# The network of international, EU, and French classifications of activities and products: a coordinated revision in 2008

Thierry Lacroix

► To cite this version:

Thierry Lacroix. The network of international, EU, and French classifications of activities and products: a coordinated revision in 2008. Courrier des Statistiques, 2009, 15, pp.37-44. hal-05413389

HAL Id: hal-05413389

https://insee.hal.science/hal-05413389v1

Submitted on 12 Dec 2025

HAL is a multi-disciplinary open access
archive for the deposit and dissemination of sci-
entific research documents, whether they are pub-
lished or not. The documents may come from
teaching and research institutions in France or
abroad, or from public or private research centers.

L'archive ouverte pluridisciplinaire HAL, est
destinée au dépôt et à la diffusion de documents
scientifiques de niveau recherche, publiés ou non,
émanant des établissements d'enseignement et de
recherche français ou étrangers, des laboratoires
publics ou privés.

<figure><img src="image_1.png" /></figure>

Distributed under a Creative Commons Attribution 4.0 International License
# The network of international, EU, and French classifications of activities and products: a coordinated revision in 2008¹

<figure><img src="image_2.png" /></figure>

Thierry Lacroix*

Modernization and international comparability were the two main goals of France's in-depth revision of its classifications of activities and products, whose tangible result was the introduction of "NAF Rev. 2" and "CPF Rev. 2" on January 1, 2008.<fnref n="2" /> The operation formed part of a process coordinated at the international, European Union, and French levels. The "2008 revision" of classifications is a complex task involving a large cast of players. Its success owes much to the implementation of an approach that combines consultative dialogue and efficiency. France played a major role in developing the new international network of classifications of activities and products. The new French classification of activities is slightly more detailed than its predecessor, and is now very effectively interlinked with the EU system.

The revised French classifications of activities and products—NAF and CPF—were introduced on January 1, 2008. NAF Rev. 2 and CPF Rev. 2 have thus replaced NAF Rev. 1 and CPF Rev. 1, which had been in effect since January 1, 2003. The project took about seven years to complete, which, on the face of it, may seem a long time. Yet the operation was conducted without pause. Indeed, the prevailing impression was a lack of time to explore various options more deeply or check the consistency of certain choices. The main reason why it took a full seven years to carry out the "2008 revision" was the sheer scale of the project, given the implications of the changes introduced and the size and number of economic classifications concerned. But the time required was also due to the complexity of the revision, a consequence of the networked structure of the classifications: classifications of activities, classifications of products, and customs classifications—all three implemented at three geographic levels: international, European, and national.

## Context and objectives of the revision

The 30th session of the U.N. Statistical Commission in March 1999

decided on a five-yearly revision of the international classifications of activities and products, ISIC and CPC. These revisions are, alternately, light and heavy. The five-year cycle matches the frequency of the updating of the Harmonized System (HS), the international customs classification. A light revision was carried out in the early 2000s. In consequence, France implemented NAF Rev. 1 and CPF Rev. 1 on January 1, 2003. The changes were merely cosmetic. The concepts and overall structure

remained untouched: only around forty NAF classes were concerned. The operation planned for 2007 was of an altogether different nature (it was eventually delayed one year to January 1, 2008, at European and French levels).

Despite the 2003 "facelift," the network of classifications of activities and products had largely been designed in the 1980s and implemented in the early 1990s. It had aged owing to technological progress and changes in the economic and social organization of firms. In addition, some countries had developed specific classifications that were more modern but incompatible with those in European

<figure><img src="image_3.png" /></figure>

Source: INSEE

<caption>French classifications of activities and products</caption>

<footnote>* Thierry Lacroix is Head of the Classifications Division and Deputy Head of the Standards and Information Systems Unit in INSEE's Statistical Coordination and International Relations Directorate.</footnote>

<footnote n="1">1. Originally published as "Le réseau des nomenclatures internationales, européennes et françaises d'activités et produits: une révision coordonnée en 2008," *Courrier des statistiques* (French series), no. 125, Nov.-Dec. 2008, pp. 37-44, http://www.insee.fr/fr/ffc/docs_ffc/cs125%20g.pdf.</footnote>

<footnote n="2">2. In keeping with standard usage, and for the sake of concision, we shall refer to the first revision of the French classification of activities as "NAF Rev. 1" and to the second as "NAF Rev. 2" or simply NAF where there is no risk of ambiguity. The same applies to NACE, CPA, and CPC. For a key to abbreviations and a brief presentation of the classifications and their terminology, see Box 1 and the explanatory sheet inserted in this issue.</footnote>
use. Two examples are the totally new North American Industry Classification System (NAICS) introduced in North American Free Trade Agreement (NAFTA) countries in 1997 and the contemporary Standard Industrial Classification for Japan (JSIC).

Because the system of classifications was obsolete (at world level and European level) and inconsistent, a more drastic overhaul was required. Preparations therefore began for a far deeper revision involving a reappraisal of the concepts, aggregated structures, and detailed categories of all classifications in the network.

The two main objectives of the “2008 revision” of classifications of activities and products were accordingly as follows:

- modernization, to better reflect economic developments of the past twenty years

- improving comparability of the main classification systems used in the world, to facilitate international comparisons of economic data (Box 2).

## Organization of revision arrangements

Given the network organization of the classifications of activities and products and the number of their users, the “2008 revision” process concerned a multitude of actors. It therefore required strong coordination in order to develop a robust, consistent project that would meet the main expectations.

The key participants in the process were governments, international organizations, statisticians, and trade organizations such as European industry federations (FEBIs and FEBSs) in the manufacturing and service sectors.

The U.N. played a major organizing role. As the entity in charge of ISIC and CPC, it occupies an “upstream” position in the process and covers the broadest geographic field, i.e., the world. The choices made for

ISIC and CPC are crucial, for they apply—by construction—to the European and French classifications, which are nested in the international classifications.

In this context, the U.N. technical subgroup (UN-TSG) acts in an essential capacity as proposal originator. The UN-TSG is an international gathering of approximately fifteen members including national statisticians and international organizations such as OECD, FAO, World Tourism Organization, and Eurostat. France is privileged to be one of the three European countries represented in the subgroup. In fact, it is currently one of the very few EU countries to belong to all international and European bodies in charge of classifications.

The UN-TSG began its work in 2001, meeting approximately twice a year. It completed key steps in the process, conducting international consultations often based on questionnaires. These successive rounds allowed the subgroup:

- first, to collect the main desiderata of countries and international organizations

- second, to validate the conceptual choices and aggregate structure of the future international classifications

- lastly, in 2004, to finalize the draft of the detailed structure of ISIC Rev. 4 as well as its explanatory notes.

On the European Union (EU) side, Eurostat provided dual coordination. First, it participated in negotiations at the U.N. on ISIC and CPC, after seeking coordinated positions among EU Member States (MSs) in order to give more weight to EU positions. Second, it oversaw the development of NACE and CPA in consultation with MSs.

The EU countries and Eurostat found themselves in a delicate situation throughout the revision process: on points for which EU countries had been able to harmonize their views, they needed to speak with a single voice, notably via Eurostat.

This harmonization required sufficient discussion time among Europeans. In the event of divergence between the MSs—a fairly common occurrence—the MSs could defend their individual positions at the U.N., but with less chance of success. The EU organization thus made it hard to provide a timely, coordinated response to U.N. proposals and, even more so, to initiate proposals.

The EU relied on the NACE-CPA Working Group, acting as steering and validation body, while *ad hoc* Task Forces developed proposals. All MSs were consulted in writing in order to define common EU positions based on Task Force proposals. For each classification, the first step was to collect MS proposals, taking the initial U.N. or Eurostat drafts as starting points.

Some French proposals were intended for use in developing the national strategy in international and EU negotiations; others concerned the construction of French classifications. Both types were prepared by INSEE's Classifications Division in cooperation with the network of “sector-specific statistical offices,” i.e., ministerial statistical offices (Services Statistiques Ministériels: SSMs) and INSEE Departments in charge of individual economic sectors.

The broad outlines and draft national classifications were submitted to the French National Commission on Economic and Social Classifications (Commission Nationale des Nomenclatures Économiques et Sociales: CNNES) for review. CNNES is a unit of the National Council for Statistical Information (Conseil National de l'Information Statistique: CNIS). Its membership consists primarily of INSEE and SSM statisticians, and representatives of chambers of commerce and employer and employee organizations. CNNES succeeded the National Commission on Classifications of Activities and Products (Commission Nationale des Nomenclatures d'Activités et de Produits: CNAP) in April 2005, with a broader remit. CNAP, then CNNES, met annually from 2004 to 2007.
Box 1: The network of classifications of activities and products (see also
diagram on loose sheet inserted in this issue)

The classifications of activities and products form a two-dimensional network:

• type of classification (activities, products, production surveys, external trade),

• geographic level: world, European or national.

The term “network” is fully justified by the relationships between these different classifications, ranging from nesting to linkage through relatively complex tables.

The classifications of activities are fully nested: the French classification of activities NAF Rev. 2 breaks down the EU classification of activities NACE Rev. 2. The latter, in turn, is a disaggregation of the International Standard Industrial Classification of All Economic Activities, ISIC Rev. 4. The first two levels (21 sections and 88 divisions) are common to all three classifications. The nesting of NAF in NACE is visible at the coding level: to the four figures of NACE classes, NAF adds a letter in fifth position to identify French sub-classes.

The international classification of products (Central Product Classification: CPC [Ver. 2]) and the EU classification of products (Classification of Products by Activity: CPA 2008) have very different structures. The first is organized in balance-of-payments form, with a breakdown into transportable goods, other goods, and services. The second is arranged by activity of origin. As a result, CPA is strictly nested in CPC at the most detailed level only. As before 2008, the French classification of products (CPF Rev. 2) is identical to CPA. But CPF has its own explanatory notes, whereas CPC and CPA lack notes for their “goods” sections altogether.

The construction principles for these classifications explain the differences in the linkage between classifications of activities and classifications of products by geographic level. The links are weak at international level, as ISIC and CPC are built along relatively independent principles. The linkage is excellent at EU level, where CPA has the same structure and coding as NACE down to class level:<fnref n="3" /> CPA has two additional levels, categories and sub-categories, for it is approximately five times as detailed as NACE.<fnref n="4" />

At French level, the NAF-CPF linkage is good. More specifically, at class level, it is comparable to the NACE-CPA linkage; but it is not guaranteed at the level of NAF sub-classes, which subdivide NACE classes. In manufacturing, this is notably the case for subcontracting operations in which the principal is the owner of the inputs.<fnref n="5" />

The Harmonized Commodity Description and Coding System (HS 2007), administered by the World Customs Organization (WCO), is the international customs classification. The EU version of HS is the Combined Nomenclature (CN 2008), which is used for statistical purposes and for setting duties.<fnref n="6" /> CN is coded with two digits beyond the first six of the HS code. Its French variant, NGP, breaks down only a few CN sectors (wines, cheeses, chemical products) by means of a ninth digit.

The specific European need for a highly detailed tracking of industrial production mainly concerns manufactured goods. This observation relies on a more detailed classification than CPA: the Prodcom ([European] Community Production) list, updated annually. The simultaneous monitoring of external trade and intra-EU trade requires the product field to be expressed as a sum of CN customs items. Consequently, Prodcom is also an aggregation of CN. Its coding therefore reproduces the six digits of CPA, plus two specific digits, to identify the 5,000-odd products surveyed. Prodfra, the French version of Prodcom, is also updated annually. It is usually more detailed than Prodcom and covers a slightly wider field.

CNNES members were consulted in
writing in late 2007 and early 2008 on
draft regulations officially approving
the new classifications of activities
and products: NAF and CPF.

An innovative arrangement was set up
to prepare the French proposals. The

"sector" representatives of the official
statistical service had a particularly
important role to play, given their
expertise in the areas of economic
activity within their purview and their
knowledge of the players whose
opinions would need to be taken
into account. The working method

chosen thus rested on decentralized
consultations in 16 areas of activity,
with the INSEE Classifications
Division acting as coordinator. For
each of these areas, aggregated into
eight sets, a "sectoral" statistical
office (an INSEE Department in
three cases, an SSM in five others)
was responsible for organizing the
necessary consultations. These
included exchanges between
statisticians—involving other
statistical offices concerned—and
dialogues with relevant government
entities and business organizations.
Table 1 shows the scope of coverage
of these various offices.

There were two major consultation
phases, one in 2004 to gather French
proposals for ISIC and NACE, the
other in 2005-2006 to prepare NAF
Rev. 2, once the near-final structure of
NACE Rev. 2 was known. The common
sequence for each consultation phase
was broadly as follows:

- The “sectoral” office designated as organizer prepared a discussion or proposal package.

- Consultations were carried out in meetings or through written exchanges.

- A summary proposal was drafted after the consultation round.

- The INSEE Classifications Division established consistency among the various proposals and prepared an overall draft.

- The draft was submitted to the "sectoral" statistical offices for approval and, after the final adjustments, was sent to CNNES for validation.

This procedure was rather demanding
because of the workload entailed
for certain offices and the need to

<footnote n="3">3. NACE and CPA are strictly linked at "division" level. The linkage may be looser at "class" level for some divisions (chiefly agriculture, fishing and aquaculture, manufacture of furniture, and retail trade).</footnote>

<footnote n="4">4. CPA 2008 comprises 3142 sub-categories.</footnote>

<footnote n="5">5. See box 1 in article by Lacroix and Fuger.</footnote>

<footnote n="6">6. CN is revised annually, HS every five years.</footnote>
<figure><img src="image_4.png" /></figure>

Source: Wikipedia

<caption>FAO headquarters, Rome</caption>

comply with a tight schedule so that a full proposal would be ready at the appropriate time. By and large, the procedure was carried out in a satisfactory manner. Several offices invested heavily in the work. This positive appraisal is not confined to quantitative issues or timeliness; it also concerns more qualitative aspects. On the whole, the general instructions for the exercise were properly followed, most notably as regards the formation of national sub-classes. The proposed headings had to be sufficiently robust and substantial to allow good statistical monitoring at a reasonable price. The instructions therefore specified a minimum size for the sub-classes, expressed in terms of sales (EUR2 billion) or jobs (15,000 people). The proposals issued took these requirements into account, thereby avoiding the proliferation of excessively small headings, unsuited to a central classification of economic statistics such as NAF.

## Build national classifications or adopt EU classifications?

Once international comparability of data becomes paramount, do

countries still need to build national classifications—even if they are, for EU Member States, nested in EU classifications? This question arose in France for NAF and CPF and was debated in the official statistical

system and in CNNES. The answer was developed in several stages.

The French strategy in international and EU negotiations has been to take the largest possible number of proposals for detailed NAF structuring and to send them up to ISIC or NACE level. Admittedly, some of these proposals have been accepted at international or EU level, but not to such an extent that France can merely adopt NACE as its national classification. A significant number of major French proposals, refining the NACE Rev. 2 structure, thus remained feasible.<fnref n="7" /> Moreover, the second round of national consultations in France indicated that participants wished to maintain or create a number of purely national categories, although substantially fewer than in the 2003 revision. Lastly, an international comparison showed that all the major developed countries, except Spain, were planning to prepare fairly detailed

<table><caption>**Table 1: Management of consultations by activity sector for NAF Rev. 2 preparation**</caption><thead><tr><th>Sectors<br>broken down by area (operational level of consultation)</th><th>NACE Rev. 2 sections</th><th>"Leader" offices</th></tr></thead><tbody><tr><td>Agriculture, forestry, fishing</td><td>A</td><td rowspan="2">Central Office of Statistical Surveys and Studies (SCEES) (agriculture ministry)</td></tr><tr><td>Food industries</td><td>C*</td></tr><tr><td>Mining and quarrying, manufacturing, energy</td><td>B, C*, D</td><td>Office of Industrial Studies and Statistics (SESSI) (economy ministry)</td></tr><tr><td>Construction</td><td>F</td><td rowspan="2">Office of Economic Analysis, Statistics, and Forecasting (SESP) (infrastructure ministry)</td></tr><tr><td>Transport</td><td>H</td></tr><tr><td>Water, sewerage, waste</td><td>E</td><td rowspan="3">INSEE: Statistical Coordination and International Relations Directorate (DCSRI), Classifications Division</td></tr><tr><td>Information and communication</td><td>J</td></tr><tr><td>Households</td><td>T</td></tr><tr><td>Wholesale and retail trade</td><td>G</td><td rowspan="3">INSEE: Business Statistics Directorate (DSE), Tertiary Activities Department</td></tr><tr><td>Accommodation and food services</td><td>I</td></tr><tr><td>Real estate; rental; specialized, scientific, and technical services; administrative and support services</td><td>L, M, N</td></tr><tr><td>Art, recreation, culture, and other services</td><td>R, S</td><td rowspan="3">INSEE: Economic Studies and National Accounts Directorate (DESE), National Accounts Department</td></tr><tr><td>Financial services</td><td>K</td></tr><tr><td>Public administration, extraterritorial</td><td>O, U</td></tr><tr><td>Education</td><td>P</td><td>Directorate for Assessment, Forward-Looking Analysis, and Performance (DEPP) (education ministry)</td></tr><tr><td>Health, social work</td><td>Q</td><td>Directorate of Research, Studies, Assessment, and Statistics (DREES) (health ministry)</td></tr></tbody></table>

<footnote>*NACE section divided between two sectors.</footnote>

<footnote n="7">7. This possibility could not be taken for granted, however, as the structural choices made for ISIC and NACE could, in some cases, prevent the construction of national subdivisions compatible with the two classifications.</footnote>
national classifications.<fnref n="8" /> All these factors drove CNNES to approve, at its meeting of July 1, 2005, the development of a specific French classification more detailed than NACE Rev. 2.

It should be noted, however, that the NAF positioning relative to NACE differs considerably from one activity sector to another. For goods-producing industries, with the notable exception of food industries, France was very determined to converge toward NACE or even to adopt it outright. In so doing, the French had three goals:

- achieving international comparability in a sector where world competition is particularly strong and where geographic diversification does not easily accommodate the specificities of national classifications

- rationalizing the extremely refined segmentation of NAF Rev. 1, where there was no longer any justification for the separate treatment of certain activities whose importance had diminished substantially in recent decades

- rationalizing the statistical production tool, with the search for the best possible correspondence between NAF and CPF, bearing in mind that such a match has been fully achieved between NACE and CPA in most sectors.

In other sectors, instead, the number of national subdivisions has remained very high, despite a decline. Examples include the food industry, construction, wholesale/retail trade, transportation, and the “information and communication” sector.

The “health and social work” sector is the only one where NAF has provided greater detail than NACE, even as the description proposed by ISIC and NACE was considerably refined between 2003 and 2008. This paradoxical situation is due to the fact that, in a sector enjoying a robust expansion in France, the organization of healthcare and social services does not closely match the

Box 2: Improved international comparability of classifications of activities

In the early 2000s, on the sidelines of “official” revision work, a “Convergence Group” composed of the U.S. Census Bureau, Statistics Canada, and Eurostat began to explore ways of improving comparability. The goal was to compare Europe’s NACE and North America’s NAICS so as to promote their convergence within the “2008 revision” process.

But the quest for a common structure for ISIC, NACE, and NAICS was unsuccessful at that stage for two reasons. First, the divergences proved too wide to bridge; second, the legitimacy of the Convergence Group was increasing challenged by the countries and organizations excluded de facto from its work—in particular, the EU countries. The Group eventually decided to end its work in June 2003, after preparing a “concordance scenario” identifying the points of convergence and divergence between NACE and NAICS. In practice, however, the results of this common effort served as an input for the construction of the new ISIC, although the U.N. has never referred to the Group explicitly.

The comparability issue remained prominent in the later revision phases, albeit with different interpretations for Europeans and North Americans. The Europeans were committed to nesting NACE in ISIC. They were ready to make many concessions for the sake of achieving convergence with NAICS (in structural terms, but far less in conceptual terms), all the more so as NAICS enjoyed an aura of modernity. The North Americans, by contrast, had just completed a major redesign of their classification of activities and were prepared to make only marginal adjustments. They did intend to converge toward ISIC, or rather to ensure ISIC’s convergence toward NAICS, but were unwilling to strictly align NAICS with ISIC.

In the end, the overall structure of ISIC Rev. 4 converged strongly toward NAICS. The European have walked the extra mile in converging with the other international classifications.<fnref n="9" /> By contrast, on methodological issues (concepts, methods, and links between classifications), the decisions taken in the revision of international classifications are, on the whole, close to the European positions and, in particular, to the French positions. Apart from the treatment of principals, these decisions confirm earlier choices while improving them on points where difficulties had arisen. For a more detailed presentation of the results obtained at the end of the revision process, see the following articles in this issue (Lacroix and Fuger; Madinier), which describe the new NAF and CPF classifications.

North-American-inspired structure adopted by ISIC and NACE. To obtain headings relevant at French level therefore requires redividing many NACE classes into NAF classes.

For CPF, the logical solution seemed to be to preserve its identity with the European Union’s CPA. However, SESSI considered the possibility of doubling the specific categories and sub-categories of subcontracted industrial services (generally coded xx.xx.9 and xx.xx.99) to avoid information loss and achieve closer linkage with NAF. These categories and sub-categories will become important as a result of the change in rule for classifying principals (donneurs d'ordre) (see article by Lacroix and Fuger).

As the rule change occurred very late, CNNES decided at its June 2007

meeting that there was no time to launch a specific consultation on refining the definition of certain CPA categories for CPF.<fnref n="10" /> France therefore decided that the CPF structure should be identical to CPA. This choice, as well, is consistent with those of most of France’s EU partners, although a few countries—mostly in Eastern Europe—have developed specific product classifications.

<footnote n="8">8. Most EU countries have, however, reduced the number of national subdivisions in the 2008 revision.</footnote>

<footnote n="9">9. The world of planetary classifications of activities is not confined to ISIC, NACE, and NAICS. But few other classifications have served as a basis for discussion for the “2008 revision.” A notable exception is Japan’s JSIC, which resembles NAICS on certain points.</footnote>

<footnote n="10">10. For a classification as detailed as CPA, there was a real risk of opening a Pandora’s box that would not have allowed the CPF structure to be finalized by end-2007.</footnote>
## NAF structure and coding

NACE used a four-digit code and continues to do so. Until 2008, the NAF coding differed only in the fourth character, which was a letter. This coding system was impractical, as it did not allow users to view the NACE classes to which NAF classes belonged. Worse yet, the NACE classes did not appear in the NAF structure. Another drawback, which emerged in the 2003 revision, was that any redivision of NACE or NAF classes could entail the renumbering of NAF classes belonging to the same group (coded on the first three digits), even if these classes had not changed at all!

France rapidly responded with a plan to add a fifth character to the NAF coding, as is the case in nearly all national classifications in EU countries. But the choice was discussed at length, for it too has its drawbacks. Adding a character to the NAF code means adding one to the "principal economic activity" (Activité Économique Principale: APE) codes of natural and legal persons recorded in the SIRENE business register—which has repercussions on business information systems (see article by Roussel). These disadvantages should, however, be downplayed by comparison with those entailed by the change in classification itself (change in content and numbering of headings). A diversified "early-warning" system should enable the units concerned to anticipate these changes.

All in all, CNNES judged that the advantages outweighed the drawbacks. It approved the five-character coding of NAF Rev. 2, i.e., the four-digit NACE code plus a fifth specific national character, consisting of a letter. The choice makes the linkage between the national classification with the EU classification clearly visible, all the more so as the four-digit NACE classes now appear explicitly in NAF. The decision also

### Box 3: Superstructure of classifications of activities

The U.N. proposed that sections and divisions should be kept as the two aggregate levels of ISIC (and therefore of NACE and CPA), with a substantially revised and refined structure, most notably to better capture service activities. Paradoxically, one drawback of this proposal was that it aggravated the imbalance between goods-producing industries and services to the benefit of services at the most aggregated level, i.e., sections. While manufacturing still accounts for more than one-quarter of divisions (24 out of 88), it is collapsed at section level, even though the number of sections has been increased from 17 to 21.

At the same time, participants considered the possibility of setting up a highly aggregated level comprising about ten headings, i.e., a more collapsed level than sections. France, for instance, proposed moving the manufacturing industry up to this level and to break it down into four or five categories at section level. The North Americans strongly opposed the idea, for the sake of continuity with the past and arguing that a single superstructure could not possibly satisfy all needs.

The UN-TSG ultimately adopted a solution favorable to the North American position. A higher aggregation level was indeed set up at international level, but is not included in the ISIC official structure (see article by Madinier). Its use is therefore only recommended but not mandatory. In consequence, no reorganization of the section level has been adopted.

### Box 4: Size of NAF Rev. 2

NAF Rev. 2 comprises 732 national sub-classes, versus 615 for NACE Rev. 2. The new NAF is therefore larger than the current NAF but not significantly (20 additional categories):

* The ISIC and NACE revisions, and their substantially increased level of detail—122 additional classes in ISIC, 101 in NACE—have made it possible to take a number of French structural demands sufficiently into account to avoid supplementing the classifications with purely national subdivisions.

* The relevance of the new national sub-classes, particularly in terms of economic weight, has been systematically examined. The revision teams have thus refrained from creating excessively small categories, although some modest-sized sub-classes whose preservation was strongly requested have been maintained for certain activities.

More specifically: 85 NACE Rev. 2 classes are broken down into 202 NAF Rev. 2 sub-classes, i.e., roughly one-third fewer redivisions of NACE classes by comparison with previous classifications (Table 2). The net balance of NACE subdivisions into NAF thus comes to 117 additional categories in NAF Rev. 2 versus 198 in NAF Rev. 1, in other words, an 81-item decrease in the level of detail provided by the national classification relative to the EU classification. This convergence between NAF and NACE in the 2008 revision thus nearly offsets the expansion of NACE and explains the moderate increase in the number of NAF categories (+20 = +101-81).

<table><caption>Table 2: Impact of revision of classifications of activities on their size<fnref n="11" /></caption><thead><tr><th></th><th></th><th>Rev. 1<br>(2003)</th><th>Rev. 2<br>(2008)</th><th>2008/2003<br>change</th></tr></thead><tbody><tr><td>ISIC</td><td>(1)</td><td>298</td><td>419</td><td>+121</td></tr><tr><td>NACE</td><td>(2)</td><td>514</td><td>615</td><td>+101</td></tr><tr><td>NAF</td><td>(3)</td><td>712</td><td>732</td><td>+20</td></tr><tr><td>NAF - NACE</td><td>(4) = (3)-(2)<br>= (6)-(5)</td><td>198</td><td>117</td><td>-81</td></tr><tr><td>NACE classes split up into NAF headings</td><td>(5)</td><td>126</td><td>85</td><td>-41</td></tr><tr><td>NAF categories resulting from splits</td><td>(6)</td><td>324</td><td>202</td><td>-122</td></tr></tbody></table>

<footnote n="11">11. The data compared in the table show the number of classification headings at the most detailed level (classes for ISIC, NACE, and NAF Rev. 1, sub-classes for NAF Rev. 2).</footnote>
makes it easier to perform national segmentation into sub-classes<fnref n="12" /> if many subdivisions are required or in the event of further revision. For the specific national position, the choice of a letter rather than a number makes it easier to distinguish NAF codes from those of other classifications; in particular, it avoids all confusion with the coding used in the classification of products (CPF), whose categories are coded with five digits, the first four being the NACE code (or now the NAF code). The letter is either A, B, C, etc. when the class is subdivided into sub-classes, or Z when the sub-class is identical to the class.

## Timetable and instruments for implementing new classifications

The U.N. Statistical Commission adopted the detailed structures of ISIC Rev. 4 and CPC Ver. 2 at its March 2006 session, with some minor amendments subsequently. The difference in status between U.N. and EU classifications should be noted. The use of U.N. classifications is merely recommended, and the U.N. readily makes a few improvements in the new system when it discovers gaps or contradictions in the explanatory notes of the revised ISIC and CPC. This flexibility does not mesh well with the rigidity of EU regulations and the preparation of a major statistical production system for Member States with NACE and CPA at its core—a system that requires great stability.

At EU level, the European Council and Parliament have issued regulations on NACE and CPA. The NACE Rev. 2 regulation, dated December 20, 2006, was published in its different language versions in the Official Journal of the European Union (OJEU) on December 30. For CPA 2008, the regulation was more arduous to finalize: although dated April 23, 2008, and published in the OJEU of June 3, 2008, the CPA 2008 regulation mandates the use of the classification starting January 1, 2008!

The publication in twenty-three languages of documents containing

substantial appendices was largely responsible for the delays. Counting all levels, CPA contains more than 5,000 headings. Moreover, the terminology is very important and must cover the same reality in all EU languages. Now while the work of the statistical groups of the Commission and Council extends up to the near-final draft of the regulation, it focuses exclusively on the English version of the text. Only when this version is nearly finalized does the work on versions in other languages begin.

In the case of French and German, their use in several European countries complicates the situation even further.<fnref n="13" /> The procedure for discussing the non-English "language versions" of the text is somewhat opaque since it requires consultations with the jurist-linguists of the Council and Parliament. This turned out to be rather arduous, requiring high-level interventions.

The consequent delay in finalizing the CPA 2008 regulation led France to separate the adoption of NAF Rev. 2 and CPF Rev. 2. The first was implemented on January 1, 2008, by a decree of December 26, 2007, published in the *Journal Officiel* (the French government publication of record) of December 30, on approval, implementation, and scope of the new NAF classification. In keeping with the EU NACE regulation, the draft decree had been approved by the European Commission, which verified the French classification's compliance with the EU classification. CNNES had also issued a favorable opinion on the text. The new CPF was adopted by a ministerial decision of June 30, 2008, once the CPA 2008 regulation had been published, and after approval by CNNES.<fnref n="14" />

## From a French and EU standpoint, how should one assess the revision process for classifications of activities and products?

The EU consultation phase for the new ISIC covered its arrangement into groups and classes, boundaries

between categories, category descriptions, and the drafting of explanatory notes. France played a dominant role in this process, authoring nearly two-thirds of the common EU proposals submitted to the U.N.

On the other hand, the negotiation on the detailed ISIC project seems to have yielded mixed results for France and, more generally, the EU, despite a rather close harmonization of EU countries' positions at this stage of the revision process. Frequent opposition from NAFTA and other major countries with substantial influence in the negotiation (Australia, Japan, India) and lack of time often entailed the rejection—or failure to examine, which led to the same result—of EU proposals, notably when they concerned the structure proposed in the UN-TSG draft for ISIC.

We should also emphasize the prominence of international organizations in the negotiation. The U.N. Statistical Division, of course, played a major part as proposal originator. But the U.N. tended to focus on the positions of other organizations specialized in particular areas, such as FAO on agriculture, OECD on ICTs and health, and UNESCO on education.

After the U.N. settled ISIC issues in February 2005, new proposals for the new NACE were examined. Many of those put forward by France were adopted. Most of those that were turned down suggested the creation of new classes—potentially, about

<footnote n="12">12. NAF Rev. 2 accordingly includes one more level than NAF Rev. 1. The most detailed level is now the sub-class, which corresponds to the class level of NAF Rev. 1; NAF Rev. 2 classes are identical to NACE Rev. 2 classes.</footnote>

<footnote n="13">13. French is used by France, Belgium, Luxembourg, and Switzerland (although not an EU member, Switzerland uses NACE and participates in the NACE-CPA Working Group). Also note that, apart from France, all the Francophone countries use another official language as well.</footnote>

<footnote n="14">14. While the final titles of CPA categories (and therefore of CPF categories) were released very late, its detailed structure remained nearly unchanged after March 2007 (it was even finalized in June 2007). This allowed its introduction into the system of business statistics without major disruptions.</footnote>
fifty—whereas many EU countries felt that the NACE expansion was adequate. Indeed, NACE was already gaining some one hundred categories compared with its earlier version. This explains the frequent rejection of segmentation requests, even as all suggestions for the removal of classes via groupings had been accepted.

The EU consultation also revealed a split. One camp, comprising the major EU countries such as France, Germany and the U.K., leaned in favor of a more detailed NACE. The other camp, consisting of the smaller countries—in particular the new EU entrants—were determined to restrict the level of NACE detail instead.

By comparison with the French proposals accepted for ISIC, those approved for NACE are more diverse. Most concern structural changes, notably the subdivision into more detailed classes or the aggregation of obsolete classes. All in all, counting the

proposals for ISIC and those directly concerning NACE, France formulated some 180 suggestions to improve the new EU classification. The outcome was fairly balanced: quantitatively, nearly as many proposals were accepted as were rejected.

Overall, we can conclude that NACE Rev. 2 lies midway between the initial draft based on the first draft of ISIC Rev. 4 and the goals embodied by the set of French proposals. France was a very active participant in the ISIC and NACE revision process, although we must recognize that the new ISIC and therefore the new NACE and NAF chiefly bear the stamp of the U.S. and Canada. The classification structure and the wording of the explanatory notes, in particular, are often imported from NAICS. Given the number of participants in the negotiation at international level and France's weight in the world, this result is significant.

At national level, the chosen consultation procedure worked well, allowing most requests to be voiced and examined.

For several reasons, it was not possible to accept all the proposals gathered:

- First, as the central classification of the statistical system, NAF cannot be too detailed.

- Second, some requests were contradictory, or went against the spirit of the classification. The most typical example is the request by organizations for the creation of cross-sectional categories to represent their members engaged in a combination of activities already described in the classification.

- Third, many requests were not primarily for statistical purposes, but concerned the regulatory uses of the classification, particularly in the social-insurance and tax areas.

Another positive index of the good match between NAF and national needs was the number of challenges recorded by INSEE in the early months of 2008. For a statistical operation of this size, there were relatively few complaints regarding the revision of classifications of activities and products and the change in APE code for enterprises in SIRENE (the business register).<fnref n="15" />

<footnote n="15">15. See Bernadette Rocca, "Le changement de nomenclature dans le répertoire Sirene: un travail au long cours," *Courrier des statistiques* (French series), no. 125, Nov.-Dec. 2008, pp. 61-66, http://www.insee.fr/fr/ffc/docs_ffc/cs125j.pdf.</footnote>