Merchandise trade data can be viewed in several ways by using different economic classifications, allowing the same base information to inform a wide range of topics.
New Zealand’s merchandise trade data is collected by the New Zealand Customs Service using detailed commodity descriptors in a format consistent with the international standard of the Harmonised System classification (HS). The HS can then be reclassified or restructured into other classifications.
The following five economic classifications can be used to give a picture of New Zealand’s merchandise trade data:
New Zealand Harmonised System Classification
The United Nations recommends the use of the Harmonised System as the primary commodity classification for the collection, compilation and dissemination of international merchandise trade statistics. The New Zealand Harmonised System Classification (NZHSC) is the main output classification for merchandise trade data in New Zealand.
Overseas trade data is supplied to the New Zealand Customs Service by exporters and importers, or their agents, and then on to Statistics New Zealand in the format of the 'Tariff of New Zealand' (also known as the Customs Tariff).
Statistics NZ edits the data and translates it into the NZHSC for output purposes. The NZHSC follows a hierarchical structure, comprising 21 sections, 98 chapters (2-digit), 1228 headings (4-digit), and 5,059 sub-headings (6-digit). This structure is further broken down into approximately 13,500 statistical keys (10-digit). The NZHSC is internationally comparable at the 2-, 4- and 6-digit levels, but is specific to New Zealand at its most detailed 10-digit level.
In its merchandise trade Hot Off The Press releases, Statistics NZ uses the first two digits (or chapter) of the NZHSC code as the primary commodity classification. However, for some chapters, specific commodities are separated out. For example, the 'milk powder, butter and cheese' grouping of 4-digit headings within chapter 04 is considered more useful than the whole of the chapter, which also includes birds’ eggs and honey. In other instances, chapters are grouped together; for example, chapters 72 and 73 are combined to give the category 'iron and steel and articles'.
New Zealand’s exports have changed over time, but these three groups of NZHSC chapters and subheadings have been in the top five of New Zealand’s commodity exports since 1990:
- milk powder, butter and cheese (HS0401-0406)
- meat and edible offal (HS02)
- logs, wood and wood articles (HS44). |
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New Zealand Broad Economic Category
The New Zealand Broad Economic Category (BEC) is a classification system which is used for analysis of imports by end-use. Under the classification system each 10-digit NZHSC code is allocated to a five-digit BEC code.
The BEC codes can be combined to produce aggregates which are directly comparable to the three basic expenditure classes of capital, intermediate, and consumer goods. When it is not possible to completely align a commodity to its end-use, the BEC code is determined by the main end-use. For example, the main end-use of most food commodities is household consumption; therefore, they are classified as consumption goods. This is despite the fact that businesses such as restaurants also use many of the same food commodities.
There are some categories which are not allocated to capital, intermediate, or consumption goods. They are:
- motor spirit – because it is commonly used as an intermediate input by industry or by consumers
- passenger motor vehicles – because they are commonly used as capital goods or as durable consumer goods
- military equipment, including arms and ammunition (usually classified as a separate category called 'military and other goods') – because this equipment is classified as a separate expenditure class within gross domestic product.
| New Zealand is a net importer of capital goods, but a net exporter of consumption goods. Capital goods account for about one-fifth of all imports, but less than one-tenth of exports. Consumption goods account for around one-quarter of all imports and nearly half of all exports. Intermediate goods (goods that are consumed or transformed in production processes) account for approximately two-fifths of both imports and exports. |
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Australia New Zealand Standard Industrial Classification
Statistics New Zealand uses the Australia New Zealand Standard Industrial Classification (ANZSIC) to break down most of its economic and financial statistics by standard industries. Exports and imports may be analysed in various ways using merchandise trade data classified by ANZSIC. For example, classifying exports data in this way shows the extent to which an industry’s output is exported, which in turn gives an indication of how the industry might be affected by world markets. Classifying imports by ANZSIC is also useful for analytical purposes, such as the examination, at industry level, of the degree of import substitution for domestic production.
There is no exact match available from trade data (collected by NZ Customs) to the ANZSIC classification, but Statistics NZ has two methods of allocating an ANZSIC code to trade transactions, both of which have strengths and weaknesses.
- The original method (which has been available for many years) is that each 10-digit code of the NZHSC is allocated a 7-digit ANZSIC code corresponding to the industry which characteristically produces that commodity. This method is strongest from a exports perspective. For example, the NZHSC code for fresh apricots has been allocated to ANZSIC class A011600 ‘stone fruit growing’ while the NZHSC codes for canned apricots have been allocated to ANZSIC class C213000 ‘fruit and vegetable processing’. However, the manufacturing industry of any particular commodity is not necessarily its exporter, and is unlikely to be its importer.
- A second method associates the trading entities (recorded in the customs trade data) with the Statistics NZ record of businesses within New Zealand (known as the business frame). By aggregating the overseas trade records of individual businesses (within an industry), the resulting ANZSIC values are a good record of which industries did the exporting or importing of goods. This method of association, however, produces a close but imperfect match between the two data sources, introducing some level of inaccuracy. Furthermore, the resulting figures do not necessarily indicate which industry produced or used the goods.
The original method allocates a high proportion of trade to the manufacturing industries. In comparison, the second method gives a lower ANZSIC value for manufacturing industries, whilst wholesale industries are shown to be larger than under the original method.
For further information on the issues and limitations of analysing trade data by ANZSIC, please see the contact details at the bottom of this page.
| Using the original method (see above) of concording ANZSIC and NZHSC based on production, manufacturing (ANZSIC C) makes up approximately 87 percent of all exports and imports. ANZSIC C21 (food, beverage and tobacco manufacturing) accounts for nearly half of all merchandise exports, while ANZSIC C28 (machinery and equipment manufacturing) accounts for about two-fifths of all imports. |
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The Standard International Trade Classification (SITC) is an output classification developed by the United Nations, designed as an analytical tool for economic analysis. Like the Harmonised System (HS), it is a commodity-based classification which groups items based on physical or functional descriptors, rather than theoretical ones. It diverges from the HS by providing a more high-level aggregation of commodity types, and includes some simple implications regarding level of processing.
At its most detailed, the SITC goes to a 5-digit level, the majority of which concord with 6-digit HS codes. Therefore, while the SITC does provide a good overview and a reasonable amount of detail, it is not ideal for questions about detailed commodity information. At its top (1-digit) level, the way commodities are aggregated has simple level-of-processing implications, a feature that was used advantageously in the Level of Processing classification (see below).
| As suggested by the more detailed commodity information available from the Harmonised System, trade figures by SITC show that food and live animals dominate New Zealand merchandise exports, while machinery and transport equipment dominate imports. |
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Level of Processing classification
The New Zealand Standard Trade Classification – Level of Processing (LOP) was approved in early 2008 as a standard output classification for publishing overseas trade data. Its purpose is to give an indication of how processed New Zealand’s imports and exports are, and whether value is being added to products domestically or overseas.
The LOP classification was developed by Statistics NZ's overseas trade team in response to requests for this type of breakdown from public and private sector stakeholders.
Unlike the classifications already mentioned, LOP is not a direct aggregation of Harmonised System codes – it is constructed using SITC codes. This allows the LOP classification to take advantage of a top-level split in the SITC, where sections 0–4 can be considered 'primary products' and sections 5–8 'manufactures'. The LOP classification mirrors this division at its top level. These two groups are further split into 'processed' or 'unprocessed' primary products, and 'simply transformed' or 'elaborately transformed' manufactures.
The LOP classification has a five-level hierarchy, which progresses from theoretical divisions at the higher levels to more descriptive commodity groupings at the more detailed levels. The Harmonised System should always be the default source for detailed commodity information.
| In line with the SITC, the LOP classification shows that New Zealand is mainly an exporter of primary products. Approximately two-thirds of exports are classed as primary products, with a fairly even split between 'processed' and 'unprocessed' primary products. Around three-quarters of New Zealand's imports are classed as manufactures, with the majority of these fitting into the category of 'elaborately transformed' manufactures. |
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These five classifications enable the same data to provide varied information on New Zealand's overseas merchandise trade. To take full advantage of the available information, it is important to use an appropriate classification for your research interests. For detailed commodity information, HS data should always be the default source.
For further information contact Customer Services: info@stats.govt.nz.
Related article
This page updates the article 'Some ways to analyse trade data', published in June 2000.
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