United Nations Statistics Division

CPC Ver.2CPC Ver.2General issuesGeneral issues

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CPC Ver.2CPC Ver.2

• ProcessProcess

• ScopeScope

• Main structureMain structure

• Link to HSLink to HS

• Link to ISICLink to ISIC

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CPC Ver.2 – processCPC Ver.2 – process

• Followed closely the ISIC revision processFollowed closely the ISIC revision process• First two rounds of questionnaires were First two rounds of questionnaires were

integrated with ISIC questionnaireintegrated with ISIC questionnaire• Questions on scopeQuestions on scope• Main structureMain structure• Areas to be reviewedAreas to be reviewed

• Third questionnaire was sent 6 months after Third questionnaire was sent 6 months after ISIC questionnaireISIC questionnaire• Structure proposalStructure proposal

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CPC Ver.2 - scopeCPC Ver.2 - scope

• CPC has three functions:CPC has three functions:• Serve as a “central” classification of productsServe as a “central” classification of products

• Requires links to other product classifications, such Requires links to other product classifications, such as HS, SITC, BOP, EBOPSas HS, SITC, BOP, EBOPS

• Provide classification of all outputs of Provide classification of all outputs of economic activities (production), as defined in economic activities (production), as defined in the SNAthe SNA

• Provide definitions of services (reference Provide definitions of services (reference classification)classification)

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CPC Ver.2 - scopeCPC Ver.2 - scope

• What are the implications?What are the implications?

• Boundary questions for:Boundary questions for:• Waste productsWaste products

(included, even non-produced, irrespective of value)(included, even non-produced, irrespective of value)

• AssetsAssets(produced assets included as products)(produced assets included as products)

• To what degree do other classifications To what degree do other classifications influence detail and structure?influence detail and structure?• E.g. discussion of softwareE.g. discussion of software

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CPC Ver.2 - scopeCPC Ver.2 - scope

• CPC covers “products”, i.e. the output of CPC covers “products”, i.e. the output of economic activitieseconomic activities

• SNA refers to products as “goods and SNA refers to products as “goods and services”services”

• Equivalent to the scope of previous versions Equivalent to the scope of previous versions of the CPCof the CPC

• Problem: there are outputs of economic Problem: there are outputs of economic activities, i.e. “products”, that do not fit the activities, i.e. “products”, that do not fit the definition of goods or servicesdefinition of goods or services

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Goods:Goods:Goods are Goods are physical objectsphysical objects for which a demand for which a demand exists, over which ownership rights can be established exists, over which ownership rights can be established and whose ownership can be transferred from one and whose ownership can be transferred from one institutional unit to another by engaging in institutional unit to another by engaging in transactions on markets.  They are in demand because transactions on markets.  They are in demand because they may be used to satisfy the needs or wants of they may be used to satisfy the needs or wants of households or the community or used to produce other households or the community or used to produce other goods or services.  The production and exchange of goods or services.  The production and exchange of goods are quite separate activities.  Some goods may goods are quite separate activities.  Some goods may never be exchanged while others may be bought and never be exchanged while others may be bought and sold numerous times.  The separation of the sold numerous times.  The separation of the production of a good from its subsequent sale or resale production of a good from its subsequent sale or resale is an economically significant characteristic of a good is an economically significant characteristic of a good that is not shared by a service.that is not shared by a service.

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Services:Services:

Services are not separate entities over which Services are not separate entities over which ownership rights can be established.  They cannot be ownership rights can be established.  They cannot be traded separately from their production.  Services are traded separately from their production.  Services are heterogeneous outputs produced to order and typically heterogeneous outputs produced to order and typically consist of changes in the conditions of the consuming consist of changes in the conditions of the consuming units realized by the activities of producers at the units realized by the activities of producers at the demand of the consumers.  By the time their demand of the consumers.  By the time their production is completed they must have been provided production is completed they must have been provided to the consumers.to the consumers.

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Problem:Problem:

““intellectual property products”intellectual property products”• outputs of a creative process carried out on own outputs of a creative process carried out on own

accountaccount

• They are not servicesThey are not services• They are not physical objectsThey are not physical objects• But: they are productsBut: they are products

• (“intangible goods” – although this concept doesn’t exist) (“intangible goods” – although this concept doesn’t exist)

• Example: R&D originalsExample: R&D originals

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Intellectual property productsIntellectual property products

• Questions: Questions:

• 1. Include this type of products in the CPC?1. Include this type of products in the CPC?• YesYes

• 2. Where to place them?2. Where to place them?• ??????

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CPC Ver.2 – structureCPC Ver.2 – structure

• Statement:Statement:• ““The CPC does not distinguish between goods The CPC does not distinguish between goods

and services.” and services.”

• However:However:• There is a general separation between There is a general separation between

(transportable) goods in sections 0-4 and (transportable) goods in sections 0-4 and services in sections 5-9services in sections 5-9

• Few exceptions existFew exceptions exist

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CPC – structureCPC – structure

• Sections 0-4: transportable goods (with HS Sections 0-4: transportable goods (with HS link)link)

• Sections 5-9: services Sections 5-9: services • (plus constructions)(plus constructions)

• Where to place the “intangible goods”?Where to place the “intangible goods”?• Compromise: group with services that Compromise: group with services that

correspond to activities that create themcorrespond to activities that create them

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CPC Ver.2 - structureCPC Ver.2 - structure

• Options for overall structure of the CPC:Options for overall structure of the CPC:• Group products based on industry of originGroup products based on industry of origin

• e.g. ISIC basede.g. ISIC based

• Group products based on demandGroup products based on demand• e.g. COICOP basede.g. COICOP based

• Group products by their characteristicsGroup products by their characteristics• used currently in CPCused currently in CPC

• What options are feasible?What options are feasible?• What are the advantages and disadvantages?What are the advantages and disadvantages?

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CPC – industry based structure CPC – industry based structure

• Advantage:Advantage:• Easy link between activity and product dataEasy link between activity and product data

• Disadvantage:Disadvantage:• Link is not always one-to-one and forcing this Link is not always one-to-one and forcing this

relationship may result in loss of datarelationship may result in loss of data• Multiple industry links for primary productsMultiple industry links for primary products

• Problem with secondary productsProblem with secondary products

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CPC – demand based structureCPC – demand based structure

• Does not exist yetDoes not exist yet

• Could be modeled on a classification like Could be modeled on a classification like COICOPCOICOP• But: COICOP scope is narrowerBut: COICOP scope is narrower

• Lack of experience with such a structure Lack of experience with such a structure makes it not suitable for an international makes it not suitable for an international standard right nowstandard right now

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CPC – current structureCPC – current structure

• Groups products according to their Groups products according to their characteristics (“intrinsic nature”)characteristics (“intrinsic nature”)

• Groupings often follow industries, but this Groupings often follow industries, but this is not a requirementis not a requirement

• Product groups often consider analytical useProduct groups often consider analytical use• Example: Transport servicesExample: Transport services

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CPC – current structureCPC – current structure

• Example: Transport servicesExample: Transport services

• In ISIC: In ISIC: • breakdown by mode of transport, then by breakdown by mode of transport, then by

passenger vs. freightpassenger vs. freight

• In CPC: In CPC: • breakdown by passenger vs. freight, then by breakdown by passenger vs. freight, then by

mode of transportmode of transport

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CPC – ISIC linkCPC – ISIC link

• Products with multiple industry linksProducts with multiple industry links• Examples:Examples:

• Mushrooms (output of growing or gathering)Mushrooms (output of growing or gathering)

• Oysters (output of aquaculture or fishing)Oysters (output of aquaculture or fishing)

• Glycerol (output of different chemical processes)Glycerol (output of different chemical processes)

• Electrical capacitors (electric vs. electronic)Electrical capacitors (electric vs. electronic)

• Sale of advertising space in print media (different Sale of advertising space in print media (different media)media)

• Internet access services (different providers)Internet access services (different providers)

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CPC – ISIC linkCPC – ISIC link• Reasons for multiple links:Reasons for multiple links:

• Insufficient product detail Insufficient product detail • (could be fixed)(could be fixed)

• One product (with unique characteristics) can be One product (with unique characteristics) can be produced by different industriesproduced by different industries• Subdividing these would create “artificial products”; Subdividing these would create “artificial products”;

goods not compatible with HSgoods not compatible with HS

• Forcing a single link may result in loss of Forcing a single link may result in loss of datadata

• Depends on application of this link for data collection Depends on application of this link for data collection and displayand display

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CPC – ISIC linkCPC – ISIC link

• Total number of CPC products with Total number of CPC products with multiple links:multiple links:• 66 (out of 2730) = 2.5%66 (out of 2730) = 2.5%

• For most products, a regrouping by industry For most products, a regrouping by industry is possibleis possible

• Other problem:Other problem:

• Secondary products !!!Secondary products !!!

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CPC – HS linkCPC – HS link

• CPC provides basic definitions (building CPC provides basic definitions (building blocks) for servicesblocks) for services

• For goods, the HS provides these building For goods, the HS provides these building blocks, i.e. each CPC goods subclass is the blocks, i.e. each CPC goods subclass is the sum of HS subheadingssum of HS subheadings

• Problem: HS is tailored for international Problem: HS is tailored for international trade and does not reflect all locally trade and does not reflect all locally produced products in a suitable fashionproduced products in a suitable fashion

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CPC – HS linkCPC – HS link

• Examples:Examples:• 1. Sugar cane – grouped with 1. Sugar cane – grouped with Locust beans; Locust beans;

fruit stones and kernels and other vegetable fruit stones and kernels and other vegetable products (including unroasted chicory roots products (including unroasted chicory roots of the varietyof the variety Cichorium intybus sativumCichorium intybus sativum) of a ) of a kind used primarily for human kind used primarily for human consumption, not elsewhere specified or consumption, not elsewhere specified or included.included.

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CPC – HS linkCPC – HS link

• Examples:Examples:• 2. Software – included in 2. Software – included in Discs, tapes, solid-Discs, tapes, solid-

state non-volatile storage devices, "smart state non-volatile storage devices, "smart cards" and other media for the recording of cards" and other media for the recording of sound or of other phenomena, whether or sound or of other phenomena, whether or not recorded, including matrices and not recorded, including matrices and masters for the production of discs, but masters for the production of discs, but excluding products of Chapter 37.excluding products of Chapter 37.

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CPC – HS linkCPC – HS link

• Examples:Examples:• 3. HS often groups raw and processed 3. HS often groups raw and processed

agricultural products (which are outputs of agricultural products (which are outputs of different industries)different industries)

• 4. HS agricultural products often do not 4. HS agricultural products often do not distinguish source by animals (e.g. cow milk, distinguish source by animals (e.g. cow milk, vs. goat milk etc.)vs. goat milk etc.)

• Unlike for services, HS adds a constraint to Unlike for services, HS adds a constraint to possible CPC detailpossible CPC detail

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CPC – HS linkCPC – HS link• CPC provides detail beyond HS in a few CPC provides detail beyond HS in a few

selected areasselected areas• Total: 268 products (of 1501) = 17.8%Total: 268 products (of 1501) = 17.8%

• Out of which 195 for agriculture/food productsOut of which 195 for agriculture/food products

• (Proposals for next HS revision are being prepared)(Proposals for next HS revision are being prepared)

• Other main areas:Other main areas:• BooksBooks

• Petroleum oilsPetroleum oils

• SoftwareSoftware

• ToysToys

• Computer equipmentComputer equipment

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CPC – HS link (and more)CPC – HS link (and more)

• In general, CPC has changed with the In general, CPC has changed with the underlying HS categoriesunderlying HS categories

• For services, CPC provides the detail and For services, CPC provides the detail and other classifications, like EBOPS, use these other classifications, like EBOPS, use these building blocksbuilding blocks