Harmonization HS codes compliance and classification

Mastering Harmonized System Codes: A Guide to Compliance and Classification for International Trade

What are Harmonized System (HS) codes?

HS codes (Har­mo­nized Sys­tem codes) are a stan­dard­ized sys­tem used to clas­si­fy trad­ed goods based on their nature, com­po­si­tion, and intend­ed use. The sys­tem con­sists of six-dig­it codes that pro­vide a com­mon lan­guage for cus­toms offi­cials, importers, and exporters to iden­ti­fy prod­ucts dur­ing inter­na­tion­al trade. 

In sim­ple terms, HS codes are used to clas­si­fy almost every­thing that is being manufactured/produced in the world today. With codes rang­ing from live ani­mals and ani­mal prod­ucts like swine (0106.10) in the first chap­ter to musi­cal instru­ments, their parts, and acces­sories (9997.00) in the last chap­ter, vir­tu­al­ly all prod­ucts can be iden­ti­fied and cat­e­go­rized for inter­na­tion­al trade pur­pos­es. In this arti­cle, we will explore more about how HS codes work and why they’re essen­tial for nav­i­gat­ing the com­plex­i­ties of glob­al commerce.

Why HS codes are created?

The HS code sys­tem has been in use for many years as an inter­na­tion­al­ly rec­og­nized clas­si­fi­ca­tion sys­tem for trad­ed goods. Before its devel­op­ment, dif­fer­ent coun­tries had their own nomen­cla­ture, cre­at­ing con­fu­sion and mak­ing trade dif­fi­cult. The sys­tem was born in 1952 when 17 found­ing coun­tries, includ­ing Aus­tralia, Bel­gium, Cana­da, and oth­ers, signed the Con­ven­tion Estab­lish­ing a Cus­toms Coop­er­a­tion Coun­cil in Brus­sels, Bel­gium, lead­ing to the for­ma­tion of the World Cus­toms Orga­ni­za­tion (WCO). Today, the WCO has 183 mem­ber coun­tries that use the same HS code nomen­cla­ture. As an inter­na­tion­al inter­gov­ern­men­tal orga­ni­za­tion, the WCO main­tains the HS code sys­tem, which facil­i­tates effi­cient and accu­rate cus­toms clear­ance pro­ce­dures, import and export data col­lec­tion, and duty and tax determination.

How to read HS codes

The HS code sys­tem is struc­tured hier­ar­chi­cal­ly, with prod­ucts being clas­si­fied into cat­e­gories and sub­cat­e­gories based on their char­ac­ter­is­tics. The first two dig­its of the code indi­cate the broad­est cat­e­go­ry, with sub­se­quent dig­its pro­vid­ing greater detail. There are 21 sec­tions in the HS code sys­tem, each cor­re­spond­ing to a par­tic­u­lar group of prod­ucts. These sec­tions are fur­ther divid­ed into chap­ters, which group prod­ucts based on com­mon char­ac­ter­is­tics. Chap­ters are then sub­di­vid­ed into head­ings, sub­head­ings, and fur­ther lev­els of detail as need­ed. This hier­ar­chi­cal struc­ture allows for easy clas­si­fi­ca­tion of prod­ucts into cat­e­gories that are con­sis­tent across coun­tries, mak­ing it an essen­tial tool for inter­na­tion­al trade.

Strug­gling to choose HS codes for Euro­pean imports? CAPLINQ offers an entire Order Ful­fill­ment ser­vice where we help cus­tomers estab­lish their pres­ence with local inven­to­ry, prop­er import tax­es, and avail­able stock in Europe.

Chapters in HS codes:

  1. Live ani­mals; ani­mal products
  2. Veg­etable products
  3. Ani­mal or veg­etable fats and oils and their cleav­age prod­ucts; pre­pared edi­ble fats; ani­mal or veg­etable waxes
  4. Pre­pared food­stuffs; bev­er­ages, spir­its, and vine­gar; tobac­co and man­u­fac­tured tobac­co substitutes
  5. Min­er­al products
  6. Prod­ucts of the chem­i­cal or allied industries
  7. Plas­tics and arti­cles there­of; rub­ber and arti­cles thereof
  8. Raw hides and skins, leather, fur skins, and arti­cles there­of; sad­dlery and har­ness; trav­el goods, hand­bags, and sim­i­lar con­tain­ers; arti­cles of ani­mal gut (oth­er than silk-worm gut)
  9. Wood and arti­cles of wood; wood char­coal; cork and arti­cles of cork; man­u­fac­tures of straw, of espar­to or of oth­er plait­ing mate­ri­als; bas­ket­ware and wickerwork
  10. Pulp of wood or of oth­er fibrous cel­lu­losic mate­r­i­al; recov­ered (waste and scrap) paper or paper­board; paper and paper­board and arti­cles thereof
  11. Tex­tiles and tex­tile articles
  12. Footwear, head­gear, umbrel­las, sun umbrel­las, walk­ing-sticks, seat-sticks, whips, rid­ing crops, and parts there­of; pre­pared feath­ers and arti­cles made there­with; arti­fi­cial flow­ers; arti­cles of human hair
  13. Arti­cles of stone, plas­ter, cement, asbestos, mica, or sim­i­lar mate­ri­als; ceram­ic prod­ucts; glass and glassware
  14. Nat­ur­al or cul­tured pearls, pre­cious or semi-pre­cious stones, pre­cious met­als, met­als clad with pre­cious met­al, and arti­cles there­of; imi­ta­tion jew­el­ry; coin
  15. Base met­als and arti­cles of base metal
  16. Machin­ery and mechan­i­cal appli­ances; elec­tri­cal equip­ment; parts there­of; sound recorders and repro­duc­ers, tele­vi­sion image and sound recorders and repro­duc­ers, and parts and acces­sories of such articles
  17. Vehi­cles, air­craft, ves­sels, and asso­ci­at­ed trans­port equipment
  18. Opti­cal, pho­to­graph­ic, cin­e­mato­graph­ic, mea­sur­ing, check­ing, pre­ci­sion, med­ical or sur­gi­cal instru­ments and appa­ra­tus; clocks and watch­es; musi­cal instru­ments; parts and acces­sories thereof
  19. Arms and ammu­ni­tion; parts and acces­sories thereof
  20. Mis­cel­la­neous man­u­fac­tured articles
  21. Works of art, col­lec­tors’ pieces and antiques

Variations in HS codes:

How­ev­er, as each coun­try has its own unique trade prac­tices, many coun­tries have cho­sen to fur­ther divide the HS codes into sub-cat­e­gories that are spe­cif­ic to their own indus­tries and reg­u­la­tions. A few exam­ples of these sub-divi­sions are fol­lowed in the EUCN(European Union com­bined nomen­cla­ture) used by all the EU mem­ber states and HTS sys­tem (Har­mo­nized tar­iff sched­ule) which is fol­lowed by all the USA.

By doing so, coun­tries can more accu­rate­ly track and man­age imports and exports, ensure com­pli­ance with domes­tic reg­u­la­tions, and make informed deci­sions about tar­iffs and trade poli­cies. Addi­tion­al­ly, sub-cat­e­go­riza­tion can help stream­line cus­toms pro­ce­dures, reduce the risk of mis­clas­si­fi­ca­tion, and make it eas­i­er for busi­ness­es to nav­i­gate the com­plex world of inter­na­tion­al trade.

While sub-cat­e­go­riza­tion may add an addi­tion­al lay­er of com­plex­i­ty to inter­na­tion­al trade, it ulti­mate­ly serves to facil­i­tate smoother and more effi­cient trade rela­tions between countries. 

HS code systems across the world:

1.European Union Combined Nomenclature (EUCN)

The EUCN is used by the mem­ber states of the Euro­pean Union for both import and export trades. It adds addi­tion­al dig­its. To give an exam­ple of an HS code under EUCN, take into con­sid­er­a­tion 8473.30.90.00. The HS cor­re­sponds to Ther­mal Inter­face Mate­ri­als (exam­ple: PTM7900SPM). In the above code, 8473.30 is com­mon in any HS code-based sys­tem but the oth­er addi­tion­al 4 dig­its cor­re­spond to oth­er mate­ri­als under the parts used for the machin­ery sub­chap­ter. The dig­its 90.00 might be exclu­sive to EUCN. 

The web­site where you can check the EUCN is called TARIC.

2. Japanese Tariff Schedule (JTS)

The Japan­ese Tar­iff Sched­ule (JTS) is a sub-divi­sion of the Har­mo­nized Sys­tem (HS) codes used in Japan, which pro­vides more detailed infor­ma­tion on trad­ed goods by includ­ing addi­tion­al dig­its. For instance, the HS code 3907.30.00.90 cor­re­sponds to Coil Insu­la­tion epoxy coat­ings (EPIFORM F‑6975) under the Euro­pean Union Com­bined Nomen­cla­ture (EUCN). How­ev­er, in the JTS sys­tem, it falls under the broad­er cat­e­go­ry of Epox­ide resins with sub-cat­e­gories based on the phys­i­cal form of the prod­uct. The EUCN sys­tem cat­e­go­rizes the same HS code based on the chem­i­cal com­po­si­tion of the Epox­ide resins. These dif­fer­ences in sub-cat­e­go­riza­tion based on dif­fer­ent attrib­ut­es still fol­low the same base nomenclature

Click here to check the HS code of JTS 

3. China Customs Tariff (CCT)

The CCT is a sub-divi­sion of the HS codes used in Chi­na. It includes addi­tion­al dig­its that pro­vide more detailed infor­ma­tion on the nature of the goods being trad­ed, such as the brand name of the prod­uct or the pro­duc­tion method used. 

4. HTS & Schedule B system (USA)

The Sched­ule B sys­tem and the Har­mo­nized Tar­iff Sched­ule (HTS) are two clas­si­fi­ca­tion sys­tems used by the Unit­ed States Cus­toms and Bor­der Pro­tec­tion (CBP) to cat­e­go­rize and reg­u­late imports and exports.

The Sched­ule B sys­tem is a 10-dig­it code that is used to clas­si­fy goods that are export­ed from the Unit­ed States. It is based on the inter­na­tion­al sys­tem of clas­si­fi­ca­tion, known as the Har­mo­nized Sys­tem (HS), but is tai­lored specif­i­cal­ly to U.S. exports. The Sched­ule B code is used to deter­mine sta­tis­tics on U.S. exports and to enforce U.S. export regulations.

On the oth­er hand, the Har­mo­nized Tar­iff Sched­ule (HTS) is a sys­tem used to clas­si­fy goods that are import­ed into the Unit­ed States. It is based on the Inter­na­tion­al Har­mo­nized Sys­tem (HS), which is used by most coun­tries in the world. The HTS is used to deter­mine the rate of duty that must be paid on import­ed goods, as well as to enforce U.S. import regulations.

Both sys­tems are crit­i­cal to the func­tion­ing of U.S. inter­na­tion­al trade, as they help to ensure that goods are clas­si­fied accu­rate­ly and that tar­iffs and oth­er import/export reg­u­la­tions are applied appro­pri­ate­ly. The use of these clas­si­fi­ca­tion sys­tems helps to ensure that the U.S. is able to com­pete in the glob­al mar­ket­place and that con­sumers are pro­tect­ed from harm­ful or dan­ger­ous goods.

If you are a busi­ness in Chi­na, the US, or any­where else in the world and want to estab­lish your busi­ness in Europe, You are at the right place! Caplinq can do fis­cal rep­re­sen­ta­tion for you and lets you do busi­ness in Europe with­out hav­ing the has­sle of main­tain­ing a legal company.

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About Sasank Grandhi

Sasank is a Logistics specialist with be the ability to efficiently and effectively manage the flow of goods and materials. This includes overseeing transportation, warehousing, inventory management, and distribution operations, all while ensuring timely delivery and minimizing costs.

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