What is the Harmonized System of Classification(HS)?

The Harmonized System of Classification, commonly referred to as HS, is an internationally recognized standard for classifying traded products. Developed and maintained by the World Customs Organization (WCO), the HS provides a common language for describing products and their associated tariffs, facilitating international trade and customs procedures.

1. What is the Harmonized System of Classification?

The HS is a comprehensive classification system that assigns a unique code to each product, based on its characteristics and intended use. These codes consist of six digits, which are further extended to eight or ten digits in some countries for more precise classification. The HS covers a wide range of products, including goods, materials, and commodities traded across borders.

2. How to Use HS Codes

Using HS codes involves a systematic approach to classify products according to their essential characteristics. When assigning an HS code to a product, several factors need to be considered, including its composition, function, and intended use. To determine the appropriate HS code, traders can refer to the official HS nomenclature published by the WCO, which provides detailed guidance on classification rules and product descriptions.

Traders can also consult national customs authorities or utilize online databases and classification tools to identify the correct HS code for their products. Additionally, companies may seek assistance from customs brokers or trade experts to ensure accurate classification and compliance with import/export regulations.

For example

How You Use the HS Code

You will need both the U.S. Schedule B number and the foreign country’s version of the HS code for your product during the export process. You use it to:

• Classify physical goods for shipment to a foreign country;
• Report shipments in the Automated Export System (AES) when the value is more than $2,500, or the item requires a license.
• Complete required shipping documentation such as shipper’s letter of instructions, commercial invoice or certificate of origin;
• Determine import tariff (duty) rates and figure out if a product qualifies for a preferential tariff under a free trade agreement;
• Conduct market research and obtain trade statistics;
• Comply with U.S. law, where applicable.

3. Identifying HS Codes in Different Countries

While the HS provides a unified classification system, individual countries may apply additional subheadings or modifications to accommodate their specific trade requirements. As a result, HS codes may vary slightly between countries, particularly at the subheading or tariff line level.

To identify HS codes in different countries, traders should refer to the respective national tariff schedules or customs regulations. Many countries provide online resources or databases where users can search for HS codes by keyword, product description, or classification criteria. However, it is essential to cross-reference the HS code with the applicable country's tariff schedule to ensure accuracy and compliance with local regulations.

In conclusion, the Harmonized System of Classification (HS) serves as a fundamental tool for international trade, providing a standardized framework for classifying products and determining applicable tariffs. By understanding how to use HS codes and identifying variations in different countries' classification systems, traders can navigate the complexities of global commerce more effectively and ensure compliance with customs regulations.