Understanding the Harmonized System Changes coming in 2022
The World Customs Organization issues changes to the Harmonized Commodity Description and Coding System (HS) every 5 years, with the last update occurring in 2017. The 2022 change to the HS will affect over 900 codes and will require updates by the 200 countries that use the system. Since Canada is one of the countries that use this system, let’s take a look at the amendments that will be in place as of January 1, 2022.
What are HS codes?
The Harmonized Commodity Description and Coding System has been in place since January 1, 1988 and was established by the World Customs Organization (WCO). The WCO is an independent intergovernmental organization based in Brussels, Belgium. Canada has been a member since 1971 and is also part of the Harmonized System Committee (HSC). The HSC is the international authority on the classification of products. One of the committee’s responsibility is to examine and refine the HS nomenclature. There are 200 member countries and economies of the WCO that use HS as the structure for classifying products internationally. Some of the most important uses of the HS are;
· A base for Customs tariffs and rules of origin;
· Collection of international trade statistics and taxes;
· Guide for trade negotiations;
· Monitoring of controlled goods such as waste, narcotics, or chemical weapons.
HS Codes in Canada
An HS code is mandatory when declaring goods entering or leaving the country. Canada requires a 10-digit HS code for clearance. The first 6 digits of this code are international and established by the WCO. The remaining 4 digits are Canada specific. Canada assembles data from declarations of imports and exports using HS codes for the following purposes;
- Determining appropriate duty rates;
- Negotiating trade agreements;
- Maintaining trade statistics; and
- Identifying shipments that pose a risk to the health, safety and security of Canada.
What Changes are Coming?
The main features of the 2022 amendments recognize new product streams and address environmental and social issues of a global concern. Some of the higher profile product changes include drones, smartphones, tobacco and nicotine products, and flat panel displays
As Canadian Customs Brokers, Orbit Brokers can assist you with not only the classification of your products under the HS code system, but also with the clearance and delivery of your goods. For more information on HS codes or help with importing goods into Canada, please contact us.