Data quality, concepts and methodology

Commercial services

1. Concepts

Concepts underlying these data reflect those for services generally. Prominent among cross-border services are those described in Canadian statistics as commercial services. ¹

Specific breakouts are described below.

Particulars as to provenance and accuracy are noted as part of this section, with a general overview taken up in the section that follows. The following main categories are all published. In addition, subcategories that are published separately in the tabular section of Canada's International Trade in Services are in italics. ²

1.1 Communication services

Communication services covers

• postal and courier services: the pick-up, transport and delivery of letters, other printed matter, parcels and packages, together with postal outlet services; and
• telecommunications services: 'basic' services such as telephone, telex, data and facsimile transmission; and 'enhanced' or 'value-added' services such as e-mail, electronic data interchange (EDI) or teleconferencing.

Included are charges to and from abroad by public carriers and interconnected suppliers for the use of facilities that teletransport client information, together, as a matter of practicality, with fees for related consulting and facilities management reported at source. Charges for the use and management of private facilities (non-public carriers) for teletransporting client information to and from abroad are included and carriage of third party or transit services is also covered. The value of the subject matter teletransported is excluded where possible. Lastly it is noted that limited coverage of internet access provision and enabling services for the internet are presently assigned to Information services below.

There is no separation of postal and courier data for reasons of confidentiality.

Data are derived from the annual survey of international transactions in services and from specific information supplied by industry participants.

1.2 Construction services

Construction services covers the erection of structures, structural repairs, installation, refurbishing, special trades, demolition and site work. Service suppliers are asked to estimate the construction portion in the case of a turnkey project, or to judge where to assign its entire value between, for example, construction and the architectural and engineering services category. Rentals of construction equipment are excluded, appearing instead with equipment rentals (see section 1.8).

According to international standards, goods supplied directly to or from Canada should be recorded with construction services. However, such goods are left with the trade in goods in Canadian statistics and, to the extent that they may be also reported in surveys of construction services, there will be duplication in the goods and services accounts. Furthermore, the Canadian expenditures related to revenues of construction services, such as expenditures for local supplies, are classified as construction payments in Canadian statistics. This treatment aligns with that recently adopted by the new UN manual on services trade statistics.

Projects extending beyond a year are still classified as cross-border services, unless the service suppliers themselves have established foreign enterprises. In other words, in Canadian statistics, regardless of the length of the contract, construction is classified as cross-border construction services if the suppliers record them as such in their books, or as direct investment if the suppliers set up foreign enterprises to manage their construction activities. This approach differs from to international standards, which typically treat site offices as direct investment:

Construction involving major specific projects that often take several years to complete, are carried out and managed by non-resident enterprises through unincorporated site offices. In most instances, site offices will meet the criteria that require site office production to be treated as the production of a resident unit and as part of the production of the last economy rather than as an export of services to that economy. ³

Construction was surveyed as a separate category for the first time in 1995. From 1990 to 1994, a proportion of results from selected survey returns in a previous broad grouping on consulting and other professional services was used. Construction activity prior to 1990 is included with the category architectural, engineering and other technical services (see section 1.12).

1.3 Insurance services

Insurance services covers the provision of various types of insurance to non-residents by resident insurance companies and vice versa. Broker and agency commissions related to insurance are included.

Data cover life insurance, pension and annuity services, as well as other direct insurance. Compulsory social security services are excluded. Other direct insurance covers private sector accident and health, property, casualty and other liability risks, such as financial or vehicular. Reinsurance, or the subcontracting of risk, is also included. No separate category is attempted for freight insurance. Some elements may be indistinguishably included with other direct insurance and/or be embedded in the valuation of freight charges shown as goods or with transportation services. No explicit provisions are made for some auxiliary services, such as claims adjustment and salvage administration.

The Canadian statistics are shown on the basis of gross premiums and claims, a departure from international standards. ⁴ Receipts are the sum of premiums received by Canadian residents from abroad and claims paid to clients in Canada by non-resident insurers. Payments for their part are the sum of claims paid abroad by insurers resident in Canada, and premiums paid to outside insurers by policyholders in Canada. From 1990, the annual insurance series are subdivided into four subcategories:

Primary life and non-life represents the premiums and claims of insurance carriers. The largest majority of international transactions are by far non-life in nature. Health and term life insurance are not excluded, although this is called for by international standards. However, compulsory social insurance transactions are excluded. Finally, no distinguishable component of freight has been identified in non-life insurance, although this is called for by international standards.

Reinsurance-life covers subcontracted risk on life insurance in return for a proportional share of the premium income.

Reinsurance-non-life, as a further significant set of international insurance transactions, covers other subcontracted risk, often to specialized operators.

Insurance commissions covers commissions by brokers and agencies and commissions identified by carriers. 

Data for insurance companies are obtained annually from Balance of Payments Division surveys of Canadian and foreign insurers in Canada, supplemented by the annual survey of international transactions in services, and a small annual survey of Canadian insurance brokers. In addition, data from the U.S. Bureau of Economic Analysis on crossborder insurance are also used-especially for insurance of Canadian resident individuals with U.S. insurance companies-as it is difficult from a Canadian viewpoint to measure activities of resident individuals. 

1.4 Other financial services

Other financial services covers financial intermediary and auxiliary services (except those of insurance enterprises and pension funds) conducted between residents and non-residents. These include the following:  

• commissions and other fees related to transactions in securities-the majority of services in this category- including brokerage, placement of issues, underwriting, redemption and arrangement of swaps, options and other hedging instruments;
• commissions of commodity futures traders, as well as service fees related to asset management,
• financial market operational and regulatory services, security custody services, and so on;
• intermediary service fees, such as those associated with letters of credit, bankers' acceptance, lines of credit and financial leasing; and
• commitment fees associated with undrawn balances under standby or extended credit arrangements.

Fees associated with foreign exchange transactions, as well as financial services rendered by means of foreign-correspondent banking, are not currently measured. Financial intermediary services indirectly measured (FISIM) are also excluded; these are classified indistinguishably with investment income both here and under International Monetary Fund standards. However, estimates of FISIM are included in the non-resident sector in the other components of the Canadian System of National Accounts.

Prior to 1986, the data mainly cover commissions paid on new Canadian securities issued abroad. Beginning in 1986, the data also include the following:

• fees and commissions paid or received on trade in outstanding securities with non-residents;
• banking services (embedded in investment income transactions prior to 1986);
• provisions for services related to guarantees and letters of credit, funds transfers, collection fees, credit card transactions, interoffice and interbank charges (some from U.S. sources); and
• trust company fees that were shown under management and administrative services prior to 1986.

Commissions on new issues are largely derived by applying a percentage against the proceeds from new issues. The percentages used are checked from time to time against prospectuses. Fees on trade in outstanding securities are derived from gross trading data coupled with certain rate factors based on discussions with the industry, and some extensions made to cover certain management and listing fees payable abroad. Rates were recomputed in 1998 and significantly lowered both receipts and payments shown from 1994. Estimates include commissions on trading in commodity futures.

The remaining fees and commissions are derived from both corporate ⁵ and regulatory sources, supplemented by the annual survey of international transactions in services and by some U.S. survey sources that are believed to be more comprehensive. Estimates of service fees with the International Monetary Fund are based on administrative records.

1.5 Computer and information services

Computer services covers the design, engineering and management of computer systems (exclusive of the value of hardware). Also covered is the development and production of original software (including operating software). Beginning with the reference year 1996, the physical exports of prepackaged software units for general commercial or personal use are excluded. These exports are part of goods, but had been included in services for the years prior to 1996 to ensure sufficient valuation in the goods and services account. Computer processing services as well as equipment maintenance and repair are covered here. The category also includes consulting and training related to the provision of computer services. Computer services may be sold or licensed, specifically including fees for the right to replicate, distribute or otherwise use software, whether custom or prepackaged; these transactions are shown for the most part with software and other royalties (see section 1.6).

Information services covers online information retrieval services, including database services (the development of subject matter through to storage and dissemination) and computer-assisted document searches and retrievals; news agency services (such as syndicated reporting services to the media). If database charges are separable from related telecommunications charges, they are reported here for convenience. Because of data limitations, direct subscriptions to newspapers and periodicals are covered as part of mail imports in goods rather than with information services, as called for by international standards.

Data on computer services are based on the annual survey of international transactions in services, which covers receipts from a range of companies not primarily providing computer services, together with payments by a wide spectrum of companies acquiring these services. To this are added receipts by major computer industry firms surveyed by the Services Division of Statistics Canada. A further amount, which is based on U.S. survey sources, serves to extend coverage on payments.

Measurement of the computer services category, as it has attempted to reflect conditions of rapid technological change, has inevitably brought a number of challenges. Indeed, efforts to measure rapid technological change have resulted in some series breaks. Computer services were not captured separately, until 1981- and not annually, until 1983 - and were intermingled with other categories, including goods. Since 1990, software royalties are assigned to Royalties and licence fees. Beginning with 1996, customs values for custom software already recorded in imports of goods is removed from goods through a balance of payments adjustment to avoid its duplication with services.

Limited coverage of internet access provision and enabling services for the internet are presently assigned to Information services.

The treatment of software continues to present difficulty. A particularly difficult issue has remained the estimation of prepackaged software exports. In recent years, it has been widely agreed that retail software is appropriately classified as goods, in much the same way as retail copies of books, magazines or music CDs. Recent research, comparing detailed records for prepackaged software from both goods and services survey sources, has enabled an approximation of the goods portion residing in the service exports. While some undervaluation in goods on a customs basis seems to remain, the higher results from recent service surveys appear mainly due to revenues for multiple usage by foreign clients of copies passing through customs, often at an appropriate unit value. In short, an estimate for the physical copies valued at content and exported on a customs basis is now deducted from services while a relatively small amount, to increase the valuation in goods, is included as a BOP adjustment to Canadian goods exports (the amount is compiled by the U.S. Balance of Payments). These changes were applied starting with the reference year 1996. ⁶ From the same reference year, prepackaged software exports less the goods portion is reclassified to royalties and licence fees in that this portion represents licences (see section 1.6).

Information services were requested for the first time in the 1995 survey of commercial services and, for prior years, consist of reallocations to this category of respondent results from several categories of data collection including consulting, computer services, and communications. As with computer services, a further amount based on U.S. survey sources is used to extend coverage on payments.

1.6 Royalties and licence fees

Royalties and licence fees covers the use of intellectual property rights (the sales of rights themselves are recorded in the capital account). The breakout of royalties and licence fees into the five following sub-categories was implemented from 1990 and goes beyond the provisions of international norms.

Patents and industrial design covers royalty or licence fees for the use of patents, industrial designs, industrial know-how or manufacturing rights, as well as payments for non-patented industrial processes.

Trademarks covers royalties or fees for the use of trademarks, that is, words, symbols, designs or combinations thereof that distinguish the holder's products or services from those of another provider.

Franchises covers contractual privileges granted by an individual or corporation to another, permitting the sale of a product or service in a specified area or manner.

The value of franchise transactions in total has appeared small compared to other service payments. This is partly attributable to the fact that many foreign franchise firms have subsidiaries established in Canada, and franchise fees payable to such subsidiaries within Canada do not give rise directly to international payments. In spite of additional coverage from U.S. sources, there may also be an element of undercoverage, for which a general provision is included under miscellaneous services to business.

Copyrights and related rights covers royalty or licence fees for the use of original artistic, literary, dramatic or musical works-for example, to stage productions or performances, or to make recordings or films. These originals or prototypes may take the form of text, data compilations or audio and visual products (such as films or sound recordings) and may or may not be in machine-readable format. Distribution rights for performances of completed audio-visual productions are reported with audiovisual services (see section 1.14). Fees for the replay of recordings or videos are recorded here. Royalties, licences or other fees for the right to use computer programs are reported below in software and other royalties. Additional provision for payments of cable services appears from the reference year 1997.

Software and other royalties covers software and other computer-related royalties including fees for the right to replicate, distribute or otherwise use software, whether custom or prepackaged. These also cover royalties for exclusive use of natural resources (private sector transactions). From the reference year 1996, licence fees included in the survey value of prepackaged software exports are reclassified here from computer services (see section 1.5). From 1997 an additional estimate from a variety of sources was made to account for certain software royalties paid directly abroad by classes of users not covered or sufficiently covered by surveys, (as school boards).

1.7 Non-financial commissions

Non-financial commissions covers commissions on goods and service transactions between non residents and resident merchants, commodity brokers, dealers, manufacturers' sales branches and commission agents. Excluded are financial service commissions, which are included in other financial services (whether involving insurance, credit, stock or bond issues), as well as commissions already recorded in the price of goods imported and exported.

A small provision is made for fees paid by the importer of goods after the point of export. However, Canada Customs and Revenue Agency (formerly Revenue Canada) view such buying commissions as less common than selling commissions, which are valued with goods.

Merchanting is the buying and selling of goods that do not enter or leave the economy from which the trader is conducting business. An apt measure of such transactions has not been found for the Canadian series. The definition of merchanting has been included in the category of non-financial commissions on the 2004 annual questionnaire on international trade in commercial services.

Data are based on both the annual survey of international transactions in services and on estimates derived by applying fixed factors to merchandise exports and imports. The factors used for trade with the United States are lower than for other countries, as a larger proportion of transactions are presumed to take place between related companies without incurring agents' fees.

1.8 Equipment rentals

Equipment rentals covers rentals (without operator) of light or heavy machinery and tools, drilling rigs and supply vessels, rail or road/off-road vehicles and aircraft (short-term leases). It also includes rentals of containers, office machinery and equipment, including computers, as well as rentals of household and personal goods. Excluded are financial leases, leases of telecommunication lines, leasing of real estate, car rentals on foreign travel and certain shipping charters.

Moreover, for practical reasons, no distinction has been made in the Canadian series between rentals with operators (to be reported in various other specific services according to international standards) and rentals without operators (reportable here). Identifiable amounts for chartering boats without crews based on Transportation Division data are incorporated here. Otherwise, rentals without crews which cannot be separately identified from rentals with crews are included in transportation, which does not conform to international standards.

The annual survey of international transactions in services and other smaller surveys are the basis for estimates on equipment rentals.

1.9 Management services

Management services covers legal, accounting and business management services (which include management and administrative overheads between related enterprises and business management consulting).

Legal services ⁷ covers legal advisory and representational services in any law, judicial and statutory procedures, and the drawing up of legal instruments or documentation.

Included here are patent and trademark registration fees and patent maintenance fees. At present, there is no provision for the inclusion of auction, escrow or bankruptcy services (see section 1.7). Additional coverage is obtained from more complete counterpart sources of the U.S. Bureau of Economic Analysis on the payments side.

Other management services covers accounting, business management consulting and other management services.

Accounting services covers the recording of business and other accounts, including reviews and audits, bookkeeping and preparation of related statements and returns. These services include business tax planning and consulting, and preparation of tax documents.

Business management consulting, ⁸ including public relations services, is typically transacted with unrelated parties. In addition, certain specialized business management consulting, is reported with the service concerned: telecommunications, computer and information services, legal, accounting, architectural, engineering and construction, environmental, artistic or recreational, education and training. Property management is included with miscellaneous business services (see section 1.13). Additional coverage from redesigned surveys by the Service Industries Division has been reflected from the reference year 1997.

Other management services comprise charges for managerial and administrative services, rendered by an individual or corporation, that cannot be allocated to another services category. Such overhead charges typically arise between related parties and may include amounts that are not always identified as services.

Figures are based largely on the annual survey of international transactions in services. The main component is management and administrative charges between related companies. Data on patent agent fees that are included here are estimated from administrative data. The data also include specific survey results for legal firms beginning in 1995, registration and maintenance fees of intellectual property, and added coverage of international management consulting services typically provided to third parties, also from 1995.

Reporting is incomplete for most major firms that provide clients with both accounting and management consulting services. At the same time, international transactions in such services in past years are not believed to have involved substantial flows. This is a reflection of the industry's international structure whereby separate partnerships operate in each domestic market in a largely self-sufficient manner.

1.10 Advertising and related services

Advertising and related services covers:

• design, creation and marketing of advertisements by advertising agencies;
• placement of advertisements in newspapers, journals, radio, TV and other media, including the purchase and sale of advertising space; and
• participation in trade fairs and other promotional outlays, including exhibition services, telemarketing and delivery services of promotional material.

Costs of maintaining representative offices of banks in another country are included in the Canadian series. Also, some advertising outlays are reported with the data on airline transactions within transportation services. Classified here are services to advertise and promote travel that are purchased from non-residents by governments in Canada. Also covered are market research and public opinion polling services.

Data are obtained from the annual survey of international transactions in services. Included also are benchmark projections of expenses in Canada of representative offices of foreign banks as well as representative offices of Canadian banks located in other countries. Tourism promotion outlays are obtained from provincial authorities on an annual basis.

1.11 Research and development

Research and development covers charges related to systematic investigation through experiment or analysis to achieve a scientific or commercial advance for, or through, the creation of new or significantly improved products or processes. Research and development extends to the social sciences and humanities but excludes market research (see section 1.10, above) and technical studies (see other technical services in section 1.12, below).

The statistics are derived from the annual survey of international transactions in services and from surveys conducted by the Science, Innovation and Electronic Information Division.

1.12 Architectural, engineering and other technical services

Architectural, engineering and other technical services covers a range of architectural and engineering activities together with a diverse group of scientific and technical services and specific services related to mineral extraction, processing and the environment.

Architectural and engineering services comprises consulting, design and predesign, as well as contract supervision services. Urban planning and landscape architectural services are covered as are the export or import of services for the management of projects after completion. Please also refer to construction services for the treatment of turnkey projects and projects of long duration (section 1.2).

Other technical services covers, the following services which cannot always be separated:

Scientific and technical services comprise geological and geophysical services; mineral exploration and prospecting work; surveying and mapping services of or from land, sea and above-surface, including weather services; and services of testing, analysis, inspection or certification of materials or products. Medical and dental laboratory services are excluded (see section 1.13). A reclassification from 1998 was made for certain technical services related to air transport. (See Transportation Services, Concepts).

Mining services comprise drilling and field services including maintenance, inspection and repair, but not equipment rentals or sales. Services related to discovery-that is, mineral prospecting and exploration, as well as geological surveying-are classed as scientific and technical services (above in section 1.12).

Environmental services comprise sanitation, protection and remediation services, waste storage, treatment, destruction, decontamination, clean-up or containment and pollution control. The series also includes environmental consulting, covering biological and ecological consulting, environmental audits, and impact and site assessments, not assigned by the new UN Manual to environmental services. Basic architectural and engineering or research and development services for projects that happen to be environmental in purpose, remain with architectural and engineering services or with research and development.

Services incidental to agriculture, fishing and certain mining and forestry activities are not systematically identified in the data collection to date: international transactions, apart from those related to mining, are not viewed as substantial.

Results from the annual survey of international transactions in services were augmented from 1991 by additional data for certain engineering, architectural and technical services surveyed by the Services Division. Data for mining services and other technical services require further development. Coverage was extended from 1996 for companies engaged in providing a range of surveying, mapping, remote sensing and related information systems sometimes referred to as 'geomatics.'

1.13 Miscellaneous services to business

Tooling and other services predominantly covers amounts paid or received by automotive companies for charges such as retooling, warranties and like charges linked to the production of new models. A provision for undercoverage of services not included elsewhere is also grouped here.

Miscellaneous business services covers a range of transactions not allocated elsewhere. These include real estate services (sales, commission fees and contracts for the management of properties including hotels and resorts), suits and settlements as they are deemed a cost of doing business; medical and dental laboratories; and education, training and staff development services.

Commercial or non-institutional education services cover charges for employee training and development. These services also cover services to the educational market such as testing, consulting and the development, delivery and adaptation of course materials and systems. Equipment sales and software replications for general sale, however, are excluded. (Fees incurred for attending full-time university and college programs are covered under personal travel; see above section on Travel).

Compensation of cross-border employees (commuter and seasonal workers' remuneration) is entered here since these employees are treated as self-employed service providers: insufficient data prevents their identification as labour income, as called for by international standards. Expenditures for local labour and supplies for construction projects are not identified separately and are included in construction.

For working purposes, an internal category under miscellaneous services to business has been established to cover what so far are infrequent cases of reported contract production abroad on a fee or contract basis. Instances where a resident hires and pays a producer abroad to transform basic materials into a new product that is then sold abroad appear not to be fully articulated, either in the data or in underlying concepts and classifications at the present time. Where residents export their own materials, this can be expected to appear in customs coverage of goods. The value added abroad is less frequently known or reported, and the international norms call for assigning it as a service to the category of merchanting and other trade-related services. Cases where the inputs are all sourced abroad and sold from abroad are not identified by international standards. Recipients of the commercial services survey are currently asked to report their contract production abroad separately. ⁹

Other components in the Canadian data include design, personnel, translation and security services together with certain conservation expenditures.

Data for tooling and other automotive charges are based on the annual survey of international transactions in services and on customs information from the International Trade Division of Statistics Canada. The provision to cover underreporting in the main services surveys reflects coverage of administrative sources and survey experience.

Remaining data are in part based on unspecified services reported by individual companies in the annual survey of international services under other transactions. Estimates of commuter and migrant labour earnings are based on benchmarks. Coverage of commercial education services from 1996 was added based on a listing compiled at Industry Canada.

A general provision is made from 1990 for Canadian government sales and purchases of services to and from the foreign private sector. Amounts for international organizations are obtained either directly or from public accounting records. A provision is made to include from 1995 a block of lower-value export contracts financed by CIDA. Some small items covered by annual reports or benchmark estimates are included here as well.

1.14 Audiovisual services

Audiovisual services covers film and video production and distribution, broadcasting, performing arts and organized sports. More specifically, these may be services and associated fees related to the production of motion pictures (on film or videotape), radio and television programs (live or on tape) and musical recordings. Included are receipts or payment for rentals; fees received by resident actors, directors, producers, and other crew members for productions abroad (or by non-residents in the compiling economy); and fees for distribution rights sold to the media for a limited number of showings in specified areas.

Fees to actors or participants in theatrical or musical productions, organized sports and other activities intended for broadcast, as well as related distribution rights are also included. Certain distribution rights for sporting events are classified here.

Physical copies of films, programs, musical compositions, books and retail software should be excluded, being treated as goods. Also excluded here are copies of software for retail sale.

Most of the data are obtained from results of annual surveys of the Science, Innovation and Electronic Information Division and the Culture, Tourism and Centre for Education Statistics Division of Statistics Canada, including film producer and distributor data from 1988. Statistics are supplemented from various provincial sources and studies and the annual survey of international transactions in services. Data for broadcasting are based on annual survey information of the Science, Innovation and Electronic Information Division. Estimates of organized sports and performing arts are based on benchmark investigations of receipts and payments of major participants and on continuing surveys.

Joint development work to edit and improve international data on cultural transactions has proceeded with the Culture, Tourism and Centre for Education Statistics Division. Certain additional coverage has lately been implemented for film labs and sound recording services as a result of redesigned and more detailed surveys.

1.15 Personal, cultural and recreational services

At present, coverage is limited to data on international activity of trade unions. Figures, until recently estimated from annual returns filed with Statistics Canada under the former Corporations and Labour Unions Returns Act, are now projected since the Act no longer covers labour unions.

2. Data sources

2.1 General description

The Balance of Payments Division collects much of the data on commercial services through its comprehensive survey International Transactions in Commercial Services-BP-21S (annual). Other Balance of Payments Division surveys used include the following:

• International Transactions in Commercial Services- BP-21SQ (quarterly);
• Transactions Between Canada and Other Countries- BP-21 (annual);
• Transactions Between Canada and Other Countries- BP-21A (quarterly);
• International Transactions Between Insurance Brokers in Canada and their Foreign Affiliates, Agents, and Other Companies or Persons Outside Canada-BP-17 (annual);
• Transactions Between Canadian Incorporated Insurance Companies and their Foreign Affiliates, Agencies and Bank Accounts and Other Companies or Persons Outside Canada-BP-27 (annual);
• Transactions Between Canadian Branches of Foreign Insurance Companies in Canada and Head or Other Offices, Companies or Persons Outside Canada-BP- 28 (annual);
• Report by Trust and Mortgage Loan Companies in Canada on Transactions with Non-residents-BP-29 (annual); and
• Canada's International Transactions in Securities- BP-30 (monthly).
• The Balance of Payments Division also relies on diverse surveys of other Statistics Canada divisions as well as administrative sources. The following annual surveys of the Services Division are used:

Annual surveys of the Services Division:

• Annual Survey of Architectural Services
• Annual Survey of Software Development and Computer Services
• Annual Survey of Engineering Services
• Accounting and Bookkeeping
• Specialized Design Services
• Management, Scientific and Technical Consulting

A number of these are basically redesigned to meet expanded statistical requirements and conform to coverage of the North American Industrial Classification System (NAICS).

The following surveys of the Science, Innovation and Electronic Information Division are used:

• Survey of Telecommunications Service Providers;
• Annual Return of "Broadcasting Distribution" Licensees;
• Annual Return For Radio and Television Programming Undertaking(s) (including Networks); and Research and Development in Canadian Industry.

The following four surveys are used from the Culture, Tourism and Centre for Education Statistics Division (CTCES):

• Film, Video and Audiovisual Production Survey;
• Film, Video and Audiovisual Distribution and Video Cassette Wholesaling Survey;
• Motion Picture Laboratory Operations and Production and Post Production Services; and
• Sound Recording Survey.

In addition to the surveys listed, data on environmental services are provided by the Environment Accounts and Statistics Division from the Environment Industry Survey, and data on courier services are provided by the Transportation Division from the Survey of the Couriers and Local Messengers Industry.

Government administrative sources from the federal government include

• tax forms T-106, GST, and NR-4 (withholding taxes);
• Citizenship and Immigration Canada;
• Bank of Canada; and
• Office of the Superintendent of Financial Institutions (federal); and 
• Canadian Intellectual Property Office.

Data sources from other Canadian governments and crown corporations include

• Public Accounts of Canada and of Crown Corporations (federal and provincial), with supplementary data obtained directly from selected corporations;
• film and tourism authorities (provincial); and
• power utilities (provincial).

Other data sources used include

• regular correspondence with corporations engaged in international communications, air and rail transportation, consulting, and so on;
• U.S. Department of Commerce data (with data exchange and annual reconciliations of U.S. current account data);
• foreign embassies;
• World Bank;
• patent agents;
• international organizations operating in Canada;
• Canadian banks;
• benchmark studies on sports and other entertainment;
• annual reports of individual companies engaged in international transactions; and
• public media.

3. Methods

3.1 General methodology

The Balance of Payments Division compiles the data on commercial services. For the current year, data are estimated from the quarterly sample surveys, which are based on the previous annual census survey data. The data are processed through a system known as the Services Integrated System (SIS) which is a relational database that consolidates the extensive but diverse sources of information on commercial services. One format file, for example, contains company names. An algorithm file (with factors changeable as needed by staff) is used to calculate certain series or to prorate global totals geographically when country level information is unavailable (that is, over and above normal imputations to deal with incomplete survey responses). It also serves as a useful registry for the firms identified as transacting international commercial services. The system also identifies the particular source and status of the data. At present the system identifies some 20 sources, from surveys through benchmark calculations, along with four status indicators as to whether the data is reported or estimated.

The coverage of the main survey is updated from listings from trade associations and from the monitoring of events by an ongoing scanning of the business media for international transactions. Tracked events are both company-specific and of a general background nature (for example, industry trends and developments). The information assists with the editing and updating of survey coverage for balance of payments surveys and other series.

Importantly, the data benefit from internal comparisons and review, both within the System of National Accounts (for example, commodity balancing through the input-output system), and with other areas of Statistics Canada, such as the Culture, Tourism and Centre for Education Statistics Division and the Services Division. Each year, results are compared and corrected, when applicable, in relation to counterpart U.S. results through the Canada-United States current account reconciliation.

Data on services are collected net of withholding taxes but published inclusive of withholding taxes. It is noted that the allocation of withholding taxes to the relevant royalty categories entails significant estimation.

3.2 Extended geographical breakouts

As all detail is initially compiled with an extensive geographical basis, more geographical data has been published for commercial services over the years than for other service accounts. The publication from 1990 of services by individual country largely entailed a review for confidentiality for countries not previously released.

Administrative data sources for commercial services, first available for 1989, initially augmented the overall coverage of these services by about 2%, but over the last three survey years have added a further 3% to value.

4. Products

4.1 Data accuracy

The overall quality of the data on commercial services is reliable. The non-responses to the surveys, the main source of information, tend largely to be comprised of low or nil value transactions for the period. A provision based on analysis of taxation records is applied to allow for underreporting in the survey and operations too small to survey. If follow-ups do not result in sufficient data, amounts are imputed from past results, external information and broader projections of annual information as a control indicator. For the most part, the geographical detail on commercial services is reported directly by survey respondents according to the geographic coding instructions that are sent to them. When respondents do not or are unable to report full details, approximations are accepted or estimates made.

The response rate in 2003 for the comprehensive survey of international transactions in services, sent to over 2,300 firms in Canada, stood at 60%. To reduce the response burden, starting with the reference year 2003, more than 900 small respondents are surveyed once every three years instead of every year. In addition, three specific surveys of 223 insurance carriers and agencies showed response rates with an average of 94% for 2003.

A quarterly sample survey for the current year was redesigned as of the first quarter 2002. Its stratification was unlinked from six summary industry categories - whose 'other' grouping was predominant - to a direct sample of some 28 categories of receipts and payments. It employs - as before - two quarterly survey sources. The first source is a quarterly survey of some 520 firms, mainly Canadian-controlled. The second source comprises a selection of about 230 firms made from a quarterly survey of financial transactions of mainly foreign-controlled firms. Response rates on the expanded base were 60% in 2004.

Lastly, accuracy of the commercial services series benefits from the extensive detailed reconciliation on current account transactions, which is conducted annually with the U.S. Bureau of Economic Analysis. This comparison assists in the data estimation process as well as in validation. ¹⁰

4.2 Data accessibility

The quarterly and annual series on commercial services are published as total receipts, payments and balances in the quarterly publication Canada's Balance of International Payments (available in print and in electronic format on the Internet) and in CANSIM.

In the present annual publication, Canada's International Trade in Services (available in print and in electronic format on the Internet) and in CANSIM, the annual series for commercial services are published for the six geographical groupings: United States, United Kingdom, Other European Union, Japan, Other OECD and Other Countries. The commercial services category is broken down to provide for over 25 product types. Not only is each main product type presented by the six standard geographical areas delineated above, but each product type is also presented according to three basic foreign regions with which the transactions are conducted-United States, European Union and Other Countries. The transactions are further identified by the party with whom they were carried out-that is, either a foreign affiliate or a foreign non-related party. The types of services are presented according to the country of control of the Canadian transactor and the transactor's industry classification.

Beginning with the reference year 1990, the geographic breakout for commercial services was further expanded to show summary receipts and payments for individual countries, starting with the 1998 edition of this services publication.

With the 1997 edition of the present publication, a quarterly breakout of some 14 commercial services was introduced beginning from 1995, both on a raw and seasonally adjusted basis. The same quarterly series also appears in the above-noted publication, as well as in Canada's Balance of International Payments.