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Schedule B Codes, NAICS and NAPCS: The Similarities and Differences

Wed Sep 19 2018
Written by: Adam Grundy, Supervisory Statistician, International Trade Management Division, U.S. Census Bureau
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Exporting companies use the Schedule B classification system to classify their products for export from the United States. Did you know there are also two other classification systems used to gather additional information about U.S. businesses and products?

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The first one is called the North American Industry Classification System (NAICS). The second is called the North American Product Classification System (NAPCS). There are benefits to understanding the similarities and differences between NAICS, NAPCS and Schedule B codes for your business endeavors.

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North American Industry Classification System (NAICS)

The NAICS was developed under the direction and guidance of the Office of Management and Budget (OMB). It was developed as the standard for use by federal statistical agencies in classifying business establishments for the collection, tabulation, presentation and analysis of statistical data describing the U.S. economy. The NAICS is based on a production-oriented concept, meaning that it groups establishments into industries according to similarity in the processes used to produce goods or services. The NAICS is designed for statistical purposes, but it is frequently used for various administrative, regulatory, contracting, taxation and other nonstatistical purposes.

The NAICS is an industry classification system, not a product classification system. As a complement to the NAICS, the NAPCS was developed under the direction and guidance of OMB and also in collaboration with the governments of Canada and Mexico. This system incorporates all of the outputs/products of the industries defined in the NAICS, with “product” referring to goods produced and services provided. For statistical purposes, a business establishment is assigned one NAICS code based on its primary business activity, whereas multiple NAPCS codes can be linked to any one establishment to indicate its various products.

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North American Product Classification System (NAPCS)

The NAPCS structure comprises six hierarchical levels. At the highest level of the structure, there are 24 sections. Each section consists of subsections, divisions, groups, subgroups and trilateral products. The NAPCS, a product classification system, and the NAICS, an industry classification system, are independent but complementary. A product produced by multiple industries carries the same title, definition and code in the NAPCS, regardless of its industries of origin. Products are linked to the industries that produce them, and industries can be linked to the products they produce. The NAPCS also provides a comprehensive list of products adopted by the United States, Canada and Mexico and will be incrementally implemented into economic statistics programs. These detailed product data will provide policymakers and the business community with the information needed to understand our ever-changing economies.

The NAPCS enables the collection and tabulation of the source data needed to improve key economic measures of growth, prices and productivity, and comparisons of these measures to international trade data. The NAPCS allows consistent reporting of output and standardized concordances to international trade classifications in order to improve comparisons of production output and international trade data. It also provides useful information to industry analysts to estimate market share of their firms or to investigate the growth of demand for their products.

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Schedule B

Lastly, but critically important for the trade community, Schedule B codes are used for all exports from the United States and are based on the international Harmonized System (HS). There are approximately 9,000 total 10-digit Schedule B commodity codes, which are organized into 97 chapters within 22 sections. The U.S. adopted this system as both its export classification system (Schedule B) and import classification system (Harmonized Tariff Schedule [HTS]). The first six digits of the Schedule B codes and HTS are identical with respect to their descriptions for Chapters 1 through 97. Past the six-digit level, the comparison varies based on detailed commodity descriptions. For example, Schedule B subheading 0713.10 is the international harmonized code for “dried peas.” However, the 10-digit Schedule B code of 0713.10.4020 is the commodity code for “dried green peas.”

The chart below shows the similarities and differences between the Schedule B codes and NAICS codes for a mechanical pencil. (The NAPCS codes are not included in this table. There will be more detail about NAPCS structure later.)

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Schedule B

Definition

Description


NAICS

Description

96

2-digit chapter in which a commodity is classified


“Misc. Manufactured Articles”

33

2-digit sector for Manufacturing

9608

4-digit heading within the chapter

“Ball point pens; felt tipped and other porous-tipped pens and markers; fountain pens, stylograph pens and other pens; duplicating stylos; propelling or sliding pencils (for example, mechanical pencils); etc.”


3399

4-digit NAICS for “Office supplies manufacturing”


9608.40

6-digit Harmonized System code or subheading


“Propelling or sliding pencils”

339940

6-digit NAICS code for “Pencils manufacturing industry”

9608.40.4000

10-digit statistical classification

“Propelling or sliding pencils other than mechanical”




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Although the three types of classification systems have similarities, they also have a great deal of differences. The NAICS and NAPCS are revised every five years, and the Schedule B numbers can be revised twice a year. Also, Schedule B codes are only used for exports, while the NAICS and NAPCS are used for all North American businesses. Each classification system is maintained by authorities who implement revisions or additions according to the established schedule. It is essential for adjustments and revisions to be made periodically to keep pace with changes over time.

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Codification System:

SCHEDULE B

NAICS

NAPCS

Purpose:

Used for exports from the United States

Used for all North American businesses

Used for all North American products

Industry Classification System:

Oriented toward type of product

Used to help classify businesses

Used to help classify products

Organization:

International Harmonized codes or Commodity codes

The NAICS structure comprises five hierarchical levels: Sector, Subsector, Industry Group, Industry and National Industry

The NAPCS structure comprises six hierarchical levels. At the highest level of the structure, there are 24 sections. Each section consists of subsections, divisions, groups, subgroups and trilateral products

Code Structure Length:

10 digits in a code

Up to 6 digits in a code

Up to 11 digits in a code

Revision Frequency:

Twice a year (typically in January and July)

Every five years

Every five years

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The NAICS, NAPCS and Schedule B codes have a great impact on the classification of North American businesses, products and exports. Without NAICS codes, it would be incredibly difficult to categorize multiple businesses by their name alone and burdensome for a data user and a statistician to speak a similar “language.” Without Schedule B codes, the same could be said about classifying U.S. exports of a wide range of products. Additionally, without proper NAPCS codes, it would be difficult to classify finished products without a proper system in place.

For more information on Schedule B codes, visit the U.S. Census Bureau’s Foreign Trade webpage. For additional classification information, visit our NAICS and NAPCS webpages.

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