RESTRICTED
WORLD TRADE GPA/IC/W/22
18May1995
ORGANIZATION(95-1317)
Interim Committee onGovernment Procurement
Working Group onStatistical Reporting
NOTE ONTHE DISCUSSION ATTHE MEETING OFTHE
WORKING GROUP HELD ON4APRIL 1995
Note bytheSecretariat
I. INTRODUCTION
1. TheWorking Group onStatistical Reporting, which wasestablished bytheInterim Committee
onGovernment Procurement atitsmeeting on29June1994, helditssecond meeting on4April 1995.
Thediscussion concentrated ontheissue ofuniform classification systems forpurposes ofstatistical
reporting andontheissue ofcountry oforigin.
II. UNIFORM CLASSIFICATION SYSTEM
2. TheWorking Group hadbefore itaSecretariat document summarizing themain arguments
advanced inprevious discussions heldintheCommittee onGovernment Procurement onauniform
classificationsystemforstatisticalreporting(GPA/IC/W/16).Onthebasisofthisdocument,theWorking
Group examined inturneachoftheclassification systems identified together withthesystem developed
forNAFTA purposes.
3. Bywayofgeneral remarks, theviewwasexpressed bysome delegations thatthetwocentral
objectives ofanyclassification system should betransparency andsimplicity. Through theclassification
system(s) usedforstatistical reporting, Signatories should beabletoappreciate what others were
procuring, notonlyinterms ofvalue butalsointerms ofthekindofgoods andservices. Toensure
thatthebenefits ofthisAgreement could beunderstood byinterested constituents within eachSignatory,
acertain level oftransparency oftheprocurement opportunities opened upwasnecessary. Onthe
other hand, uniform classification system(s) should beflexible enough toallow translation ofnational
statistics intotheclassification system(s) under theAgreement. Anysystem chosen should besuch
soastoenable tominimize theamount ofdetail andeffort ofreporting. Itwasalsosaidthatthechoice
ofanyclassification system waswithout prejudice tothechoice oflevel ofdetail, expressed inthe
number ofdigits; thiscould varywithin aparticular system, depending onthelevelofdetail desired.
4. Inthediscussion onthevarious options forclassification systems, thefollowing points were
made bydelegations.
TheSystem of26Product Categories, Extended
5. Several delegations expressed theviewthat,fortheclassification ofgoods, there wasmerit
inexploring thepossibilities ofbuilding onthesystem of26product categories, expanding asnecessary
thenumber ofcategories inareas inwhich procurements were generally concentrated orwhere
derogations under theAgreement existed. Onedelegation offered tosubmit apaper illustrating how
thepresent system related totheoneusedbyitsgovernment, showing lacunae inthesystem of26
product categories where expansion ofthesystem might bewarranted. TheEuropean CommunitiesGPA/IC/W/22
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distributed apaper containing some initial analyses ithadcarried outofthederogations andexclusions
intheAgreement aswellasofthecategories ofproducts inwhich itsprocurements tended tobe
concentrated withregard togoods, withaviewtoidentifying categories ofproducts which might be
separately identified forstatistical reporting (document GPA/IC/W/20). Bywayofexample, computers
andelectrical equipment werementioned aspossible areas where more detail might berequired. One
delegation mentioned thatitwasintheprocess ofidentifying areas inwhich itsprocurement tended
tobeconcentrated. Itwasalsosaidthatthesystem of26product categories should beupdated so
astobebased ontheHarmonized System rather thanontheCCCN (Customs Co-operation Council
Nomenclature).
UNCPC
6. Theviewwasexpressed thattheuseofUNCPC fortheclassification ofservices merited further
reflection. Inthiscontext itwasmentioned thattheNAFTA classification system hadincorporated
theUNCPC classification forconstruction services. Onedelegation stressed thedesirability ofreporting
services ofafairly aggregate leveloftheUNCPC. Asfarastherelation between UNCPC andthe
HSwasconcerned, itwaspointed outthat,asageneral rule,eachUNCPC goods itemwasanaggregate,
oraregrouping, ofoneormore HSitems; inother words, HSitems werethebuilding blocks ofthe
goods partoftheUNCPC. Globally, therewasastrict correlation between thegoods partofUNCPC
andtheHS.
Harmonized System
7. Onedelegation wasoftheviewthattheHSwasnotsuitable forpurposes ofstatistical reporting
under theAgreement onGovernment Procurement because itwastoocomprehensive, containing a
levelofdetail unnecessary forgovernment procurement anddidnotcorrespond sufficiently tothekind
ofgoods being procured. Itsauthorities would finditalmost impossible toestablish anyreliable
concordance between theHSandtheirnational system. TheHShadbeendeveloped forcustoms
classification purposes andnotforprocurement purposes. Another delegation cautioned against such
precluding oftheHarmonized System from theoutset, since itwasdesirable thatanysystem chosen
should beuniversal andnotlinked toaspecific geographical area,andshould beonewhich wasused
inthenormal course oftrade, criteria which theHSfulfilled. Itwasalsonoted thattheHS,asabuilding
block ofother systems suchastheUNCPC ortheCPA(Classification ofProducts byActivity) used
bytheEuropean Communities, allowed some sortofcorrelation withthose systems.
NAFTA Classification System
8. Twodelegations highlighted themerits oftheNAFTA classification system which hadbeen
developed specifically forNAFTA andwasbased ontheUSFederal Supply Classification System
(FSC). Thesystem hadbeenestablished specifically forgovernment procurement purposes andit
covered bothgoods andservices, aswellasservices related togoods. Itmetrequirements bothof
simplicity andtransparency. Onedelegation saidthatamajor problem wastheabsence ofacorrelation
between theNAFTA system, ontheonehand, andtheUNCPC andtheHSontheother; hewould
welcome anyinformation onthis. Inthiscontext, oneofthedelegations using theNAFTA system
recalledthatin1981itsauthoritieshaddevelopedaconcordancebetweentheFSC,onwhichtheNAFTA
classification system wasbased, andthe26product categories, which hewould behappy toshare with
delegations. Another delegation observed thattheNAFTA system, ortheFSConwhich theNAFTA
system isbased, wasnotuniversally usedwhich made italesslikely candidate.
9. Therepresentative oftheUnited States expressed theviewthattheFederal Supply Classification
system (FSC) wasprobably theclassification system which wasusedmostuniversally byprocurement
officials. Ithadbeendeveloped originally bytheUSDepartment ofDefense andwasemployed byGPA/IC/W/22
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anumber ofAsian countries andbyNATO. Onedelegation saidthatFSC'sheavy biasondefence
didnotmake itthemostuseful candidate forpurposes ofreporting statistics under theWTO Agreement
onGovernment Procurement. Secondly, FSC, being afederal classification system, didnotnecessarily
make itsuitable forreporting statistics bythesub-federal governments norbyutilities. Inthiscontext,
therepresentative oftheUnited States saidthatthestates inhiscountry usedavariety ofclassification
systems. Inthefirstfewyears, itmight bedifficult totranslate themintoauniform system. Acertain
degree offlexibility maybenecessary therefore tobegin with, bothwithrespect tothemandutilities,
inreporting statistics according toauniform classification system.
10. TheChairmaninvitedthedelegationsoftheUSandCanadatosubmitanyadditionalinformation
theyhadontheNAFTA classification system interms ofitsadvantages anddisadvantages, including
concordances withother systems. Herecalled thattheNAFTA classification system itself hadbeen
reproduced andcirculated tothemembers oftheInterim Committee indocument GPA/IC/W/11 dated
23November 1994.
11. Inconcluding thediscussion onclassification systems, theChairman invited delegations to
submit anywritten material theythought relevant, bothdescriptive andinterms ofadvantages and
disadvantages, preferably wellinadvance ofthenextmeeting.
III. COUNTRY OFORIGIN OFPRODUCTS AND SERVICES
12. TheWorking Group hadbefore itaSecretariat document describing thewayinwhich the
question of"nationality" wasdefined incertain WTO Agreements (GPA/IC/W/15), aswellastwo
documents circulated bytheEuropean Communities, regarding theestablishment ofalinkbetween
theissueoforigin andthedegree oftransparency ofnotices ofintended procurement asawayofensuring
effective monitoring ofprocurement (GPA/IC/W/19 andGPA/IC/W/20).
13. TheGroup considered whether therulesoforigin usedforthepurpose ofstatistical reporting
inArticle XIX:5 should bethesame asthose applied under Article IV,which arethose usedinthe
normal course oftrade. Onedelegation expressed theviewthattheyshould. Other delegations pointed
out,however, thatcriteria other thanthose usedinthenormal course oftrade might berelevant, such
asthevendor supply point, orthelocation where theproduct wasmined, produced ormanufactured
andthatthisquestion merited further reflection. Moreover, thepoint wasmade that,forpractical
purposes, itwould benecessary tohavesimple andeasily-applied rules forstatistical purposes.
14. Onedelegation noted thatitsauthorities weretrying tocollect statistics onthecountry oforigin
onthebasis oftheaddress ofthewinning tenderer. Thisdidnotalways giveatrueaccount ofthe
degree ofmarket opening, since foreign suppliers orsuppliers ofimported goods might often have
alocaladdress. Inthelightofthisdiscrepancy, hemade thepoint thatanydiscussion ontheissue
oforigin inthecontext ofstatistical reporting should beviewed inthebroader context ofhowtoensure
effectivemonitoringofprocurementcoveredbytheAgreement.Heobservedthatreviewingthestatistics
ontheaward ofcontracts alone wasnotsufficient tomonitor theapplication oftheAgreement and
suggested thattheGroup alsolookatother ways ofmonitoring itsapplication, inparticular through
statistics ontransparency ofnotices ofintended procurement. Itmight bedesirable toestablish alink
between thedegree oftransparency ofthose notices andtheaward ofcontracts under theAgreement.
Inthiscontext hedrew theattention ofdelegations totwopapers hisdelegation haddistributed
(GPA/IC/W/19 andGPA/IC/W/20). Another delegation cautioned thatitsauthorities needed some
timetoreflect onthissuggestion.
15. TheGroup thenturned todiscuss theorigin ofaservice and,inthiscontext, theconcept of
nationality. TheChairman recalled thattheissue of"nationality ofthesupplier" hadcome upintheGPA/IC/W/22
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previous meeting ofthisWorking Group inthediscussions onhowtodefine theorigin ofaservice.
Theviewhadbeenexpressed atthattimethatthenationality ofaservice supplier might beusedas
abasisfordefining theorigin ofaservice forstatistical reporting purposes. Onedelegation, referring
tothepaper oftheSecretariat describing thevarious ways inwhich "nationality" wasdefined inthe
different international legalinstruments (GPA/IC/W/15), expressed theviewthatintheprocurement
context there wasaneedtosimplify thewayinwhich thenationality ofasupplier wasdefined. One
wayofsimplifying wasperhaps torecognize thatcertain suppliers weremultinational companies, and
toprovide forsuchacategory. Hisdelegation wascurrently studying theissue andhewould like
toputthissuggestion forward totheotherdelegations fortheirconsideration. Another delegation noted
thatitsauthorities were currently studying theissue oftheorigin ofaservice andhehoped tohave
amore definitive position onthisissue atalaterstage. Arepresentative oftheSecretariat mentioned
thatanInter-Agency TaskForce onServices Statistics, inwhich representatives ofvarious international
organizations suchastheWTO, IMF, UNCTAD, OECD andEUROSTAT participated, wasinthe
process ofstudying thequestion ofhowtodefine theorigin ofaservice inawaywhich wassusceptible
ofready application forstatistical reporting purposes; thediscussion inthiscontext hadfocused on
theconcepts ofdetermining origin ofthefirstforeign parent oroftheultimate beneficial owner.
16. TheChairman, insumming upthediscussion, encouraged delegations todeepen theirreflection
onthevarious issues discussed andinvited themtosubmit anythoughts inwriting forthenextmeeting.
Hementioned thattherewasacertain urgency totheworkoftheWorking Group, inlightofitsmandate,
which called forittoreport totheInterim Committee, which normally should cease toexistatthe
endofthisyear, andinlightofthenature ofitswork, which wasextremely relevant totheoperation
oftheAgreement, onceitwould enter intoforce nextyear.
IV. DATE OFTHE NEXT MEETING
17. Itwasagreed thattheChairman would setthedateofthenextmeeting inconsultations with
delegations, which would again coincide withafuture meeting oftheInterim Committee onGovernment
Procurement.