Prior to the Harmonized System, before 1987, many countries and territories used the Customs Cooperation Council Nomenclature (CCC Nomenclature) as the basis for classifying their customs tariffs. However, some countries, particularly the United States and Canada, used different nomenclatures.
In 1970, a Study Group was established within the Customs Cooperation Council (now the World Customs Organization—WCO). Its purpose was to examine the possibility of developing a new nomenclature system that would meet the primary requirements of customs authorities, statisticians, carriers, and producers.
The “Harmonized Commodity Description and Coding System” (Harmonized System or HS) is an international product nomenclature. It was developed as a result of the aforementioned study under the auspices of the WCO, an intergovernmental organization with more than 160 member countries headquartered in Brussels, Belgium.
This system is used today by more than 200 economies to facilitate statistics, tariffs, customs, and trade negotiations.
History of the Harmonized System
The HS is a 6-digit nomenclature. Some countries have expanded it to 10 digits for customs purposes and to 8 digits for export purposes.
This nomenclature is largely based on the NCCA and the United Nations’ HS (Harmonized System). However, it also takes into account certain aspects of the U.S. Tariff and the Canadian nomenclature.
According to the World Trade Organization (WTO), the Harmonized System was developed not only for customs purposes, but also to compile trade statistics. Moreover, it serves all types of transactions in international trade (transportation, insurance, etc.).
World Customs Organization
The HS comprises some 5,000 product groups, each identified by a 6-digit code, arranged according to a legal and logical structure. More than 200 countries and economies use the system as the basis for their customs tariffs, and over 98% of goods in international trade are classified according to the HS.
The Harmonized System is governed by the “International Convention on the Harmonized Commodity Description and Coding System.” The official interpretation of the HS is contained in the Explanatory Notes (five volumes in French and English) published by the WCO.
And the 2007 version is the third major revision of the HS since its adoption by the WCO Council in 1983 and its entry into force in 1988. The new version includes more than 350 amendments to the HS Nomenclature.