Trade in services between affiliated enterprises began to be recorded on a gross basis. The adoption of a new methodology was implemented for both royalties and license fees and for “other” private services. This improvement was carried back to the estimates for 1982. Previously, services transactions between U.S. parent companies and their foreign affiliates had been netted and recorded under services exports, and similar transactions between U.S. affiliates of foreign companies and their foreign parents had been netted and recorded under services imports. This treatment obscured the two-way flow of intrafirm services trade, and as a result, total exports and imports of services were understated. In a similar situation in the direct investment income accounts, dividends were previously recorded gross and remained so. An exception to the gross recording principle was made for interest income, which continued to be recorded net. The rationale was that net interest income, for some purposes, must be related to the corresponding direct investment position estimates in order to measure the cost of debt capital.
Published