Every five years, the World Customs Organization (WCO) makes changes to the global Harmonized Tariff Schedule (HTS). The U.S., as a contracting party to the convention, is obligated to amend its HTS to reflect the changes. Currently, the U.S. International Trade Commission (ITC) has posted the preliminary 2012 HTSUS on its website, available at: http://www.usitc.gov/tata/hts/index.htm.

The 2012 HTSUS changes will take effect on February 3, 2012, based upon Presidential Proclamation 8771, which was signed on January 4, 2012. The ITC official HTSUS 2012 schedule will reflect changes made by the WCO as well as changes requested by U.S. Customs and Border Protection to continue existing duty treatment for certain goods and reflect changes in the free trade agreements in force, which are further summarized below. The proposed WCO-related changes to the 2012 tariff schedule have been published and are available at: http://www.usitc.gov/tariff_affairs/hts_documents/pub_4276_Combined_report_for_printing.pdf.

There are a total of 225 amendments to the 2012 HTSUS, according to WCO officials. These changes are required by law to be "substantially rate neutral." The WCO's goals in amending the 2012 schedule were to increase the precision of the nomenclature texts to ensure their uniform application, take account of environmental concerns, and tailor the nomenclature to reflect current trade practice. As a result, the bulk of the 2012 changes affect agriculture and food chapters.

The HTSUS chapters effected are: 1-4, 6-9, 10, 11, 27-30, 37, 38, 41, 42, 44, 47, 48, 56, 58, 61-65, 68, 71, 73, 74, 76, 82, 84, 85, 87, 90-96, 98 and 99. Specifically, 98 changes relate to the agriculture sector, 30 to the machinery sector, 27 to the chemical sector, nine to the paper sector, 14 to the textile sector, and five to the base metal sector. Some of the more important changes to note are:

  • Food and agricultural products. A large number of changes were made to facilitate the use of the HTSUS for the compilation of food security data and agriculture statistics. For example, the WCO extensively revised Chapter 3 and included detailed identification of various species of fish.
  • Diapers, biodiesel and batteries. The WCO also created a new heading for hygiene absorbent products, both for infants and adults, and removed those products from the four headings in which they were previously found. The 2012 HTSUS provides separate identification for biodiesel fuels, nickel-metal hydride batteries (for use in hybrid vehicles) and lithium-ion batteries (for use in consumer electronics).
  • Chemicals and pharmaceuticals. The 2012 HTSUS reflects new subheadings in Chapters 29 and 30 for substances controlled under international conventions, such as the Rotterdam Convention, which monitors the international trade in hazardous chemicals and the Montreal Protocol, which stipulates a phase-out of production and consumption of depleting compounds.

Similarly, changes made by the U.S. Government with regard to duty preference programs and free trade agreements will be implemented in the 2012 HTSUS. These changes include:

  • Modifying the duty rates of specified agricultural products from Israel and reducing administrative burdens of same as described in Presidential Proclamation 8742;
  • Designating Cote d'Ivoire, the Republic of Guinea and the Republic of Niger as beneficiaries under the African Growth and Opportunity Act;
  • Extending the Generalized System of Preferences through July 31, 2013;
  • Implementing the next stages of duty reduction in the following free trade agreements: Peru, Oman, Bahrain, Dominican Republic-Central America, Morocco, Australia, Singapore and Chile;
  • Correcting typographical errors in the basic edition; and
  • Changing certain statistics and reporting requirements as requested by the Committee for Statistical Annotation of Tariff Schedules and the Bureau of Census.

Although these changes will not be in effect for another 30 days, it is imperative your company review the proposed changes, and understand which will have an impact on your imports and exports. The WCO changes affect each of the 177 member countries and may result in thousands of updates, corrections and changes in your database housing HTS data, critical to the flow of the global supply chain. Also, as customs officials in these countries struggle to implement and understand the changes, they could detain more shipments, which could affect your bottom line. Therefore, it would be beneficial to communicate with your suppliers and customers at this time regarding any changes that may impact classifications that relate to your business.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.