CPC Ver.2 - Changes and New Concepts in Structure, Scope, and Boundary

1. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Changes and new concepts Changes and new concepts Changes and new concepts Application rules Application rules Application rules Application rules Application rules CPC Ver.2 Structure

2. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Changes and new concepts Changes and new concepts Changes and new concepts Application rules Application rules Application rules Application rules Application 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

3. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Changes and new concepts Changes and new concepts Changes and new concepts Application rules Application rules Application rules Application rules Application rules High-level structure

4. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Changes and new concepts Changes and new concepts Changes and new concepts Application rules Application rules Application rules Application rules Application rules CPC Ver.2 Changes and new concepts

5. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Changes and new concepts Changes and new concepts Changes and new concepts Application rules Application rules Application rules Application rules Application rules CPC – origins of change CPC Ver.2 Harmonized System 2007 (WCO) ISIC Rev.4 World Economy

6. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Changes and new concepts Changes and new concepts Changes and new concepts Application rules Application rules Application rules Application rules Application rules Summary of change • Change in structure • Top structure unchanged • At lower levels: • introduction of detail • reorganization • Change in scope • Constructions • New concept: originals

7. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Changes and new concepts Changes and new concepts Changes and new concepts Application rules Application rules Application rules Application rules Application rules Significant new detail Little change Significant new detail Differentiation of published products Computer-related prod. Constructions reintroduced Restructuring of transport services Significant new detail New detail (div. 83, 84, 85) New detail (health, waste management, audiovisual)

8. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Changes and new concepts Changes and new concepts Changes and new concepts Application rules Application rules Application rules Application rules Application rules Changes for agriculture and food products • 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

9. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Changes and new concepts Changes and new concepts Changes and new concepts Application rules Application rules Application rules Application rules Application rules 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

10. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Changes and new concepts Changes and new concepts Changes and new concepts Application rules Application rules Application rules Application rules Application rules

11. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Changes and new concepts Changes and new concepts Changes and new concepts Application rules Application rules Application rules Application rules Application rules Changes for agriculture and food products • 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

12. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Changes and new concepts Changes and new concepts Changes and new concepts Application rules Application rules Application rules Application rules Application rules Changes relating to services • 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)

13. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Changes and new concepts Changes and new concepts Changes and new concepts Application rules Application rules Application rules Application rules Application rules Changes relating to services • Specific division that have been reviewed: • 64-67 Transportation services • 71 - Financial services • 84 – Telecommunications, broadcasting and information supply services • 88 - Manufacturing services • 93 - Human health services • 94 - Waste treatment services (etc.)

14. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Changes and new concepts Changes and new concepts Changes and new concepts Application rules Application rules Application rules Application rules Application rules Changes relating to services:Division 64-67: Transportation services • 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

15. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Changes and new concepts Changes and new concepts Changes and new concepts Application rules Application rules Application rules Application rules Application rules Changes relating to services:Division 64-67: Transportation services • 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

16. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Changes and new concepts Changes and new concepts Changes and new concepts Application rules Application rules Application rules Application rules Application rules Changes relating to services:Division 71: Financial services • CPC Versions 1.0 and 1.1 included an annex with a suggested alternate detail for financial services • More detailed than “regular” division 71 • This alternate detail has now been incorporated into the regular CPC structure • Eliminates need for an annex • In addition, some small detail was added in response to special needs (e.g. travel insurance)

17. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Changes and new concepts Changes and new concepts Changes and new concepts Application rules Application rules Application rules Application rules Application rules Changes relating to services:Division 84: Telecommunications … • Revision mostly affects products related to the on-line distribution of content • Part of review of ICT and content product groupings • Includes “originals” alongside services of broadcasting etc. • Revises previous understanding of services for content distribution

18. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Changes and new concepts Changes and new concepts Changes and new concepts Application rules Application rules Application rules Application rules Application rules Changes relating to services:Division 88: Manufacturing services • A manufacturing unit (defined in ISIC) can provide two types of output: • Good (if production is done on own account) • Manufacturing service (if production is done on account of others) • The CPC provides categories for both

19. Changes relating to services:Division 88: Manufacturing services • In previous versions of the CPC, the detail of manufacturing services was limited • Typically one service class responding to one ISIC division • In CPC Ver.2 this detail has been increased • There is now one CPC service category (subclass) for each ISIC Rev.4 manufacturing class

20. Changes relating to services:Division 88: Manufacturing services • Why are these services necessary? • They apply in the case of outsourcing • The contractor provides a service (e.g. assembly) • Contractor can not report on the value of the goods he has produced • He does not sell them on the market • He can only report the fee he has received from the principal for his work • The data is also important for calculation of short term indicators (weights for indices of production)

21. Division 88 - structure

22. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Changes and new concepts Changes and new concepts Changes and new concepts Application rules Application rules Application rules Application rules Application rules Changes relating to services:Division 93: Human health services • Detail has been changed to reflect new detail introduced in ISIC • Veterinary services have been moved out • New detailed services respond to needs for analysis, e.g. in the system of Health Accounts

23. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Changes and new concepts Changes and new concepts Changes and new concepts Application rules Application rules Application rules Application rules Application 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

24. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Changes and new concepts Changes and new concepts Changes and new concepts Application rules Application rules Application rules Application rules Application 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

25. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Changes and new concepts Changes and new concepts Changes and new concepts Application rules Application rules Application rules Application rules Application rules Changes relating to services:Division 94: Waste treatment services

26. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Changes and new concepts Changes and new concepts Changes and new concepts Application rules Application rules Application rules Application rules Application 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”.

27. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Changes and new concepts Changes and new concepts Changes and new concepts Application rules Application rules Application rules Application rules Application rules 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

28. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Changes and new concepts Changes and new concepts Changes and new concepts Application rules Application rules Application rules Application rules Application 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).

29. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Changes and new concepts Changes and new concepts Changes and new concepts Application rules Application rules Application rules Application rules Application 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”

30. END OF PRESENTATION