International Trade Tariffs Quiz

Harmonized System-Classification and Tariff System

• The Harmonized System (HS) is a standardized numerical method for classifying traded products
• The HS is used internationally to uniformly identify and describe products
• Purposes of HS include assessing duties and collecting trade statistics
• The HS is a multipurpose international product nomenclature for classifying products
• The HS is a universal economic language for goods
• The HS is systematically organized according to easily understood principles
• The HS must adhere to the schedules and explanatory notes set by the World Customs Organization (WCO) every 5-6 years

Outline/Objective

• Overview of the Structure of the HS
• Identify and define the HS
• Recognize the purpose and importance of the HS
• Describe the structure of the HS
• Recognize the importance of knowing the structure to understand the General Rules of Interpretation (GIR)
• General Interpretation of the Rules
• List or state the rules
• Interpret and explain the 6 Rules of Interpretation
• Analyze and apply the rules

The Law Governing the Belize Customs Tariff and Trade Classification

• The Belize Customs Tariff and Trade Classification is governed by the International Convention
• Legal authority: Chapter 48 Customs & Excise Duties Act Section 3(1) and Schedules 8, 10, 8, 12

Function of the Harmonized System Committee

• The Harmonized System Committee has functions concerning the provisions of Article 8
  • Propose amendments to the Convention, considering users' needs and trade changes
  • Prepare Explanatory Notes, classification opinions, and other guidance on interpreting the Harmonized System
  • Develop recommendations for uniformity in interpreting and applying the Harmonized System
  • Compile and spread information about the application of the Harmonized System
• Furnish information concerning classification of goods in the Harmonized System to Members of the Council of Trade and Economic Development (COTED) and other international organizations
• Present Reports to each Session of the Council concerning activities, proposed amendments, Explanatory Notes, and Classification Opinions.
• Exercise other powers and functions related to the Harmonized System as deemed necessary by the Council of the Contracting Parties
• Administration decisions with budgetary implications require approval from the Council.

Harmonized System (HS) Classification Governing Bodies

• Governed by "The International Convention on the Harmonized Commodity Description and Coding System"
• COTED: Council for Trade and Economic Development established the HS in 1988; responsible for rates schedule.
• WCO (World Customs Organization): Harmonized System Committee. Administers, develops and maintains nomenclature and legal notes

Harmonized System Committee

• A committee of representatives from the Contracting Parties was established under the International Convention on the Harmonized Commodity Description and Coding System.
• The HS has undergone revisions, entering into force in 1966, 2002, 2007, 2012, 2017/2018, and 2022.

Why the Harmonized System (HS) Was Created and Used by WTO

• The HS contributes to the harmonization and standardization of customs and trade procedures
• Non-documentary trade data interchange is facilitated by the HS

Purpose of the Harmonized System (HS)

• Purposes such as compiling transport statistics, price monitoring of goods, monitoring controlled goods, and compilation of national accounts.
• The purposes of the Harmonized System (HS) are monitoring of controlled goods, internal taxes, freight tariffs, trade policies, rules of origin, and economic research and analysis.

HS-Tariff System- Common External Tariff (CET)

• A uniform tax or tariff applied by a group of countries in a customs union, or common market (e.g., CARICOM) to imported goods from outside the union.
• The same customs duties, import quotas, preferences, and other non-tariff barriers to trade apply to all goods entering the area, regardless of the country of origin.
• Under the HS Convention, contracting parties are obligated to base their tariff schedules on the HS nomenclature.
• Contracting parties determine their own duty rates and are free to adopt additional subcategories and notes.
• The purpose of a CET is to protect member countries from outside competition while promoting trade amongst them.

Belize Customs Tariff and Trade Classification

• National tariff implemented the (CET) Common External Tariff of CARICOM.
• The Customs tariff schedule comprises goods nomenclature (WCO) and a list of tariff rates (COTED).
• Nomenclature comes from the Latin word for name, which is a system for naming things within a specific discipline, profession, or field.

Tariff Rates

• Tariff is a tax on imported or exported goods and services
• Two types of tariff rates in the national tariff: specific and ad valorem

Calculating Specific Tariff, Mode of Ascertaining Specific Duty: Reputed Pint, Split and Quart

• Customs and excise duties act chapter 48 Section 8 and 12
• Legal bearing : customs and excise duties act chapter 48 revised edition 2000 for specific duty calculations as at 31st December 2000.

Calculating Specific Tariff

• Reputed split: 5-6 2/3 fluid ounces (148-197 ml)
• Reputed pint: 8 2/3- 13 1/2 fluid ounces (256ml - 399 ml)
• Reputed quart: 20-26 2/3 fluid ounces (591ml - 789 ml)
• Spirits and wine: 6 reputed quarts/12 reputed pints/24 reputed splits = 1 imperial gallon
• Malt liquor: ascertained by actual volume displayed by measurement
• Cordials and liqueurs: provisions of subsection 1 (1) are not applicable
• Units of measurement conversion: US gallon converted to UK gallons and vice versa.

What Liquors May Be Classified as Wine or Malt

• Liqueurs with more than 42% proof spirit are deemed wine.
• Liqueurs having more than 20% proof spirit are deemed malt liquors.
• Other criteria used to classify liquors for spirits

Structure of the Harmonized System (HS)

• The HS is structured in a hierarchical system composed of sections, chapters, headings, and subheadings.
• Numerical codes are employed for each classification level.
• HS codes are six-digit codes composed of heading and subheading codes

Harmonized System (HS) Headings

• Located within HS sections
• Each chapter contains 4-digit codes.
• Related to sections
• Contain product descriptions with numerical codes.

How To Establish HS Headings for a Commodity

• Locate the HS section
• Locate the HS chapter
• Locate the HS heading
• Compare appropriate subheadings within the HS heading.

HS Subheadings

• Subdivision of HS headings provide further details on the listed commodities.
• Subheadings are represented by 6-digit codes, paired with descriptions.
• Method for finding HS subheadings

HS Structure/Numerical Codes

• HS code = heading + subheading
• Typically comprises of 6 digits.

Section II: Vegetable Products

• Section II of the HS is dedicated to vegetable products.
• Section II includes Chapter 10 (Cereals), Heading 10.06 (Rice), and Subheading 1006.30 (Semi-milled or wholly milled rice) classifications of products.

HS Chapters

• Located within HS sections.
• 96 chapters currently active.
• Specific product descriptions accompany each numerical code.

Additional Questions and Answers

• This section presents answers to questions concerning goods' identification and classification within the HS system.
• Methods for product identification and classification are explained using procedures and examples
• Additional questions related to particular scenarios are answered.

General Rules of Interpretation (GIR)

• Six general rules for the interpreting nomenclature,
• An integral part of the system,
• Establishes the criteria for implementing the Harmonized System

GIR 1: Legal and Non-Legal Basis

• The Titles of sections, Chapters, and Subchapters present an overview of the goods
• Guideline- give a general indication of what type of goods or where a specific goods are likely located.
• GIR 1 is the primary rule

GIR 2: Imported Condition

• Any reference in a heading to an article is inclusive of an article that is incomplete, unfinished, unassembled, or disassembled.
• Essential character of the complete or finished article is critical to classification
• Blanks are articles not ready for direct use that have the outline of the finished article
• The complexity of the assembly method is not a factor to consider

GIR 2B: Combining Materials and Substances

• Reference to a material or substances includes mixtures or combinations with other materials
• References including material or substance means products that are wholly or partly made from the given material

GIR 3: Two or More Headings

• Goods that are classifiable under two or more headings should be classified under the heading providing the most succinct description rather than a general description
• If several headings are equally specific, the most important or essential character of the product determines the correct classification
• Classification of mixed or composite goods or sets sold in retail

GIR 4: Most Akin

• Goods not classifiable using other GIRs are classified using similar articles
• Commonly applied for new products or products not covered by other classifications
• Primarily used for new goods

GIR 5: Packaging

• Specially shaped or fitted containers for specific items are classified with those items
• Suitable for long term or repeated use when presented with the intended item

GIR5B: Packing Materials and Containers

• Packing materials or packing containers that are normally used to pack goods are classified with the packing contents when the product is in a saleable form.
• Not generally binding,
• Packing materials or containers used for repetitive use are not classified with the contents,

GIR 6: Subheading Classification

• For legal purposes, the subheading's details should determine classification
• Subheadings should use the same methodology as headings

Application of the GIR 6

• Comparison of subheadings with the same numerical characters
• Applicability for cases when Rule 6 is not required

How to Determine HS Code

• Know your product
• Locate possible sections and chapters
• Identify 4-digit heading
• Determine the 8-digit code