UA-29869588-1
“Commerce, trade and exchange make other people more valuable alive
than dead, and mean that people try to anticipate what the other guy needs and
wants. It engages the mechanisms of reciprocal altruism, as the evolutionary
biologists call it, as opposed to raw dominance”.
Steven Arthur
Pinker (born
September 18, 1954)
Introduction
International trade is
the exchange of capital, goods, and services across international borders or territories. In most
countries, such trade represents a significant share of gross domestic product (GDP). Trading globally gives consumers and
countries the opportunity to be exposed to new markets and products. Almost
every kind of product can be found on the international market: food, clothes,
spare parts, oil, jewelry, wine, stocks, currencies and water. Services are
also traded: tourism, banking, consulting and transportation. A product that is
sold to the global market is an export, and a product that is bought from the
global market is an import. Imports and exports are accounted for in a
country's current account in the balance of payments. Harmonized
System (HS) is for classifying goods is a six-digit code system in international Market.
The Harmonized System (HS) is an international nomenclature
defined by the World Customs Organization (WCO) for the classification of
products. It allows participating countries to classify traded goods on a
common basis for customs purposes. At the international level, the Harmonized
System for classifying goods is a six-digit code system.
The HS comprises approximately 5,000
article/product descriptions that appear as headings and subheadings, arranged
in 96 chapters (Chapter 77 is reserved for future use) and grouped into 21
sections.
Of the six digits, the first two digits identify
the chapter the good is classified in, e.g. 09 = Coffee, Tea, Maté and Spices.
The first four digits identify the heading, a finer breakdown of the chapter,
e.g. 09.02 = Tea, whether or not flavoured. The full six digits identify the
sub-heading, and are even more specific, e.g. 09.02.10 = Green tea (not
fermented). Up to the HS-6 digit level, all countries using the Harmonized
System have the same codes.
History
As early as a century ago, the lack of uniformity between
the many different classification systems that had grown up throughout the
world had become a major concern. Since that time, several attempts have been
made to create an international system of classification.
In 1950, the Customs Cooperation Council was
formed in Brussels. Shortly thereafter, the classification system it developed,
known as the Customs Cooperation Council Nomenclature, came into use. By 1970,
it became apparent that this system would have to be revised both in order to
make it usable by more countries and to ensure compatibility with modern,
computerized methods of doing business. Thus the development of the Harmonized
Commodity Description and Coding System began.
On January 1, 1988 most members of the WTO
adopted the new Harmonized System. In the United States, the HTSUS (Harmonized
Tariff Schedule of the United States) was enacted by subtitle B of title I of
the Omnibus Trade and Competitiveness Act of 1988, and became effective on
January 1, 1989 – replacing the TSUS (Tariff Schedules of the United States).
There are now more than 200 countries using the
international Harmonized Tariff. So are they all the same? Yes, and No. Yes to
the 6 digit level. No beyond that level. Before being adopted into law by a
country, the WTO Harmonized System is augmented to accommodate particular
national goals. For example, most add additional levels to provide a finer
breakout of products. Duty rates and units of measurement are added — generally
at the 8th digit
level, but often enough at the 10th digit level.
Harmonized System
The Harmonized System is an international nomenclature for the
classification of products. It allows participating countries to classify
traded goods on a common basis for customs purposes. At the international
level, the Harmonized System (HS) for
classifying goods is a six-digit code system.
Under the HS
Convention, the contracting parties are obliged to base their tariff
schedules on the HS nomenclature, although parties set their own rates of duty. The HS is organized into 21
sections and 96 chapters, accompanied with general rules of interpretation and
explanatory notes. First, the system assigns goods to sections, and then
proceeds to assign these goods to
their specific chapter, heading, and subheading, in that order, as necessary.
The HS therefore assigns up to a total of 8 digits at the tariff-rate (legal)
level. Two extra digits may also be assigned as statistical reporting numbers
for a total of 10 digits to be listed on entries.
To
ensure harmonization, the contracting parties must employ at least 4- and
6-digit provisions, international rules and notes, but are free to adopt
additional subcategories and notes. Chapter 77 is reserved for future
international use only. Chapters 98 and 99 are reserved for national use.
Chapter 98 comprises special classification provisions, and chapter 99 contains
temporary modifications pursuant to a parties' national directive or
legislation.
The system is used by
more than 200 countries and economies as a basis for their Customs tariffs and
for the collection of international trade statistics. Over 98 % of the merchandise
in international trade is classified in terms of the HS.
The HS contributes
to the harmonization of Customs and trade procedures, and the non-documentary
trade data interchange in connection with such procedures, thus reducing the
costs related to international trade.
It is also
extensively used by governments, international organizations and the private
sector for many other purposes such as internal taxes, trade policies,
monitoring of controlled goods, rules of origin, freight tariffs, transport statistics,
price monitoring, quota controls, compilation of national accounts, and
economic research and analysis. The HS is thus a universal economic language
and code for goods, and an indispensable tool for international trade.
Importance
For
Government
For government, a tariff classification system enables "uniform
identification of imported and exported goods for purposes of duty and tax
collection, enforcement of national laws and international treaties, analysis
for economic and business planning, and international trade negotiations."
For Companies
For users of the tariff (importers and exporters of all types and sizes),
correct classification is a legal responsibility. Non-compliance can mean
shipment delays, increased inspections, fines, and other administrative
penalties.
Correct classification often saves money, both in the short and long term.
When examining a company's past imports, customs consultants find that overall,
too much duty has been paid, indicating that full advantage of provisions of
the tariff were not taken. Making use of these provisions requires a precise
knowledge of the product to be classified, something that the importer or
exporter has, as well as knowledge of the Tariff and the principles of
classification, something readily know-able.
Whether goods are eligible for any of the special provisions of the Tariff
that allow for lower duty rates usually depends on the use or purpose for which
they are being imported, or on the availability of certificates of origin.
Again, the importer is in the best position to know these facts.
Verifying the classification decisions of customs brokers and professional
classification suppliers is a good way of protecting both compliance records
and revenue outlay in the form of duties and taxes. By understanding how the
tariff classification process works, importers will be able to work together
with their classification provider (usually a customs broker or consultant) to
ensure that their goods are classified correctly.
An international "Harmonized System" for the description and
classification of goods was created in 1988, and soon after adopted by nations
around the world. The broad, core specifics and structure of Harmonized System
classifications is universal, with each participating country eligible to add
and define specific detail items, and to create and assign rates of duty in any
required categories for all classifications.
Reff; http://www.globaltariff.com/; retried on 3rd may 2015
HU codes are availbale @ https://www.foreign-trade.com/reference/hscode.htm
Read More @ http://www.globaltariff.com/aboutHTS.cfm
