Without harmonized codes, importers and exporters all over the world would be in disarray concerning the fees, regulations, safety, security, collection of international statistics and other factors relating to international trade. But HS tariff classifications, which are part of the Harmonized Commodity Description and Coding System or HS, have created a universal system of tariff nomenclature to streamline the process.
Harmonized tariff codes are part of an internationally standardized system of names and numbers for categorizing traded products developed and maintained by the World Customs Organization. The WCO an independent intergovernmental organization based in Brussels, Belgium that has more than 170 member countries and oversees 98 percent of the world’s trade. Basically, HS tariff classifications consist of as many as ten digits depending on the country. The first four digits are the heading. The first six digits are the subheading. Countries are not allowed to alter HS tariff classifications in any way that is associated to a heading or a subheading. The numerical codes at the four or six digit level can never be altered.
Although the first six digits of harmonized codes cannot be altered, individual countries may extend a Harmonized System number to eight or ten digits for customs purposes or export purposes. Harmonized tariff codes are considered harmonious, or universal, because there are more than 200 countries, customs and economic unions representing more than 98 percent of world trade that use the HS. It is used as a basis for customs tariffs, collection of international trade statistics, rules of origin, collection of internal taxes, trade negotiations, transport tariffs and statistics, monitoring of controlled goods, and Areas of Customs controls and procedures including risk assessment, information technology and compliance.
HS code lookup might still be a tedious process, although it’s made easier with various digital tools, the fact that some sort of system is in place keeps international trade so much more organized than it would be otherwise.
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