How does ISIC relate to product classifications?

ISIC relates to product classifications as the activity side of one integrated system of statistical classifications. Eurostat states in its NACE background article that NACE is part of an integrated system, developed mainly under the auspices of the United Nations Statistical Division, and it lists the members of that system: ISIC for activities, CPC for products, HS for goods, CPA for European products by activity, PRODCOM for industrial production goods, and CN for foreign trade goods. ISIC classifies the activity carried on by a unit. The product classifications classify the goods and services produced.

The two sides are linked, because a product is produced by an activity, but they are not the same classification, and a code on one side does not translate directly into a code on the other without a correspondence.

What does each classification in the system classify?

Each classification in the system classifies a different characteristic, and the distinction is the point of the system. ISIC classifies economic activities, by kind of activity. CPC, the Central Product Classification, classifies products, meaning goods and services, in a central system maintained by the United Nations. CPA, the Classification of Products by Activity, is the European classification of products by activity, which groups products by the activity that produces them. PRODCOM is the classification of goods used for statistics on industrial production in the European Union. HS, the Harmonized Commodity Description and Coding System, classifies goods for customs and trade, and CN, the Combined Nomenclature, is the European classification of goods used for foreign trade statistics, built on HS. Eurostat gives those definitions in its NACE background article, and it states that the integrated system allows the comparability of statistics produced in different statistical domains, so that, for instance, production statistics reported under PRODCOM can be compared with trade statistics produced under CN.

How are activity and product classifications linked?

Activity and product classifications are linked through the production relationship: an activity produces products, and a product is the output of an activity. CPA makes that link explicit in its name, by grouping products by the activity that produces them, and Eurostat notes that NACE is closely linked with CPA, as the Central Statistics Office also states on its NACE page. The link is not an identity. One activity can produce more than one product, and one product can be produced by more than one activity, in different units or in different countries. A correspondence between an activity category and a product category therefore shows a relationship, not an equivalence, and it must be read with the mapping type and the notes for both categories. A reader who treats an ISIC code as a product code, or a CPA code as an activity code, confuses the input side of the system with the output side.

Classification	Classifies	Custodian or level, as stated by Eurostat
ISIC	Economic activities	United Nations, international
CPC	Products, goods and services	United Nations, central
CPA	Products by activity	European
PRODCOM	Goods, for industrial production statistics	European
HS	Goods, for customs and trade	International, harmonized system
CN	Goods, for foreign trade statistics	European, built on HS

The table is a system map, not a correspondence table. It names what each classification classifies, and the level at which it operates. It does not state that any named category in one classification corresponds to any named category in another. That is the work of the correspondence tables between the classifications, and it is done category by category.

Why does the distinction matter for a NACE reader?

The distinction matters for a NACE reader because NACE codes are often shown alongside product codes in datasets, reports, and listings, and the two codes can look similar while meaning different things. A NACE class code has four digits. A CPA code can share the same digits at the higher levels, because CPA is grouped by activity, and the Central Statistics Office notes that NACE codes are very similar to CPA at the three digit level, in its account of an earlier NACE and CPA pairing. Similarity is not identity. A NACE code describes the activity of a unit. A CPA code describes the product. A unit classified in a NACE class can produce products classified in more than one CPA category, and a product classified in one CPA category can be produced by units in more than one NACE class. A citation should therefore name the classification, not just the code, and should state whether the code is an activity code or a product code, so that a reader does not compare an activity total with a product total as if they were the same measure.

How is a product code checked?

A product code is checked in the product classification publication for the version in use, in the same way that an activity code is checked in the activity classification publication. The reader opens the product category, reads its title and its note, and records the version, the reference period, and the correspondence used, where a correspondence was applied. Where a product code is shown with a NACE code, the reader should check both, and should record the relationship between them as stated in the correspondence, rather than assuming that the shared digits mean a shared category. The Eurostat NACE background article is the source for the system map in this guide, and the product classification publications are the sources for the product categories themselves. No product category title is asserted in this guide, because no product classification publication was consulted in detail for it, and a title from a secondary source would be unverified.

What does the system not decide?

The integrated system of classifications does not determine the code for any unit, and it does not decide tax, licensing, funding, collective agreement or social security questions. It is a system of statistical classifications, for the collection, presentation and comparison of statistics. The entry for a specific business is confirmed with the national statistical institute or the business register that holds the record, in the activity classification the register uses. The meaning of a product category is confirmed in the product classification publication for the version in use.

Name the classification with every code, state whether it is an activity code or a product code, and confirm a business entry with the institute or register that holds it. ”