REGIONAL COOPERATION AND ECONOMIC INTEGRATION

The discussion elaborated above will mean than in classical concept of foreign trade
statistics most of the mentioned activities will be recorded in foreign trade statistics of a
host country of a foreign affiliated. But new approach in gathering statistics on international
trade will record all the mentioned activities to a foreign trade statistics of a home country
of a parent company which is in this example ultimate controlling authority. New concept
of international trade defines export of a country not only as its direct export but it also
includes the foreign sales of the affiliates of parent companies of that country in the host
country and all other countries. But this export, under new concept, does not include export
that foreign affiliates of outside parent companies have made from the observed country.
Due to this unprecedented role of transnational companies in international trade we can
conclude that traditional official foreign trade statistics can not provide us with a needed
data for a quality analysis of international trade flows. That is why new statistical framework
is being set up having in focus the activities of foreign affiliates in international trade.
4. Foreign affiliates trade statistics (FATS)
SOME ASPECTS OF TRADE STATISTICS AND REPORTING
Some new approaches try to minimize the effects of distortions in gathering of statistical
data on international trade transactions caused by TNCs. The main tool is the new concept
of the international trade statistics which is known as Foreign Affiliate Trade Statistics
(FATS). The key to a better, comprehensive picture of the world economy and world trade
is to capture the flows between parent companies and foreign affiliates. This can only
be achieved through an expanded collection of data of foreign direct investments and
associated financing arrangements, that is activities of transnational companies and their
foreign affiliates.
Interest in FATS has arisen from two primary reasons: GATS and globalization. Entering
into force on January 1, 1995, the WTO General Agreement on Trade in Services (GATS) is
the first set of multilaterally negotiated and legally enforceable rules covering international
trade in commercial services (excluding government services). According to GATS,
international trade in services can take place through four modes of supply:
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mode 1 – cross-border supply, in which only the service crosses the border,
mode 2 – consumption abroad, occurs when consumers consume services while
outside their country,
mode 3 – commercial presence, in which the service supplier establishes its commercial
presence in another country,
mode 4 – presence of natural persons, when an individual has moved temporarily into
the territory of the consumer to provide a service.
For FATS the most important flow of international trade in services is mode 3 – commercial
presence. The important step in building more comprehensive statistics has been the
publishing of Manual on Statistics of International Trade in Services (MSITS), which has
been a joint product of the United Nations, European Commission, IMF, OECD, UNCTAD
and WTO. According to MSITS, by applying a simplified approach to the statistical
treatment of GATS modes of supply in order to facilitate the compilation of statistics by
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