Classifying Your Goods for Export and Import
Harmonized Commodity Description and Coding System
The World Customs Organization (WCO) developed the Harmonized Commodity Description and Coding System, known as the "Harmonized System" or "HS". The WCO have classified more than 5,000 commodity groups at a 6-digit code level. Over 200 countries use the uniform 6-digit classification, as a basis for their own Customs tariffs and trade statistics records.
There are Commodity Description Codes for over 98% of products, classifying products from a pin to an elephant. These codes assist in identifying what the product is for customs clearance purposes, so that correct duties, taxes can be charged, preferential trade agreements can be applied, and import or export restrictions can be identified.
What are HS Codes, Commodity Codes, Tariff Codes, HTS Codes and USHTS Codes?
When moving your products between different countries you must classify them correctly using the Harmonized System. However, most countries require products to be classified at a more elevated level than the 6-digit Harmonized System and the codes can go up to a 14-digit level to allow for tariff policies.
Individual countries tend to use different terms to describe these extended codes and some of these terms have become interchangeable within international trade. However, your business should follow the correct customs requirements of the country you are dealing with.
Examples:
HS Code is the World Customs Organization (WCO) Harmonized System code, which is the universal first 6-digits of most classifications.
Harmonized Tariff Schedule Code (HTS) is a 7 to 10-digit, which is more specific to importing into the United States.
USHTS or HTSUS is the Harmonized Tariff Schedule of the United States, which is generally 10-digits in length.
Commodity Codes (sometimes referred to as Trade Tariff Commodity Codes or Tariff Codes) are used within the United Kingdom and are generally 8 to 10-digits in length.
Commodity Codes are used within the European Union (EU), include additional Combined Nomenclature (CN) and Integrated Tariff (TARIC) digits. Most EU commodity codes have 10-digits, but certain goods are classified using 14-digits. Additional 4-digit codes are used mainly when the goods nomenclature needs to be further detailed for specific EU purposes.
Tariff / Commodity Code Structure
The USA use Schedule B numbers for the classification of their domestic and foreign export commodities. Schedule B numbers are based on HS codes, but contain additional 10-digit subdivisions to gather export data of particular U.S. interest. Schedule B numbers are administered by the U.S. Census Bureau.
Classifying Goods Correctly
Importers and exporters have a legal responsibility to classify their goods correctly with customs authorities. The classification of the goods will determine the customs duties and taxes payable. The classification may also determine if any import or export controls apply to the movement of the goods, such as licenses. Many customs authorities expect importers and exporters to demonstrate a high-level of due diligence when classifying their goods. Incorrect classification of goods can result in increased customs inspections, fines, penalties and shipping delays.
It is therefore important that you know all the details about your product to ensure correct classification, such as:
- What the product purpose is
- The type of product
- What materials are used to make it
- How it is packaged
- What production methods were used to make it
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