Manual on Statistics of International Trade in Services

E.  Attribution of FATS variables 
4.29.  FATS variables may be attributed or classified in 
a variety of ways.  One way is geographic - that is, in 
what country did the production take place, and what 
country is to be regarded as the country of the owner of 
the producing affiliate?  Another way is on the basis of 
the primary industrial activity of the producer.  Some 
variables may, in addition, be classified by product - 
according to the types of goods or services produced.  
Recommendations on each of these bases of attribution 
are provided below. 
1. By country 
4.30.  The issues to be addressed in attributing variables 
by country differ as between inward FATS and outward 
FATS.  For inward FATS, a choice must be made between 
attribution to the immediate investing country and 
attribution to the ultimate investing country.  For outward 
FATS, the issue is whether to attribute variables to the 
immediate host country or to the ultimate host country.  (As 
noted in para. 4.24 above, both directly and indirectly held 
affiliates are to be included in the FATS universe.) 
4.31. For FATS statistics, the need to follow 
investments to their ultimate origins or destinations 
reflects both the nature and uses of the statistics.  These 
issues are discussed below with respect to each type of 
investment, and recommended bases of attribution are 
given. 
(a) Inward FATS 
4.32.  For foreign-owned affiliates in the compiling 
economy, the question is whether to attribute FATS 
variables to the country of the immediate investor (first 
foreign parent) or to that of the ultimate investor 
(ultimate beneficial owner (UBO)) (for a discussion of 
these two ownership concepts, see box 8). Commonly, 
the first foreign parent and the UBO are one and the 
same, but in many cases they differ.  Thus, it is 
necessary to determine the primary principle to be 
applied.  Some perspective on the matter may be gleaned 
from a review of relevant information concerning 
recommendations for FDI statistics, the Eurostat task 
force report mentioned above and an OECD-Eurostat 
questionnaire on the subject. 
4.33.  Both BPM5 and BD3 recommend that FDI 
balance of payments flows be compiled only in respect 
of the immediate investing country, a practice followed 
by virtually all countries.  With respect to direct 
investment positions, BPM5 recommends that these 
should be allocated to the country of the immediate host 
or investing country. BD3 suggests that positions should 
also be compiled separately with respect to the ultimate 
host or controlling country. 

---

 
61 
4.34.  The Eurostat FATS Task Force report (see footnote 
60 above) recommended that the UBO be considered as the 
first priority to define the level of control because it is the 
most relevant.  It observed that this principle can be very 
complex to follow in practice, and thus it proposed that 
initially the country of the first foreign parent could be used 
as a substitute, with the possibility of later obtaining data 
on the basis of UBO to be explored.  However, in a pilot 
study, conducted in the framework of structural business 
statistics, data were successfully collected on the UBO 
basis by most participants. Also, the United States has 
collected data on this basis for some time.  In the light of 
this successful experience, the UBO basis is to be 
recommended in the proposed OECD manual of economic 
globalization indicators.