Trade Term: Harmonized System

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By: John Sperry

Though I joined the Foreign Trade Division in July, I still find myself exposed to new trade terms. During my first assignment to learn how to use USA Trade Online (UTO), I was introduced to this month’s trade term: Harmonized System (HS).

HS stands for the international Harmonized System and serves as the foundation for the import and export classification systems used in the United States. The U.S. import, Harmonized Tariff Schedule (HTS), and export, Schedule B, classification systems rely on HS codes for their 4 and 6 digit HS headings and subheadings. The Harmonized System is administered by the World Customs Organization and is updated approximately every five years. 2012 marked the most recent HS revision, meaning the next revision will not be due until 2017.

Since greater commodity detail are often needed than the 4 and 6 digit HS headings and subheadings, Harmonized System codes under the Harmonized Tariff Schedule and Schedule B classification systems expand their scope to 10 digits. Proposed code changes to these 10 digit classification codes are submitted to and reviewed by the 484(f) Committee and published biannually in January and July (HTS) or annually in January (Schedule B). Due to these consistent revisions, it is essential to check your Schedule B commodity codes annually on Foreign Trade Schedule B website. For instance, in 2011 the Schedule B commodity code 7319.20.0000 represented safety pins of iron or steel but as of January 2012, with the WCO updates, the code changed to 7319.40.2000 for the same product. For further information about Schedule B codes and how to get them, refer to a prior blog post on Schedule B.

Proper classification of imports and exports under the HS is fundamental to ensure our trade statistics are accurate in order to monitor the condition of the economy. The published trade statistics on USA Trade Online can serve to help businesses understand what commodities are being traded, where those commodities are traded, and how much they are traded. This would not be possible without the proper HS classification of goods.

For more information on how to use the HS to classify your export goods visit the Foreign Trade website or call 1-800-549-0595, Menu Option #2.

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