of U.S.-held foreign bonds Other transactions in outstanding bonds, net -7,846 -909 -1 ,079 170 -6,937 -6,855 -2,295 -1 ,496 -2,573 -491 5,261 -5,343 market reports, and other sources, supplemented by a program of monitoring large month-to-month changes in reported securities and direct investment transactions. (3) The value of stocks exchanged as part of a foreign di- rect investment in the United States is added. This adjustment represents U.S. residents' acquisition of stocks in a foreign company in exchange for the debt and equity securities that the U.S. residents hold in that foreign company's U.S. affiliate. The U.S. resi- dents' acquisition of stocks is portfolio investment if U.S. residents' holdings account for less than 10 per- cent of ownership equity; if U.S. residents' holdings account for 1 percent or more of ownership equity, the transaction is recorded as U.S. direct investment abroad (line 46). Estimates are based on financial market information and direct investment reporting. (4) Other adjustments include additions or subtractions for transactions that have not yet been incorporated in the Treasury data, and additions for transactions that have been omitted from the S forms, but that have been verified from other sources. These adjustments to the data reported to the Treasury Department result in estimates of net U.S. purchases (or net U.S. sales) of foreign stocks on a balance of payments basis. BEA estimates the amount of new issues in- cluded in the net figures on the basis of financial market information. The procedure for estimating net U.S. purchases of foreign corporate bonds is as follows: (1) Data on gross sales and gross purchases in the United States by foreigners of foreign corporate bonds are based on the monthly S reports. BEA adjusts the data to exclude estimates of commis- sions, taxes, and other charges from reported gross foreign purchases and to include estimates of under- writing fees on new issues, other fees, taxes, and other charges in reported gross foreign sales. The net adjusted figure on foreign sales or purchases is used as the equivalent of net U.S. purchases or sales, respectively. (2) Adjustments are made to the data covering U.S. pur- chases of Canadian bonds to account for additional redemptions of Canadian-issued bonds that are held by U.S. residents. This adjustment is based on a Transactions in Securities Other Than U.S. Treasury Securities 99 Table 111-8. — U.S. Securities, Other Than U.S. Treasury Securities, Net Foreign Purchases, 1988 (Line 61) [Millions of dollars; credits +, net foreign purchases; debits -, net foreign sales.] Total Stocks Corporate and other bonds New issues sold abroad by U.S. corporations U.S. federally sponsored agency bonds, net.. Other outstanding bonds, net 26,448 -476 26,924 18,788 5,410 2,726 comparison of data on gross purchases reported for Canada on the S form with data on redemptions re- ported to Statistics Canada by Canadian issuers of securities. Canadian data cover issues handled both by fiscal agents in the United States who may not file the S form and by fiscal agents in Canada, who are not subject to U.S. reporting requirements. The U.S. data are adjusted to match the Canadian series for redemptions. (3) Other adjustments include additions or subtractions for transactions that have not been incorporated into the Treasury data; additions for transactions that have been omitted from the S form, but that have been verified from other sources; and additions for acquisitions of foreign debt securities by U.S. resi- dents through the exchange of securities with foreign residents, including those resulting in foreign direct investment in the United States. These adjustments to the data reported to the Treasury Department result in estimates of net U.S. purchases (or net U.S. sales) of foreign bonds on a balance of payments basis. BEA estimates the amount of new foreign issues on the basis of financial market information, with sepa- rate estimates for type of issuer and type of issue. Most of the new issues are denominated in U.S. dollars and are designed specifically for U.S. placement; that is, they are registered with the Securities and Exchange Com- mission and placed with U.S. underwriters. The U.S. agent reports the issue as a foreign sale on the S form, whether it is publicly offered or privately placed. If a new foreign issue in the United States is purchased by a foreigner, the foreign sale is offset by a reported foreign purchase on the S form. Redemptions of securities are not reported separately on the S form. Redemptions of foreign issues held by U.S. residents are reported by U.S. fiscal agents as purchases by foreigners when the secu- rity is called or matures. Redemptions handled abroad for the U.S. reporter's own account or the account of its domestic customers are also reported as purchases by foreigners. If foreign securities are presented for redemp- tion to U.S. fiscal agents for the account of foreigners, both purchases by foreigners and sales to foreigners are reported. BEA estimates the total amount of bond re- demptions on the basis of information obtained through a program of monitoring public notices of redemptions. Other transactions represent net trading in outstanding bonds, either net purchases or net sales of U.S. dollar- and foreign-currency-denominated foreign bonds. 2 U.S. Securities Other Than U.S. Treasury Securities — Net Foreign Purchases (line 61) This account measures net foreign purchases of U.S. se- curities classified as U.S. stocks and U.S. corporate and other bonds (see table III-8). Included are U.S. corpo- rate new issues of securities in foreign markets; trading in, and redemptions of, outstanding stocks and bonds issued by U.S. corporations and State and local govern- ments; and trading in securities of U.S. Government corporations and federally sponsored agencies. The procedure for estimating net foreign purchases of U.S. stocks is as follows: (1) Data on gross purchases and sales of U.S. stocks by foreign residents are based on the monthly S form. BEA adjusts the data to exclude commissions and other charges from reported gross foreign purchases and to include estimates of commissions, taxes, and other charges in reported gross foreign sales. (2) The value of stocks exchanged as part of U.S. direct investment abroad (line 46) is added. (Exchanges of these securities are not generally included on the S form.) This adjustment represents the acquisition of stocks by foreign residents in a U.S. company in exchange for the debt and equity securities that the foreign residents hold in that U.S. company's foreign affiliate. The foreign residents' acquisition of stocks is portfolio investment if it accounts for less than 1 percent of ownership equity; if it accounts for 1 per- cent or more of ownership equity, the transaction is recorded as direct investment in the United States (line 59). The U.S. acquisition of additional securi- ties of an affiliate abroad is recorded in U.S. direct investment abroad (line 46). Estimates are based on financial market information and direct investment reporting. (3) If transactions reported on the S form involve direct investment in the United States, as in the case of takeovers conducted in the open market through se- curities dealers, the value of stocks is deducted from the net figure. (In most cases, however, direct in- vestment transactions bypass the open market and are effected through private dealings between par- ticipants.) BEA estimates the adjustment on the basis of information on publicly known takeover bids reported in financial journals, market reports, and other sources, supplemented by a program of mon- itoring large month-to-month changes in reported securities and direct investment transactions. (4) Other adjustments include subtractions for pur- chases of U.S. corporate stocks by foreign official agencies from the total reported on the S form (recorded in other foreign official assets (line 57)); additions or subtractions for transactions that have not yet been incorporated into the Treasury data; and additions for transactions that have been omit- ted from the S form, but that have been verified from other sources. 100 The Capital Account These adjustments to the data reported to the Treasury Department result in estimates of net foreign purchases (or net foreign sales) of U.S. corporate stocks on a balance of payments basis. The procedure for estimating net foreign purchases of U.S. bonds is as follows: (1) Data on gross purchases and sales by foreign res- idents of U.S. bonds are based on the monthly S reports. BEA adjusts the data to exclude underwrit- ing costs on U.S. corporations' overseas issues and other charges from reported gross foreign purchases and to include the cost of commissions and other charges in reported gross foreign sales. (2) Other adjustments include subtractions for pur- chases by foreign official agencies of debt securities of U.S. Government corporations and agencies, private corporations, and State and local governments; addi- tions or subtractions for transactions that have not been incorporated into the Treasury data; and addi- tions for transactions that have been omitted from the S form, but that have been verified from other sources. These adjustments to the data reported to the Treasury Department result in estimates of net foreign purchases (or net foreign sales) of U.S. bonds on a balance of pay- ments basis. BEA estimates the amount of new U.S. issues purchased by foreign residents on the basis of financial market information, including debt securities denominated in both U.S. dollars and foreign currencies placed directly in the Eurobond and other foreign mar- kets by U.S. companies. Separate estimates are devel- oped for the types of issuers, issues, and currencies. An estimate is also made for net foreign purchases of bonds of U.S. Government corporations and of nonguaranteed bonds of U.S. federally sponsored agencies. Redemptions of securities are not reported separately on the S form and no estimate is made by BEA; redemp- tions are included in other outstanding bonds, net, in table III-8. U.S. securities presented for redemption di- rectly by foreigners to fiscal agents or trustees, or sinking fund purchases abroad of these securities, are reported as sales by foreigners. Called or matured securities presen- ted for redemption abroad for the reporter's own account or for the account of its domestic customers are reported as purchases by foreigners. Transactions in U.S. Treasury Securities — Net Foreign Purchases (Line 60) This account measures net purchases by private foreign residents and international financial institutions of U.S. Treasury bills, notes, bonds, certificates of indebtedness, and special nonmarketable U.S. Treasury issues (see ta- ble III-9). U.S. Treasury securities of all maturities are included. Excluded from this account are net purchases by foreign official agencies. Quarterly estimates are made by BEA on the basis of data reported to the U.S. Treasury Department under its International Capital reporting system, supplemented by Treasury Department data on its special note issues sold to foreign residents. Estimates of net foreign purchases of U.S. Treasury bills and certificates of indebtedness are based on the monthly BL-2 report, "Custody Liabilities of Reporting Banks, Brokers, and Dealers, to Foreigners — Payable in Dollars," that U.S. banks, banking institutions, brokers, and dealers file with district Federal Reserve banks. The data are reported at face value for outstanding amounts at the end of each month. Net transactions for the quarter represent the difference between outstanding amounts for the closing month of each quarter. Infor- mation is not available to BEA to adjust the data for discounts or premiums reflecting fluctuations in the mar- ket price of these obligations. Furthermore, because reporting is at face value, any initial discount reflecting prepaid interest is not taken into account. Bonds and notes are marketable long-term securities issued by the Treasury Department and one of its agen- cies, the Federal Financing Bank. Estimates of net foreign purchases are based on the monthly S reports that U.S. banks, banking institutions, brokers, dealers, Table 111-9.— U.S. Treasury Securities, Net Foreign Purchases, 1988 (Line 60) [Millions of dollars; credits +, net foreign purchases; debits -, net foreign sales.] Total Bills and certificates Marketable bonds and notes . Nonmarketable notes 20,144 -1.651 21,795 and other persons file with the district Federal Reserve banks. Data are reported on a transactions basis, that is, the total amount of money debited or credited as of the pay- ment or settlement date. For foreign purchases in the United States, the amount represents money received for or owed by the foreign buyer, excluding commissions and other charges; for foreign sales in the United States, the amount represents money paid or due to the foreign seller, net of discounts, commissions, taxes, and other charges incurred in the United States. Special nonmarketable notes denominated in foreign currencies, issued by the Treasury Department, were sold through foreign central banks to residents in the countries in which the notes were issued. Several issues were sold to residents of Germany and Switzerland be- tween December 1978 and January 1980; however, none of these notes were outstanding after July 1983. The primary purpose was to obtain foreign currencies for ex- change market operations in support of the U.S. dollar; the securities were subject to restricted transferability among foreign residents. 101 Transactions Reported by U.S. Banks Banking transactions between U.S. and foreign resi- dents, other than those with foreign official agencies, are measured in the following accounts: (1) U.S. claims re- ported by U.S. banks (line 49); and (2) U.S. liabilities reported by U.S. banks (line 63). Although U.S. banks and their international banking facilities (IBF's) account for most of the transactions, reporters include other depository institutions (for example, savings and loan associations), Edge Act Corporations, bank holding com- panies, brokers, and dealers in the United States. The branches, agencies, subsidiaries, and other affiliates of foreign banking institutions in the United States are also included. Transactions represent changes in claims on and liabilities to foreigners and include both those under- taken for the banks' own account and those undertaken for the account of their domestic and foreign customers. For foreign residents, data are reported separately for foreign banks, other private foreigners, international fi- nancial institutions, and foreign government agencies other than official agencies. Liabilities to foreign offi- cial agencies — that is, foreign monetary and exchange rate authorities — reported by U. S. banks are included in "Transactions With Foreign Official Agencies." Banking transactions, payable in dollars or in foreign currencies, cover loans, advances, and overdrafts; place- ments of funds; acceptance financing and depositing; and borrowing through repurchase and resale agreements, that is, temporary exchanges of securities as collateral on short-term lendings or borrowings. Also included are operating transactions between related institutions, such as those between U.S. banks and their foreign branches and majority-owned subsidiaries, and transactions be- tween the U.S. branches, agencies, and majority-owned subsidiaries of foreign banks and their head offices, parents, and other branches of the same banking organ- izations located abroad. (Equity and permanent debt transactions between these institutions are included in direct investment (lines 46 and 59).) Quarterly estimates of transactions are made by BEA on the basis of data on outstanding claims and liabilities at the end of a period, reported on the U.S. Treasury In- ternational Capital (TIC) BC, BQ, and BL forms. Data are reported separately for each country or group of coun- tries in certain geographic areas and for international and regional institutions. The reporting system consists principally of the following forms: BQ-1: Part 1. — Reporting Bank's Own Claims, and Selected Claims of Broker or Dealer, on Foreigners. (Quarterly.) Part 2. — Domestic Customers' Claims on For- eigners Held by Reporting Bank, Broker, or Dealer, Payable in Dollars. (Quarterly.) BQ-2: Part 1. — Liabilities to, and Claims on, For- eigners, of Reporting Bank, Broker, or Dealer. (Quarterly.) Part 2. — Domestic Customers' Claims on For- eigners Held by Reporting Bank, Broker, or Dealer, Payable in Foreign Currencies. (Quarterly.) BL-1: Reporting Bank's Own Liabilities, and Selected Liabilities of Broker or Dealer, to Foreigners, Payable in Dollars. (Monthly.) BL-2: Custody Liabilities of Reporting Banks, Bro- kers, and Dealers, to Foreigners, Payable in Dollars. (Monthly.) Reporting is mandatory, and the reports are filed with district Federal Reserve banks by banks and banking in- stitutions and with the Federal Reserve Bank of New York by all brokers and dealers. Reports are required if total claims on, or liabilities to, foreigners are $15 million or more for any monthend closing balance. Reporting must continue for 5 succeeding months, after which it may be discontinued if the outstanding balance falls be- low $15 million, computed on a 6-month moving average basis. Banks or banking institutions with branches in the United States may apply the $15 million exemption limit separately to each branch. In 1988, approximately 975 reporters, mainly banks and banking institutions, filed regular monthly and quarterly reports. Amounts on outstanding claims and liabilities are reported on a gross basis, without deduction of any offsets against them. Excluded from both claims and liabilities are: Long- term securities of foreign or U.S. issuers (reportable on the S form); permanent capital invested in affiliated agencies, branches, subsidiaries abroad or in the United States by U.S. or foreign banks (reportable on BEA's di- rect investment reporting forms); contingent claims and liabilities, unutilized credits, and credit commitments; gold, silver, or currency in transit to and from the United States or held abroad or in the United States; interest rate and foreign currency swaps associated with bank indebtedness; and forward exchange contracts. BC: Reporting Bank's Own Claims, and Selected Claims of Broker or Dealer, on Foreigners, Payable in Dollars. (Monthly.) 1 Claims on Foreigners (line 49) This account measures claims on foreign residents, ac- quired or held in the United States or abroad, reported 102 Transactions Reported by U.S. Banks 103 by U.S. banks; reporters also include other depository institutions, bank holding companies, and brokers and dealers (see table 111-10). Two categories of claims are distinguished: (1) Banks' own claims, which refer to assets owned by the reporting institutions, and (2) claims of domestic customers held by the reporting in- stitutions. Claims payable in both dollars and foreign currencies — which are converted into dollars at exchange rates prevailing on the reporting date — are included. Transactions for a given quarter represent changes be- tween outstanding amounts at the end of the current quarter and end of the preceding quarter, reported on the BC, BQ-1 (part 2), and BQ-2. International banking facilities (IBF's) are U.S. banking offices set up solely to conduct banks' international lending and borrowing op- erations; their transactions are separately identified in table 111-10. No deduction is made for any reserves or allowances that may have been established against possible future losses. For example, provisions by banks for possible future loan losses against heavily indebted developing countries do not alter the amount of the reported claims. However, when an asset is partially or entirely written off, or required by regulatory agencies to be so treated, Table 111-10.— U.S. Claims on Foreigners Reported by U.S. Banks, 1988 (Line 49) [Millions of dollars; credits +, decrease in U.S. assets; debits -. increase in U.S. assets.] Total 3anks' own claims Payable in dollars By borrower: Claims on: Own foreign offices Unaffiliated foreign banks Foreign public borrowers Other private foreigners By bank ownership: U.S.-owned banks' claims on: Own foreign offices Unaffiliated foreign banks Other foreigners Foreign-owned banks' claims on: Own foreign offices Unaffiliated foreign banks Other foreigners Payable in foreign currencies 3anks' domestic customers' claims Payable in dollars Deposits Negotiable and readily transferable instruments Outstanding collections and other Payable in foreign currencies Memoranda: IBF's own claims, payable in dollars By borrower: Claims on: Own foreign offices Unaffiliated foreign banks Foreign public borrowers All other foreigners By bank ownership: U.S.-owned IBF's Foreign-owned IBF's Banks' dollar acceptances payable by foreigners.. IBF's International banking facilities. -54,481 -45,231 -30,414 -31 ,788 -1 ,934 2,730 577 -22,670 -982 -1 ,296 -9,118 -951 4,603 -14,816 -9,250 -9,437 -4,597 1,324 -6,165 188 -17,881 -21 ,679 490 63 3.245 -8,051 -9,830 3,622 the amount of the writeoff is deducted from outstand- ing claims and from changes in claims in the accounts. These writeoffs are considered valuation changes and are included in the U.S. international investment position. Banks' own claims payable in dollars are reported separately for banks' own foreign offices, unaffiliated foreign banks, foreign public borrowers, and all other foreigners. These claims cover loans, advances, and over- drafts granted to foreigners; participations purchased in loans of the Export-Import Bank and international and regional lending institutions; acceptances payable by foreigners; items in process of collection; demand and time deposits with unaffiliated foreign banks; certifi- cates of deposit purchased; and amounts due from foreign branches and majority-owned foreign subsidiaries or from head offices, parents, and other directly related for- eign institutions. Data are derived from the monthly and the semiannual BC forms; the semiannual BC is identical to the monthly BC except that it is filed semiannually for countries not reported separately in the monthly report. Claims on foreigners held for the account of the report- ing banks' domestic customers cover demand and time deposits; marketable instruments, such as negotiable certificates of deposit, bankers acceptances, commercial paper issued by foreign financial and nonfinancial busi- ness concerns, and obligations of foreign governments; outstanding items held for collection; and other dollar assets held here or abroad for the account of domestic customers, which represent claims on foreigners. These data are not classified by type of foreign resident. Data on customers' claims are derived from the BQ-1, which also provides data on the maturity breakdown of banks' own claims on unaffiliated foreigners — 1 year or less, or over 1 year, according to time remaining to maturity. Be- cause foreign currency positions are reported at dollar equivalents, changes derived from outstanding amounts include some changes due to exchange rate fluctuations that do not result from transactions. These cannot be removed because the data are not available by currency. Foreign-currency-denominated claims on foreigners re- ported by banks — both the banks' own claims and claims held for the account of domestic customers — include demand and time deposits, certificates of deposit, obliga- tions of foreign governments, commercial paper, finance paper, loans, and collection items outstanding. Data are derived from the BQ-2; the maturity composition of cer- tain types of claims is on the basis of time remaining to maturity. 2 Liabilities to Foreigners (line 63) This account measures liabilities, acquired or held in the United States or abroad, to private foreign resi- dents and international financial institutions reported by U.S. banks; reporters also include other depository institutions, bank holding companies, and brokers and dealers (see table III-ll). Two categories of liabilities are distinguished: (1) Reporting banks' own liabilities to foreigners, and (2) custody liabilities, which are fi- nancial claims on persons in the United States held by or through the reporting institutions for the account 104 The Capital Account of foreigners. Liabilities payable in both dollars and foreign currencies — which are converted into dollars at exchange rates prevailing on the reporting date — are in- cluded. Transactions of IBF's are separately identified in the table. Transactions for a given quarter represent the difference between amounts outstanding at the end of the current quarter and end of the preceding quarter, reported on the BL-1, BL-2, and BQ-2 (part 1). Banks' own liabilities payable in dollars are reported separately for banks' own foreign offices, unaffiliated for- eign banks, other private foreigners, and international financial institutions. These liabilities represent de- mand, time, and savings deposits; nonnegotiable time certificates of deposit; federal funds borrowings; bor- rowings under repurchase agreements; deferred credits; sales of participations in pools of loans in which the terms of participation are different from the terms of the loans; and amounts due to foreign branches and majority-owned foreign subsidiaries or to head offices, parents, and other directly related foreign institutions. Included as part of banks' own liabilities are deposits and other balances held with the reporting institutions by domestic trustees for the account of trusts created in the United States by foreign entities, both businesses Table 111-11.— U.S. Liabilities to Private Foreigners and International Financial Institutions Reported by U.S. Banks, 1988 (Line 63) [Millions of dollars; credits +, increase in U.S. liabilities; debits -, decrease in U.S. liabilities.] Total Banks' own liabilities Payable in dollars By account: Liabilities to own foreign offices Liabilities to unaffiliated foreigners: Demand deposits Time deposits Other liabilities By holder: Liabilities to own foreign offices Unaffiliated foreign banks Other private foreigners International financial institutions By bank ownership: U.S.-owned banks' liabilities to: Own foreign offices Unaffiliated foreign banks Other private foreigners and International financial institutions Foreign-owned banks' liabilities to: Own foreign offices Unaffiliated foreign banks Other private foreigners and international financial institutions Payable in foreign currencies v Banks' custody liabilities payable in dollars Of which: Negotiable and readily transferable instruments Memoranda: IBF's own liabilities, payable In dollars By holder: Liabilities to: Own foreign offices Unaffiliated foreign banks Foreign official agencies Other private foreigners and international financial institutions By bank ownership: U.S.-owned IBF's Foreign-owned IBF's Negotiable certificates of deposit held for foreigners IBF's International banking facilities. 68,832 60,068 44,506 40,402 -704 5,705 -897 40,402 -3,604 7,883 -175 27,663 -246 4,409 12,739 -3,358 3,299 15,562 8,764 573 17,668 22,287 -3,842 -3,133 2,356 8,761 8,908 and governments (personal or individual trusts are not covered). Borrowing from foreigners through the sale of securities under repurchase agreements or other ar- rangements by brokers and dealers is also included on the BL-1 . To avoid possible duplication in reporting, ne- gotiable certificates of deposit are not included by the issuing bank as part of its own liabilities reported on the BL-1 ; these certificates are reportable on the BL-2 by the institution that holds them in custody for the account of foreigners, regardless of whether the reporting bank itself or another bank is the issuer. International financial institutions include the In- ternational Bank for Reconstruction and Development, International Development Association, Asian Develop- ment Bank, International Finance Corporation, Inter- American Development Bank, and the International Monetary Fund's Trust Fund. Although reporting on the TIC forms classifies these institutions as "foreign official institutions," they are not so classified in the U.S. balance of payments, in which the "official" category is limited to the monetary and exchange rate authorities of individual countries. Foreign-currency-denominated liabilities to foreigners are reported by banks and banking institutions on the BQ-2. These liabilities, which are held by the reporters for their own account, include loans, advances, and over- drafts granted by foreign banks; acceptances made by foreign correspondents; and other liabilities payable in foreign currencies. There is no breakdown by maturity, by type of currency, or by type of foreign resident. Be- cause foreign currency positions are reported at dollar equivalents, changes derived from outstanding amounts include some changes due to exchange rate fluctuations that do not result from transactions. These cannot be removed because the data are not available by currency. Banks' custody liabilities payable in dollars are re- ported separately for foreign banks, for other private foreigners, including the banks' own foreign offices, and for international financial institutions. Custody liabil- ities cover financial claims on persons in the United States, other than long-term securities, which the re- porting institutions hold for foreigners either in direct custody or in their own name with a custodian bank or other institution. Included are negotiable certificates of deposit, whether issued by the reporting bank or other banks; bankers acceptances, whether created by the re- porting bank or other banks; commercial paper issued by U.S. financial and nonfinancial business concerns; short-term (original maturity of 1 year or less) obli- gations of U.S. Government corporations and federally sponsored agencies and of State and local governments; participations granted to foreigners in loans to domestic customers; and bills held for collection for foreign cus- tomers. Also included in custody liabilities are assets held with the reporting institutions by domestic trustees for the account of trusts created in the United States by foreign entities, both businesses and governments (per- sonal or individual trusts are not covered). (A discussion of short-term U.S. Treasury obligations, which are re- ported on the BL-2, is included in "Transactions in U.S. Treasury Securities.") Transactions Reported by U.S. Banks 105 This account also covers foreign bank loans to U.S. transactions are to be included in amounts reported on residents if the transaction is reported by a U.S. inter- the BL-2 forms.) mediary, such as a bank or broker, or a U.S. addressee Direct foreign loans to U.S. residents, other than servicing the U.S. resident's loan. (TIC form BL-3, banks, are not included in this account, but in liabil- "Intermediary's Notification of Foreign Borrowing De- ities to unaffiliated foreigners reported by nonbanking nominated in U.S. Dollars," notifies reporters that these concerns (line 62). Transactions Reported by U.S. Nonbanking Concerns Transactions of U.S. nonbanking concerns with unaffil- iated foreign residents are measured in the following accounts: (1) U.S. claims on unaffiliated foreigners (line 48); and (2) U.S. liabilities to unaffiliated foreigners (line 62). Nonbanking concerns include exporters, importers, industrial and commercial firms, and nonbanking finan- cial institutions, whether sole proprietorships, partner- ships, associations or corporations, and the U.S. agencies, branches, subsidiaries, and other affiliates of foreign business enterprises, which, for their own account or for the account of other U.S. persons, have claims on, or liabilities to, unaffiliated foreigners. Quarterly estimates of transactions are made by BEA on the basis of data on outstanding assets and liabil- ities reported on Treasury International Capital (TIC) nonbanking forms and on the basis of data on futures transactions. The two main forms are the CQ-1, "Finan- cial Liabilities to, and Financial Claims on, Unaffiliated Foreigners," and the CQ-2, "Commercial Liabilities to, and Commercial Claims on, Unaffiliated Foreigners," which U.S. nonbanking concerns are required to file quarterly with the Federal Reserve Bank of New York. Data are reported separately for each country or group of countries in certain geographical areas and for inter- national and regional institutions. Reports are required for the first quarter when financial or commercial claims on, or liabilities to, unaffiliated foreigners total $10 mil- lion or more at the end of the quarter; subsequently, two succeeding end-of-quarter totals may be averaged and reporting may be discontinued if the average of closing balances falls below the exemption level. Reports are required only for that part of the form for which the reportable items exceed the exemption level. In 1988, approximately 475 reporters filed quarterly reports. Other Treasury Department data are available con- cerning the foreign activities of U.S. nonbanking con- cerns in two additional reports: the monthly CM report, "Dollar Deposit and Certificate of Deposit Claims on Banks Abroad." Amounts of outstanding claims and liabilities are on a gross basis, without deduction of any offsets against them. No deduction is made for any reserves or al- lowances that may have been established against possi- ble future losses. However, when an asset is partially or entirely written off, the amount of the writeoff is de- ducted from the outstanding amounts. These writeoffs are considered valuation changes and are included in the U.S. international investment position. The reported ma- turity breakdown — between 1 year or less, and over 1 year — is based on the time remaining to maturity; all ad- vance receipts and payments are considered as maturing in 1 year or less. Claims and liabilities are also distin- guished according to whether they are denominated in dollars or foreign currencies. Those denominated in for- eign currencies are translated into dollars at the closing spot exchange rates prevailing on the date of the report. Thus, changes derived from outstanding amounts include exchange rate changes that do not result from trans- actions. These valuation changes cannot be removed because the data are not available by currency. Reporters on the CQ-1 and CQ-2 are instructed to exclude from liabilities any accounts, notes, and drafts payable to foreigners that are held for collection by banks in the United States. Also excluded are any deposits and investments abroad held for their account by banks, deal- ers, or brokers in the United States, and any accounts, notes, and drafts receivable from foreigners that are held for collection by banks in the United States. These items are reported on the TIC B forms by banks, which are required to report their domestic customers' claims on foreigners as shown on the reporters' books and their custody liabilities to foreigners that represent claims on U.S. residents. Similarly, firms reporting on the TIC non- banking forms are instructed to exclude their holdings in long-term securities; transactions in these securities are reportable on the TIC S form. Interest rate and foreign currency swaps associated with nonbanking concerns are not included. 1 Claims on Unaffiliated Foreigners (line 48) This account measures claims on unaffiliated foreign res- idents reported by U.S. nonbanking concerns (see table 111-12). Two categories of claims are distinguished: (1) Financial claims, which typically arise from investment activities conducted by an enterprise, and (2) commer- Table 111-12.— U.S. Claims on Unaffiliated Foreigners Reported by U.S. Nonbanking Concerns, 1988 (Line 48) [Millions of dollars; credits +, decrease in U.S. assets; debits -, increase in U.S. assets.] Total Financial claims Denominated in U.S. dollars Denominated in foreign currencies.... By type: Deposits Other claims Commercial claims Denominated in U.S. dollars Denominated in foreign currencies.... By type; Trade receivables Advance payments and other claims -1,684 -577 -976 399 714 -1,291 -1,107 -1.126 19 -1,105 -2 106 Transactions Reported by U.S. Nonbanking Concerns 107 Table 111-13.— U.S. Liabilities to Unaffiliated Foreigners Reported by U.S. Nonbanking Concerns, 1988 (Line 62) [Millions of dollars; credits +. increase in U.S. liabilities; debits -, decrease in U.S. liabilities.] Total Financial liabilities Denominated in U.S. dollars Denominated in foreign currencies.... Commercial liabilities Denominated in U.S. dollars Denominated in foreign currencies.... By type: Trade payables Advance receipts and other liabilities 6,558 2,846 2,962 -116 3,712 3,818 -106 -683 4,395 rial claims, which generally arise from the sale of goods and services in normal business operations and from the disposal of assets employed in business. Financial claims include demand and time deposits and certificates of deposit held with banks abroad; loans made to unaffiliated foreigners and accrued interest thereon; mortgage claims on foreigners; and other ne- gotiable and readily transferable financial instruments, such as bills and notes drawn on foreigners, partici- pations in loans of international lending institutions, and short-term obligations of foreign governments and their agencies. Also included are notes issued by for- eign governments to U.S. corporations in payment for nationalization of U.S. direct investment assets abroad. Included among commercial claims are trade receivables representing deferred receipts from the sale of goods and services; advance payments made to foreigners for fu- ture delivery of goods and services; claims arising from rights to receive commodities under barter agreements; and the value of goods located abroad that are owned by reporters. Transactions for a given quarter represent the differ- ence between outstanding amounts at the end of the current quarter and end of the previous quarter, reported on the CQ-1 and CQ-2 forms. BEA makes certain adjust- ments to the Treasury data to bring them into conformity with balance of payments concepts. The adjustments include a regular quarterly deduction from claims on Canada related to the Columbia River project — for which the United States provided part of the financing — and the subsequent U.S. purchase of electricity. Other ad- justments are made as necessary for the omission from the TIC forms of transactions that have been verified from other sources and for notes exchanged for direct investment acquisitions by foreigners. An additional source of information is the monthly CM report, which contains data on deposit claims of $10 million or more reported by major corporations. 2 Liabilities to Unaffiliated Foreigners (line 62) This account measures liabilities to unaffiliated foreign residents reported by U.S. nonbanking concerns (see table 111-13). Two categories of liabilities are distin- guished: (1) Financial liabilities, which typically arise from borrowing activities conducted by an enterprise, and (2) commercial liabilities, which generally arise from the purchase of goods and services in normal business operations. Financial liabilities include loans received from for- eigners and accrued interest; commercial paper and other marketable short-term obligations issued abroad or held by foreigners abroad; other accounts, notes, bills, and drafts payable to foreigners; and accrued tax liabilities to foreign governments. Included among commercial liabilities are trade payables, representing deferred pay- ments arising from the purchase of goods and services; advance payments received from foreigners for future delivery of goods and services; and liabilities arising from obligations to deliver commodities under barter agreements. Net transactions for a given quarter represent the dif- ference between outstanding amounts at the end of the current quarter and end of the preceding quarter, re- ported on the CQ-1 and CQ-2 forms. BEA adjusts the Treasury data to bring them into conformity with bal- ance of payments concepts and for the omission from the TIC reports of transactions that have been verified from other sources. In addition, BEA estimates the margin accounts and profits and losses on futures trading, based on information on foreign transactions on U.S. futures exchanges. Transactions With Foreign Official Agencies Changes in foreign official assets in the United States — or in the corresponding U.S. liabilities to foreign official agencies — are measured in the following accounts: (1) U.S. Treasury securities (line 53); (2) Other U.S. Gov- ernment securities (line 54); (3) Other U.S. Government liabilities (line 55); (4) U.S. liabilities reported by U.S. banks (line 56); and (5) other foreign official assets (line 57). Foreign official agencies are defined as the treas- uries, including ministries of finance or corresponding departments of national governments; central banks; stabilization funds, exchange control offices, or other governmental exchange authorities; fiscal agents of na- tional governments that have as an important part of their functions activities similar to those of a treas- ury, central bank, or stabilization fund; diplomatic and consular establishments; and other agencies of national governments. U.S. liabilities recorded in lines 53, 54, 56, and 57 represent claims of foreign official agencies on the U.S. Government, State and local governments, and on other U.S. residents, including banks, nonbanking firms, and other organizations. Most foreign official assets are held in the form of U.S. Treasury securities, other U.S. Gov- ernment obligations, and bank deposits; generally, they constitute part of the foreign exchange reserves of for- eign monetary authorities held in U.S. dollars. Included in these accounts are changes in foreign official holdings of U.S. Government securities as a result of official recip- rocal currency arrangements with foreign central banks. Some foreign official assets are held in the form of U.S. corporate bonds and stocks. Quarterly estimates of transactions are made by BEA on the basis of data from U.S. Treasury International Capital (TIC) reports and, for line 55, from data pro- vided by other U.S. Government agencies. The various TIC reporting forms used in estimating the accounts are listed in the appropriate sections below. Additional infor- mation necessary to estimate these accounts is obtained from special monthly reports- prepared by the Federal Reserve Bank of New York and the U.S. Treasury De- partment. BEA works closely with both agencies to maintain comprehensive coverage of the relevant inter- national transactions. Special issues of securities and other unusual transactions are handled on a case-by-case basis for proper inclusion in the estimates. The term "foreign official institutions" used in the TIC reporting system differs from the term "foreign official agencies" used in the U.S. balance of payments in that the former includes, and latter excludes, international and regional organizations; the necessary adjustments are made by BEA. Table 111-14.— U.S. Treasury Securities, Net Transactions by Foreign Official Agencies, 1988 (Line 53) [Millions of dollars; credits +, net foreign purchases; debits -, net foreign sales.] Total Bills and certificates . Bonds and notes, nonmarketable Denominated in U.S. dollars Denominated in foreign currencies . Bonds and notes, marketable 41,68; 14,83- 22' 22. 26,62! 1 U.S. Treasury Securities (line 53) This account measures net transactions by foreign official agencies in U.S. Treasury bills, certificates, and bonds and notes, both marketable and nonmarketable, as listed in table 111-14. 1.1 Bills and certificates Data are obtained from the monthly BL-2 form, "Custody Liabilities of Reporting Banks, Brokers, and Dealers, to Foreigners, Payable in Dollars." Holdings of short- term U.S. Treasury obligations for the account of foreign official agencies are reported on the BL-2 by banks, bro- kers, and dealers at par value; both marketable and nonmarketable foreign series bills and certificates of indebtedness are included. Obligations held for for- eign accounts under repurchase agreements are excluded from this account; they are included in U.S. liabilities reported by U.S. banks (line 56). Net foreign transactions for a given quarter represent the difference between outstanding amounts at the end of the current quarter and end of the preceding quarter. Because reporting is at par value, any initial discount due to prepaid interest is not taken into account. In- formation is not available to adjust for transactions at market prices of outstanding obligations involving pre- miums or discounts. Nonmarketable short-term U.S. Treasury obligations denominated in foreign currencies — part of the foreign series securities — are reported in terms of their dollar equivalents at time of issue. When these securities are repurchased or redeemed by the U.S. Treasury, BEA adjusts the original dollar-equivalent val- ues for subsequent exchange rate changes in order to record the transactions at current exchange rates. 1.2 Marketable bonds and notes Data are obtained from the monthly S form, "Purchases and Sales of Long-term Securities by Foreigners." This 108 Transactions With Foreign Official Agencies 109 rable 111-15. — U.S. Government Securities, Excluding U.S. Treasury Securities, Net Transactions by Foreign Official Agencies, 1988 (Lines 54 and 57) [Millions of dollars; credits +, net foreign purchases; debits -, net foreign sales.] Total J.S. Government securities, excluding U.S.Treasury securities Xther foreign official assets: U.S. corporate and other bonds U.S. stocks -1,186 1,309 -103 -2,392 brm is filed by U.S. banks, and other depository insti- ;utions, brokers, dealers, nonbanking enterprises, and >ther persons, who on their own behalf, or on behalf >f their customers, engage in transactions in long-term securities directly with foreigners; transactions are re- >orted at market prices as of the payment or settlement late. Long-term refers to securities with an original naturity of more than 1 year. Net foreign transactions are estimated by BEA on the >asis of data reported under "U.S. Treasury and Federal financing Bank Bonds and Notes" on the S form. Foreign )urchases in the United States represent the amount of noney received or due from the foreign buyer, includ- ng commissions and other charges. Foreign sales in the Jnited States represent the amount of money paid or due o the foreign seller, after deducting all discounts, com- nissions, taxes, and other charges incurred in the United 5tates; redemptions of securities are reported as sales by breigners. Gross foreign official purchases and sales are lot adjusted to exclude commissions and other charges, >artly because market costs are often not applicable in ifficial transactions. .3 Nonmarke table bonds and notes >Jet foreign purchases or sales of nonmarketable U.S. treasury bonds and notes are estimated by BEA on he basis of data provided monthly in a special attach- tient to the Treasury S form — the "Issue and Redemption Notice" — by the Federal Reserve Bank of New York icting as collection agent for the Treasury. An issue-by- ssue listing of nonmarketable foreign series securities is (ublished by the Treasury Department in the Monthly Statement of the Public Debt of the United States [73] and n the quarterly Treasury Bulletin [75]. Securities included have original maturities of more han 1 year; some are payable prior to maturity only un- ler special conditions. Both dollar and foreign-currency- lenominated securities are reported at face values at ime of issue. Special issues of zero coupon bonds are re- >orted at current value — principal plus accrued interest. 5EA makes adjustments to account for any premiums »r discounts. Issues of foreign-currency-denominated lecurities are recorded by BEA in dollar equivalents it exchange rates prevailing at the time of issue or edemption. 2 Other U.S. Government Securities (line 54) This account measures net transactions by foreign offi- cial agencies in bonds, notes, and other obligations of U.S. Government corporations and federally sponsored agencies and U.S. Government obligations not included elsewhere (see table 111-15). Securities included in this account have contractual maturities of more than 1 year. Net foreign purchases or sales of bonds and notes are estimated by BEA on the basis of transactions data from the Treasury S form, "Purchases and Sales of Long- term Securities by Foreigners." Reported transactions, gross purchases and gross sales, represent the cost of purchases and sales as of the payment or settlement date. Redemptions of securities are reported as sales by foreigners. Periodic transactions in special U.S. Govern- ment obligations are also included in this account, based on data provided separately by the Treasury Department under Office of Management and Budget Directive No. 19. No adjustments are made by BEA for commissions or other charges. 3 Other U.S. Government Liabilities (line 55) This account primarily measures net transactions in U.S. Government liabilities to foreign official agencies asso- ciated with U.S. military agency sales contracts and other U.S. Government transactions (see table 111-16). Changes in certain other U.S. Government liabilities to foreigners — generally, to foreign government agencies other than official agencies — are also included. Transactions included in military-related liabilities represent the sum of U.S. Government cash receipts from foreign governments for purchases of military goods and services and the financing of military sales by U.S. Gov- ernment credits and grants. Netted against this gross total are (1 ) the part of the receipts from foreign govern- ments that represents principal repayments on credits financing military agency sales contracts, (2) issues of Table 111-16. — U.S. Government Liabilities to Foreign Official Agencies Other Than U.S. Government Securities, 1988 (Line 55) [Millions of dollars; credits +, increase in U.S. liabilities; debits -, decrease in U.S. liabilities.] Total Associated with military sales contracts U.S. Government cash receipts from foreign governments, net of refunds Plus: Financing of military sales contracts by U.S. Government By long-term credits By short-term credits By grants Less: U.S. Government receipts from principal repayments Less: U.S. Treasury securities issued in connection with repayments for military purchases in the United States, net of redemptions Less: Transfers of goods and services Associated with U.S. Government grants and transactions increasing Government assets Associated with other liabilities Sales of nuclear materials by U.S. Department of Energy Sales of space launch and other services by NASA Other sales and miscellaneous operations NASA National Aeronautics and Space Administration. -1,284 -1,280 10,396 2,191 730 1,461 3,489 376 10,002 -2 21 5 -27 110 The Capital Account special U.S. Treasury securities that are subject to re- demption prior to maturity for the purpose of prepaying for military purchases in the United States, and (3) the counterpart to the value of deliveries of goods and serv- ices recorded in transfers under U.S. military agency sales contracts (line 4). The nonmilitary liabilities include changes associated with (1) deposits and trust funds held with the U.S. Government and the sales operations of its nonmili- tary agencies, such as sales of nuclear materials by the Department of Energy, (2) funds provided as grants or loans under assistance programs, but held in re- stricted accounts with the U.S. Government to ensure their expenditure for purchases from the United States, (3) accounts payable of Government agencies that re- port their current transactions on an accrual basis, and (4) non-interest-bearing Treasury securities that were issued as part of U.S. Government contributions to in- ternational institutions, but are subject to redemption prior to maturity to obtain U.S. dollars for the immediate operating needs of the institutions. Quarterly estimates are made by BEA on the basis of data on transactions submitted by U.S. Government agencies under Directive No. 19 and from published statements and other financial and operating records of Government agencies. 4 U.S. Liabilities Reported by U.S. Banks (line 56) This account measures net transactions in U.S. liabil- ities to foreign official agencies, not included in other accounts, reported by U.S. banks and other deposi- tor institutions, brokers, and dealers (see table 111-17). Transactions are estimated by BEA on the basis of out- standing liabilities reported on the TIC BL-1 and BL-2 forms. Banks' own liabilities to foreign official agencies as reported on the BL-1, "Reporting Bank's Own Liabil- ities, and Selected Liabilities of Broker or Dealer, to Foreigners, Payable in Dollars." Included are demand deposits, time deposits, nonnegotiable time certificates of deposit, savings deposits, federal funds borrowings, and borrowings under repurchase agreements. Liabilities that reporters hold for foreign official agen- cies either in direct custody or in their own name with a Table 111-17. — U.S. Liabilities to Foreign Official Agencies Reported by U.S. Banks, Not Included Elsewhere, 1988 (Line 56) [Millions of dollars; credits +, increase in U.S. liabilities; debits -, decrease in U.S. liabilities.] Total Banks' liabilities for own account, payable in dollars Demand deposits Time deposits Other Banks' custody liabilities, payable in dollars -33 -1,60 14 -3,05 1,30 1,27 custodian bank or other institution are reported on the BL-2 form. Included are negotiable certificates of deposil issued by banks in the United States; bankers accept- ances created by banks in the United States; commercial paper issued by U.S. financial and nonfinancial busi- ness concerns; short-term (original maturity of 1 yeai or less) obligations of U.S. Government corporations anc federally sponsored agencies, and of State and local gov- ernments; participations in loans to domestic customers and bills held for collection for foreign customers. Alsc included are assets held with the reporting institutions by domestic trustees for the account of trusts created ir the United States by foreign governments. Transactions for a given quarter represent the differ- ence between outstanding amounts at the end of the current quarter and end of the preceding quarter, re- ported on the BL-1 and BL-2. Liabilities are reported or a gross basis. 5 Other Foreign Official Assets (line 57) This account measures net transactions by foreign offi- cial agencies in stocks and bonds of U.S. corporations anc in bonds of State and local governments (see table III- 15). These securities are long term; that is, they have no contractual maturities (stocks) or have maturities o\ more than 1 year. Transactions are estimated by BE.A on the basis of data on gross foreign purchases and gross foreign sales reported on the S form. Reported transac- tions represent the cost of purchase and sale as of the payment or settlement date; no adjustments are made bj BEA for commissions or other charges. Sources 1. Board of Governors of the Federal Reserve System. "Selected Interest Rates." (Statistical Release G 13 415.) Washington, DC: Board of Governors, monthly. 2. . Table, "Assets and Liabilities of Insured Commercial Banks' Domestic Offices in the United States, and Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks in the United States." Federal Reserve Bulletin. Washington, DC: Board of Governors, monthly. 3. . Table 3.13, "Foreign Official Assets Held at Federal Reserve Banks." Federal Reserve Bulletin. Washington, DC: Board of Governors, monthly. 4. . Financial Markets Section. "Brokers' Bid Rates for Dollar Deposits in the London Dol- lar Market." Washington, DC: Board of Governors, monthly. 5. Canada. Statistics Canada. Balance of Pay- ments Division. Quarterly Estimates of the Cana- dian Balance of International Payments. Ottawa, quarterly. 6. . Statistics Canada. External Trade Division. Exports by Commodities. Catalog 65004. Ottawa, monthly. 7. . Statistics Canada. International Travel Section. Table 3A, Non-Resident Travelers Entering Canada by Type of Transportation." Travel Between Canada and Other Countries. Catalog 66-001. Ottawa, quarterly. 8. . Statistics Canada. International Travel Section. Table 3C, Resident Travelers Return- ing to Canada by Type of Transportation." Travel Between Canada and Other Countries. Catalog 66-001. Ottawa, quarterly. 9. Dun and Bradstreet Corporation. Official Airline Guide. Oak Brook, IL: Dun and Bradstreet, monthly. 10. Executive Office of the President. Bureau of the Budget. The Balance of Payments Statistics of the United States: A Review and Appraisal. Washington, DC: GPO, 1965. 11. . Office of Management and Budget. Standard Industrial Classification Manual. Wash- ington, DC: GPO, 1987. 12. . Office of Management and Budget. Budget of the United States Government. Washing- ton, DC: GPO, annually. 13. Fairplay Publications, Ltd. Fairplay International Shipping Weekly. London, weekly. 14. Germany. Deutsche Bundesbank. Monthly Report, Series 3, Balance of Payments Statistics. Frankfurt, monthly. 15. Institute of International Education. Open Doors, 1988/89. New York, annually. 16. International Monetary Fund. Balance of Payments Manual. 4th ed. Washington, DC: IMF, 1977. 17. . Country tables. International Financial Statistics. Washington, DC: IMF, monthly. 18. Table, "Consumer Prices." Interna- tional Financial Statistics. Washington, DC: IMF, monthly. 19. Knight-Ridder. The Journal of Commerce. New York, Daily. 20. Mexico. Banco de Mexico. Direccion de Investigacion Economica. Table, "Egresos por Transacciones Fron- terizas." Indicadores Del Sector Externo. Mexico, D.F., monthly. 21. . Direccion de Investigacion Economica. Table, "Tourismo Receptive" Indicadores Del Sector Externo. Mexico, D.F., monthly. 22. Pennwell Publishing Co. Offshore. Tulsa, OK, monthly. 23. Tokyo Stock Exchange. Fact Book. Tokyo, annually. 24. Transportation Guides, Inc. Official Steamship Guide International. New Canaan, CT, monthly. 25. United Kingdom. Central Statistical Office. Economic Trends. London, monthly. 26. United Nations. Permanent Missions to the United Nations. New York, annually. 27. . Statistical Office. Commodity Trade Statistics According to the Standard International Trade Classification. Series D. New York, annually. 28. United States-Canada Trade Statistics Committee. The Reconciliation of U.S. -Canada Trade Statistics, 1970. Washington, DC: GPO, 1973. (After 1970, reconciled United States-Canada trade statistics are made available by the committee in annual press releases.) 29. U.S. Committee for UNICEF. Table, "Remittances Abroad." Annual Report. New York, annually. 30. U.S. Department of Agriculture. Agricultural Mar- keting Service. Grain and Feed Market News: Weekly Summary and Statistics. Washington, DC: USDA, weekly. 31. . Economics, Statistics, and Coopera- tive Service. Crop Reporting Board. Farm Labor. Washington, DC: USDA, annually. 32. U.S. Department of Commerce. Bureau of the Cen- sus. Bunker Fuels. FT 810. Washington, DC, monthly. ill 112 Balance of Payments of the United States 33. Bureau of the Census. Guide to Foreign Trade Statistics. Washington, DC: GPO, monthly. 34. . Bureau of the Census. Highlights of U.S. Export and Import Trade. FT 990. Washington, DC: GPO, monthly. 35. . Bureau of the Census. Unpub- lished study, based on samples of shipper's export declarations, taken in July and September 1968. 36. . Bureau of the Census. U.S. Exports by Air. AM 754. Magnetic tape. Washington, DC, monthly. 37. . Bureau of the Census. For 1985 and after, U.S. Exports of Domestic and Foreign Mer- chandise by Schedule B Number, by Unit Control, by Country of Destination, by Customs District of Ex- portation, and Method of Transportation. Magnetic tape, Series EM 522. Prior to 1985, U.S. Exports: In Terms of 4-Digit End-Use Categories by Selected Areas or Countries of Destination: Monthly, Cumu- lative Year-to-Date, and Quarterly. Magnetic tape, Series EM 571, Part 3 (f.a.s. value). Washington, DC: Bureau of the Census, monthly. 38. . Bureau of the Census. U.S. Gen- AM 354. eral Imports by Air Washington, DC, monthly. 39. . Bureau of the Census Magnetic tape. For 1985 and after, U.S. Imports for Consumption and Gen- eral Imports. TSUSA Schedule by TSUSA Number, by Unit Control, by Country of Origin, by Customs District of Entry and Unloading, by Rate Provision, by Economic Class, and by Method of Transporta- tion. Magnetic tape, Series IM 145. Prior to 1985, U.S. General Imports: In Terms of 4-Digit End-Use Categories by Selected Areas or Countries of Origin: Monthly, Cumulative Year-to-Date, and Quarterly. Magnetic tape, Series IM 171, Part 3 (Customs value). Washington, DC: Bureau of the Census, monthly. 40. . Bureau of the Census. U.S. Water- borne Exports, Domestic and Foreign Merchandise. SM 704, Magnetic tape. Washington, DC, monthly. 41. . Bureau of the Census. U.S. Water- borne Imports. SM 304, Magnetic tape. Washington, DC, monthly. 42. . Bureau of the Census. TheX-11 Vari- ant of the Census Method II Seasonal Adjustment Program. Technical Paper No. 15. Washington, DC: GPO, 1967. 43. . Bureau of Economic Analysis. "Cur- rent Business Statistics: Finance." Survey of Current Business. Washington, DC: GPO, monthly. 44. . Bureau of Economic Analysis. Foreign Transactions. BEA-MP-3. Washington, DC: GPO, 1987. 45. . Bureau of Economic Analysis. Guide to Industry and Foreign Trade Classifications for International Surveys. Washington, DC: DOC, 1987. 46. . Bureau of Economic Analysis. Ta- ble, "United States-Canadian Balance on Current Account." Survey of Current Business. Washington, DC: GPO, December issues. 47. . Bureau of Economic Analysis. U.S. Direct Investment Abroad, 1982. Washington, DC: GPO, 1985. 48. Bureau of Economic Analysis. For- eign Direct Investment in the United States, 1980. Washington, DC: GPO, 1983. 49. . Bureau of Economic Analysis. U.S. Exports and Imports, Classified by OBE End-Use Commodity Categories, 1923-1968. Washington, DC: GPO, 1970. 50. . Bureau of Economic Analysis. U.S. Merchandise Trade, Exports and Imports. Diskette or printout. Washington, DC, quarterly. 51. . Bureau of Economic Analysis. U.S. Merchandise Trade, Exports and Imports, 1965-76. Washington, DC: GPO, 1977. 52. . Bureau of Foreign and Domestic Commerce. Foreign Aid by the United States Government, 1940-1951. Washington, DC: GPO, 1952. 53. . Office of Business Economics. Balance of Payments Statistical Supplement. Washington, DC: GPO, 1963. 54. . Office of Business Economics. Foreign Grants and Credits by the United States Government. Washington, DC: DOC, annually 1964-67, quarterly 1943-63. 55. U.S. Department of Defense. Office of the Assist- ant Secretary of Defense (Comptroller). Interna- tional Balance of Payments Program — Accounting, Reporting, and Estimating. DOD Instruction 7060.2. Washington, DC: DOD, 1969. 56. . Office of the Assistant Secretary of Defense (Comptroller). U.S. Submission to the NATO Quarterly Defense Expenditure Questionnaire. Washington, DC: DOD, quarterly. 57. . Washington Headquarters Serv- ices. Directorate for Information, Operations, and Reports. Worldwide Manpower Distribution by Geographical Area. Washington, DC: GPO, quarterly. 58. U.S. Department of Education. National Center for Education Statistics. Digest of Education Statistics, Table 218. Washington, DC: GPO, annually. 59. U.S. Department of Energy. Economic Regula- tory Administration. Electricity Transactions Across International Borders. Washington, DC: DOE, annually. 60. U.S. Department of Justice. Eastern European Parcel Services Section. Form DJ-302, filed annually. 61. . Immigration and Naturalization Serv- ice. Form 1-94, "Immigration and Naturalization Service Arrival/Departure Record." 62. . Immigration and Naturalization Service. Form 1-92, "Aircraft/Vessel Report." 63. . Immigration and Naturalization Serv- ice. Table, "Nonimmigrants Admitted by Classes Sources 113 64. Under the Immigration Laws and Country or Region of Last Residence." Statistical Yearbook of the Im- migration and Naturalization Service. Washington, DC: GPO, annually. (Data published in Annual Re- port: Immigration and Naturalization Service until 1977.) Immigration and Naturalization Serv- ice. Table, "Passengers Departed From the United States, by Sea and Air, to Foreign Countries by Country of Debarkation." Annual Report: Immigra- tion and Naturalization Service. Washington, DC, annually. 65. . Report of the Attorney General to the Congress of the United States on the Administra- tion of the Foreign Agents Registration Act of 1938. Washington, DC: GPO, annually. 66. U.S. Department of Labor. Bureau of Labor Statis- tics. Employment and Earnings. Washington, DC: GPO, monthly. 67. U.S. Department of State. Diplomatic List. Washington, DC, quarterly. 68. . Foreign Consular Offices in the United States. Washington, DC, annually. 69. . Allowances Staff. Maximum Travel Per Diem Allowances for Foreign Areas. Washington, DC: Department of State, monthly. 70. U.S. Department of Transportation. Transportation Systems Center. Center for Transportation Informa- tion. Table Ha, "Passenger Travel Between U.S. and Foreign Countries, Distribution by U.S. and Foreign Flag Carriers — U.S. Arrivals." U.S. International Air Travel Statistics. Cambridge, MA, monthly. 71. . Transportation Systems Center. Cen- ter for Transportation Information. Table lid, "Pas- senger Travel Between U.S. and Foreign Countries, Distribution by U.S. and Foreign-Flag Carriers — U.S. Departures." U.S. International Air Travel Statistics. Cambridge, MA, monthly. 72. U.S. Department of the Treasury. National Advisory Council on International Monetary and Financial Policies. International Finance: Annual Report. Washington, DC: GPO, annually. 73. . Bureau of the Public Debt. Monthly Statement of the Public Debt of the United States. Washington, DC, monthly. 74. . Office of the Secretary. Report on For- eign Portfolio Investment in the United States as of December 31, 1978. Washington, DC: GPO, 1980. 75. . Office of the Secretary. Treasury Bulletin. Washington, DC: GPO, quarterly. 76. . U.S. Customs Service. "Record of Ves- sels Engaged in Foreign Trade Entered or Arrived Under Permit to Proceed." Form 1400. Washington, DC, monthly. 77. U.S. Postal Service. Annual Report of the Postmaster General. Washington, DC, annually. Appendix This appendix reproduces the complete set of balance of payments tables from the June 1989 SURVEY OF CURRENT BUSINESS. 115 116 Balance of Payments of the United States Table 1.— U.S. International [Millions of dollars. (Credits +• debits -) ' 1966 1967 1968 1969 Exports of goods and services 2 Merchandise, adjusted, excluding military ' Services 4 Transfers under U.S. military agency sales contracts.. Travel Passenger fares Other transportation . Royalties and license fees 56 Other private services 6 , U.S. Government miscellaneous services.. Receipts of income on U.S. assets abroad .. Direct investment Other private receipts U.S. Government receipts Transfers of goods and services under U.S. military grant programs, net.. Imports of goods and services Merchandise, adjusted, excluding military 3 Services 4 Direct defense expenditures Travel Passenger fares. Other transportation . Royalties and license fees 56 Other private services 6 U.S. Government miscellaneous services.. Payments of income on foreign assets in the United States .. Direct investment Other private payments U.S. Government payments U.S. military grants of goods and services, net Unilateral transfers (excluding military grants of goods and services), net . U.S. Government grants (excluding military grants of goods and services).... U.S. Government pensions and other transfers Private remittances and other transfers U.S. assets abroad, net (increase/capital outflow (-)).. U.S. official reserve assets, net 7 Gold Special drawing rights Reserve position in the International Monetary Fund . Foreign currencies U.S. Government assets, other than official reserve assets, net U.S. credits and other long-term assets Repayments on U.S. credits and other long-term assets 8 U.S. foreign currency holdings and U.S. short-term assets, net.. U.S. private assets, net Direct investment Foreign securities U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns.. U.S. claims reported by U.S. banks, not included elsewhere Foreign assets in the United States, net (increase/capital inflow (+)) Foreign official assets in the United States, net U.S. Government securities U.S. Treasury securities 9 Other 10 Other U.S. Government liabilities " * U.S. liabilities reported by U.S. banks, not included elsewhere Other foreign official assets l2 Other foreign assets in the United States, net Direct investment U.S. Treasury securities U.S. securities other than U.S. Treasury securities U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns.. U.S. liabilities reported by U.S. banks, not included elsewhere Allocations of special drawing rights Statistical discrepancy (sum of above items with sign reversed) Memoranda: Balance on merchandise trade (lines 2 and 17) Balance on services (lines 3 and 18) Balance on goods and services (lines 66 and 67) n Balance on goods, services, and remittances (lines 68. 33. and 34) Balance on current account (lines 68 and 31)' 3 28,861 19,650 9,211 335 919 175 1,607 837 570 153 4,616 3,621 646 349 1,695 -23,670 -14,758 -8,912 -3,087 -1,750 -513 -1,402 -74 -593 -254 -1,238 -394 -511 -332 -1,695 -2,367 -1,672 -273 -423 ^1,099 2,145 1,703 29,937 20,108 9,829 402 947 183 1,620 906 607 164 4,999 3,823 793 383 1,465 -23,453 -14,537 -8,916 -2,998 -1,785 -506 -1,437 -89 -588 -268 -1,245 ^432 -535 -278 -1,465 -2,662 -1,855 -373 -434 -5338 607 857 31,803 20,781 11,022 656 957 191 1,764 1,056 585 195 5,618 4,241 904 473 1337 -25,676 -16,260 -9,416 -3,105 -1,939 -567 -1,558 -100 -528 -296 -1,324 -399 -586 -339 -1,537 -2,740 -1,916 -347 -477 1,535 890 34,214 22,272 11,942 657 1,015 205 1,898 1,162 613 236 6,157 4,636 1,022 499 1362 -26,970 -17,048 -9,922 -2,961 -2,114 -612 -1,701 -112 -493 -370 -1,560 —459 -701 -101 -1,562 -2,831 -1,917 -339 -575 -7,270 378 461 38,826 25,501 13,325 747 1,207 241 2,076 1,314 651 265 6,824 5,106 1,256 462 1340 -29,102 -18,700 -10,402 -2,880 -2,211 -642 -1,817 -127 -527 -415 -1,783 -529 -802 -453 -1340 -2,901 -1.888 -399 -614 -9360 171 125 41,087 26,461 14,626 830 1,380 271 2,175 1,534 714 285 7,437 5,506 1,421 510 1,636 -32,708 -21,510 -11,198 -2.952 -2,438 -717 -1,951 -135 -461 -457 -2,088 -657 -942 -489 -1,636 -2,948 -463 -677 -5,716 1,225 1,665 44,562 29,310 15,252 829 1,590 317 2,333 1,516 814 326 7,528 5,260 1,669 599 1,892 -38,468 -25,493 -12,975 -3,764 -2,657 -753 -2,161 -140 -506 -513 -2,481 -711 -1,221 -549 -1,892 -3,064 -1,910 -499 -655 570 571 47314 30,666 16,648 1,152 1,646 371 2,426 1,747 951 336 8,021 5,603 1,781 636 2,039 -41,476 -26,866 -14,610 -4,378 -3,207 -829 -2,157 -166 -565 -561 -2,747 -821 -1,328 -598 -2,039 -3355 -1,805 -571 -879 -9,757 53 1,170 52363 33,626 18,737 1,392 1,775 411 2,548 1,867 1,024 353 9,367 6,591 2.021 756 2,547 ^18,671 -32,991 -15,680 -4,535 -3,030 -885 -2,367 -668 -631 -3,378 -876 -1,800 -702 -2347 -3,082 -1,709 -537 -836 -10,977 -870 1,173 57,522 36,414 21,108 1,528 2,043 450 2,652 2,019 1,160 343 10,913 7,649 2,338 925 2,610 -53,998 -35,807 -18,191 -4,856 -3,373 -1,080 -2,455 -221 -751 -586 -3,244 -777 -2,610 -3,125 -1,649 -537 -939 -11,585 -1,179 -967 -1,100 -1,214 642 -528 -5,144 -2,940 -663 -394 -1,148 2394 1,473 655 655 -135 -115 -910 -1,928 1,279 -261 -5,235 -2,653 -762 -558 -1,261 2,705 765 233 233 215 603 626 19 -1,085 -2,128 1,288 -245 -4,623 -2,851 -969 -354 -450 1,911 1,270 1,409 1,410 -1 152 -291 29 -112 -1,662 -2,204 988 ^447 -5,986 -3,483 -1,105 157 -1,556 3317 1,986 816 803 12 429 742 266 -220 -1,680 -2.382 720 -19 -8,050 -3,760 -677 -1,108 -2,505 3,643 1,660 432 434 -2 298 930 -94 -346 -1,605 -2,463 874 -16 -5,336 -5,01 1 -759 341 93 742 134 -141 -134 -7 65 210 537 -538 -1,543 -2,513 1,235 -265 -6,347 -5,418 -720 ^442 233 3,661 -672 -1,527 -1,548 21 113 742 -94 -1,023 -2,423 -3,638 1,005 209 -7,386 -4,805 -1,308 -779 -495 7379 3,451 2,261 2,222 39 83 1,106 -870 -1,173 -2,274 -3,722 1,386 62 -7,833 -5,295 -1,569 -1,203 233 9,928 -774 -769 -798 29 -15 10 -1,034 822 -2,200 -3,489 1,200 -8,206 -5,960 -1,549 -126 -570 12,702 -1,301 -2,343 -2,269 -74 251 792 821 315 -364 282 -90 678 1,939 311 151 324 226 928 641 346 -66 134 -110 336 1,231 231 -149 287 -37 1.983 322 -146 -85 75 1.818 607 415 -131 -358 178 503 4.333 425 -356 906 476 2,882 3,928 698 -135 1,016 584 1.765 10,703 807 136 4,414 1,475 3,871 14,002 1,263 -68 3.130 792 Transactions in U.S. official reserve assets and in foreign official assets in the United States: Increase (-) in U.S. official reserve assets, net (line 36) Increase (+) in foreign official assets in the United States (line 51 less line 55) -1,019 4,892 299 5,191 4,496 2,824 2,145 1,258 5,571 913 6,484 5,677 3,822 607 741 -1,124 4,521 1,606 6,127 5.303 3,387 1,535 1,118 5,224 2,020 7,244 6,331 4,414 378 1,558 6,801 2,923 9,724 8,711 6,823 171 1,362 4.951 3,427 8,378 7.238 5,431 1,225 69 3,817 2,278 6,095 4.941 3,031 570 -785 3,800 2,038 5,838 4,388 2,583 53 3,368 635 3,058 3,693 2,320 611 -870 -759 -1316 607 2.917 3,524 2.048 399 -1.179 -1,552 See footnotes on page 146. Appendix — Balance of Payments Tables, June 1989 SURVEY 117 Transactions not seasonally adjusted] 1 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 19X7 1988 Line 68,838 77,495 110,241 146,666 155,729 171,630 184,276 219,994 286,796 342,485 378,697 352,127 337380 371,101 371,212 391,958 446,138 529,806 1 43,319 49,381 71,410 98,306 107,088 114,745 120,816 142,054 184,473 224,269 237,085 211,198 201,820 219,900 215,935 223,367 250,266 319,251 2 25,519 1,926 28,114 1,364 38.831 2,559 48,360 3,379 48,641 4,049 56,885 5,454 63,460 7,351 77,940 7,973 102,323 6,516 118,216 8,274 141,612 10,041 140,929 11,986 135,560 12,344 151,201 9.817 155,277 8,626 168,591 8,495 195,872 11,238 210.555 10,050 3 4 2,534 615 3,299 2,817 699 3,579 3,412 975 4,465 4,032 1,104 5,697 4,697 1,039 5,840 5.742 1,229 6,747 6,150 1,366 7,090 7,183 1,603 8,136 8,441 2,156 9,971 10,588 2,591 11,618 12.913 3,111 12,560 12,393 3,174 12,317 10,947 3,610 12,590 " 17,753 "4,015 13,809 17.937 4,388 14,674 20,454 5.546 15,458 23,505 6,882 16,989 29,202 8,860 18,930 5 6 7 2,545 1,546 347 2,770 1,764 357 3,225 1,985 401 3,821 2,321 419 4,300 2,920 446 4,353 3,584 489 4,920 3.848 557 5,885 4,296 620 6,184 4,403 520 7,085 5,158 398 7,284 " 8,775 517 5,177 11,757 576 5.276 12,876 666 5,629 13,555 714 5.995 13.948 878 7,254 "22,174 595 9,070 22,959 526 10.735 24,331 672 8 9 10 12,707 9,160 2,641 906 14,765 10,949 2,949 866 21,808 16,542 4,330 936 27,587 19,157 7,356 1,074 25,351 16,595 7,644 1,112 29,286 18,999 8,955 1,332 32,178 19,673 10,881 1,625 42,245 25,458 14,944 1,843 64,132 38,183 23,654 2,295 72,506 37,146 32,798 2,562 86,412 32,549 50,182 3,680 83,548 21,381 58.050 4,118 77,251 20,499 51,920 4.832 85,908 21,217 59,464 5,227 88.832 33,202 50,131 5.499 88,615 38,533 43,669 6,413 104,703 54,754 44,638 5.311 107,775 48,264 52,840 6,672 11 12 13 14 3346 4,492 2,810 1318 2,207 373 203 236 465 756 679 585 180 153 46 % 53 92 15 -66,414 -79,237 -98,997 -137,274 -132,745 -162,109 -193,764 -229,869 -281,659 -333360 -362,887 -349,936 -371,890 ^462,818 ^468,468 -509,428 -575,626 -641,698 16 -45,579 -55,797 -70,499 -103,811 -98,185 -124,228 -151,907 -176,001 -212,009 -249,749 -265,063 -247,642 -268,900 -332,422 -338,083 -368,425 ^109,766 -446,466 17 -20,835 -4,819 -23,440 "-4,784 -28,498 14 -4,629 -33,463 -5,032 -34,560 ^1,795 -37,881 ^1,895 -41,857 -5,823 -53,868 -7,352 -69,650 -8.294 -83,611 -10,851 -97,824 -11.564 -102,294 -12,460 -102,990 -12,687 -130,396 -11,916 -130,385 -12.183 -141,003 -13,071 -165,860 -14,095 -195.232 -14.656 18 19 -4,373 -1,290 -3,130 -5,042 -1,596 -3,520 -5,526 -1,790 ^t,694 -5,980 -2,095 -5,942 -6,417 -2,263 -5,708 -6,856 -2,568 -3,852 -7,451 -2,748 -7,972 -8,475 -2.896 -9.124 -9.413 -3.184 -10,906 -10,397 -3.607 -11.790 -11,479 ^(,487 -12,474 -12,394 -4,772 -11,710 -13,149 -6,003 -12,222 " -22,709 17 -5.910 -14,843 -24,517 -6,671 -15,643 -26,000 -6,774 -16.715 -29.215 -7,423 -18,062 -32,112 -7.872 -19.641 20 21 22 -241 -956 -592 -294 -1,043 -589 -385 -1,180 -640 -346 -1,262 -722 -472 -1,551 -789 -482 -2,006 -911 -504 -2,190 -951 -671 -2.573 -1.099 -831 -2,822 -1,239 -724 -2,909 -1,214 -650 17 -3,554 -1,287 -617 -3,997 -1,460 -723 -4,264 -1,567 -955 -5,113 -1,531 -891 -5,847 -1,732 -1.062 " -8.730 -1,684 -1,365 -11,390 -1,891 -2,048 -11,400 -1,955 23 24 25 -5,435 -1,164 -2,428 -1,844 -6,572 -1,284 -2,604 -2,684 -9,655 -1,610 -4,209 -3,836 -12,084 -1,331 -6,491 -4,262 -12,564 -2,234 -5,788 -4,542 -13,311 -3,110 -5,681 -4,520 -14,217 -2,834 -5,841 -5,542 -21,680 -4,211 -8,795 -8,674 -32,961 -6,357 -15,481 -11,122 -42,119 -8,635 -20,893 -12,592 -52,329 -6,898 -28.553 -16,878 -54,884 -3,155 -33,443 -18,285 -52,376 -5,598 -28,953 -17,825 -67,419 -9,229 -38,421 -19,769 -62,901 -6,079 -35,516 -21.306 -66,968 -5,379 -38,982 -22,607 -82,420 -9,500 -18,868 -24,052 -105,548 -16,748 -59.746 -29,054 26 27 28 29 -3346 -4,492 -2,810 -1,818 -2,207 -373 -203 -236 -465 -756 -679 -585 -180 -153 ^»6 -96 -53 -92 30 -3,856 ^1,052 ^4,103 "-7,431 -4,868 -5,314 -5,023 -5,552 -6,128 -7393 "-7,647 -9,188 -9,776 -12,468 -15,426 -15,778 -14,212 -14,656 31 -2,043 -696 -1,117 -2,173 -770 -1,109 -1,938 -915 -1,250 " -5,475 -939 -1,017 -2,894 -1,068 -906 -3,146 -1,250 -917 -2,787 -1,378 -859 -3.176 -1,532 -844 -3,550 -1,658 -920 -4,731 -1,818 -1,044 ^»,466 -2,041 "-1,140 -5.501 -2,251 -1,436 -6,288 -2,207 -1,281 -8.543 -2,159 -1,766 -11,222 -2,138 -2,067 -11,730 -2,197 -1.852 -10,149 -2.212 -1,851 -10,377 -2,491 -1,788 32 33 34 -12,475 -14,497 -22,874 -34,745 -39,703 -51,269 -34,785 -61,130 -64331 -86,118 -110,951 -121,153 -49,777 -22304 -32,628 -99,665 -76,218 -82,110 35 2,349 866 -249 1,350 382 -4 547 -703 153 -1 158 -1,467 -849 -2,558 -375 -118 -121 -294 158 732 -65 1,249 4,231 -4,683 -1,133 -65 -1,136 -189 257 -8,155 -5,175 <*) -1,824 -2,491 -861 -4,965 -1,196 -3,131 -3,858 312 9,149 -3,566 36 37 9 -33 182 -172 -1,265 -30 -66 -466 -317 -78 -2,212 -268 -16 -1,667 -6,472 -1,371 -2,552 -1,041 -66 -4,434 3,304 -979 -995 -1,156 -897 908 -3,869 -246 1,501 -942 -509 2,070 7,588 474 1,025 -5,064 38 39 40 -1,884 -4,181 2,115 182 -1,568 -3.819 2,086 165 -2,644 -4,638 2,596 -602 15 366 -5,001 13 4,826 "541 -3.474 -5.941 2,475 -9 -4,214 -6.943 2,596 133 -3,693 -6,445 2,719 33 -4,660 -7,470 2,941 -131 -3,746 -7,697 3,926 25 -5.162 -9,860 4,456 242 -5,097 -9.674 4,413 164 -6.131 -10,063 4,292 -360 -5,006 -9,967 5,012 -51 -5,489 -9.599 4,490 -379 -2,821 -7,657 4,719 117 -2,024 -9.093 6,090 979 997 -6,515 7,625 -113 2,999 -7,579 10,313 265 41 42 43 44 -12,940 -7,618 -1,113 -1.229 -2,980 -12,925 -7,747 -618 -1,054 -3,506 -20,388 -11,353 -671 -2,383 -5.980 -33,643 -9,052 -1,854 -3,221 -19,516 -35,380 -14,244 -6,247 -1,357 -13.532 ^14,498 -11,949 -8,885 -2,296 -21,368 -30,717 -11,890 -5,460 -1,940 -11,427 -57,202 -16,056 -3,626 -3,853 -33,667 -59,453 -25,222 -4,726 -3,291 -26,213 -72,802 -19,222 -3,568 -3,174 -46,838 -100,679 -9,624 -5,699 -1,181 -84,175 -110,058 2,369 -7,983 6,626 -111,070 -43,576 -373 -6,762 -6,513 -29,928 -13,685 -2.821 -4,756 5.019 -11,127 -25,950 -18,068 -7,481 923 -1.323 -97,954 -26,312 -4,271 -7,396 -59,975 -86,363 -44,194 -5,251 5.201 -42,119 -81,543 -17,533 -7,846 -1,684 -54,481 45 46 47 48 49 22,970 21,461 18,388 34,241 15,670 36318 51319 64,036 38,752 58,112 83,032 93,746 84369 102,621 130,012 221,605 218,039 219,299 50 26,879 26,570 26,578 -8 -510 819 10,475 8,470 8.213 257 182 1,638 185 6,026 641 59 582 936 4,126 323 10,546 4,172 3.270 902 301 5.818 254 7,027 5,563 4,658 905 1,517 -2,158 2,104 17,699 9,892 9,319 573 4,627 969 2,205 36.816 32,538 30,230 2,308 1,400 773 2,105 33,678 24,221 23,555 666 2,476 5,551 1,430 30,358 7,897 "2,178 2,254 1,889 16,141 -13,665 -21,972 -22,435 463 -40 7,213 1,135 15,497 11,895 9,708 2.187 615 -159 3,145 42,615 16,918 16 2,645 5,457 6,852 10,743 4,960 6,322 5,019 1,303 -338 -3,670 2,646 78,072 25,195 16 2,927 6,905 917 42,128 3,593 5,085 5,779 -694 605 -1,747 -350 5,845 6.496 6,972 -476 602 545 -1.798 79.023 11,946 16 8,689 8,164 -118 50,342 3,140 4,703 4,690 13 739 555 -2,857 99,481 25,359 23,001 12,568 4,704 33,849 -1,083 -1,139 -838 -301 880 645 -1.469 131,096 19,022 20,433 50,962 -366 41.045 35,594 33,150 34,364 -1,214 2,141 1,187 -884 186,011 34,091 3,809 70,969 -2,641 79,783 45,193 44,802 43.238 1,564 -2,520 3,918 -1,007 172,847 46,894 -7,643 42,120 2,450 89,026 38.882 42,992 41.683 1.309 -1.284 -331 -2.495 180,418 58,436 20,144 26,448 6.558 68.832 51 52 53 54 55 56 57 58 59 60 61 62 63 -3,909 367 -24 2,289 369 -6,911 10,986 949 -39 4,507 815 4,754 12,362 2,800 -216 4.041 1.035 4,702 23.696 4,760 697 378 1,844 16,017 8,643 2,603 2,590 2,503 319 628 18,826 4,347 2,783 1,284 -578 10,990 14,503 3,728 534 2,437 1.086 6,719 52,416 11,877 16 4,960 1,351 1,621 32,607 90,154 13,792 16 7,027 6,085 -2,383 65.633 717 -9,779 710 -1,879 1,139 25,431 1,152 25322 1,093 18,663 64 -2,654 -1,458 5,917 10344 -2,023 12321 34,404 9,194 23,869 15,298 11308 1,878 -10,641 65 -2,260 4,683 2,423 610 -1,433 -6,416 4,674 -1,742 -3,622 -5,795 911 10,333 11,244 9,078 7,140 -5,505 14,897 9,392 7,436 1,962 8,903 14,081 22,984 21,011 18,116 -9,483 19.004 9,521 7,354 4,207 -31,091 21,603 -9.488 -11,724 -14,511 -33,947 24,072 -9,875 -12,251 -15,427 -27,536 32,674 5,138 2,559 -991 -25,480 34,606 9.126 6.264 1,533 -27,978 43,788 15,810 12,629 8,163 -36,444 38,635 2,191 -1.496 -6,997 -67,080 32,570 -34,510 -37,998 -44,286 -112,522 20,805 -91,718 -95.643 -104,186 -122,148 24.892 -97,256 -101,460 -112,682 -145,058 27,588 -117,470 -121,519 -133,249 -159,500 30,012 -129,488 -133.551 -143.700 -127,215 15,323 -111.892 -116.171 -126.548 66 67 68 69 70 2,349 27,389 -4 10,293 158 5,090 -1,467 10,244 -849 5,509 -2,558 13,066 -375 35,416 732 31,202 -1,133 -13,624 -8,155 14,881 -5,175 5,298 -4,965 2,988 -1,196 5,243 -3,131 2,401 -3.858 -1,963 312 33.453 9,149 47,713 -3,566 40.166 71 72 118 Balance of Payments of the United States Table 1.— U.S. International [Millions of dollars. Line (Credits +; debits -) ' 1984 Exports of goods and services 2 Merchandise, adjusted, excluding military 3 . Services 4 Transfers under U.S. military agency sales contracts . Travel Passenger fares Other transportation. Royalties and license fees 56 Other private services 6 U.S. Government miscellaneous services . Receipts of income on U.S. assets abroad.. Direct investment Other private receipts U.S. Government receipts Transfers of goods and services under U.S. military grant programs, net,. Imports of goods and services Merchandise, adjusted, excluding military J Services' 1 Direct defense expenditures Passenger fares Other transportation.. Royalties and license fees 56 Other private services 6 U.S. Government miscellaneous services . Payments of income on foreign assets in the United States . Direct investment Other private payments U.S. Government payments U.S. military grants of goods and services, net Unilateral transfers (excluding military grants of goods and services), net.. U.S. Government grants (excluding military gTants of goods and services).... U.S. Government pensions and other transfers Private remittances and other transfers U.S. assets abroad, net (increase/capital outflow (-)) . U.S. official reserve assets, net 7 Gold Special drawing rights Reserve position in the International Monetary Fund.. Foreign currencies 49,652 32,958 3,669 2,593 810 2,950 1,224 3,579 159 17,973 4,275 12,568 1,130 34 -82,175 -58,852 -23,323 -3,127 -2,317 -1,185 -2,779 -153 -1,155 -385 -12.221 -1,085 -6,709 -4,428 -34 -1,777 -1,011 -485 -281 50,592 33,351 3,136 2,781 976 3,131 1,317 2,943 252 18,814 4,971 12,533 1,311 26 -91,603 -65,614 -25,989 -3,149 -3,461 -1,924 -2,957 -163 -1,087 -447 -12,800 -1,512 -6,919 -4,368 -26 -1,961 -1,245 -450 -265 -815 48,032 35,049 3,064 3,361 1,027 3,255 1,290 3,116 142 19,795 5,242 13,247 1,305 46 -70,304 -27,776 -3,191 -4,572 -1,637 -3,228 -185 -1,047 -390 -13,526 -1,640 -7,425 -4,462 -46 -2,389 -1,549 -445 -395 -8,435 87,746 53,544 34,202 2,475 2,212 797 3,254 1,445 3,237 113 20,669 6,011 13,572 1,086 74 -100,032 -74,130 -25,902 -3,220 -2,799 -1,257 -3258 -221 -975 -345 -13.828 -1,361 -7,901 -4,567 -74 -3,649 -2,483 -827 -340 91,945 38,277 2,639 " 3,637 "826 3,237 1,289 3,803 157 22,690 7,551 13,912 1,227 25 -106,751 -78,203 -28,548 -2,903 "-4,016 "-1,157 -3,384 -222 -1.083 -348 -15.435 -2,356 -8.423 -4,656 -25 -2,440 -1,473 -470 ^196 -4,413 37,485 2,464 4,899 1,106 3,434 1,375 2,997 186 21,024 4,759 14,949 1,315 31 -118,662 -84,913 -33,749 -3,065 -6,335 -1,605 -3,770 -213 -1.182 -384 -17,196 -2,569 -9,865 -4,762 -31 -2,366 -1,526 -445 -395 -20,204 -566 91,279 53,420 37,859 2,522 5,046 1,189 3,550 1,354 3,381 178 20,638 3.350 15,934 1,354 44 -120,111 -83,772 -36,339 -2,864 -7,882 -1,806 -3,867 -244 -1,285 —413 -17,979 -2,294 -10,625 -5,059 -3,110 -2,230 -450 -430 U.S. Government assets, other than official reserve assets, net U.S. credits and other long-term assets Repayments on U.S. credits and other long-term assets 8 U.S. foreign currency holdings and U.S. short-term assets, net U.S. private assets, net Direct investment Foreign securities U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns.. U.S. claims reported by U.S. banks, not included elsewhere Foreign assets in the United States, net (increase/capital inflow (+)) . Foreign official assets in the United Slates, net U.S. Government securities U.S. Treasury securities 9 Other 10 Other U.S. Government liabilities " U.S. liabilities reported by U.S. banks, not included elsewhere Other foreign official assets " Other foreign assets in the United States, net Direct investment , U.S. Treasury securities , U.S. securities other than U.S. Treasury securities U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns.. U.S. liabilities reported by U.S. banks, not included elsewhere Allocations of special drawing rights Statistical discrepancy (sum of above items with sign reversed) . Memoranda: Balance on merchandise trade (lines 2 and 17) Balance on services (lines 3 and 18) Balance on goods and services (lines 66 and 67) "- Balance on goods, services, and remittances (lines 68, 33, and 34) .. Balance on current account (lines 68 and 31) i- 1 -98 -2,139 1,450 -1,225 -2,378 1,229 -77 -22,886 1,742 -1,549 -2,776 -20,303 16,002 -38 2,641 3.012 -371 ^104 -1,893 -382 16,039 1,789 16 2.913 2.873 -2,763 11,227 -303 -212 531 -1,246 -2,421 1,213 -38 415 -61 -2,813 -230 3,518 15,635 1,612 1,825 1.995 -170 382 231 -826 14,023 4,097 16 3,1 16 2,470 -64 4,404 826 -1,207 -2,755 1,511 38 -7,756 -2,600 -1,308 -233 -3,616 19,386 -2.689 -973 -611 -362 101 -1,353 ^164 22,075 4,325 16 1,008 1.777 1,311 13,654 545 -1,996 498 -1,328 -2,413 1,058 27 -13,348 546 -1,093 -3,274 -9,527 33347 6,960 3,003 2.576 427 523 3,560 -126 26,887 1,736 1.652 1,044 1,398 21,057 -226 -200 -231 -2,153 -2,792 892 -252 -1,603 -1,678 758 873 -1,557 22,116 -2,956 -271 -274 3 150 -2,242 -593 25,073 5,199 1.950 1,333 5,066 11,525 -288 -321 44 -1,295 -2,695 1.397 3 -18.344 1,002 -764 1,564 -20,146 41^55 -156 -125 -271 146 576 363 -970 42.01 1 9.009 6.336 362 4,714 21,590 -271 -331 -197 -1,408 -2,190 912 -130 19,472 1,220 -1,106 1,541 17,817 2,472 -487 -571 84 -73 400 -724 3,355 4,853 5.303 1,447 -3,056 -5,192 Transactions in U.S. official reserve assets and in foreign official assets in the United States: Increase (-) in U.S. official reserve assets, net (line 36) Increase (+) in foreign official assets in the United States (line 51 less line 55) 10,239 -9,200 9,636 436 -330 -1,341 -787 366 -5,199 -15,022 7,362 -7,660 -8,376 -9,621 16 1,230 6,437 -22,272 7,273 -14,999 -15,838 -17,388 529 -2.790 -2J82 -20,586 8,299 -12,287 -13,453 -15,936 -953 6.437 -24,535 9,730 -14,805 -15,772 -17.245 -657 -3.106 5,930 -28,950 3,736 -25,214 -26,055 -27.581 -566 -732 12,206 -30,352 1,520 -28,832 -29,713 -31.942 -799 -811 See footnotes on page 146. Appendix — Balance of Payments Tables, June 1989 SURVEY 119 Transactions — Continued not seasonally adjusted) 1985 1986 1987 1988 1989 1 II III IV 1 II III IV I 11 III IV I II III IV 1' Line 90,432 94,054 91^16 95,210 96,932 99,322 96,474 99,229 104,131 107,428 108,826 125,753 127,448 129,075 129305 143,978 141,661 1 55,381 55,500 50,779 54,275 54,052 58,017 53,734 57,564 57,668 61,696 61,635 69,267 77,01 1 80,461 77,547 84,232 88,634 2 35,051 2,614 38,554 2,255 40,737 1,962 40,935 1,795 42,880 1,880 41,305 2,023 42,740 2,103 41,665 2,490 46,463 3,266 45,732 3,324 47,191 2,579 56,486 2,070 50,437 2,665 48,614 2,604 51,758 2,645 59,746 2,136 53,027 2,180 3 4 4,152 829 3,515 4,757 1,161 3.568 5,133 1,334 3,707 3,895 1,064 3,885 4,528 1,106 3,745 4,896 1,234 3,832 6,277 1,910 3.978 4,753 1,296 3,903 4,706 1,289 3,945 5,793 1,752 4,163 7,230 2,187 4,415 5,776 1,654 4,466 5,751 1,771 4,605 7,031 2,180 4,769 9,118 2,858 4,800 7,302 2,051 4,757 6,999 1,979 4,944 5 6 7 1,315 3.927 218 1,382 3,098 231 1,342 3,428 275 1,956 3,494 154 1,575 "6,031 161 1,754 5,112 151 1,787 5,46! 129 2,138 5,570 155 2,025 6,144 103 2,130 5,321 124 2,215 5,720 177 2,700 5,774 122 2,377 6,583 124 2,548 5,514 179 2,556 6.008 189 3,254 6,227 181 2,734 7,431 148 8 9 10 18,481 4,201 12,994 1,287 22,102 8,269 12,694 1,140 23,556 9,638 12,244 1.674 24,692 11.094 12,199 1,398 23,855 10,711 11,560 1,583 22,304 9,866 11,140 1.298 21,096 8,498 10.460 2,137 21,360 9,458 10,509 1,394 24,986 13,270 10,332 1.384 23,126 10,974 10,873 1,279 22,668 10,221 10,942 1.505 33,923 20,289 12,491 1,143 26,561 12,115 11,724 2,722 23,790 10,203 12,382 1,205 23,585 8,649 13,613 1,323 33,839 17,297 15,121 1,421 26,613 8,880 16,544 1.189 11 12 13 14 6 6 8 26 19 10 19 48 4 24 13 11 41 4 7 40 13 15 -109,490 -120,197 -119,132 -119,649 -121,077 -128,648 -129,898 -129,806 -130,983 -143,781 -149,976 -150^87 -151,674 -160,164 -162,910 -166,951 -164,333 16 -78,761 -85,565 -83,721 -90,036 -87,113 -92,674 -92,524 -96,114 -93,458 -101,189 -104,510 -1 10,609 -107,464 -111,473 -110452 -117,277 -113,162 17 -30.729 -2,938 -34,632 -2,939 -35,411 -2,833 -29,613 -3,474 -33,964 -3,291 -35,974 -3,321 -37,374 -3,192 -33,692 -3,267 -37,525 -3,442 -12,592 -3,534 -i5,466 -3,610 -40.278 -3310 -14,210 -3,629 -48.691 -3,637 -52,658 -3,651 -49,674 -3,740 -51,171 -3,662 18 19 -1,483 -1,301 -3,563 -7,133 -1,877 -3,984 -8,346 -2,095 -3,922 -1,555 -1,398 ^1,175 -5.154 -1,479 -3,913 -6.542 -1.646 -4,107 -8,892 -2,139 -1,428 -5,412 -1,510 -1,267 -5.324 -1.487 -3.923 -8.390 -1,965 -4,477 -9,283 -2,295 -4,658 -6,218 -1,676 -5,005 -6,181 -1,702 -4,883 -8,679 -2,062 -5,005 -10,598 -2,347 -4,923 -6,654 -1,761 -1,830 -6,398 -1,769 -1,964 20 21 22 -229 -1,425 -433 -201 -1.400 -429 -228 -1.468 -465 -234 -1,554 -^105 -262 " -2,063 -445 -279 -2,159 -388 -301 -2,218 -475 -220 -2,291 -375 -331 -2,886 -378 -322 -2,915 -436 -323 -2,854 -540 -389 -2,736 -537 -474 -2,918 -468 -539 -2,699 -457 -550 -2,749 -530 -485 -3,034 -500 -438 -3,083 -487 23 24 25 -16,358 -2,284 -8,779 -5,296 -16,670 -2,544 -8,854 -5,272 -16,055 -1,937 -8,749 -5,369 -13,818 686 -9,135 -5,369 -17,357 -2,061 -9,669 -5,627 -17,532 -2,388 -9,585 -5,560 -15,729 -577 -9,462 -5,690 -16,350 -353 -10,266 -5,731 -19,755 -3,412 -10,391 -5,952 -20,554 -2,606 -11,984 -5,964 -21,904 -3,648 -12,276 -5,980 -20,207 166 -14,217 -6,156 -23,955 -3,807 -13,509 -6,639 -25,613 -4,512 -14,001 -7,100 -27,310 -4,373 -15,396 -7,541 -28,670 -4,056 -16,840 -7.774 -30,370 -4,225 -18,013 -8,132 26 27 28 29 -6 -6 -8 -26 -19 -10 -19 -18 -1 -24 -13 -11 -11 -» -7 -40 -13 30 -3,396 -3,419 -4,096 -4,515 -3,090 —4,121 -4^47 -4J20 -3,173 -3,101 -3,218 -1,720 -3330 -2,786 -3322 -53 18 -3,458 31 -2,230 -484 -683 -2,585 -116 -418 -3,085 ^159 -552 -3,321 -779 -414 -2,078 -456 -557 -3,246 -511 -364 -3,450 -435 —462 -2.956 -794 -169 -2,103 -490 -580 -2,244 -472 -386 -2,194 -513 -511 -3,609 -738 -374 -2,233 -494 -603 -1,928 -589 -269 -2,288 -537 -497 -3,928 -871 -420 -2.228 -596 -635 32 13 34 -2,482 -2,584 -7,473 -20,090 -15,999 -26,474 -26,563 -30,629 8352 -24356 -26,022 -33,992 3,892 -19,443 -37355 -28,703 -32,107 35 -233 -356 -121 -3.148 -115 16 280 132 1,956 3,419 32 3,741 1,503 39 -7,380 2,272 -4,000 36 37 -264 281 -250 -180 72 -248 -264 388 -245 -189 168 -3,126 -274 344 -185 -104 366 -246 163 508 -391 -31 283 -120 76 606 1,274 -171 335 3,255 -210 407 -165 -205 722 3,225 155 446 901 180 69 -210 -35 202 -7,547 173 307 1,791 -188 316 ^1,128 38 39 40 -920 -1,790 940 -70 -1,002 -2,553 1,285 266 -(37 -1,733 1,278 18 -462 -1,581 1,217 -98 -381 -1,826 1,423 22 -158 -1,637 1,436 43 -1,579 -4,274 1,737 957 94 -1,356 1,494 -43 -121 -978 1,010 -153 -100 -2,127 1,867 159 289 -2,067 2.360 -i 929 -1,343 2,388 -116 -1,673 -2,808 1,031 105 -829 -2,017 1,166 22 2,001 -1,458 3,402 57 3,499 -1,296 4,714 81 832 -1,093 1,922 3 41 42 43 44 -1,329 1 -127 -2,474 988 284 -1,226 -1,388 -2,219 2,056 3,325 -6.915 -7,317 -1,572 -1.874 3,847 -16,480 -4,236 -1,217 -247 -8,779 -15,503 -11.852 -5.930 -2,637 4.916 -26,332 -9,165 -1.051 -2,456 -13,660 -25,263 -6,352 181 -183 -18,909 -30,855 1.058 2,529 -2,120 -32,322 6317 -11,211 -1,749 -760 20,237 -27,875 -8,157 -287 3,442 -22,873 -26.343 -8,646 -1,159 322 -16,860 -38,662 -16,180 -2,056 2,197 -22,623 4,061 -6,600 ^1,539 -65 15,266 -18,653 -941 1,333 -6,443 -12,602 -32,477 -4,912 -1,592 255 -26,229 -34,474 -5,080 -3,047 4,569 -30,916 -28,938 -3.783 -2.554 n.a. -22,601 45 46 47 48 49 16307 25,103 35,082 53,320 39,048 50490 69,927 62,340 33381 51,134 73375 59,950 27,027 65334 46,179 80,759 49,077 50 -10,976 -7,499 -7,177 -322 -357 -3,007 -113 8,507 8.886 8.750 136 565 -120 -824 2,488 -358 -414 56 302 2,927 -383 -1,102 -2,168 -1,997 -171 370 845 -149 2,720 3,061 3,238 -177 431 -1,131 359 15,838 13,896 14,540 -644 1,001 1,472 -531 15,785 11,895 12,171 -276 1,149 3,043 -302 1.251 4,298 4,415 -117 -440 -2,197 -410 14,040 12,131 12,193 -62 -1,274 3,543 -360 10,330 11,340 11,084 256 -1,343 615 -283 753 1,555 841 714 -142 -35 -625 20.070 19.776 19.120 656 238 -205 261 24,631 27,540 27,702 -162 -304 -1,772 -833 5.895 6,055 5,853 202 -517 774 -417 -2,234 -3,197 -3,769 572 -232 1,703 -508 10,589 12,594 11,897 697 -232 -1.036 -737 6,914 5,301 4,585 716 -377 1,538 452 51 52 53 54 55 56 57 27.484 [ 5.321 j 2,590 9,615 -2,148 12,106 16,596 5,342 5,188 7,194 -1,778 650 32,594 5,007 7,736 11,669 870 7,312 54,422 3,352 4,919 22,484 2,690 20,977 36,328 4.014 5.820 18.730 -1,933 9,697 34,453 5,686 3,820 22,752 -1,131 3,326 54,142 8,087 -1,754 17.107 1,122 29,580 61,088 16,304 -4,077 12,380 -699 37,180 19,341 8,180 -2,826 18,372 2,153 -6338 40.805 7,876 -2,431 15,960 1.045 18,355 72,822 16,277 -2,835 12,676 109 46,595 39,879 14361 449 -4,888 -857 30,614 2,396 9.616 5,928 2,424 1,565 -17,137 59,438 13,885 5,458 9,699 -59 30,455 48,413 11,896 3,422 7,454 2,350 23,291 70,170 23,038 5,336 6,871 2.702 32,223 42.163 14.429 8.745 8391 n.a. 10,398 58 59 60 61 62 63 64 8,428 7,043 4,104 -4,276 4,186 9,630 -5494 3,086 -11,708 12,877 -3,186 3396 -3364 -12,015 28,603 -23,865 9,160 65 -23,380 i 4,322 -19,058 -20,224 -22,454 -30,065 3,922 -26,143 -26,977 -29,562 -32,942 5,326 -27,616 -28,627 -31,712 -35,761 11,322 -24,439 -25,632 -28,954 -33,061 8,917 -24,144 -25,157 -27.235 -34,657 5,332 -29,326 -30,201 -33,447 -38,790 5,367 -33,423 -34,320 -37,770 -38,550 7,973 -30,577 -31,840 -34,797 -35,790 8,938 -26,852 -27,922 -30,025 -39,493 3,140 -36,353 -37,21 1 -39,454 -42.875 1.726 -11.150 -42,173 -44,367 -41.342 16.209 -25,134 -26.245 -29.854 -30,453 6,227 -24,226 -25,323 -27,556 -31,012 -77 -31,089 -31,947 -33,875 -32,705 -900 -33,605 -34,638 -36,926 -33,045 10,072 -22,973 -24,263 -28,191 -24,528 1.856 -22,672 -23,902 -26.131 66 67 68 69 70 -233 -10,619 -356 7,942 -121 2,186 -3,148 -1,472 -115 2,289 16 14,837 280 14,636 132 1,691 1,956 15,314 3,419 11,672 32 895 3,741 19,832 1,503 24,935 39 6,412 -7,380 -2,002 2,272 10,821 -4.000 7391 71 72 120 Balance of Payments of the United States Table 1. — U.S. International [Millions of dollars. (Credits +; debits - 1984 Exports of goods and services 2 Merchandise, adjusted, excluding military 3 Services 4 Transfers under U.S. military agency sales contracts.. Travel Passenger fares Other transportation.. Royalties and license fees 16 Other private services 6 U.S. Government miscellaneous services . Receipts of income on U.S. assets abroad.. Direct investment Other private receipts U.S. Government receipts Transfers of goods and services under U.S. military grant programs, net.. Imports of goods and services Merchandise, adjusted, excluding military J Services * Direct defense expenditures Travel Passenger fares Other transportation. Royalties and license fees 56 Other private services 6 U.S. Government miscellaneous services Payments of income on foreign assets in the United States . Direct investment.. Other private payments U.S. Government payments U.S. military grants of goods and services, net Unilateral transfers (excluding military grants of goods and services), net.. U.S. Government grants (excluding military grants of goods and services).... U.S. Government pensions and other transfers Private remittances and other transfers U.S. assets abroad, net (increase/capital outflow (-)) .. U.S. official reserve assets, net 7 Gold Special drawing rights Reserve position in the International Monetary Fund.. Foreign currencies 82,257 49,317 32.940 3,669 2,647 899 3,034 1,278 3,189 147 18,077 4,298 12,568 1,211 34 -83,721 -59,488 -24,233 -3,127 -2,966 -1.336 -2,880 -154 -1.144 -404 -12,222 -1,085 -6.709 -4,428 -34 -1,782 -1,01 1 -542 -229 -23,634 -787 82,602 49,224 33,378 3,136 2,662 900 3,111 1,330 3,266 241 18,732 5,028 12,533 1,171 26 -89,689 -64,406 -25,283 -3,149 -3,259 -1,517 -2,865 -163 -1,100 ^131 -12,799 -1,512 -6,919 -4,368 -26 -2,107 -1,245 -559 -303 -464 16 86,311 50,824 35,487 3,064 2,999 879 3,187 1,343 3.199 132 20,684 6,205 13.247 1,232 46 -97,384 -70,839 -26,545 -3,191 -3,501 -1,542 -3,157 -186 -1,069 -372 -13,527 -1,640 -7,425 -4,462 -46 -2,489 -1,549 -550 -390 -8361 529 86,213 52.455 33.758 2,475 2,639 932 3,258 1,326 3,223 147 19,758 4,968 13,572 1,218 74 -101,102 -74,167 -26.935 -3,220 -3,424 -1.609 -3,320 -221 -951 -361 -13,829 -1,361 -7,901 -4,567 -74 -3399 -2,483 -557 -359 -17,119 -953 91,913 53.240 38.673 2,639 "4,040 "983 3,332 1,352 3,380 149 22,798 7,676 13,912 1,210 25 -109,996 -79,635 -30,361 -2,903 " -5,397 17 -1,423 -3,550 -222 -1,069 -362 -15,435 -2,356 -8,423 -4,656 -25 -2,442 -1,473 -536 -433 -3381 -657 37,780 2,464 4,778 1,026 3,436 1,393 3,334 201 21,148 4,762 14,949 1,437 31 -116,095 -83,332 -32,763 -3,065 -5,596 -1,463 -3,663 -213 -1,196 -371 -17,196 -2,569 -9,865 -4,762 -31 -2^24 -1,526 -555 -443 -19,454 -566 94,014 56,170 37,844 2,522 4,294 1,001 3,500 1,433 3,439 164 21,491 4,302 15,934 1,255 44 -118335 -84,339 -33,996 -2,864 -5,970 -1,467 -3,782 -243 -1,309 -383 -17,978 -2,294 -10,625 -5,059 -44 -3,173 -2,230 -524 -419 17395 -799 U.S. Government assets, other than official reserve assets, net U.S. credits and other long-term assets Repayments on U.S. credits and other long-term assets 8 U.S. foreign currency holdings and U.S. short-term assets, net U.S. private assets, net Direct investment Foreign securities U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns.. U.S. claims reported by U.S. banks, not included elsewhere Foreign assets in the United States, net (increase/capital inflow (+)) . Foreign official assets in the United States, net U.S. Government securities U.S. Treasury securities 9 Other 10 Other U.S. Government liabilities " U.S. liabilities reported by U.S. banks, not included elsewhere Other foreign official assets" Other foreign assets in the United States, net Direct investment U.S. Treasury securities U.S. securities other than U.S. Treasury securities U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns.. U.S. liabilities reported by U.S. banks, not included elsewhere Allocations of special drawing rights Statistical discrepancy (sum of above items with sign reversed).. Of which seasonal adjustment discrepancy Memoranda: Balance on merchandise trade (lines 2 and 17) , Balance on services (lines 3 and 18) Balance on goods and services (lines 66 and 67) n , Balance on goods, services, and remittances (lines 68, 33, and 34) . Balance on current account (lines 68 and 31) 13 -2.139 1,450 -1,136 -2,378 1,319 -77 -21.711 2,917 -1,549 -2,776 -20,303 16,002 -38 2,641 3,012 -371 -404 -1,893 -382 16,039 1,789 "2,913 2,873 -2.763 11,227 -303 -212 531 -1,263 -2,421 1,196 -38 783 308 -2.813 -230 3.518 15,635 1,612 1,825 1,995 -170 382 231 -826 14,023 4,097 16 3,116 2.470 -64 4,404 K26 -1,171 -2,755 1,546 38 -7,919 -2,762 -1,308 -233 -3,616 19386 -2,689 -973 -611 -362 101 -1,353 -(64 22,075 4,325 16 1,008 1,777 1,311 13,654 545 -1,996 498 -1,436 -2,413 950 27 -14,730 -836 -1,093 -3,274 -9,527 33,847 6,960 3,003 2,576 427 523 3,560 -126 26,887 1,736 1,652 1,044 1,398 21,057 -226 -200 -231 -2,033 -2.792 1,011 -252 -891 -965 758 873 -1,557 22,116 -2,956 -271 -274 3 150 -2,242 -593 25,073 5,199 1,950 1,333 5,066 11,525 -288 -321 44 -1,342 -2,695 1,350 3 -17,547 1,799 -764 1.564 -20,146 41,855 -156 -125 -271 146 576 363 -970 42,011 9,009 6,336 362 4,714 21,590 -271 -331 -197 -1,392 -2,190 928 -130 19,586 1,334 -1,106 1,541 17,817 2,472 -487 -571 84 -73 400 -724 3,355 4,853 5,303 1,447 -3.056 -5,192 Transactions in U.S. official reserve assets and in foreign official assets in the United States: Increase (-) in U.S. official reserve assets, net (line 36) , Increase (+) in foreign official assets in the United States (line 51 less line 55) 10,879 641 -10,171 8,707 -1.464 -2.235 -3,246 -787 366 -5,977 -778 -15,182 8,095 -7,087 -7.949 -9,194 16 1,230 2,737 -3,700 -20,015 8,942 -11,073 -12,013 -13,562 529 -2,790 1360 3,842 -21,712 6,823 -14,889 -15,805 -18,288 -953 6,437 1,989 2,447 -26,395 8,312 -18,083 -19,052 -20,525 -657 -3.106 3,782 -2,148 -28,676 5,017 -23,659 -24,657 -26,183 -566 -732 7,628 -4,578 -28,169 3,848 -24,321 -25.264 -27,494 -799 -811 See footnotes on page 1 46. Appendix — Balance of Payments Tables, June 1989 SURVEY 121 Transactions — Continued seasonally adjusted) 1985 1986 1987 1988 1989 Line I II III IV I 11 III IV I II III IV I II III IV I' 90,532 92,932 93,947 93,800 97,413 98,115 98,322 98,109 104315 105,694 110,922 125,211 127,810 126,800 131373 143,626 142,569 1 55,067 54,197 53,434 53,237 53,899 56,796 56,182 56,490 57,255 60,015 64,297 68,699 76,447 78.471 80,604 83,729 88,496 2 35,465 2,614 38,735 2,255 40,513 1,962 40,563 1,795 43,514 1.880 41,319 2.023 42,140 2,103 41,619 2,490 47,060 3,266 45,679 3,324 46,625 2,579 56,512 2,070 51,363 2,665 48,329 2.604 50,969 2,645 59,897 2,136 54,073 2,180 3 4 ! 4,645 979 3,595 4,623 1,086 3,572 4,341 1,119 3,642 4,328 1,203 3,865 5,130 1,328 3,826 4,788 1,168 3,844 5,276 1,577 3.910 5,260 1,473 3,878 5,304 1,533 4,009 5,722 1.670 4,163 6,073 1.797 4.337 6,405 1,883 4,480 6,518 2,115 4,675 6,968 2,085 4,769 7,626 2,321 4,710 8,090 2,339 4,776 7,847 2,348 5,014 5 6 7 1,391 3.468 230 1,414 3,460 233 1,407 3,488 244 1.782 3,533 171 1,664 17 5,527 189 1,789 5,496 133 1,879 5,524 127 1,922 5,627 147 2,144 5,578 109 2,176 5,748 132 2,334 5,782 145 2.416 5.852 141 2,517 5,974 149 2,610 5,973 172 2.697 6,078 172 2.911 6,306 180 2,885 6,773 164 8 9 10 18,543 4,284 12,994 1,265 22,092 8,112 12,694 1,286 24,310 10,516 12,244 1,550 23,886 10,290 12,199 1,397 23,970 10,832 11,560 1,578 22,078 9.491 11,140 1,447 21,744 9,307 10,460 1,977 20,822 8,902 10,509 1,411 25,117 13,415 10,332 1,370 22,744 10.446 10,873 1,425 23,578 11.300 10,942 1,336 33,265 19,595 12,491 1,179 26,750 12,297 11,724 2,729 23,148 9,439 12,382 1,327 24,720 9,940 13,613 1.167 33,159 16,589 15,121 1,449 26,862 9.094 16.544 1,224 11 12 13 14 6 6 8 26 19 10 19 48 4 24 13 11 41 4 7 40 13 15 -113,508 -117,397 -116,922 -120,644 -125,693 -125,768 -127,532 -130,439 -135305 -141,249 -147,609 -151,266 -156,492 -157386 -160337 -167,285 -169,834 16 -80,770 -83,843 -84,032 -89,438 -89,549 -90,812 -92,983 -95,081 -95,916 -99,834 -104,903 -109,113 -109,893 -109,882 -110,943 -115,748 -116.130 17 -32,738 -2,938 -33,554 -2,939 -32,890 -2,833 -31.206 -3,474 -36,144 -3,291 -34.956 -3,321 -34,549 -3,192 -35,358 -3,267 -39,589 -3,442 -11,415 -3,534 -42,706 -3,610 -42,153 -3,510 -46,599 -3,629 -47,504 -3,637 -49,594 -3,651 -51,537 -3,740 -53,704 -3,662 18 19 -6,013 -1,599 -3,750 -6,295 -1,728 -3,883 -6,310 -1.712 -3,826 -5,899 -1,632 -1,184 -6,811 -1,794 -4,131 -5,749 -1,507 -4,009 -6.588 -1,736 -4,313 -6,852 -1,738 -4,262 -6,973 -1,789 -4,049 -7,358 -1,816 -4,469 -7,034 -1.880 -4,572 -7,850 -1,939 -4,972 -8,092 -2,037 -5,033 -7,643 -1,903 ^1,995 -8,084 -1,902 -4,826 -8,293 -2,031 —4,787 -8,377 -2,152 -5,144 20 21 22 -229 -1,411 -439 -201 -1,415 -423 -228 -1,492 -434 -234 -1,529 -436 -262 11 -2,049 -449 -279 -2,174 -384 -301 -2,245 -445 -220 -2,263 ^106 -331 -2,871 -379 -322 -2,932 -430 -323 -2,882 -501 -389 -2,705 -581 -474 -2,902 -477 -539 -2,718 -456 -550 -2,780 -491 -485 -3,000 -531 -437 -3,066 -496 23 24 25 -16,359 -2,284 -8,779 -5,296 -16,670 -2,544 -8.854 -5.272 -16,055 -1,937 -8,749 -5,369 -13,818 686 -9,135 -5,369 -17.357 -2,061 -9.669 -5,627 -17,533 -2.388 -9,585 -5,560 -15,729 -577 -9,462 -5,690 -16,350 -353 -10.266 -5,731 -19,755 -3,412 -10,391 -5,952 -20,554 -2,606 -11,984 -5,964 -21,904 -3,648 -12,276 -5,980 -20,207 166 -14,217 -6,156 -23,955 -3,807 -13,509 -6,639 -25,613 -4,512 -14,001 -7,100 -27,310 -4,373 -15,396 -7,541 -28,670 -4,056 -16,840 -7,774 -30,370 -4,225 -18,013 -8,132 26 27 28 29 -6 -6 -8 -26 -19 -10 -19 -48 -4 -24 -13 -11 -41 -4 -7 -40 -13 30 -3,381 -3383 -4,151 -4,312 -3,068 -4,199 -»,376 -4,136 -3,137 -3,265 -3,225 -4386 -3,364 -2,899 -3376 -5,018 -3,420 31 -2,230 -542 -609 -2,585 -522 ^176 -3,085 -531 -535 -3,321 -544 -447 -2,078 -517 -(73 -3,246 -521 -432 -3,450 -489 ^137 -2,956 -670 -510 -2,103 -544 -490 -2,244 -559 -462 -2,194 -551 -480 -3,609 -558 —419 -2,233 -620 -511 -1.928 -622 -349 -2,288 -626 M62 -3,928 -623 -467 -2,228 -649 -543 32 33 34 -1,611 -1,622 -7392 -21,804 -15,401 -24,763 -26,078 -33,422 8,759 -22,632 -25,976 -36370 4340 -16,119 -37,886 -32,648 -31,816 35 -233 -356 -121 -3,148 -115 16 280 132 1,956 3,419 32 3,742 1,503 39 -7,380 2,272 ^4,000 36 37 -264 281 -250 -180 72 -248 -264 388 -245 -189 168 -3,126 -274 344 -185 -104 366 -246 163 508 -391 -31 283 -120 76 606 1,274 -171 335 3,255 -210 407 -165 -205 722 3,225 155 446 901 180 69 -210 -35 202 -7,547 173 307 1,791 -188 316 -4,128 38 39 40 -760 -1,790 1,100 -70 -1,053 -2,553 1,234 266 -»53 -1,733 1,262 18 -555 -1,581 1,124 -98 -232 -1,826 1,572 22 -238 -1,637 1,356 43 -1,565 -4,274 1,752 957 11 -1,356 1,410 -43 40 -978 1,171 -153 -195 -2,127 1,773 159 308 -2.067 2,379 -1 843 -1,343 2,302 -116 -1,490 -2,808 1,213 105 -885 -2,017 1,110 22 1,961 -1,458 3,362 57 3,413 -1,296 4,628 81 1,012 -1,093 2,102 3 41 42 43 44 -618 584 -2,474 988 284 -213 -3,375 -2,219 2,056 3,325 -7,018 -7,419 -1,572 -1,874 3,847 -18,102 -7,859 -1,217 -247 -8,779 -15,054 -11,403 -5,930 -2,637 4,916 -24,541 -7,374 -1,051 -2,456 -13,660 -24,793 -5,882 181 -183 -18,909 -33,565 -1.652 2,529 -2,120 -32,322 6,763 -10,965 -1,749 -760 20,237 -25,856 -6,138 -287 3,442 -22,873 -26,316 -8,619 -1,159 322 -16,860 -40.955 -18,473 -2,056 2,197 -22,623 4,528 -6,134 -4,539 -65 15,266 -15,273 2.439 1,333 -6,443 -12,602 -32,467 -4,901 -1,592 255 -26,229 -38,332 -8,938 -3,047 4,569 -30,916 -28,828 -3,673 -2,554 n.a. -22,601 45 46 47 48 49 16307 25,103 35,082 53,320 39,048 50,291 69,927 62339 33381 51,134 73375 59,949 27,027 65334 46,179 80,759 49,077 50 -10,976 -7,499 -7,177 -322 -357 -3,007 -113 8,507 8,886 8,750 136 565 -120 -824 2,488 -358 -414 56 302 2,927 -383 -1,102 -2,168 -1,997 -171 370 845 -149 2,720 3,061 3.238 -177 431 -1,131 359 ' 15,838 13,896 14,540 -644 1,001 1.472 -531 15,785 11,895 12,171 -276 1,149 3,043 -302 1,251 4,298 4,415 -117 -440 -2,197 -110 14,040 12,131 12,193 -62 -1,274 3,543 -360 10.329 11,340 11,084 256 -1,343 615 -283 753 1,555 841 714 -142 -35 -625 20,070 19,776 19,120 656 238 -205 261 24.631 27.540 27,702 -162 -304 -1.772 -833 5,895 6,055 5,853 202 -517 774 -117 -2,234 -3,197 -3,769 572 -232 1,703 -508 10,589 12,594 11,897 697 -232 -1,036 -737 6,914 5,301 4,585 716 -377 1.538 452 51 52 53 54 55 56 57 27,484 5,321 1 2,590 9,615 -2,148 12,106 16,596 5,342 5,188 7,194 -1,778 650 32,594 5,007 7,736 11.669 870 7,312 54,422 3,352 4.919 22.484 2,690 20,977 36.328 4,014 5,820 18,730 -1,933 9,697 34,453 5,686 3,820 22,752 -1,131 3,326 54,142 8.087 -1.754 17,107 1,122 29.580 61,088 16,304 ^1,077 12,380 -699 37,180 19,341 8,180 -2,826 18,372 2,153 -6.538 40.805 7,876 -2,431 15,960 1,045 18,355 72,822 16,277 -2,835 12,676 109 46,595 39,879 14,561 449 -4,888 -857 30,614 2,396 9,616 5,928 2,424 1.565 -17,137 59,438 13,885 5,458 9.699 -59 30,455 48.413 11,896 3.422 7,454 2,350 23,291 70,170 23,038 5,336 6,871 2,702 32,223 42,163 14,429 8.745 8391 n.a. 10.398 58 59 60 61 62 63 64 11,460 3,032 4367 -2,476 -364 -4.468 -360 3,916 7,701 3,515 6324 -3,306 -10,263 -»,669 7349 4.463 -7^13 3,895 10318 -2.559 -7,687 ^t,501 7,062 3.166 479 3,843 -15,729 -3.714 24,047 -4.556 -19,434 4,431 13,424 4,264 65 65a -25,703 2,727 -22,976 -24,127 -26,357 -29,646 5,181 -24,465 -25.463 -28,048 -30,598 7,623 -22,975 -24,041 -27,126 -36,201 9,357 -26,844 -27,835 -31,156 -35,650 7,370 -28,280 -29,270 -31.348 -34,016 6,363 -27,653 -28,606 -31,852 -36.801 7,591 -29,210 -30,136 -33,586 -38,591 6,261 -32,330 -33.510 -36,466 -38,661 7,471 -31,190 -32,224 -34,327 -39,819 4,264 -35,555 -36,576 -38,820 -40,606 3,919 -36,687 -37,718 -39,912 ^10.414 14.359 -26,055 -27.032 -30,641 -33,446 4,764 -28,682 -29,813 -32,046 -31,411 825 -30,586 -31,557 -33.485 -30.339 1.375 -28.964 -30,052 -32,340 -32.019 8.360 -23,659 -24,749 -28,677 -27,634 369 -27.265 -28.457 -30.685 66 67 68 69 70 -233 -10,619 -356 7,942 -121 2,186 -3,148 -1,472 -115 2,289 16 14,837 280 14,636 132 1,691 1,956 15,314 3,419 11,672 32 895 3,742 19,832 1,503 24,935 39 6,412 -7,380 -2,002 2,272 10,821 -4.000 7.291 71 72 122 Balance of Payments of the United States Table 2.— U.S. Line 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 A 1 2 Balance of payments adjustments to Census trade data: EXPORTS Merchandise exports, Census basis ' including reexports and including military grant shipments. Adjustments: 143,682 102 36 756 2,118 -4,720 80 142,054 174,757 422 844 181,860 109 159 899 4,662 -3,229 13 184,473 209,458 623 1,407 220,626 156 317 1,043 5,103 -3,317 341 224,269 244,871 664 2,772 233,677 178 1,285 1,151 5,108 ^(,921 607 237,085 261,305 940 1,816 212,193 163 883 967 4,485 -7,369 -124 211,198 243,941 910 1,462 1,118 115 ^127 523 247,642 211,198 59,701 46,905 5,153 7,194 9,213 4,641 7,455 10,694 2.419 12,796 39,203 20,694 7,656 4,402 3,749 33,152 3,446 11,736 5.192 12,778 46,978 39.817 12,000 2,920 2,450 5,286 3,206 4,006 6,933 2,647 65 127,254 20.651 63,228 201,656 166 350 1,164 5,014 -6,546 16 201,820 261,724 999 290 1,325 1,292 -446 3.716 268,900 201,820 55,448 43,776 5,055 6,029 8,641 3,947 7,286 10,572 2.246 11,672 44,512 21,789 6,604 3,850 2,976 25,641 2,556 9,094 2,707 11,284 44,785 38,639 10,217 2,228 2,572 5,732 3,715 4,291 5,876 1,733 65 128,353 15,256 58.146 218,722 169 330 1,373 5,164 -5,719 -139 219,900 330,514 1,067 474 1,504 -841 -774 478 332,422 219,900 56,867 46,380 5,194 6.055 8,775 4,310 7,486 12,201 2,359 10.487 53,037 23,241 7,849 4,849 4,290 29,766 2,746 12,020 3,386 11.614 44,817 39,005 8,419 3,017 3,118 5,887 3,687 4,765 5,526 1,316 33 140,994 13,771 65,102 212,606 194 406 1,345 6,771 -5,461 74 215,935 336,228 1,022 559 1,376 -708 -1,005 611 338,083 215,935 56,015 45,191 4,805 6,097 8,939 4,557 7,241 11.087 2,465 10,824 55,390 22,145 6,967 5,060 3,258 30,788 3,311 13,386 3,063 11,028 41,180 35,265 6,203 3,854 2,754 5,728 3,444 4,274 5,619 1,558 192 140,517 11,409 63.817 226,471 175 457 1.298 253,934 243 718 1.609 322,471 245 592 1,845 3 4 5 6 7 Merchandise exports transferred under U.S. military agency sales contracts identified in Census documents 3 . -4,550 -484 223,367 365,672 872 2,163 1,643 -645 -1,199 -81 368,425 223.367 60,375 51.848 5,456 7,119 10,461 4,750 7,190 11,152 5,720 8,527 56,503 26.354 -5,686 -552 250,266 406,283 986 2,133 1,830 -5,221 -681 319.2S1 441,351 844 3.576 2,254 8 9 Equals: Merchandise exports, adjusted to balance of payments basis excluding "military" (table 1, line 2). IMPORTS 10 Adjustments: 11 12 13 -247 -162 387 176,001 142,054 39,546 31,778 3,682 4,258 7,204 3,371 4,843 7,277 1,123 7,768 31,229 12,960 4,213 2,712 3,893 22,033 2,959 6,689 3,727 8.658 28,180 23,466 8,633 863 1,625 2.929 1,452 2.165 4,576 1,886 403 -225 343 212,009 184,473 54.177 42.474 5,223 5,663 8,694 4,459 6,334 10,686 1,425 11,703 38.690 17,629 5.434 3,482 5,913 28,555 3.425 9,931 3,933 11,266 34,075 29,141 8,372 1,731 2,082 3,830 2,251 3.089 4,706 1,557 419 -394 1,418 249,750 224,269 67,603 53,466 6,673 7,539 11,449 5,606 7,454 12,818 1,693 14,137 41,626 20,806 7,117 4,044 4,143 38,844 4,359 15,231 4,574 14,680 44,097 37,332 9,655 3,821 2,682 4.403 3,028 4.089 6,504 2,281 33 137,152 17.368 69,716 623 -307 686 265,063 237,085 65,108 51,366 5,643 7,43! 10,502 5,415 7,358 12,483 2,622 13,742 46,016 21,796 8,980 5,100 4,440 42,804 3,784 18,207 5,441 15,372 47.853 39,473 11,597 3,624 2,633 4,998 2,967 4.033 7,873 3,207 88 141,900 21,097 74,000 14 -1,330 -136 409,766 250466 68.605 59.530 6,147 7,949 11,533 5,466 8,026 13,752 6,657 9,075 62,005 27,619 -1.686 127 446,466 319451 86.414 74,510 7.353 9.996 14,036 6,668 9,961 18,042 8.454 11,904 73.540 37,148 15 16 II 1 Equals: Merchandise imports, adjusted to balance of payments basis, excluding "military" (table 1, line 17). Merchandise trade, by area and country, adjusted to balance of payments basis, excluding military: 6 EXPORTS 2 3 4 5 6 7 g 9 10 Other 11 12 13 14 15 5,072 2,074 30,757 3.879 12,310 3,094 11.474 42,232 36.332 5.780 3.065 2.981 5.862 3,344 5,115 5,636 911 5,291 2,262 34,971 4,082 14,558 3,534 12.797 49,513 43,694 5,775 3,512 3,974 7.646 4,044 7,096 5.581 778 6,804 3.796 43.624 4.240 20,573 4.525 14,286 67.925 60.394 7.369 5,028 5,663 10,666 5.756 11.859 7,195 1.177 16 17 18 Brazil 19 20 21 Other 22 23 24 Members of OPEC 75 China 7(i 27 28 24 1(1 31 Members of OPEC 3? 33 Memoranda: 87,948 14,846 39,260 115,930 14.556 53,987 150,318 10,387 62,662 165,623 10.706 73,937 206,531 13,745 98,975 34 Members of OPEC 35 See footnotes on page 146. Appendix — Balance of Payments Tables, June 1989 SURVEY 123 Merchandise Trade of dollars] Noi seasonally adjusted Seasonally adjusted 1987 1988 1989 1987 1988 1989 Line 1 II III IV 1 II III IV 1' I 11 III IV I II III IV \' 58,471 62,924 62,296 70,243 77,713 81,091 78,438 85,229 89,176 58,050 61,266 64,945 69,673 77,145 79,127 81,478 84,721 89,040 1 58 52 59 74 58 54 58 75 60 58 52 59 74 58 54 58 75 60 2 152 147 363 56 14 296 126 156 133 152 147 363 56 14 296 126 156 133 3 368 424 399 418 453 473 458 461 447 376 400 412 421 457 447 475 466 445 4 5 -1,221 -1.685 -1,396 -1,384 -1,076 -1,305 -1,472 -1,368 -1,036 -1,221 -1,685 -1,396 -1,384 -1,076 -1,305 -1,472 -1,368 -1,036 6 -160 -166 -86 -140 -151 -148 -61 -321 -146 -160 -165 -86 -141 -151 -148 -61 -321 -146 7 57,668 61,696 61,635 69,267 77,011 80,461 77,547 84,232 88,634 57,255 60,015 64,297 68,699 76,447 78,471 80,604 83,729 88,496 8 92,903 100,757 103,465 109,158 105,527 109,693 109,665 116,466 112,681 95,360 99,402 103,858 107,663 107,957 108,101 110,356 114,937 115,649 9 241 264 242 170 256 560 247 1,139 246 1,573 193 1,460 238 224 167 319 241 264 242 170 256 560 247 1,139 246 1,573 193 1,460 238 224 167 319 10 443 443 11 447 469 453 461 665 554 501 534 535 447 469 453 461 665 554 501 534 535 12 13 -285 -330 -370 -345 -409 -387 -445 •-M5 -360 -285 -330 -370 -345 ^409 -387 -445 -445 -360 14 -112 -119 146 -51 -138 -40 69 236 -137 -111 -119 146 -52 -139 -39 69 236 -137 15 93,458 101,189 104310 110,609 107,464 111,473 110.252 117,277 113,162 95,916 99,834 104,903 109,113 109,893 109,882 110,943 115,748 116,130 16 57,668 61,696 61,635 69,267 77,011 80,461 77,547 84,232 88,634 57,255 60,015 64,297 68,699 76,447 78,471 80,604 83,729 88,496 1 16.964 17,033 15,812 18,796 21,552 22,110 19.927 22,825 24,632 16,867 16,573 16,498 18,667 21,439 21,541 20,673 22,761 24,634 2 14,879 14,773 13.673 16.205 18,636 19,015 17.202 19,657 21.348 14,790 14,381 14,276 16,083 18,529 18,531 17,855 19,595 21,346 3 1,494 1,454 1.585 1,614 1,837 1,794 1,764 1,958 2,038 1,488 1,409 1,644 1,606 1.833 1,740 1.823 1,957 2,041 4 1.847 1 ,963 1,854 2,285 2,613 2,432 2.370 2,581 2,857 1,843 1.902 1,926 2,278 2,607 2,361 2,448 2,580 2,864 5 2.963 2.704 2.640 3,226 3,583 3,668 3,138 3,647 4,102 2,941 2,630 2,755 3,207 3,563 3,571 3.258 3,644 4,109 6 1,408 1,434 1.173 1,451 1,616 1.766 1,496 1,790 1.829 1,398 1,402 1,224 1,442 1,605 1,726 1,551 1,786 1,829 7 2.273 1,880 1,749 2,124 2,533 2,396 2,282 2,750 2,820 2,243 1,854 1,853 2,076 2,498 2,359 2,387 2,717 2,802 8 3.274 3.587 3,243 3,648 4,424 4,679 4,202 4,737 5,089 3,274 3,471 3,363 3,644 4,422 4,537 4.345 4,738 5.106 9 1.620 1,751 1,429 1,857 2.030 2,280 1,950 2,194 2,613 1,603 1,713 1,511 1,830 2,001 2,237 2.043 2,173 2,595 10 2,085 2.260 2,139 2,591 2,916 3,095 2,725 3,168 3,284 2,077 2,192 2,222 2,584 2,910 3,010 2.818 3,166 3,288 11 14,947 16.242 14,185 16.631 19,094 18.807 16,924 18.715 20,524 14.953 15,720 14,686 16,646 19,091 18,230 17,479 18,740 20,582 12 5,808 6.487 7,532 7,792 8,740 9,226 9,590 9,592 10,375 5,709 6,366 7,897 7,647 8,609 9,061 10,027 9,451 10,316 13 14 i . i 82 1.385 1,354 1,370 1,335 1,529 1,736 2,204 1,817 1,182 1,337 1,399 1,373 1,333 1,477 1,788 2,206 1,824 15 343 702 582 635 1,190 1,036 552 1,018 1,711 328 708 630 596 1,132 1,081 601 982 1,648 16 7,580 8,469 9.348 9.574 9.601 10,630 11,318 12,075 11,894 7,516 8.231 9,726 9,498 9,536 10,342 11,763 11,983 11,884 17 716 901 1.316 1,149 951 1,189 1,043 1,057 1,044 709 873 1,360 1,140 952 1,150 1,076 1,062 1.048 18 3.335 3.567 3.732 3.924 4,325 4,975 5,374 5,899 6,022 3,314 3.461 3.876 3,907 4,302 4,836 5,585 5,850 6,018 19 665 840 964 1 ,065 997 1.044 1,230 1,254 1,037 656 820 1,006 1,052 986 1,018 1,281 1,240 1,032 20 2,864 3,161 3,336 3,436 3,328 3.422 3,671 3,865 3,791 2,837 3,077 3,484 3,399 3,296 3,338 3,821 3,831 3,786 21 10.844 1 1 ,378 12,822 14,469 15.499 17.123 17,500 17,803 17,681 10,700 11,080 13,461 14,272 15,307 16,739 18,273 17,606 17,608 22 9.486 9,960 11,356 12,892 13.898 15,056 15,553 15,887 15,916 9,372 9,688 11.896 12.738 13,750 14,694 16,214 15.736 15.862 23 1.288 1,364 1.464 1,659 1.812 1.704 1,830 2,023 1,964 1,268 1,335 1,546 1,626 1,784 1,671 1,918 1.996 1,955 24 863 703 837 1,109 1.053 1.263 1.319 1,393 1.492 858 684 871 1.099 1,048 1.233 1.374 1,373 1.477 25 908 905 1.030 1,131 1,200 1,352 1.631 1.480 1.487 900 881 1,073 1,120 1,192 1,314 1,685 1,472 1.486 26 1,677 1,881 2.028 2,060 2,387 2,572 2,878 2,829 3,059 1,644 1,842 2,144 2,016 2.339 2.523 3.011 2,793 3.041 27 954 968 992 1,130 1,250 1.398 1,525 1.583 1,771 954 936 1.025 1,129 1.250 1,352 1,570 1,584 1,778 28 1.331 1.578 1,707 2.480 3,245 3,432 2,688 2,494 2,428 1,307 1,543 1.794 2,452 3.225 3,353 2.807 2.474 2.420 29 1,316 1,352 1.402 1,511 1,536 1,980 1,873 1,806 1,660 1,286 1.327 1,497 1,471 1,492 1,960 1,978 1,765 1,640 30 193 204 164 217 287 306 262 322 252 188 205 178 207 276 310 281 310 248 31 32 39.350 41.671 39,441 45,161 51,303 52.287 48,920 54.021 57,969 39,159 40,500 41.060 44,904 51,052 50.903 50.734 53.842 57,977 33 2.281 2.585 2.747 3,093 3,251 3.208 3,510 3.776 3.436 2,246 2.533 2.891 3,036 3,198 3.150 3.675 3,722 3,417 34 16,037 17.440 19,447 21,013 22,457 24.966 25,117 26,435 27,229 15.850 16,982 20.346 20,759 22,197 24,418 26,195 26,165 27,102 35 124 Balance of Payments of the United States Table 2. — U.S. Merchandise [Millions Line 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 B 36 Merchandise trade, by area and country, adjusted to balance of payments basis, excluding military 6 — Continued: IMPORTS 176,001 36.608 29.049 1,762 4,067 9,969 4,107 1.590 6,470 1,009 7,559 33,756 24,540 4,440 1,657 1,508 23,038 2,826 6,091 3,589 10,532 51,359 35,683 16,162 326 3,476 3,746 1,068 5,174 15,500 12,794 752 99,344 33,286 42,619 -33,947 2,938 2,729 1,920 191 -2,765 -736 3,253 807 114 209 -2,527 -11,580 -227 1,055 2,385 -1,005 133 598 138 -1,874 -23,179 -12,217 -7,529 537 -1,851 -817 384 -3.009 -10,924 -10,908 -752 -11,396 -18,440 -3,359 212,009 41,817 33,219 1,739 4,781 10,952 4.922 1,851 8,004 1.032 8,598 39,227 26.260 5,493 2,163 1,896 30,532 3,133 8,798 5,204 13,397 65,599 42,425 19,306 594 3,998 4,047 1,467 5,908 22,965 19,699 1,185 112,797 45,039 52,988 -27^36 12,360 9,255 3,484 882 -2,258 -463 4,483 2,682 393 3,105 -537 -8,631 -59 1,319 4,017 -1,977 292 1,133 -1,271 -2,131 -31,524 -13,284 -10,934 1,137 -1,916 -217 784 -2,819 -18,259 -18,142 -1,185 3,133 -30.483 999 249,750 47,235 36,077 1,912 5,261 11,692 4.298 1,895 9.842 1,137 11,158 42,901 31,216 6.532 2,508 1,444 37,522 3,793 12,581 5,314 15,834 81,613 49,931 22,792 1.057 4.739 4,244 1,921 6,854 31,103 26,620 1,287 127,884 55,602 64.977 -25,481 20,368 17.389 4,761 2,278 -243 1,308 5,559 2,976 556 2,979 -1,275 -10,410 585 1,536 2,699 1,322 566 2,650 -740 -1,154 -37,516 -12.599 -13,137 2,764 -2,057 159 1,107 -2.765 -24,599 -24.339 -1,254 9,268 -38,234 4,739 265,063 52,864 41,416 2,281 5,838 11,388 5,179 2,348 12,742 1,693 11,448 48,253 37,597 5,608 2,458 1.553 39,096 4,475 13,767 5,563 15,291 80,092 55.296 23,330 1.892 5,422 5,141 2,114 8,049 24,648 20,020 247,642 52.900 42,342 2,386 5,531 11,902 5.289 2.476 13,042 1,696 10,558 48,523 37,683 5,033 2,282 1,066 38,554 4,808 15,556 4,761 13,429 63,860 47,894 14,784 2,284 5,531 5,667 2,193 8,892 15,941 10,840 23 144,139 31,517 71,963 -36,444 6,801 4,563 2,767 1,663 -2,689 -648 4,979 -2,348 723 2,238 -9,320 -16,989 2,623 2,120 2,683 -5,402 -1,362 -3.820 431 -651 -16.882 -8,077 -2,784 636 -3,081 -381 1,013 -4,886 -9,008 -8,193 42 -16,885 -10,866 -8,735 268,900 55.623 45.161 2,502 6.185 13,163 5,695 3,029 12,660 1,927 10,462 55,982 42,844 5,443 2,268 1,413 42,836 5,132 17,243 5,011 15,450 64,758 52,200 10,933 2,314 6,615 7,475 3,032 11,611 12,472 7,894 1 159,892 25,282 83,725 -67,080 -175 -1,385 2,553 -156 ^4,522 -1,748 4,257 -2.088 319 1,210 -11,470 -21,055 1,161 1,582 1,563 -17,195 -2,576 -8,149 -2,304 -4,166 -19.973 -13.561 -716 -86 ^t,043 -1,743 683 -7,320 -6,596 -6,161 64 -31,539 -10,026 -25,579 332,422 72,054 57.774 3.089 7,957 17,426 8,056 4.126 14,418 2,702 14,280 67,630 60,210 5,632 2,745 2,217 48,364 7,754 18.076 6,660 15,874 76,315 64,423 11,629 3,114 8,357 9,857 3.959 15,429 11,793 6,801 338,083 77,454 62,591 3,269 8,907 19,535 9.355 4,111 14,475 2,939 14,863 70,394 65,653 5.601 2,697 1.847 46,109 7,195 19,104 6,521 13,289 71,025 60,777 8.459 3,830 7,936 9,980 4,127 15,480 9,890 5,945 368,425 88,959 74,162 3.938 9,542 24,526 10,347 4,097 15,055 6,657 14,797 69,693 80,752 409,766 96,127 81.451 4,223 10.506 26,941 10,916 4,809 17,210 6,846 14,676 73,599 84,578 446,466 102,200 85.646 4,502 12,118 26,295 11,502 5,951 17,680 7,598 16,554 84,400 89,760 37 38 39 40 41 42 43 44 45 Other 46 47 48 49 50 2,595 1,979 42,014 6,990 17,664 4,811 12,549 82,433 72,261 8,318 4,690 8,782 12,805 4.589 19,757 10.064 4,308 2,965 1,920 47,291 8,178 20,289 5,652 13,172 103,286 91,259 11,556 6,300 9,829 16,964 6,148 24,604 11,946 5,937 3,516 2.165 51,421 9,448 23,325 5,163 13,485 113,004 102,065 11,325 8,535 10,238 20,154 7,943 24,856 10.861 5.284 51 52 51 54 55 56 Other 57 58 59 Members of OPEC 60 61 62 63 64 65 66 Members of OPEC 67 68 Memoranda: 144,322 49,934 70.807 -27,978 12,244 9,950 3.362 1,593 -886 236 5,010 -259 929 2.294 -2,237 -15,801 3,372 2,642 2,887 3,708 -691 4,440 -122 81 -32,239 -15,823 -11,733 1.732 -2,789 -143 853 -4,016 -16,775 -16,813 88 -2,422 -28,837 3,193 205,526 26,852 100,044 -112,522 -15,187 -11,394 2,105 -1,902 -8,651 -3,746 3,360 -2,217 -343 -3,793 -14,593 -36,969 2,217 2,104 2,073 -18,598 -5,008 -6,056 -3,274 -4,260 -31,498 -25,418 -3,210 -97 -5,239 -3,970 -272 -10,664 -6,267 -5,485 33 -64,532 -13,081 -34,942 219,102 22,680 96,301 -122,148 -21,439 -17,400 1,536 -2,810 -10,596 -4,798 3,130 -3,388 ^474 -4,039 -15,004 -43,508 1,366 2,363 1,411 -15,321 -3,884 -5,718 -3,458 -2,261 -29,845 -25,512 -2,256 24 -5,182 -4,252 -683 -11,206 -4,271 -4,387 192 -78,585 -11,271 -32,484 245,350 18,895 104,180 -145,058 -28,584 -22,314 1,518 -2,423 -14,065 -5,597 3,093 -3,903 -937 -6,270 -13,190 -54,398 259,665 24,416 125,685 -159,500 -27,522 -21,921 1,924 -2.557 -15,408 -5,450 3,217 -3,458 -189 -5,601 -11,594 -56,959 282,363 23,000 141,103 -127,215 -15,786 -11,136 2,851 -2,122 -12,259 -4,834 4,010 362 856 -4,650 -10,860 -52,612 69 Members of OPEC ' . 70 71 BALANCE (EXCESS OF EXPORTS +) T> 73 74 75 76 77 78 79 80 Other 81 87 83 84 85 2,477 95 -11,257 -3,111 -5,354 -1,717 -1,075 -10.201 -35,929 -2,538 -1,625 -5,801 -«,943 -1,245 -14,642 -4,428 -3,397 2,326 342 -12,320 -4,096 -5,731 -2,118 -375 -53,773 -47,565 -5.781 -2,788 -5,855 -9,318 -2,104 -17,508 -6,365 -5,159 3.288 1,631 -7,797 -5,208 -2.752 -638 801 -45,079 ^41,671 -3.956 -3,507 -4,575 -9,488 -2,187 -12.997 -3,666 -4,107 S6 87 88 Brazil „ 89 90 91 Other 92 93 94 Members of OPEC 95 China 96 97 98 99 100 101 Members of OPEC 107 103 Memoranda: -95,032 -8,508 ^41,518 -94,042 -13,710 -51,748 -75,832 -9,255 -42,128 104 Members of OPEC 105 See footnotes on page 146. Appendix — Balance of Payments Tables, June 1989 SURVEY 125 Trade — Continued of dollars] Not seasonally ad usted Seasonally adjusted 1987 1988 1989 1987 1988 1989 Line 1 11 111 IV 1 II III IV I» 1 II HI IV I II III IV I' 93,458 101,189 104^10 110,609 107,464 111,473 110,252 117,277 113,162 95,916 99,834 104,903 109,113 109,893 109,882 110,943 115,748 116,130 36 22,151 23,948 23,048 26,980 25,205 26,109 23,908 26,978 24,988 22,757 23,606 23,140 26,624 25,782 25,723 24,065 26,630 25,658 37 18,695 20,164 19,625 22,967 21,242 21,686 20,161 22,557 20,756 19,207 19,875 19,704 22,665 21,732 21,358 20,292 22,264 21,312 38 874 1,017 1.072 1,260 1,172 1.198 991 1,141 1,127 899 1,003 1.077 1,244 1,200 1,180 997 1,125 1,158 39 2,317 2,603 2,638 2,948 2,784 3,239 3,011 3,084 3,063 2,384 2,564 2,650 2,908 2,855 3,186 3,032 3,045 3,148 40 6,415 7,002 6,173 7,351 6.645 6,491 6,099 7,060 6,162 6,594 6,896 6,198 7,253 6,806 6,383 6,138 6,968 6,333 41 2,510 2,656 2,803 2,947 2,847 2,782 2,823 3,050 2,727 2,579 2,616 2,814 2,907 2,914 2,737 2,841 3,010 2.801 42 985 999 973 1.852 1,833 1,615 1,188 1,315 1,234 1,010 986 977 1.836 1,856 1,600 1,196 1,299 1,265 43 . 4,017 4,222 4,243 4,728 4,178 4,589 4,154 4,759 4,248 4,121 4.169 4,258 4,662 4,276 4,526 4.182 4,696 4,363 44 1,577 1,665 1,723 1,881 1,783 1,772 1,895 2,148 2,195 1,620 1,641 1,730 1,855 1,825 1,746 1,906 2,121 2,244 45 3,456 3,784 3,423 4,013 3,963 4,423 3,747 4,421 4,232 3,550 3,731 3,436 3.959 4,050 4,365 3,773 4,366 4,346 46 18,002 18,491 17,018 20,088 20,774 22,455 19,631 21,540 22,574 18,466 18,238 17,076 19,819 21,240 22,134 19,756 21,270 23,171 47 19,516 21,127 21,281 22,654 20,853 21,501 22,242 25,164 22,843 20,058 20,804 21,364 22,352 21,362 21,156 22,394 24,848 23,475 48 49 701 748 834 682 969 899 792 856 859 719 738 836 672 990 886 796 844 882 50 426 490 500 504 514 626 477 548 559 436 485 502 497 524 620 480 541 573 51 10,734 11,644 12,212 12,701 12,763 12.761 12,932 12,965 13,445 10,988 1 1,522 12,257 12.524 13,030 12,603 13,003 12,785 13,773 52 1.709 1,855 2,264 2,350 2,350 2,290 2.532 2,276 2,072 1,754 1,830 2,274 2,320 2,401 2,255 2,547 2,245 2,126 53 4,675 5,184 4.995 5,435 5,739 5,878 5,670 6,038 6,335 4,791 5,123 5,014 5,361 5,866 5,798 5,704 5,957 6,498 54 1,312 1,375 1,532 1,433 1,244 1.377 1,325 1,217 1,465 1,331 1,376 1,536 1,409 1,261 1,377 1,328 1,197 1,487 55 3,038 3,230 3,421 3.483 3,430 3,216 3,405 3,434 3,573 3,112 3,193 3,433 3,434 3,502 3,173 3,424 3,386 3,662 56 21,928 24,741 29,617 27,000 26,386 27,122 30,270 29,226 27,894 22,492 24,441 29,728 26,625 26,965 26,760 30,449 28,830 28,598 57 19,713 21,903 25,931 23,712 23,606 24,270 27,576 26,613 24,788 20,236 21,609 26,029 23,385 24,142 23,920 27,744 26,259 25,433 58 2,154 2,335 3,894 3,173 2,905 2,651 2,961 2,808 3,080 2,191 2,335 3,906 3,124 2,946 2,647 2,970 2,762 3,130 59 1,573 1,517 1,721 1,489 1,813 1,892 2,375 2,455 2,260 1,614 1,494 1,726 1,466 1,856 1,864 2,392 2,423 2,322 60 ! 2,076 2,278 2,916 2,559 2,202 2,297 2,890 2,849 2,111 2,134 2,244 2,927 2,524 2,256 2,259 2,910 2,813 2,169 61 3,476 4,338 4.696 4,454 4,505 4,793 5.528 5,328 4,708 3,576 4,275 4,717 4,396 4,615 4,715 5,564 5,260 4,838 62 1,326 1,453 1.646 1,723 1,743 1,926 2,078 2,196 1.934 1,363 1,432 1,653 1,700 1,786 1,895 2,093 2,169 1,987 63 5,476 6,208 6.712 6,208 5,899 6,144 6,674 6,139 5,352 5,629 6,112 6,738 6,125 6,039 6,043 6,716 6,058 5.500 64 2,196 2,819 3,668 3,263 2,761 2,835 2,655 2,610 3,065 2,240 2,814 3,680 3,212 2,804 2,824 2,665 2,568 3,120 65 943 1,426 1,945 1,623 1,304 1,538 1,253 1,189 1,493 956 1,432 1.951 1,598 1,320 1,540 1,256 1,168 1,515 66 67 60,949 64,924 62,816 70,976 68,482 71,673 67,063 75,145 72,007 62,593 63,986 63,054 70,032 70.071 70,595 67,505 74,192 73,949 68 4,740 5,372 7,654 6,650 5,759 5,853 5,844 5,544 6,403 4,816 5,375 7,679 6,546 5,837 5,848 5,863 5,452 6,505 69 27,769 30,893 34,040 32,983 33,223 33,947 37,345 36,588 34,752 28,507 30,473 34,170 32,535 33,985 33,439 37,575 36,104 35,676 70 -35,790 -39,493 -42,875 ^11,342 -30,453 -31,012 -32,705 -33,045 -24,528 -38,661 -39,819 ■^10,606 -40,414 -33,446 -31,411 -30,339 -32,019 -27,634 71 -5,187 -6,915 -7,236 -8,184 -3,653 -3,999 -3,981 -4,153 -356 -5,890 -7,033 -6,642 -7,957 -4,343 -4,182 -3,392 -3,869 -1,024 72 -3,816 -5,391 -5,952 -6,762 -2,606 -2,671 -2,959 -2,900 592 -4,417 -5,494 -5,428 -6,582 -3,203 -2,827 -2.437 -2,669 34 73 620 437 513 354 665 596 773 817 911 589 406 567 362 633 560 826 832 883 74 -470 -640 -784 -663 -171 -807 -641 -503 -206 -541 -662 -724 -630 -248 -825 -584 -465 -284 75 -3,452 -4,298 -3,533 -4,125 -3,062 -2,823 -2,961 -3,413 -2,060 -3,653 -4,266 -3,443 -4,046 -3,243 -2,812 -2.880 -3,324 -2,224 76 -1,102 -1,222 -1,630 -1,496 -1,231 -1,016 -1,327 -1,260 -898 -1,181 -1,214 -1,590 -1,465 -1,309 -1,011 -1,290 -1,224 -972 77 1,288 881 776 272 700 781 1,094 1.435 1,586 1,233 868 876 240 642 759 1,191 1,418 1,537 78 -743 -635 -1.000 -1,080 246 90 48 -22 841 -847 -698 -895 -1.018 146 11 163 42 743 79 ! 43 86 -294 -24 247 508 55 46 418 -17 72 -219 -25 176 491 137 52 351 80 -1,371 -1,524 -1,284 -1,422 -1,047 -1,328 -1,022 -1.253 -948 -1,473 -1,539 -1,214 -1,375 -1,140 -1,355 -955 -1,200 -1,058 81 -3,055 -2,249 -2,833 -3,457 -1,680 -3,648 -2,707 -2,825 -2,050 -3,513 -2,518 -2,390 -3,173 -2,149 -3,904 -2,277 -2,530 -2,589 82 -13,708 -14,640 -13,749 -14,862 -12,113 -12,275 -12,652 -15,572 -12,468 -14,349 -14,438 -13,467 -14,705 -12,753 -12,095 -12,367 -15.397 -13,159 83 84 481 637 520 688 366 630 944 1,348 958 463 599 563 701 343 591 992 1,362 942 85 -83 212 82 131 676 410 75 470 1,152 -108 223 128 99 608 461 121 441 1,075 86 -3,154 -3.175 -2,864 -3,127 -3,162 -2,131 -1.614 -890 -1,551 -3,472 -3,291 -2,531 -3,026 -3,494 -2,261 -1.240 -802 -1,889 87 -993 -954 -948 -1,201 -1,399 -1,101 -1.489 -1,219 -1,028 -1,045 -957 -914 -1,180 -1,449 -1,105 -1,471 -1,183 -1,078 88 -1,340 -1,617 -1,263 -1,511 -1,414 -903 -296 -139 -313 -1,477 -1,662 -1,138 -1,454 -1,564 -962 -119 -107 -480 89 -647 -535 -568 -368 -247 -333 -95 37 -428 -675 -556 -530 -357 -275 -359 -47 43 ^155 90 -174 -69 -85 ^7 -102 206 266 431 218 -275 -116 51 -35 -206 165 397 445 124 91 -11,084 -13,363 -16,795 -12,531 -10,887 -9,999 -12,770 -11,423 -10,213 -11,792 -13,361 -16,267 -12,353 -11,658 -10.021 -12,176 -11,224 -10.990 92 -10,227 -11,943 -14,575 -10,820 -9,708 -9,214 -12,023 -10,726 -8,872 -10,864 -11,921 -14,133 -10,647 -10,392 -9,226 -11,530 -10,523 -9,571 93 -866 -971 -2,430 -1,514 -1,093 -947 -1,131 -785 -1,116 -923 -1,000 -2,360 -1,498 -1,162 -976 -1,052 -766 -1,175 94 -710 -814 -884 -380 -760 -629 -1,056 -1,062 -768 -756 -810 -855 -367 -808 -631 -1,018 -1,050 -845 95 -1,168 -1,373 -1,886 -1,428 -1,002 -945 -1,259 -1,369 -624 -1,234 -1,363 -1.854 -1,404 -1,064 -945 -1,225 -1,341 -683 96 -1,799 -2,457 -2,668 -2,394 -2,118 -2,221 -2,650 -2,499 -1,649 -1,932 -2,433 -2,573 -2,380 -2,276 -2,192 -2,553 -2.467 -1.797 97 -372 -485 -654 -593 -493 -528 -553 -613 -163 -409 -496 -628 -571 -536 -543 -523 -585 -209 98 -4,145 -4.630 -5.005 -3,728 -2,654 -2,712 -3,986 -3,645 -2,924 ^»,322 -4.569 -4,944 -3,673 -2,814 -2,690 -3.909 -3.584 -3.080 99 -880 -1,467 -2.266 -1,752 -1,225 -855 -782 -804 -1,405 -954 -1,487 -2,183 -1,741 -1,312 -864 -687 -803 -1.480 100 -750 -1,222 -1,781 -1,406 -1,017 -1,232 -991 -867 -1.241 -768 -1,227 -1,773 -1,391 -1,044 -1,230 -975 -858 -1,267 101 102 -21,599 -23,253 -23,375 -25,815 -17,179 -19,386 -18,143 -21,124 -14,038 -23,434 -23,486 -21,994 -25,128 -19,019 -19,692 -16,771 -20,350 -15.972 103 -2,459 -2,787 -4,907 -3,557 -2,508 -2,645 -2,334 -1,768 -2,967 -2,570 -2,842 -4,788 -3,510 -2.639 -2.698 -2.188 -1,730 -3.088 104 -11,732 -13,453 -14,593 -11,970 -10,766 -8,981 -12,228 -10,153 -7,523 -12,657 -13.491 -13,824 -11,776 -11,788 -9,021 -11,380 -9,939 -8,574 105 126 Balance of Payments of the United States Table 2.— U.S. Merchandise [Millions 1982 1984 1985 1986 1987 Merchandise trade, by principal end-use category, adjusted to balance of payments basis, excluding military: 2 Merchandise exports, balance of payments basis, excluding military (A-8) Agricultural products Nonagricultural products- Foods, feeds, and beverages.. Agricultural Grains and preparations Wheat Corn Soybeans Meat products and poultry Vegetables, fruits, nuts, and preparations Other agricultural foods, feeds, and beverages. Nonagricultural (fish, distilled beverages, etc.).. Fish and shellfish Industrial supplies and materials.. Agricultural Raw cotton Tobacco, unmanufactured Hides and skins, including furskins.... Other agricultural industrial supplies.. Nonagricultural Energy products Fuels and lubricants 8 Coal and related fuels Petroleum and products . Paper and paper base stocks Textile supplies and related materials.. Chemicals, excluding mcdicinals Building materials, except metals Other nonmetals Metals and nonmetallic products Steelmaking materials Iron and steel products Nonferrous metals Nonmonetary gold Other precious metals Other nonferrous metals Other metal and nonmetallic products.. Capital goods, except automotive . Machinery, except consumer-type Electric generating machinery, electric apparatus, and parts Nonelectric, including pans and attachments Oil drilling, mining, and construction machinery Industrial engines, pumps, and compressors Machine tools and meialworking machinery Measuring, testing, and control instruments Other industrial, agricultural, and service industry machinery.. Computers, peripherals, and parts Semiconductors Telecommunications equipment Other office and business machines Scientific, hospital, and medical equipment and pans . Civilian aircraft, engines, pans Civilian aircraft, complete, all types.. Other transponation equipment Automotive vehicles, pans, and engines . To Canada Passenger cars, new and used Trucks, buses, and special purpose vehicles . Engines and engine pans Other pans and accessories To other areas Passenger cars, new and used Trucks, buses, and special purpose vehicles . Engines and engine pans Other pans and accessories Consumer goods (nonfood), except automotive.. Consumer nondurables, manufactured Medical, dental, and pharmaceutical preparations, including vitamins.. Consumer durables, manufactured Household and kitchen appliances and other household goods Unmanufactured consumer goods (gem stones, nursery stock) Expons, n.e.c, and reexpons.. Other domestic expons and balance of payments adjustments not included above (minimum value shipments and miscellaneous expons). Foreign (reexpons) 142,054 29,885 112,169 25,287 24,179 13,367 4,600 5,294 5,201 1,028 1,947 2,636 1,108 832 38,820 5,286 1,754 1,358 914 1,253 33,534 4,775 4,771 2,132 1,858 2,544 2,507 9,850 2,567 2,628 8,663 927 1,628 3,283 1,168 230 1,884 2,825 46,714 38,536 4,085 34,451 6,675 2,646 1,487 2,001 10,693 4,115 1,516 2,214 994 1,655 7,129 3,657 1,049 15,522 10,443 2,617 1,094 1,135 5,597 5,079 1.025 1,643 537 1,874 10,520 5.260 1,521 4,570 2,047 532 5,191 2,690 2.501 184,473 35,593 148,880 30,171 28,843 16,598 5,583 7,017 5,739 1,187 2,361 2,958 1,328 1,020 57,812 6,236 2,213 1,184 1,313 1,502 51,576 6,844 6,841 3,507 2,329 3,276 3,691 13,996 3,670 3,811 16,288 1,454 2,075 9,280 5,371 688 3,221 3,479 59,183 47,641 5,053 42,588 7,478 3,476 1,742 2,545 12,874 5,377 2,069 2,504 1,203 2,115 10,373 6.297 1,169 18,065 11,810 3,289 1,501 1,209 5,811 6,255 1,400 1,768 701 2,386 12,899 6,423 1,722 5,398 2,374 718 6,343 3,208 3,135 224,269 42,157 182,112 35,893 34,640 20,737 6,658 8,547 5, 1.359 3,1 3,567 1,253 904 71,583 6,954 2, 1,334 1,037 1,671 64,629 9,307 9,269 4,800 3,487 4,871 4,258 17,156 3,750 4,786 20,502 1,605 2,923 11,738 4,259 2,273 5,206 4,236 75.140 59,278 6,267 53,011 9,483 4,337 2,202 3,203 15,691 7,450 2,786 2,791 1,378 2,456 14,103 8,601 1,759 17,088 10,194 3,037 1,003 1,092 5,062 6,894 959 1,963 827 3,145 16,311 7,652 2,072 7,522 2,969 753 8,254 4,209 4,045 237,085 44,035 193,050 38,338 36,956 21,995 8,153 8,009 6.229 1,565 3,407 3,760 1,382 1,073 69,743 6,529 2,278 1,458 1,021 1,773 63,214 11,948 11,926 6,019 4,676 4,841 4,276 16,831 3,293 5,093 16,935 956 2,724 8,723 4,447 647 3,629 4,532 82,426 66,517 7,117 59,400 11,192 4.726 2,610 3,740 17,188 8,478 2,837 3,247 1.482 2,943 13,703 8,809 2,206 19,284 11,464 3,155 1,096 1,347 5,866 7,820 841 2,131 916 3,932 16,142 8,375 2,312 6,665 3,256 584 11,152 211,198 37,231 173.967 31.783 30,515 17,032 6,920 5,637 6,251 1,366 2, 2,980 1,268 985 63,622 6,257 1,980 1,547 1,017 1,713 57,365 14,400 14,395 6,113 6,953 4,235 3,280 15,562 3,067 4,686 12,135 823 1,957 5,591 2,232 400 2,959 3,764 74,345 62,355 6,912 55,443 9,901 4,496 2,002 3,726 14,746 8.937 3,063 3,449 1,407 2,958 9,712 4,906 2,278 16,984 10,698 2,344 745 1,375 6,234 6,286 579 1,666 856 3,185 14,538 8,013 2,427 5,690 2,783 418 9,926 5,029 4.897 201,820 37,140 164,680 31,754 30,551 18,092 6,651 6,523 5,817 1,251 2,632 2,759 1,203 912 58,416 6,164 1.845 1,465 1,004 1,791 52,252 10,831 10.828 4,114 5,304 4,185 2,793 15,282 3,309 5,127 10,725 904 1,517 5,166 1,785 709 2,672 3,138 69,230 56,511 6,342 50,169 6,037 3,730 1,446 3,610 12,395 10,398 3,683 3,596 1,432 2,921 10,891 5,818 1.828 18,316 13,840 3,857 1,071 1,632 7,280 4,476 391 907 711 2,467 13,968 7,757 2,653 5,168 2,461 500 10,136 5,554 4.582 219,900 38,401 181,499 31,790 30,650 18,065 6,672 7,036 5,299 1,277 2,661 3,348 1,140 845 63,296 7,271 2,488 1,541 1,372 1,820 56,025 10,935 10,924 4,239 5,126 4,503 3,090 17,439 3,134 5,293 11,631 1,247 1,393 5,652 2,172 492 2, 3,339 74,273 62,777 6,997 55,780 5,1 3,478 1,543 3,920 13,257 13,467 4,764 3,511 1,453 3,016 9,758 4,143 1,738 22,147 17,098 4,565 1,701 1,868 8,964 5,049 305 724 939 3.081 13,818 7,961 2,791 5,044 2,430 473 14,576 8,780 215,935 29,573 186,362 24,140 22,870 12,557 3,863 5,202 3,748 1,221 2,573 2,771 1,270 1,019 60,275 6,272 1,612 1,499 1,303 1,812 54,003 11,426 11,417 4,543 5,413 3,996 2,995 16,680 3,036 5,355 10,515 1,258 1,249 5,029 1,740 358 2,931 2,979 76,519 61,684 6,324 55,360 6,418 3,249 1,623 4,011 12,194 13,702 3,627 3,863 1,275 3,141 13,046 6,716 1,789 24,728 19,349 5,722 2,096 1,982 9,549 5,379 342 645 932 3,460 13,134 7,726 2,863 4,539 2,053 501 17,139 10,938 6,201 223,367 27,356 196,011 23,273 21,351 9,758 3,288 2,659 4,315 1,497 2,869 2,912 1,922 1,424 64,068 5,387 823 1,204 1,509 1,671 58,681 9,956 9,945 4,060 4,532 4,684 3,145 17,163 3,332 6,244 14,157 1,334 1,178 8,622 5,648 350 2,624 3,023 79,342 62,760 7,544 55,216 5,355 2,926 1,848 3,829 12,019 14,310 4,056 4.074 1,125 3,476 14,793 7,333 1,789 24,916 19,407 7,002 2,431 1,729 8,245 5.509 521 611 901 3,476 14,613 8,532 3,203 5,034 2,069 627 17,155 9,958 7,197 250,266 29,547 220,719 24,757 22,658 10,515 3,272 3,260 4,332 1,891 3.323 2,597 2,099 1,797 68,952 6,307 1,658 1,090 1,752 1,807 62,645 9,102 9,092 3,501 4,533 6,072 3,604 20,875 4,474 5,313 13,205 1,276 1,463 6,606 2,666 465 3,475 3,860 87,736 70,209 8,214 61,995 4,836 3,007 2,100 4,321 14,301 17,735 5,434 4,756 1,448 4,057 15,936 7,528 1,591 27,546 20,553 6,770 3,229 2,166 8,388 6,993 1,168 734 932 4,159 18,290 10,514 3,438 6,965 2,906 811 22,985 14,059 8,926 See footnotes on page 146. Appendix — Balance of Payments Tables, June 1989 SURVEY 127 Trade — Continued of dollars] Not seasonally adjusted Seasonally adjusted 1987 1988 1989 1987 1988 1989 Line I 11 111 IV 1 II III IV [» I II III IV I II III IV 1' 57,668 61,696 61,635 69,267 77,011 80,461 77447 84,232 88,634 57,255 60,015 64,297 68,699 76,447 78,471 80,604 83,729 88,496 1 7,086 6,728 7,057 8,676 9,743 8,928 8,876 10,595 11,418 6,546 7,089 8,047 7,865 9,021 9,405 9,927 9,789 10,884 2 50,582 54,968 54,578 60,591 67,268 71,533 68,671 73,637 77,216 50,709 52,926 56,250 60,834 67,426 69,066 70.677 73,940 77,612 3 5,630 5,569 6,489 7,069 7,782 7,608 8,485 9,069 9,788 5,425 5,889 6,833 6,610 7,545 8,053 8,708 8,638 9,733 4 5,293 5,143 5,650 6,572 7,293 7,022 7,279 8,545 9,122 4,978 5,391 6,303 5,986 6,885 7,347 7,954 7,953 8,842 5 2,460 2,570 2,745 2,740 3,582 3,714 3,840 4,294 5,011 2,348 2,634 2,828 2,705 3,444 3,758 3,998 4,230 4,965 6 604 749 1,093 826 1,188 1,309 1,339 1,272 1,774 660 789 896 927 1,269 1,344 1,070 1,425 1,922 7 683 947 774 856 978 1,184 1,370 1.604 1,746 655 875 948 782 927 1.066 1,668 1,475 1.699 8 1,132 719 933 1,548 1,580 919 885 1.466 1,580 836 883 1,463 1,150 1,197 1,182 1,368 1,103 1,215 9 407 460 464 560 464 601 766 808 717 435 468 467 521 502 614 770 753 770 10 726 788 781 1,028 906 950 919 1,146 1,018 776 813 845 889 964 969 982 1.006 1,075 11 568 606 727 696 761 838 869 831 796 583 593 700 721 778 824 836 861 817 12 337 426 839 497 489 586 1,206 524 666 447 498 530 624 660 706 754 685 891 13 271 350 756 420 398 471 1,106 425 566 376 424 452 545 564 596 658 582 787 14 15,658 17,233 17,224 18,837 21,924 22,944 21,705 22,251 23,667 15,684 16,788 17,672 18,808 21,866 22,406 22,206 22,346 23,819 15 1,615 1,447 1,283 1,962 2,255 1,716 1,465 1,883 2,112 1,412 1.563 1,600 1,732 1,964 1,870 1,820 1,665 1,878 16 ! 373 383 342 560 765 536 276 410 576 287 386 471 514 630 571 402 384 465 17 I 321 247 132 390 397 297 214 346 471 312 300 222 256 361 334 349 210 448 18 481 456 386 429 538 456 422 422 435 399 439 454 460 448 440 486 464 367 19 440 361 423 583 555 427 553 705 630 414 438 453 502 525 525 583 607 598 20 14,043 15,786 15,941 16,875 19,669 21,228 20,240 20,368 21,555 14,272 15,225 16,072 17,076 19,902 20,536 20,386 20,681 21,941 21 1,962 2,402 2,284 2,454 2,001 2,487 2,531 2,500 2,749 2,151 2,327 2,319 2,305 2,197 2.407 2,558 2,357 3,049 22 ; 1,961 2,400 2,280 2,451 1,990 2,480 2,513 2,485 2,745 2,150 2,324 2,317 2,301 2,186 2,401 2.540 2.341 3,044 23 ! 730 904 910 957 698 1,110 1,201 1,191 1,060 941 810 835 915 904 1,010 1,128 1.158 1,368 24 1,094 1,158 1,063 1,218 1,100 1,138 978 1,161 1,263 1,074 1,170 1,178 1,111 1,091 1.151 1,082 1.053 1.258 25 1,384 1,534 1,588 1,566 1,843 1,889 1,944 1,988 2.092 1,379 1,489 1,591 1,613 1,841 1,834 1,943 2.046 2.084 26 866 936 879 923 1,098 1,123 1.133 1,220 1,311 860 900 910 934 1.090 1.081 1,169 1.234 1.300 27 4,835 5,313 5,301 5,426 6,316 6,525 6,704 6,436 6,810 4,811 5,120 5,271 5,673 6,267 6.295 6,655 6.764 6.769 28 1,022 1,036 1,170 1,246 1,396 1,647 1,516 1,537 1,681 1,022 1,004 1,210 1.238 1,395 1.603 1,568 1.530 1,682 29 1,221 1,372 1,337 1,383 1,654 1,712 1,634 1,641 1,835 1,206 1,307 1.353 1,447 1,634 1,626 1,663 1,718 1.814 30 2,753 3,193 3,382 3,877 5,361 5,845 4,778 5.046 5,077 2,843 3,078 3,418 3,866 5,478 5,690 4,830 5.032 5.243 31 216 349 321 390 290 526 453 464 494 283 304 319 370 381 459 453 440 634 32 341 361 359 402 440 506 540 779 972 338 349 371 405 437 492 557 779 957 33 1,350 1,480 1,693 2,083 3,506 3,630 2,627 2,534 2,432 1,367 1,458 1,702 2,079 3,525 3,604 2,637 2,531 2.464 34 ; 498 496 716 956 2,235 1,979 916 742 586 498 496 716 956 2,235 1.979 916 742 586 35 90 135 121 119 153 141 127 136 226 90 135 121 119 153 141 127 136 226 36 762 849 856 1,008 1,118 1,510 1,584 1.656 1,620 779 827 865 1.004 1,137 1,484 1,594 1.653 1.652 37 846 1,003 1,009 1,002 1,125 1,183 1,158 1,269 1,179 855 967 1,026 1,012 1,135 1,135 1,183 1,282 1,188 38 19,881 21,232 22,051 24,572 26,838 28,107 27,174 30,233 30,849 19,881 20,627 22,924 24,304 26,882 27,319 28,216 29,935 30.857 39 15,660 17,357 17,410 19,782 21,656 21,989 22,098 24,152 24,436 15,683 16,908 17,978 19,640 21,679 21,450 22,816 23,950 24,430 40 1,860 2,069 2,029 2,256 2,648 2,703 2,688 2,818 2,729 1,842 1.984 2,092 2,296 2,619 2,595 2,771 2,872 2,702 41 13,800 15.288 15,381 17,526 19,008 19,286 19,410 21,334 21,707 13,841 14.924 15,886 17,344 19,060 18,855 20.045 21,078 21,728 42 1,073 1,199 1,200 1,364 1,541 1,541 1,597 1,714 2,047 1,084 1,156 1,239 1,357 1,549 1,498 1.640 1,706 2,050 43 670 722 755 860 1,044 893 956 1,074 1,375 682 732 786 807 1,060 905 987 1,015 1.389 44 491 555 506 548 569 630 621 753 700 491 531 536 542 569 603 656 745 698 45 966 1,085 1,081 1,189 1,282 1,316 1,344 1,455 1,193 972 1,081 1,097 1,171 1,291 1.308 1.360 1.438 1,201 46 3,208 3,605 3,507 3,981 4,447 4,620 4,556 4,942 4,925 3,214 3,457 3,627 4,003 4,442 4,447 4,716 4.960 4,922 47 3,930 4,260 4,354 5,191 5,510 5,438 5,328 6,098 5,423 3,906 4,219 4,570 5,040 5,480 5,405 5,603 5,886 5,342 48 1,113 1,345 1,446 1.530 1,578 1,756 1,856 1,888 2,225 1,151 1,268 1,433 1,582 1,638 1,650 1,840 1,950 2,314 49 1,064 1,158 1,168 1,366 1,408 1,472 1,485 1,611 1,677 1,076 1,129 1,195 1,356 1,424 1.431 1,529 1,592 1,697 50 i 331 347 374 396 374 398 413 406 548 338 344 375 391 385 394 412 400 564 51 954 1,012 990 1,101 1,255 1,222 1,254 1,393 1,594 927 1,007 1,028 1,095 1,222 1.214 1,302 1,386 1,551 52 3,853 3,454 4,239 4,390 4,734 5,692 4,648 5,568 5,864 3,830 3,298 4,544 4,264 4,755 5,443 4,972 5,472 5,878 53 1,874 1,475 2,087 2,092 2,378 3,122 2,088 2,694 2,789 1,848 1,314 2,346 2,020 2,398 2.864 2,354 2,666 2,801 54 368 421 402 400 448 426 428 513 549 368 421 402 400 448 426 428 513 549 55 6,909 7,328 5,738 7,571 8,551 8,455 7.009 8,499 9,137 6,662 6,683 6,460 7.741 8,190 7.770 7.981 8,573 8,833 56 5,288 5,587 4,104 5,574 6,384 5,955 4,691 5.542 6,333 5,025 5,024 4.712 5,792 6,031 5.408 5.430 5,703 6.032 57 1,699 2,125 1,137 1,809 2,034 1,987 1,557 1.859 2,262 1,602 1,795 1,430 1,943 1,899 1,664 1,921 1.953 2,142 58 791 895 690 853 912 845 710 720 872 802 785 728 914 912 750 761 764 872 59 589 554 451 572 576 549 444 500 595 556 514 516 580 529 504 528 508 565 60 2,209 2,013 1,826 2,340 2,862 2,574 1,980 2,463 2,604 2,065 1,930 2,038 2,355 2,691 2,490 2,220 2,478 2,453 61 1,621 1,741 1,634 1,997 2,167 2,500 2,318 2,957 2,804 1,637 1,659 1,748 1,949 2,159 2,362 2,551 2,870 2,801 62 242 301 204 421 516 612 471 830 847 228 286 278 376 472 570 642 745 790 63 175 162 154 243 229 277 249 311 262 192 154 166 222 250 261 271 284 285 64 230 227 218 257 248 299 316 358 445 232 218 228 254 252 287 332 350 458 65 974 1,051 1,058 1,076 1,174 1,312 1,282 1,458 1,250 985 1,001 1,076 1,097 1,185 1,244 1,306 1,491 1.268 66 4,162 4,613 4,618 4,897 5,494 6,025 6,116 6,545 7,650 4,171 4,448 4,719 4,952 5,517 5.791 6,226 6,646 7.680 67 i 2.397 2,643 2,735 2,739 3,005 3,253 3,353 3,495 3,681 2,391 2,597 2,741 2,785 3,018 3,182 3,337 3,569 3,701 68 863 892 864 819 983 1,034 1,065 1,097 1,072 818 870 894 856 940 1.004 1.082 1,153 1,022 69 i 1,590 1,770 1.667 1,938 2,234 2,494 2,478 2,756 3,655 1,601 1,664 1.746 1,954 2,240 2,344 2,593 2,785 3.661 70 662 709 729 806 936 978 982 1,118 1,608 660 692 742 812 930 955 999 1,130 1.586 71 175 200 216 220 255 278 285 294 314 179 187 232 213 259 265 296 292 318 72 ' 5,428 5,721 5,515 6,321 6,422 7,322 7,058 7,635 7,543 5,432 5.580 5,689 6,284 6,447 7,132 7,267 7.591 7,574 73 3,436 3,433 3,333 3,857 3,811 4,292 4,092 4,305 4,008 3,428 3,345 3,441 3,845 3,802 4,187 4.222 4,289 3.993 74 1,992 2,288 2,182 2,464 2,611 3,030 2,966 3,330 3,535 2,004 2,235 2,248 2,439 2,645 2,945 3,045 3,302 3.581 75 128 Balance of Payments of the United States Table 2.— U.S. Merchandise [Millions 1985 Merchandise trade, by principal end-use category, adjusted to balance of payments basis, excluding military 2 — Continued: Merchandise imports, balance of payments basis, excluding military (A-16) Petroleum and products Nonpetroleum products Foods, feeds, and beverages Agricultural Coffee, cocoa, and sugar Green coffee Meat products and poultry Vegetables, fruits, nuts, and preparations Wine and related products Other agricultural foods, feeds, and beverages Nonagricultural (fish, distilled beverages, etc) Fish and shellfish Whiskey and other alcoholic beverages Industrial supplies and materials Agricultural ~ Nonagricultural products Energy products Fuels and lubricants 8 Paper and paper base stocks Textile supplies and related materials Chemicals, excluding medicinals Building materials, except metals Other nonmetals Metals and nonmetallic products Steelmaking materials Iron and steel products Nonferrous metals Nonmonetary gold Other precious metals Bauxite and aluminum Other nonferrous metals Other metallic and nonmetallic products Capital goods, except automotive Machinery, except consumer-type Electric generating machinery, electric apparatus and parts Nonelectric, including parts and attachments Oil drilling, mining, and construction machinery Industrial engines, pumps, and compressors Machine tools and metalworking machinery Measuring, testing, and control instruments Other industrial, agricultural, and service industry machinery Computers, peripherals, and pans. Semiconductors Telecommunications equipment Other office and business machines Scientific, hospital, and medical equipment and pans Transportation equipment, except automotive Civilian aircraft, engines, pans Civilian aircraft, complete, all types Automotive vehicles, pans, and engines From Canada Passenger cars, new and used Trucks, buses, and special purpose vehicles , Engines and engine pans Other pans and accessories From other areas Passenger cars, new and used Trucks, buses, and special purpose vehicles Engines and engine pans Other pans and accessories Consumer goods (nonfood), except automotive Consumer nondurables, manufactured Textile apparel and household goods, except rugs Footwear of leather, rubber, and other materials Consumer durables, manufactured Household and kitchen appliances and other household goods Toys, shooting, and sporting goods, including bicycles Television and video receivers Radio and slereo equipment, including records, tapes, and disks Unmanufactured consumer goods (gemstones, nursery stock) Imports, n.e.c. and U.S. goods returned U.S. goods returned Other products, including balance of payments adjustments not included above (minimum value shipments and miscellaneous impons). 176,001 42,649 133,352 15,836 12,106 5,126 3,728 2,176 1,600 832 2,370 3,730 2,194 912 83,221 1,572 81,649 46,412 45,990 3,906 2.054 3,884 4,596 1,127 19,670 1,901 7,362 7,748 1,765 893 1,823 3,267 2,659 19.356 18,166 1,813 16,353 1,371 1,168 1,735 482 5,263 977 1,788 1,674 1,207 1,190 856 271 25,009 10,423 4.027 2,290 1,113 2,993 14,586 9,545 1,473 745 2,823 29,399 11,226 5,269 2,634 15,824 4,550 1.775 2,064 2.292 2,349 3,180 2,548 632 212,009 60,956 151,053 18,001 13,716 5,358 3,820 2,836 1,884 986 2,653 4,285 2,621 1,028 108,464 1,771 106,693 65,620 64,998 4,693 2,185 4,577 5,057 1,367 23,194 2,156 7,638 10,315 2,913 1,869 1,752 3,781 3,085 24,460 22,560 2,362 20,198 1,395 1,599 2,635 606 6,225 1,219 2.516 2,023 1,213 767 1,900 1,371 519 26,454 9,668 3,652 2,143 816 3,057 16,786 11.135 1.682 782 3,187 31,207 11.975 5,552 2,955 16,912 4,976 2,153 2,166 1,959 2,320 3,423 2.879 544 249,750 79,355 170,395 18,548 14,552 6,263 3,872 2,650 1,939 1,083 2,618 3,996 2,593 1,137 132,256 130,308 85,006 84,341 5,148 2,254 5,246 3,962 1,632 27,060 1,728 7,393 15,055 5,565 2,921 2,066 4,503 2,884 31,420 27,068 2,786 24,282 1,788 1,744 1,964 727 8,049 1,452 3,342 2,958 1.405 853 4,352 3,123 1,015 28,058 8,708 3,727 2,004 529 2,448 19,350 13,137 2,124 832 3,257 34,222 12.997 6,350 2,527 18,327 5,634 2,505 1.396 1.926 2,898 5,246 4,316 930 78,580 186,483 18,531 14,149 5,236 2,622 2,243 2,847 1,169 2,654 4,382 2,943 1,230 134,944 2,863 132,081 84,751 83,812 5,456 2.910 5,914 3,974 1,869 27,207 2,088 9,916 12,545 4,014 1,936 2,413 4,182 2,658 36,912 32,618 3,296 29,322 3,466 2,129 2,123 862 8,840 1,912 3,865 3,568 1,573 984 4,294 3.844 1,339 30,885 10.686 4,372 2,721 766 2,827 20.199 13,474 2,201 874 3,650 38,302 14,765 7,564 2,728 20,593 6,271 2,803 2,152 2,459 2,944 5,489 4,531 958 62,018 185,624 17,462 12,874 3,922 2,730 2,445 2,783 1,257 2,478 4,588 3,123 1,256 1 10.922 2,630 108,292 68.728 67,818 5,136 2,587 5,617 3,437 1,952 20,835 1.090 7,703 9,652 3,403 1,545 2,025 2,679 2,390 381407 34,448 3,703 30,745 3,775 1,718 2,028 845 8,621 2,689 4,577 3,853 1.534 1,105 3,959 3,524 1,132 34,040 13,058 5.584 3,285 941 3.248 20,982 14,475 1.995 1,002 3,510 39,661 16,010 8,201 3.017 21.050 6,828 3,223 2,145 2,285 2,601 7,150 5,204 1,946 268,900 55,342 213,558 18,871 13,851 3.960 2,561 2,383 2,883 1,397 2,920 5,020 3,559 1,235 109,193 2,701 106,492 61,198 60,199 5,323 3,363 6,682 4,866 2,411 22,040 1,122 7,748 10,469 2,395 2,910 2,122 3,042 2,701 43,193 39,361 4,432 34,929 1,406 1,566 1,693 1,078 9,482 5,384 5,488 5,578 1,840 1,414 3.832 3.189 1,012 43,218 17,335 7,840 3.559 1,375 4,561 25,883 16,809 2,335 1,659 5,080 47,200 19.332 9,765 3,637 24,037 8,069 3,252 3.147 2.466 3,256 7,225 5.017 2.208 332,422 58,030 274,392 21,873 16,596 4,866 3,099 2,539 3,874 1,562 3,799 5,277 3,683 1,312 124,026 3,086 120,940 64,041 62,973 7,103 3,833 8,697 5,694 3,225 28,347 1,394 11,593 11,454 3,359 2,004 2,754 3,337 3,906 60.460 55.586 6,070 49,516 3,144 2,299 2,268 1,524 12.266 8,342 7,857 7,434 2,598 1,784 4,874 3,700 1,081 56,561 22,755 9,904 4,697 1.902 6,252 33,806 20,601 3.605 2.225 7,375 61,155 25,957 13,469 4,554 31,451 10.487 4.383 5,329 3,438 3,747 8,347 5,793 2,554 338,083 51.262 286,821 21,873 16,335 4,433 3,079 2,711 3,826 1,607 3,767 5,538 3,927 1,273 113,678 2,738 1 10,940 56,813 55,792 6,926 3,402 8,651 6,256 3,639 25,253 1,250 10.099 10,206 3,179 1,991 2,132 2,904 3,698 61,434 54,770 6,752 48.018 3,265 2,353 2,852 1,725 12,999 8.404 5,607 6,027 2,691 2,095 6,664 5,309 1,833 65,077 24,528 11.086 4,793 1,826 6,823 40,549 24,897 4,774 2,542 8,336 66,345 27,707 14,528 4,563 34,724 11.167 4,653 6.783 3,452 3,914 9,676 6,221 3,455 368,425 34,391 334,034 24,346 17,702 5,387 4,263 2,820 4,092 1,760 3,701 6,644 4,746 1,247 104,263 2,730 101,533 38,574 37,702 7,382 4,558 8,972 7,438 4,430 30,179 1,193 9,974 15.264 7,859 2,159 2,654 2,592 3,748 72.139 65.025 8,047 56,978 3,125 2.682 3,440 2,032 15,831 11,020 5,947 6.924 3,315 2,662 7,114 6,038 1,902 78,110 24,668 11.681 4,231 1,600 7,156 53,442 33,469 6,198 3,035 10,740 79,179 33,393 17,449 4,878 41,236 13,372 5.778 8.095 4,229 4.550 10,388 6,450 3,938 42,944 366,822 24,809 17,266 3,664 2,710 3,305 4,426 1,916 3,955 7,543 5,591 1,356 113.746 3,106 1 10,640 46,781 45,796 8,670 5,417 9,812 7,390 4,546 28,024 1,277 10,822 11,894 3,784 1,889 2,982 3,239 4,031 85,129 77,408 9,518 67,890 3,502 3,215 3,320 2,472 18,074 14,839 7,784 8,128 3,605 2,951 7,721 6.577 2,081 85,174 24,531 10,185 5.261 1,720 7,365 60,643 37,737 5.483 3.696 13,727 88.824 39.431 20,292 5,558 44,894 16,066 7,196 6,410 4,851 4,499 12,084 7,192 4,892 See footnotes on page 146. Appendix — Balance of Payments Tables, June 1989 SURVEY 129 Trade — Continued of dollars] Not seasonally ac usted Seasonally adjusted 1987 1988 1989 1987 1988 1989 Line 1 II III IV 1 II III IV I' I II III IV I II III IV I" 93,458 101,189 104^10 110,609 107,464 111,473 110,252 117,277 113,162 95,916 99,834 104,903 109,113 109393 109,882 110,943 115,748 116,130 76 8,750 10,058 12.713 11,423 9,954 10,225 9,748 9,382 10,690 8,866 10,090 12,753 11,235 10,068 10.248 9,775 9,218 10,834 77 84.708 91,131 91,797 99,186 97,510 101,248 100,504 107,895 102,472 87,050 89,744 92,150 97,878 99,825 99,634 101,168 106,530 105,296 78 5,945 6,181 6,183 6,500 6,517 5,920 6,049 6,423 6,328 5,967 6.177 6,325 6,340 6,503 5,939 6,198 6,269 6,290 79 4,240 4.369 4,195 4,462 4,746 4,102 4,246 4,357 4,574 4,131 4,325 4,383 4,427 4,610 4,072 4,430 4,339 4,418 80 953 995 818 898 877 654 851 755 909 953 995 819 897 877 654 851 755 909 81 689 768 620 633 635 483 658 507 604 689 768 620 633 635 483 658 507 604 82 793 866 846 800 1,059 868 790 758 874 793 866 846 800 1,059 868 790 758 874 83 1.195 1,085 1,048 1,098 1,410 1,078 987 1,158 1,431 945 1,026 1,248 1,207 1,129 1,032 1,190 1,282 1.146 84 399 490 477 550 414 502 489 500 358 488 472 461 495 502 484 470 449 432 85 900 933 1,006 1,116 986 1,000 1,129 1,186 1,002 952 966 1,009 1,028 1,043 1,034 1,129 1,095 1,057 86 1,705 1,812 1,988 2,038 1,771 1,818 1,803 2,066 1,754 1,836 1,852 1,942 1,913 1,893 1,867 1,768 1,930 1.872 87 1,248 1,393 1,498 1,452 1,326 1,372 1,300 1,424 1,322 1,324 1,382 1,455 1,430 1,394 1,363 1,268 1,397 1,389 88 326 286 317 427 341 313 355 492 335 364 331 326 335 378 364 365 394 369 89 25,546 27,031 30,177 30,992 30,873 31,661 29,651 30,165 32,062 25,641 26,533 30,408 31,164 30,979 31,057 29,936 30,378 32,325 90 910 772 660 764 865 802 797 936 1,164 808 778 740 780 781 802 876 941 1,063 91 24,636 26,259 29,517 30,228 30,008 30,859 28.854 29,229 30,898 24,833 25,755 29,668 30,384 30,198 30,255 29,060 29,437 31.262 92 1 9,777 10,822 13,595 12,587 11,130 11,150 10,729 10,385 11,670 9,794 10,887 13,729 12,371 11,138 11,212 10,857 10.187 11,726 93 9,536 10,580 13,340 12,340 10,885 10,956 10,492 10,217 11,532 9,553 10,646 13,474 12,123 10,892 11,019 10,619 10.020 11,588 94 2,082 2.083 2,186 2,319 2,458 2,567 2,664 2,522 2,455 2,098 2,088 2,181 2,303 2,474 2,578 2,651 2,508 2,472 95 1,230 1,371 1,384 1.432 1,369 1,402 1,357 1,369 1,330 1,243 1,322 1,377 1,475 1,391 1,346 1,354 1,406 1,349 96 ! 2,401 2,431 2,331 2,649 3,088 3,170 2,952 3,159 3,521 2,298 2,335 2,421 2,758 2,944 3,051 3,079 3,295 3,394 97 1,635 1,920 1,996 1,839 1,752 1,988 1,912 1,748 1,833 1,768 1,754 1,893 1,975 1,896 1,812 1,809 1,883 1.990 98 1,130 1,175 1,102 1,139 1,187 1,255 1,235 1,355 1,646 1,154 1,127 1,114 1,151 1,202 1.200 1,260 1,370 1,681 99 6,381 6,457 6,923 8,263 9,024 9,327 8,005 8,691 8,443 6,478 6,242 6,953 8,351 9,153 9,056 8,050 8,788 8,650 100 212 315 336 414 398 478 523 521 539 277 282 312 406 506 433 480 501 691 101 2,630 2,726 2,642 2,824 3,076 3,185 3,134 3,184 2,726 2,646 2,643 2,650 2,883 3,079 3,087 3,162 3,251 2,721 102 2.596 2,406 2,966 3.926 4,304 4,381 3,109 3,678 3,946 2,620 2,351 2,983 3,940 4,332 4,305 3,136 3,699 4.019 103 754 472 904 1,654 1,870 1,764 559 667 805 754 472 904 1,654 1,870 1,764 559 667 805 104 462 437 496 494 452 537 473 564 592 462 437 496 494 452 537 473 564 592 105 669 729 744 840 858 913 936 962 1,053 678 674 745 885 862 840 935 1.032 1.075 106 711 768 822 938 1,124 1,167 1,141 1,485 1,496 726 768 838 907 1,148 1,164 1,169 1,436 1,547 107 ! 943 1,010 979 1.099 1.246 1,283 1,239 1,308 1,232 935 966 1,008 1,122 1,236 1,231 1,272 1,337 1,219 108 18,630 20,910 21,837 23.752 23,532 25,510 25,547 27,168 26,267 19,133 20,678 21,892 23,426 24,054 25,254 25,670 26,779 26,930 109 17,155 18,995 19.683 21,575 21,798 23,125 23,477 25,041 24,009 17,685 18,729 19,727 21,267 22,350 22,826 23,587 24,678 24,705 110 2,141 2,466 2,364 2,547 2,544 2,831 2,994 3,160 2,723 2.231 2,417 2,376 2,494 2,631 2,775 3,008 3,115 2,831 111 15,014 16.529 17,319 19,028 19,254 20.294 20,483 21,881 21,286 15,454 16,312 17,351 18,773 19,719 20,051 20,579 21,563 21,874 112 760 888 925 929 1,096 1,148 1,033 952 1,065 803 819 900 980 1,154 1,067 1,006 1,002 1.110 113 751 808 788 868 916 1,001 1,010 1,035 1,080 751 755 788 921 914 942 1,018 1,088 1,078 114 810 856 793 861 934 855 882 1,001 1,063 810 856 793 861 934 855 882 1.001 1,063 115 542 614 607 709 701 735 721 782 472 557 598 630 687 719 714 748 758 483 116 4,114 4,576 4,532 4,852 5.059 5,346 5.020 5,464 5,738 4,169 4,392 4,582 4,931 5,085 5,139 5,117 5,548 5,802 117 3,173 3,415 3,740 4,511 4,299 4,443 4.605 4,984 4,671 3,276 3,490 3,832 4,241 4,418 4,544 4,704 4,665 4,806 118 1,625 1,903 2,080 2,176 2,331 2,716 2,934 2,980 2,919 1,692 1,856 2.018 2,218 2,400 2,652 2,872 3,037 3,062 119 1.774 1,944 2,180 2.230 2,139 2,269 2.398 2,590 2,375 1,898 1,968 2.125 2,137 2.281 2,293 2,341 2,481 2.527 120 796 806 944 1,059 1,012 938 1,009 1,171 1,016 797 853 946 1,009 1,014 995 1,010 1,111 1,016 121 669 719 730 833 767 843 871 922 887 701 725 737 788 800 850 881 872 927 122 1.475 1,915 2,154 2,177 1,734 2,385 2,070 2,127 2,258 1,448 1,949 2,165 2,159 1,704 2,428 2,083 2,101 2,225 123 1.302 1,658 1,711 1,906 1,580 2,084 1,907 1,973 1,949 1,276 1,701 1,718 1,882 1,552 2,136 1.916 1.940 1,920 124 226 557 594 704 369 940 728 654 552 226 557 594 704 369 940 728 654 552 125 20.432 22,465 19,177 23,100 21.313 22,634 19,626 24,368 22,404 20,818 21,256 21,074 22,026 21,618 21,319 21.754 23,250 22.775 126 6,552 6,307 4,801 6,871 7.181 8,154 6,131 7,734 7,714 6,485 5,812 5,647 6,587 7,046 7,458 7,324 7,372 7,600 127 2.920 2,538 1,613 3,114 3,423 3,916 2,638 3,279 3,360 2,890 2,324 2,069 2,902 3,349 3,542 3,366 2,999 3,288 128 1.217 1,366 1,256 1.422 1,404 1,633 1,361 1,684 1,743 1,181 1,217 1,457 1,406 1,364 1,458 1.596 1,664 1,711 129 465 423 368 464 502 519 384 572 571 456 395 420 449 490 487 451 549 558 130 1,950 1,980 1,564 1,871 1,852 2,086 1,748 2,199 2,040 1,958 1,876 1,701 1,830 1,843 1,971 1,911 2,160 2,043 131 13,880 16,158 14,376 16,229 14,132 14,480 13,495 16,634 14,690 14,333 15,444 15,427 15,439 14,572 13,861 14,430 15,878 15,175 132 8,176 10,200 9,028 10,333 8,018 8,154 7.622 10,000 8,325 8,744 9,641 9,888 9,464 8,643 7,718 8,306 9,127 9,004 133 1,597 1,578 1.083 1,225 1,146 1,043 927 1,150 1,027 1,597 1,578 1,083 1,225 1,146 1,043 927 1,150 1,027 134 927 947 874 948 1.080 1,210 1,040 1,227 1,462 868 925 926 977 1,004 1,174 1.104 1,275 1,367 135 3,180 3,433 3,391 3,723 3,888 4,073 3.906 4,257 3,876 3,124 3,300 3,530 3,773 3,779 3,926 4,093 4,326 3,777 136 19.985 21,610 24,182 23.047 22,145 22,634 26,180 25,420 23.055 21,337 22,271 22,196 23,020 23,550 23,261 24,124 25,444 24,647 137 8.996 9,674 11,133 9,628 10.235 10,188 12,118 10,551 10,134 9,349 9,992 9,820 10.270 10,579 10,478 10,765 11,270 10,541 138 4.838 4.972 5,889 4,593 5.102 4.774 5.936 4,952 5,083 4,909 5,204 5,074 5,105 5,089 4.983 5,152 5.540 5.165 139 1.290 1,379 1,505 1,384 1.456 1.438 1,635 1,373 1,346 1.307 1,422 1,359 1.470 1,480 1,475 1,488 1.459 1,371 140 9,890 10,860 11,861 12,283 10,556 11.102 12,642 13,444 11,345 10,890 11,182 11,214 11,608 11,632 11,424 11,946 12,742 12,542 141 3,648 4,048 4,190 4,180 4,089 4.217 4,389 4,520 4,270 3,819 4,083 4,026 4,138 4,269 4,243 4,212 4,491 4,483 142 1.429 1,736 2,115 1,916 1.643 1.847 2.234 2,258 1,713 1,684 1,790 1,856 1,866 1,934 1.893 1,943 2,212 2,022 143 1,564 1,551 1,627 1.668 1.294 1,227 1,573 1,728 1,502 1,738 1,597 1,524 1,551 1,441 1.272 1,484 1,625 1,669 144 1,003 1.117 1,309 1,422 1,103 1,311 1,554 1,662 1,512 1,165 1,176 1.196 1,314 1,288 1,381 1.426 1,535 1,757 145 1.099 1,076 1,188 1,136 1,354 1,344 1,420 1,425 1,576 1,098 1,097 1,162 1,142 1,339 1,359 1,413 1,432 1,564 146 2.920 2,992 2,954 3,218 3,084 3,114 3,199 3,733 3,046 3,020 2,919 3,008 3,137 3,189 3,052 3,261 3.628 3,163 147 1,777 1,736 1,739 1,940 1,728 1,914 1,971 2,263 1,984 1,870 1,689 1,787 1,846 1,822 1,879 2,029 2.146 2.088 148 1,143 1,256 1,215 1,278 1,356 1,200 1,228 1,470 1,062 1,150 1,230 1,221 1,291 1,367 1,173 1,232 1,482 1,075 149 130 Balance of Payments of the United States Table 3. — Selected Service Transactions [Millions of dollars] 1986 1987 1988 Not seasonally adjusted Seasonally adjusted Line 1988 1989 1988 1989 I II III IV U I II III IV I' 1 70,886 20,454 5,546 15,458 3,969 10,480 1,009 7,254 5,412 5,518 106 1,842 22,174 3,024 5,375 2,351 19,150 3,480 3,301 2,041 1,827 4,368 4,133 59,281 26,000 6,774 16,715 10,687 5,201 827 1,062 602 171 773 461 8,730 -1,284 2,808 1,524 10,014 461 1,769 2,201 3,252 1,252 1,079 79,405 23,505 6,882 16,989 4,700 11,575 714 9,070 6,900 7,049 150 2,171 22,959 2,196 5,106 2,910 20,763 3,804 3,731 2.285 2,105 4,270 4,568 67,455 29,215 7,423 18,062 10,999 6,360 703 1,365 843 240 1.083 522 11,390 -616 2,683 2,067 12,006 513 2,077 3,168 3,701 1,425 1,122 92,058 29,202 8,860 18,930 5,345 12,830 755 10,735 8,319 8,431 112 2,416 24,331 2,858 6.168 3,310 21,471 4,111 3,835 1.564 2,357 4,787 4,817 73,073 32,112 7,872 19,641 11,841 7,059 741 2,048 968 238 1,205 1,080 11,400 -694 3,028 2,334 12,094 555 1,656 2,781 4,264 1,646 1,192 21,087 5,751 1,771 4,605 1,370 3,054 181 2,377 1,797 1,831 34 580 6,583 651 1,453 801 5,931 1,628 972 440 564 1,135 1,192 16,158 6,181 1,702 4,883 3,042 1,671 170 474 247 41 289 227 2,918 18 628 646 2,899 133 342 727 1,002 389 306 22,042 7,031 2,180 4,769 1,372 3,209 188 2,548 1,954 1,980 26 594 5,514 726 1.523 797 4,788 540 934 388 579 1,153 1,194 18,984 8,679 2.062 5,005 3,022 1,799 184 539 236 56 292 303 2,699 -255 761 506 2,953 130 387 688 1,042 402 304 25,340 9,118 2.858 4,800 1,289 3,319 192 2,556 1,945 1,964 19 611 6,008 699 1,491 792 5,310 1,010 937 365 597 1,205 1,196 21,167 10,598 2,347 4,923 2,895 1,837 191 550 242 63 305 308 2,749 -245 765 521 2,994 131 435 677 1,086 413 252 23391 7,302 2,051 4,757 1,315 3,248 194 3,254 2,623 2,656 33 631 6,227 782 1,702 919 5,445 934 992 370 618 1,295 1,236 16,764 6,654 1,761 4,830 2,882 1,753 195 485 242 78 320 243 3,034 -213 874 661 3,247 160 492 689 1,133 442 331 24,087 6,999 1,979 4,944 1,481 3,281 182 2,734 2,079 2,104 25 655 7,431 849 1,674 825 6,581 1,787 1,125 405 640 1,345 1,279 16,652 6,398 1,769 4,964 2,839 1,933 192 438 257 74 331 180 3,083 -211 852 642 3,295 147 489 735 1,165 426 333 21,799 6,518 2,115 4,675 1,370 3,124 181 2,517 1,938 1,984 46 580 5,974 677 1,491 814 5,297 994 972 440 564 1,135 1,192 18338 8,092 2,037 5,033 3,042 1.816 175 474 247 41 289 227 2,902 18 628 646 2,884 135 342 727 1,002 389 289 22,405 6,968 2,085 4,769 1,372 3,209 188 2,610 2,016 2,043 27 594 5,973 722 1,542 820 5,251 1,003 934 388 579 1,153 1,194 17,798 7,643 1,903 4,995 3,022 1,788 185 539 236 56 292 303 2,718 -255 761 506 2,972 136 387 688 1,042 402 317 23,432 7,626 2,321 4,710 1.289 3,229 192 2,697 2,086 2,103 17 611 6,078 717 1,501 784 5,362 1,062 937 365 597 1,205 1,196 18,142 8,084 1,902 4,826 2,895 1,741 190 550 242 63 305 308 2,780 -245 765 521 3,026 140 435 677 1,086 413 275 24,422 8.090 2,339 4,776 1,315 3,267 194 2,911 2,279 2,300 21 631 6,306 743 1,634 891 5,564 1,053 992 370 618 1,295 1,236 18496 8,293 2,031 4,787 2,882 1,714 191 485 242 78 320 243 3,000 -213 874 661 3,212 144 492 689 1,133 442 312 24,867 2 7.847 i 2.348 4 5,014 5 1,481 6 3.351 7 Other 182 8 2,885 9 2,230 10 2,265 11 35 12 655 13 6,773 14 883 15 1,717 16 836 17 5,891 18 1,097 19 1,125 20 405 21 640 22 1,345 21 1,279 24 19,176 25 8,377 26 2,152 27 5,144 28 2,839 24 2,103 in Other 202 31 437 32 257 33 74 34 331 35 180 36 3,066 -211 37 38 852 19 642 40 3 278 41 148 47 489 43 735 44 1,165 426 4^ 46 315 See footnotes on page 146. Appendix — Balance of Payments Tables, June 1989 SURVEY 131 Table 4. — Selected U.S. Government Transactions (Millions of dollars] 1986 1987 I '):-;:; U.S. Government grants (excluding military) and transactions increasing Government assets, total . By category Grants, net (table 1. line 32, with sign reversed).. Financing military purchases ' Other grants Credits and other long-term assets (table 1, line 42, with sign reversed) Capital subscriptions and contributions to international financial institutions, excluding IMF.. Credits repayable in U.S. dollars Credits repayable in other than U.S. dollars Other long-term assets Foreign currency holdings and short-term assets, net (table 1, line 44, with sign reversed) Foreign currency holdings (excluding administrative cash holdings), net Receipts from: Sales of agricultural commodities Interest Repayments of principal Reverse grants Other sources Less currencies disbursed for: Grants and credits in the recipient's currency Other grants and credits Other U.S. Government expenditures Assets acquired in performance of U.S. Government guarantee and insurance obligations, net.. Other assets held under Commodity Credit Corporation Charter Act, net Assets financing military sales contracts, net 1 Other short-term assets (including changes in administrative cash holdings), net 19,843 11,730 3,873 7,856 9,093 1,481 7,050 121 441 1 -979 -12 49 53 120 10,149 2,816 7,333 6,515 1,212 4,738 115 450 IH -137 41 76 53 17,691 10,377 3.185 7,192 7,579 1,314 5,733 75 457 -265 -72 38 38 3,234 2,103 715 1,388 978 189 685 -6 109 153 -66 4,211 2,244 683 1,560 2,127 282 1.707 19 I IX -159 -40 5 14 19 4,265 2,194 611 1,582 2,067 407 1.491 61 107 5,068 3.609 807 2.802 1,343 333 854 41 115 116 -38 io 11 15 2,233 994 1,239 2,808 279 2.425 -11 115 -105 3,923 1,928 681 1,247 2.017 298 1,603 6 110 -22 -46 (*) 12 3,689 2.288 705 1.583 1 ,458 325 984 57 92 -57 9 31 10 9 5,142 3.928 807 3,122 1,296 412 721 23 139 -81 -21 10 1 272 -908 14 304 235 (*) -179 (*) 79 -134 (*) 44 -171 (*) By program Capital subscriptions and contributions to international financial institutions, excluding IMF... Under Agricultural Trade Development and Assistance Act and related programs Under Foreign Assistance Act and related programs Under Export-Import Bank Act Under Commodity Credit Corporation Charter Act Under other grant and credit programs Other foreign currency assets acquired (lines AI3. A14, and AI6) Less foreign currencies used by U.S. Government other than for grants or credits (line A19) . Other (including changes in administrative cash holdings), net By disposition ' Estimated transactions involving no direct dollar outflow from the United States Expenditures on U.S. merchandise Expenditures on U.S. services 4 Financing of military sales contracts by U.S. Government J (line C6) By long-term credits By short-term credits ' By grants ' U.S. Government grants and credits to repay prior U.S. Government credits ' 4 U.S. Government long- and short-term credits to repay prior U.S. private credits 6 and other assets Increase in liabilities associated with U.S. Government grants and transactions increasing Government assets (including changes in retained accounts) 7 (line Cll). Less receipts on short-term U.S. Government assets (a) financing military sales contracts, ' (b) financing repayment of private credits and other assets, and (c) financing expenditures on U.S. merchandise. Less foreign currencies used by U.S. Government other than for grants or credits (line A19) Estimated dollar payments to foreign countries and international financial institutions Repayments on U.S. Government long-term assets, total (table 1, line 43) 1,481 1,873 13,194 1,260 1,139 575 221 272 369 19,842 5,256 2,912 3,742 1,448 1,212 1,757 11,258 998 713 540 141 304 462 11,770 5.486 2,473 2,807 1,492 1.314 1,815 12.448 971 224 577 112 218 448 12.984 5,422 4,522 2,209 730 189 242 2,230 152 211 114 45 112 162 2,354 1,328 425 457 218 282 377 2,780 487 76 121 35 79 130 3,210 1,070 952 407 659 2,640 205 209 93 32 45 3,262 1,589 501 868 504 333 478 3.608 153 216 212 28 68 107 2.943 1.499 595 674 272 279 346 3,696 253 78 103 27 44 198 4,037 1.312 1.889 539 108 298 511 2,545 311 80 81 34 77 140 3.016 1.091 882 726 332 325 545 2.286 295 42 1X8 22 43 30 2,776 1,328 689 521 179 412 413 3,92 1 112 24 204 29 53 79 3,155 1 ,692 1,062 423 111 Receipts of principal on U.S. Government credits Under Agricultural Trade Development and Assistance Act and related programs.. Under Foreign Assistance Act and related programs Under Export- Import Bank Act Under Commodity Credit Corporation Charter Act Under other credit programs Receipts on other long-term assets U.S. Government liabilities other than securities, total, net increase (+) (table 1, line 55) Associated with military sales contracts 2 U.S. Government cash receipts from foreign governments (including principal repayments on credits financing military sales contracts), net of refunds. '. Less U.S. Government receipts from principal repayments Less U.S. Treasury securities issued in connection with prepayments for military purchases in the United States. Plus financing of military sales contracts by U.S. Government i (line A36) By long-term credits By short-term credits ' By grants ' Less transfers of goods and services (including transfers financed by grants for military purchases, and by credits) ' ! * (table 1, line 4). Associated with U.S. Government grants and transactions increasing Government assets (including changes in retained accounts) 7 (line A42). 2,294 1,197 494 -12 6,090 5,649 368 1,674 2.916 569 122 441 2,141 2,187 7,250 87? -565 3,742 1,448 1.315 559 796 2 52 304 5,009 7,625 7,176 275 2,336 4,293 152 120 449 -2,520 -2,277 7,828 1,301 373 2,807 1.492 1,479 610 568 -2 31 218 4,707 10,313 9,855 451 7,716 1,440 126 122 456 -1,284 -1,280 10,378 3,489 376 2,209 730 239 112 8X0 1,010 899 31 248 564 47 9 111 -1,274 -1,261 1,971 161 262 457 218 310 313 151 (*) 1,001 1,867 1,754 52 362 1,315 25 1 111 -1,343 -1,170 2,205 160 700 809 499 364 118 267 1 2,360 2,247 46 601 1,549 46 5 112 -74 1,700 3X7 324 504 41)? 40 206 1 2,388 2,275 145 1.126 865 34 105 113 1.952 594 -266 674 272 431 237 108 -1 1,031 911 125 392 377 10 6 -335 1 ,604 1,166 1.049 90 404 501 52 -405 1,381 726 332 3,402 3,290 113 2,835 293 45 -250 3,849 1.417 606 521 [79 4,714 4,603 122 4,085 269 18 110 I 10 -211 3,544 1,749 293 423 111 Associated with other liabilities Sales of nuclear material by Department of Energy Sales of space launch and other services by National Aeronautics and Space Administration .. Other sales and miscellaneous operations 2,294 8,495 1,315 11,238 -246 -75 -68 -103 1,479 10,050 239 3.266 310 3,324 (*) -173 -25 -56 -92 364 2.579 -69 -3 -29 -38 402 2,070 431 2.665 394 2.604 342 2,645 312 2.136 See footnotes on page 146. 132 Balance of Payments of the United States Table 5. — Direct Investment: Income, Capital, Royalties and License Fees, and Other Private Services [Millions of dollars] (Credits +; debits -) 1986 1987 1988 1987 U.S. direct investment abroad: Income (table 1. line 12) Income before capital gains/losses Capital gains/losses (gains +; losses -) l Earnings (net of withholding taxes) Distributed earnings Reinvested earnings Interest (net of withholding taxes) U.S. parents' receipts U.S. parents' payments Capital (table 1, line 46) Equity capital Increases in equity capital 2 Decreases in equity capital 3 Reinvested earnings Intercompany debt U.S. parents' receivables U.S. parents' payables Royalties and license fees (table 1, line 8) U.S. parents' receipts U.S. parents' payments Other pnvate services (table 1, line 9) U.S. parents' receipts U.S. parents' payments By industry of affiliate: 4 Income (line 1 ) Petroleum Manufacturing Other Income before capital gains/losses (line 2) Petroleum Manufacturing Other Capital: Equity capital (line II) Petroleum Manufacturing Other Reinvested earnings (line 14. or line 6 with sign reversed).. Petroleum Manufacturing Other Intercompany debt (line 15) Petroleum Manufacturing Other Foreign direct investment in the United States: Income (table 1, line 27) Income before capital gains/losses Capital gains/losses (gains -; losses +> 5 Earnings (net of withholding taxes) Distributed earnings Reinvested earnings Interest (net of withholding taxes) U.S. affiliates 1 payments U.S. affiliates' receipts Capital (table 1, line 59) Equity capital Increases in equity capital 2 Decreases in equity capital 3 Reinvested earnings Intercompany debt U.S. affiliates' payables U.S. affiliates' receivables Royalties and license fees (table 1, line 23) U.S. affiliates' payments U.S. affiliates' receipts Other private services (table 1, line 24) U.S. affiliates' payments U.S. affiliates' receipts By industry of affiliate: 4 Income (line 44) Petroleum Manufacturing Other Income before capital gains/losses (line 45) Petroleum Manufacturing Other Capital: Equity capital (line 54) Petroleum Manufacturing Other Reinvested earnings (line 57, or line 49 with sign reversed) Petroleum Manufacturing Other Intercompany debt (line 58) Petroleum Manufacturing Other 38,533 29,927 8,606 41,780 24,126 17,654 -3,247 1,512 -4,759 -26,311 -551 -12,473 11,922 -17,654 -8,106 -1,498 -6,609 5,412 5,518 -106 3,024 5,375 -2,351 -5,379 -7,433 2,054 -2,231 -4,524 2,293 -3,148 -3,990 842 34,091 25,086 30,663 -5,578 -2,293 11,298 13,412 -2,113 -602 -773 171 1,284 -1,524 2,808 -5,379 -302 -75 -5,001 -7,433 -1,430 -2,318 -3,685 25,086 1,226 9,488 14,372 -2,293 -1,114 -1.897 718 11,298 550 4,274 6,474 54,754 38,580 16.174 57,246 22,982 34,264 -2,492 1,615 -4,107 -44,194 -3,677 -14,831 11,154 -34,264 -6,252 -4,173 -2,079 6,900 7,049 -150 2,196 5,106 -2,910 54,754 8,667 27,616 18,471 38,580 7.620 18,537 12,423 -3,677 -2,127 -744 -806 -34,264 -1,822 -19,903 -12,539 -6,252 604 -213 -6,642 -9,500 -9,871 371 -5.874 -4,393 -1,481 -3,626 -4,813 1,187 46,894 30,621 36,222 -5,601 1,481 14,792 21,364 -6,572 -843 -1,083 240 616 -2.067 2,683 -9,500 -2,345 -3,864 -3,291 -9,871 -2,321 -4,166 -3,383 30,621 761 15,020 14,840 1,481 1,315 1,209 -1,042 14,792 4.543 7,144 3.105 48,264 48,408 -144 49,860 34,690 15,170 -1,596 2,052 -3,648 -17,533 5,469 -8,655 14,124 -15,170 -7,831 -2.357 -5,474 8,319 8,431 -112 2,858 6,168 -3,310 48,264 7,932 23,319 17,013 48,408 7,476 25,447 15,485 5,469 3,381 797 1,290 -15,170 ^15 -7,266 -7,859 -7,831 -1,584 1,163 -7,410 -16,748 -15,882 -866 -11,830 -5,270 -6,560 -4,918 -6,240 1,321 58,435 40,362 43,644 -3,282 6,560 11,513 17,747 -6,234 -968 -1.205 238 694 -2.334 3,028 -16,748 -2,929 -7,172 -6,647 -15,882 -3,001 -5,961 -6,920 40,362 866 17,573 21,923 6,560 696 4,030 1,834 11,513 -2,426 6,629 7,310 13,270 8,463 4,807 13,918 4,884 9,035 -648 377 -1,025 -11,211 -923 -3,546 2,622 -9,035 -1,253 -2,701 1,448 1,512 1,530 -17 490 1,184 -694 13,270 2,263 6,624 4,383 8,463 1,702 4,008 2,753 -923 65 -50 -938 -9,035 -718 -5,023 -3,293 -1,253 316 -498 -1,072 -3,412 -2,104 -1,308 -2,617 -956 -1,662 -795 -1,027 232 8,180 4,465 5,541 -1,076 1,662 2,053 5.263 -3,211 -215 -237 22 44 ^198 542 -3,412 -303 -859 -2.250 -2,104 -302 -900 -902 4,465 41 2.783 1,641 1,662 -12 473 1,200 2,053 360 3,170 -1,476 10,974 9,862 1,112 11,572 4,448 7,124 -598 392 -989 -8,157 508 -2,109 2,618 -7,124 -1,542 -1,812 270 1,594 1,625 -31 567 1,263 -696 10.974 1,979 4,975 4,021 9,862 1,878 4,659 3,325 508 -730 176 1,062 -7,124 -715 -3,427 -2,982 -1,542 1,288 -418 -2,412 -2,606 -2,588 -18 -1,770 -1,190 -580 -836 -1,085 249 7,876 5,534 6,305 -772 580 1,762 3,489 -1,727 -201 -250 49 148 -489 637 -2,606 -622 -1,253 -731 -2,588 -642 -1,161 -785 5,534 80 2,400 3,054 580 347 736 -503 1,762 476 295 991 10,221 9,126 1,095 10,866 4,836 6,030 -645 417 -1,062 -8,646 -715 -2,723 2,008 -6,030 -1,901 955 -2,856 1,661 1,714 -53 516 1,235 -719 10,221 1,987 4,339 3,895 9,126 1,861 3,817 3,448 -715 131 -522 -324 -6,030 -259 -2,431 -3,340 -1,901 -1,067 1,545 -2,379 -3,648 -2,990 -658 -2.792 -788 -2,003 -857 -1,284 428 16,277 7,243 8,888 -1,645 2,003 7,031 8.434 -1,403 -190 -254 64 123 -430 552 -3,648 -765 -1,079 -1,804 -2,990 -713 -1,026 -1,251 7,243 350 3,184 3,709 2,003 566 719 719 7,031 3.881 4,012 -862 20,289 11,129 9,160 20,890 8,814 12,076 -601 429 -1,030 -16,180 -2,547 -6.453 3.906 -12,076 -1,557 -615 -942 2,132 2.181 -49 623 1,424 -801 20,289 2,438 11,678 6,173 11,129 2,179 6,053 2,897 -2,547 -1,594 -347 -606 -12,076 -129 -9,022 -2,924 -1,557 66 -843 -780 166 -2,190 2,355 1,305 -1,459 2,764 -1,139 -1,417 279 14,561 13,379 15,488 -2,109 -2,764 3,946 4,177 -231 -237 -341 104 301 -651 952 166 -656 -672 1,494 -2,190 -664 -1,079 -M6 13,379 290 6,653 6,436 -2,764 415 -720 -2,458 3,946 -174 -332 4,453 12,115 11,256 858 12,561 8,660 3,901 -446 450 -896 -6,600 1,015 -2,628 3,642 -3,901 -3,714 -3,684 -30 1,797 1,831 -34 651 1,453 -801 12,115 2,428 5,269 4,418 11,256 1,880 5,830 3,547 1,015 1,496 282 -763 -3,901 -686 -973 -2,242 -3,714 -368 685 -4,031 -3,807 -3,458 -349 -2.710 -937 -1,774 -1.097 -1,367 270 9,616 9,600 10,921 -1,322 1,774 -1,758 -847 -911 -247 -289 41 -18 -646 628 -3,807 -914 -1,460 -1,433 -3,458 -877 -1,393 -1,188 9,600 21 2,027 7,552 1,774 565 815 394 -1,758 -1.773 -627 642 10,203 12,690 -2,487 10,542 7,821 2,721 -339 540 -879 -941 2,195 -1,522 3,718 -2,721 -415 457 -873 1,954 1,980 -26 726 1.523 -797 10,203 1,630 4,393 4.180 12,690 1,740 6,610 4,340 2,195 1,080 641 475 -2,721 -371 -542 -1,808 -415 -427 -205 216 -4,512 -U64 -148 -3,378 -2,021 -1,357 -1,134 -1,416 282 13,885 9,318 9,754 -436 1,357 3,210 4,189 -978 -236 -292 56 255 -506 761 -4,512 -758 -1,986 -1,768 -4,364 -784 -1,849 -1,731 9,318 164 5,836 3,318 1,357 -603 1,371 589 3,210 -342 3,252 301 8,649 11,233 -2,585 9,041 4,552 4,489 -392 508 -900 -4,912 -294 -1,902 1,608 -4,489 -128 -300 172 1,945 1.964 -19 699 1,491 -792 8,649 1,778 4,246 2,625 11,233 1.739 6,186 3,308 -294 39 231 -564 -4,489 -752 -1,907 -1,830 -128 ^125 1,277 -981 -4,373 -4,114 -259 -3,077 -995 -2,083 -1,295 -1,633 337 11,896 7,938 8,678 -741 2,083 1,876 4,310 -2,434 -242 -305 63 245 -521 765 -4,373 -856 -1.815 -1,702 -4,114 -850 -1,438 -1,826 7,938 -2 3,220 4,719 2,083 630 961 491 1,876 -14 646 1,244 17,297 13,228 4,069 17,716 13,658 4,058 -419 554 -972 -5,080 2,552 -2,604 5,156 -4,058 -3,574 1,169 -4,743 2,623 2.656 -33 782 1,702 -919 17,297 2,096 9,412 5,789 13,228 2,117 6,821 4,290 2,552 766 -357 2,143 -4,058 1,764 -3,844 -1,979 -3,574 -364 -595 -2.615 -4,056 -3,947 -109 -2,664 -1,317 -1,347 -1,392 -1,824 431 23,038 13.507 14,290 -783 1,347 8,185 10,095 -1,911 -242 -320 78 213 -661 874 -4,056 -401 -1,911 -1,743 -3,947 -490 -1,282 -2,175 13,507 683 6,490 6,334 1,347 105 883 359 8,185 -297 3,358 5,124 See footnotes on page 146. Appendix — Balance of Payments Tables, June 1989 SURVEY 133 Table 6. — Securities Transactions [Millions of dollars] (Credits +; debits -) 1986 1987 1988 1 IV II IV Foreign securities, net U.S. purchases (-), (table 1, line 47 or lines 2 + 11 below).. Stocks, net U.S. purchases New issues in the United States.. Of which Canada Transactions in outstanding stocks, net.. Western Europe Of which United Kingdom Canada Japan Other Bonds, net U.S. purchases . New issues in the United States By issuer: Central governments and their agencies and corporations.. Other governments and their agencies and corporations ' .. Private corporations International Financial institutions 2 By area: Western Europe Canada Japan Latin America Other countries International financial institutions : Redemptions of U.S. -held foreign bonds 3 Western Europe Canada Other countries International financial institutions 2 ... Other transactions in outstanding bonds, net \. Western Europe Of which United Kingdom Canada Japan Other ^1,271 -1,153 -924 -104 -229 ^126 -547 -945 1,642 -500 -3,118 -6,708 -3,150 -1,186 -926 -1.446 -996 -1,477 -2,789 -1,446 3,717 2,442 U.S. securities, excluding Treasury securities and transactions of foreign official agencies, net foreign purchases (+), (table 1, line 61 or lines 2 + 10 below). Stocks, net foreign purchases By area: Western Europe Of which Germany. Federal Republic of Switzerland United Kingdom Canada Japan Other Corporate and other bonds, net foreign purchases By type: New issues sold abroad by U.S. corporations 4 U.S. federally-sponsored agency bonds, net Other outstanding bonds, net By area: Western Europe Of which Germany, Federal Republic of Switzerland United Kingdom Canada. Japan Other countries International financial institutions 2 Memoranda: Other foreign transactions in marketable, long-term U.S. securities included elsewhere in international transactions accounts: Foreign official assets in the United States (lines in table 9): U.S. Treasury marketable bonds (line A4) Other U.S. Government securities (line A6) U.S. corporate and other bonds (part of line A14) U.S. stocks (pan of line A14) Other foreign transactions in U.S. Treasury bonds and notes (table 9, line B4) 1,275 -127 -14,611 -13,486 -760 6,282 8,962 70,969 17,166 9,095 311 1,451 4,592 714 3,225 4,132 53,803 39,378 8,180 6,245 39,745 -312 4,566 34,125 542 9,568 3,163 785 14,215 -1,214 -1,617 732 4,942 -5,251 2,130 -2,665 -463 4,795 -1.123 -1,888 -1,853 7,149 622 -7,381 -6,071 -2,658 -1,876 -197 -1.340 -910 -1,745 -642 -1,434 -1,340 2,994 447 1,347 1,200 -4,304 -8,207 -8,989 -1,307 -12 5,222 42,120 15387 1,336 -113 -1.279 362 915 11,096 2,240 26433 22,585 3,472 476 21,469 27 1,581 19,460 1,289 1,584 1,481 710 31,058 1,564 -445 -562 -5,808 -7,846 -909 -1,079 -24 170 -577 198 521 -217 443 -6,937 -6,855 -2,295 -1,496 -2,573 ^)91 -1.483 -2,537 -1,079 -250 -1,015 —491 5,261 1,747 1,981 33 1,500 -5,343 -5,715 -5,876 -3,696 1,803 2,265 26,448 -3,768 191 -2,326 -1,135 1,007 1,668 617 26,924 18,788 5,410 2,726 16,773 1,341 459 13,442 701 7.642 2,363 -555 26,625 1,309 -103 -2,392 21,795 -1,749 -1,363 -232 -1,131 -936 -1,200 -985 450 340 -386 -1,139 -891 -188 -60 -440 -134 1,094 447 347 300 -341 -1,289 -1,227 -184 -801 1,933 18372 9337 4,547 87 335 2,352 260 3,448 1,582 8335 7,000 773 762 6,386 125 697 5,535 449 1,555 147 -2 8,213 -62 -36 -324 -1,601 -287 -685 -1,431 -148 746 -723 -164 -566 2.095 -60 398 -193 -233 -87 -396 -1,159 272 -797 -315 1,069 -363 -84 -321 1,561 192 -1,431 -377 -261 -116 -2,056 3,906 -205 -4339 -716 1,333 1,216 -286 -99 -396 -116 ,.„„,„„ -149 4,111 899 ^140 19 3,043 150 -5,962 -3,646 -1,313 -1,339 -50 -944 -794 -891 -396 -716 -9 533 78 -901 116 -3323 -2.115 -669 -949 -497 1,502 574 660 45 55! 332 116 -1,048 -725 -358 -1.291 -224 -99 -45(1 -99 -263 350 '450 507 -2,727 -3,585 -156 1,708 1,682 15,960 3,051 -148 415 1,491 21 4,043 1,287 7358 5,929 767 862 6,438 -65 339 5,890 230 -8 725 171 10.650 256 -231 -52 -1.940 550 '366 250 -1,604 -973 -2,280 -1,071 36 404 12,676 2,022 -93 -12 1,525 126 1,833 1,102 7393 6,348 726 519 6,912 17 663 5,958 125 197 470 -111 6,203 714 -250 -375 -«21 -944 550 -250 -216 350 '206 -2.866 -3,218 -1,897 104 -955 1,203 -4,8 -8,284 41 -2.017 -5,006 508 1,772 -1,731 2347 3,308 1,206 -1,667 1,733 -50 -118 2,077 485 -160 139 65(1 5,992 656 72 189 1,581 1,000 '566' 500 -2,708 -2,840 -2,163 -951 669 414 2,424 -208 -1,006 187 -416 -639 -100 999 -101 2,632 2,626 304 -298 2,251 437 -81 1.761 84 525 599 -827 20,450 -162 -36 -797 6.235 -137 -99 2,048 1,448 300 300 -1,265 -1,084 415 955 -758 -4 ^180 -172 150 1,459 -33 8381 4,957 2,448 1,476 4,707 586 68 3,702 416 3.017 512 229 6,510 202 -7 -410 5,748 -1392 -228 -181 -24 -47 -1,560 -961 133 1,296 -1,364 -2,051 -156 -150 -1,553 -192 -333 -728 -642 -3,047 -1,181 -612 -569 418 -34 265 -1,163 -1,866 -1,641 -745 -397 -299 -200 -342 -419 -174 -156 -192 821 21 400 400 -134 263 -314 -607 -583 793 7,454 1,074 -108 -20 -652 763 245 133 804 6380 4,803 889 0X8 3,895 331 39 2,971 (') 1,772 594 119 -5.346 572 -420 3.785 -506 -200 1,392 278 781 33 300 -1,617 -1,873 -2,315 -1,149 1,302 103 6,871 -1,896 28 -778 -1.087 712 -923 -53 9.031 6.402 1,769 860 5,920 -13 433 5,008 201 2,328 658 -76 5,01 1 697 28 -765 6.027 See footnotes on page 146. 134 Balance of Payments of the United States Table 7. — Claims on and Liabilities to Unaffiliated Foreigners Reported by U.S. Nonbanking Concerns [Millions of dollars] (Credits +; increase in U.S. liabilities or decrease in U.S. assets. Debits -; decrease in U.S. liabilities or increase in U.S. assets.) 1986 1987 1988 1987 1988 1989 Amounts Line I II in IV I II III IV I' standinc Dec. 31, 1988 Al Claims, total (table 1, line 48) -7J96 -7,398 -7,106 -292 ^1,403 -2,995 -5,884 -3,848 -1,548 -1,401 -113 2 -197 199 -87 89 165 21 -184 -2,641 -1,467 -1,648 181 -43 836 -1,213 -211 -1,174 -1302 128 -235 -939 312 -1,249 -237 5,201 5,848 5,938 -90 5,007 841 3,448 1,383 1,957 2,306 94 -647 -567 -80 -800 153 -818 37 134 2,450 -251 -1251 1,000 768 218 -1,027 8 2,701 2,155 546 984 1,717 1,977 93 631 -1,684 -577 -976 399 714 -1,291 -481 -646 281 -89 -7 -1,107 -1,126 19 -1,105 -2 -577 22 -552 6,558 2,846 2,962 -116 2,387 941 299 160 3,712 3,818 -106 -683 4,395 3,522 -745 935 -760 -856 -578 -278 405 -1,261 -543 -466 10 -419 106 96 97 -1 -41 137 -131 94 133 2,153 872 623 249 470 224 422 -20 1,281 1,174 107 584 697 634 238 409 3,442 3,467 3,768 -301 3,522 -55 1,459 -424 1,085 2,105 -97 -25 -27 2 -M 15 -239 56 158 1,045 916 7JJ 163 1,563 1,282 -616 -31 129 -4 133 253 -124 333 -110 -94 322 814 327 487 -1,272 2,086 804 671 419 29 -19 -492 -425 -67 -557 65 -402 36 -126 109 -964 -1,039 75 -348 -289 -712 96 1,073 1,055 18 262 811 157 207 709 2,197 2,423 2,421 2 2,352 71 1,728 1,602 443 591 104 -226 -212 -14 -162 -64 ^t6 -149 -31 -857 -1,075 -1388 513 -917 -999 -121 -37 218 -70 288 -115 333 853 -242 -393 -65 71 -186 257 1,867 -1,796 -425 -590 156 468 28 -136 -294 158 -91 -45 -152 72 -56 1,565 1,754 1,643 111 1,428 870 341 -15 -189 -240 51 -852 663 235 -911 487 -6,443 -5,826 -5,856 30 -6,802 976 -1,402 -1,580 -264 ^1,340 -84 -617 -567 -50 -697 80 -306 -78 -233 -59 -417 -254 -163 -556 -344 (•) 139 358 498 -140 318 40 -1 256 103 255 -142 229 -371 284 -426 56 1.099 -585 -192 -6 397 534 -137 345 52 534 22 -159 2,350 856 972 -116 1,317 837 -363 -98 1,494 1,454 40 -290 1,784 1,444 114 -64 4,569 5,320 4,837 483 5,365 -45 1,290 425 974 3,975 55 -751 -799 48 -662 -89 -653 6 -104 2,702 653 601 52 198 -422 321 134 2,049 2,106 -57 141 1,908 1.844 -204 409 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 32,900 2 21,016 3 19^84 4 1,632 5 14,209 6 6,807 7 13,612 g 9,118 9 10 2,571 6,540 11 Other 864 12 11,884 13 11 361 14 523 15 10,687 16 1,197 17 6,240 18 Members of OPEC 4 1,003 19 Other 4,641 Bl 35,532 2 14,727 3 11319 4 3,408 5 12.880 6,300 6 7 1,118 g Other 729 9 20,805 19,051 1,754 6.751 14 054 10 11 12 13 14 14,607 I 542 15 Members of OPEC 4 16 Other 4,656 See footnotes on page 146. Appendix — Balance of Payments Tables, June 1989 SURVEY 135 Table 8. — Claims on Foreigners Reported by U.S. Banks {Millions of dollars] (Credits +; decrease in U.S. assets. Debits -; increase in U.S. assets.) Amounts out- standing Mar. 31, 1989 Total (table 1, line 49) . By type: Banks' own claims . Payable in dollars . By borrower: Claims on: own foreign offices unaffiliated foreign banks- foreign public borrowers ' . other private foreigners By bank ownership: 2 U.S. -owned banks' claims on: own foreign offices unaffiliated foreign banks other foreigners Foreign-owned banks' claims on: own foreign offices unaffiliated foreign banks other foreigners Payable in foreign currencies.. Banks' domestic customers' claims Payable in dollars Deposits Negotiable and readily transferable instruments.. Outstanding collections and other Payable in foreign currencies By area: Industrial countries ' Western Europe Of which United Kingdom.. Canada Japan Other Caribbean banking centers 4 . Other areas Of which Members of OPEC, included below 5 ., Latin America Asia Africa Other 6 Memoranda: International banking facilities' (IBF's) own claims, payable in dollars (lines 1-13 above). By borrower Claims on: own foreign offices unaffiliated foreign banks foreign public borrowers all other foreigners By bank ownership: 2 U.S.-owned IBF's Foreign-owned IBF's Banks' dollar acceptances payable by foreigners -59,975 -53,023 —43,137 -37,271 -6,292 -3,587 4,013 26 2,010 80 -37,297 -8,302 346 -6,952 -5,025 -1,078 ^t,713 766 -1,927 -47,583 -10,551 -3,414 -5,150 -32,463 581 -8,704 -3,688 178 675 -2,282 396 -2,477 -28,235 -21,369 -5,638 -3,019 1,791 5,438 -33,673 2.781 -42,119 -40,223 -15,133 -13,195 ^(,663 -511 3,236 -3,580 7,570 2,409 -9,615 -12,233 316 -25,090 -1,896 -3,853 721 -2,652 -1,922 1,957 -31,380 1,465 4,966 -5,175 -27,850 180 -9,610 -1,129 -787 891 -1,138 -169 -713 -15,546 ^1,439 -10,888 -8,651 -6,895 2,600 -54,481 -45,231 -30,414 -31,788 -1,934 2,730 577 -22,670 -982 -1,296 -9,118 -951 4,603 -14,816 -9,250 -9,437 -4,597 1,324 -6,165 188 -46,403 -14,145 -12,636 6,456 -39,563 -5,721 -2,356 -2,530 5,762 -7,882 -678 441 -21,679 490 63 3,245 -8,051 -9,830 3,622 20,237 17,258 25,862 20,911 5,483 -1,642 1,110 6,038 5,232 -641 14,873 251 109 -8,604 2,979 2,484 1.031 3,493 -2,040 495 11,945 8,830 5,651 574 2,521 20 8,069 223 -1,324 147 1,026 -327 -623 413 -345 943 9,492 271 -22,324 -22,157 -14,552 -9,099 857 637 -4,736 872 975 -9,816 -9,971 519 -167 -549 -1,639 -92 -833 -714 1,090 -22,669 -14,434 -5,961 -1,977 -6,627 369 -^1,067 3,863 1,618 95 2,496 200 1,072 -13,655 -5,656 -7,708 -1.382 1,091 -2,507 -11,148 1,853 -16,860 -15,966 -8,887 -5,360 -1,624 -3,316 1,413 -5,694 -109 -1,599 334 -1,515 -304 -7,079 -894 -750 306 -622 -434 -144 -776 8,365 5,387 267 -9,505 97 -11,086 -4,998 -1,260 -1,237 -285 -2 -3,474 ^t,875 -2,572 -100 -724 -4,736 -3,535 1,851 -22,623 -19,191 -9,951 -14,194 577 3,590 76 812 1,575 3,674 -15,006 -998 -9,240 -3,432 -3,948 -524 ^1,690 1,266 516 -19,880 -1,296 -111 ^1,039 -14,239 -306 -2,526 -217 179 1,886 -4,375 -40 2,312 -4,055 -3,427 -1,456 1,061 -233 -2,351 -1,704 -1,375 14,721 15,728 1,531 9,884 1,285 3,027 -1,696 2,068 1,434 3,227 7,817 2,878 -1,006 545 804 -1,318 3,377 -1,255 -259 10,173 10,090 6,151 3,543 -4,105 645 296 4,798 749 1,171 2,435 -144 1,335 13,376 6,971 5,361 -531 1,575 323 13,053 4,398 -12,602 -14,069 -15,330 -7,423 -5,733 -784 -1,390 7,906 -3,331 -1.815 -15,329 -2,402 -359 1,261 1,467 1,661 167 -663 2,157 -194 -20,340 -3,938 -2,901 -2,014 -14,158 -230 9,456 -1,718 -789 1,326 -2,307 -248 -489 -9,910 -8,585 -1,738 53 360 1,605 -11,515 -26,410 -17,652 -14,854 -1,103 -1,075 -620 -13,062 -1,288 -2,790 -1,792 185 1,095 -8,758 181 -487 -548 3,086 -3,026 669 -8,824 -1,938 -2,192 1,184 -8.602 532 -12,820 -4,585 -1.962 1,285 -2,933 -19 -2,918 -8,163 -1,061 -5,485 -2,193 911 -19,473 -13,160 -11,042 -4,982 3,304 -440 -15,818 1.569 1,875 4,776 -6,551 989 -6,313 -11,443 -11.415 -2,898 ^t,476 -4,041 -28 -27,412 -18,359 -13,694 3,743 -12,698 -2,653 -851 -528 1,980 -5,077 -267 2,513 -13,669 -11,902 -2,072 -341 646 -4,494 -9,175 -807 -16,606 -15,443 -15.957 -414 -462 1,390 -5,076 686 502 -10,881 -1,100 426 -1,163 -5.995 -5.982 -3.795 412 -2,599 -13 -15,169 -3,804 2,206 -571 -10,496 -298 -10,016 2,584 -153 -819 3,482 -232 153 -7,065 -3,571 61 -440 -1,368 -9,647 2,323 626,435 572,881 505.626 272,471 129,957 62,230 40.96K 125,526 45,038 60.306 146.945 84,919 42.892 67,255 53,554 53,178 12,084 24,960 16,134 376 333,948 158,277 93,061 25,238 146.004 4,429 143.449 149,038 22,098 92,957 45,731 4,505 5,845 274,756 146.945 84,919 26,165 16,727 94,216 180.540 17.161 See footnotes on page 146. 136 Balance of Payments of the United States Table 9. — Foreign Official Assets and Other Foreign Assets in the United States Reported by U.S. Banks [Millions of dollars) (Credits +; increase in foreign assets. Debits -; decrease in foreign assets.) 1987 I II III IV 1988 1989 Foreign official assets in the United States (table 1, line 51) By type: U.S. Treasury securities (table 1, line 53) Bills and certificates Bonds and notes, marketable Bonds and notes, nonmarketable Other U.S. Government securities (table 1, line 54) Other U.S. Government liabilities (table 1, line 55) U.S. liabilities reported by U.S. banks, not included elsewhere (table 1, line 56). Banks' liabilities for own account, payable in dollars ' Demand deposits Time deposits ' Other liabilities 2 Banks' custody liabilities, payable in dollars' J Other foreign official assets (table 1, line 57) By area: (see text table B). Other foreign assets in the United States (table 1, lines 60 and 63) By type: U.S. Treasury securities (line 60) By security: Bills and certificates Marketable bonds and notes By holder: Foreign banks Other private foreigners Internarional financial institutions 4 U.S. liabilities reported by U.S. banks (line 63) Banks' own liabilities '... Payable in dollars By account: Liabilities to own foreign offices Liabilities to unaffiliated foreigners: demand deposits time deposits ' other liabilities 2 By holder: Liabilities to: own foreign offices unaffiliated foreign banks other private foreigners international financial institutions * By bank ownership: 5 U.S. -owned banks' liabilities to: own foreign offices unaffiliated foreign banks other private foreigners and international financial institutions 4 . Foreign-owned banks' liabilities to: own foreign offices unaffiliated foreign banks other private foreigners and international financial institutions 4 . Payable in foreign currencies Banks' custody liabilities, payable in dollars ' 3 Of which negotiable and readily transferable instruments By area: Industrial countries 6 Western Europe Canada Other Caribbean banking centers 7 Other areas Of which Members of OPEC, included below B Latin America Asia Africa Other' Memoranda: International banking facilities' (IBF's) own liabilities, payable in dollars (in lines A9, and BIO above). By holder: Liabilities to: own foreign offices unaffiliated foreign banks foreign official agencies other private foreigners and international financial institutions 4 . By bank ownership: s U.S. -owned IBF's Foreign-owned IBF's 35,594 34,364 22,399 14,215 -2,250 -1,214 2,141 1,187 4,593 191 -453 4,855 -3,406 83492 3.809 -1,133 4,942 152 6,594 -2,937 79,783 75,119 60,784 35,680 2,493 14,066 8,545 35,680 21,723 2,043 1,338 -3,546 1,466 558 39,226 20,257 2,823 14,335 4,664 929 50,427 20,615 9,454 20,358 30,355 2,810 150 667 3,452 -589 -720 20,925 21,009 3,897 -2,607 -3,077 46,300 45,193 43,238 13,180 31,058 -1,000 1,564 -2,520 3,918 3,275 -510 2,346 1,439 643 -1,007 81,383 -7,643 -1,835 -5,808 -850 -1,463 -5,330 89,026 86,721 60,986 39,212 -895 15,137 7,532 39,212 22,965 65 -1,256 24,425 124 -1,352 14,787 22,841 161 25,735 2,305 157 66,605 50,419 5,963 10,223 10,471 4,309 3,966 1,227 9,836 29 -6,784 35,401 11,436 22,313 1,912 -260 9,197 26.204 38,882 41,683 14,834 26,625 224 1,309 -1,284 -331 -1,606 144 -3,058 1,308 1.275 -2,495 88,976 20,144 -1.651 21.795 -1,533 20,774 903 68,832 60,068 44,506 -704 5,705 -897 40,402 -3,604 7,883 -175 27,663 -246 4,409 12.739 -3,358 3,299 15,562 8,764 573 41.178 15,573 -11,024 36,629 39,306 8,492 967 6,414 2.660 101 -683 17,668 22,287 -3,842 -3,133 2,356 8,761 8,908 14,040 12,193 3,980 8,213 -62 -1,274 3,543 2,889 -348 569 2,668 654 -360 -9,364 -2,826 -1.225 -1,601 -225 -2,658 57 -6,538 ^(,874 -13,118 -5.448 -1,529 -6,819 678 -5,448 ^1,926 -3,492 748 -2,066 -1.463 -1,694 -3,382 -3,463 -1,050 8,244 -1,664 -1,108 4,623 6,657 299 -2,333 -11,472 -2,515 -996 -2,007 -755 -194 441 -11,028 -4,791 -3,534 -1,429 -1,268 -1.738 -9,290 10,330 11,084 1,034 10,650 -600 256 -1,343 615 372 -176 2,458 -1,910 243 -283 -2,431 -491 -1,940 -693 330 -2,068 18,355 15,042 13,607 8,842 777 5,789 -1.801 8,842 6,016 940 -2,191 7,491 551 -1,179 1,351 5,465 -72 3,313 1,642 14,535 18,820 -3,761 -524 1,290 99 1,410 722 3,674 36 -4,334 4,035 5,581 2,775 764 444 12,711 753 841 ^1,962 6,203 -400 714 -142 -35 -345 57 742 -1,144 310 -625 43,760 -2,835 1,013 -3,848 140 163 -3,138 46,595 45,636 38,804 16,798 -1,702 14,454 9,254 16,798 15,848 3,903 2,255 14,959 4,215 3,249 1,839 11.633 2,909 6.832 959 -150 27.185 10,509 4,722 11,954 13,465 3,112 2,791 1,286 2,556 30 -760 21.418 3,843 13,661 1,737 2,177 8,499 12,919 20,070 19,120 13,128 5,992 Negotiable certificates of deposit held for foreigners ' (in lines A13 and B27 above). 656 238 -205 359 -43 -1,423 1.825 -564 261 31,063 449 -1,132 1,581 -72 702 -181 30,614 30,917 21,693 19,020 1,559 1,713 -599 19,020 6,027 -1,286 -2,068 4,041 -3,179 -1,728 14.979 9,206 -1,626 9,224 -303 -227 20.262 14,433 4,703 1.126 7,188 3,613 761 1,226 4,361 157 -2,131 11.856 8.355 6,605 -1,171 -1,933 1,992 9,864 812 24,631 27,702 6,760 20,450 492 -162 -304 -1,772 -1,683 259 -1,052 -890 -89 -833 -11,209 5,928 -307 6,235 -539 7,038 -571 -17,137 -23,834 -24,314 -853 -9,471 -3,348 -10,642 -14,597 -973 1,898 -7,108 1,742 464 -3,534 -16,339 461 6,697 1,253 -12.789 -13,768 -4,682 5.661 -672 2,252 -60 2,651 -1,679 -126 1,406 -16.842 -1,407 -14,652 -1,172 389 -240 -16,602 5,895 5,853 -367 6,510 -290 202 -517 774 920 -183 155 948 -146 -417 5,458 -290 5,748 -383 3,374 2,467 30,455 30,316 31,682 27,810 1,262 3,369 -759 27,810 754 1,993 1,125 9,544 2 2,336 18,266 752 782 139 -1.668 20.975 18,423 1.347 1.205 10,640 4,298 -763 237 18 314 3,729 14,073 12,784 487 379 423 -128 14,201 -3,769 1,566 -5.346 11 572 -232 1,703 1,073 -84 -89 1.246 630 -508 3,422 -363 3,785 -243 4,788 -1,123 23,291 19,973 13,214 2,185 -1,396 7,552 4,873 2,185 7,877 3,955 -803 7,917 561 1,295 -5,732 7,316 1,857 3,318 996 12,809 2,152 -1,657 12,314 11,708 2,196 3,414 1,923 2,690 -198 -2,219 -862 7,492 244 1,375 1,804 6,445 -1,313 10489 11,897 6,875 5,011 11 697 -232 -1,036 -1,916 152 -2,072 4 880 -737 37459 5,336 -691 6,027 -368 5,574 130 32,223 33,613 23,924 21,049 283 4,255 -1,663 21,049 2,362 2,908 -2,395 17,310 -2,551 314 3,739 4,913 199 9,689 -1,390 20,183 8.766 -6,032 17,449 17,630 -254 -1,624 1,603 1,631 111 -3,599 11,772 2,831 -2,584 169 7,325 4,864 6,914 4,585 -8,245 12,819 11 716 -377 1,538 283 -298 1,086 -505 1,255 452 8,745 1,262 7,483 -340 8,943 142 10,398 10,141 10,381 885 981 6,681 1,834 885 8,366 489 641 -2,244 4,687 464 3,129 3,679 666 257 -333 16.591 6,211 2,313 8,067 1,345 1,207 708 1.553 -1,416 66 1,004 9,551 3,118 1,786 -340 -53 14,168 See footnotes on page 1 46. Appendix — Balance of Payments Tables, June 1989 SURVEY 137 Table 10. — U.S. International Transactions, by Area — Continued (from page 143) [Millions of dollars] (Credits +; debits -) ' Other countries in Asia and Africa International organizations and unallocated ' 1988 Exports of goods and services l Merchandise, adjusted, excluding military ' . Services 4 Transfers under U.S. military agency sales contracts.. Travel Passenger fares Other transportation.. Royalties and license fees 56 Other private services 6 U.S. Government miscellaneous services . Receipts of income on U.S. assets abroad.. Direct investment Other private receipts U.S. Government receipts Transfers of goods and services under U.S. military grant programs, net.. Imports of goods and services Merchandise, adjusted, excluding military 3 Services 4 Direct defense expenditures .. Travel Passenger fares Other transportation.. Royalties and license fees 36 Other private services 6 U.S. Government miscellaneous services . Payments of income on foreign assets in the United States „ Direct investment Other private payments U.S. Government payments U.S. military grants of goods and services, net Unilateral transfers (excluding military grants of goods and services), net.. U.S. Government grants (excluding military grants of goods and services).... U.S. Government pensions and other transfers Private remittances and other transfers 24,926 15.499 9,427 1,189 409 107 1,191 154 1,859 53 4,464 1,601 818 2,045 24 -32,016 -26,386 -5,630 -404 -1,089 -351 -1,015 -21 -218 -188 -2,344 -17 -968 -1,359 -24 -2,278 -1,614 -83 -582 U.S. assets abroad, net (increase/capital outflow (-)) . U.S. official reserve assets, net 7 Gold Special drawing rights Reserve position in the International Monetary Fund.. Foreign currencies 25,478 17,123 8,355 1,360 859 215 1,291 106 3,163 1,658 787 718 1 -33,734 -27,122 -6,612 ^*58 -1,793 -344 -1,112 -33 -230 -177 -2,466 85 -991 -1,560 -1 -1,758 -1,323 -95 -340 -3,787 26,615 17,500 9,115 1,250 1,231 317 1,224 174 1,536 74 3,308 1,622 973 713 4 -37,093 -30,270 -6,823 -459 -1,569 -395 -1,063 -41 -268 -212 -2,817 -19 -1,053 -1,745 -4 -2,139 -1,590 -86 -464 25311 17.803 8,008 942 837 142 1,197 212 1,603 100 2,976 1,389 1,095 492 24 -35,624 -29,226 -6,398 -485 -1,392 -395 -988 -12 -293 -201 -2,632 147 -1,186 -1,593 -24 -3,406 -2,905 -86 ^115 -2,617 25319 17,681 8,138 934 113 1,311 197 2,167 55 2,873 1,346 1,132 395 7 -34,059 -27,894 -6,165 -418 -1,027 -383 -1,032 5 -261 -200 -2,850 101 -1,201 -1,750 -7 -2,370 -1,680 -90 -600 3,086 1,287 1,287 1,465 333 449 403 532 (*) 422 -5 246 181 521 495 64 2«7 134 547 1 513 92 270 152 -21 -444 -13 -537 -IX -478 -105 -29 -113 -42 -127 -16 1,771 602 -107 -96 -12 -57 244 -265 -56 -2,854 167 1,538 4 14 545 1 573 107 306 160 -IS -440 -300 -296 4,127 481 155 446 180 69 -35 202 U.S. Government assets, other than official reserve assets, net U.S. credits and other long-term assets Repayments on U.S. credits and other long-term assets 8 U.S. foreign currency holdings and U.S. short-term assets, net U.S. private assets, net Direct investment Foreign securities U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns.. U.S. claims reported by U.S. banks, not included elsewhere Foreign assets in the United States, net (increase/capital inflow ( + 1) . Foreign official assets in the United States, net U.S. Government securities U.S. Treasury securities 9 Other 10 Other U.S. Government liabilities" U.S. liabilities reported by U.S. banks, not included elsewhere Other foreign official assets 12 Other foreign assets in the United States, net Direct investment U.S. Treasury securities U.S. securities other than U.S. Treasury securities U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns.. U.S. liabilities reported by U.S. banks, not included elsewhere Allocations of special drawing rights -1,424 -2,025 430 171 1,564 -872 -11 121 2,325 400 (") (") (") <"> 123 (") (19, (19) -352 (19) -410 -527 " 1,566 -486 -1,228 697 46 -3,302 -581 62 -166 -2,617 -2,260 (") (19) ("> (") -400 (") (") (19) -190 (") 156 217 •-2,044 2,307 -640 2,853 93 -3,207 -837 547 -195 -2,721 3,749 (19) (") (19, (") -96 (19) ,19, (") 418 (19) 464 180 ' 2,783 2,663 ^134 3,169 -73 -5,280 253 -103 -67 -5,363 8,562 (19) (19) ("I (") -190 (19) (") (") 1.620 (19) -124 165 '7,091 542 -430 963 9 2,545 -740 188 7,943 (") (") ("> (") 86 (19) (19) (") 502 (") 384 n.a. ' 6,970 -189 -189 1 -245 -245 -232 -232 1,358 63 58 1 1,235 262 (*) -61 16 213 -1 -289 4,211 (*) -2,790 106 178 -3.074 -2,106 173 507 -302 -502 3,949 -9 310 -3 3.651 -2,352 (*) (*) 262 4,211 -2.106 -2.352 -865 11 1,116 ,19) 188 59 > 3,964 (") I4h -153 -2,099 ('"1 -211 49 -2.190 Statistical discrepancy, and transfers of funds between foreign areas, net (sum of above items with sign reversed). Memoranda: Balance on merchandise trade (lines 2 and 17) Balance on services (lines 3 and 18) Balance on goods and services (lines 66 and 67) ,3 Balance on goods, services, and remittances (lines 68, 33, and 34) Balance on current account (lines 68 and 31 ) '- 8,830 -10,887 3,797 -7,091 -7,755 -9.369 16,062 -9,999 1,743 -8,257 -8,691 -10,014 9,769 -12,770 2.292 -10.479 -11,028 -12,618 -2,457 -4,614 4,578 -11.423 1,610 -9,813 -10,314 -13.218 -10,213 1.973 -8,240 -8,930 -10,611 567 567 551 424 675 675 568 461 704 704 648 585 835 835 558 See footnotes on page 146. 138 Balance of Payments of the United States Table 10.— U.S. International [Millions (Credits +; debits -) ' Exports of goods and services 2 Merchandise, adjusted, excluding military 3 Services 4 Transfers under U.S. military agency sales contracts.. Travel Passenger fares Other transportation.. Royalties and license fees 56 Other private services 6 U.S. Government miscellaneous services . Receipts of income on U.S. assets abroad.. Direct investment Other private receipts U.S. Government receipts Transfers of goods and services under U.S. military grant programs, net.. Imports of goods and services Merchandise, adjusted, excluding military 3 Services 4 Direct defense expenditures Travel Passenger fares Other transportation- Royalties and license fees 56 Other private services 6 U.S. Government miscellaneous services . Payments of income on foreign assets in the United States . Direct investment Other private payments U.S. Government payments U.S. military grants of goods and services, net Unilateral transfers (excluding military grants of goods and services), net.. U.S. Government grants (excluding military grants of goods and services).... U.S. Government pensions and other transfers Private remittances and other transfers U.S. assets abroad, net (increase/capital outflow (-)) . U.S. official reserve assets, net 7 Gold Special drawing rights Reserve position in the International Monetary Fund- Foreign currencies Western Europe 120,894 60,375 60.519 2,029 5,725 1,894 4,857 4,197 "5,600 130 36.088 22,971 12,095 1,023 24 -153,130 -88,959 -64,171 -8,713 -9,032 -3,037 -5,199 -740 " -3,459 -510 -33,481 -5,701 -18,566 -9,214 -24 -442 -589 -759 906 ^•5,366 -431 145,935 68,605 77,330 3,250 7.602 2,722 4,889 5,364 6,056 121 47,326 32,975 13,258 1,094 3 -174,318 -96,127 -78,191 -9,632 -9,812 -3,495 -5,541 -994 -4,360 -542 -43,816 -8,465 -24,587 -10,764 -3 -24 -330 -766 1,072 -29,692 2,168 159,467 73,053 3,532 9,795 3,680 5,439 6,172 6,131 136 38.168 22,033 14,781 1,354 22 -194,735 -102,200 -92,535 -10,355 -11,004 -3,736 -6,449 -1,349 -4,097 -54,958 -13,370 -29,008 -12,580 -22 -64 -520 -825 1,281 -28,765 -3,906 European Communities (12) ' 1986 102,820 51,848 50,972 1,550 4,655 1,684 3,968 3,688 " 4,622 107 30,698 19,638 10,281 778 19 -128,775 -54,613 -8,376 -8,242 -2,509 -4,024 -533 " -2,961 -404 -27,565 -4,878 -15,920 -6,767 -19 226 -191 -613 1,030 -48,354 -2,517 1987 125,149 59,530 65.619 2,528 6,167 2,428 3,827 4,751 5.097 96 40.725 28,321 11,603 801 2 -148,305 -81,451 -66,854 -9,116 -8,854 -2.938 -4,366 -722 -3,765 ^»04 -36,690 -7,040 -21,466 -8,184 -2 547 -49 -624 1,220 -26,942 1,672 1988 135,790 74,510 61,280 2,585 7,577 3,182 4,303 5,542 5.143 101 32.848 18,957 13,121 769 15 -79,465 -9,690 -9,970 -3,127 -5,169 -881 -3,399 ^168 -46,761 -11,658 -25,300 -9,803 -15 662 -142 -651 1,455 -30367 -3,470 United Kingdom 27,480 11,152 16,328 405 1,492 610 858 834 " 1,853 58 10,218 3,456 6,686 76 -39,870 -24,815 -897 -3.003 -817 -809 -175 ' -2,043 -52 -17,019 -2,61 1 -12,360 -2,048 -23,600 -2 38,341 13,752 24,589 386 2,025 819 803 1,094 2,484 44 16,934 9.428 7,440 65 -49,965 -17.210 -32,755 -1,107 -2,884 -1,046 -1,085 -266 -2,454 ^19 -23,864 -4,520 -16,904 -2,440 -92 391 -10,736 -3 U.S. Government assets, other than official reserve assets, net U.S. credits and other long-term assets Repayments on U.S. credits and other long-term assets 8 U.S. foreign currency holdings and U.S. short-term assets, net U.S. private assets, net Direct investment Foreign securities U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns.. U.S. claims reported by U.S. banks, not included elsewhere Foreign assets in the United States, net (increase/capital inflow (+)) . Foreign official assets in the United States, net U.S. Government securities U.S. Treasury securities 9 Other" Other U.S. Government liabilities" U.S. liabilities reported by U.S. banks, not included elsewhere Other foreign official assets l2 Other foreign assets in the United Slates, net Direct investment U.S. Treasury securities U.S. securities other than U.S. Treasury securities U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns.. U.S. liabilities reported by U.S. banks, not included elsewhere Allocations of special drawing rights -431 346 -1,090 1.448 -13 -45,280 -14,053 -16,761 -3.902 -10,564 106,762 15,132 (") (") ('*) 955 (I!) ('*) 91,630 21,729 ('*) 48,838 404 2,168 54 -1,532 1.499 87 -31,914 -22,376 -11,688 661 1,489 151,233 36,099 (") ('*) (") 104 (") (") 115,134 40,436 (») 22,805 1,456 (") -3.906 -1,068 1.953 2 -25,747 -3,335 -6,817 -1,433 -14,162 62,835 75 ('*) (") (") -395 ,18) ('"> 62,759 29,824 ('") 13,006 4,354 ('■) -2,517 247 -763 998 13 -46,085 -12,778 -18,766 -3,741 -10,800 100355 (") (") (") (") 832 (") (") (") 19,095 (") 42,327 443 " 37,658 1,672 223 -963 1,112 75 -28,836 -18.916 -12,608 557 2,131 131,113 (") (") (") (") 48 (") (") (") 36,174 (") 22,132 1,499 "•71,260 -3,470 -179 -660 486 -6 -26,918 -4,439 -8,188 -1,131 -13,160 61,170 (") (") (") (") -312 (") (") o 28,365 (19) 14,770 3,418 ' 14,929 202 -7 -23,794 -1,850 -14,582 -3,948 -3,414 66357 (") (") (") (") 155 (") (") <") 10,827 (") 38,716 994 ' 15.866 347 5 -11,085 -5,370 -11,967 1,286 4,966 82,946 (") (IV) (") <") 73 (") (") C) 22,444 (") 19,823 561 ' 40,045 Statistical discrepancy, and transfers of funds between foreign areas, net (sum of above items with sign reversed). Memoranda: Balance on merchandise trade (lines 2 and 17) Balance on services (lines 3 and 18) Balance on goods and services (lines 66 and 67) l3 Balance on goods, services, and remittances (lines 68, 33, and 34) Balance on current account (lines 68 and 31) ln -28,584 -3,653 -32,237 -32.090 -32,679 -27,522 -861 -28,383 -28,076 -28,406 1,262 -15,786 -19,483 -35,269 -34,813 -35,332 -26472 -22,314 -3,641 -25,955 -25,538 -25.729 -81362 -21,921 -1,235 -23,156 -22,561 -22.609 -11,136 -18,186 -29,322 -28,518 -28,660 -30*35 -3,903 -8.487 -12,390 -12,122 -12,122 -60,884 -3,458 -8,166 -11,624 -11.326 -11.326 See footnotes on page 146. Appendix — Balance of Payments Tables, June 1989 SURVEY 139 Transactions, by Area of dollars] European Communities (6) l5 Eastern Europe Canada Latin America and Oth Hemisphere er Western Japan Australia 1986 1987 1988 1986 1987 1988 1986 1987 1988 1986 1987 1988 1986 1987 1988 1986 1987 1988 64,511 72,962 75313 3,120 2,759 4,402 75,662 84,278 99,282 65,401 68341 81,867 43301 48,655 62,863 8,091 9,407 13343 1 34,976 39.121 48,014 2.074 2,262 3,796 56,503 62,005 73,540 30,757 34,971 43,624 26,354 27,619 37,148 5.072 5,291 6,804 2 29,535 740 33,841 1,064 27,299 1,061 1,046 497 606 (*) 19,159 98 22,273 165 25,742 197 34,644 302 33,370 282 38,243 304 17,147 164 21,036 371 25,715 309 3,019 355 4,116 569 6339 967 3 4 2.545 937 2,198 3,390 1,409 2,287 4,021 1,676 2,478 128 129 179 2,689 496 876 3,252 604 901 3,976 664 1,035 5,717 1,310 2,068 5.494 1,233 2,639 6,288 1,393 2,851 3,183 1,102 2,369 3.941 1,481 2,558 4,926 1,861 2,753 483 178 200 548 313 255 702 481 238 5 6 75 94 108 7 2,626 "2,174 41 3,313 2,019 41 3,705 2,113 57 13 17 104 5 9 105 5 32 123 10 724 " 2,994 31 739 3,236 56 790 3,181 33 278 " 3,782 89 267 3,641 91 295 3,950 119 1,347 17 1,798 16 1,933 1,774 12 2,420 2,130 31 214 "504 6 230 494 2 315 486 5 8 9 10 18,274 14.670 3,157 447 20,319 16,061 3,782 477 12,188 7,528 4,209 451 721 155 154 11,251 5,063 6,140 48 13,319 6,990 6,288 41 15,867 8,954 6,882 31 21,099 3,516 16,972 611 19,724 3.812 15.305 606 23,044 4,617 17,832 594 7,167 3,387 3,435 345 8,965 3,873 4,921 170 11,285 3,270 7,949 66 1,078 548 510 21 1,706 1,182 509 16 3,345 2,862 474 10 11 12 127 595 120 35 130 24 13 14 (*) 1 -78312 -3 -87,422 -1 -94,936 25 -68,239 18 -78,181 18 -83,205 -1 -97,205 -1 -103,924 15 -2,400 -2,485 -2,740 -77343 -82,927 -95,833 -112,734 -4,134 -4,771 -6,011 16 1 -52,450 -57,395 -60,368 -1,979 -1,920 -2,165 -69,693 -73,599 -84,400 -42,014 -47,291 -51,421 -80,752 -84,578 -89,760 -2,595 -2,965 -3,516 17 1 -26,062 1 -6,944 -30.027 -7,378 -34,568 -7,658 -421 -3 -565 -4 -575 -3 -7,850 -217 -9,328 -201 -11,433 -249 -26,225 -347 -30,890 -333 -36.784 -236 -16,453 -1,994 -19,346 -2,055 -22.974 -1.955 -1.539 -37 -1,806 -42 -2,495 -54 18 19 1 -1,508 -1,202 -5,008 -1,322 -2,345 -5,652 -1.496 -2,693 -117 -230 -244 -3,030 -212 -476 -2,949 -195 -588 -3,241 -241 -716 -7,208 -1,456 -1,939 -8,094 -1,511 -2,291 -9,206 -1,544 -2,132 -1,321 -422 -3.096 -1,522 -457 -3,328 -1.793 -465 -3.676 -459 -239 -372 -622 -295 -424 -781 -331 -120 20 21 -2,087 -168 -185 -171 22 -345 17 -705 -272 ^134 -1,203 -268 -521 -1,164 -289 (*) "-61 -42 -1 -64 -48 -76 -40 -17 17 -881 -95 -25 -1,220 -149 -225 -1,650 -114 -30 17 -3.099 -278 -28 -3,576 -324 -9 -3,391 -303 -281 "-485 -58 -324 -753 -62 -361 -628 -99 -7 17 -54 -43 -9 -123 -32 3 -126 -34 23 24 25 -9,999 -2,208 -3,323 -4,468 -12,070 -2,416 -4,287 -5,367 -15,095 -4,217 -5,098 -5,780 -31 -33 -42 -2,922 -390 -1,932 -600 -4,002 -943 -2,155 -904 -1,997 -1,082 -2,615 -1,300 -11.868 1.395 -12,044 -1.219 -14,733 247 -13,888 -1,092 -19,963 -893 -17,931 -1,139 -8,795 -1,009 -2,435 -5,350 -10,845 -846 -3,954 -6,045 -13,999 -1,478 -5,347 -7,174 -328 -39 -98 -191 -259 174 -137 -296 -752 -120 -179 -453 26 27 -29 -2 -29 -4 -41 -1 28 29 (*) 359 3 534 1 498 -25 -2,722 -18 -3,155 -18 -3,046 1 -87 1 -97 30 -161 -161 -176 -290 -325 -337 -103 -51 -56 -75 31 -24 -362 744 -11 -364 908 -17 -378 893 -15 -19 -127 -11 -18 -132 -9 -20 -147 -1,421 -390 -911 -1,790 -116 -950 -1,618 ^167 -961 32 -288 -3 -298 -27 -318 -19 -4 -84 -14 -83 -29 -74 -16 -35 -17 -39 -18 -56 33 34 -24,861 -13,374 -4,668 -617 163 -1,103 -9,937 -14326 -1,031 -14,755 -14,557 -3,863 -27,145 -18,781 -41,939 -592 -1,546 -1329 35 -2,514 1,674 -3.467 -198 167 -17 -313 5,253 -1,142 36 37 38 39 40 -2,514 199 1,674 116 -3,467 51 -!98 -851 -2,162 1,249 62 167 -1,001 -2,057 1,146 -90 -17 -238 -1,216 1,019 -41 -313 84 5,253 322 -1,142 8 -395 -1.855 610 851 172 141 73 -7 68 12 152 79 89 42 31 41 42 156 44 51 65 52 -1 135 37 110 31 158 -6 50 29 87 -3 318 3 4 4 118 -28 30 12 26 4 43 44 -22,546 -10,031 -4,012 206 -8,709 -15,164 -11,544 -64 -724 -2,832 -1,252 1.481 -2.244 -216 -274 -222 -9 -1,244 -10,010 -2,565 -844 -1,451 -5,150 -14,678 -7,450 -1.020 1,967 -5,175 -1,110 -4,101 -3,754 289 6,456 -13,705 -7,441 3,312 -1.548 -8,028 -13,723 -8,042 839 2,221 -8,741 -3,608 -4,579 1,213 -270 28 -26,917 -1,987 7,923 -390 -32,463 -24,355 -2,908 6,289 114 -27,850 -40,806 -1,976 507 227 -39,563 -681 37 -1,273 23 531 -1,588 -1,062 -263 -87 -176 -1,260 -1,681 -225 -113 760 45 46 47 48 49 -18 38 -29 -23 -74 -1,147 -98 -124 31,184 43,989 7,807 145 -148 327 13,611 12,672 -1,666 30,854 8,643 56,669 51,253 42,697 86,325 5,696 252 4345 50 (") (") (") (") (") (") (") (") (") (") <") (") (") <") (") (") (") (") 789 (IS) 3,020 ('") 4,606 (") pi) (19) (19) (") (19) (19) (19) (19) (19) (19) (") (19) (19) (") (19) (19) (19) (19) (19) (19) (19) (19) (") <") (19) (") (19) (19) 51 52 53 (") 270 (") (") (") 102 (") ("> (") 16 (") <") ("> (*) (") (") (") (*) (") (") ("> (18) 100 ('") ('■) ("•) 64 m -16 (") (") -44 (19) (19) (19) -168 (19) (") (19) -63 (19) (") (19) 68 (19) (19) (19) -87 (19) (19) (") 219 (>,) (19) (19) 354 (19) (19) (19) 25 (19) (19) (19) -467 (19) (19) 54 55 56 57 (") (") (") 8,040 13,548 (") 8,742 (") (") <") 12,823 2,547 9,652 1,614 -6,272 2 847 (19) -332 (19) -4,200 (") 2,320 -1,206 "11,897 (19) 5,899 ("> 2,992 562 " 47.279 (19) 7,268 (19) 12,795 445 " 30,677 (.9) 7,504 (19) 12,680 1,348 "21,253 (19) 17,838 (19) 9,310 761 "58,197 (19) 2,606 (19) 408 -143 "2,471 (19) 469 (19) 205 79 is -527 (19) 532 (19) 68 574 " 3,638 58 59 60 61 62 63 64 65 (") 3.512 -444 " 19,806 (") 2.303 685 "27,351 (") 2.326 1,410 " -4,687 (") -2 -17 "164 (") 30 -17 "-161 (") 21 108 "198 1,259 -»37 2,205 -131 ('*) (") 1,707 198 ( ii) (19) 4.383 -1,753 " 28,600 7,319 -16,688 15,987 -87 -129 -709 -1304 829 -415 -10340 18,909 -43,422 29,684 31,450 5390 -9,009 -3,287 -10373 -17,474 3.473 -14,001 -13,618 -13.642 -18,274 3,814 -14.460 -13.916 -13,926 -12,354 -7,270 -19,624 -19,109 -19,125 95 624 719 574 559 342 -67 275 124 114 1,631 30 1,661 1.494 1,486 -13,190 11,310 -1,881 -2,171 -2,171 -11,594 12,945 1,351 1,026 1.026 -10,860 14,310 3,450 3,113 3,113 -1 1,257 8,419 -2,838 -4,139 -5,559 -12,320 2,480 -9,840 -11,206 -12,995 -7,797 1,459 -6,338 -7,767 -9,385 -54,398 694 -53,704 -53.792 -53,792 -56,959 1.690 -55,269 -55,366 -55,366 -52,612 2,740 -49.872 -49.975 -49.975 2,477 1,479 3.956 3,905 3,905 2,326 2,310 4,636 4,581 4381 3,288 4,044 7,332 7,258 7,258 66 67 68 69 70 140 Balance of Payments of the United States Table 10.— U.S. International [Millions (Credits +; debits -) ' Other countries in Asia and Africa 1988 International organizations and unallocated l6 Western Europe 19 Exports of goods and services 2 Merchandise, adjusted, excluding military 3 .. Services 4 Transfers under U.S. military agency sales contracts- Travel Passenger fares Other transportation . Royalties and license fees 36 Other private services 6 U.S. Government miscellaneous services.. Receipts of income on U.S. assets abroad.. Direct investment Other private receipts U.S. Government receipts Transfers of goods and services under U.S. military grant programs, net . Imports of goods and services Merchandise, adjusted, excluding military 3 - Services 4 Direct defense expenditures Travel Passenger fares. Other transportation . Royalties and license fees 36 Other private services 6 U.S. Government miscellaneous services.. Payments of income on foreign assets in the United States- Direct investment Other private payments U.S. Government payments U.S. military grants of goods and services, net Unilateral transfers (excluding military grants of goods and services), net .. U.S. Government grants (excluding military grants of goods and services) .... U.S. Government pensions and other transfers Private remittances and other transfers U.S. assets abroad, net (increase/capital outflow (—)).. U.S. official reserve assets, net 7 Gold Special drawing rights Reserve position in the International Monetary Fund .. Foreign currencies 71,077 42,232 28,845 5,547 2,529 566 3,948 482 " 5,403 316 10,054 3,563 3,529 2,962 47 -103,722 -82,433 -21,289 -1,760 ^t,833 -1,340 -4,020 13 " -377 -658 -8,315 366 -3,620 -5,061 -47 -11,071 -9,011 -473 -1.587 -1,056 81454 49,513 32,041 6,601 2.539 529 4,419 528 5,542 235 11,649 5,796 3,189 2,664 33 -126,485 -103,286 -23,199 -1,829 -5,986 -1,400 -4,339 15 -927 -734 -7,999 334 -3,796 -4,537 -33 -9,462 -7,420 -349 -1,693 2,237 102,829 67,925 34,904 4,741 3,336 781 4,903 712 6,187 333 13,911 6,270 3,673 3,968 53 -138,468 -113,004 -25,464 -1,805 -5,843 -1,485 -4,179 -107 -1,008 -777 -10,259 196 -4,198 -6,257 -53 -9381 -7,432 -349 -1,801 4,214 5,210 5,754 4,214 5,210 5,754 1,234 1,603 " 1,989 3 1,155 -516 861 810 2.112 3 1,860 127 1,048 685 2,144 4 2,003 258 1,119 626 -3,055 -2,536 -2,972 -3,055 -2,536 -2,972 -70 -1,367 -70 -1,899 "-314 -1 -1,228 -366 -1 -t25 -1 -259 -969 -322 -410 -427 -150 -955 -694 -248 -13 -198 1,254 -932 483 1,561 -1,276 -799 -465 -12 2,986 1,498 38,158 21,552 16,606 1,039 1,669 683 1,362 1,390 1,626 38 8,800 5,289 3,236 275 12 -46,364 -25,205 -21,159 -2,627 -1,839 -685 -1,586 -327 -1,022 -161 -12,912 -3,104 -6,780 -3,028 -12 -10 -123 -198 311 4,901 656 37,231 22,110 15,121 823 2,361 879 1,372 1,427 1,447 28 6,783 2,933 3,632 218 -49,788 -26,109 -23,679 -2,567 -3,169 -1,042 -1,646 -340 -959 -134 -13,822 -3.649 -6,961 -3,212 -112 -201 353 -2.498 3639 19,927 16,462 907 3,266 1,298 1,344 1,444 1,472 37 6,694 2,830 3,616 248 2 -18,753 -23,908 -24,845 -2,555 -4,309 -1,239 -1,580 -339 -968 -137 -13,719 -3,286 -7,371 -3,062 -2 47 -72 -196 315 -7,647 ^1,795 47,689 22,825 24,864 764 2,499 820 1,360 1,911 1,586 34 15,891 10,981 4,297 612 6 -49,830 -26,978 -22,852 -2,606 -1,687 -770 -1,638 -343 -1,147 -155 -14,506 -3,332 -7,896 -3,278 -6 -140 -212 -231 303 -23,521 447 -246 1,501 -509 2,070 474 1.025 U.S. Government assets, other than official reserve assets, net U.S. credits and other long-term assets Repayments on U.S. credits and other long-term assets 8 U.S. foreign currency holdings and U.S. short-term assets, net U.S. private assets, net Direct investment Foreign securities U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns . U.S. claims reported by U.S. banks, not included elsewhere Foreign assets in the United States, net (increase/capital inflow (+)) Foreign official assets in the United States, net U.S. Government securities U.S. Treasury securities 9 Other 10 Other U.S. Government liabilities " U.S. liabilities reported by U.S. banks, not included elsewhere Other foreign official assets lz Other foreign assets in the United States, net Direct investment U.S. Treasury securities U.S. securities other than U.S. Treasury securities U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns. U.S. liabilities reported by U.S. banks, not included elsewhere Allocations of special drawing rights -446 -3,052 2,508 -609 -1,190 2.796 -26 -2,189 14,185 (") (") (") (") 708 (") (") (") 273 (") 2,723 -1,291 "11,772 2,039 -2,138 4,334 -157 198 -2,173 3,236 283 -1,148 8,239 (") ("> (") (") -2,406 (") (") (") 1,071 (19) 1,222 869 ' 7,483 3,059 -4,327 7,149 237 -10,225 -2,037 495 -307 -8,376 10,450 (") (") (") (") -563 (") (") (") 1,496 (") 86 35 "9,396 -924 -927 4 -784 -788 4 "n.S -969 1 -529 887 576 -4 -902 (*) -294 -183 374 4 ^189 -5,548 -52 2,456 176 760 -3 1,523 15 (*) (*) (*) -902 -5,496 (") 565 151 -1,618 (") 653 52 '-6,201 (") -742 -34 " 791 23 -245 293 -25 4,222 -2,161 -3,208 -525 10,116 -3,913 4,523 (") -286 ('*) (18) -8,436 2,660 (") 1.245 1,421 ( ,! ) -214 -233 -340 139 -31 -2,052 3,949 20 -2,083 -3,938 27,954 -2,701 (") ('«) (") -93 ('*) ('") 30,655 9.018 (") 3,950 -714 (") -4,795 -9 -249 226 15 -2,843 -454 -1,622 1,171 -1,937 8,291 -5,464 ('«) ( ,«) (") -161 ("> (") 13,754 5,573 ('") 3.787 2,217 (") 1.106 -234 1,296 44 -25.075 -4,668 -2,008 4 -18,403 30403 3,717 (") ( ,g ) ('*) 145 (") ('*) 26,787 12,574 (") 4,024 1.430 ('») Statistical discrepancy, and transfers of funds between foreign areas, net (sum of above items with sign reversed). Memoranda: Balance on merchandise trade (lines 2 and 17) Balance on services (lines 3 and 18) Balance on goods and services (lines 66 and 67) l3 Balance on goods, services, and remittances (lines 68, 33, and 34) Balance on current account (lines 68 and 31) 13 30487 -40,201 7.556 -32.645 -34,705 -43,716 43,918 -53,773 8,842 -44,931 -46,974 -54,393 41,934 -45,079 9,441 -35.638 -37,787 -45,219 3324 ^•408 1,159 1,159 2,673 2,673 2,340 1,741 2,782 2,782 2,306 1.506 7,228 -3,653 -4,553 -8,206 -8,093 -8,216 -3,999 -8,558 -12.557 -12,405 -12,517 1,673 -3,981 -8.383 -12,364 -12,245 -12,317 -4,153 2.012 -2.141 -2,070 -2,282 See footnotes on page 146. Appendix — Balance of Payments Tables, June 1989 SURVEY 141 Transactions, by Area — Continued of dollars] Europe. n Communities (12) M United Kingdom European Communities (6) u 1988 1989 1988 1989 1988 1989 Line I II 111 IV [» 1 11 III IV 1' I II III IV 1' 32,658 31,320 31,115 40,697 36,081 10,576 10,125 10,320 13412 11,421 18,124 17,072 17,081 23,035 20,065 1 18,636 19,015 17,202 19,657 21,348 4,424 4.679 4,202 4,737 5,089 12.182 12,056 11,050 12.726 13,646 2 14,022 821 12,305 576 13,913 671 21,040 518 14,733 712 6,152 187 5.446 83 6,118 106 8,475 94 6,332 114 5,942 231 5,016 260 6,031 317 10,309 253 6,419 340 3 4 1,282 587 1,043 1,803 739 1,093 2,596 1,146 1,075 1,896 710 1,092 1,462 654 1,276 428 223 215 622 298 225 833 402 215 760 296 223 512 270 298 715 316 616 938 376 618 1,413 642 622 955 342 623 782 328 695 5 6 7 1,257 1,366 32 1.273 1.226 18 1,296 1,236 25 1,716 1,315 25 1,397 1,562 41 307 674 8 317 565 1 322 560 11 405 613 2 313 726 16 857 525 21 841 515 9 868 530 11 1,139 543 17 932 639 18 8 9 10 7,634 4,497 2,946 191 5,577 2,359 3.090 129 5,869 2,389 3,306 174 13,768 9,713 3.779 275 7,630 3,200 4.148 282 4,109 2,223 1.886 1 3.335 1,339 1,995 1 3,669 1,523 2,145 1 6,083 3,551 2,484 48 4,083 1,320 2,762 1 2,662 1,591 966 106 1,460 390 989 81 1,628 481 1.066 82 6,437 5,067 1,188 182 2,684 1,251 1452 181 11 12 13 14 9 -39,284 2 -41,995 1 -41487 3 -42446 2 ^10,933 C) -23347 C) -24453 (*) -23,600 15 -13,004 -14,685 -14399 -15,144 -14,462 -23337 -22,912 16 -21,242 -21,686 -20,161 -22,557 -20,756 -4,178 -4,589 -4,154 -4,759 -4,248 -15,281 -15,325 -14.112 -15.650 -14,313 17 -18,042 -2,462 -20,309 -2,412 -21,426 -2,350 -19,689 -2,466 -20,177 -2,470 -8,826 -431 -10,096 -327 -10,445 -326 -10,385 -332 -10,214 -350 -8,266 -1,877 -8,928 -1,925 -9,425 -1,895 -7,950 -1,961 -8,599 -1,950 18 19 -1,616 -580 -1,217 -2,903 -849 -1,331 -3,883 -1,024 -1,278 -1,568 -674 -1.344 -1,739 -648 -1,380 -515 -191 -301 -1,125 -284 -339 -1,200 -343 -345 -484 -257 -357 -591 -211 -357 -977 -283 -662 -1,478 ^109 -696 -2,259 —491 -649 -938 -313 -687 -1,015 -334 -715 20 21 22 -208 -868 -133 -221 -791 -105 -224 -815 -107 -228 -925 -124 -250 -922 -113 -75 ^179 -22 -80 -467 -17 -90 -460 -17 -94 -560 -17 -94 -569 -19 -127 -340 -90 -136 -263 -62 -129 -279 -63 -129 -282 -75 -151 -281 -68 23 24 25 -10,958 I -2,693 -5,908 -2,357 -11,697 -3,184 -6,079 -2,434 -11,745 -2,896 -6,439 -2,410 -12,361 -2,885 -6,874 -2,602 -12,656 -2,857 -7,123 -2,676 -6,812 -1,485 -4,598 -729 -7,458 -1,884 -4,829 -745 -7,664 -1,864 -5,045 -755 -8,283 -2,027 -5,338 -918 -8,023 -1,644 -5,420 -959 -3,910 -1,186 -1,231 -1,493 -3,959 -1,262 -1,169 -1,528 -3,660 -984 -1,293 -1,383 -3366 -785 -1,405 -1,376 -4,085 -1,137 -1,544 -1,404 26 27 28 29 -9 -2 -1 -3 -2 C) 154 (*) (*) 30 197 160 177 128 179 114 148 160 119 112 126 100 119 146 31 -3 -163 363 -68 -162 390 -19 -163 358 -52 -163 344 -8 -172 359 -24 138 -1 -24 173 -1 -25 185 -1 -25 145 -25 137 -1 -95 249 -11 -95 231 (*) -94 195 -5 -95 218 -1 -100 247 32 33 34 3,430 -2,643 -8,906 -22,448 -7,011 1,417 ^»,943 -4,911 -15380 -2,674 2,832 1328 -3,331 -5,697 -3390 35 722 -154 -4,781 743 -3,527 -1 -1 -1 -1 -1 722 -153 -4,780 744 -3.526 36 37 38 722 -154 -4,781 '743 -3,527 -1 -1 -1 -1 -1 722 -153 -4,780 744 -3,526 39 40 -90 -190 129 -29 -82 -125 76 -33 -2 -142 121 20 -6 -204 161 37 340 -90 429 2 -2 -5 (*) 104 6 -10 -13 31 43 12 41 42 107 -3 14 -24 12 -26 14 18 12 31 14 -1 43 -2 -5 C) 6 44 2,798 -3,120 -2.694 -592 9,204 -2,407 3.633 -1,039 -1.939 -3,062 -4,123 ^145 -1,915 1,116 -2.880 -23,185 -4,507 -2,540 284 -16,422 -3,824 -3,045 -1,755 n.a. 976 1,420 -2,524 -1,630 -577 6,151 -4,937 67 ^186 -1,617 -2,901 -4,910 -2,466 -1,275 1,023 -2,192 -15,683 296 -2,680 395 -13,694 -2,678 -2,016 -2,868 n.a. 2.206 2,120 -103 -1,113 -33 3,369 1.694 3,586 -1,073 -284 -535 1,418 2,142 ^152 98 -370 -6.484 -4.143 395 3 -2.738 -76 -610 1,189 n.a. -655 45 46 47 48 49 -2,168 28.201 6,272 28,866 19341 -7,891 23,660 9,948 14,880 17,248 3312 218 -7474 11,050 2,483 50 (") (") (") (") (") (") (") (") (") (") (") (") (") (") (") (") (") (") (") (") (") (") (") (") (19, (") (") (") („) (19) (") (") (") (19, (19) (19) (19) (") (") (19) (19) (19) (19) (") (19) 51 52 53 (") (") <") (19) (") (") (") (") (19) (19) (19) (19) (") (19) (19) 54 -312 i (") (") -106 (") (") -85 (") (") 190 (") <") -269 (") n -127 (") (") 20 (") (") -7 (") (") 95 ,„) ("> -110 (19) (") -56 (") (") -42 (") (19) 34 (") (19) 80 ,19) (19) -69 (19) (19) 55 56 57 i (") 3.497 8,644 (") 4,650 (") 11,575 (") 10,514 (") 2,567 (") 5,231 (") 2,963 ("> 8,012 (") 9.255 (") 861 (") 3,330 (") 1,651 ,19) 2.900 (19) 870 58 59 60 61 62 63 1,599 1,174 " -8,1 26 4,296 -505 "15,871 4,505 2,066 " -4,864 4,370 683 " 12,048 5,894 n.a. " 3,402 1,122 1,038 "-12,491 3.530 -339 " 15,218 3,734 1,146 "2,112 3.921 -124 " 2,976 4,984 n.a. "3,119 (19) 468 116 " 2,423 (19) 742 -172 " -3,640 (19) 678 914 "-10,551 438 552 "7.081 746 n.a. "936 5,167 -15,043 12,929 -4,997 -7,857 8,789 -14,306 -918 2313 -11,645 -1,376 5,309 16,961 -4,907 3,809 65 -2,606 -4,020 -6,626 -6,426 -6,429 -2,671 -8,004 -10,675 -10.447 -10,515 -2,959 -7,513 -10,472 -10,276 -10,295 -2,900 1,351 -1.549 -1,369 -1,421 592 -5,444 -4,852 ^1,664 -4,673 246 -2,674 -2,428 -2,314 -2,314 90 -4,649 -4,559 ^t,410 -4,412 48 -4,327 -4,279 —4.119 -4,119 -22 -1,910 -1,932 -1,812 -1,813 841 -3,882 -3,041 -2.929 -2.929 -3,099 -2,323 -5,422 -5,268 -5,269 -3,269 -3,911 -7,180 -7,044 -7,055 -3,062 -3,394 -6,456 -6,355 -6,356 -2,924 2,359 -565 -442 -447 -667 -2,181 -2.848 -2.701 -2.701 66 67 68 69 70 142 Balance of Payments of the United States Table 10. — U.S. International [Millions (Credits +; debits ■ Eastern Europe 19 II 1' Canada Exports of goods and services : Merchandise, adjusted, excluding military ] Services' 1 Transfers under U.S. military agency sales contracts.. Travel Passenger fares Other transportation- Royalties and license fees 56 Other private services 6 U.S. Government miscellaneous services . Receipts of income on U.S. assets abroad.. Direct investment Other private receipts U.S. Government receipts Transfers of goods and services under U.S. military grant programs, net.. Imports of goods and services Merchandise, adjusted, excluding military 3 Services 4 Direct defense expenditures Travel Passenger fares Other transportation.. Royalties and license fees 56 Other private services 6 U.S. Government miscellaneous services . Payments of income on foreign assets in the United States . Direct investment , Other private payments , U.S. Government payments U.S. military grants of goods and services, net Unilateral transfers (excluding military grants of goods and services), net.. U.S. Government grants (excluding military grants of goods and services).... U.S. Government pensions and other transfers Private remittances and other transfers U.S. assets abroad, net (increase/capital outflow (-)) . U.S. official reserve assets, net 7 Gold Special drawing rights Reserve position in the International Monetary Fund- Foreign currencies 1323 1,190 1,181 1,036 145 712 552 160 1,185 1,018 1,890 1,711 179 25,783 19,094 6,689 63 1,011 184 253 183 840 6 4,149 2,521 1,613 15 25,667 18,807 6,860 75 1,110 165 244 193 770 10 4,295 2,616 1,678 1 23,271 16,924 6,347 32 1,061 141 252 199 781 10 3,872 2,074 1,783 15 24362 18,715 5,847 27 794 174 287 216 790 3,551 1,743 1,808 (*) -621 -514 -107 -1 -16 "-55 -774 -626 -148 -1 -65 -702 ^177 -151 -643 -548 H562 -559 -103 -1 -40 -19 -11 -20 -11 -11 "-i i -23342 -20,774 -2,568 -69 -378 -38 -172 -40 -536 -20 -1,315 -418 -618 -279 -2531 -22,455 -2,746 -48 -776 -73 -173 -78 -345 -28 -1,225 -277 -642 -306 -23,162 -19,631 -3,531 -72 -1,528 -88 -179 -75 -390 ^10 -1,159 -138 -668 -353 -24,129 -21,540 -2,589 -59 -559 -42 -192 -33 -379 -26 -1,299 -250 -687 -362 -73 -1 -6 -49 -79 -11 -26 -2,427 -80 8 4424 U.S. Government assets, other than official reserve assets, net U.S. credits and other long-term assets Repayments on U.S. credits and other long-term assets 8 U.S. foreign currency holdings and U.S. short-term assets, net U.S. private assets, net Direct investment Foreign securities U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns.. U.S. claims reported by U.S. banks, not included elsewhere Foreign assets in the United States, net (increase/capital inflow (+)) . Foreign official assets in the United States, net U.S. Government securities U.S. Treasury securities 9 Other 10 Other U.S. Government liabilities " U.S. liabilities reported by U.S. banks, not included elsewhere Other foreign official assets lr Other foreign assets in the United States, net Direct investment U.S. Treasury securities U.S. securities other than U.S. Treasury securities U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns.. U.S. liabilities reported by U.S. banks, not included elsewhere Allocations of special drawing rights -78 -170 201 (") (") (") (") (*) (") (") (") -9 86 6 -280 (19) (") (19) (19) (*) (19) (") (") 1 -80 -1,097 285 (") (") (19) (") (19) (") 12 9 MOO (") 5 9 -294 661 -1,153 -1,663 -66 3,543 -762 2,993 (") ('«) (") (*) (") ('") -3,755 884 < l! ) -16 59 (") 23 16 -3,837 -1,046 -743 -34 -2,014 4,812 2.772 (") ('«) (") ^17 ('*) ( .») 2,039 407 (") 565 -280 (") 14 6 -2.447 -2,217 -825 -589 1,184 -1399 -705 (") (") (") 14 ('") (") 495 (") 245 23 (IS) II 4,514 315 -522 978 3,743 -455 ('«) (I!) ('") 17 (") (18) -3,662 1,061 ('") 913 396 (18) Statistical discrepancy, and transfers of funds between foreign areas, net (sum of above items with sign reversed). Memoranda: Balance on merchandise trade (lines 2 and 17) Balance on services (lines 3 and 18) Balance on goods and services (lines 66 and 67) ,3 Balance on goods, services, and remittances (lines 68, 33, and 34) Balance on current account (lines 68 and 31) 13 676 26 702 664 664 410 -3 407 371 365 75 -65 10 -29 -30 470 72 542 -1,200 1.152 75 1,227 1,189 1,188 -2,259 -1,680 4,121 2,441 2,351 2,351 -3.648 4,114 466 398 398 -2,707 2,816 109 4 -2,825 3,258 433 360 360 See footnotes on page 146. Table continues on page 137. Appendix — Balance of Payments Tables, June 1989 SURVEY 143 Transactions, by Area — Continued of dollars] Latin America nd Other Western Hemisphere Japan Australia 1988 .1989 1988 1989 1988 1989 Line I 11 III IV I' I II Ml IV 1' I II III IV 1' 18,737 19,693 21369 21,869 23,059 14,741 15,089 15,990 17,042 17390 2,494 3,271 3,295 4,283 2316 1 9,601 10,630 11,318 12,075 11,894 8,740 9,226 9.590 9392 10,375 1,335 1,529 1,736 2.204 1.817 2 9,136 60 9,063 62 10,251 111 9,794 71 11,165 50 6,001 118 5,863 49 6,400 52 7,450 91 7,215 71 1,159 196 1,742 235 1,559 293 2,079 242 999 170 3 4 1,346 296 714 1,412 327 657 1,868 392 775 1,662 378 705 1,788 349 675 1,152 432 657 1,109 470 665 1,418 566 724 1,247 393 708 1,279 454 694 135 69 63 142 124 62 215 144 56 210 144 58 184 97 47 5 6 7 62 1,061 24 74 919 29 70 950 40 88 1,019 27 78 1,181 29 522 511 2 603 524 3 581 569 22 715 525 4 639 579 7 60 123 (*) 72 115 1 80 121 (*) 103 127 4 81 138 (*) 8 9 10 5,572 1,299 4,084 189 5,583 1,325 4,145 113 6,045 1,178 4,683 184 5,844 815 4,920 109 7,015 1,348 5,518 149 2,607 1,040 1,558 10 2,441 713 1,721 7 2,469 322 2,139 8 3,768 1,195 2,531 42 3,493 364 3,106 23 513 370 141 2 991 893 95 3 651 531 118 2 1,191 1.068 120 3 283 144 137 2 11 12 13 14 5 -21378 1 -21,280 2 -22361 10 -22,987 2 -24^49 15 -25,814 -27,179 -28326 -31,416 -29,154 -1,419 -1,419 -1353 -1,620 -1,606 16 -12,763 -12,761 -12,932 -12,965 -13,445 -20,853 -21,501 -22,242 -25,164 -22,843 -969 -899 -792 -856 -859 17 -8,615 -53 -8,519 -50 -9,629 -68 -10,022 -64 -11,104 -60 -4,961 -461 -5,678 -503 -6,084 -479 -6,252 -512 -6,311 -500 -450 -15 -520 -10 -761 -17 -764 -12 -747 -13 18 19 -2,309 -443 -598 -2,140 -377 -527 -2,413 -386 -528 -2,344 -338 -480 -2,370 -397 -521 -390 -89 -898 -586 -136 -860 -391 -126 -967 -426 -114 -950 ^154 -87 -956 -160 -75 -115 -150 -77 -106 -237 -95 -98 -234 -84 -101 -213 -69 -107 20 21 22 -2 -852 -61 -2 -855 -75 -3 -813 -94 -2 -872 -73 -2 -1,100 -77 -83 -143 -18 -90 -156 -28 -91 -149 -31 -97 -180 -21 -92 -8 -23 -1 -32 -11 3 -32 -5 -1 -32 -5 2 -30 -13 1 -38 -11 23 24 25 -4,297 -222 -3,836 -239 -4,493 -216 -4,051 -226 -5,324 -238 -4,756 -330 -5,849 -217 -5,288 -344 -6,577 -197 -6,031 -349 -2,879 -116 -1,154 -1,609 -3,320 -438 -1,203 -1,679 -3,848 -608 -1,374 -1,866 -3,951 -315 -1,616 -2,020 -4,191 -229 -1,799 -2,163 ^42 70 -40 -72 -144 -18 -39 -87 -275 -83 -49 -143 -292 -90 -51 -151 -296 -106 -56 -134 26 27 28 29 -5 -716 -1 -712 -2 -713 -10 -906 -2 -756 30 -37 -15 -31 -21 -39 -18 -16 -20 -20 -20 31 -369 -99 -248 -379 -109 -224 -360 -101 -252 -510 -159 -238 -398 -107 -251 -2 -4 -14 32 -9 -27 -2 -12 -9 -22 -9 -12 -8 -31 -5 -14 -5 -12 -5 -15 -5 -16 33 34 -32 5408 -13,449 4,109 -10,839 -4,680 -13,496 -10,731 -13,032 -10358 1,014 -1,149 58 -1,152 39 35 -129 160 ^18 -402 375 -156 -2,752 1,392 -192 36 37 38 39 40 -129 -120 -349 277 -48 160 4 -204 233 -25 ^48 -24 -326 210 92 ^402 121 -199 328 -8 375 3 -156 3 -2,752 (*) 1,392 3 -192 (*) -99 -337 298 -60 13 6 3 8 3 41 4'' 1 1 (*) 2 (*) -1 3 1 5 8 8 -2 5 -2 8 (*) 5 -2 43 (*) 44 217 -1,821 183 392 1,463 5,344 -2,090 1.150 -4,497 10.781 -13,350 -1,565 (*) -239 -11,546 4,181 896 -119 4,074 -610 -10,558 -152 422 n.a. -10,828 -5,057 -671 -232 ^49 -4,105 -13,343 -347 703 460 -14,158 -7,979 537 71 15 -8,602 -14,427 -1,495 -35 -199 -12,698 -10,366 14 116 n.a. -10,496 1.000 14 348 63 575 -1,154 -842 -72 -44 -197 54 -482 70 6 461 -1,160 -372 -571 -138 -79 36 97 112 n.a. -173 45 46 47 48 49 6,271 12,473 15,762 22,163 4355 23,900 14,855 21^31 26^39 11337 749 3,088 1,032 -525 -639 50 i (") (") (") (") -19 (") (") (") (") (") (") 50 <"> (") (") (") (") (") -54 (") (") (") (") ("> (") -40 (") (") (") (") (") (") 9 (") (") (") (") (") (") -96 (") (") (") (") (") (") 110 (") (") (") (") (") (") 248 (") (") (") ("> (") (") ^43 (") (") (") (") (") (") -80 (") (") (") (") (") (") -26 (") (") (") <") (") (") -138 (") (") (19) (") (") (") -183 (19) („) (.9) (") (") (") -121 (") (") (") (") (19) <") -100 (") (") 51 52 53 54 55 56 57 ! (") 2.281 (") 755 427 " 2,827 (") -293 (") 409 234 " 12,073 (") 1,005 (") 915 ^448 " 14,344 (") 2,906 (") 913 349 " 18,035 (") 1,251 (") 2,820 n.a. "775 (19) 3,879 (") 1,525 66 " 18,526 (") 5,078 (") 4,475 169 " 5,023 (") 4,339 (") 1.905 311 " 14,528 (") 4,542 (19) 1,405 215 "20,120 (") 1,602 (19) 123 n.a. " 9.693 <") 265 (") 178 99 "233 (19) -135 (19) -46 264 " 3,143 („) 66 (") -13 211 "951 (") 336 (19) -51 (") -310 (") 135 n.a. "-364 58 59 60 61 62 "-689 63 64 65 -2^83 -15,683 -609 -24,248 8,230 -8,110 10,746 1,767 1,187 10323 -2,819 -3,775 -2312 -966 -590 -3,162 521 -2,641 -2,988 -3,357 -2,131 544 -1,587 -1,919 -2,298 -1,614 622 -992 -1,345 -1,705 -890 -228 -1,118 -1,515 -2,025 -1,551 61 -1,490 -1,847 -2,246 -12,113 1,040 -11.073 -11,110 -11,110 -12,275 185 -12.090 -12,104 -12,104 -12,652 316 -12,336 -12,367 -12,367 -15,572 1,199 -14,373 -14,394 -14,394 -12,468 904 -11.564 -11,603 -11,603 366 709 1.075 1,057 1,057 630 1,222 1,852 1,836 1,836 944 798 1.742 1,723 1,723 1,348 1,315 2.663 2,643 2,643 958 252 1210 1.191 1.190 66 67 68 69 70 144 Balance of Payments of the United States Table 10a. — U.S. International Transactions, [Millions (Credits +; debits -) ' Belgium-Luxembourg 1987 France Federal Republic of Germany 1986 1987 Exports of goods and services 2 Merchandise, adjusted, excluding military 3 . Services 4 Transfers under U.S. military agency sales contracts . Travel Passenger fares Other transportation.. Royalties and license fees 16 Other private services 6 U.S. Government miscellaneous services . Receipts of income on U.S. assets abroad.. Direct investment Other private receipts... U.S. Government receipts Transfers of goods and services under U.S. military grant programs, net.. Imports of goods and services Merchandise, adjusted, excluding military 3 Services 4 Direct defense expenditures.. Travel Passenger fares Other transportation .. Royalties and license fees 56 Other private services 6 U.S. Government miscellaneous services . Payments of income on foreign assets in the United Stales . Direct investment Other private payments U.S. Government payments U.S. military grants of goods and services, net Unilateral transfers (excluding military grants of goods and services), net.. U.S. Government grants (excluding military grants of goods and services).... U.S. Government pensions and other transfers Private remittances and other transfers U.S. assets abroad, net (increase/capital outflow (-)) . U.S. official reserve assets, net 7 Gold Special drawing rights Reserve position in the International Monetary Fund- Foreign currencies 9,102 5,456 3.646 29 124 62 197 285 .4 293 1 2,655 1,627 1,024 4 n.a. -5,178 -3,938 -1,240 -117 -153 -106 -167 -30 14 -80 -35 -552 20 -443 -129 n.a. -28 10,320 6,147 4,173 65 150 45 204 307 238 3 3,161 1,891 1,267 3 n.a. -6,253 -4,223 -2,030 -184 -120 -85 -214 -29 -56 -42 -1,300 -346 -755 -199 11,172 7,353 3,819 251 173 38 258 313 304 3 2,479 1,016 1,461 2 n.a. -6389 -4,502 -2,387 -196 -166 -82 -225 -36 -61 -32 -1,589 ^128 -949 -212 n.a. 12,618 7,119 5,499 89 682 355 507 581 "260 10 3,015 2,043 965 7 n.a. -13,109 -9,542 -3,567 -67 -1,002 -199 -284 -72 14 -196 -86 -1,661 -54 -946 -661 n.a. -86 15,034 7,949 7,085 90 832 539 494 815 263 16 4,036 2,759 1,271 6 -14,774 -10,506 -4,268 -81 -1,138 -255 -314 -69 -248 -92 -2,071 -56 -1,254 -761 n.a. -87 16,099 9,996 6,103 38 942 562 515 906 323 16 2,801 1,321 1,475 5 n.a. -17,430 -12,118 -5,312 -97 -1,187 -301 -412 -81 -312 -2,833 -414 -1,553 19,836 10,461 9,375 247 1,032 292 723 847 " 693 23 5,518 4,826 278 414 n.a. -38J53 -24,526 -13,827 -6,158 -1,913 -417 -863 -237 '■* —1 17 -106 -4,016 23 -1,047 -2,992 n.a. 744 23,209 11,533 11.676 426 1,544 490 719 1.177 580 13 6,727 6,056 215 456 -42J94 -26,941 -15,453 -6,386 -2,203 -464 -302 -502 -80 -4,627 172 -1,102 -3,697 n.a. -9 -19 -6,407 -9 -22 -5,715 -33 -53 -3,641 (*) -5300 (*) -133 877 -7,954 -2,514 -133 1,055 -U82 1,674 U.S. Government assets, other than official reserve assets, net U.S. credits and other long-term assets Repayments on U.S. credits and other long-term assets 8 U.S. foreign currency holdings and U.S. short-term assets, net.. U.S. private assets, net..... Direct investment Foreign securities.... U.S. claims on unaffiliated foreigners reported by U.S. nonbanking concerns.. U.S. claims reported by U.S. banks, not included elsewhere Foreign assets in the United States, net (increase/capital inflow (+)) Foreign official assets in the United States, net U.S. Government securities U.S. Treasury securities 9 Other 10 Other U.S. Government liabilities " U.S. liabilities reported by U.S. banks, not included elsewhere Other foreign official assets ' 2 Other foreign assets in the United States, net Direct investment U.S. Treasury securities U.S. securities other than U.S. Treasury securities U.S. liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns.. U.S. liabilities reported by U.S. banks, not included elsewhere Allocations of special drawing rights 9 10 -6,426 -278 -4,311 11 -1,848 3,086 (") (") n 5 ) 56 (") (") (") 552 (") 1,045 -59 15 1,492 9 9 -5,733 -1.715 -1,731 -12 -2,275 2,789 (") ( ,! ) s ) ( ,! ) 70 s ) (") <.") -32 (") 103 -4 15 2,652 9 -9 -2,048 -115 -2.676 -1 1,044 3,183 C 5 ) (") (") <"> -119 s ) (") (") 1,747 5 > -74 241 5 1,388 -3,669 -1,236 7 42 -2,482 8,912 (") s ) C 5 ) ( ,! ) 41 (") (") (") 1,017 (") 812 -309 ! 7,351 (*) -2,514 -5 1,674 64 13 -5 -5.808 -2,222 -1,039 -120 -2.127 11,415 5 ) (") (") ( IS ) -25 (") n o 5 ) 2,471 ( ,! ) 1,044 -115 15 8,040 14 2 -1,704 -754 -743 64 -271 -2^43 <") (") <") s ) -4 ( ,! ) ("> <") 962 s ) -181 -11 ' -3.079 -5 -5,435 -3,542 -1,492 9 -410 9,074 ( ,! ) (") s ) s ) 142 (") (") C 5 ) 1,982 (") -3 178 15 6,775 64 -3,020 -3,568 1.802 -107 -1,147 18J80 <"> (") ("> <"> 120 (") <") (") 3,150 (") -87 450 ' 14,747 Statistical discrepancy, and transfers of funds between foreign areas, net (sum of above items with sign reversed). Memoranda: Balance on merchandise trade (lines 2 and 17) Balance on services (lines 3 and 18) Balance on goods and services (lines 66 and 67) n Balance on goods, services, and remittances (lines 68, 33, and 34) Balance on current account (lines 68 and 31) ,3 1,518 2,406 3,924 3,896 3,896 -1,110 1,924 2,143 4.067 4,036 4,036 -5,387 2,851 1,432 4,283 4.252 4.252 -4,694 -2,423 1,932 -491 -577 -577 -5,788 -2,557 2,817 260 173 173 5,450 -2,122 791 -1,331 -1,419 -1,419 16,653 -14,065 -4,452 -18,517 -17,773 -17,773 -15.408 -3,777 -19,185 -18.263 -18,263 See footnotes on page 146. Appendix — Balance of Payments Tables, June 1989 SURVEY 145 by Selected Countries (published annually) of dollars] Italy Netherlands Mexico Venezuela South Africa Line 1986 1987 1988' 1986 1987 1988' 1986 1987 1988' 1986 1987 1988' 1986 1987 1988' 10,000 10310 10,903 12,952 13,878 15,242 19,017 21,438 28,679 5,226 5,447 6,806 1,873 2,037 2,188 1 4,750 5,466 6,668 7.190 8,026 9,961 12,310 14,558 20,573 3,094 3,534 4.525 1,149 1.281 1.683 2 5.250 66 5,044 73 4,235 74 5,762 309 5,852 410 5,281 341 6,707 7 6,880 3 8,106 15 2,132 42 1,913 48 2,281 31 724 756 505 3 4 492 192 246 585 302 268 634 383 307 215 36 525 279 33 602 322 35 577 1,942 117 355 2,040 145 394 2,652 182 252 > 614 453 611 I. !i 62 1CX) 5 6 t 38 62 52 7 483 14 404 5 549 385 8 640 395 12 430 "525 2 466 552 1 671 617 2 105 "865 10 104 813 22 133 843 27 14 } " 279 21 261 20 264 71 | "98 i 4 54 96 1 59 108 2 8 9 10 3,362 2,650 692 20 2,874 2.127 737 10 1.790 1,120 662 8 3,720 3,523 196 1 3,509 3,228 280 1 2,716 2,388 327 1 3,306 217 2,986 103 3,359 707 2,512 140 4,002 1,190 2,649 163 1,183 162 1,009 12 1,130 223 896 11 1,355 351 995 9 418 285 133 (*) 481 367 114 (*) 184 45 139 (*) 11 12 13 14 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 15 -13,675 -14,690 -15,772 -8,194 -9313 -11,201 -23,950 -27,339 -31315 -6,103 -6,870 -6364 -2320 -1,485 -1,724 16 -10,347 -10,916 -11.502 -4,097 -4.809 -5,951 -17,664 -20,289 -23,325 -4,811 -5,652 -5,163 -2,372 -1,342 -1,529 17 -3,328 -502 -3,774 -611 -1,270 -566 -4.097 -99 -4,504 -117 -5,250 -147 -6,286 -2 -7,050 -A -7,990 -3 -1.292 -1 -1.218 -2 -1.401 -1 -148 -1 -143 (*) -195 (*) 18 19 -1,337 -169 -390 -1.447 -197 -443 -1,700 -214 -544 -103 -311 -383 -100 -321 -486 -186 -350 -434 -3,579 -420 -339 -3,928 -544 -M2 -4,720 -466 -372 * / -62 -4 -24 -68 -107 20 21 -17 -34 22 -15 I "-210 i -32 -24 -254 -11 -32 -284 -19 10 " -102 -13 -10 -142 -12 -39 -157 -11 -3 -1,032 -66 1 -1,102 -69 ' "-477 -503 -592 { "2 "-12 -19 -1 -14 -19 1 -16 -18 23 "-916 -49 24 25 -673 -18 -514 -141 n.a. -757 53 -634 -176 n.a. -881 83 -720 -244 n.a. -3.096 -2,179 -373 -544 n.a. -3,316 -2,240 -542 -534 n.a. -3,926 -2,869 -596 -461 n.a. -981 21 -936 -66 n.a. -1,031 11 -994 -48 n.a. -1,259 -36 -1,096 -127 n.a. -814 -74 -649 -91 n.a. -713 -81 -570 -62 n.a. -808 -133 -654 -21 n.a. -24 -1 -18 -5 n.a. -24 -4 -18 -2 n.a. -21 _2 -19 26 27 28 29 n.a. 30 -239 -245 -242 -21 -22 -22 -499 -571 -540 -27 -38 -39 -26 -33 -44 31 -12 -178 -49 -8 -179 -58 -1 -184 -57 -57 -172 -270 -72 -174 -325 -21 -189 -330 -1 -3 -35 -2 -2 -22 -6 -25 -9 -2 -33 32 -9 -12 -9 -13 -9 -13 -2 -25 -3 -35 33 34 -U27 934 -25 -5,631 -1,510 -1,101 1,151 -198 58 198 3,414 -592 193 -127 462 49 141 35 36 37 38 39 40 -198 79 -92 177 -6 1,270 132 227 103 808 198 ^166 -771 299 6 326 -275 221 46 334 116 30 34 41 -3 -5 9 -201 209 1 3,405 -«07 -103 -70 4,185 31 (*) 31 (*) -623 -545 68 -70 -76 37 30 (*) -1 41 42 U9 -3 -1.343 -459 514 14 -1,412 29 1 904 -1,446 652 -14 1,712 29 5 -59 12 10 -82 1 1 40 -5,672 -4,515 1,270 130 -2,557 1 -4 -1,507 -2,593 252 -171 1,005 38 -1 156 58 50 -57 105 29 1 -157 -256 -9 68 40 43 -5 -1,096 -882 -113 -129 28 (*) 462 1 35 35 391 -1 142 327 14 -29 -170 44 49 -37 12 -24 98 45 46 47 48 49 1,950 1,635 2,409 8,161 9,767 5,930 228 1,014 1313 -1374 -811 402 15 124 43 50 (") 1 <") (") ("> (") ("> (") (") s ) s ) (") ("> (") <") (") (") s ) (") (") (") (") s ) (") (") <") C 5 ) e 5 ) s ) <") (") (") (") (") (") (") (") (") (") (") (") (") (") 51 52 53 (") 26 C 5 ) ( l! ) 7 (") (") <"> -28 ("> (") (") 5 n -73 (") (") <") 48 <") <") -3 (") (") 2 (") (") ("> -9 ( l! ) (") c 5 ) -14 (") (") (") -66 c 5 ) (") -31 <") <") <") (*) (") <"> (") (") (*) (") (") 54 55 (") (") 56 57 114 (") 351 -11 " 1,470 <") -334 (") 125 44 15 1,793 (") -1,039 (") 91 120 " 3,265 c 5 ) 4,374 (") 1,307 -243 "2,718 (") 8,293 (") 1,118 310 15 119 (") 4,766 <"> 958 188 "-30 ( l! ) 315 (") 508 -212 "-380 n 26 (") 163 -35 15 858 (") 18 ( l! > 208 -16 15 1,112 c 5 ) 444 (") 166 2 ,s - 1,972 n -23 <") 119 -54 "-787 193 (") 6 16 "218 (") 84 ("> 10 23 "-102 (") 194 ("> 1 -9 "-62 (") -184 (") -9 24 "212 58 59 60 61 62 63 64 3,191 1356 2,727 -7,267 -12300 -8,848 4,053 5,400 -1,551 2,870 2,079 ->78 196 -692 -604 65 -5,597 1,922 -3.675 -3.902 -3.914 -5,450 1,270 -4.180 -4,417 -4,425 -4,834 -35 -4,869 -5,110 -5,111 3,093 1.665 4,758 4,737 4,737 3,217 1,348 4,565 4,543 4,543 4,010 31 4,041 4,019 4,019 -5,354 421 -4,933 -5,375 -5,432 -5,731 -170 -5,901 -6,400 -6,472 -2,752 116 -2,636 -3,155 -3,176 -1,717 840 -877 -904 -904 -2,118 695 -1,423 -1,461 -1,461 -638 880 242 204 203 -1,223 576 -647 -671 -673 -61 613 552 525 519 154 310 464 429 420 66 67 68 69 70 146 AODDOlTlbfl^l Balance of Payments of the United States Footnotes to U.S. International Transactions Tables l-10a P Preliminary. General notes for all tables: ♦Less than $500,000 (±) n.a. Not available. Table 1: 1. Credits, +: Exports of goods and services; unilateral transfers to United States; capital inflows (increase in foreign assets (U.S. liabilities) or decrease in U.S. assets); decrease in U.S. official reserve assets; increase in foreign official assets in the United States. Debits, — : Imports of goods and services; unilateral transfers to foreigners; capital outflows (decrease in foreign assets (U.S. liabilities) or increase in U.S. assets); increase in U.S. official reserve assets; decrease in foreign offical assets in the United States. 2. Excludes transfers of goods and services under U.S. military grant programs (see line 15). 3. Excludes exports of goods under U.S. military agency sales contracts identified in Census export documents, excludes imports of goods under direct defense expenditures identified in Census import documents, and reflects various other adjustments (for valuation, coverage, and timing) of Census statistics to balance of payments basis; see table 2. 4. Includes some goods: Mainly military equipment in line 4; major equipment, other materials, supplies, and petroleum products purchased abroad by U.S. military agencies in line 19; and fuels purchased by airline and steamship operators in lines 7 and 22. 5. Beginning in 1982, line 8 and line 23 are redefined to include only net receipts and payments for the use or sale of intangible property rights. Other services are reclassified to lines 9 and 24. 6. Affiliated and unaffiliated transactions, previously shown separately, have been combined. 7. For all areas, amounts outstanding March 31, 1989, were as follows in millions of dollars: Line 36, 49,854; line 37, 11,061; line 38, 9,443; line 39, 9,052; line 40, 20,298. Data are preliminary. 8. Includes sales of foreign obligations to foreigners. 9. Consists of bills, certificates, marketable bonds and notes, and nonmarketable convertible and nonconvertible bonds and notes. 10. Consists of U.S. Treasury and Export-Import Bank obligations, not included elsewhere, and of debt securities of U.S. Government corporations and agencies. 11. Includes, primarily, U.S. Government liabilities associated with military agency sales con- tracts and other transactions arranged with or through foreign official agencies; see table 4. 12. Consists of investments in U.S. corporate stocks and in debt securities of private corporations and State and local governments. 13. Conceptually, the sum of lines 70 and 64 is equal to "net foreign investment" in the national income and product accounts (NIPA's). However, the foreign transactions account in the NIPA's (a) includes adjustments to the international transactions accounts for the treatment of gold, (b) excludes capital gains and losses of foreign affiliates of U.S. parent companies from the NIPA's mea- sui-e of income receipts from direct investment abroad, and from the corresponding income payments on direct investment in the United States, (c) includes an adjustment for the different geographical treatment of transactions with U.S. territories and Puerto Rico, and (d) includes services furnished without payment by financial intermediaries, except life insurance carriers and private noninsured pension plans. In addition, for NIPA purposes, U.S. Government interest payments to foreigners are excluded from "net exports of goods and services" but included with transfers in "net foreign investment." A reconciliation of the balance on goods and services from the international accounts and the NIPA net exports appears in the "Reconciliation and Other Special Tables" section in this issue of the Survey of Current Business. A reconciliation of the other foreign transactions in the two sets of accounts appears in table 4.5 of the full set of NIPA tables (published annually in the July issue of the SURVEY). 14. Includes return import into the United States, at a depreciated value of $21 million in 1972:rV and $22 million in 1973:11, of aircraft originally reported in 1970:111 in line 4 as a long- term lease to Australia. 15. Includes extraordinary U.S. Government transactions with India. See "Special U.S. Gov- ernment Transactions," June 1974 SURVEY, p. 27. 16. Includes foreign currency-denominated notes sold to private residents abroad. 17. Break in series. See Technical Notes in the June 1989 SURVEY. Table 2: 1. Exports, Census basis, represent transaction values, f.a.s. U.S. port of exportation, for all years; imports. Census basis, represent transactions values, f.a.s. foreign port of exportation for 1974-81. For all prior years and beginning in 1982, imports reflect Customs values (see Technical Notes, June 1982 SURVEY). From 1983 forward, both unadjusted and seasonally adjusted data have been prepared by BEA from "actual" and "revised statistical" month data supplied by the Census Bureau (see Technical Notes, December 1985 Survey). The seasonally adjusted data are the sum of seasonally adjusted five-digit end-use categories (see Technical Notes in the June 1980 Survey and in the June 1988 Survey). Prior to 1983, annual data are as published by the Census Bureau, except that for 1975-80 published Census data are adjusted to include trade between the U.S. Virgin Islands and foreign countries. 2. Adjustments in lines A5 and A13, B12, B47, and B82 reflect the Census Bureau's reconcilia- tion of discrepancies between the merchandise trade statistics published by the United States and the counterpart statistics published in Canada. These adjustments are distributed to the affected end-use categories in section C. Beginning in 1986, estimates for undocumented exports to Canada, the largest item in the U.S. -Canadian reconciliation, are included in Census basis data shown in line A-l. 3. Exports of military equipment under U.S. military agency sales contracts with foreign gov- ernments (line A6), and direct imports by the Department of Defense and the Coast Guard (line A14), to the extent such trade is identifiable from Customs declarations. The exports are included in tables 1 and 10, line 4 (transfers under U.S. military agency sales contracts); the imports are included in tables 1 and 10, line 19 (direct defense expenditures). 4. Addition of electrical energy; deduction of exposed motion picture film for rental rather than sale; deduction of exports to the Panama Canal Zone before October 1, 1979; net change in stock of U.S. -owned grains in storage in Canada; for 1975-82, net timing adjustments for goods recorded in Census data in one period but found to have been shippped in another; coverage adjustments for special situations in which shipments were omitted from Census data; deduction of the value of repairs and alterations to foreign-owned equipment shipped to the United States for repair; and the inclusion of fish exported outside of U.S. customs area. 5. Addition of understatement of inland freight in f.a.s. values of U.S. merchandise imports from Canada in 1974—81; deduction of foreign charges for repair of U.S. vessels abroad, which are included in tables 1 and 10, line 21 (other transportation); deduction of imports from the Panama Canal Zone before October 1, 1979; for 1975-82, net timing adjustments for goods recorded in Census data in one period but found to have been shipped in another; coverage adjustments for special situations in which shipments were omitted from Census data; and the deduction of the value of repairs and alterations to U.S. -owned equipment shipped abroad for repair. 6. Beginning in 1986, New Zealand and South Africa are included in "Other countries in Asia and Africa," with New Zealand included as part of "Asia" and South Africa as part of "Africa." 7. Annual and unadjusted quarterly data shown in this table correspond to country and area data in table 10, lines 2 and 17. Trade with international organizations includes purchases of nonmonetary gold from the International Monetary Fund, transfers of tin to the International Tin Council (ITC), and sales of satellites to Intelsat. The memoranda are defined as follows: Industrial countries: Western Europe, Canada, Japan, Australia, New Zealand, and South Africa; Members of OPEC: Venezuela, Ecuador, Iraq, Ii'an, Kuwait, Saudi Arabia, Qatar, United Arab Emirates, In- donesia, Algeria, Libya, Nigeria, and Gabon; Other countries: Eastern Europe, Latin America and Other Western Hemisphere, and other countries in Asia and Africa, less OPEC. Before 1984, com- plete geographic area detail was not available for some balance of payments adjustments. Therefore, the detail shown does not always sum to the values shown for the area aggregates. For all years, "Asia" and "Africa" exclude certain Pacific Islands and unidentified countries included in "Other countries in Asia and Africa." 8. Includes nuclear fuel materials and fuels. Table 3: 1. Insurance receipts (exports) are published net of losses paid, and payments (imports) are published net of losses recovered. 2. Other unaffiliated services receipts (exports) include mainly expenditures of foreign govern- ments and international organizations in the United States. Payments (imports) include mainly wages of foreign residents temporarily employed in the United States and Canadian and Mexican commuters in U.S, border areas. Table 4: 1 . Expenditures to release foreign governments from their contractual liabilities to pay for mili- tary goods and services purchased through military sales contracts — first authorized (for Israel) under Public Law 93-199, section 4, and subsequently authorized (for many recipients) under similar legislation — are included in line A3. Deliveries against these military sales contracts are included in line C10; see footnote 2. Of the line A3 items, part of these military expenditures is applied in lines A40 and A43 to reduce short-term assets previously recorded in lines A38 and C8; this application of funds is excluded from lines C3 and C4. A second part of line A3 expenditures finances future deliveries under military sales contracts for the recipient countries and is applied directly to lines A39 and C9. A third part of line A3, disbursed directly to finance purchases by recipient countries from commercial suppliers in the United States, is included in line A34. A fourth part of line A3, representing dollars paid to the recipient countries to finance purchases from countries other than the United States, is included in line A45. 2. Transactions under military sales contracts are those in which the Department of Defense sells and transfers military goods and services to a foreign purchaser, on a cash or credit basis. Purchases by foreigners directly from commercial suppliers are not included as transactions under military sales contracts. The entries for the several categories of transactions related to military sales contracts in this and other tables are partly estimated from incomplete data. 3. The identification of transactions involving direct dollar outflows from the United States is made in reports by each operating agency. 4. Line A35 includes foreign currency collected as interest and line A40 includes foreign currency collected as principal, as recorded in lines A13 and A14, respectively. 5. Includes (a) advance payments to the Department of Defense (on military sales contracts) financed by loans extended to foreigners by U.S. Government agencies and (b) the contraentry for the part of tine C10 that was delivered without prepayment by the foreign purchaser. Also includes expenditures of appropriations available to release foreign purchasers from liability to make repayment. 6. Includes purchases of loans from U.S. banks and exporters and payments by the U.S. Gov- ernment under commercial export credit and investment guarantee programs. 7. Excludes liabilities associated with military sales contracts financed by U.S. Government grants and credits and included in line C2. 8. Excludes return export from the United States, at a contractual replacement value of $48 million in 1988:111, of leased aircraft originally reported in table 1, line 18. Transactions recording the offsets for this leased property are included in line C15. Table 5: 1 . Also included in line 4. 2. Acquisition of equity holdings in existing and newly established companies, capital contribu- tions, capitalization of intercompany debt, and other equity contributions. 3. Sales, liquidations, and other dispositions of equity holdings, total and partial. 4. Petroleum includes, and manufacturing and "other" industries exclude, the exploration, development, and production of crude oil and gas, and the transportation, refining, and marketing of petroleum products, exclusive of petrochemicals. "Other" industries includes wholesale trade; banking; finance (except banking), insurance, and real estate; services; and other industries — agriculture, forestry, and fishing; mining; construction; transportation, communication, and public utilities; and retail trade. 5. Also included in line 47. Table 6: 1. Primarily provincial, regional, and municipal. 2. Largely transactions by International Bank for Reconstruction and Development (IBRD), International Development Association (IDA), International Finance Corporation (IFC), Asian De- velopment Bank (ADB), and Inter-American Development Bank (IDB). 3. Estimate for scheduled redemptions and identifiable early retirements. Includes estimates based on Canadian statistics for redemptions of Canadian issues held in the United States. Uniden- tified and nonscheduled retirements appear in line 28. Table 7: 1. Primarily mortgages, loans, and bills and notes drawn on foreigners. 2. Western Europe, Canada, Japan, Australia, New Zealand, and South Africa. 3. Bahamas, British West Indies (Cayman Islands), Netherlands Antilles, and Panama. 4. Based on data for Ecuador, Venezuela, Indonesia, and other Asian and African oil-exporting countries. Table 8: 1. Includes central governments and their agencies and corporations; state, provincial, and local governments and their agencies and corporations; and international and regional organizations. 2. U.S. -owned banks are mainly U.S. -chartered banks and Edge Act subsidiaries. U.S. brokers' and dealers' accounts may be commingled in some categories. Foreign-owned banks include U.S. branches and agencies of foreign banks and majority-owned bank subsidiaries in the United States. 3. Western Europe, Canada, Japan, Australia, New Zealand, and South Africa. 4. Bahamas, British West Indies (Cayman Islands), Netherlands Antilles, and Panama. 5. Based on data for Ecuador, Venezuela, Indonesia, and other Asian and African oil-exporting countries. 6. Includes Eastern Europe and international and regional organizations. Table 9: 1. Negotiable certificates of deposit issued by banks in the United States are included in banks' custody liabilities and are separately identified in memorandum line 8. Nonnegotiable certificates of deposit are included in time deposits. 2. Includes borrowing under Federal funds or repurchase arrangements, deferred credits, and liabilities other than deposits. 3. Mainly negotiable and readily transferable instruments, excluding U.S. Treasury securities. 4. Mainly International Bank for Reconstruction and Development (IBRD), International De- velopment Association (IDA), International Finance Corporation (IFC), Asian Development Bank (ADB), Inter-American Development Bank (IDB), and the Trust Fund of the International Monetary Fund. , 5. U.S.-owned banks are mainly U.S.-chartered banks and Edge Act subsidiaries. U.S. brokers and dealers' liabilities may be commingled in some categories. Foreign-owned banks are U.S. branches and agencies of foreign banks and majority-owned bank subsidiaries in the United States. 6. Western Europe, Canada, Japan, Australia, New Zealand, and South Africa. 7. Bahamas, British West Indies (Cayman Islands). Netherlands Antilles, and Panama. 8. Based on data for Ecuador, Venezuela, Indonesia, and other Asian and African oil-exporting countries. 9. Includes Eastern Europe and international and regional organizations. Table 10: For footnotes 1-13, see table 1. 14. The "European Communities (12)" includes the "European Communities (6)," United King- dom, Denmark, Ireland, Greece, Spain, and Portugal. 15. The "European Communities (6)" includes Belgium, France, Federal Republic of Germany, Italy, Luxembourg, Netherlands, European Atomic Energy Community, European Coal and Steel Community, and European Investment Bank. 16. Includes, as part of international and unallocated, the estimated direct investment in foreign affiliates engaged in international shipping, in operating oil and gas drilling equipment that is moved from country to country during the year, and in petroleum trading. 17. Break in series. See Technical Notes in the June 1989 SURVEY. 18. Details not shown separately; see totals in lines 51 and 58. 19. Details not shown separately are included in line 63. Table 10a: For footnotes 1-13, see table 1. 14. Break in series. See Technical Notes in the June 1989 SURVEY. 15. Details not shown separately are included in line 63. Note. — Country data are based on information available from U.S. reporting sources. In some instances the statistics mav not necessarily reflect the ultimate foreign transactor. For instance: U.S. export statistics reflect country of reported destination; in many cases the exports may be transshipped to third countries (especially true for the Netherlands and Germany). The geographic breakdown of security transactions reflects country with which transaction occurred but may not necessarily reflect the ultimate sources of foreign funds or ultimate destination of U.S. funds. Data for individual countries within EC(6) may not add to the published totals for EC(6), because in several instances estimates for the group are not available for each country. In addition, country data may not add to EC(6) totals because of rounding. *U . S .GOVERNMENT PRINTING OFF I CE : 1 9 90- 2 6 1 -9 7 9 : 2 34 5 2 : : :