harmonized system by ree russell us commercial service

Harmonized SystemBy

Ree Russell

US Commercial Service

What is the HS number?

• It’s like a Social Security Number, uniquely explains your product. Helps others who are not familiar with your product.

• HS is a Product Classification.

• A Harmonized System is used because Customs officials worldwide don’t speak the same language.

• With everyone using the same “songbook,” we can watch the flow of goods in and out of countries.

Classifying your Product

Classify your good on WHAT IT IS, not on its end use, nor its destination (like Mexico or Malaysia.)•Example: A bolt by itself may be a part of a machine, but it is first and foremost a bolt, and it should be classified as such.•Example: Grass seed and fertilizer mix. Classify the mixture as being primarily grass seed, if it is.

HHarmonized SystemSystem• The World HS number is 6 digits The World HS number is 6 digits

longlong

• US schedule B number is 10 digits US schedule B number is 10 digits longlong

• The whole world only recognizes the The whole world only recognizes the first 6 digits (everybody has the first 6 digits (everybody has the same songbook) same songbook)

THE MORE NUMBERS,THE MORE NUMBERS,

THE MORE DESCRIPTIVETHE MORE DESCRIPTIVE

HS Sections are usually arranged in order of degree of manufacture

• Section 1 Raw material, a cow

• Section 2 Semi manufactured, such as rawhide

• Section 3 Finished product, like a handbag or leather

shoes

What is the HS number?What is the HS number?• Chapter: 82 • Tools, Implements, Cutlery,

Spoons and Forks, of Base Metal

• Heading: 8208 Knives and cutting blades

• Subheadings: 820810 for Metalworking

• 820820 for Woodworking

820830 for Food Industry Machines

• 820840 for Agricultural, Forestry Machines: includes a LAWNMOWER BLADE)

• The world recognizes the first six digits.

• Notice the US does not further define this particular Lawnmower Blade,as the US last four 4 digits are zeroes.

• US Schedule B Number:

• 8208400000

Where to find the HS code:Where to find the HS code:The Harmonized Tariff Schedule of the US is online, but can be

purchased at the government bookstore:

U.S. Department of Commerce Schedule B Classification of Exports

CALL your US Commercial Service/Export Assistance Center

704 333 4886 –or- our “sister” agency the U.S. Census Bureau, Foreign: Trade Division.

For “Assistance with Classifying Products” OR “Finding a Schedule B Number,” call any of the phone numbers below: (an upgrade from “Durable Goods,” Non-Durable Goods, or “Don’t Know”)

• (301) 763-3259; (301) 763-3484; (301) 763-3047

Census On-line: www.census.gov/trade (NEW! eff. Mar 8, 2010)

- choose Schedule B Search Engine from tool bar- or select Search and type in a key word(s) - Remember: the US-specific number Schedule B is 10 digits long; the

first 6 digits is a world recognized HS number

The Classification Challenge

• Let’s look for classifying a Generator

Suggested because of the market potential for countries that are logistically close to North Carolina exporters!

And the product is in Demand in the Caribbean, CAFTA countries, and African countries! Thank you, Electricity!

Select 2 Numbers At A Time

Find your Chapter:

Chapter 1 (Live Animals) to

Chapter 98 (Special Classifications)

Chapter 85 is Electrical Machinery and Equipment and Parts Thereof

Select the Chapter Heading

Next 2 numbers is the Chapter Heading.Chapter Heading 8501 is Electric motors

and generators “Look around” or “further” to the 4-digit codes

ONLY in this area:8502 - Electric generating sets and rotary

converters8503 - Parts suitable for use solely or

principally with Machines in 8501 or 85028504 - Transformers

Proceed to Add Another 2 numbers8501.10 - Motors with a certain wattage output

8501.21 – “Universal” AC/DC Motors

8501.31 – “Other” DC Motors and DC Generators not exceeding 750 W

8501.32 - “Other” DC Motors and DC Generators of output 750 W but not exceeding 75 kW

Stay on Track by just Adding 2 numbers at a time.

8501.33 - Generators exceeding 75 kW

(which is 100 hp) but not exceeding 375 kW

8501.34 - Generators exceeding 375 kW

8501.40 - “Other” AC Motors

If you see .0000 at the end, try to focus on the 5th and 6th

digits only

HS Code 8501.32 refers to DC Generators of an output of 750 W but not exceeding 75 kW – just like the Generator in the Lowe’s catalog page (see handout)

Final 7th, 8th, 9th, 10th #s

• Represent the HS Statistical Subdivisions

• Full 10 digits (sometimes these last four “Final” numbers are just “0”s!

• The Statistics can be very Specific –

• or still rather Vague!

•So….

•We have a “medium output” Generator – (a full 10 digits and even more descriptive) =

•8501.32.6000 -- the U.S’s Schedule B!

HS + 4 = 10 digit Sched B

Other Classification Challenges

• The same process for Lawnmower Blades and Generators is applied for additional Audience Requests of EU 201 Class #2 (last week):

• Forklifts• Hardwood Living Room Furniture• Scrap Metal, ferrous and non-ferrous• Plywood• Motor Fuel Additive

If you’re still awake… GRI Explanatory Notes

• Found at the US Customs website, the Explanatory Notes go into greater detail concerning General Rules of Interpretation.

– Go to www.customs.gov

– Select Trade

– On the right hand side, select Harmonized Tariff Schedule of the United States

– On right, select Current HTSA Edition by chapter

– Select General Notes, General Rules of Interpretation, General Statistical Notes

– Click General Rules of Interpretation

– Scroll through to your product area

General Rules of Interpretation

• Found in the beginning of the Harmonized Tariff Schedule, GRIs lay the ground work for Product Classification overall, including systems, sets, mixtures and composites, repetitive uses, etc.

• If in doubt, call us: your Charlotte US Commercial Service (704) 333-4886. We interface w/our “sister” Federal agencies like US Customs (now part of US Customs & Border Protection - CBP) on your behalf.

Containers and Cases General Rules of Interpretation

• If a container is suitable for repetitive use, it must be classified on its own.

• Example: If you are exporting propane in a tank to Canada, you actually have to classify the propane in its own classification and the tank in its classification, because the tank itself is reusable in Canada.

Containers and CasesGeneral Rules of Interpretation

• Full cartons of eggs are classified under eggs, 040700. Without the eggs, the carton is made of paperboard, 482370.

• A can of Coke falls under beverage, 220210.

• A violin case without the violin is HS 4202xx, but if shipped with the violin inside, it is HS 920210, a stringed musical instrument.

General Rules of Interpretation

GRIs form part of the Customs Tariff legislation and have been designed to

ensure uniformity in classification decisions

• GRIs are essential for classifying.

NOW GET READY FOR THE FUN PART!

ANSWERING THE QUESTION:WHAT ARE MY TOP 10

MARKETS?

Harmonized System

HS numbers are “drivers” of the import duties that foreign importers pay for your product.

Foreign Customs authorities determine what your product is by the numerical product code – the Ninja Turtle!

HS numbers also determine US export statistics – you can watch product flows in and out of countries. CAN BE great for Marketing Managers, but not always!

Determining AND Using

I look forward to helping YOU to

DETERMINE and to USE the HS number (s)

or the Schedule B number (s)

These Numbers are for myriad Export Docs uses and -- when the number (or related number) is specific -- to help you Target Markets and/or determine your MARKET SHARE in those countries!

Finding Export Statistics

• After determining your HS code, the US Department of Commerce/US Commercial Service/Charlotte Export Assistance Center (me!)* can help you tap into the export statistics by country market. Helps to determine “Top Ten” Markets for your product! WWW.USATRADEONELINE.GOV

• • *or my Charlotte co-workers and intern

Determining AND USING

THE FOLLOWING ARE CURRENT AND REAL LIFE EXAMPLES OF

DETERMINING AND USING YOUR HS CODES TO TARGET YOUR TOP 10 MARKETS

and/or

DETERMINE YOUR MARKET SHARE in those countries!

So…Top 10 markets for

• Coniferous (Pine) flooring under

• Schedule B Code 4409102000 (HS is 6 digits 440910)

• Are:

• Mexico, China, Canada, UK, Sweden, Russia, BERMUDA (interesting), Czech Republic, Bahamas, UAE. Continuing…

“Current” Top 10 Markets for:• Electric DC Generators in the Lowe’s Catalog

(>750 W but <75 KW)

• HS 850132; Schedule B 8501326000 are:

• Canada, UK, Trinidad & Tobago, Venezuela, Germany, Costa Rica

• Mexico, Panama, Dominican Republic, Guatemala

“Current” Top 10 Markets for:• Chairs, household, of wood, Upholstered:

• HS 940161; Schedule B 9401613000

• Canada, Mexico, Saudi Arabia, Taiwan, UK, Macao, Israel, Germany, Kuwait, UAE

• Seats with Wooden Frames, Upholstered, NESOI (Couches and other seats)

• HS 940161; Schedule B 9401616000

• Canada, Mexico, Saudi Arabia, Venezuela, UAE, Kuwait, Chile, Israel, Honduras, China

“Current” Top 10 Markets for:• Fork Lifts (all three types):

• HS 872710 Fork Lift Trucks, self-propelled, electric powered, operator riding or walking;

• HS 842720 Fork Lift Trucks, self-propelled, gasoline powered, operator riding or walking

• HS 842790 Fork Lift Trucks, NESOI (not elsewhere specified or indicated

• Top 10 markets for 8427 (note: there are no further 6-digit codes beyond the above):

“Current” Top 10 Markets for:• FORKLIFT TRUCKS

• HS 8427 ARE:

• Canada, Mexico, Brazil, Australia, Colombia, Singapore, Netherlands,Belgium, Chile, Venezuela

“Current” Top 10 Markets for:• HS 720410-50 Scrap, ferrous are:

• China, Taiwan, S. Korea, India, Canada, Turkey, Mexico, Finland, Hong Kong, Egypt

“Current” Top 10 Markets for:• HS 740400 Scrap, non-ferrous copper scrap

are:

• China, Canada, Hong Kong, S. Korea, Japan, Germany, Belgium, Spain, Greece, Mexico

“Current” Top 10 Markets for:• HS 2701011 Light Oils & Preparations (non-

crude) from Petro & Bitum are:

• Mexico, Brazil, Canada, Venezuela, Ecuador, Chile, Japan, Netherlands Antilles, Costa Rica, Guatemala

“Current” Top 10 Markets for:• HS 4412 Plywood are:

• Canada, Mexico, Australia, Germany, India, Grenada, Belgium, Dominican Republic, Bahamas

HOMEWORK

EVERYONE GO TO

www.census.gov/trade

and determine your HS Code –

I will pull your one product’s HS-based

current US export statistics to know your

Top 10 target markets or market share

(where possible)

Make $ … then let us know about yourEXPORT SUCCESS

Thank You! - Ree Russell