Glossary—Harmonized Tariff System (HTS)

GISTnet Glossary—Harmonized Tariff System (HTS)

This is a comprehensive product/commodity classification system developed under the auspices of the United Nations and the Customs Cooperation Council, now the World Customs Organization (WCO), for universal use by customs authorities and the international trade community. Customs authorities and trade statistics reporting agencies in most countries (over 190 to date) have adopted this system.

The HTS is a significant facilitation of international trade. Prior to the introduction of the HTS predecessor, the Brussels Tariff Nomenclature (BTN) in Europe in the 1970s, there was little or no common classification of products for customs tariff purposes; each country used its own product classification schema for determining the correct assessment of customs duty. This created considerable additional work by international traders and their agents in projecting duty costs and complying with customs entry regulations. With the BTN as its base, further development was undertaken by the U.N. Customs Cooperation Council to create an even more universal product/commodity classification system for worldwide use. The HTS emerged in the early 1980s, and was adopted via the Convention on the Harmonized Commodity Description and Coding System, presented and initially adopted in June 1983. A list of current countries that have adopted the HTS, and more information on HTS, can be found on the WCO web site document Harmonized System Convention - General information - Countries applying the HS . The HTS has also been adopted by a few transportation carriers for use in cargo commodity rate tariffs.

Correct use of the HS system is governed by HTS General Rules of Interpretation (GRI-HS), universally applicable, as well as HTSUS Additional U.S. Rules of Interpretation. Applicability of individual headings and subheadings is governed by universal notes, if any, appearing in the heading/sub-heading sections. Applicability of the final four digits is governed by notes, if any, added by the adopting authority. In addition to the HS classification schedule, GRIs and heading/sub-heading notes, the UN/Customs Cooperation Council has published a lengthy set of accompanying HTS Explanatory Notes as further guidance in using the HS system. However, these Notes are not adopted by all countries that have adopted the HTS, in which case they are for guidance purposes only.

In addition to providing a universal, high level classification system listing and differentiating all known commodities and products, the HS system also provides a "catch-all" chapters (Section XXII, chapters 98 and 99) to cover, at the discretion of the adopting agency or user, situations where the classification of the goods are not to be based on the goods themselves, but rather controlled by the circumstances surrounding the goods, exporter, importer or shipper.

The HTS is reviewed twice each year by a group of national customs officials and updated as needed with respect to headings, Chapter Notes and HTS Explanatory Notes to reflect new products and technology that the HTS does not yet address, or for which the classification has become controversial as to which HTS heading applies. A completely updated HTS is published every three years as is deemed necessary by the WTO.

(U.S.) Both the U.S. Schedule B (export classification system) and the HTSUS (import classification system) now use the Harmonized System. The HS system uses a universal "base" number consisting of four digits (the first two digits denote the "chapter," and the first four together are known as the "heading"), followed by two digits (known as the "sub-heading"), optionally followed by two to four digits at the option of the adopting authority or user to complete the classification number. The U.S. implementation uses all four of these optional numbers, for a classification number configuration of nnnn.nn.nnnn.

HTS Explanatory Notes are not currently adopted by the U.S. as binding on the use of the HTSUS.