International shipping is a sophisticated area. It involves multiple laws, regulations, permits, and restrictions. Many countries have adopted an international harmonised system, HS codes, since the late 80s to make a general convention for traders worldwide and make things easier.
The primary purpose behind this system is to cut down the complexity and make shipping manageable for sellers and regulating authorities.
What Is HS Code In Shipping?
Harmonized System code or the HS code is an internationally recognised list of commodities with descriptions and codes, which helps classify products being traded across countries. It helps in the easy identification of products and categories. Around 200 countries use the HS codes to impose appropriate regulation on those products, accounting for approximately 98% of the world trade.
The World Customs Organization is the body that is responsible for its maintenance and also ensures its uniform interpretation across the world. The HS codes go through periodic updates to maintain the dynamism which develops due to new technologies and products.
An HS committee overlooks these amendments, and they update these codes every five or six years. Now since we know what is HS code, let us learn a bit about their implementation.
Implementation Of HS Code
Currently, the HS codes are laid out for some 5300 products. Unlike the HTS code, the HS codes comprise only six digits, while every country is independent to add extra codes as per their comfort.
The first two digits represent the category such as technologies, liquors, etc. The second two digits further describe the sub-groups such as computers or mobile phones, or wines or whiskeys. Finally, the last two digits represent further specific information, such as the processor used in the computer or the alcohol percentage in the liquor.
A country’s HS coder is generally depicted in their customs website, but you can find the universal ones on many websites across the countries, including the WCO’s.
Which Countries Currently Use HS Codes?
As already mentioned, around two hundred countries across the globe use the harmonised system codes for shipping. Though the usage of the HTS code is more prevalent in the Americas and Europe, HS codes are popular across all continents.
They are used by most shipping nations such as the USA, Australia, UK, China, India, Japan, Canada, European Union, and Turkey.
What Are The Advantages Of HS Codes?
Given below are the benefits of implementing HS codes:
- They provide a standardised process for the identification of goods being traded across the countries.
- It becomes more accessible for the customs authorities to evaluate and levy the duties on each product.
- The additional time required for individual codification is eradicated, thereby making shipping faster and easier.
- Collecting trade data also becomes more manageable.
- The e-commerce retailers are bounded by a legal responsibility to use the HS codes.
- It increases the overall productivity of the shipping process.
- Training employees to identify and decrypt HS codes is a more straightforward and global practice.
- They also ensure the continued relevance of the trade policies, as they keep getting updated from time to time.
- HS codes are a common language in commercial trade across the countries, making them highly significant to implement.
Why Use Harmonised Codes For Shipping?
All exporters who wish to sell their products in the international markets need to deal with customs duties and other taxes. WCO realised the need for a generalised identification system, and they introduced the HS codes.
Therefore, to stay in the same league as other major exporters in international trade and to join their enormous community, it becomes essential for exporters to understand the HS codes and follow them for shipping their products.
