role of the Harmonized System in international trade
Reference >HS Codes > The role of the Harmonized
System in international trade
The Harmonized System (HS) of tariff 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 accordance with international classification standards.
While the Harmonized System is today
a valuable tool to ensure proper revenue collection,
the initial impetus when it was developed during the
1970s and 80s 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 recognised that it
could not be eliminated entirely. Developed as a multipurpose
nomenclature, 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
- Transport tariffs and statistics
- Monitoring of controlled goods (e.g., wastes, narcotics,
chemical weapons, ozone layer depleting substances, endangered
- 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