TRADE/CEFACT/2000/12
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UNITED
NATIONS
/E
/Economic and Social
Council
/ Distr.GENERAL
TRADE/CEFACT/2000/12
19 January 2000
ORIGINAL: ENGLISH
ECONOMIC COMMISSION FOR EUROPE
COMMITTEE FOR TRADE, INDUSTRY AND ENTERPRISE DEVELOPMENT
Centre for the Facilitation of Procedures and
Practices for Administration, Commerce and Transport
Sixth session, 27-30 March 2000
Item 5 of the provisional agenda
DRAFT RECOMMENDATION NO. 30
HARMONIZED COMMODITY DESCRIPTION AND CODING SYSTEM
FOR THE CODING OF GOODS AND COMMODITIES
***
Submitted by the Codes Working Group (CDWG) *
* This document is reproduced in the form in which it was received by the secretariat.
GE.00-
TRADE/CEFACT/2000/12
page 3
I. PREAMBLE
The United Nations through UN/CEFACT (United Nations Centre for the facilitation of procedures and practices for administration, commerce and transport) supports activities dedicated to improving the ability of business, trade and administrative organisations, from developed, developing and transitional economies, to exchange products and relevant services effectively. Its principal focus is to facilitate international transactions, through the simplification and harmonisation of procedures and information flows.[1]
Globalisation of the marketplace is taking place rapidly, with companies sourcing components in one part of the world, assembling them in another part of the world and selling them in yet another. The trend towards transacting business through electronic means is leading to more physical goods flows with smaller and more frequent shipments of goods and commodities. This globalisation of markets has resulted in the growing need for even more efficient and effective information flows. The solution to achieving effective information flows across international markets lies in the use of common procedures and processes based on the use of globally agreed standards. Inherent in this approach is the need for precise mechanisms to define the data and for common coding systems to represent specific data items.
The “Harmonized Commodity Description and Coding System” (HS) has been adopted by Customs administrations worldwide as the method for the classification of goods. It provides accepted descriptions of products and groups of products that are most commonly produced and traded.
The use of the HS in a more general environment and in particular, among all parties involved in trade and transport, would facilitate and harmonise the exchange of goods information through a single universal and coherent coding system. Such usage would compliment the many developments taking place in the fields of trade, transport and customs controls, including advances in information and communication technology, improvements in cargo handling and more streamlined processes and procedures. Arising from these developments there is an increasing need to use a single means to identify goods and commodities instead of the many descriptions and codes presently in use throughout the world.
The UN/CEFACT work-program emphasises the need for developing recommendations, which simplify and harmonise the current practices and procedures used in international transactions. Within this context, the role of the UN/CEFACT Codes Working Group (CDWG) is to secure the quality, relevance and availability of code sets and code structures to support the objectives of UN/CEFACT, including managing the maintenance of UN/ECE Recommendations related to codes. The CDWG prepared Recommendation 30 based on the HS as developed by the World Customs Organisation (WCO)[2], for the more general coding of goods and commodities.
II. RECOMMENDATION
At its sixth session in March 2000, UN/CEFACT agreed to adopt the following Recommendation. A list of the countries and organisations present at this session can be found in Annex 1.
The Centre for the facilitation of procedures and practices for administration, commerce and transport (UN/CEFACT) recommends that Governments and business do mutually promote and support the use of the Harmonized Commodity Description and Coding System” as the preferred method for the coding of goods and commodities in support of a common approach to trade facilitation.
This implies:
1. For participants in international trade and transport:
· to accept and implement the Harmonized System (HS);
2. For Governments or their agencies responsible for administration of the HS at national level:
· to accept and implement the HS within transport related operations, where appropriate;
· to make relevant HS information publicly available;
3. For statistical offices:
· to accept and support the use of the HS codes in the compilation for trade and transport statistics.
4. For international organisations and national trade facilitation bodies:
· to accept and encourage the implementation of the HS codes.
III. SCOPE
1. This Recommendation establishes a common code list for the identification of goods and commodities in trade, transport and other economic activities related to international trade. This code list is based on the HS developed and maintained by the World Customs Organisation.
IV. FIELD OF APPLICATION
2. This Recommendation applies in cases where a coded representation is required for the description of goods and commodities, for information exchange between parties involved in international trade and transport. It has particular relevance to maritime transport but may be applied to any other mode of transport.
V. EXPLANATORY TEXT
A. Definitions
3. The following definitions have been adopted for the purposes of this Recommendation:
code: A character string that represents a member of a set of values.
code list: The complete set of code values for a data item.
commodity: Article of trade used as an indication of the type of goods.
data: A re-interpretable representation of information in a formalised manner suitable for communication, interpretation or processing.
document: Recorded permanent data containing information.
EDI (Electronic Data Interchange): The electronic transfer from computer application to computer application of commercial or administrative transactions using an agreed standard to structure the transaction or message data.
EDI message: An approved, published, and maintained formal description of how to structure the data required to perform a specific business function, in such a way as to allow for the transfer and handling of this data by electronic means.
Electronic business: The process of transacting business electronically. This includes the sharing of unstructured or structured business information by any electronic means among suppliers, customers, governmental bodies, service providers and other parties in order to conduct and execute transactions in business, administrative and other activities.
facilitation: The implementation of measures leading to the simplification, standardisation and harmonisation of the formalities, procedures, documents and operations inherent to international trade transactions.
formality: A set of requirements of an official, commercial or institutional nature.
goods: All materials received from a shipper.
harmonization: The alignment of national formalities, procedures, documents, information, and operations to acceptable international commercial norms, practices and recommendations.
HS (Harmonized System): Harmonized Commodity Description and Coding System developed and maintained by the World Customs Organisation.
intermodal transport: The movement of goods in one and the same loading unit or vehicle which uses successively several modes of transport without handling of the goods themselves in changing modes.
multimodal transport: The carriage of goods by at least two different modes of transport.
procedure: Steps to be followed in order to comply with a formality, including the timing, format and transmission method for the submission of required information.
standardization: The development of standards whose purpose is to align formalities, procedures, documents, information, and operations.
B. HS Specific Considerations
B 1. The use of the HS as the basis for Customs tariffs and the compilation of trade statistics.
4. Formalities, procedures and paperwork in international trade are generated by the need for governments and trade operators to monitor and control the movement of goods, the transfer of services and related financial flows. This is necessary in order to safeguard each party's legitimate interests and fulfil the information requirements of their operational, planning and policy activities.
5. Proper unambiguous coding of the type of goods is an essential part of the present information requirements especially wherever computer systems are used to support the monitoring and control.
6. The Harmonized Commodity Description and Coding System, popularly known as the Harmonized System or the HS, developed by the World Customs Organization (WCO), fulfils this role. The HS was implemented on 1 January 1988 (International Convention on the Harmonized Commodity Description and Coding System).
7. The Harmonized Commodity Description and Coding System is:
· a multipurpose nomenclature for transportable goods;
· composed of about 5000 commodity groups, each identified by a six-digit code;
· provided with a legal and logical structure (sections, chapters, headings and subheadings), supported by well defined rules to achieve uniform classification;
· designed to allow further subdivisions beyond the six-digit level to meet specific requirements (e.g., to identify commodities of national interest);
· used by more than 170 countries and Customs or Economic Unions as the basis for Customs tariffs and trade statistics (over 98% of world trade);
· applied by governments and the private sector for a variety of other purposes such as internal taxation, origin rules, quota controls, tariff negotiations, trade monitoring, freight tariffs, transport statistics, price monitoring and economic analysis;
· accompanied by a number of complementary publications (explanatory Notes, classification decisions on Internet, CD-ROM database) to ensure uniform application;
· kept up-to date (amended every 4-6 years) taking account of developments in technology, changes in trade patterns and needs of the users;
· maintained by the WCO through the HS Committee (representing contracting parties to the HS Convention).
B 2. The use of the HS across the international transport chain.
8. The increasing need to manage goods over the total chain from seller to buyer has led to a requirement for better integrated transport operations. The need to have accurate and timely information is a prerequisite for effective transport planning. The availability of unique and unambiguous codes to identify the goods and commodities transported will lead to more effective and efficient supply chain.
9. The management of cargo in transit may also benefit from the availability of coded goods descriptions for monitoring purposes. In some countries it is a requirement that the HS code be specified for transit declarations.
10. Whilst intermodal transport is viewed as a potential means to improve the overall efficiency across the transport chain, consolidation of consignments often leads to difficulties in tracking the identity of individual goods and commodities. Advance information on cargo and equipment would assist in mitigating these difficulties.
11. It is recommended to use, whenever available, the applicable 6-digit HS code. When the 6-digit code is not applicable, it is recommended that the first 4 digits of the HS code be used in place of the 6-digit HS code. To this end, it is further recommended to provide the HS code for at least the main cargo item, especially in those instances where more than one HS number may apply (eg. for multiple consignments carried in one container).
12. Parties responsible for each stage of a trade transaction in a value chain are encouraged to use the HS in conjunction with other applicable UN Recommendations.
These include:
· UN Recommendation 8 - Unique Identification Code Methodology - UNIC,
· UN Recommendation 11 - Documentary aspects of the international transport of dangerous goods.
· UN Recommendation 16 - UN/LOCODE - Code for Ports and Other Locations,
· UN Recommendation 18- Facilitation Measures related to International Trade Procedures,
· UN Recommendation 19- Codes for Modes of Transport,
· UN Recommendation 21 - Codes for Types of Cargo,
Packages and Packaging Materials.
· UN Recommendation 24- Harmonization of Transport Status codes.
B 3. Concurrence with the HS.
13. The code list provided in Annex 4 of this Recommendation is based on the rules for the general interpretation of the HS. In order to facilitate the use of the HS in the more general international trade and transport environment, certain variations have been applied in consultation with the World Customs Organisation. These variations are as follows:
· Only those HS codes that have been identified as having a general application to trade and transport have been included,
· Where appropriate, HS headings and sub-headings have been included as specific codes without alteration to their HS 6-digit value
· Additional 6-digit codes have been inserted where a more generic entry is required and there is no equivalent HS heading or sub-heading code.
14. The aforementioned variations are consistent with the structure of the HS.
B 4. Need for co-ordination and concert with the WCO and national Customs administrations.
15. The national Customs administrations are primarily responsible for application of the HS for Customs tariffs and trade statistics. Implementation of the HS for the general coding of goods, especially for non-tariff purposes, should therefore be with the co-operation and technical support of national Customs authorities.
16. Any local inconsistencies arising from the specific application of the HS should be examined in consultation with the Customs authorities and, if necessary, brought to the notice of the WCO for resolution.
17. In principle, the maintenance requests to the WCO should be forwarded through the national Customs authorities to ensure proper co-ordination. Alternatively, such requests may be forwarded to international organisations representing particular modes of transport or specific groups of users, for processing through a WCO liaison arrangement.
18. Annex 4 represents a sub-set of the HS and as such will be updated in concert with the periodic updates to the HS as approved by the WCO. In instances where commercial considerations indicate that changes are required to Annex 4 and these changes are not required to the HS, then these requests should follow the procedures detailed in section VI - Maintenance and updating.
19. A more general use of the HS codes will require co-ordination between the WCO and UN/CEFACT to ensure that the maintenance, dissemination and publication process for this Recommendation is in concert.
C. General Considerations
C 1. Impact of Information Technology Trends.
20. Emerging technologies such as those offered through Electronic Business and the World Wide Web are having an increasing impact on the way business is being conducted.
21. The growth in the number of parties using the Internet for commercial or personal purposes will have significant impact on the level of goods being moved across international boundaries.