What is the Harmonized Tariff System?
The efficiency of International trade is very important, and so it is crucial that we have a system that is easy to process. Of course, when multiple countries do business, there is going to be a language barrier. Fortunately, the World Customs Organization (WCO) has developed a coding system that works around the language barrier to classify the goods that are most commonly traded and distributed throughout the world.
Clearit Canada customs consulting could explain that this system is known as the Harmonized System (HS); sometimes it referred to as the Harmonized Tariff Schedule (HTS), even though they are not the same thing.
Harmonized System vs Harmonized Tariff Schedule
The difference between HS Codes and HTS Codes is subtle but necessary. Basically, if the code has six digits it is a universal standard HS code. If the code has 7 to 10 digits, it is an HTS code; and the 7th number in an HTS code always designates the country of origin.
An HTS Code Example
Here is an example of a standard HTS code: 0901.21.0010
- In this code the first two digits (09) classify this package as the [coffee or tea] group.
- In this code, the second pair of digits (01) classifies that the [coffee or tea] is roasted (and not still in husks/skins); thus this is coffee and not tea
- The third pair of digits (21) classifies that this is regular coffee (not decaffeinated)
- The fourth pair of digits (00) classifies that this coffee does not have any additional duties
- The fifth pair of digits (10) is the final pair and is a statistical suffix which classifies that this coffee is certified organic
Why Do We Need HS and HTS Codes?
Again, we use the HS and HTS Codes to move goods across the world without having to translate classifications. At any given time, there are roughly 200 countries participating in the international trade system, so simple mathematical coding ensures that everyone who participates can communicate without having to stop and translate or interpret.
In addition, though, the HTS/HS Code system has been developed as a means to communicate what tariffs and/or duties will be assessed to a product as it passes through its different international trade channels. The codes help retailers, essentially, to understand the ultimate price of a particular good, based on how many duties and taxes have been added over time.