2007 Harmonized Tariff to Undergo Major Changes

The 2007 Customs Tariff is scheduled to undergo major changes worldwide as a result of modifications to the Harmonized System (HS) recommended by the World Customs Organization (WCO). All importers and exporters should take measures to ensure the transition between the old edition and the new revisions is a smooth one.

The Harmonized Commodity Description and Coding System, better known as the Harmonized System or the HS, is developed by the World Customs Organization (WCO).

The HS can rightly be called the “language of international trade” as it also lends itself to many other uses, for example in areas of trade policy, rules of origin, the monitoring of controlled goods, internal taxation, transport tariffs, statistics, quota controls and economic studies and analyses.

It is a unique trade facilitation instrument which ensures the application of Customs rules and is used and applied by both the public and the private sectors to identify and code of goods in international trade.  More than 200 countries and economic or Customs unions around the world use the Customs Tariff  based on the HS to regulate approximately 98% of all goods traded globally.

What ’s New in the 2007 Version?

The 2007 version is the third major revision of the HS since its adoption by the WCO Council in 1983 and its entry into force in 1988. They were adopted in order to: 

  • reflect technological developments
  • take account of current trade practices
  • clarify texts to ensure uniform application
  • cater for social and environmental concerns
  • assign code numbers

The 2007 changes are much more wide ranging and, as a result, will affect many more importers and exporters. Consider the following factoids: 

  • The Harmonized System Convention will undergo 354 amendments to notes and classifications.
  • The 2007 amendments will affect 83 chapters.
  • Over 240 headings will undergo changes.
  • Over 1600 eight-digit HTSA classifications will change.
  • Almost 10% of the eight-digit HTSA classifications will change.

All of the free trade agreement rules will need to be amended to reflect the changes in classification.

The changes to the HS will primarily affect industrial and products including textiles. The changes are not limited to numeric classifications only; there are Section and Chapter Note changes as well. 

US HTS Implementation 

The U.S. versions of the Harmonized Convention undergo minor changes each year. The U.S. International Trade Commission (ITC) regularly updates the import Harmonized Tariff System Annotated (HTSA) at least twice each year. Generally, modest changes are implemented to the nomenclature of the tariff and to duty rates each January while technical adjustment to free trade agreements and duty preference programs occur each spring.

The 2007 updated HTS will be in effect on February 3, 2007 in US. There will be a grace period which begin on February 3, 2007 and end at close of business February 20, 2007. Entries filed on or after February 21, 2007 will be made with the appropriate WCO HTSUS changes. 

Impact on Companies

The initial impact upon companies will be the administrative burden of updating your classification databases, don’t forget your legal obligation to properly classify your imported and exported products. Fines and penalties for incorrect classifications are levied upon the importer and the exporter and rarely upon the broker or forwarder.

The ITC has published an excellent document on its website detailing the changes to take effect in 2007. Within this report you will find the list of the eight-digit classifications, which will be changing.  

The following websites are useful: 

http://www.wcoomd.org

http://www.usitc.gov/tata/hts/index.htm

Back to Index of February 2007