1 Represents transfers under U.S. military sales contracts for exports and direct defense expenditures for imports.

Source: U.S. Census Bureau,U.S. International Trade in Goods and Services, series FT-900.

http://www.census.gov/foreign-trade/www/press.html

*BALANCE OF PAYMENTS (BOP) BASIS

Goods on a Census basis are adjusted by the Bureau of EconomicAnalysis to goods on a BOP basis to bring the data in line withthe concepts and definitions used to prepare the internationaland national accounts. Broadly, the adjustments include changesin ownership that occur without goods passing into or out of thecustoms territory of the United States. These adjustments arenecessary to supplement coverage of the Census basis data, toeliminate duplication of transactions recorded elsewhere in theinternational accounts, and to value transactions according toa standard definition.

The export adjustments include:

U.S. military sales contracts - This deduction of U.S.military sales contracts is made because the Census Bureau hasincluded these contracts in the goods data, but BEA includesthem in the service category "Transfers Under U.S. MilitarySales Contracts." BEA's source material for these contractsis more comprehensive, but has no distinction between goodsand services.

Private gift parcels. This addition is made for parcelsmailed to foreigners by individuals through the U.S. PostalService. (Only commercial shipments are covered in Censusgoods exports.)

Gold exports, nonmonetary. This addition is made for goldthat is purchased by foreign official agencies from privatedealers in the United States and held at the Federal ReserveBank of New York. The Census data only includes gold thatleaves the customs territory.

Some smaller adjustments are also made to exports:Deductions for repairs of goods, developed motion picturefilm, and military grant-aid. Additions for sales of fish inU.S. territorial waters, exports of electricity to Mexico, andvessels and oil rigs that change ownership for which no exportdocument is filed.

The import adjustments include:

Inland freight in Canada. An addition is made for inlandfreight in Canada. Imports of goods from all countries arevalued at the foreign port of export, including inland freightcharges ("customs value"). In the case of Canada, this shouldbe the cost of the goods at the U.S. border. However, thecustoms value for imports for certain Canadian goods is thepoint of origin in Canada. The BEA makes an addition for theinland freight charges of transporting these Canadian goods tothe U.S. border to make the value comparable to the customsvalue as reported by all other countries. Insurance andfreight charges for transporting goods to the United Statesfrom all other countries to the U.S. border are included inservices by the BEA. (The same procedure is used for Mexico asan Other Adjustment, but is much smaller.)

Gold imports, nonmonetary. This addition is made for goldsold by foreign official agencies to private purchasers outof stock held at the Federal Reserve Bank of New York. TheCensus data only includes gold that enters the customsterritory.

Imports by U.S. military agencies. This deduction of U.S.military sales contracts is made because the Census Bureau hasincluded these contracts in the goods data, but BEA includesthem in the service category "Direct Defense Expenditures". BEA's source material is more comprehensive, but has nodistinction between goods and services.

Some smaller adjustments are also made to imports:Deductions for repairs of goods, and developed motion picturefilm. Additions for imported electricity from Mexico,conversion of vessels for commercial use, and repairs to U.S.vessels abroad, and valuation of prepackaged software importsat market value.

SERVICES

The statistics are estimates of services transactions betweenforeign countries and the 50 states, the District of Columbia,Puerto Rico, the U.S. Virgin Islands, and other U.S. territoriesand possessions. Transactions with U.S. military, diplomatic,and consular installations abroad are excluded because they areconsidered to be part of the U.S. economy.

Services are shown in seven broad categories. Types of servicesfor imports and exports are the same for six of the sevencategories. For the seventh, exports is "Transfers Under U.S.Military Sales Contracts" while for imports the category is"Direct Defense Expenditures". The following is a briefdescription of the types of services included in each category:

Travel - Purchases of services and goods by U.S. travelersabroad and by foreign visitors to the United States. Atraveler is defined as a person who stays for a period of lessthan 1 year in a country of which the person is not aresident. Includes expenditures for food, lodging,recreation, gifts, and other items incidental to a foreignvisit.

Passenger Fares - Fares paid by residents of one country toresidents of other countries. Receipts consist of faresreceived by U.S. carriers from foreign residents for travelbetween the United States and foreign countries and betweentwo foreign points. Payments consist of fares paid by U.S.residents to foreign carriers for travel between the UnitedStates and foreign countries.

Other Transportation - Charges for the transportation ofgoods by ocean, air, waterway, pipeline, and rail carriers toand from the United States. Includes freight charges,operating expenses that transportation companies incur inforeign ports, and payments for vessel charter and aircraft rentals with crew.Royalties and License Fees - Transactions with foreignresidents involving intangible assets and proprietaryrights, such as the use of patents, techniques, processes,formulas, designs, know-how, trademarks, copyrights,franchises, and manufacturing rights. The term "royalties"generally refers to payments for the utilization ofcopyrights or trademarks, and the term "license fees"generally refers to payments for the use of patents orindustrial processes.

Other Private Services - Transactions with affiliatedforeigners, for which no identification by type is available,and of transactions with unaffiliated foreigners. (The term"affiliated" refers to a direct investment relationship,which exists when a U.S. person has ownership or control,directly or indirectly, of 10 percent or more of a foreignbusiness enterprise's voting securities or the equivalent,or when a foreign person has a similar interest in a U.S.enterprise.) Transactions with unaffiliated foreignersconsist of education services; financial services (includescommissions and other transactions fees associated with thepurchase and sale of securities and noninterest income ofbanks, and excludes investment income); insurance premiumsand losses; telecommunications services (includestransmission services and value-added services); andbusiness, professional, and technical services. Included inthe last group are advertising services; computer and dataprocessing services; database and other informationservices; research, development, and testing services;management, consulting, and public relations services; legal services; construction, engineering, architectural, andmining services; industrial engineering services;installation, maintenance, repair of equipment; and otherservices, including medical services and film and taperental.

Transfers Under U.S. Military Sales Contracts (Exportsonly) - Exports of goods and services in which U.S.Government military agencies participate. Includes bothgoods, such as equipment, and services, such as repairservices and training, that cannot be separately identified.

Direct Defense Expenditures (Imports only) - Expendituresincurred by U.S. military agencies abroad, includingexpenditures by U.S. personnel, payments of wages to foreignresidents, construction expenditures, payments for foreigncontractual services, and procurement of foreign goods. Includes both goods and services that cannot be separatelyidentified.

U.S. Government Miscellaneous Services - Transactions ofU.S. Government nonmilitary agencies with foreign residents. Most of these transactions involve the provision of servicesto, or purchases of services from, foreigners; transfers ofsome goods are also included.Services estimates are based on quarterly, annual, and benchmarksurveys and partial information generated from monthly reports. Service transactions are estimated at market prices. Estimatesare seasonally adjusted when statistically significant seasonalpatterns are present. No country or area detail is available dueto the lack of adequate source data upon which to base estimates.

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