What Are HS Codes?

What Are HS Codes?

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The World Customs Organization (WCO) has developed something called the Harmonized System (HS)—or the Harmonized Tariff Schedule (HTS)—which serve to classify and define goods that are commonly and regularly traded internationally.  Most of the time such goods must be assigned hs codes corresponding with the appropriate Harmonized Tariff Schedule of the country of import before exporting it.

Hs Codes Vs HTS Codes

While they are similar, HS codes and HTS codes are easily distinguishable.  Basically, the difference between the two is the number digits in the code.  If the code has six digits it is a universal standard HS code.  If the code has between 7 and 10 digits then it is an HTS code, and the unique number (or numbers) after the sixth digit will be determined by the individual countries of import.

For example, in a US HTS code, the first two numbers are known as the chapter, which is the type of product.  The second number pair Is the heading, which helps to classify the product type further.  The third pair is the sub-heading which continues to further classify the product.  This is the HS code.  More subheadings can be added to continue classifying the product.

Here Is An HTS Code:  0901.21.0010

09 is the chapter for coffee and tea. The next two numbers signify how the product is processed.  In this case, 01, represents that the coffee is roasted (as opposed still in husks and skins).  The third pair tells us that the coffee has not been decaffeinated.  The fourth pair (00) means there is no additional duty; and the final pair is a statistical suffix which tells us the coffee has been certified organic.

Why Are These Codes Important

HS codes and HTS codes are important for a couple reasons. First of all, these codes are important because the y determine the tariff/duty rate of the product being traded internationally.  Secondly, though, these codes also help to keep a record of international trade statistics used in almost 200 countries worldwide.  In the United States and Canada, for example, these codes help to determine the value, weight, quantities, countries traded with, and many other variables for every single product imported and exported by the United States.

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