HS code: a quick guide

HS code: a quick guide

When it comes to international trade, HS codes play a crucial role. HS codes, or Harmonized System codes, are standardized names and numbers used to classify products in international trade. They are used by customs authorities to identify the products being imported or exported and to determine the applicable duties and taxes. 

The Harmonized System facilitates global trade by creating unified categories to classify different types of goods. Understanding HS codes is essential for ensuring that goods are shipped smoothly across international borders.

Here is a quick guide to understanding HS codes.

What are HS codes?

HS codes are a standardized system of names and numbers used to classify products in international trade. They were developed by the World Customs Organization (WCO) in 1983 and operated by more than 200 countries worldwide. The Harmonized System classifies about 5,000 commodity groups.

How are HS codes structured?

There are thousands of HS codes covering a wide range of products. Global and US HS codes consist of four components.

1. Section:

There are 21 separate sections which are divided into 96 sections. Section 09 is selected for Coffee, Tea, Mate, and Spices in the example above. Exception sections include section 77, reserved for future use; sections 98 and 99, for national service; and unique code limited to temporary amendments.

2. Title:

A heading indicates a specific category in each particular section. In the example above, 01 refers to coffee.

3. Subheading:

The last two digits of the International Harmonized Code are more specific, defining product subcategories. For example, caffeinated coffee beans have 0901.21 and decaffeinated 0901.22.

4. Additional numbers:

Countries may use an additional 2-4 digits. Because these numbers are unique, a non-organic caffeinated coffee in another country will start with the same six digits, but the last four digits will differ. 0050 is used for non-organic coffee.

What is the purpose of HS codes?

HS codes are used by customs authorities to identify the products being imported or exported and to determine the applicable duties and taxes. Statisticians also use them to gather data on international trade and businesses to track their imports and exports.

How do you find the HS code for your product?

The WCO provides a searchable database of HS codes called the Harmonized System Database. You can search for the HS code for your product by entering a description of the product or its name in the search bar.

What are the benefits of using HS codes?

Using HS codes can simplify importing and exporting goods by providing a standardized system for classifying products. This can help reduce errors and delays at customs and can also help ensure that the correct duties and taxes are applied to each product.

Why are HS codes essential in logistics?

  1. Accurate classification of goods

One of the essential roles of HS codes in logistics is to ensure the accurate classification of goods. Each product has a specific HS code corresponding to its characteristics, such as its materials, function, and intended use. This classification is essential because it determines the applicable duties and taxes for the product and any regulatory requirements for its import or export.

  1. Compliance with regulations

HS codes are also crucial for ensuring compliance with regulations. Depending on the product and the country of import or export, specific restrictions may apply, such as safety, environmental, or health requirements. By using the correct HS code, logistics professionals can ensure that the products comply with these regulations and avoid any potential penalties or delays at customs.

  1. Streamlining customs clearance

HS codes also play a role in streamlining customs clearance. When goods arrive at a border or port, customs authorities use the HS code to quickly identify the products and determine the appropriate customs duties and taxes. By providing the correct HS code on the shipping documentation, logistics professionals can help speed up the customs clearance process and avoid unnecessary delays or inspections.

  1. Tracking shipments

HS codes also use to track shipments. By assigning a unique HS code to each product, logistics professionals can easily track the movement of the products throughout the supply chain. This can be useful for monitoring inventory levels, identifying any bottlenecks or delays in the shipping process, and ensuring that products are delivered on time to their destination.

In conclusion, HS codes play a critical role in logistics by ensuring the accurate classification of goods, compliance with regulations, streamlining customs clearance, and tracking shipments. By understanding HS codes and using them correctly, logistics professionals can help ensure that goods are shipped smoothly across international borders with minimal delays or complications.

PartnerTrade helps e-commerce entrepreneurs, manufacturers, retailers, and distributors with logistics and warehouse services. We transport products to different parts of the world and help solve various freight transportation issues. Contact our managers for detailed information.

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