HS Nomenclature
2017 Comes into Effect from 1 Jan 2017
The
WCO has published the accepted amendments to the Harmonized System (HS)
Nomenclature that will enter into force on 1 January 2017. It includes 233 sets
of amendments, divided as follows: agricultural sector 85; chemical sector 45;
wood sector 13; textile sector 15; base metal sector 6; machinery sector 25;
transport sector 18; other sectors 26.
Environmental and social issues of global concern are
the major feature of the HS 2017 amendments. The majority of these changes to
the HS have been broached by the FAO (Food and Agriculture Organization of the
United Nations).
Due to the importance of the HS in the collection of
trade statistics, the HS 2017 amendments for fish and fishery products are to
further enhance the coverage of species and product forms which need to be
monitored for food security purposes and for better management of resources.
The split by more detailed product forms for crustaceans, molluscs
and other invertebrates is motivated by the importance of trade and consumption
of these species in the various product forms. The subdivisions enable a better
correspondence between the HS and the United Nations Central Product
Classification (CPC). The amendment for cuttlefishes and squids is to extend
the coverage of the present codes, in order to have all those species grouped.
At present, a significant share of cuttlefish and squid trade is recorded under
residual codes for molluscs.
The amendment for forestry products aims at one main
area: enhancement of the coverage of wood species in order to get a better
picture of trade patterns, including endangered species. In particular,
separating the data on tropical wood trade will both serve to focus attention
on the important issue of tropical wood use and clarify data on non-tropical
hardwoods. The HS 2017 amendments also include the creation of new subheadings
for the monitoring and control of certain products of bamboo and rattan,
requested by the International Network for Bamboo and Rattan (INBAR).
Nearly one-half of the world’s population lives at risk
of malaria. The HS 2017 amendment aims at detailed information for several
categories of products that are used as antimalarial commodities.
The HS 2017 Edition also introduces new subheadings for
specific chemicals controlled under the Chemical Weapons Convention (CWC), for
certain hazardous chemicals controlled under the Rotterdam Convention and for
certain persistent organic pollutants (POPs) controlled under the Stockholm
Convention. Furthermore, at the request of the International Narcotics Control
Board (INCB), new subheadings have been introduced for the monitoring and
control of pharmaceutical preparations containing ephedrine, pseudoephedrine or
norephedrine, and for alpha-phenylacetoacetonitrile
(APAAN), a pre-precursor for drugs.
Other amendments resulted from changes in international
trade patterns. Headings 69.07 (unglazed ceramic products) and 69.08 (glazed
ceramic products) were merged to take account of the fact that the main
subheadings within these headings concern products which are essentially no
longer manufactured, and the industry and trade no longer make a distinction
between unglazed and glazed ceramic products, whilst new products with a very
high trade volume are classified under subheadings 6907.90 and 6908.90
(“Other”).
Furthermore, for purposes of adapting the HS to current
trade practices, certain important products will be separately identified in
either existing or new subheadings.
Advances in technology are also reflected in the
amendments, inter alia, the size criteria for newsprint, light-emitting diode
(LED) lamps, multi-component integrated circuits (MCOs), and hybrid, plug-in
hybrid and all-electric vehicles.
Finally, the amendments include clarification of texts
to ensure uniform application of the nomenclature. For example, the regrouping
of monopods, bipods, tripods and similar articles in a new heading, namely 96.20.
WCO
Secretariat has worked out the requisite correlation tables between the old and
new editions of the HS, and on updating the HS publications, such as the
Explanatory Notes, the Classification Opinions, the Alphabetical Index and the
HS online database.
Customs
administrations have a huge task to ensure timely implementation of the HS 2017
Edition, as required by the HS Convention. The process of implementing the HS
2017 in their national Customs tariff or statistical nomenclatures has begun.
India is slow, the HS2017 is seen as mere “editing” changes in classification
(Ref 2016 Budget letter from TRU to field Commissioners).
India
has done nothing to update its 20 year old antiquated eight digit extension of
the six digit WCO classification. For example, push button phones still occupy
an independent eight digit code under the six digit code of 851712 for mobile
phones. Smart phones and tablet phones do not have a code and are subsumed
under the “Other” category reserved for miscellaneous items even though the two
phones occupy the bulk of the volume in mobile phones.
It is correctly said that customs have a vested
interest in preserving the antiquated system. They can play around with the
system to classify new items entering the trade basket to codes which have high
duties. For example, wrist bands to measure body activities have entered the
trade basket, customs classify them under wireless equipment on account of
their blue tooth capability. The correct classification should be under
measuring instruments which attract low duty. If new items were given a code in
the initial stage, this problem will not arise. China has moved fast to adopt
its system to HS2017. It has dropped 2500 HS Codes in a sudden move to update
its system to the new world!