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5368.0.55.005 - Discussion Paper: ABS Implementation in January 2007 of Revisions to International Trade Classifications, 2007  
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 09/06/2006  First Issue
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INTRODUCTION

This paper summarises changes that are being made to the classifications used to present Australia's import and export statistics. These changes are to be implemented from 1 January 2007.

The changes are the result of revisions to the international classifications and will affect individuals and organisations who are either:

  • involved in importing or exporting goods; or
  • using ABS merchandise trade or balance of payments statistics.

Both the Harmonized System (HS) and the Standard International Trade Classification (SITC) will change. The Australian Bureau of Statistics (ABS) will also change the way in which the Australian Harmonized Export Commodity Classification (AHECC) is published.

The ABS will release additional information papers as further work is undertaken on the classifications.

This information paper has the following contents:

THE HARMONIZED SYSTEM

The HS is a broad classification system of approximately 5,000 6-digit headings which are used to classify internationally traded goods as they enter or leave a country. It was developed and is maintained by the World Customs Organization (WCO). First introduced on 1 January 1988, it has been adopted by most trading nations, including Australia. It enables information on traded goods to be compared internationally.

Australia expands the international HS to produce two different classifications for imports and exports. These classifications are the Combined Australian Customs Tariff Nomenclature and Statistical Classification (referred to as the Customs Tariff) and the AHECC.

The extensions to the HS exist:
  • for customs purposes, to differentiate between imported goods grouped under a single 6-digit HS code. Such differentiation is generally driven by the need to impose varying import duty rates on similar goods. This is achieved by adding two digits to the HS code, making an 8-digit code in the Customs Tariff. This extension to the HS is maintained by the Australian Customs Service (Customs).
  • for statistical purposes, to provide a finer level of detail. This is achieved by adding two digits to the combination of HS and 8-digit codes for imports and to the 6-digit HS codes for exports. The statistical codes are maintained by the ABS.

Australia's international merchandise trade statistics are derived from information provided by importers, exporters and their agents to Customs. Statistics are produced on Australia's imports and exports.

International changes

The HS is subject to ongoing review by the WCO to ensure it:
  • reflects newly developed commodities and changes in the types of commodities traded;
  • meets administrative requirements (e.g. for the General Agreement on Tariffs and Trade);and
  • minimises the burden on data providers by requesting only the level of detail that is administratively and statistically relevant.

The HS is reviewed by the WCO on a systematic basis, but major changes are normally implemented only every five years. HS2007 is the third major revision of the HS since the System was adopted by the WCO and it is estimated to impact on more than 1,000 of the approximately 5,000 6-digit headings to the nomenclature.

Australian classifications

Changes at the 6-digit level of the HS have implications for all Australian extensions of those 6-digit codes (i.e. 8- and 10-digit import codes and 8-digit export codes). HS codes scheduled for change could be affected by:
  • movement - the code may simply be moved from its current position and placed elsewhere in the classification either as a result of an actual change or a change in the interpretations provided in the Explanatory Notes;
  • dissection - the code may be further dissected to provide greater detail at the international HS level, or Customs may determine it necessary to subdivide new or revised HS codes in the Customs Tariff in order to preserve existing duty rates;
  • combination and subsequent dissection - the code may be combined and as a result dissected differently;
  • change in unit of quantity (UQ) - UQs will need to be reviewed where existing codes are merged and/or split. Newly created statistical codes are assigned a standard UQ and inconsistencies resulting from the classification changes will have to be rationalised.

The ABS will prepare spreadsheets showing the proposed changes to the export and import classifications. These will be released on the ABS website in an information paper, Proposed changes on 1 January 2007 to statistical codes for the AHECC and the HS Tariff. This is planned for release in August 2006.

User requests

Users of trade statistics can request that existing statistical structures be split to provide greater detail on specific commodities. When such a request is made, the ABS conducts a Classification Feasibility Study to ensure the dissection meets certain criteria. These criteria include:
  • significance of trade in the newly specified items;
  • ease of interpretation of proposed classification structures; and,
  • minimising risks of creating items that may be confidentialised at a later time.

However, any requests received will be deferred until the new classification is implemented. Requests to change statistical codes will be charged for in the normal manner as outlined on the ABS website at: http://www.ausstats.abs.gov.au/Ausstats/subscriber.nsf/0/B2B2BA8878330025CA257110007E36D6/$File/5499055001_international%20trade%20cfs_1.pdf.

ABS initiated changes

The ABS approach for HS2007 is to maintain the existing statistical codes in the Customs Tariff and AHECC where possible. However, the ABS will not necessarily create a statistical code for each theoretical split. The ABS may consider closing up statistical codes where:
  • the statistical reliability of aggregate data is in doubt, or
  • the cost outweighs the benefit of measuring multiple splits for a commodity.

In addition, the ABS may close up statistical codes in extreme cases where misreporting at the statistical code level results in data quality problems. This is not generally done, unless repeated liaison with importers or exporters fails to rectify the data quality problems.

OTHER CLASSIFICATIONS

While the most detailed statistics on Australia's international merchandise trade are available according to the statistical codes of the Customs Tariff and the AHECC, statistics are also presented according to broader classifications. These include:
  • the Standard International Trade Classification, Revision 3 (SITC, Rev 3);
  • the classification of Broad Economic Categories (BEC) or its related ABS variant, Balance of Payments BEC (BoPBEC); and,
  • the Australian and New Zealand Standard Industrial Classification (ANZSIC).

At the same time as the HS2007 review, changes are being made to the SITC. This is the main classification used for high level outputs of aggregate merchandise trade and trade in goods statistics. In the past, in order to maintain continuity in SITC series, the United Nations Statistics Division issued appropriate correlation tables between SITC and each new edition of HS. However, a strict period-to-period comparability was being lost for a growing number of series due to significant changes in the HS. An aim of the current review is to address these anomalies. More information about the SITC review can be found on the United Nations website at http://unstats.un.org/unsd/trade/sitcrev4.htm

It is unlikely that the HS and SITC changes will have any major impact on the international BEC or BoPBEC.

ANZSIC is used to present trade statistics on an industry of origin basis. These statistics are compiled by allocating statistical codes from the AHECC and Customs Tariff to an industry of origin based on the primary activities of the industry with which they are most commonly associated. The ANZSIC classification has been recently revised, however international trade data will not be presented according to the new ANZSIC until the July 2009 reference month.

USER OPPORTUNITY TO REVIEW STATISTICAL CODE CHANGES

As the ABS is intending to maintain the current statistical codes wherever possible, the ABS will generally not consult clients as part of this review. However, the ABS will appreciate feedback on any apparent errors in the statistical codes or concordances.

The ABS will progressively issue proposed changes to the 8-digit export statistical codes from August 2006 and then provide a limited period for interested parties to provide feedback. A similar process will be followed for the 10-digit import statistical codes, once Customs has released the 8-digit tariff items.

After the consultation period, the final new classifications will be made available progressively on the ABS website, so importers, exporters and their agents and statistical users can update their systems. It is expected that these will be available by mid to late November 2006.

IMPACT ON STATISTICAL SERIES

As occurred with the introduction of the previous update to the HS in 2002 and as occurs with subsequent changes to statistical codes in the AHECC and HS Tariff, no attempt will be made to maintain the time series of individual statistical codes i.e there will be a break in series between the HS2002 and HS2007. However, statistical codes unaffected by the introduction of HS2007 will be comparable before and after 1 January 2007 (about 15 chapters appear not to be changing with HS2007). Detailed concordances will be available to assist clients trying to follow the export or import of particular commodities over time. While it will not be explicitly ensured, it is more likely that the broader levels of the classification will be compatible over time

Subject to further investigation, ABS is unlikely to maintain time series of international merchandise trade data, on a recorded trade basis, before and after 1 January 2007. For trade data on a Balance of Payments basis, it is unlikely that the ABS will maintain the time series except for SITC at the two digit level and BoPBEC at the detailed (or 109 category) level. These plans will be confirmed in a future information paper.

ELECTRONIC PUBLICATION OF THE AHECC

In addition to being responsible for the statistical codes of the AHECC, the ABS produces the actual classification which is used by exporters and their agents and statistical users. When HS2002 was implemented in January 2002, the ABS released a hard copy of the AHECC (about 760 pages) to subscribers. Since then the ABS has issued replacement pages (usually twice a year) as a PDF.

With the January 2007 changes the ABS is planning to only release the AHECC in electronic format. The exact format is still being finalised but it is anticipated that a spreadsheet will be used with each item (e.g. 6 digit heading, 8 digit statistical code, UQ) presented in a different column. This format will facilitate electronic searching of the classification. The spreadsheet will be printable in a readable format but the presentation will not be as hard copy friendly as the current paper-based AHECC. Exporters, agents or statistical users requiring a hard copy of the AHECC will have to print their own copy.

The Australian Customs Service will continue to produce a hard copy version of the HS tariff.

Any comments on the proposed electronic release of the AHECC should be directed to the contact listed below.

FURTHER INFORMATION

It is proposed to release the following information papers during the year, with their tentative timing indicated:


July 2006- Impact on statistics of changes to AHECC, HS tariff and SITC on 1 January 2007
August 2006- Proposed changes on 1 January 2007 to statistical codes for the AHECC and the HS tariff(with chapters progressively released as they are finalised; and the release of import chapters is subject to when the 8 digit codes and duty rates are tabled in Parliament)
September 2006- Proposed changes on 1 January 2007 to the international SITC
November 2006- Changes on 1 January 2007 to statistical codes for the AHECC and the HS tariff

For further information about the proposed changes, readers can (from 14 June 2006):
  • visit the ABS website and view the changes via the Foreign Trade Theme Page (www.abs.gov.au, see Themes, Foreign Trade, Noticeboard - Changes to classifications used to present Australia's export and import statistics);
  • write, email or telephone:

HS2007 Review Team
Balance of Payments and International Trade Section
Australian Bureau of Statistics
PO Box 10
BELCONNEN ACT 2616

ph: 02 6252 5409
email: international.trade@abs.gov.au


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