An introduction to CPC Ver.2 Scope and boundary, structure, changes and new concepts, application rules Scope and boundaryStructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules

CPC Ver.2 Scope and boundary StructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules

Purpose of the CPC  CPC has three functions: Serve as a “central” classification of products  Requires links to other product classifications, such as HS, SITC, BOP, EBOPS Provide classification of all outputs of economic activities (production), as defined in the SNA Provide definitions of services (reference classification) Scope and boundaryStructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules

Scope and boundary  CPC covers “products”, i.e. the output of economic activities  Market value not a criterion: By-products and waste are also included These are output of economic activities  Produced assets included as output of a production process. Scope and boundaryStructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules

Scope and boundary (cont.)  SNA refers to products as “goods and services”  However: there are outputs of economic activities, i.e. “products”, that do not fit the SNA definition of goods or services GoodsServices physical objects demand exist ownership can be established and transferred production and sale are separable activities Not separate entities for which ownership can be established Produced by order Changes the condition of the consuming units when production is completed, the product has already been delivered Scope and boundaryStructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules

 Other outcomes from economic activities: Original manuscripts, sound and video recordings Results of research activities Results from geological surveying activities Product design specifications Trademarks and franchises  Neither “goods” nor “services”  Still considered products, and covered in CPC Ver.2  These are intellectual property (IP) products and similar products Scope and boundary (cont.) Scope and boundaryStructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules

CPC Ver.2 Structure Scope and boundaryStructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules

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 Scope and boundaryStructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules

High-level structure Section Title 0Agriculture, forestry and fishery products 1Ores and minerals; electricity, gas and water 2Food products, beverages and tobacco; textiles, apparel and leather products 3Other transportable goods, except metal products, machinery and equipment 4Metal products, machinery and equipment 5Constructions and construction services 6Distributive trade services; accommodation, food and beverage serving services; transport services; and electricity, gas and water distribution services 7Financial and related services; real estate services; and rental and leasing services 8Business and production services 9Community, social and personal services Scope and boundaryStructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules

CPC Ver.2 Changes and new concepts Scope and boundaryStructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules

CPC – origins of change Scope and boundaryStructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules CPC Ver.2 Harmonized System 2007 (WCO) ISIC Rev.4 World Economy

Summary of change  Change in structure Top structure unchanged At lower levels:  introduction of detail  reorganization  Change in scope Constructions New concept: originals Scope and boundaryStructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules

SectionTitle 0Agriculture, forestry and fishery products 1Ores and minerals; electricity, gas and water 2Food products, beverages and tobacco; textiles, apparel and leather products 3Other transportable goods, except metal products, machinery and equipment 4Metal products, machinery and equipment 5Constructions and construction services 6Distributive trade services; accommodation, food and beverage serving services; transport services; and electricity, gas and water distribution services 7Financial and related services; real estate services; and rental and leasing services 8Business and production services 9Community, social and personal services Scope and boundaryStructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules Significant new detail Differentiation of published products Little change Computer-related prod. Constructions reintroduced Restructuring of transport services Significant new detail New detail (div. 83, 84, 85) New detail (health, waste management, audiovisual)

 Involved sections: Section 0 – agriculture, forestry and fishery products Section 2 – food products, beverages and tobacco; textiles, apparel and leather products  A major complaint by majority of countries (esp. developing countries): Insufficient detail for agricultural products Scope and boundaryStructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules Changes for agriculture and food products

Changes for agriculture and food products – relationship with HS  Goods in CPC used to be defined in terms of aggregation of HS classes. Imposed a limitation on the level of detail possible  Unprocessed agricultural products are not heavily traded internationally. Therefore, HS does not provide much detail in these products.  For CPC Ver.2, the FAO was consulted to advice on necessary detail.  CPC Ver.2 more detailed than HS when it comes to agricultural and food products. Many split links Scope and boundaryStructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules

Scope and boundaryStructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules CPC Ver1.1CPC Ver.2 Agricultural products Divisions44 Groups1719 Classes6685 Subclasses83208 Food products Divisions59 Groups23 Classes8793 Subclasses111229

Scope and boundaryStructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules  Substantial increase of detail at lowest level recognition of more types of plants, animals separation of raw and processed products separation of meat by type of animal  Some changes make CPC more applicable to individual regions e.g. tropical fruits, sheep, goat, camel Changes for agriculture and food products

Scope and boundaryStructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules  General motivations for changes: Provide better coverage of outputs Reflect new services Provide more precise definition of services Define services in a way that facilitates reporting by businesses Group services in a way useful for analysis  Concerns section 5-9 (although these also contain other things than services) Changes relating to services

Scope and boundaryStructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules  Specific division that have been reviewed: Transportation services 71 - Financial services (*) 84 – Telecommunications, broadcasting and information supply services (*) 88 - Manufacturing services (*) 93 - Human health services (*) 94 - Waste treatment services (etc.) Changes relating to services (*) - Dedicated presentations will be held on these divisions

Scope and boundaryStructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules  Transportation services have been grouped in a way that is more useful for analysis Interest is primarily for passenger vs. freight transport Secondary, split by mode of transport  In ISIC, the structure reflects the organization Breakdown first by mode of transport, then by passenger/freight Changes relating to services: Division 64-67: Transportation services

Scope and boundaryStructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules  At lower levels of the structure: Within passenger transport, the breakdown is by local vs. long-distance transport Sightseeing transport services are recognized separately (and then broken down by mode of transport)  In ISIC: no concept of “sightseeing” Passenger air transport is separated into domestic and international travel Changes relating to services: Division 64-67: Transportation services

Scope and boundaryStructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules Changes relating to services: Division 94: Waste treatment services  Exact title: “Sewage and waste collection, treatment and disposal and other environmental protection services”  Number of subclasses increased from 9 to 28, mainly to reflect ISIC Rev.4 changes GroupTitle 941Sewerage, sewage treatment and septic tank cleaning services 942Waste collection services 943Waste treatment and disposal services 944Remediation services 945Sanitation and similar services 949Other environmental protection services n.e.c.

Scope and boundaryStructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules Changes relating to services: Division 94: Waste treatment services  Groups 942 and 943 make distinction between services related to: Hazardous materials Non-hazardous, recyclable materials Other non-hazardous materials GroupTitle 941Sewerage, sewage treatment and septic tank cleaning services 942Waste collection services 943Waste treatment and disposal services 944Remediation services 945Sanitation and similar services 949Other environmental protection services n.e.c.

Scope and boundaryStructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules Changes relating to services: Division 94: Waste treatment services SubclassTitle 9421Collection services of hazardous waste 94211Collection services of hazardous medical and other biohazardous waste 94212Collection services of industrial hazardous waste (except medical and other biohazardous waste) 94219Collection services of other hazardous waste 9422Collection services of non-hazardous recyclable materials 94221Collection services of non-hazardous recyclable materials, residential 94229Collection services of non-hazardous recyclable materials, other 9423General waste collection services 94231General waste collection services, residential 94239General waste collection services, other

Scope and boundaryStructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules Changes relating to services: Division 94: Waste treatment services  Exact definitions for “hazardous” and “recyclable” will depend on countries’ definitions  What is important here is not type of waste collected, but the procedures of collection  Distinctions should be made with the following considerations: Collection process specifically set up to address handling of hazardous materials? (radioactive materials, oil, etc.) Collection process specifically set up to ensure materials are recycled? (paper, etc.) If no special procedures are used, the waste collection is “other”.

Important new concept: ORIGINALS  As we saw earlier, intellectual property (IP) products are output of economic activities and within scope of CPC. research results product design sound/video recordings trademarks/franchises computer software  Value lies in information content, not physical form  In the CPC, we talk about originals and content Scope and boundaryStructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules

Important new concept: ORIGINALS  Originals are outcomes of intellectual or creative activities (before copying or distribution). Value lie in information content. When intellectual/creative activity carried out on own account: the original is considered the output of that activity. However, when carried out for someone else (“fee/contract basis”), the output of the activity is considered a service.  The original, in this case, is considered output of the client.  Originals are not services  Originals are not copies There is by definition never produced more than one original. Copying an original is an act of production. A new product (the copy) is being made. The copies are not originals, but they are often content products (as identified in the alternative aggregation). Scope and boundaryStructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules

Classification of intellectual property products  Originals are neither goods nor services are classified in part 5-9 of the CPC (i.e., the “services” part), close to the services with whom they are related  e.g. research and development originals found in division 81 – “Research and development services”  Content Can be presented on physical media (disks, books, etc.), in which case the products are classified in CPC part 0-4 as tradeable goods. Can be provided in a non-physical way over the internet, in which case the products are found in group 843 – “On- line content” Scope and boundaryStructureChanges and new conceptsApplication rules StructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules

CPC Ver.2 Application Rules Scope and boundaryStructureApplication rules StructureApplication rulesScope and boundaryStructureApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules

 Within the scope of the Harmonized System – links exist  Classify according to HS and identify the corresponding CPC class(es). HS has a comprehensive system of  Section and Chapter notes  Explanatory notes  Index  “General Rules for the Interpretation of the Harmonized System”  If the relevant HS code links to more than one CPC class, CPC explanatory notes are provided. CPC index can also be helpful. Explanatory notes only in the case of split link, not provided for 1-1 cases. Application rules for section 0- 4 (transportable goods): Scope and boundaryStructureApplication rules StructureApplication rulesScope and boundaryStructureApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules

 Where in the CPC do we classify unroasted chicory roots?  HS code: Where in the CPC does it link? – Locust beans – Stimulant, spice and aromatic crops n.e.c – Sugar cane – Other sugar crops n.e.c – Other raw vegetable materials, n.e.c.  We must consult the CPC Explanatory Notes Application rules for section 0-4: EXAMPLE Scope and boundaryStructureApplication rules StructureApplication rulesScope and boundaryStructureApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules

Scope and boundaryStructureApplication rules StructureApplication rulesScope and boundaryStructureApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules

Application rules for section 5-9 Scope and boundaryStructureApplication rules StructureApplication rulesScope and boundaryStructureApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules  Mainly concerns services  Determine correct subclass using the provided descriptions (explanatory notes) of divisions, groups, classes and subclasses. The CPC index may also provide support.

Application rules for section 5-9 Scope and boundaryStructureApplication rules StructureApplication rulesScope and boundaryStructureApplication rulesScope and boundaryStructureChanges and new conceptsApplication rules  If more than one CPC subclass seems appropriate: Prefer subclass with the more specific description Composite services classified according to the service component which gives them their essential character. If still ambiguous, choose category occurring last in numerical order  Products making up a bundle of goods and services are classified to main component (according to value added). But breaking up product into homogeneous components should be considered first

END OF PRESENTATION