Building partnerships to enhance the value of Egyptian
Foreign Trade statistics
Mostafa Mahmoud Abd El-Naby
Statistician
Foreign Trade Statistics
Central Agency for Public Mobilization and Statistics
http://www.capmas.gov.eg
Cairo, Egypt
mos.capmas@hotmail.com
Abstract
The foreign trade statistics one of the most important statistics for Strategic
and influential in national economies and their impact on the global economy. In light of
the technological development which has made the world a small village interconnected
parties , Hence the importance of building partnerships between statistical agencies at
the national and International levels in order to develop , audit and tracking foreign trade
statistics and work to raise the quality for use in decision-making. We will show in this
paper the Egyptian experience in the field of building partnerships and cooperation
between the Central Agency for Public Mobilization and Statistics of Egypt with
international organizations such as European Union and the impact of these
partnerships in the development and verification of Foreign Trade Data. We use in this
paper descriptive analysis method and the style of desk studies and statistical releases,
newsletters and International recommendations.
Key words: Global Economy, Decision-Making, Tracking foreign trade statistics.
1- Introduction
The key objective of the trade Euro-Mediterranean partnership is the creation
of a deep Euro-Mediterranean Free Trade Area. It aims at removing barriers to trade
and investment between both the EU and Southern Mediterranean countries Algeria,
Egypt, Israel, Jordan, Lebanon, Libya, Morocco, Occupied Palestinian Territory,
Syria, Tunisia and between the Southern Mediterranean countries themselves. EuroMediterranean Association Agreements are in force with most of the partners (with
the exception of Syria and Libya).
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The scope of these agreements is essentially limited to trade in goods and a number
of bilateral negotiations are on-going or being prepared in order to deepen the
Association Agreements. These ongoing or future negotiations are related to further
liberalization of trade in agriculture, liberalization of trade in services, accreditation
and acceptance of industrial products and regulatory convergence.
The project aims at improving the statistical capacity and ensuring the institutional
strengthening of the national statistics institutes and national statistical system in the
Mediterranean Partner Countries in order to collect updated, timely, relevant and
high-quality data, necessary for political decision-making and good governance.
Furthermore, it promotes the further harmonization of statistical data in line with
European and international standards, as well as consolidating the data exchange
process between Euro stat and the national statistical systems.
The main purpose of this paper is showing the Egyptian experience in the field of
building partnerships and cooperation between the Central Agency for Public
Mobilization and Statistics of Egypt with international organizations such as
European Union and the impact of these partnerships in the development and
verification of Foreign Trade Data to improve its quality.
The rest of the paper divided into (3) sections. The first is the key words definitions,
the second is Data and Methodology and the third is Conclusion and Summary then
References.
2- Global Economy
Global economy specifically means the economic relations between
countries in a world where markets in individual countries have now spread
beyond national boundaries and are more integrated with those of other
countries.
Generally refers to the economy, which is based on economies of all of the
world's countries' national economies. Also global economy can be seen as the
economy of society and national economies – as economies of local societies,
making the global one. It can be evaluated in various kind of ways. For instance,
depending on the model used, the valuation that is arrived at can be represented
in a certain currency, such as 2006 US dollars.
It is inseparable from the geography and ecology of Earth, and is therefore
something of a misnomer, since, while definitions and representations of the
"world economy" vary widely, they must at a minimum exclude any consideration
of resources or value based outside of the Earth. For example, while attempts
could be made to calculate the value of currently unexploited mining
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opportunities in unclaimed territory in Antarctica, the same opportunities
on Mars would not be considered a part of the world economy—even if currently
exploited in some way—and could be considered of latent value only in the same
way as uncreated intellectual property, such as a previously unconceived
invention. Beyond the minimum standard of concerning value in production, use,
and exchange on the planet Earth, definitions, representations, models, and
valuations of the world economy vary widely.
It is common to limit questions of the world economy exclusively to human
economic activity, and the world economy is typically judged in monetary terms,
even in cases in which there is no efficient market to help valuate certain goods
or services, or in cases in which a lack of independent research or government
cooperation makes establishing figures difficult. Typical examples are illegal
drugs and other black market goods, which by any standard are a part of the
world economy, but for which there is by definition no legal market of any kind.
However, even in cases in which there is a clear and efficient market to establish
a monetary value, economists do not typically use the current or official
exchange rate to translate the monetary units of this market into a single unit for
the world economy, since exchange rates typically do not closely
reflect worldwide value, for example in cases where the volume or price of
transactions is closely regulated by the government.
Rather, market valuations in a local currency are typically translated to a single
monetary unit using the idea of purchasing. This is the method used below,
which is used for estimating worldwide economic activity in terms of real US
dollars or euros. However, the world economy can be evaluated and expressed
in many more ways. It is unclear, for example, how many of the world's 7.01
billion people have most of their economic activity reflected in these valuations.
In 2011, the largest economies in the world with more than $2 trillion, €1.25
trillion by nominal GDP were the United States, China, Japan, Germany, France,
the United Kingdom, Brazil, Russia, and Italy. The largest economies in the world
with more than $2 trillion, €1.25 trillion by GDP (PPP) are the United
States, China,India, Japan, Germany, Russia, the United Kingdom, Brazil, and France.
3- Decision-Making
Decision making is the mental process resulting in the selection of a
course of action among several alternatives. Every decision making process
produces a final choice in an action or an opinion of choice. If a person neither
takes an action nor gives an opinion, this is also decision.
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Decision making can be broken down into the following steps:

Objectives must first be established

Objectives must be classified and placed in order of importance

Alternative actions must be developed

The alternative must be evaluated against all the objectives

The alternative that is able to achieve all the objectives is the tentative
decision

The tentative decision is evaluated for more possible consequences

The decision is implemented.
Analysis of Alternatives
Too many choices increase the difficulty in making a decision.
A major part of decision making involves the analysis of a finite set of
alternatives using some set of criteria. These criteria may be benefit or cost
oriented. For example, when choosing a place to live, some of the criteria
would include the rent or mortgage cost, the cost of maintenance, and the
cost and ease of access to work, shopping and friends. We see how people
value ease of access from the high rents and home prices in housing located
within short distance to the main business districts in a community.
The decision maker(s) may face a problem when they try to rank alternatives
in terms of how attractive they are when all the criteria are considered
simultaneously. Time and emotion also play a role in the quality of decision
making - the more time, the more deliberate the decision making process.
Secondly, the more that is at stake, emotion will come into play, rising as the
decision making timeline is reached.
Another goal might be to just find the best alternative or to determine the
relative total priority of each alternative (for instance, if alternatives represent
projects competing for funds) when all the criteria are considered
simultaneously.
4- Tracking foreign trade statistics
Tracking foreign trade statistics means “making mirror exercises” or
“making reconciling data with trading partner” which we make comparison
between exports of country A to country B correspond to imports of country B
from country A.
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From the point of view of producers of trade statistics, i.e. normally the national
statistical institutes, this fact provides an excellent possibility for examining the
results in the mirror, i.e. to examine how well exports of country A to country B
correspond to imports of country B from country A. Not surprisingly this report as
well as other similar investigations show that the assumption of equivalence
regarding exports of country A to partner B, and imports of B from partner A in
practice will prove to be wrong. Small discrepancies are normally explained by
differences in methods, definitions etc.Larger discrepancies should, however, be
examined in order to arrive at a set of explanations, which is the primary purpose
of undertaking a mirror study. A side effect may, however, be that deficiencies
are recognized, which at a later stage may necessitate an improvement or
change in the data or data collection and processing procedures.
Taking into account the increasing internationalization and globalization, the quite
complicated trade operations observed from time to time, and furthermore the
harmonization of data collection methods, concepts and definitions in trade
statistics, the producers are facing an obligation to explain at least the largest
mirror discrepancies.
The producers of the statistics are familiar with the fact that a variety of
explanations exists regarding the discrepancies between the trade figures of
country A and country B. Nevertheless, producers show some sceptisism if the
mirror analysis involves a substantial breakdown on detailed level .
For the producers it is often a complicated matter to examine the enormous
number of data elements and eventually to correct the discrepancies, notably
when the large number of reporting enterprises is taken into account. Another
drawback regarding investigations at detailed level is that contacts to the
enterprises are normally only possible, if the transactions scrutinized are of
recent nature.
Trade statistics play an important role as information base for enterprises,
federations, governmental bodies and other users. Most experienced users seek
information from several sources. Accordingly, there is confusion among users,
when large discrepancies are displayed in the trade between country A and
country B, be it on the aggregated or the detailed level, and in particular if the
results are contradictory. There is a need to explain the reasons, and to highlight
the most important ones.
The strong belief that one's own figures are always correct has shown its
deficiency. Instead the invitation to an open dialogue seems a productive way to
accomplish results, i. e. to explain the discrepancies and thereby improving the
quality of the trade statistic
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5- Data and Methodology
We will depend on data and technical analysis from “MEDSTAT II:
Asymmetry in foreign trade statistics in Mediterranean partner countries” 2009
edition.
In the MEDSTAT II programme, north-south and south-south mirror exercises were
carried out to assess data quality and comparability, quantify mirror discrepancies at
total trade and detailed product levels, identify their causes and make recommendations
for solving them.
MEDSTAT II experts visited the Mediterranean partner countries (MPCs) to share results
with the relevant local administrations (national statistical institutes and customs
administrations, in particular), conducted additional joint research and found the precise
causes of the main discrepancies. In addition, a specific ‘EJPAI group’ has been
established, bringing together Egypt, Jordan, the Palestinian Authority and Israel to
discuss and solve discrepancies detected in their bilateral trade. Multilateral EJPAI
meetings held at various locations have produced valuable results and facilitated
cooperation between administrations.
The outcomes have been extremely useful and encouraging. Analysis of the customs
procedures adopted by the partner countries put the experts in a position to draft specific
recommendations on the kind of transactions to be included in trade statistics.
Cooperation between national administrations has been strengthened, by finding areas
for integration to improve the overall quality of data. In cases where the discrepancies
at total trade level were extremely wide, countries have decided to change their
production system and their methodology (by adopting the general trade system and
nomenclatures, more in line with international standards). This has been the case in
Egypt, where the export and import figures were half those declared by the European
Union, mainly due to the strong role played by national Free Zones.
The next sections give a few examples of the most tangible results achieved during the
EU-MPC mirror exercises
The results of a mirror study were presented in a workshop organized by the Central
Agency for Mobilization and Statistics of Egypt (CAPMAS) in which delegates from the
customs authority participated. Until then Egypt’s foreign trade statistics had been based
on data collected from CAPMAS regional offices at the main customs posts.
However, the mirror study revealed substantial under-coverage, because the CAPMAS
offices did not receive all customs declarations. In addition, the strict definition of ‘special
trade system’ was applied and the product nomenclature adopted by CAPMAS was
based on the 1992 version of the UN's Harmonized Commodity and Coding System,
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(HS). Egyptian Free Zones and bunkers were considered as separate countries and
imports from them into the area of free circulation were recorded without any product
distinction.
Since the workshop, a new production system has been put in place in Egypt. The 2007
HS has been adopted by CAPMAS, starting in January 2008, and, in order to be more
consistent with real trade figures, Egypt has decided to publish data based on the
general trade system and to avoid duplication of data collection and storage. Protocols
of understanding have been signed to give CAPMAS direct access to the databases of
other administrations. Data on imports are now taken from the new data warehouse of
the customs administration and data on exports are collected via the General
Administration for Exports and Imports Control in the Ministry of Trade and Industry.
As part of the MEDSTAT II programme, eight asymmetry studies were carried out
between the EU and the following Mediterranean partner countries (MPCs): Algeria
(DZ), Egypt (EG), Israel (IL), Jordan (JO), Lebanon (LB), Morocco (MA), Syria (SY) and
Tunisia (TN).
The studies analysed the pattern of trade of the MPCs and the level of asymmetries
between the EU and MPCs at total trade, chapter and detailed product levels for trade
flows in both directions (concentrating on the ten most concerned chapters). In addition,
a similar study was carried out to analyse the trade between the members of the EJPAI
group (Egypt, Jordan, the Palestinian Authority and Israel).
The studies were conducted between December 2006 and August 2009. Depending on
data availability, detailed analyses were carried out for the years from 2004 to 2007
(and the first quarter of 2008 within the EJPAI group, in response to major changes
made in Egypt from January 2008 on).
Table (1): Overview of used data description
Table (2) provides an overview of the global level of asymmetry between EU trade
statistics and mirror MPC flows for northbound trade (exports from MPCs compared
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with EU imports) and southbound flows (exports from the EU compared with MPCs’
imports).
The global level of asymmetry depends largely on the partner country and on the
direction of trade.
Some countries had a limited level of asymmetry (below 10 %) in both directions. This is
the case with Israel, Morocco and Tunisia. Others showed significant asymmetry in one
direction only: Algeria and Syria on the import flow and Lebanon on the export flow.
Two countries had a high level of asymmetry in both directions: Egypt and Jordan.
Table (2): Overview of asymmetries between the EU and MPCs
Detailed analyses were carried out at the two-digit level of the Harmonized commodity
classification System (HS), focusing on the main product chapters with the highest level
of asymmetry. Table 3 summarises the results obtained.
Certain types of products appear specifically for some bilateral links and certain
chapters appear more frequently as a source of asymmetry for several countries or for
several flows.
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Chapter 88 (Aircraft) was often the source of asymmetries since, as mentioned earlier,
transactions linked to repairs were included in the EU data up to the end of 2005.
Some chapters appear on the list due to their high share in the trade of MPCs: this is
the case with Chapter 27 (Mineral fuels, oils, distillation products, etc.) in exports from
Algeria, Egypt and Syria or with the textile industry (Chapters 60, 61 and 62) for exports
from Egypt, Morocco, Syria and Egypt. In the southbound flow, Chapters 84
(Machinery) and 85 (Electrical and electronic equipment) are often sources of
asymmetries.
Detailed analysis of asymmetries between the EU and MPCs shows that the main
reasons for discrepancies are:
a. Confidentiality concerning the partner country in some EU countries (in
particular for HS27);
b. Repairs of aircraft (HS88, HS84 and HS90);
c. Differences in the trade systems (impact on processing);
d. Difficulties with measuring trade involving Free Zones;
e. Non-use of registers to measure trade in vessels and aircraft (HS88 and
HS89);
f. Difficulties with measuring trade in diamonds (HS71);
g. Registration of the country of origin for used cars in accordance with
international recommendations;
h. Possible under-declaration of values.
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Table (3): Main asymmetries at HS chapter level in EU-MPC trade
Table(4) provides a quantitative measurement of the results of the studies, in terms of
the value of the discrepancies ‘solved’ (either explained or which will disappear
following corrective measures).
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Table(4): Results of investigations, million euro
Significant results have been obtained by the various studies already carried out, but in
the case of several MPCs there is still room for further investigations to limit the
asymmetry in the future.
6- Conclusion and Summary
From the above models we conclude that partnership with European Union
through “MEDSTAT II” project contributed in analyzing foreign trade data between
European Union and Mediterranean partner countries. The main purpose is assessing
data quality and comparability, quantify mirror discrepancies at total trade and detailed
product levels, identify their causes and make recommendations for solving them .This
partnership is contributing in strengthening cooperation between national administrations
by finding areas for integration to improve the overall quality of data.
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7- References
1) http://www.qfinance.com/dictionary/global-economy
2) http://en.wikipedia.org/wiki/World_economy
3) https://www.boundless.com/management/decision-making/decisionmaking-in-management/defining-decision-making/
4) Anne B.Dahle,Jens Thomasen and Hans Kristian Ostereng (eds.) 1998, The
Mirror Statistics Exercise between the Nordic Countries 1995,.page.5, Statistics
Norway,Department for Economic Statistics
5) Nicola Veronese and Henri Tyrman (2009) Methodologies and Working
papers, MEDSTAT II: Asymmetry in foreign trade statistics in Mediterranean
partner countries” 2009 edition. European Commission,EUROSTAT.
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