Harmonized System (HS)
What is the Harmonized System (HS)?
The Harmonized Commodity Description and Coding System (Harmonized System or HS) is a multipurpose international product nomenclature developed by the World Customs Organization (WCO). It comprises about 5,300 commodity groups; each identified by a six digit code, arranged in a legal and logical structure and is supported by well-defined rules to achieve uniform classification. The HS is a universal economic language and code for goods, and an essential tool for international trade.
The Harmonized System is governed by "The International Convention on the Harmonized Commodity Description and Coding System".
Administration of the Harmonized System
The international Harmonized System is administrated by the World Customs Organization and serves as the foundation for the import and export classification systems used in the United States. The United States (U.S.) import classification system, the Harmonized Tariff Schedule (HTS) administered by the U.S. International Trade Administration Commission (USITC), and the U.S. export classification system, the Schedule B administered by the U.S. Census Bureau, Foreign Trade Division, both rely on the international HS codes for their 4- and 6-digit headings and subheadings. The World Customs Organization updates the HS System approximately every five years. The year 2017 marks the most recent HS revision, meaning the next revision will not be due until 2022.
The Harmonized Tariff Schedule of the United States is the list of tariffs charged for all products imported into the United States.
How to Read an HS NumberExample
|Section||XV||Base Metals and Articles of Base Metal|
|Chapter||74||Copper & Articles Thereof|
|Subheading||7408.21||Wire of Copper-Zinc Base Alloys-Brass|
What is a Schedule B number?
A Schedule B number is a 10-digit number used in the United States to classify physical goods for export to another country. The Schedule B is based on the international Harmonized System (HS) of 6-digit commodity classification codes. There is a Schedule B number for every physical product, from golf shoes to helicopters.
What is HS used for?
- 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
- It also contributes to 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
- Economic research and analysis
Why do Exporters Need to Know their Product's Schedule B and HS Number?
- To determine applicable import tariff rates and whether a product qualifies for a preferential tariff under a Free Trade Agreement
- To file the Electronic Export Information in the Automated Export System (AES)
- To complete shipping documents, such as certificates of origin
Why is the Harmonized System Important?
- It classifies all goods according to the international Harmonized Commodity Coding and Classification System (Harmonized System) which has been established by the World Customs Organization
- Virtually all countries base their tariff schedules on the Harmonized System, making it easier to conduct international trade
For more information, see: http://www.wcoomd.org/en/topics/nomenclature/overview/what-is-the-harmonized-system.aspx