WCO says HS2027 to be Finalised by June 2024

· World Customs Organization (WCO) and the WTO held on 17 October a joint workshop to address the periodical update of the Harmonized System (HS)

· high interest of members in building the capacity and expertise of the Committee on Market Access on matters related to the Harmonized System and in better understanding the interlinkages between the work undertaken by the WCO and the WTO

· HS is currently used by 211 economies and over 98% of the merchandise trade is classified in terms of the HS.

· WTO members must incorporate such changes in their national tariff nomenclature and update their WTO schedules of concessions — often referred to as “goods schedules”. This exercise is called “transposition” in WTO jargon

· the next HS review cycle (HS2027) which is currently under negotiation at the WCO.

· review cycle for the 2027 edition started in the second half of 2019. The last voting meeting of the HS Committee is scheduled for March 2024 and the final HS2027 recommendation to the WCO Council is scheduled for June 2024.

The World Customs Organization (WCO) and the WTO held on 17 October a joint workshop to address the periodical update of the Harmonized System (HS) — the international nomenclature that allows countries to classify traded goods in a standardized manner. Participants in the workshop also discussed how updates to the HS can have an impact on legal instruments recording tariffs and other commitments by WTO members with respect to trade in goods, in particular on schedules of concessions.

The workshop responded to the high interest of members in building the capacity and expertise of the Committee on Market Access on matters related to the Harmonized System and in better understanding the interlinkages between the work undertaken by the WCO and the WTO on this issue.

The Chair of the Committee, Kenya Uehara of Japan, underlined that the Harmonized System plays a key role in facilitating cross-border trade by providing a universal language for the coding and classification of goods. The HS is currently used by 211 economies and over 98% of the merchandise trade is classified in terms of the HS. Changes to its nomenclature can have an impact on the rights and obligations of WTO members, particularly with regard to their tariff commitments.

The HS is periodically updated in light of developments in technology and changes in trade patterns. The latest set of amendments (HS2022) entered into force on 1 January 2022, introducing major changes on a wide range of goods. It also addressed current global environmental and social issues, such as health and safety, societal protection and the fight against illicit trade and terrorism.

The Chair noted that as the HS evolves, WTO members must incorporate such changes in their national tariff nomenclature and update their WTO schedules of concessions — often referred to as “goods schedules”. This exercise is called “transposition” in WTO jargon and is carried out in the HS multilateral review process by the Committee on Market Access.

“It is of paramount importance to ensure transparency and predictability of trade as it allows members, and the trading community, to compare the obligations undertaken by members in the WTO with the trade regimes that they apply in practice,” Mr Uehara said.

The workshop was organized in four sessions. In the first session, Gael Grooby, Deputy Director of Tariff and Trade Affairs at the WCO, offered an overview of the HS amendment procedures, in particular the most recent one (HS2022), and outlined the main reasons behind the HS updates.

These include recognising changes in the trade value of certain goods, clarifying classification issues, and reflecting goods restricted, monitored or controlled in international agreements. They also include acknowledging societal needs and any other needs prompting a member or an international governmental organization to make an update proposal.

The second session gave representatives of WTO members the opportunity to share their experience with the implementation at the national level of the HS2022 amendments. Cambodia, China, Ecuador, Maldives and the United States took the floor to provide concrete examples of their experiences and described the main challenges faced with HS2022 implementation. They also explained how inter-agency coordination worked and how other stakeholders, such as the private sector, get involved in this process.

Session three saw an introduction by the WTO Secretariat of the HS transposition work in the Committee on Market Access and on the technical work that is behind the preparation of HS transposition files. Finally, session four allowed the WCO to speak in more detail about the next HS review cycle (HS2027) which is currently under negotiation at the WCO.

The HS revision runs in a five-year cycle, starting once the WCO Council approves the edition that has just completed. The 2022 edition was approved in June 2019 (for entry into force in 2022), and the review cycle for the 2027 edition started in the second half of 2019. The last voting meeting of the HS Committee is scheduled for March 2024 and the final HS2027 recommendation to the WCO Council is scheduled for June 2024.

In his concluding remarks, the Chair said: “I believe that this workshop has strengthened our understanding of the HS transposition process, which should also help members proceed with adopting HS2022 at the national level and also get ready to prepare and review the HS2022 transposition files in the Committee.”

“The WTO Secretariat team stands ready to assist members with any further questions or concerns to ensure a successful transposition work by all members,” he added.