Opinion of the Economic and Social Committee on the 'Proposal for a European Parliament and Council Regulation (EC) amending Council Regulation (EEC) No 3330/91 on the statistics relating to the trading of goods between Member States, with specific reference to the nomenclature of products` () (98/C 19/16)

On 29 July 1997, the Council decided to consult the Economic and Social Committee, under Article 100 A of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for Economic, Financial and Monetary Questions, which was responsible for the preparatory work, adopted its opinion on 14 October 1997. The Rapporteur working without a study group was Mr Walker.

At its 349th plenary session of 29 and 30 October 1997 (meeting of 29 October) the Economic and Social Committee adopted the following opinion by 118 votes to 3 with 5 abstentions.

1. Introduction

1.1. The Intrastat system for compiling statistics relating to the trading of goods between Member States came into effect on 1 January 1993 and is scheduled to end on the date of change-over to a unified system of VAT based on the principle of taxation in the Member State of origin.

1.1.1. It is complemented by the Extrastat system for compiling statistics relating to the trading of goods between Member States and non-EU countries.

1.2. The simplification of legislation for the Internal Market, as formulated in the SLIM (Simpler Legislation for the Internal Market) initiative, is intended to improve the competitiveness of enterprises in the EU and increase their job creation potential.

1.3. The simplification of the Intrastat system has been chosen as a pilot SLIM project and specific proposals drawn up by a SLIM-Intrastat Working Party for reducing the burden on the providers of statistical information (PSIs) have been the subject of a communication to the European Parliament and the Council and have been welcomed by them.

1.4. The simplification of the product nomenclature to be used for Intrastat purposes is one such proposal, since information providers generally regard the classification of products as difficult.

1.4.1. There is, therefore, a perceived need to simplify this nomenclature while maintaining its link with the nomenclature used for the trading of goods with non-member countries and its compatibility with other statistical classifications.

1.5. The Commission considers it desirable to establish a partnership with the national authorities of Member States and the providers and users of statistical information in order to draw up proposals for simplifying the nomenclature applicable for Intrastat purposes.

2. The Commission proposals

2.1. The text of the proposed change is set out in Appendix 1.

2.2. The method of classification of goods employed in the Intrastat system is the Combined Nomenclature (CN) - a very fine categorization of goods using eight digits. It is an extension of the Harmonized System (HS) used by the World Customs Organization. This is a system of six-digit product codes, comprising 5 600 items, which is widely used for international trade. It was agreed in 1988 and up-dated in 1995. A new version is planned in 2002.

2.2.1. The CN contains a number of sub-divisions below the HS sub-heading level; these sub-divisions are created by using the two additional digits of the CN code. It currently has 10 600 items.

2.2.2. The Commission proposes to reduce the incidence of these sub-divisions by limiting them to instances where they are necessary to take account of special needs. In this way, it is hoped to produce a list of no more than 7 000 items - the Intrastat Nomenclature (IN) - and this would be a sub-set of the CN.

2.2.2.1. Where several items in the CN are derived from the same item in the HS and it is desired to merge them all together, the new composite item would have '00` as its last two digits. The same is presumably true for HS items which have never been split.

2.2.2.2. Any such sub-divisions below HS sub-heading level would be identified by sub-headings of the current version of the CN.

2.3. The IN would be adopted by the Commission in accordance with Article 30, taking into account the results of the work of a group composed of the representatives of PSIs and the users.

2.4. To take account of their internal organization, PSIs may, if they choose, use the eight-digit CN code to identify goods on the statistical data medium for all transactions.

2.5. The Member States may require PSIs to describe the goods in such a way that the codification can be checked.

3. General Comments

3.1. It is, of course, necessary to strike a balance between the needs of those businesses which find data on their industry useful and the burden which is placed on the PSIs. Given that the latter include large numbers of SMEs who are least well-equipped to support the burden and who make little or no use of the resulting data, the ESC considers that this balance should be struck more favourably to the PSIs than has previously been the case. It therefore welcomes the Commission's proposal as a step in this direction and considers that the information collected should be reduced to the absolute minimum necessary to ensure the correct collection of VAT and collation of trade data so far as this is genuinely important to the macro-economic management requirements of governments and the needs of other users.

3.2. Intrastat is primarily a statistics-collecting tool rather than a mechanism for policing the VAT system; European sales lists are used for VAT policing. It is true that large discrepancies between Intrastat figures and VAT return figures can trigger enquiries but the already-agreed removal of the indicator of stage payments from the Intrastat form from 1 January 1998 will make this form of monitoring less useful than hitherto.

3.3. The value of Intrastat for business purposes is reduced by the fact that, as the Commission states, 'the data are sometimes of inadequate quality and limited relevance.` While the Intrastat system provides aggregate data of sufficient quality for economic management purposes, even the present complex system does not yield high-quality, disaggregated data on particular products. The detailed, disaggregated data which businesses require would be better supplied by targeted market research.

3.3.1. The quality of the statistical data, even for economic measurement purposes, is impaired by the fact that the threshold of intra-EU trading activity above which completion of the Intrastat form is a mandatory requirement varies at the present time from one Member State to another. Thus, that proportion of the economy in each Member State which is excluded from the statistical base will also vary. The Committee therefore considers that there should be a single uniform threshold for reporting. This would not only improve the equality of treatment of businesses in different Member States but would enhance the value of the statistical information.

3.4. While it supports the aim of simplifying the Intrastat procedures and consequently endorses the present proposals, the ESC is concerned at the frequency with which changes in the reporting requirements for businesses are taking place. The HS was introduced in 1988 and up-dated in 1995. The CN came into effect in 1993 and is now to be amended by the creation of the IN, to come into effect on 1 January 1998. A new version of the HS is expected in 2002 and this will doubtless require a further revision of the CN and, consequently, the IN. Businesses will thus have to cope with the effects of five changes to the system in the space of fifteen years.

3.4.1. In order to minimise the administrative and financial burdens of complying with statistical reporting requirements, businesses need continuity, certainty and stability. The ESC hopes that it will be possible to arrive at a position in the year 2002 where businesses are presented with a simplified system which imposes the least possible burden, which has a high degree of compatibility between intra-EU and extra-EU requirements and which will be capable of remaining in force for the foreseeable future without further substantial amendment.

3.4.1.1. The ESC believes that this can be achieved only if the various bodies within and outside the EU adopt a coordinated approach to the issue.

3.4.1.2. It also considers that the opportunity should be taken in the intervening period to explore the possibility of further streamlining the system. For example, consideration should be given to requiring Intrastat (and Extrastat) forms from only a sample of traders. The sampling errors which would be introduced by a system based on random-sampling techniques are unlikely to be any greater than the errors which exist in the current system.

3.5. The possibility of a further radical simplification of the coding system should not be ignored. One way forward might be to use the digits at the beginning of bar-codes, which indicate the nature of the product (e.g. 978 for books and 977 for journals). This would have the added advantage that, in many cases, the code would already be conveniently to hand on the product packaging and in a company's computer system.

4. Conclusions

4.1. The present Intrastat system is a major source of cost, complication and frustration, particularly for SMEs. The Committee therefore endorses the Commission's objective of reducing the items in the Intrastat nomenclature to around 7 000.

4.2. However, it feels that more can still be done in this area and that the present proposals should be regarded as a first stage in an on-going process of simplification aimed at culminating in a dramatically-streamlined common system for Intrastat and Extrastat to be introduced concurrently in the year 2002. Decisions on IN, CN and HS nomenclatures should not be taken in isolation but as a coherent package.

4.3. Consideration should be given to requiring statistical data from only a sample of traders and to the possibility of introducing further radical simplifications to the coding structure for both Intrastat and Extrastat purposes.

4.4. The ESC considers that the threshold of intra-EU activity for inclusion in the Intrastat reporting system should be unified across the EU and that, in order to minimise the burden on those small businesses which are least able to support it, this threshold should be fixed towards the upper extent of the present range.

Brussels, 29 October 1997.

The President of the Economic and Social Committee

Tom JENKINS

() OJ C 245, 12. 8. 1997, p. 12.

APPENDIX to the opinion of the Economic and Social Committee

Article 1

Article 21 of Regulation (EEC) No 3330/91 is replaced by the following:

'Article 21

1. On the statistical medium to be transmitted to the competent authorities, goods shall be identified by the subheadings of the current version of the nomenclature applicable to the trading of goods between Member States (Intrastat Nomenclature).

2. The Intrastat Nomenclature shall be a goods code nomenclature based on the Harmonized System in force. In order to take account of specific needs, it may contain a strictly limited number of subdivisions below Harmonized System subheading level. Any such subdivisions below Harmonized System subheading level shall be identified by subheadings of the current version of the Combined Nomenclature.

3. This nomenclature shall be adopted by the Commission in accordance with Article 30, account being taken of the results of the work of a group composed of representatives of the providers and users of statistical information on the trading of goods.

4. The operational procedures of this group shall be adopted by the Commission in accordance with Article 30.

5. To take account of their internal organisation, providers of statistical information may use the Combined Nomenclature to identify goods on the statistical data medium.

6. The Member States may require providers of statistical information to describe the goods in such a way that the above-mentioned codes can be checked.`

Article 2

This Regulation shall enter into force on the twentieth day following its publication in the Official Journal of the European Communities.

Until the nomenclature adopted under Article 1 of this Regulation comes into force, the Member States shall use the Combined Nomenclature to identify goods.

This Regulation shall be binding in its entirety and directly applicable in all Member States.