Harmonized System Codes: Why Should You Care?
Classifying your products properly will go a long way in helping you avoid nasty delays in custom and allow for global e-commerce growth. You have to get on board and at least be aware of the rules and intents if you would like to sell globally. The Harmonized System (HS) was developed by the World Customs Organization in 1988 to boost import/export efficiency. Everything moved between member nations has a 4 to 10-digit code.
Although execution of the Harmonized System (HS) or the Global Harmonized System (GHS) is voluntary (nations decide to implement portions of the recommendations), each significant player utilizes a variation of the same. In other words, if you want to go global, complying with HS is necessary.
The first four digits point to a category such as apparel, the next two digits a subheading, like hats. Therefore, the first six digits are for product classification. Businesses from participating nations must employ all of 4 and 6-digit provisions along with rules and notes as they are, but are allowed to embrace more subcategories and notes.
The next 2 to 4-digits represent a tariff code depending on the country. The last two digits are optional and can be added for statistical reporting, if necessary, to get a total of 10 digits to be listed on entry documents. The complexity level increases with more sensitive materials such as chemicals, food and plant substance. Check this site to know more!
So, why should you care?
Would you want to grow globally or are ramping for global distribution? If this is so, then it is simply essential.
Duty and tax is highly variable depending on the market, with categories that vary from country to country(and thus, not harmonized). To gain more knowledge on the importance of HTS codes, go to https://en.wikipedia.org/wiki/Harmonized_System#Classification.
Automate
Third-party harmonization is available, which saves retailers time by obtaining vendor codes from the cloud, classifying stock automatically and employing tariffs according to the International trade agreements. A few of the global e-commerce software also can recognize items that are prohibited, either ton export or import. Moreover, it automatically generates a notification for a certificate of origin based on dispatch price. Visit this site for more info!
Restricted Categories
Changes to the global harmonization system (GHS) largely affected the hazardous materials industry. Material safety data sheets are somewhat costly to review as well as to create. Improving terminology and signage was necessary to decrease office casualty - and the Occupational Safety and Health Administration estimates USD 500 million in cost savings as a result of reduced review time. The new legislation is anticipated to reduce the number of deaths and injuries and affects millions of employs of employees. OSHA has also revised its Hazard Communication Standards to align with the United Nations' GHS of Classification and labeling.
The Bottom Line
The fantastic news is that manual Classification can work well for companies that are small with few vendors, SKUs or target import/export countries. The other good thing is that every government stipulates the required codes for free online, and many of them have trade divisions that can answer custom questions. For US companies going global, for instance, additional information, such as case studies, are offered free.