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Asymmetries in statistics on International Trade in Goods

Trustworthy, consistent and comparable figures about the level and the development of international trade in goods are extremely important for both economically and political reasons. When Georgia entered into the Free Trade Area with the EU in 2014, it was expected to have a positive influence on the trade between EU and Georgia.

19 October 2021 14:00

Trustworthy, consistent and comparable figures about the level and the development of international trade in goods are extremely important for both economically and political reasons. When Georgia entered into the Free Trade Area with the EU in 2014, it was expected to have a positive influence on the trade between EU and Georgia. It has been more than difficult to get a consistent picture of the trade between the two areas because of the huge differences (asymmetries) in statistics on trade in goods published by Eurostat and Geostat (National Statistics Office of Georgia) respectively. The differences have been both concerning the level and – even more worrying – also the trend in trade.

A fruitful and intensive 2-year cooperation between Geostat and Danish experts from Statistics Denmark in the frame of the Twinning project Strengthening the Capacity of the Georgian Statistical System has now resulted in a comprehensive report describing the nature, reasons and possible solutions to these asymmetries. The report is an important input to understanding asymmetries and how to handle them in the future “Link”. 

Georgia’s geographical location on the shore of the Black Sea means that many goods traded between countries in Europe and mainly Armenia and Azerbaijan are transiting through Georgia. The European traders/custom are in many cases not aware that the specific imported/exported good is only transiting in Georgia and is therefore incorrectly reporting the good as being imported/exported from/to Georgia. Incorrect reporting of goods that are only transiting through Georgia are by far the major reason for the asymmetries according to the report prepared by the project, which has analysed in depths the methodology applied to trade in goods statistics in Georgia, the concepts applied and the practical data collection. 

The analysis thereby also implies that the Georgian data in the cases where goods are transiting in Georgia, are more likely to be correct than Eurostat’s data as the asymmetry appears due to incorrect declaration of country of origin (when EU is importing) and country of final destination (when goods are exported from the EU). In many of these cases, the hypothesis was supported by mirror analysis carried out on data from Azerbaijan, Armenia and Turkmenistan, which showed similar asymmetries in trade data with the EU.

Asymmetries might be caused by methodological reasons, as well as by data errors. A thorough review of the compilation of international trade in goods in Geostat has revealed a sound methodology applied in Geostat’s compilation of International Trade Statistics and great awareness of international standards. The analysis also indicates that there might be a few issues concerning the so-called trade system, volatile currency, high exemption threshold for export, imputation of missing import of cars and misclassifications of commodities, all of which are more or less out of the hands of Geostat, and more importantly, are minor issues in the big asymmetry picture.

Data errors are by far the biggest problem detected. A good understanding and overview of the nature and major sources of the data errors were obtained from structured in depths microlevel analysis involving a lot of correspondence with colleagues from 6 different EU National Statistical Offices and to some extent local importers/exporters. A lot of hard work remains to reduce the asymmetries in the future, requiring most of all careful training of individual data reporters concerning the importance of indicating the correct country of origin/country of final destination.

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