Manual on Statistics of International Trade in Services

Box 6.   Merchanting services
 
Merchanting is the process by which a good is purchased by a resident (of the compiling economy) from a non-
resident and then subsequently resold to another non-resident; during the process, the good does not enter or leave 
the compiling economy.  Merchanting transactions may include both commodity arbitrage, where goods may be 
bought and resold almost simultaneously, and wholesale trading, where the merchant may own the goods for a 
period of time and take responsibility for moving them from the country of the seller to the country of the ultimate 
buyer.  In the latter case, the merchant may incur various costs, such as for transportation, insurance or interest, in 
connection with the movement and holding of the goods; where these represent transactions with residents of 
countries other than that of the merchant, they are to be separately recorded, rather than deducted from 
merchanting services, in consonance with the BPM5 principle, followed in the present Manual, of  recording 
current account transactions on a gross basis. 
The value of the merchanting services is the difference between the value of goods when acquired and the value 
of the goods when resold. If the purchase and sale take place within one accounting period, then this is the time at 
which the merchanting services are recorded. If the good is not resold by the merchant in the same accounting 
period as that in which it is purchased, then the merchanting transaction is recorded at the time of the sale of the 
good, in the later period. This treatment is as recommended in BPM5 and is consistent with the 1993 SNA.  
It should be noted that the recording of merchanting transactions is asymmetrical––that is, merchanting services 
are recorded in the economy in which the merchant is resident. Neither the country exporting the good nor the 
country importing the good will record these services; however, the value of the goods will be reported differently 
in the merchandise trade and balance of payments statistics of the two countries. The difference is accounted for by 
the value of merchanting services supplied by a third country. 
If the goods are resold for less than the original cost of purchase - that is, the merchant makes a loss on the sale - 
then a negative export of merchanting services would be recorded.