Key Changes in the Harmonized System 2022

Updates to the Harmonized Commodity Description and Coding System kick in on January 1, 2021. In this QAD Precision Report we look at some of the most important changes.

The World Customs Organization (WCO) is making changes to the Harmonized Commodity Description and Coding System. Also known as the Harmonized System or HS, the changes are effective from January 1, 2022. The 2022 edition is a global update, as opposed to annual local, EU updates. 

The Harmonized Commodity Description and Coding System

The World Customs Organization developed the Harmonized System. The HS nomenclature serves as the basis for customs tariffs globally. It is used for tariff schedules as well as the compilation of international trade statistics in more than 200 countries worldwide. 

When engaging in global trade, companies must properly classify their goods with the correct commodity codes. Almost all goods traded internationally are classified with a six-digit code, called a subheading. These subheadings come from the HS. 

Key Modifications Included in the HS 2022 Edition 

HS 2022, the seventh edition of the codes, includes 351 sets of amendments. These cover a broad range of goods moving across borders and make significant improvements to the Harmonized System. 

The updated HS recognizes changing trade patterns. Consequently, a major modification to HS 2022 is the introduction of visibility to a number of high-profile product streams. These include:

• Unmanned aerial vehicles (UAVs), commonly called drones

• Electrical and electronic waste

• Novel tobacco and nicotine-based products such as vaping products

• Smartphones

Furthermore, the WCO has made significant changes in regard to glass fibers and articles thereof and for metal forming machinery. According to the WCO, these amendments acknowledge that the current subheadings fail to represent the technological advancements in these sectors. The current subheadings may result in potential classification difficulties and a lack of trade statistics. 

The classification of multi-purpose intermediate assemblies is one focus area for the future. However, the HS 2022 edition includes one important example of such a product. Flat panel display models will be classified as a product in their own right. This amendment simplifies classification of these modules by removing the need to identify final use.

Health and safety has also featured in the amendments. The WCO has implemented changes to acknowledge the dangers of delays in the deployment of tools for the rapid diagnosis of infectious diseases in outbreaks. This has resulted in modifications to the provisions for such diagnostic kits to simplify classification.

Dual Use Goods and Controlled Goods

A key area for customs authorities is to assist in the fight against terrorist activities. Therefore, HS 2022 includes new subheadings for dual use goods that criminals or other bad actors could divert for unauthorized use. Examples include radioactive materials and biological safety cabinets. This update also applies to items required for the construction of improvised explosive devices, such as detonators. 

The WCO has also made updates to goods specifically controlled under various Conventions. The 2022 edition establishes new subheadings for:

• Chemicals controlled under the Chemical Weapons Convention (CWC)

• Hazardous chemicals controlled under the Rotterdam Convention

• Persistent organic pollutants, known as POPs, controlled under the Stockholm Convention.

How QAD Precision Can Help 

QAD Precision Import Management offers specialized tools to assist importers remain compliant with global trade laws, including the correct commodity codes. By correctly classifying their goods, importers can avoid penalties while reducing costs. 

QAD Precision’s automated import management software provides access to the Harmonized Commodity Description and Coding System (HS). Additionally, the import management solution offers ongoing access to current country-specific tariffs. 

Further Reading 

IMPORT MANAGEMENT: THE IMPORTANCE OF CORRECT CLASSIFICATION

LEVERAGING IMPORT CLASSIFICATION: 5 LESSONS LEARNED  

CREATING A GLOBAL TRADE COMPLIANCE PROGRAM