The harmonized tariff provides a standard naming system for classifying goods and commodities for international trade. The Harmonized Commodity Description and Coding Systems is used by around 200 countries, with each item assigned a classification number. The US Harmonized Tariff Schedule has over 17,000 items with a unique ten-digit classification code. Countries can add up to six digits to gather business information, and the table allows them to track import and export trends and potentially dangerous goods.
The main objective of a harmonized tariff is to create a common point of reference for international trade. It provides countries with a standard naming system for classifying goods and commodities that cross their borders. Around 200 countries around the world base their harmonized tariff schedules on the Harmonized Commodity Description and Coding Systems, also known as the Harmonized System (HS). In addition to the HS, most countries keep their own supplemental tariff information to help track duty rates and trade statistics.
In an HS-based harmonized tariff schedule, goods and commodities are divided into sections and chapters, depending on their use or substance. For example, section 11 includes textiles and textile articles. Section 11 Chapter 52 contains all cotton commodities, including thread, yarn and fabric, but cotton clothing is classified in Section 11 Chapter 62 with other articles of clothing and clothing accessories, not knitted or crocheted. ‘crochet.
Each item is then assigned a classification number, part of which is determined by the World Customs Organization (WCO). WCO is the international trade organization that maintains and updates the HS. All participating countries use the same basic AV number, so their individual tariff schedules can be harmonized with the rest of the world.
The US Harmonized Tariff Schedule can be considered, for the most part, representative of most international tariff schedules. There are over 17,000 items in the US program, each with a unique ten-digit classification code. Each digit of the US tariff code represents an aspect of the good or commodity. The digits one to six are set by the OMD and are common to all programs that comply with the HS. The first through fourth digits are called headers, while the fifth and sixth are called subheadings.
Individual countries typically add up to six digits to the base HS classification to gather their business information. The US harmonized tariff adds four digits. The digits seven and eight, along with the HS code, indicate the general rates of duty, or general tariff rates, applied to an item. The digits nine and ten designate any special circumstances in the tariff, also called statutory tariffs. Statutory rates often refer to preferential rates applied to particular countries.
A harmonized tariff table not only allows countries to classify and charge customs duties for all types of goods and raw materials, but also allows them to gather information on international trade. Many countries use the raw data provided by the SA and any additional country codes to study statistically significant trends. They typically use this information to track import and export trends, to help set customs tariffs, and to track and even restrict potentially dangerous goods crossing their borders.
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