Imports of Goods and ServicesMerchandise, Adjusted, Excluding Military

(Line 16) (Cont'd)

Direct Defense Expenditures (Line 17)

Travel (Line 18)

Passenger Fares (Line 19)

which in various other aspects are not oriented to ideal balance-of-payments concepts, leads to some additional departures from the conceptual definition stated above. Census Bureau import statistics are, in general, valued at the wholesale market price, f.o.b. foreign country of export. This valuation, which is required under U.S. customs legislation, excludes U.S. import duties and freight and insurance charges from the foreign country to the U.S. port of entry. The use of f.o.b. foreign country as the basis for import valuation is in accord with balance-of-payments concepts. However, the Customs requirement for a general "market value at which the goods are freely offered for sale" may not necessarily coincide with the actual purchase-sale contract price, f.o.b. foreign country, agreed to between buyer and seller-the transactions value. In such cases, a valuation adjustment is made to accord with the transactions value, if appropriate information is available. Adjustments for timing and coverage are also made to Census import statistics to bring them into closer conformity with balance of payments requirements.

This account measures direct defense expenditures for foreign goods and services by U.S. Government military agencies and similar defense transactions of the Atomic Energy Commission and the Coast Guard which meet the NATO definition of defense expenditures. Also included are the personal expenditures of U.S. military and civilian personnel and their dependents abroad, together with the foreign purchases of the military exchanges and similar agencies which sell to personnel (e.g., post exchanges, commissaries). Other disbursements include foreign expenditures of U.S. contractors employed to construct and operate U.S. foreign military installations and to furnish other services abroad, expenditures for NATO infrastructure, the offshore procurement of military equipment to be transferred as aid to foreign countries, contributions to international military headquarters expenses, and other outlays abroad for administration of military assistance programs. Excluded are foreign products purchased in the United States by U.S. military agencies. Estimates are based primarily on Department of Defense reports.

This account measures expenditures in foreign countries by U.S. travelers (excluding U.S. Government personnel and their dependents and U.S. citizens residing abroad) for lodging, food, transportation within foreign areas, entertainment, personal purchases, gifts, and other outlays incidental to a trip abroad. Transocean passenger fares are excluded. Included are passenger fares paid to Canadian and Mexican carriers by U.S. residents visiting Canada and Mexico. Travel payments to each major area of the world are estimated by multiplying the average expenditure per traveler derived from sample surveys of BEA, by the corresponding number of travelers derived from statistics of U.S. Immigration and Naturalization Service.

This account measures passenger fares paid to foreign ocean and air carriers by U.S. residents for transocean transportation. Excluded are passenger fares for travel between the United States and Canada, and between the United States

and Mexico (part of line 18). For each major area of the world, an estimate is made by multiplying the average roundtrip fare derived from travel questionnaires, by the corresponding number of travelers derived from data provided by the U.S. Immigration and Naturalization Service. The estimate for total passenger fares is the sum of estimates for all areas. Additional adjustments for inter-airline transfers are made on the basis of official reports of U.S. international air carriers.

This account measures the following: freight payments to foreign-operated ocean, air and other carriers (including rail and Great Lakes shipping) for the international transportation of U.S. imports; port expenditure payments representing purchases of goods and services in foreign countries by U.S. operators and transportation companies; and payments made to foreign owners by U.S. operators for the charter of vessels and the rental of freight cars. For the major componentsfreight and port expenditure payments-value estimates are made by multiplying the average rates based on reports of shipping companies and airlines to BEA, by the corresponding tonnage data derived essentially from statistics of the Census Bureau. For the other components, estimates are made on the basis of reports to BEA and various other sources of information.

This account measures payments by U.S. residents to foreign residents not affiliated with the U.S. payer for the use of intangible property or rights (patents, techniques, processes, formulae, designs, trademarks, copyrights, franchises, manufacturing rights, etc.). Estimates are made on the basis of data obtained from BEA questionnaires circularized among U.S. individuals and firms directly involved in such transactions.

This account measures payments by U.S. private residents to foreign residents not affiliated with the U.S. payer and to foreign governments for various miscellaneous services rendered domestically or abroad. Such outlays include payments of international reinsurance operations of U.S. insurance companies; net payments for direct writing of insurance abroad; payments of U.S. communication companies for foreign cable, radio, and telephone operations; net earnings of Canadian commuters employed in the United States; payments of consular fees for export privileges; and various other minor service payments. Estimates are based on reports filed with BEA by U.S. individuals and firms, statistics provided by foreign government agencies, and other information obtained from various domestic publications.

This account measures expenditures of the nonmilitary agencies of the U.S. Government for foreign services and for foreign goods which are purchased abroad and used or stockpiled abroad. Also included are net payments by such nonmilitary agencies to U.S. nationals employed abroad and their dependents and payments to international organizations for membership assessments. Estimates are based primarily on reports submitted by nonmilitary agencies of the U.S. Government.

1

Direct Investment Fees and Royalties (Line 24)

Direct Investment Interest, Dividends, and Branch Earnings (Line 25)

Income Payments on Other Private Liabilities (Line 26)

Income Payments on U.S. Government Liabilities (Line 27)

U.S. Military Grants of Goods and Services, Net (Line 28)

This account measures payments by U.S. companies to their foreign parent organizations of fees and royalties (after withheld taxes) for the use of intangible property or rights (patents, techniques, trademarks, copyrights, manufacturing rights, etc.) and for professional, administrative and management services. Payments include not only actual transfers but also other amounts due in the reporting period that are not actually transferred. In the latter instances, the amounts are offset by contra-entries in line 48. Data are based on quarterly reports filed by approximately 350 U.S. companies with BEA. (See line 48 for definition of direct investments.)

This account measures payments by U.S. companies to their foreign parent organizations of interest and dividends (after withheld taxes) and branch earnings (after income taxes). Payments include not only actual transfers but also other amounts due in the reporting period that are not actually transferred. In the latter instances, the amounts are offset by contraentries in line 48. Data are collected by BEA from approximately 350 U.S. companies. The data are used to derive estimates for total payments on the basis of the relation of the reporting sample to benchmark data (based on the 1959 survey of foreign direct investments in the United States), with adjustments made for new investments and liquidations. (See line 48 for definition of direct investments.)

This account measures (1) interest paid by U.S. residents to foreign holders of U.S. debt obligations and to foreign owners of U.S. bank deposits, and (2) dividends paid by U.S. residents to foreign holders of U.S. equities.

Excluded are income payments on foreign direct investments in the United States (recorded in line 25). Estimates are based on applicable Eurodollar rates, U.S. money market rates, and U.S. dividend yields applied to amounts outstanding in the appropriate period, with lags when relevant.

This account measures (1) interest paid to foreign residents on their holdings of U.S. Government securities, based on applicable rates, (2) interest paid to foreign official agencies on advance payments for military equipment and on other special deposits with the Treasury Department, (3) interest paid on Export-Import Bank participations, and (4) IMF service charges.

This account measures transfers by U.S. military services to foreign countries under legislation enacted by the Congress authorizing provision of foreign military assistance for which no repayment is expected or for which repayment terms are indeterminate. Excluded are transfers of cash and of nonmilitary items, even when under military aid legislation, and military assistance provided on established credit repayment terms.

An identical offsetting entry is made in line 14. (For details of gross transfers, transactions netted against gross transfers, and the basis of BEA estimates, see note for line 14.)

490-859 O - 73 - 5

Unilateral Transfers (Excluding Military Grants), Net-U.S. Government Grants (Excluding Military) (Line 30)

This account measures (1) payments of annuities and other benefits, to Americans residing abroad or to foreigners entitled to such payments, under social security and allied programs; (2) similar payments under retirement and compensation programs for former Government employees, military personnel, and veterans, including costs of providing medical services abroad under Veterans Administration programs; (3) payments abroad under U.S. educational and cultural exchange programs, primarily administered by the Department of State; (4) payments of grants supporting individual and institutional research abroad; and (5) payments and receipts of indemnity claims and of claims settled by intergovernmental agreements, including collections of funds for distribution to private claimants as a result of nationalization of property by foreign governments (when such claims involve receipts in installments over a period of years, the collections are not included in this entry but are recorded in line 36).

Data are reported by U.S. Government operating agencies based upon their financial records, generally of checks issued and collections made.

Private Remittances and Other Transfers (Line 32)

U.S. Government Capital Flows, Net -Loans and Other Long-Term Assets (Line 34)

Foreign Currencies and Other ShortTerm Assets

(Line 35)

This account measures net private unilateral transfers of goods, services, cash and other financial claims between U.S. residents and residents or governments of foreign countries. Receipts include transfers to U.S. private residents through postal service money orders; German Government indemnification payments; Canadian Government pension payments, inheritance and migrants transfers; and various other inflows. Payments include personal remittances of U.S. private residents to foreign residents through banks, communication companies, and the U.S. Postal Service; private parcel post shipments; cash and goods donated abroad by religious, charitable, educational, scientific, and similar nonprofit organizations; and inheritance and migrants transfers. Estimates are made on the basis of data received directly from U.S. banks, nonprofit organizations and other private agencies, from U.S. and foreign government agencies, and on the basis of other statistics obtained from various publications of foreign governments.

This account measures utilization of U.S. Government financing to transfer resources under legislation enacted by the Congress for the provision of foreign assistance, or for credits to foreign governments or foreign entities, under agreements which give rise to specific obligations to repay, over a period of years, usually with interest. U.S. Government loans to U.S. private entities specifically for projects abroad are included as foreign credits, identified with the country in which the project is located.

Transfers of resources include cash transfers from, or goods and services purchased with, dollar funds established, or foreign currencies owned, by the U.S. Government whose use has been authorized by legislation. Such transfers are valued on the basis of the agreed obligation assumed by the debtor under the contractual agreement for repayments. Also included are capital investments in, or contributions to, the international financial institutions; capital flows abroad reflecting the Government's direct investment in productive facilities and installations; and equity holdings of "public enterprise" accounts of Government agencies.

Data are compiled from reports furnished by the operating agencies for inclusion in this table, and from published statements and financial and operating records of Government agencies. Prior to the availability of their records, estimates are made by BEA, particularly for preliminary data. Adjustments are also made to report transactions at time of occurrence, rather than at time of record on books of the operating agencies.

This account measures, in significant part, the financing of exports of U.S. farm products in exchange for foreign currencies under the Agricultural Trade Development and Assistance Act (Public Law 83-480) less the Government's disbursements of the currencies as grants, credits, or for purchases. Also included are changes in U.S. Government deposits abroad from acquisition of foreign currency collected as interest, principal, or reverse grants; accounts receivable of Government agencies that report their current transactions on an