The Harmonized System (HS) code system is how most countries classify traded goods. On January 1st, 2022, the World Customs Organization released the latest update – HS 2022.
It’s the 7th edition since 1998. This blog will explain what the HS code system is, why it matters, and what changes the HS 2022 update brings.
What is the HS nomenclature?
The HS nomenclature is a multipurpose international nomenclature for goods. WCO developed it and is maintaining it as well. Most countries in the world use it as the universal basis for customs tariffs and international trade in goods statistics.
In addition to that, countries use the Harmonized System for:
- internal taxes
- trade policies
- monitoring of controlled goods
- rules of origin
- freight tariffs
- quota controls
- transport statistics
The HS provides a coding system, based on a hierarchical structure to classify international traded products (goods). The building blocks of the HS are sub-headings, identified by six-digit codes.
The HS Nomenclature comprises about 5,000 commodity groups. HS identifies these groups by the 6-digit code and arranges them according to a structure based on fixed rules.
HS codes cover more than 98 percent of goods. Countries can assign a longer code themselves to have a more specific classification. For instance, the US uses 10-digit codes and China’s codes are 13 digits. Still for all countries, the first 6 numbers of a code are the internationally agreed HS-6 code.
Based on those codes, customs offices determine the rate of duty and taxes for goods that enter a country. And as the 6-digit code is the same everywhere, there is no confusion, and nothing is “lost in transition”.
What are the changes in HS 2022?
The new system has many new updates that reflect how trading patterns have changed over the years.
- Electrical and electronic waste, commonly referred to as e-waste, is one example of a product class that presents significant policy concerns as well as a high value of trade, hence HS 2022 includes specific provisions for its classification to assist countries in their work under the Basel Convention.
- New provisions for novel tobacco and nicotine-based products resulted from the difficulties of the classification of these products, lack of visibility in trade statistics, and the very high monetary value of this trade.
- Unmanned aerial vehicles (UAVs), commonly referred to as drones, also gain their own specific provisions to simplify the classification of these aircraft.
- Smartphones will gain their own subheading which will clarify and confirm the current heading classification of these multifunctional devices.
- Major reconfigurations have been undertaken for the subheadings of heading 70.19 for glass fibers and articles thereof and for heading 84.62 for metal forming machinery. These changes recognize that the current subheadings do not adequately represent the technological advances in these sectors, leaving a lack of trade statistics important to the industries and potential classification difficulties.
How to get ready for HS 2022?
The WHO has released a Correlation Table that companies can use as a guide for updating their system. But before doing that, you should review your current product classification. Just to make sure that there are no errors.
Of course, when you use Eurora HS Code Allocation service, you can be sure that when getting HS codes after January 1st, 2022, all the values you get are accurate. Our database is always up to date.
Are you searching for a secure, fast, and reliable solution to allocate HS codes? Check out Eurora’s HS Code Allocation Service or get in touch with us!