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THE LANGUAGE OF INTERNATIONAL TRADE


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Datamatrix – The Language of Int'l Trade

Suite 206

THE LANGUAGE OF INTERNATIONAL TRADE


The Harmonized System

A Multipurpose Nomenclature

Role of the WCO

Relations with the Private Sector

206.01 THE HARMONIZED SYSTEM

The Harmonized Commodity Description and Coding System (HS) nomenclature is used as a basis for the collection of Customs duties and international trade statistics by almost all countries. Use of the HS ensures that a Customs administration produces statistics in exact accord with international classification standards. Currently 190 countries and Customs or Economic Unions (including 119 Contracting Parties to the HS Convention), representing about 98% of world trade, use the Harmonized System. It is therefore one of the most important instruments in world trade.

While today, the Harmonized System is a valuable tool to ensure proper revenue collection, the initial impetus when it was developed during the 1970's and 80's was as a trade facilitative initiative. The Harmonized System has since become the true “language of International Trade”.

Many studies have shown the heavy costs involved for both the public and private sectors in maintaining different product classification systems in different countries. The HS was designed to be an international standard system to avoid such duplication, but it was recognized that it could not be eliminated entirely.

206.02 A MULTIPURPOSE NOMENCLATURE

Developed as a multipurpose nomenclature by the World Customs Organization (WCO), the HS is now used as the basis for:

  • Customs tariffs
  • Collection of international trade statistics
  • Rules of origin
  • Collection of internal taxes
  • Trade negotiations (e.g., the WTO schedules of tariff concessions)
  • Transport tariffs and statistics
  • Monitoring of controlled goods (e.g, wastes, narcotics, chemical weapons, ozone layer depleting substances, endangered species)
  • Areas of Customs controls and procedures, including risk assessment, information technology and compliance.

The HS is backed by Explanatory Notes and a Compendium of Classification Opinions. This helps to ensure a rational and uniform application of classification rules, and thus, trouble-free export and import clearance. It is a major element in good Customs/trade working relationships.

All modern, computerized Customs declaration systems depend on HS classification. Common use of the HS in such systems will be essential in the development of Customs-to-Customs information exchanges which trade interests see as the basis of the progressive elimination of unnecessary export/import requirements in favour of seamless end-to-end, integrated international transactions.

Approximately 80% of the 168 Members of the WCO could be categorized as developing or in transition to a market economy. A large percentage of these countries depend, and will continue to be reliant to an important extent on Customs duties for their national revenues. Developed countries also still collect substantial amounts of Customs duties. In the US , Customs duties amount to $18 billion per year while in the European Community they represent 1`5% of the total revenues.

206.03 ROLE OF THE WCO

The WCO Strategic Plan has three goals in relation to the Harmonized System.

  • To secure uniform interpretation and application of the HS
  • To update and improve the HS, reflecting changes in technology and trade patterns.
  • To promote the use of the HS by Customs administrations and other government agencies, international organizations and the private sector.


Harmonized System Committee

Almost all countries still maintain protective tariffs for specific products, which often result in tariff disputes. Twice each year, the WCO's Harmonized System Committee (HSC) acts as an international tribunal with regard to the classification of goods in the Harmonized System. The HSC is the single international body which can provide authoritative advice with regard to tariff classification.

HS Review Sub-Committee

The Sub-Committee (RSC) is responsible for a systematic review of the HS Nomenclature on a regular basis with a view to assisting the HSC in ensuring that the Harmonized System is kept up to date in terms of technological developments and trading practices.

Scientific Sub-Committee

The Sub-Committee assists the HSC and the RSC in their most technical work (in particular, with questions involving the classification of chemical products).

Responsibilities of the Nomenclature Sub-Directorate, Tariff and Trade Affairs Directorate

The Nomenclature Sub-Directorate is staffed by a Deputy Director, 9 Technical Offices and 4 Technical Attaches and has the following major responsibilities:

  • To provide Secretariat support to the work of the Committees, Sub-Committees and Working Parties, (organizing meetings, preparation of working documents, reports, etc.)
  • To conduct technical assistance missions (regional seminars, training courses, expert missions to promote the HS, expert missions to study tariff classification work infrastructure, expert missions to assist in the establishment or improvement of Customs laboratories and HS multi-purpose training courses).
  • To provide technical advice on specific classification questions to Member Customs administrations
  • To update HS publications (such as the HS Explanatory Notes, the Compendium of Classification Opinions, the Alphabetical Index, the HS commodity Data Base (CD-ROM) and the e-learning modules).

206.04 RELATIONS WITH THE PRIVATE SECTOR

The work of Customs involves providing a service to the entire international trade community. While classification questions must still be brought to the WCO by Member administrations, private sector participation has increased significantly.

The International Chamber of Commerce (ICC) is invited, as a representative of the private sector, to participate in all of the HS Committee meetings as an observer and, in fact, the ICC is regularly consulted for technical information with regard to the classification of many products.

Available information

The WCO publishes numerous essential publications such as the HS Explanatory Notes, the HS Commodity Database on CD-ROM and the Harmonizer (the HS training course available on CD-ROM)> All these publications are available from the Publication Service of the WCO. The WCO Web site contains essential information on the Harmonized System, including the latest decisions of the Harmonized System Committee and the HS Explanatory Notes and the HS Commodity Data Base in a searchable format.

Contact

Maintained by the World Customs Organization (WCO), an independent intergovernmental organization with over 160 member countries based in Brussels , Belgium

Izaak Wind - Tel: 00 32 (0)2 209 9252 E-mail : izaak.wind@wcoomd.org

AID TO TRADE
UNDERSTANDING TRADE
WHAT IS TRADE?
THE ORIGIN OF TRADE
THEORY OF INTERNATIONAL TRADE
ORGANIZATION OF TRADE
CURRENCY AND THE TRADING LANGUAGE
THE HISTORY OF CURRENCY
CURRENCY A UNIT OF EXCHANGE
THE LANGUAGE OF INTERNATIONAL TRADE
IMPORT / EXPORT TERMINOLOGY
TRADE ETHICS, TRENDS AND POLICIES
ETHICAL TRADING
RISKS AND REWARDS
ECONOMIC TRADE POLICIES
AGENCY FOR INTERNATIONAL DEVELOPMENT
GETTING STARTED
EXPORTING ? THE START
ASSESSING YOUR EXPORT POTENTIAL
PREPARING YOUR PRODUCT FOR EXPORT
PRICING, QUOTATIONS AND TERMS
MARKETING
MARKET RESEARCH
MARKET INFORMATION
MARKET ENTRY
THE MARKETING PLAN
STRATEGY, PORTS AND WAREHOUSES
EXPORT LICENCE
IMPORTING
AN EXPORT STRATEGY
SHIPPING
DOCUMENTATION, FOOD, DRUG AND ENVIRONMENT
DOCUMENTATION
BONDED WAREHOUSE
LEGAL CONSIDERATIONS
FOOD, DRUG & ENVIRONMENT
PAYMENT, CREDIT AND FINANCE PROGRAMS
METHODS OF PAYMENT
EXPORT CREDIT
EXPORT FINANCE PROGRAMS
EXPORT FINANCE PROTECTION
REPRESENTATION AND INTELLIGENCE
TRADE ASSISTANCE PROGRAMS
OFFSHORE REPRESENTATION
EXAMPLE FORMS
INTELLECTUAL PROPERTY
THE PENTHOUSE - INTERACTION
FINANCE
THE DIRECTORS CLUB
THE CONFERENCE ROOM
THE SITE?S BONUS FEATURES


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