CPC Ver.2 Scope, Structure, Changes & Application Rules

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 Scope and boundary, concepts, application rules

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 Scope and boundary

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 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)

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 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.

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 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

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 Scope and boundary (cont.) • 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

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 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

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 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).

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 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”

10. Other scope issues • One of the functions of the CPC is to serve as a “central” classification of products • Other product classifications may cover products that are not produced • e.g. some forms of waste, used products • CPC covers these products as well • Allows measurement of inputs for certain industries (proxy for output in physical terms)

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

12. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Application rules Application rules Application rules Application rules Application rules Application rules for section 0-4 (transportable goods): • 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.

13. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Application rules Application rules Application rules Application rules Application rules Application rules for section 0-4: EXAMPLE • Where in the CPC do we classify unroasted chicory roots? • HS code: 1212.99. Where in the CPC does it link? • 01391 – Locust beans • 01690 – Stimulant, spice and aromatic crops n.e.c. • 01802 – Sugar cane • 01809 – Other sugar crops n.e.c. • 01990 – Other raw vegetable materials, n.e.c. • We must consult the CPC Explanatory Notes

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

15. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Application rules Application rules Application rules Application rules Application rules Application rules for section 5-9 • 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.

16. Scope and boundary Scope and boundary Scope and boundary Structure Structure Structure Structure Changes and new concepts Application rules Application rules Application rules Application rules Application rules Application rules for section 5-9 • 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

17. END OF PRESENTATION