The Harmonized System Is Changing in 2012. Don’t Quote Me But…
Perhaps you’ve heard? The Harmonized System Convention (HS) is to be revised yet again! It seems as if it were only yesterday when the World Customs Organization (WCO) released the HS 2007 edition. As importers and exporters it means we need to update our classification databases to reflect the changes.

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"Change is inevitable in a progressive society. Change is constant." - Benjamin Disraeli
 
Perhaps you've heard? The Harmonized System Convention (HS) is to be revised yet again! It seems as if it were only yesterday when the World Customs Organization (WCO) released the HS 2007 edition.
 
As you might recall the HS is the six-digit nomenclature on which the U.S. Harmonized Tariff Schedule and the Schedule B are built.
 
"Oh bother!" - Winnie the Pooh
 
Yes, change can be a bother. When the underlying HS changes it causes a cascading affect that influences national tariffs such as the U.S. HTS. It also influences trade agreements that use tariff-change rules. As importers and exporters it means we need to update our classification databases to reflect the changes.
 
"The world hates change, yet it is the only thing that has brought us progress." - Charles Kettering
 
Change can also be good. The Harmonized System was designed to be a dynamic nomenclature, one that would reflect goods in contemporary trade. The HS convention allows for the system to undergo updates on a four- to six-year cycle. The 2012 amendments represent the fifth edition of the convention since it was first released in 1983.
 
"All change is inevitable, except from a vending machine." - Robert C. Gallagher
 
The amendments to the 2012 edition of the HS may or may not cause a change for your company. According to a news release from the WCO, the HS 2012 includes 220 sets of amendments divided as follows:
  • 98 relate to the agricultural sector,
  • 27 to the chemical sector,
  • 9 to the paper sector,
  • 14 to the textile sector,
  • 5 to the base metal sector,
  • 30 to the machinery sector, and
  • 37 to the remaining sectors of the HS.
The news release from the WCO also states:
Environmental and social issues of global concern are the major feature of these amendments, particularly the use of the HS as the standard for classifying and coding goods of specific importance to food security and the early warning data system of the Food and Agriculture Organization of the United Nations (FAO.)
This statement reflects the fact that the majority of amendments found in the HS 2012 are in the agricultural and chemical sectors. The WCO has released a pair of correlation tables that compare the HS 2007 to the HS 2012 and visa versa. These are available on the WCO website.
 
What Should a U.S. Importer or Exporter Do?
 
The U.S. is committed to adopting the HS 2012, but the timeline for doing so is not yet clear. Indeed some of the administrative formalities behind implementation of changes are still pending. The intent is for the changes to go into affect with the 2012 versions of the HTS and the Schedule B. These have yet to be made available to the general public on the USITC or Census websites.
 
Even more unclear will be the changes to the tariff-change appendices of the various free trade agreements. For example, it took until the fall of 2009 for the HS 2007 changes to appear within the NAFTA rules of origination. Other FTAs still reference HS 2002.
 
Despite the uncertainty U.S. importers and exporters can discover if their headings and subheadings will be affected by querying the correlation tables above.
 
"All change is not growth, as all movement is not forward." - Ellen Glasgow
 
Admittedly I’m not going to convince all of you change is good. When it comes to the Harmonized System, however, it is inevitable. Even before implementation of HS 2012, plans are already underway for issuing an HS 2017 edition. The question for all of you will be how you deal with the change.
 
"Only the wisest and stupidest of men never change." – Confucius
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