Introduction
Statistics Canada has initiated a major revision and re-organization of the commodity classification systems used for its economic, business and trade statistics. The main objective of the project was to improve the coherence of commodity-level data.
The first step in the revision process was the introduction of a new classification structure to present merchandise imports and exports in various statistical programs. The new structure, named NAPCS Canada 2007, was published in August 2011 and revised in May 2012. It replaced the classification structures known as the summary import groups (SIG) and the summary export groups (SEG) that have been in use for several decades. International merchandise trade statistics were first published on the basis of the new classification on October 18, 2012.
The 2011 notice informed readers that the introduction of the new classification structure was only a first step towards improved harmonization and integration of commodity classifications. The plan was to develop a classification of all goods and services, the 2012 Canadian version of the North American Product Classification System (NAPCS Canada 2012).
Background
Statistics on various aspects of the supply and use of goods and services are pervasive in the Canadian statistical system. These statistics inform on a variety of topics, including the outputs of industries, the consumption by businesses and households, the value of imports and exports, and the movement of industrial and consumer prices. As an illustration, about 80% of Statistics Canada's business and trade statistics programs measure an aspect of the supply or use of goods or services.
Previously these statistics were not always comparable. They were based on many commodity classification systems, and there was no standard classification system integrating them into a coherent whole. NAPCS Canada 2012 is intended to fill this gap.
In the domain of statistics on the supply and use of goods, the key standard classifications currently in use in business and trade statistics programs are the Annual Survey of Manufactures (ASM) 2004 - List of Goods, the Canadian Export Classification (CEC) and the Customs Tariff. In addition, there are several program-specific classifications such as the ones used for agricultural and mining production statistics, and those used to create industrial product and raw material price indexes.
In the domain of statistics on the supply and use of services, the key standard classification is NAPCS Canada [Provisional Version 0.1], a classification developed in collaboration with the United States and Mexico and first published in 2007. There are also program-specific classifications such as the ones used to measure the sale of commodities at retail and wholesale, and the one used to measure trade in services.
NAPCS Canada 2012 integrates many of these classifications into a single system that comprises both goods and services. The objective is to improve the coherence of commodity-level data across surveys and statistical programs within the Agency, but the use of a single system will also contribute to the efficiency of statistical processes.
Integration of commodity data in economic accounts
Commodity statistics are an important input to the Canadian System of National Accounts. In particular, the input-output accounts provide the framework to integrate commodity statistics from a variety of sources, and based on a variety of classifications, into a system that describes the supply and use of goods, services and production factors in our economy. The input-output commodity classification (IOCC) underlies that framework; several versions have been developed over time, the latest for the 2009 accounts and historical revision.
In order to achieve the objective of improving the coherence of commodity-level data, the 2009 IOCC has been incorporated into NAPCS Canada 2012 where feasible. There are a number of conceptual and practical constraints that prevent embedding the IOCC in its entirety. That said, establishing a strong relationship between classifications used for the collection of commodity data and the classification used to create input-output tables is a key feature of NAPCS Canada 2012, the feature that will contribute the most to improving coherence.
Standard classification structure
The standard classification structure comprises four levels named group, class, subclass and detail. The table below outlines the nomenclature and provides the number of categories within each level of the classification.
| Level | Coding | Number of categories |
|---|---|---|
| Group | 3-digit code | 158 |
| Class | 5-digit code | 510 |
| Subclass | 6-digit code | 1,398 |
| Detail | 7-digit code | 2,648 |
NAPCS Canada 2012 uses a traditional hierarchical coding system, that is, the code of a child adds a digit (two digits in the case of classes) to the code of the parent.
The classification is designed to accommodate the needs of the many business and trade statistics programs that collect and publish commodity data. Its hierarchical structure allows different programs to choose a level of detail that suits their needs and constraints in a way that supports the coherence of data collected and published at different levels of detail. The paragraphs that follow describe the main purpose of each level of the classification.
At the lowest level (7-digit), the classification recognizes 2,648 categories of goods and services. This is the most detailed level for which business statistics programs will collect and publish data on the outputs of industries, unless there is an extension variant where the program will publish more detail.
The primary purpose of the subclass level (6-digit) is to support the industrial product price index (IPPI) and raw material price index (RMPI) programs. There are 1,398 categories at that level, of which 645 are an industrial product price index and 78 are a raw material price index. The remaining subclasses are goods and services that are not part of the universes of industrial product or raw material price indexes.
The class level (5-digit) is at the core of the system. This is the target level to produce coherent statistics on the production, imports, exports and consumption of goods and services. The class level comprises 510 categories of goods and services, most of which are the same in the 2009 input-output commodity classification (IOCC).
Finally, the group level (3-digit) provides 158 higher level aggregates for presentation and analytical purposes. This level will also be the basis to define alternative aggregation structures, known as regrouping variants. The next section discusses variants in NAPCS Canada 2012.
Classification variants
Classification variants play two roles. Regrouping variants allow for alternate aggregation structures when the standard aggregation structure does not meet the analytical needs of particular programs. Extension variants allow for additional categories when the most detailed level of the standard classification is still too aggregated to meet user needs.
The regrouping variants of NAPCS Canada 2012 typically add one or two levels above the standard classification structure, named section and division. The division level is typically defined in terms of standard groups (3-digit); this approach ensures a clear understanding of the relationship between the standard classification and the variants.
In theory, there could be as many regrouping variants as there are analytical interests, but in practice there will only be a few. At the time of publishing this note, the plan is to create regrouping variants for international merchandise trade statistics, industrial product price statistics and raw material price statistics.
In order to accommodate a system of regrouping variants, the coding is alphanumeric. Each variant has its own codes at the section and/or division levels. The table below uses the international merchandise trade variant to illustrate the nomenclature.
| Level | Coding | Number of categories |
|---|---|---|
| Section | Alpha + 2 digit | 13 |
| Division | Alpha + 3 digit | 34 |
| Group | 3-digit standard code | 97 (of 158) |
| Class | 5-digit standard code | 290 (of 510) |
| Subclass | 6-digit standard code | 774 (of 1,398) |
| Detail | 7-digit standard code | 1,402 (of 2,648) |
The regrouping variants of NAPCS Canada 2012 typically do not cover the entire universe of goods and services, and different variants will cover different universes. The number of groups comprised in each variant will therefore vary.
Extension variants of NAPCS Canada 2012 allow for additional product categories below the most detailed level of the standard classification (7-digit). The standard hierarchical coding system applies, that is, the code of the additional categories adds a digit to the parent code.
Concordances
Conceptual and practical constraints prevent the integration of all existing commodity classification into a single system. Notably, the Canadian Export Classification (CEC) and the Customs Tariff are not embedded into the structure of NAPCS Canada 2012.
These classifications were developed independently from NAPCS Canada 2012 and do not always use the same criteria to distinguish commodities. They are based on the Harmonized Commodity Description and Coding System (HS) published by the World Customs Organization (WCO). The use of an HS-based system to collect and present import and export data is prescribed by administrative agreements and Canada is obliged to conform its statistical nomenclature with the Harmonized System.
Any effort to integrate commodity statistics must account for import and export statistics. In NAPCS Canada 2012, this is done by concordance. Each of the most detailed categories of the CEC and CT will be assigned to one of the five-digit classes of the standard classification. This approach allows for the presentation of import and export statistics on the basis of two distinct systems; on the basis of the Harmonized System and derived Canadian versions (the CEC and CT), and on the basis of the new classification system presented here.
The NAPCS and the HS are not always compatible. Though this is a limitation of the system, establishing the concordance at the class level of NAPCS makes it possible to eliminate most of the inconsistencies between the HS based systems and NAPCS.
Relationship between NAPCS Canada 2012 and existing commodity classifications
In addition to integrating several classifications into a single system, NAPCS Canada 2012 revises existing classifications at the detail level. The most significant revisions are to the classifications of manufactured goods, retailed goods, wholesaled goods and constructions. The classification of agricultural goods, and of consumer, business and institutional services remain largely unchanged. It is expected that the 2017 version of the classification will introduce more significant changes to services.
NAPCS Canada 2012 also represents a significant departure from the current system used to organize industrial product and raw material prices, the Principal Commodity Group Aggregates (PCGAs). The PCGAs are based on the Standard Classification of Goods (SCG), an older standard last updated for reference year 2001.
Relationship between NAPCS Canada 2012 and the trilateral classification
The chosen approach is to define the most detailed categories of the domestic classification so as to permit aggregation into the North American system. The North American aggregation structure will therefore be a regrouping variant.
That said, the trilateral NAPCS was developed in parallel and is not yet final. It was therefore necessary to make assumptions about the North American system when developing NAPCS Canada. As a consequence, it is possible that the domestic classes will not always respect the boundaries of the final trilateral classes. The situation will improve with the 2017 revision of the classification.
Implementation of NAPCSCanada 2012
Many programs will implement NAPCS Canada 2012 for reference year 2013, and a smaller number for reference years 2014 and 2015. The implementation in business and trade statistics programs will be gradual and largely completed in 2016 for 2015 reference year data. A more detailed transition plan will be published at a later date.
Additional information
For additional information on the North American Product Classification System, please contact Standards Division at standards-normes@statcan.gc.ca.