Registry Detail

1007

Proposal

07/09/2001 16:50:00

Amend the explanatory notes under CPC Group 624: Other Non-Store Retail Trade Services: Direct selling companies, as part of the distribution services sector, face a number of barriers to cross-border growth, trade and investment. WFDSA proposes that point two of the Explanatory Notes under Group 624: Other Non-Store Retail Trade Services of the CPC (Version 1.0) be amended by striking "door-to-door sales persons" and inserting "door- to-door sales or direct sales" and include the standard, accepted definition of direct selling, as follows: Door-to-door sales or direct sales, which is defined as a method of consumer product and services distribution via sales in a person-to-person manner, way from a fixed retail location primarily through independent salespeople and distributors who are compensated for their sales and for their marketing and promotional services, based on the actual use or consumption of such products or services. This proposal is supported by the World Federation of Direct Selling Associations, the leading global organization representing the direct selling industry in more than 50 countries. The U.S. Trade Representative has also supported an update of the CPC to reflect a more accurate and industry-accepted definition of direct selling.

Also see ID#s 938, 1022, 1020, 1348 Detailed description of proposal Classification of Door-to-Door Sales or Direct Sales Retailing and wholesaling, along with commission agents, independent contractors and franchising services are traditionally considered the prime elements of the distribution service sector within the GATS (General Agreement on Trade in Services) framework. Modem business expands these distribution services to include additional ancillary activities and services to allow the unfettered ability to move merchandise through a supply chain, Direct selling is an integral part of the distribution services sector. The WTO (World Trade Organization) Services Sectoral Classification List defines "distribution services" as encompassing: Commission agents' service: sales on a fee or contract basis by an agent, broker or auctioneer or other wholesalers of goods/merchandise; Wholesaling services: the sale of goods/merchandise to retailers, including direct sellers, to industrial, commercial, institutional, or other professional business users, or to other wholesalers; Retailing services: the sales of goods/merchandise for personal or household consumption either from a fixed location (e.g., store, kiosk, etc.) or away from a fixed location, e.g., direct selling in a person-to-person format. Franchising services: the sale or use of a product, trade name or particular business format system in exchange for fees or royalties. Product and trade name franchising involves the use of a trade name in exchange for fees or royalties and may include an obligation for exclusive sale of trade name products. Business format franchising involves the use of an entire business concept in exchange for fees and royalties, and may include the use of a trade name, business plan, and training materials. Moving products from the port of entry through the supply chain to the ultimate individual consumer (whether it is an individual or another business), is also characterized by additional activities including, but not limited to: inventory management, direct contracting for production of merchandise domestically and internationally, customs brokerage activities, consolidation and deconsolidation of merchandise, delivery and transportation services (including road, rail, water, air and postal service), storage and warehousing services, garage services and fleet maintenance, installation and product services, sales promotion, marketing and advertising services, which themselves require access to other ancillary services including telephone, television, radio and Internet services, and protection of retail trademarks. CPC Revision Proposal WFDSA proposes that point two of the Explanatory Notes under Group 624: Other Non-Retail Trade Services of the CPC (Version 1.0) be amended by striking "door- to-door sales persons" and inserting "door-to-door sales or direct sales" and include the standard, accepted definition of direct selling, as follows: Door-to-door sales or direct sales, which is defined as a method of consumer product and services distribution via sales in a person-to-person manner, away from a fixed retail location primarily through independent salespeople and distributors who are compensated for their sales and for their marketing and promotional services, based on the actual use or consumption of such products or services. Is a similar approach already used at a national or regional level? The definition of direct selling, above, has been submitted for inclusion in the U.S.- Singapore Free Trade Agreement, the Free Trade Area of the Americas (FTAA) and the U.S.-Chile Free Trade Agreement. List of resource materials / other concerned parties: For resource materials about direct selling globally and the World Federation of Direct Selling Associations, please refer to the WFDSA website, located at http://www.wfdsa.org. Concerned parties include the WFDSA and its member DSAs, which include the DSAs of Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile, Colombia, Costa Rica, Czech Republic, Denmark, Finland, France, Germany, Greece, Guatemala, Hong Kong, Hungary, India, Indonesia, Ireland, Israel, Italy, Japan, Korea, Malaysia, Mexico, Netherlands, New Zealand, Norway, Panama, Peru, Philippines, Poland, Portugal, Russia, Singapore, Slovenia, South Africa, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey, United Kingdom, United States, Uruguay, and Venezuela. Other comments Background materials on the WFDSA available. Also see http://www.wfdsa.org, N. Langkjaer - 15/1/2001 Given this internationally agreed definition, is it complete? What about a company who does it on its own account, not through independent salesmen, but with own staff? (if it exists) Also the following discussion from TSG 03/2001 1. Electronic agents and brokers If these are agents and brokers using electronic means to conduct business, they are currently included in the existing CPC group 612. If there is a need to separate those out, a possible scenario would be to create a new group and change the name of the existing group accordingly: 611 Wholesale trade services, except on a fee or contract basis 612 Wholesale trade services, except electronic, on a fee or contract basis 613 Wholesale trade services, electronic, except on a fee or contract basis A clear definition of “electronic” vs. “non-electronic” wholesale services would be absolutely necessary. 2. Electronic retail shopping This is now included in CPC group 623. However, there is a small inconsistency in the wording of the notes. Group 623 refers to services by stores only, while the title of 624 reads “Other non-store retail trade services”. If group 624 is “other” non-store, where is the rest? It’s not in 623. So the first question here would be: Does 623 really cover only sales by stores (through catalog, internet etc.) or does it cover all of these sales by any unit, i.e. including non-store? From a product point of view, there should be no distinction between stores and non-store units providing a mail order service. It may be sufficient to just replace the word “store”. Electronic retail shopping, since it relates to all products, should be singled out in the first dimension, as a new group (3-digit) code. 3. Electronic retail auctioning A treatment similar to that in ISIC could place this in group 624. However, since the wholesale/retail sector has no link to ISIC published, group 625 seems more appropriate. If it has to be identified separately, a new group (3-digit) code has to created. 4. Auctioning houses (retail), in-store In the current CPC, this is covered under 621, similar to the treatment in ISIC. If it has to be identified separately, a new group (3-digit) code has to created. 5. Auctioning houses, wholesale In the current CPC, this is covered under 612. If it has to be identified separately, a new group (3-digit) code has to created. Summary There are two options to explicitely include these services in the CPC: Add descriptions to the explanatory notes, unless they are already there, or create new classes. Option 1: This would only require to add a single line to each of the CPC groups 612, 621 and 624. Electronic retail shopping is already mentioned in 623. Option 2: This would result in a new structure, which has a much greater impact in the CPC. All these new groups could be linked to all available products listed in the CPC. Such a new structure could look like the following: Division 61 WHOLESALE TRADE SERVICES 611 Wholesale trade services, except on a fee or contract basis 612 Wholesale trade services, except electronic, on a fee or contract basis, except auctions 613 Wholesale auctioning 614 Wholesale trade services, electronic, on a fee or contract basis houses Division 62 RETAIL TRADE SERVICES 621 Non-specialized store retail trade services 622 Retail auctioning 623 Specialized store retail trade services 624 Mail order retail trade services, except electronic retail shopping 625 Electronic retail shopping 626 Other non- store retail trade services 627 Retail trade services on a fee or contract basis 628 Electronic retail auctioning Option 3: New categories are added at the group (3-digit) level, but are not related to the product breakdown used for groups 611-625. In this case, codes similar to option 2 can be used. However, the presentation in the printed publication will be rather difficult, unless one completely changes the current format (first listing the group level for the first dimension-type of business), then listing all the products (second dimension). While new codes for the retail trade could be listed after the products, this will not work for the wholesale services. Comment The whole of new categories in option 2 seems to much. Even with only a few of them, I feel that this breakdown puts too much emphasis on the activity side and not on the product/service provided. I prefer option 1. RB

Change CPC V.1.0 code 624 to read: Other non-store retail trade services This group includes: - retail sales services through vending machines - the retail sales services of market stalls - the retail sales services of door-to-door sales or direct sales, defined as a method of consumer product and services distribution via sales in a person-to-person manner, away from a fixed retail location primarily through independent salespeople and distributors who are compensated for their sales and for their marketing and promotional services, based on the actual use or consumption of such products or services.