Appendix A. Sources of Data and Data Comparisons Domestic Output Product Classification. The output classification of products based on the SIC represents an organization of products into a structure related to the origin of production, i.e., to the establishments in the industry primarily responsible for the output. The production of goods (other than construction) is grouped in the SIC into three main economic divisions: agriculture, forestry, and fishery products; mineral products; and manufactured products. The production of some goods, such as motion pictures or works of art (not factory basis), gas, and electricity, does not fall within the above three divisions and comparable output-export-import data are not available. The economic divisions are segmented into two-digit major groups, which in turn are divided into three-digit subgroups and then into four-digit industry groups. The four-digit manufacturing industry product groups are further broken down by the Bureau of the Census into five-digit product classes and finally, into detailed individual seven-digit products. The numbering system provides a flexible basis for obtaining broader or more detailed levels of classification. Products having identical initial digits may, in most cases, be aggregated into meaningful, though broad, categories. The SIC divisions concerned primarily with the production of goods have a total of 28 major groups at the two-digit level and approximately 534 industry product groups at the four-digit level. There are 44 four-digit industry product groups in agriculture, forestry, and fishery; 31 in mining; and 459 in manufacturing. There are about 40 additional four-digit industries in these divisions, but these are industries covering the performance of services rather than the production of goods. There are over 1,500 domestic output product classes (1,462 for manufactured products) at the five-digit level. The four-digit industry codes in the SIC represent the base for the product codes and SIC-Based codes used in this report. For manufactured products, the five-digit codes are those of the Annual Surveys of Manufactures and Census of Manufactures. All dollar figures are in millions and on a current-year price basis (i.e. unadjusted for inflation). For other products, codes are created by appending digits to the basic four-digit industry code to which the products are primary. All data are presented in terms of the SIC and SIC-based codes in effect in the most current year for which data are shown. Domestic output data are from the following sources: 1. Agricultural Products. Economic Indicators of the Farm Sector: State Financial Summary. Also other reports published annually by the Economic Research Service, U.S. Department of Agriculture, especially Crop Values. 2. Fishery Products. Fisheries of the United States, National Oceanic and Atmospheric Administration, National Marine Fisheries Service of the U.S. Department of Commerce. 3. Mineral Products. Minerals Yearbook, Bureau of Mines, Department of the Interior (issued annually). Data for mineral services (i.e. 1081; 1241; 1381,2; 1389; and 1481) are not included in totals. 4. Manufactured Products. Census of Manufactures, Annual Survey of Manufactures, and various annual publications in the Current Industrial Reports series, Bureau of the Census. Export and Import Commodity Classifications. Export commodity data are collected in terms of the classifications contained in Schedule B, Statistical Classification of Domestic and Foreign Commodities Exported from the United States, and import data in terms of the classifications of the Harmonized Tariff Schedules of the United States Annotated. The structure and detail of each of these systems are quite different from those of output. The basic commodity classification systems for output, exports, and imports are divided initially into broad categories. These are based, in many areas, upon the material from which the classified products are made (such as wood, paper, textiles, metal, and nonmetallic minerals) but also include general categories such as machinery, chemicals, and food. The export and import systems do not, however, reflect the basic emphasis of the SIC on stage of processing as indicated by the initial separation at the division level of crude agricultural, fishery, and mineral products from manufactured products. Within the broad categories, the factors that are important in the subcategories for output are different from those for exports and imports. Industry patterns are based on a wide range of factors: product, manufacturing process (casting, forging, etc.), stage of processing (fresh fruit versus processed), market or use (furniture for use in household versus office) and combinations of these factors such as further splitting furniture by material or fruit processing among canning, freezing, or drying. Classification detail for exports and imports will often reflect these same factors but with restrictions derived from the basic legal requirements and systems on which their structures are based. Thus, these systems stress the objective characteristics of the commodities. Considerably less emphasis is placed on the manufacturing process and on the stage of processing. More emphasis is placed on material, on operating characteristics of the products themselves (calendaring, lifting, processing by a change in temperature, etc.), and on a reluctance to accept market or use as an element unless there are sufficient objective differences in the products themselves. For many types of commodities, statistical breakdowns for comparability are established within the export and import schedules which provide acceptable comparability by combining a limited number of four-digit or five-digit product codes based on the SIC. For other commodities, the differences in structure and detail are so great that an unacceptable number of additional classes would be needed for comparability. Relationship Between Domestic Output and Foreign Trade Commodity Classifications. Data for this report are derived by assigning each individual Foreign Trade commodity code to the SIC-related class judged to contain the same products. Many of the export and import codes can be thus assigned to a single five-digit output class or combined group of classes. When the foreign trade commodity classifications are not precisely comparable to the output classes, they are assigned to the output class judged to contain the products accounting for the largest proportion of the value of such export or import commodity classifications. Consequently, the import or export items assigned to each output class may not contain exactly the same commodities as the output class. However, the total value assigned to each output class is assumed to approximate the total actual value, since the output class is not published as a comparable separate item if such overlapping commodity codes are thought to cover a significant proportion of the export or import value of the class. Import classifications, particularly for agricultural and forestry products (SIC Major Groups 01 to 08), and to a lesser extent for mineral products (SIC Major Groups 10 to 14), contain many commodities not produced domestically. Therefore, making import-domestic output comparisons are not always precise. Supplementary and complementary, as defined by the U.S. Department of Agriculture in the publication, Foreign Agriculture Trade of the United States are no longer used in the present comparisons. By arranging and aggregating import and export commodity data on an SIC basis, imports and exports of commodities can be related to output of comparable products produced in the agricultural, forestry, fishery, mineral, and manufacturing industries of the domestic economy. This comparability is improved to some extent by attempts to introduce categories of importance in one system into the details of the others. However, because of the basic differences in their individual structures, there is considerable difficulty in meshing the three systems. This is reflected in the many adjustments required in the output, export, and import classifications to provide the appropriate level of accuracy for comparability of data. Limitations on Comparisons of Export, Import, and Output Data It is somewhat easier to find a reasonable statistical basis for comparing domestic output with exports than with imports. This is because there are substantial numbers of imported commodities which are not produced in the United States or are produced in very small quantities. On the other hand, the merchandise exported from the United States is ordinarily produced in this country and reflects items important to output. There are other problems with the three sets of data, all of which affect comparability to some degree. For these reasons, and because of the limitations inherent in the classification systems, the relationships shown in this report should be considered as only approximations. Domestic producers' shipments or production is usually valued at the point of production. Values of production for farm products are sometimes derived by multiplying the quantity of production by the estimated seasonal average price received by farmers for the portion of the product actually sold. Mine production represents mine shipments and sales of marketable production (including consumption by producers). Manufactures' shipments represent values, f.o.b. plant (exclusive of freight and taxes) of all products shipped, both primary and secondary, as well as all miscellaneous receipts such as receipts for contract work performed for others, installation and repair receipts, sale of scrap, and sale of products bought and resold without further processing, including interplant transfers, from establishments during the year. On the other hand, exports are by definition valued at the point of exportation: the seaport, border point, or airport. Export values are the selling price, or cost if not sold, and include expenditures for freight, insurance, and other charges to the export point. For many mineral commodities, the transportation cost represents a very significant portion of the commodity at port. In proportion to such inclusion, the export value percentages are inflated. The exporters' trade margin costs also increase export values compared with producers' values. Information on the magnitude of this incremental margin on a commodity-by-commodity basis is not available. The foreign trade data represents the value of exports in terms of f.a.s. (free alongside ship) and the value of imports in terms of c.i.f. (cost, insurance, and freight). Data are also shown on duty charges incurred in bringing imported merchandise to the United States. Definitions of the three import valuations and import charges are as follows: 1. Customs Import Value represents a value in the foreign country and therefore excludes U.S. import duties, freight, insurance, and other charges incurred in bringing the merchandise to the United States. This valuation is primarily used for collection of import duties and frequently does not reflect the actual transaction values. 2. F.A.S. Import Value represents the transaction value and includes all charges incurred in placing the merchandise alongside the carrier at the port of exportation in the country of exportation. The value, as defined, excludes the cost of loading merchandise aboard the exporting carrier. 3. C.I.F. Import Value represents the value of imports at the first port of entry in the United States. It is based on the purchase price and includes all freight, insurance, and other charges (excluding U.S. import duties) incurred in bringing the merchandise from the country of exportation and generally placing it alongside the carrier at the first port of entry in the United States. If the merchandise was acquired in a transaction between related parties, the purchase price used in deriving the c.i.f. value is based on an arm's-length equivalent transaction price, i.e., a price which would exist between unrelated buyers and sellers. The c.i.f. value is usually computed by adding the "Import Charges" to the "Customs Value". The Customs Value is the value of imports as appraised by the U.S. Customs Service. Import Charges represent the aggregated cost of all freight, insurance, and other charges, but does not include U.S. import duties, incurred in bringing the merchandise from alongside the carrier at the port of exportation in the country of exportation and placing it alongside the carrier at the first port of entry in the United States. In the case of overland shipments originating in Canada or Mexico, such costs, if any, are not required to be reported. The c.i.f. valuation is considered to be the most appropriate basis for competitive comparisons with output data. Import data in this publication are, therefore, valued on the c.i.f. basis for 1974 and subsequent years and on the Customs value basis for earlier years. Duplication in Value of Output. Because producers' shipments of some products may be used as materials for incorporation into other products, combinations of data for such products may contain a certain amount of duplication. Thus, percentages of exports to output or imports to new supply (imports plus output) at four-digit or broader levels may be understated. Low-Value Export and Import Transactions. Detailed commodity information is not included for individual export or import shipments at or below a certain dollar limit. This dollar limit is $2,500 for exports and $1,250 for imports, except for imports of textiles and textile products, gloves, footwear, and miscellaneous rubber and plastics products, where the limit is $250. Low-value data for export and import commodities are estimated. The estimates are shown under a single Schedule B or HS code and are included in the miscellaneous (3XXX) SIC category for this publication. Time Lag Between Output and Exports. There will sometimes be a lag between the time a commodity is produced or shipped by the producer and the time it is actually exported. The time lag will usually be greater if the merchandise moves through intermediaries (wholesalers, exporters) rather than directly from producers into the export market. Customs procedure also allows importers to file documentation up to 10 workdays after the date of release of the merchandise. Ordinarily, this type of discrepancy would not be very important in annual figures. "Direct" vs. "Total" Commodity Exports. Commodity export data represent direct exports only. They do not include the value of commodities which are incorporated into other, more finished products and exported in finished form. Thus, by showing only direct exports, the importance of exports to output for intermediate products such as steel shapes and forms is considerably understated. The figure for steel exported as such does not include steel incorporated in automobiles, tractors, etc., which are also exported. Used Commodities. Used or rebuilt commodities can be classified in the same import or export codes as is the new merchandise. Percentages are thus overstated to some extent. Import and export data generally do not distinguish between new, used or rebuilt commodities. Output Data. The output data are taken from the Annual Survey of Manufactures (ASM), except for years ending in '2' or '7' when the data are taken from the Census of Manufactures. ASM data are based on a sample and thus are subject to sampling error as described in that publication series. To speed the availability of this publication, the preliminary values are most often used. An inherent weakness in surveys is the inability to identify and classify all the entries from a respondent. Hence, an additional category, referred to as 'not specified by kind' (n.s.k.), in addition to the 'all other' category, is added to the reports taken from the data. Because of a number of variables in processing the data, different survey years will show different amounts of this category successfully placed in their correct classifications. In our publication, this value adds to the 4- digit and higher totals, where possible, but does not show up in any 5-digit line. For more information see the introduction to any ASM publication.