RESTRICTED
WORLD TRADE S/CSC/W/16
12March 1998
ORGANIZATION(98-1015)
Committee onSpecific Commitments
POTENTIAL IMPACT OFTHE REVISION 1OFTHE CPC
ONTHE SECTORAL DEFINITIONS USED
INTHE SCHEDULES
1. Thepresent notedraws uptheconclusions ofasystematic study ofthetypes ofconnections
between provisional CPCandCPC rev.1 andtheirpotential impact onthedrafting ofthecommitments.
Thisstudy isattached tothisnote(Annex).
2. Itappears thatthebasic issues, when considering theconsistency ofthelanguage ofthe
CPC rev.1 withthelanguage ofprovisional CPC, arebothoflogical andjuridical nature. Infact,
acomparison ofthetwosystems reveals onlytwomain problems:
(a) AlthoughconcordancetablesprovidedbytheCPCdraftersshowadirectcorrespondence
between twoitems ofeachclassification, theexplanatory notes attached toeachofthese
items mayhavebeendrafted inadifferent manner; thiscanimply (ornot)thata
substantial modification ofthecoverage ofthenewitemhasoccurred. Thedebatable
point iswhether thisbroadening constitutes whatcould beheldasasubstantially new
service: thispoint isrelevant tothequestion of"new services" already summarised
inaninformal notebytheChairman oftheCommittee onSpecific Commitments
(JobNo.5719) andcanimpact ontheinterpretation ofthecoverage ofcommitments
already undertaken (seepartIIofAnnex).
(b) Another problem would bethecasewhen twoorseveral provisional CPCitems have
beenmerged,accordingtotheconcordancetables,soastoformanewsingleCPCrev.1
item; inthiscase,theonlywaytokeepwiththedifferentiation oftheprovisional CPC
items would betocontinue withreferring totheseoriginal items, i.e.toignore defacto
thenewclassification;inthisrespect,onecoulduseforinstancethefollowinglanguage:
"CPC rev.1 itemXXX onlyforitspartcorresponding toprovCPCitemXXX", or
evencontinue toreferonlytoprovisional CPCitems (seefigure 2inAnnex). Roughly
30%ofprovisional CPCsubclasses aredirectly concerned bythissecond problem.
PartIoftheAnnex gives further details onthetypology oftheconnections made
between theitems ofthetwoCPC'sassetoutbytheconcordance tables.
3. More precisely, different hypotheses ofconnection between provitems andrevitems involving
avarious degree ofcomplexity areproblematic, allthese different hypotheses being infactreducible
tothetwobasic problems presented above; Annex 1attempts toclarify andsystemize theapparent
complexity oftheconnections 'typology. Examples ofsuchcomplexity are:
(a) Thehypothesis ofamerger oftwoorseveral provitems.
(b) Thesame, withsubstantial modifications arising from theredrafting ofexplanatory
notes.S/CSC/W/16
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(c) Thehypothesis ofamerger ofoneorseveral provitem(s) withparts ofother prov
items intoonenewrevitem.
(d) Thesame, withsubstantial modifications arising fromtheredrafting oftheexplanatory
notes.
4. Duetotheparticularly important number ofproblematic connections setoutbytheconcordance
tablesandthoroughlydescribedinAnnex1tothepresentpaper,acompleteswitchtoCPCrev.1appears
extremely difficult fromapractical andlegalpointofview, whereas itsbenefits interms ofimprovement
oftheaccuracy ofthedescription ofthesectors appear marginal.
5. IfMembers weretodecide that,asaconsequence, provisional CPCshould remain thegenerally
agreed basis forscheduling commitments, thiswould notprevent periodic improvements ofthis
classification, forinstance through theintroduction ofnewitems, collectively defined, inadocument
"GNS/W/120/rev.1".S/CSC/W/16
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ANNEX
Asystemization oftheconnections between
CPC rev.1 andprovisional CPC
1. Thepurpose ofthepresent annex istosupplement thework already donebytheSecretariat
asregards theanalysis ofthemodifications brought bytherevision oftheCPC andthequalitative
assessment ofthesemodifications, byproviding asystematic description ofthecorrelation ofprovisional
CPCandCPCrev.1 asawhole, andbydescribing themethods followed bytheSecretariat inthedrafting
ofitssectoral notes (documents S/CSC/W/6/Add.1-13). Tothiseffect, structural aspects (I)willbe
distinguished from definitional aspects (II).
I. STRUCTURAL ASPECTS
2. TheVoorburg Group hasmade available detailed concordance tables linking theCPC rev.1
items totheprovisional CPCitems. These tables aretheonlybasisforthepurpose ofconnecting these
items together, andtheyhavetherefore underpinned thenotes issued bytheSecretariat onmodifications
brought bytheCPC rev.1. When theSecretariat hashadanydoubt inthecourse ofitsanalysis, either
concerning therelevance ofaconnection made ortherelevance ofapossible connection unforeseen
inthetables, ithasreferred ittotheVoorburg Group, who, incertain instances, hasintroduced
subsequent corrections. Asalready stressed bytheSecretariat, CPC rev.1 hasnolegalimplications
withregard tocommitments already undertaken onthebasis oftheCPC, andtheopinions ofthe
Voorburg Group arenotlegally binding forWTO Members.1Inaddition, itshould bekeptinmind
thattheconcordance tables arebased ontheconsensus opinions oftheVoorburg Group, obtained after
debates where various connections haveoften beenenvisaged.
3. Anexamination oftheconnections between theitems ofeachoftheCPC astheyappear in
theconcordance tables shows that,inmany instances, thelanguage ofCPC rev.1 staysneutral ineffect.
However, incertain instances, connections toCPCrev.1 arenotneutral: thisisthecasewhen there
arenostrictequivalencies between aprovisional CPCitemandaCPC rev.1 item. Foragreater clarity
andinorder toimprove comprehension ofthese somewhat complex issues, theSecretariat haschosen
toprovide aconceptual approach. Firstly, ithasbeenconsidered thattheimpact ofthemodifications
depends onwhether the"perimeter" ofanitemcanberestored inthelanguage ofCPC rev.1 (A).
Secondly, thestructural changes occurring between provisional CPCandCPCrev.1 havebeenreduced
tofivestandard models whose number ofoccurrences hasbeenquantified bytheSecretariat (B).
A. DEFINING THE "PERIMETER"
4. Basic elements ofthesystem oftheCPC'swillbepresented first(1),thentheconcept of
perimeter (2).
(1) Thelogic oftheCPC's
(a) Thecoding system oftheCPC
5. Thecoding system oftheCPCisthefollowing: theclassification consists ofsections (identified
bythefirstdigit), divisions (identified together bythefirstandsecond digit), groups (identified by
thefirstthree digits), classes (identified bythefirstfourdigits) andsubclasses (identified byallfive
1Seedocument S/CSC/M/3, paragraph 36.S/CSC/W/16
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digits, taken together). Thecodes usedforthesection range fromzerotonineandeachsection may
bedivided intoninedivisions; atthethirddigitlevelofthecodeeachdivision may,inturn,bedivided
intoninegroups which would thenbefurther divided intonineclasses andthenintoninesubclasses.
Intheory, thisallows for65,610 categories, butinpractice thereareonlytensections (fiveconcerning
services), 69divisions (31onservices), 293groups (110onservices), 1,050 classes (316concerning
services) and1,811 subclasses (upon which 675concerned services) inprovisional CPC. Thecode
number consists offivedigits without separation ofanykindbetween thedigits; where agiven level
ofclassification isnotfurther subdivided, a"0"isusedintheposition forthenextmore detailed level.
6. InCPCrev.1, thenumber ofdivisions havebeenaugmented upto33(compared to31inprov),
thenumber ofrelated groups upto119(compared to110), thenumber ofrelated classes upto419
(compared to316)andthenumber ofrelated subclasses upto979(compared to675). Thisincrease
alone evidently shows thattheaccuracy oftheCPC hasbeenimproved.
(b) Themeaning oftheasterisks inconcordance tables
7. Itshould beremembered thatconcordance tables haveusedasterisks forindicating, ifnecessary,
thatthecorresponding itemintheright-hand column alsocorresponds toanother orother items in
theversion ofCPC placed intheleft-hand column. Indeed, intheleft-hand column, items are
enumerated inthestrict numerical order, while theitem(s) mentioned intheright-hand column is/are
theoneortheonescorresponding toeachitemintheother column. Inthissense, theasterisk means
"part of";therefore, ifonewants tocheck which is/are theitem(s) inprovisional CPC(CPC rev.1)
corresponding totheremainder ofthecoverage oftheiteminCPC rev.1 (provisional CPC) whose
only"part of"tallies withoneiteminprovisional CPC (CPC rev.1), thereverse concordance table
should bethenconsulted.
8. Each column isdedicated toonlyoneofthetwoversions ofCPC. Theasterisks appear in
theright-hand column ofconcordance tables. Inthereverse concordance table, therelated itembecomes
areference item, andtheitems related toitintheother version ofCPCareexhaustively mentioned.
Consequently theasterisk disappear intheleft-hand column since allrelated items arementioned in
theright-hand column. Inthisrespect, itshould beborne inmind thatthefunction oftheasterisk
isrelative.S/CSC/W/16
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9. Inthefollowing tables, basic hypotheses asregards theuseoftheasterisk areexemplified.
[Table 1]
PROVISIONAL CPC CPC REV.1
a B*
b E
c G
D
F*
d U
e B*
f C
g F*
[Table 2]
CPC REV.1 PROVISIONAL CPC
A h
B a
e
C f
D c*
E b
F c*
g
m
G c*
10. Intheexamples above, onecanremark, inthefirsttable(prov-rev) atthetopoftheright-hand
column, thatitemB*hasanasterisk because itemaanditemecorrespond atthesame timewithit
(table 1,right-hand column, firstandfifthline); inthereverse concordance table, itemBonly
corresponds withitemaanditeme(table 2,right-hand column, second line). Inprov-rev concordance
table, itemctallies withitemG,itemGanditemF*(table 1,right-hand column, thirdline); thelatter
hasanasterisk because itcorresponds atthesame timewithitemg(table 1,right-hand column, last
line): inthereverse concordance table(rev-prov), itappears thatitemFalsocorresponds withitem
m,inaddition toitems c*andg(table 2,right-hand column, penultimate line).
11. Assaidbefore, thefunction oftheasterisk isrelative: theasterisk attached toitemBinthe
firsttabledisappears inthesecond one,andsofortheasterisk attached toitemcanditemF.These
twotables should beseenasextracts fromconcordance tables: items h,mandUappear inonlyone
table, because intheexamples given tables onlyhaveseven lines, though hisineighth position, m
isinthirteenth position andUisintwenty-first position inthealphabet.S/CSC/W/16
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(2) Theconcept ofperimeter
(a) Formal description
12. Central istheconcept of"perimeter". Forinstance, theperimeter ofonegroup would be
constituted oftheadding upofasetofsubclasses, themselves related toclasses inahierarchical order
whose headwould be,inthiscase, thegroup which hasbeenconsidered.
13. Theperimeter ofoneaggregated iteminprovisional CPCcanberestored inCPCrev.1 when
eachsubclass orseries ofsubclasses itincludes hasonlyonecorrespondent (which canbeasubclass,
aseries ofsubclass oreven amore aggregated item), butnone other, inCPC rev.1, andthis
correspondent doesnottallyatthesame timewithanother provisional CPCitemnotyetincluded in
theperimeter ofthisaggregated item.
(b) Basic techniques fordetermining when perimeters havenotbeenaltered
14. Anyitemabove thesubclass levelcanbeseenasthesimple adding upofarange ofsubclasses.
Therefore connections should beobserved, inthefirstinstance, atthemostdisaggregated level--namelyS/CSC/W/16
Page7
thesubclass level --,andthenproceed towards themore aggregated levels.2Initssectoral notes
(documents S/CSC/W/6/Add.1-13), theSecretariat described modifications ofthecomplete framework
oftheCPCincludingtheupper-levels.Yet,asperimeterscanbedescribedasanadding-upofsubclasses,
thequestion oftheiralteration hasbeenaddressed onlyasmodifications impact onthescope ofrelated
subclasses.
15. Intheexample below (figure 2),theperimeter ofprovisional CPC subclass p87190 "Other
advertising services" corresponds totheadding upofCPCrev.1 subclass r83690 "Other advertising
services" andsubclass r83620* "Purchase orsaleofadvertising space ortime,oncommission" ,minus
provisional CPCsubclass p87110 "Sale orleasing services ofadvertising space ortime".Thiscould
besymbolized bythefollowing formula: p87190 =r83690 +r83620 -p87110.
Figure 2
B. MODELS OFCONNECTION
16. Onecanfindintheconcordance tables different models ofconnection. Eachofthese models
isdescribed below, with, foreachofthem, theprecise number ofactual casespresent intheconcordance
tables.TheSecretariathasdifferentiatedfivemodelsofconnection,certainofwhicharenon-problematic
(1),andothers problematic (2). Finally, theglobal impact ofeachofthese standard models of
connections onthetotalamount ofitems ineachoftheCPC'swillbeassessed inasynthesis (3).
(1) Non-problematic cases
17. Three cases ofconnection arenon-problematic: one-to-one connections, either when theCPC
codeoftheitemhasbeenmodified ornotmodified (aandb);one-to-several (1-N) connections, when
oneprovisional CPCitemhassplitinseveral CPCrev.1 items (c).Inthissituation, itwould always
bepossible torestore theperimeter ofanitem, because either ithasonlyonecorrespondent, either
itcorresponds toaseries ofitems which areexclusively linked toit.
2Subclasses arethebasic elements whose assemblage draws theperimeter ofanymore aggregated level:
classes, groups, divisions orsections. Furthermore, asterisks athigher levels donotinduce thattheperimeter
cannot berestored interms oftheircorrespondents inCPCrev.1. They simply mean theaddition ofnewmaterial
atsub-levels: theperimeter cantherefore berestored ifsub-items include theelements corresponding toone
considered perimeter inprovisional CPC; inthiscase, allother sub-items would simply benotmentioned when
restoring thisperimeter inCPC rev.1 language.S/CSC/W/16
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(a) One-to-one connections withthesame CPCcode
18. Figure 3below isthemodel standard ofthedirect andexclusive connections where oneelement
ofprovisional CPC isrelated toonlyoneelement ofCPC rev.1 which, atthesame time, haskept
thesame titleandthesame CPC code. Thisparticular hypothesis occurs 63times according to
concordance tables. Thepractical example given concerns thelinkbetween subclass p93329 "Other
social service without accommodation" andsubclass r93329, which hasthesame title.
Figure 3
(b) One-to-one withchange ofCPCcode
19. Figure 4isthemodel standard ofthedirect andexclusive connections where oneelement of
provisional CPCisrelated toonlyoneelement ofCPCrev.1, butmayhavechanged bothitstitleand
itsCPC code. Thisparticular hypothesis occurs 318times according toconcordance tables. The
practical example given concerns thelinkbetween subclass p74210 "Storage services offrozen or
refrigerated goods" andsubclass r67210 "Refrigerated storage services" .
Figure 4
(c) Splits (I-N)
20. Figure 5modelizes thesplitofoneelement ofprovisional CPCintotwoelements ofCPCrev.1.
Thisparticular hypothesis occurs 38times according toconcordance tables. Thepractical example
given concerns thesplitofprovisional CPCsubclass p87907 "Specialty design services" intwo"new"
subclasses: CPCrev.1 subclass r83410 "Interior design services" andsubclass r83490 "Other specialty
design services" .
Figure 5S/CSC/W/16
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21. Inaddition, splits ofonesubclass intomore thantwosubclasses haveoccurred; thechart
below indicates thenumber ofactual cases foreachtypeofsplit.
Number ofitems resulting from thesplit Number ofoccurrences
2 38
3 6
4 7
5 30
6 1
8 1
9 2
10 5
34 1
(2) Problematic cases
22. Twohypotheses ofconnections areproblematic: thecases when several items ofprovisional
CPChavebeenmerged inorder tocreate onlyoneitemofCPCrev.1 (N-1) (a);andthecases when
several items ofprovisional CPC arerelated toseveral items ofCPC rev.1 (N-N) inacomplex
framework ofconnections which involves atthesame timesplits andmergers (b).Insuchcases,
theonlywaytokeepwiththedifferentiation oftheprovisional CPCitems would betocontinue with
referring tothese original items (seeabove paragraphs 14-15).
(a) Mergers (N-1)
23. Figure 6modelizes thesimple merger oftwoorseveral elements ofprovisional CPCintoonly
oneelement ofCPC rev.1. Thishypothesis occurs 42times according toconcordance tables. The
practical example given concerns themerger ofprovisional CPCsubclass p64196 "Sleeping carservices
andsleeping services inother transport media" andsubclass r64199 "Other lodging services n.e.c."
soastocreate CPC rev.1 subclass r63199 "Other lodging services" .
Figure 6S/CSC/W/16
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24. Most ofthemergers concern thecombination oftwoprovisional CPC items intooneCPC
rev.1 item. Twenty-seven occurrences upon 42concern thistypeofconnection. Inaddition, nine
occurrences concern athree-to-one connection, three occurrences concern afour-to-one connection,
three occurrences concern afive-to-one connection, andoneatwelve-to-one connection.
(b) Splitandmerger atthesame time(N-N)
25. Inanumber ofcases, thereshuffling hasbeenmore complex thanthecases modelized before.
Thishappens forinstance when asplitandamerger havesimultaneously occurred. These cases are
envisaged inaddition tothemodels of"simple" mergers andsplits described before. There isnosimple
standard models describing thisparticular case. Therefore, theSecretariat hassetastandard ofthe
basic aspects germane tothistypeofconnection, anditgives inaddition apractical, non-exhaustive,
example ofconnection ofagreater complexity.
Figure 7
26. Intheexample above (figure 7),provisional CPCsubclass p87190 "Other advertising services"
hasbeensplitintotwoCPCrev.1 subclasses, subclass r83690 "Other advertising services" andsubclass
r83620* "Purchase orsaleofadvertising space ortime, oncommission" ,thelatter resulting aswell
fromprovisional CPCsubclass p87110 "Sale orleasing services ofadvertising space ortime".This
particular caseistheconjunction ofamerger andasplit. Other sorts ofconnections aresimilar to
theexample above. Inmany cases, thelevelofcomplexity issimilar totheonepresented infigure
7.Incertain instances, thesetofconnections ismuch more complex, asonecanseeinfigure 8(on
theright, shaded cellsrepresent cases ofmergers andsplits atthesametime, thelastoneonlyresulting
from asplit). However, thishigher level ofcomplexity never creates anytypeofconnection not
reducible tothestandard model ofsplitandmerger, soas,basically, theproblems arethesame as
theonesetoutabove infigure 7.
27. Figure 8concerns subclasses p86711 "Advisory andpre-design architectural services" ,p86721
"Advisory andconsultative engineering services" andp51110 "Site investigation work" ,astheyare
related tosubclass r83211 "Architectural advisory andpre-design services" ,andtheseries ofsubclasses
r83331 "Engineering advisory andpre-design services forbuildings" ,r83332 "Engineering advisory
andpre-design services forcivilengineering works ",r83333 "Engineering advisory andpre-design
services forindustrial plant andprocesses ",r83339 "Engineering advisory andpre-design services
forother project ".
28. TheSecretariat hasfound thatatotal amount of87provisional CPC subclasses and
119CPC rev.1 subclasses areinvolved inN-Nconnections.S/CSC/W/16
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Figure 8
(3) Synthesis3
29. Thefollowingchartindicatesthenumberofsubclassesinvolvedastoeachstandardofconnection
inbothprovisional CPC andCPC rev.1.
3Inalimited number ofcases, provisional CPC subclasses relative toonesection which deals withgoods
have been connected toCPC rev.1 subclasses relative to"services" sections ofCPC rev.1. Ineach ofthose
cases, theprovisional CPC subclass hasbeen splitintwosubclasses, onebeing a"services" subclass. Such
connections arenotreported intheaccount given below. Thishasconcerned thefollowing subclasses: subclass
p17100"Electricalenergy",relatedtosubclassesr17100"Electricalenergy"andr69110"Electricitytransmission
anddistribution services" ;subclass p17200 "Coal gas,water gas,producer gasandsimilar gases, other than
petroleum gases andother gaseous hydrocarbons" ,related tosubclasses r17200 "Coal gas,water gas,producer
gasandsimilar gases, other thanpetroleum gases andother gaseous hydrocarbons" andr69120 "Gas distribution
services through mains" ;subclass p17300 "Steam andhotwater ",related tosubclasses r17300 "Steam andhot
water" andr69220 "Steam andhotwater distribution services through mains" ;subclass p18000 "Natural water" ,
relatedtosubclassesr18000 "Natural water"andr69210 "Water, except steam andhotwater, distribution services
through mains" .S/CSC/W/16
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PROVISIONAL CPC CPC REV.1
1-1 381 381
splits (1-N) 92 408
mergers (N-1) 115 42
splits +mergers (N-N) 87 119
TOTAL 675 950
30. Thefollowing piesgiveanideaoftheproportion ofsubclasses involved asregards eachstandard
ofconnection. Ineachcase, theshare ofproblematic cases hasbeenextracted fromthepie.Thefirst
pie(figure 9)isinteresting, sinceitdirectly concerns theversion ofCPCcurrently usedintheschedules
ofMembers.
Figure 9
Figure 10S/CSC/W/16
Page13
31. Figure 10readinconjunction withfigure 9shows thatthewhole CPChasbeensimultaneously
subject toaslight movement ofcontraction (minus 61)andtoahugemovement ofexpansion (plus 365),
thisfinally creating anincrease of304inthetotalamount ofsubclasses.
II. DEFINITIONAL ASPECTS
32. Incertain cases, explanatory notes havebeenwidened andcompletely redrafted. TheVoorburg
Group affirms inmany cases thatthishasnoeffect onthecoverage ofcorresponding items, butthis
mayremain theviewofagroup ofstatisticians. TheSecretariat hasalready drawn theattention of
Members tothefactthattheprinciples ofconstruction oftheCPC were ofastatistical andnotofa
legalnature, andthattherefore itwassupposed toinclude allservices, existing andfuture, andthat
thisinclusioncouldbeimplicitandnotnecessarilydescribedinthedefinitions.4Legaltermsarenarrower
thanstatistical categories: thisisamong others onereason forhaving settheissueof"new services".
33. Inpractice,thisissuecouldbeexemplifiedasfollows:intheexplanatorynotetosubclassr73220
"Leasing orrental services concerning video tapes" ,mention ofvideo games isadded; explanatory
noteunder original subclass p83202 "Leasing orrental services concerning video tapes" concerned
"renting orhiring services concerning pre-recorded video cassettes foruseinhome entertainment
equipment, predominantly forhome entertainment ";thenewsubclassr73220 "Leasing orrental services
concerning video tape" comprises thefollowing explanatory note:
"Thissubclass includes:
- leasing, renting orhiring services concerning pre-recorded video cassettes forusein
home entertainment equipment, predominantly forhome entertainment
- leasing, renting orhiring services concerning video games ".
34. Adescription ofmodifications accruing from theredrafting oftheexplanatory notes andof
theirrelevance isgiven inthesectoral notes (documents S/CSC/W/6/Add.1-13) bytheSecretariat.
__________
4Seedocument S/CSC/M/3, paragraph 36.