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'
Date: 1997-10-29
Institutions: European Economic and Social Committee
Subjects: Combined Nomenclature, intra-EU trade, statistics, tariff nomenclature, trading operation

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Official Journal of the European Communities

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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’ (1)

(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.

The simplification of legislation for the Internal
1.2.
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 communi-
cation to the European Parliament and the Council and
have been welcomed by them.

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

There is, therefore, a perceived need to simplify
1.4.1.
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 estab-
lish a partnership with the national authorities of

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

Member States and the providers and users of statistical
information in order to draw up proposals for simplify-
ing the nomenclature applicable for Intrastat purposes.

2. The Commission proposals

The text of the proposed change is set out in

2.1.
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
comprising
product
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.

six-digit

codes,

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 inci-
dence 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.

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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 busi-
nesses 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 require-
ments 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
further streamlining the system. For
possibility of
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.

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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

The present Intrastat system is a major source of
4.1.
cost, complication and frustration, particularly for
SMEs. The Committee therefore endorses the Com-
mission’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.

Consideration should be given to requiring stat-
4.3.
istical 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

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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.

The operational procedures of this group shall be adopted by the Commission in accordance with

4.
Article 30.

To take account of their internal organisation, providers of statistical information may use the

5.
Combined Nomenclature to identify goods on the statistical data medium.

The Member States may require providers of statistical information to describe the goods in such

6.
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.