WCO Adopts HS2017 New Classification to replace HS2012 from 1^st January 2017

· Non-Alcoholic Beer Gets New Code 2202.91 and 2202.99

· Multi-component ICs (MCO) Recognized Separately under Heading 8542

· New Codes for Strategic Trade Items for Food Security, Chemical Weapons

· New Deal for Electric Vehicles under Heading 8702 and 8703

-Asim Goyal-

The Indian Customs and Excise organizations will implement in the new tariff and statistical systems. It is expected that Budget 2016 will take these changes on board for implementation for 1 January 2017 with corresponding changes in the eight digit ITC (HS) codes. However a major exercise to revise the eight digit codes which are more than 15 years old is required. This is specially so since domestic trade items for excise and VAT are poorly represented. In quite a few cases 8 digit codes are faulty or poorly formulated.

The new HS2017 code tries to capture the advances in technology. Major changes included the size criteria for newsprint, light-emitting diode (LED) lamps, multi-component integrated circuits (MCOs), and hybrid, plug-in hybrid and all-electric vehicles.

The new version of the HS includes 234 sets of amendments. Environmental and social issues are a major feature of these amendments, due to the importance of the HS as a global tool for collecting trade statistics and monitoring trade. This is borne out by the fact that the HS Convention currently has 150 Contracting Parties, making it the WCO’s most successful international instrument to date.

The majority of the recommended amendments were broached by the Food and Agriculture Organization of the United Nations (FAO):

• Amendments relating to fish and fishery products are aimed at further enhancing the coverage of species and product forms which need to be monitored for food security purposes, and the better management of resources.

• Amendments relating to crustaceans, molluscs and other invertebrates are motivated by the importance of the trade in and consumption of these species in their various product forms.

• Amendments relating to cuttlefish and squid enlarge the coverage of the present HS codes for these species, in order to have all these species grouped together.

The classification of forestry products has also been modified, in order to enhance the coverage of wood species and get a better picture of trade patterns. The modification will enable trade data on tropical wood to be identified, resulting in better statistics on the trade in tropical wood and better data on the use of non-tropical hardwoods. In addition, the amendments include new subheadings for the monitoring and control of certain bamboo and rattan products.

Furthermore, HS 2017 amendments aim to provide detailed information on several categories of products that are used as anti-malarial commodities. This will facilitate classification work, and the trade in these life-saving products.

The amendments also introduce specific subheadings to facilitate the collection and comparison of data on the international movement of certain substances controlled under the Chemical Weapons Convention.

New subheadings have also been created for a number of hazardous chemicals controlled under the Rotterdam Convention and for certain persistent organic pollutants (POPs) controlled under the Stockholm Convention. In some cases, there is a confluence of control regimes for chemicals by both the Rotterdam and Stockholm Conventions.

In addition, new subheadings have been created 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”).

Finally, the HS 2017 Recommendation includes amendments to clarify texts to ensure uniform application of the nomenclature. For example, the regrouping of monopods, bipods, tripods and similar articles were given a new heading, namely 96.20.

The WCO Council, at its 123rd/124th Sessions in June 2014, adopted a Recommendation that lists recommended amendments to the Harmonized System (HS) nomenclature which will enter into force on 1 January 2017 as HS 2017.

This Recommendation is being promulgated under the provisions of Article 16 of the HS Convention, which implies that HS Contracting Parties now have six months to notify the WCO Secretariat of an objection to a recommended amendment.

Since the entry into force of the current version of the HS (HS 2012), the HS Committee has been revising this version of the HS nomenclature for almost five years. HS 2017 will be the sixth version of the HS since the Convention entered into force in 1983. HS 2017 will enter into force for all HS Contracting Parties, but will exclude any amendments objected to during the six month timeframe.

The WCO Secretariat has also prepared requisite tables correlating the 2012 and 2017 versions of the harmonized system in accordance with the instructions received from the Harmonized System Committee. The tables have a purpose of facilitating the implementation of the 2017 version of the Harmonized System.