boundary whitespace question

In the absence of an xmlspace preserve declaration, what's the result in
XQuery of boundary whitespace removal on the following constructed element:

<a>{()}    </a>

Is it (1) or is it (2)?

(1) <a></a>

(2) <a>    </a>

In other words, is boundary whitespace removal governed by the presence of
an enclosed expression, or by the presence of an enclosed expression that
evaluates to a non-empty result?

TIA
Howard