This article will help clarify this often-muddled topic by summarizing some of the key points discussed by Robert P. Imbriani in his free webinar, Classifying Your Products for Importing and Exporting.
Before the 1960s, no unified global tariff system existed, and individual countries had unique tariffs. In the U.S., we had the Tariff Schedule of the U.S. (called the Schedule A) as well as the Schedule B.
In the 1970s, in order to facilitate trade agreements and compare statistical information, an international group called the Customs Cooperation Council began working toward harmonizing tariff schedules, ultimately landing on what was called the Harmonized System—a system that was consistent to a certain level, but one that also left flexibility for individual countries to monitor goods as they saw fit. In 1988, the U.S. adopted the Harmonized System. Today, the Harmonized System is administered by the World Customs Organization.
The Harmonized System (HS) classification is an internationally recognized, “core” system that provides uniformity for the classification of internationally traded goods. The Harmonized System classification, called HS codes or HS numbers, consists of a 10-digit numbering system, of which the first six digits are “harmonized” between all the countries who use the system. Under the HS, countries are obligated to adhere to all headings and subheadings without addition or modification. Learn more about these codes in our comprehensive resource for all exporters: Export Procedures and Documentation: An In-Depth Guide.
The last two sets of numbers are country-specific and may or may not be used as part of a country's harmonized system. In the U.S., these last four numbers are identified as either the Harmonized Tariff Schedule (HTS) of the U.S. or the Schedule B.
The United States uses both the HTS as well as a harmonized Schedule B. These two versions of the harmonized system are specific to importing and exporting and allow for flexibility in the level of detail used.
Learn More: HS Codes, HTS Codes, and Schedule B Codes: What's the Difference?
Product classification exists to resolve two problems:
To classify products under the General Rules of Interpretation (GRI), section, chapter, subheading notes and the terms of the headings and subheadings are to be applied. These are the “legal text” of the HS (or “nomenclature”). Chapter and section titles have no legal significance.
There are six universal General Rules of Interpretation and one U.S.-specific rule. These rules are contained in the beginning of the HS and Schedule B; the rules are the same for both. These rules are important because they create a hierarchy of classification, as they are harmonized throughout the World Trade Organization. You can learn more about the GRIs in our article, Doing It by the Book: Classifying Your Goods for International Trade.
Our free webinar, Classifying Your Products for Importing and Exporting, is a great starting point for anyone in your company who engages in international trade, from purchasing agents to sales reps, logistics personnel and even your company’s legal team. In it, you’ll learn:
Click below to watch the webinar now—and move toward clarity and confidence in using the various classification systems used globally and in the United States.
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