1. ESTP COURSE ON ECONOMIC AND SOCIAL CLASSIFICATIONS Introductory course Day 2 – first afternoon session Custom classifications CPC and CPA
Marie-Madeleine Fuger INSEE – France Hans Van Hooff CBS - Netherlands

2. Foreign trade classification
Harmonized System (HS)
Since 1988, revision every 5 years
Classification built and managed by the WCO (World Customs Organization)
Only commodities (transportable goods)
A little more than products grouped into 21 sections and 97 chapters
4 levels
The sections are coded in roman numerals
The chapters in 2-digits numbers (01 – 97)
Headings and subheading, respectively in 4 and 6-digits numbers
Very precise rules to classify imports and exports:
Customs taxes
2000 pages of explanatory notes

3. Foreign trade classification
Harmonized System (HS): Focus at the rules
Rule 1 :titles of sections, Chapters and sub‑Chapters are provided for ease of reference only
Rule 2: Incomplete or unfinished articles; Articles presented unassembled or disassembled
Rule 3: classification of goods classifiable under two or more headings
Rule 4: classification of goods when rules 1 to 3 are useless
Rule 5: packing materials and packing containers
Rule 6: classification of goods within the subheading

4. Foreign trade classification
Harmonized System (HS): Amendments of HS 2012
220 amendments divised into:
agricultural sector 98;
chemical sector 27;
paper sector 9;
textile sector 14;
base metal sector 5;
machinery sector 30;
other sectors 37

5. Foreign trade classification
Combined nomenclature (CN)
Strictly linked to HS + details
About 14,400 headings (of which about 9,300 CN subheadings) organized in five hierarchical levels Same rules as HS + some specific notes
Updated each year
Used for
Foreign trade statistics
Custom duty purposes
Classification rules
the General Rules for the Interpretation of the Harmonized System
the Section and Chapter explanatory notes
The relevant criteria for HS and CN are :
The material (substance)
The degree of transformation
The function

6. CPC: Central Product Classification
History
UN Expert Group in 1974 then Statistical Commission in 1976
Based on the Harmonized System (HS) concerning the “good” part
Implication of Voorburg Group and City Group for services statistics
to improve “Services” part
1987: first draft; 1989: final version (even if named “provisional”)…
2008: completion of CPC Ver.2
2013: revision process started, is about to be completed

7. CPC: Central Product Classification
Purpose
Provide a framework for international comparisons of statistics about goods, services and assets:
Production, intermediate and final consumption, investment
Foreign trade
Flux, stocks and balances
Concerning input-output and supply-demand tables, balance of payments or any other analytical work
CPC must be a central classification in which all statistics in any classification can be reclassified
CPC provides definitions of services (reference classification)

8. CPC: Central Product Classification
Scope and boundary
CPC covers “products”,
i.e. the output of economic activities
By-products and waste of economic activities
Produced assets as output of a production process also included.

9. CPC Ver. 2 Scope and boundary
SNA refers to products as “goods and services”
Includes all products being transacted or stocked, produced or not
Includes non-produced assets (contracts, patents, trademarks, copyrights (intangible assets); lands, constructions
Covers transportable or not-transportable goods
Commodities: based on HS items used as “elementary bricks” : a CPC item groups one or more HS items, never part of a HS item
Services: no existing external reference  so details and structure created ex-nihilo
Activity of origin criterion: not alone
Structure voluntarily different than the ISIC one
However: there are outputs of economic activities, i.e. “products”, that do not fit the SNA definition of goods or services

10. CPC Ver. 2
Scope and boundary (cont.)
Other outcomes from economic activities which are neither “goods” nor “services” :
Original manuscripts, sound and video recordings
Results from research activities
Results from geological surveying activities
Product design specifications
Trademarks and franchises
Still considered products, and covered in CPC Ver.2
These are intellectual property (IP) products and similar products

11. CPC Ver. 2 Structure Options for overall structure of the CPC:
Group products based on industry of origin
e.g. ISIC based
Group products based on demand
e.g. COICOP based
Group products by their characteristics
used currently in CPC
CPC Ver.2 uses the last approach
Products grouped according to characteristics
Groupings often follow industries, but not as a rule
Product groups often consider analytical use

12. CPC Ver. 2: High-level structure
At the most detailled level, it includes 2738 subclasses

13. CPC Ver. 2: revision
Recommendation by the Expert Group at UNSD to undertake an update to CPC for 2012 (known as CPC Ver.2.1)
Creation of a technical subgroup (UNSD, Canada, Eurostat, France, USA) to:
consider the proposed inputs into CPC
discuss technical and procedural elements of the update

14. CPC Ver. 2 update Changes in the CPC were based on:
• 2012 amendments to the Harmonized System (HS);
• Improve links between CPC and the Standard International
Energy Product Classification (SIEC)
• Proposals form the Food and Agriculture Organization of the United Nations (FAO) to adapt the detail of CPC
• Proposals from the Voorburg Group
• CPC issues received in the Statistics Division Classifications
Hotline.

15. CPA: Classification of Products by Activity
Targets
European version of CPC
Same principles, concepts, obligations, etc.
Plus : legal obligations (European regulation) about uses and links with other EU product classifications
CPA revised like CPC
Principles
Major principles:
All products classified depending on the activity of origin as defined in NACE class
 some necessary conventions: all CPA objects being no products: wastes, second-hand goods, by-products.
A CPA item = a full or split CPC item (so CPA more detailed); CPA Rev. 2 has 3142 subcategories

16. CPA Rev. 2 Coding system Sections, divisions: like NACE
Less groups and classes
Products not always linked to NACE classes but to Divisions: more than one possible origin activity
In such a case codes: xx.00.xx
6-digit codes: NACE code + two digits (xx.xx.xx)
Fifth digit of industrial services = always 9
Fifth digit of CPA code NEVER equals 0
Categories
Sub-categories

17. CPA Rev. 2 Particular characteristics Interpretation
Wastes and by-products: if produced
Second-hand goods: out
Production on a fee and contract basis
Mixed farming (NACE 01.50)
Fish and sea-food
Seats
Retail sale trade services
Non-specialized trade
Constructions (buildings and civil engineering works) and construction services
Interpretation
Commodities: HS rules and explanatory notes
Non-transportable goods and services: explanatory notes
Based on CPC ones then developed and more precise

18. CPA Rev. 2 Main uses Revision policy
Same as for CPC (PPI, SNA, EBoPS, tourism products)
Short term statistics: PRODCOM
Non-statistical uses
Public procurements : Community Procurement Vocabulary (CPV)
Revision policy
Like CPC

19. Revision in progress Context: revision of CPC ver 2
Need to keep international consistency
Consequences: creation of a TF
Austria, Bulgaria, France, the Netherlands, Poland
Principles
Update not revision
Relevance of breakdowns
Consistency with NACE, Prodcom
Consistency with CPC

20. CPA revision: the process
TF prepared around 100 proposals of change
Analyses of these proposals in june 2013
Extra information to be collected in summer
Result: a draft updated CPA submitted to the WG in November 2013
14th May on the agenda of the European Statistical System Committee

21. CPA revision INPUT for the update process Draft updated CPC
"Task force on the critical classes"
Input from the CPA (and also NACE) forum
Inconsistencies with NACE Rev. 2
Mistakes and inconsistencies between NACE and CPA
Inconsistencies between title and content of headings
Inconsistencies with CPC Ver. 2 and ISIC Rev. 4
Inconsistencies between PRODCOM and CPA
Better consistency with CN
Need for more or less details
Integration of the Classification of Types of Constructions in CPA
This exercise was also considered an opportunity to review the classification not only having in mind an alignment with the revised CPC but also profiting to correct errors previously detected and to analyse specific European Union emerging needs.
Therefore, the Task Force decided to use as input for the proposals of change the following items:
- Draft updated CPC
- Discussions carried out when we have conducted the "Task force on the critical classes" and decisions taken by the Working Group at its April 2010 meeting
- Input from the CPA (and also NACE) forum
- Inconsistencies with NACE Rev. 2 detected in manufacturing (in divisions 26, 27 and 28)
- Mistakes and inconsistencies between NACE and CPA
- Inconsistencies between title and content of headings
- Inconsistencies with CPC Ver. 2 and ISIC Rev. 4
- Inconsistencies between PRODCOM and CPA
- Better consistency with CN
- Change in the content of headings (due to late change in the content of related ISIC/NACE classes in Rev. 2)
- Need for more details
- Need for less details
- Integration of the Classification of Types of Constructions in CPA

22. CPA revision: nature of the changes
Improvement of explanatory notes
Introduction of further breakdown
Separate identification of specific products
Reorganisation of items
Move from one item to another
Standardize terminology

23. Main features of changes
Agriculture:
Expand detail on cereals, leguminous crops, on forest products
Move “cotton seeds” from to
Move all shelled nuts from and to
Move stemmed and redried tobacco from to 12.00
Separate horses and other equines
Reorganize eggs

24. Main features of changes
Reorganization of fish and other fish products:
Introduce biological species,
Distinguish between aquaculture and fishery,
Distinguish between freshwater and marine
It effects
Fish,
Crustaceans
Molluscs and other aquatic invertebrates
Seaweeds and algae
These changes effect both division 03 and division 10

25. Examples of changes in manufacturing
Lignite
Renumbering of into
Less detail for vegetable oils ( )
Change of title for
New sub-category under
Deletion of
Pellets and briquettes
Change of title for

26. Examples of changes DIVISIONS 19 and 20
Reorganization of fuel oil and gas;lubricating oils
Separate identification for ethylene, propylene, butylene, butadiene in
Transfer of not chemically defined products from various CPA to
New CPA for urea and nitrate ammonium solutions
New CPA for hazardous pesticides
New CPA for biodiesel

27. Examples of changes DIVISION 26
Creation of new CPA for bare printed circuit boards
Services connected with manufacturing of electronic integrated circuits ( and )
Change in title for radio broadcast receivers ( and )
Create new CPA optical measuring and checking devices and instruments
Merge CPA to into one single CPA watch and clock movements
Delete CPA codes and and move their content to residual CPA

28. Examples of changes DIVISION 27 Consistency with NACE for:
Solid state inverters, rectifying apparatus
Surge suppressors
Appliance cords, extension cords and other
Creation of new CPA in
Photographic flashbulbs, flashcubes: move the content of to and renumber

29. Examples of changes DIVISION 28
Creation of new CPA for household-type heating appliances
Merge of several small CPA into one single CPA
Typewriters and word processing machines
Office machines
Parts and accessories
Change in title
Creation of new CPA for stationary rotary or rotary percussion drills, filing machines, riveters, sheet metal cutters
Merge of and and renumbering of CPA
Renumbering of CPA into
Change in title for

30. Examples of changes
Improve description in division 38 to include used automobiles, computers, televisions and other equipment
Reshuffle of (consistency with CPC and CC)
Creation of new CPA for sale of advertising space in directories and mailing lists ( ) and in Internet ( )
Move streamed video and audio content from 63 to 59
Reorganization of 60.2 Television programming and broadcasting
Deletion of CPA and move content to (new CPA)
Align categories for R&D in CPA with frascati Manual categories
Introduction of new subcategories to exhaustively home assistance service; it will effect divisions 81, and 97

31. Revision in progress Now the Members of WG are invited to:
Analyse the proposed changes
Comment on its relevance and feasibility
In order to finalize the updated CPA

32. Revision process Members of WG have:
Analysed the proposed changes
Commented on revision’ relevance and feasibility
Eurostat is finalizing the updated CPA
New structure, correspondence tables
Explanatory notes
Translation
Legal process

33. Thank you!