HS 2022 – New rules in HS code allocation
By Alexander Maasik
On January 1st, 2022, the World Customs Organization releases the 2022 edition of the HS Nomenclature that updates the Harmonized System code system (HS codes). This update, HS 2022, is the 7th edition of the HS code that most countries use since 1998.
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 good 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 be ready for 2022?
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.
If you want to automate your entire supply chain from HS code allocation to electronic declarations, contact Eurora, to see how we can automate and speed up your processes.