Plan Ahead For 2017 WCO Harmonized System Updates
The World Customs Organization updates the Harmonized Commodity Description and Coding System, or Harmonized System (HS), every five years. The next update is coming up soon, on January 1, 2017. There are 153 contracting parties to the HS each with their own country specific tariff. The Harmonized System is used by 206 countries – all will require updates and translation. It’s a big deal!
The HS is a multipurpose international product nomenclature that countries use to assess customs tariffs, collect international trade statistics, designate preferential trade program rules of origin, track quotas, and many other purposes.
The HS is organized into 21 sections and 96 chapters. To ensure harmonization, the contracting parties must employ the HS six-digit provisions and international rules and notes. Each country is free to adopt additional subcategories and notes, usually up to eight or ten-digits. Chapter 77 is reserved for future international use only. Chapters 98 and 99 are reserved for national use.
The 2017 HS changes encompass 233 sets of amendments relating to a wide range of products and product groups, including: fish and fishery products; forestry products; antimalarial products; substances controlled under the Chemical Weapons Convention; hazardous chemicals controlled under the Rotterdam Convention; persistent organic pollutants controlled under the Stockholm Convention; ceramic tiles; newsprint; light-emitting diode lamps; monopods, bipods, and tripods; multi-component integrated circuits; and hybrid, plug-in hybrid, and all-electric vehicles.
Whether your company is a big or small international trader, you should be aware of changes, and make plans to prepare in 2016 as appropriate. The place to start is with your product classification database. On January 1, 2017, or such other date the country you import to or export from designates to adopt the changes, your product numbers will need to have the latest HS code.
The World Customs Organization provides a six-digit correlation table showing the expiring classification and the one or more new classifications to be considered for that product. This is available now. Also, subject to further refinement, the US has already published a 10-digit correlation. Other countries may wait until very close to the deadline.
By comparing the product database to the correlation table, you can assess the degree of difficulty to make the necessary changes. Typically, it involves obtaining some new piece of information. This information may or may not be evident in the description or audit trail for the existing records so you may need to review material specifications, engineering drawings, product bills of material, or other information to make an accurate update. If possible, segregate out obsolete product numbers for archiving. Be careful to collect any new part numbers classified between now and the adoption date. Each of these will require a new classification as well.
It is necessary to study and take in the details in the correlation table. Also, there are critical section and chapter note changes that require close scrutiny. Finally work closely with your classification subject
Philip Sutter is director of governance policy at Livingston International. The original article appeared here.