HS Code and Other Aspects of Global Trade
Things like the HS code and all the associated costs are not necessarily the first things that come to mind when people think about global trade, but they are integral to the process of any import and export of goods and materials. If you are involved with global trade management, you must understand the Harmonized Commodity Description and Coding System (HS) of tariff nomenclature, a globally standardized system of names and numbers to classify traded products which was developed and maintained by the World Customs Organization, a Brussels-based independent intergovernmental organization with more than 170 member countries. You must also understand the landed cost of any raw materials, semi-finished and finished goods, including the total cost of purchasing, transporting, warehousing and distributing.
The average person probably doesn't know the HS code exists, but chances are that products throughout their home and office were classified by this coding system before making their way down the supply chain to their local store. The HS is a six-digit nomenclature consisting of four digits known as the heading, followed by a subheading. The 170 member countries that use this coding system cannot alter the heading or subheading in any way, which keeps the numbering system harmonized.
There are more than 200 countries, customs and economic unions in total that use the HS for a number of activities related to global trade management. They can use it to determine the landed cost and as a basis for customs tariffs, collection of international trade statistics rules of origin, collection of internal taxes, trade negotiations, transport tariffs and statistics, monitoring of controlled goods and areas of customs controls and procedures including risk assessment, information technology and compliance. The codes have changed a bit over the years, though, so it is important to be sure that the definition set being used for the goods or materials in question is correct for the current system.
Understanding all the codes and performance measures used to determine global trade factors and examine the efficiency of an organization's logistics is an integral part of managing an international commodity-based business.
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For more resources regarding hs code or even about landed cost and especially about global trade management please review these pages.
Author: Groshan Fabiola
