HARMONIZED COMMODITY

DESCRIPTION AND CODING

SYSTEM

By:
Abdul Majid Yousfani 1
1/28/2007
Agenda
z History of Classification

z Int’l Systems of Classification of Goods

z BTN; CCCN

z Need for Harmonization

z HS; General Rules of Interpretation

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Introduction

z Earliest Classifications Systems

– Simple Alphabetical Lists of goods

– Purpose - to collect cross-border taxes or tolls

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History of Classification Text
Text

z Industrialization – + Trade Statistics

Text
– Simple; Alphabetical list of taxable goods;
alphabetical list of exempt good
Text
– Complexities emerged–differential duty rates,
exemptions - # of lists increased
Text
– Need for a Classification System–Nature of goods
– Growth of Int’l Trade – Problems – order;
arrangement of headings, names and definitions of
products, classification principles - Need for
Harmonization
z National Protective Measures; Text Text
z Multilateral Tariff Arrangements Text 4
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 Need for Standard Customs
Nomenclature
z Systematic Classification of Internationally
Traded Goods
z Uniform Classification on a sound basis
z Adoption of a Common Int’l Customs Language
– Readily understandable by experts and public
– Simplification of the task of importers, exporters,
producers, carriers and customs administration
z Correct Interpretation of Bilateral & Multilateral
Customs Agreements
z Uniform Collation of Data – Analysis &
Comparison of World Trade Statistics
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 Int’l Efforts for Customs
Nomenclature
z Belgium 1831-1854; Foreign Trade Statistics
– 3 General Headings; Raw Materials, Produce &
Manufactured Articles
– 1854 – Reversion to Alphabetic Order
z Austria-Hungary 1892;
z Nomenclature similar to Brussels Nomenclature of 1913
z League of Nations Draft Customs Nomenclature of 1931
z International Economic Congresses 1853-1908
z International Statistical Nomenclature
z Need for Uniform International Tariff Nomenclature
z Similar endorsement by Second Int’l Congress of Chambers of
Commerce (Milan 1906)
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 Int’l Efforts for Customs
Nomenclature (Contd.)
z First International Conference of American States –
Washington DC 1889
– Recommended nomenclature in alphabetical order
– Multilingual – English; Portuguese, Spanish
z Second International Conference on Commercial
Statistics – Brussels 1913
z Uniform Statistical Nomenclature
z 29 Countries signed
z 186 items arranged in 5 groups: Live Animals, Food and Beverages,
Raw or simply prepared Materials, Manufactured Products, Gold &
Silver
z Later, became a basis for first compilation of commercial statistics
by International Bureau of Commercial Statistics in 1922.
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z Also used by 30 nations for Tariff Purposes. 1/28/2007
 Int’l Efforts for Customs
Nomenclature (Contd.)
z League of Nations Draft Customs Nomenclature
– World Economic Conference May 1927 – Recommendation
for Common Framework for Customs Tariff
– Draft Customs Nomenclature prepared by a Committee of
Experts – First Version 1931, Revision 1937
– Later known as “GENEVA NOMENCLATURE”
– 991 headings, 86 chapters, grouped in 21 sections;,
secondary, tertiary and quaternary headings as well.
– Contracting parties were free to reduce the number of
subheadings or create new distinctions.
– Used as a basis for Customs Tariff
– But filed to become a real Standard Customs Nomenclature
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 Int’l Efforts for Customs
Nomenclature (Contd.)
z Customs Cooperation Council Nomenclature(CCCN)
– European Customs Union Study Group (1948 onwards)
z Common Customs Tariff
z Basis = Geneva Nomenclature +Technical Progress-Shortcomings
z Initially known as “Brussels (Tariff) Nomenclature (BTN) - 1955
z Renamed in 1974 as Customs Cooperation Council Nomenclature
(CCCN)
z Special Provisions;
– Procedure for periodic updating through Nomenclature Committee
z Contracting parties – 52 countries
z Implemented by 150 countries
z 70% of the International Trade used CCCN
– Features of CCN
z Explanatory Notes+, Alphabetic Index of listing, Compendium of
Classification Opinions 9
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 Other Int’l Efforts
z Standard International Trade Classification (SITC)
– Geneva Nomenclature was used beyond its intended purpose
z Minimum List of Commodities for International Trade Statistics –
Leagues of Nations 1938
z Minimum List revised (1948-1950) by UN Statistical Commission
and became SITC
– UN Economic and Social Council (ECOSOC)
z Resolution urged Govts.to adopt SITC for External Trade
z UN Statistical Committee prepared “TWO-WAY CODING KEY”
(151) revised in 1956 by CCC
z UN Statistical Office, CCC, GATT. PEC and EC improved the key –
SITC-BTN III (1959) – Later (1978) known as SITC Rev., Second
Revision was known as SITC Rev.2 (262 headings, 1083
subheadings); alphanumeric.
z SITC Rev.2 - Dual Purpose nomenclature – Customs and Statistics
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Origin of Harmonized Commodity
Description and Coding System
z Need for Rationalization and Harmonization (Late
1960s) of trade documentation
z Country codes, units of quantity, modes of transport, transport
handling requirements and commodity coding
z Development of Data Transmission – Need for Internationally
Recognized Codes
z Focal Point – Economic Commission for Europe; Working Party
on Facilitation of International Trade Procedures; Group of Experts
on Data Requirements and Documentation
z CCC’s coordination with other Int’l Orgs.(1970)
– Consensus on CCC to sponsor a study on Commodity
Description and Coding
– Exploratory work took 13 years – HS 11
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Exploratory Phase for HS
z Study Group of CCC (1970)
z Aim = Meeting requirements of stakeholders –
customs, statisticians, carriers and producers.
z Final Report of Study Group
z HS is not only feasible but essential in long-term
interest of facilitation of Int’l Trade
z Basis of HS should be CCCN and SIT Rev.

z CCC to be CORE of HS

z Current Nomenclature and Systems be taken in

consideration – to meet the requirements of
customs, statistical and transport requirements
z Development under the auspices of CCC +
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Int’l/Inter-organization body 1/28/2007
 Preparatory Phase for HS
z HS Committee set up
z Represented by Customs, National, Regional and International
Organizations. (60 countries; 20+ Org.) CCC, UN Statistical Office,
UNCTAD, GATT, ISO, IATA, ICC, ICS, IATA, UIC and others.
z Assisted by Working Party (for technical work)
z Basis of HS
– Core = CCN + SITC Rev.2
– Other Systems were
z Custom Tariff of Japan, Tariff Nomenclature for Latin American Free
Trade Association (NABALALC), Nomenclature of Goods for External
Trade Statistics of EC, Community and Statistics of Trade between
Member States (NIMEX), Customs Tariff of Canada, Customs Tariff of
United States, “Import Commodity Classification” and “Export
Commodity Classification” (Canada), “Schedule B (Export)” of US,
International Union of Railways’ Standard Commodity Nomenclature
(NUM), International Air Transport Association’s “Worldwide Air Cargo
Commodity Classification” (WACCC), the Freight Tariff of the
Association of West India Trans-Atlantic Steamship Lines (WIFT), & 13
Standard Transportation Commodity Code (STCC) 1/28/2007
Where to Get More Information

z Introducing The International Convention

on The Harmonized Commodity
Description and Coding System
(Publication of CCC)

Also published by “Printing and

Publication Deptt. CPF, Custom House
Karachi.

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