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MIST CLEARS OVER 2012 HS REVISIONS

May 12, 2011

In order to correctly reflect the World Customs Organization (WCO)’s amendments to the Harmonized System (HS), the United States International Trade Commission (USITC) published their proposed modifications to the Harmonized Tariff Schedule of the US (HTSUS) in June 2010. Much water has flowed under the bridge since then (some would argue not as much due to drying up rivers but this topic is for another time) and with reality due to hit January 1, 2012, importers need to know now what these changes are, how they will affect their imports come Monday, January 2nd and what they need to do to comply.

In all, the WCO recommendation includes 204 amendments in 53 different HS chapters, affecting 39 legal notes, 108 different headings and changing 1266 unique 10-digit HTSUS numbers.

While studying the changes, it becomes quite obvious in which categories most of these lie. Unlike in 2007 when the last significant change to the HTS was announced, changes in the electrical, electronic, and textile/apparel categories do not prevail. Most of the volume of changes is in the food categories resulting from a request by U.N.’s Food and Agriculture Organization for separate identification of food products. These are reflected in HTS chapters 1 through 21. Other amendments arose from a need to address technological changes as well as to capture trade data on products swinging their weight in the volume of trade. Biodiesel fuels harked to be identified separately as did nickel-metal hydride batteries (used in hybrid motor vehicles), and lithium-ion batteries (used to power consumer electronics products) contributing to their particular economic and technological importance. The U.S. proposal to segregate sanitary goods, such as diapers, tampons, and sanitary pads led the WCO to combine these products into a single heading, the all-new 9619 for a more uniform and simplified classification. They had hitherto been classified under various sections of the nomenclature, depending on the essential character of their composite constituent materials.

So, here is a readable summary of some of the important changes.

It seems our endearing cold-water friends, the seals, sea lions and walruses have now their own habitat within the confines of our capacious HTS. They will henceforth be identified under sub-heading 0106.12.01 and their meat and offal under 0208.40.01.

Not to isolate the dromedaries and the Bactrian, camels will now be identified under 0106.13.00 and their meat and offal under new sub-heading 0208.60.00.

Atlantic and Pacific bluefin tunas are under 0301.94.01 while heading 0302 for fresh and chilled fish has undergone extensive revision with the addition of many new sub-headings as for example, subheadings 0302.40.00 through 0302.70.40 now containing a variety of other fish species identified also by their scientific names.

Sea cucumbers, sea urchins, jellyfish, high-priced dishes in Chinese restaurant menus, any one of which being an essential component in any respectable Chinese banquet are now in their very own heading 0308 with subsequent new sub-headings 0308.11, 0308.19 and 0308.30. Here’s one scientific name to remember Stichopus japonicas for a sea cucumber!

Chapter 3’s fish, crustaceans, molluscs and other aquatic invertebrates’ 17 pages of nomenclature has almost doubled to 35 pages. Whew! These pages can be viewed here.

The new description for tobacco smoked through a “water-pipe” as described by WCO means tobacco intended for smoking in a hookah or a similar vestibule which consists of “a mixture of tobacco and glycerol, whether or not containing aromatic oils and extracts, molasses or sugar, and whether or not flavored with fruit”. The new sub-heading for this is 2403.11. Of course products that are tobacco-free smoked through water-pipes or hookahs would not fall into this category.

Chapter 27 containing minerals and fuels now identifies biofuels as being “mono-alkyl esters of fatty acids of a kind used as a fuel, derived from animal or vegetable fats and oils”. This is outlined under the new sub-heading 2710.20.

In extension, products from biodiesel fuels are referenced in Chapter 38 under their very own brand-new heading 3826 with subheadings 3826.00.10 to 3826.00.30 addressing them. A 4.6% duty will be levied for mixtures containing no or less than 70% by weight of petroleum oils compared to 6.5% for others. On the other hand, a duty-free status on this category may have served as an incentive to importers to reduce reliance on substances containing more polluting oils. The biodiesel pages are here.

The wonderful world of leather and those who just love the smell of finished leather will praise the inclusion of the elusive chamois in Chapter 42 containing leather goods which now also covers metalized leather. Both chamois and metalized leather are currently covered in Chapter 41 for leather. Metalized? This obviously means laminating the leather with some sort of plastic or PVC coating of the color of metal not the substance itself. Cannot imagine a leather handbag coated with a sheet of metal. Looking around for the meaning of metalized, this is what came up, “metalizing is to protect metal surfaces from corrosion and oxidation using a metalizing process to apply Thermal Sprayed Aluminum (TSA), Zinc or other non corrosive metals”. Shopping sites selling “metalized” handbags do not specifically mention the word metalized though gold and silver handbags were common. Presumably the Explanatory Notes to the HS would define this term being used by the WCO.

In Chapter 85, it is interesting to note that in respect of televisions the term “black and white” will go out of the window and only “monochrome” will be used. Which country manufactures B&W anyway?

Video game consoles now have their own new category 9504.50.00 what with the proliferated sales of X-Box’s, WII’s and PlayStation’s, this was bound to happen.

The all new heading 9619 has been created with subheadings 9619.00.11 through 9619.00.90 for sanitary towels, pads and tampons, and baby diapers and diaper liners. Depending on the material composition whether of natural textile, plastic, synthetic or artificial fabric, the import duty ranges from 0% for paper-based to 16%, you guessed it, for man-made fibers like nylon or polyester-based. They are now no longer spread about in chapters 48, 56, 61 or 62. New note 1 (f) in chapter 56 now clearly states “Sanitary towels (pads) and tampons, napkins and napkins liners for babies and similar articles of heading 9619” are not covered here.

USITC’s HTSUS modifications document can be found at http://www.usitc.gov/tariff_affairs/hts_documents/1205-7FinalReport.pdf that also contains the 2007 to 2012 and the 2012 to 2007 HTS numbers correlation tables.

An adapted Excel-file version of the correlation tables is at: http://www.asmara.com/hts2012.htm

 

New 2012 HTS changes announced by World Customs Organization (WCO)!

July 2010

Every five years, the World Customs Organization (WCO) revises the Harmonized System, the last one, as you all know took effect on January 1, 2007. Well, be prepared for the next update which CBP probably will announce after they get the correlation tables ready perhaps later this year.

Below you will find the link to the WCO-published HS amendments to enable an early start for all you importers and compliance folks out there.

You will surely notice the extensive revision in Chapter 3 and the detailed identification of various species of fish. One could assume this is necessary for accurate capture of trade data to help in formulating future environment policies because of continued and excessive fishing. In addition, illegal logging and the Lacey Act could have been better assisted with more scrutinized modifications in Chapter 44 and 48, wood and paper, respectively, rather than some skimpy description revisions.

Amusingly a new subheading note to Chapter 24 reveals for the first time ever, "water-pipe tobacco" and world customs' classy description of its embellished form that is smoked in great volumes in hookah bars of Adams Morgan-DC, Sunset Boulevard-West Hollywood and in almost every hip gathering hole in most U.S. cities every evening. Smiles are brought to the fore while reading, "containing aromatic oils and extracts, molasses or sugar, and whether or not flavored with fruit" hiding a vision of mysterious locales in the far corners of Morocco, India, Egypt, Syria and other exotic places. But surely, hookah bars mushroomed way before 2007, WCO's last HS revision. No one smoked hookah in Brussels at that time, we presume!

Watch for other changes in Chapters 29 and 30 for chemicals and pharmaceuticals in which new sub headings have been created for substances controlled under international conventions such as the Rotterdam Convention that monitors the international trade in hazardous chemicals and the Montreal Protocol, an international agreement designed to protect the earth's ozone layer by stipulating the phase-out of the production and consumption of depleting compounds.

Major revisions are not evident in Chapters 84 and 85 that was seen in 2007. However, it is pleasing to note the creations of new sub-headings 8507.50 for Nickel-metal hydride
and 8507.60 for Lithium-ion batteries. With the profusion of hand-held electronic devices, these categories are welcome additions.

But what of other products that are of so much concern to the world these days. Should not environment-enhancing goods be separately identified to promote duty-free trade in them? How about addressing nuclear proliferation by extricating each description of all the major components of such a weapon and putting it in its respective HS chapter? Going into details of munitions, for example, take cannon ammunition that is 20 mm to 57 mm which is presently lumped under 9306.30 that also contains cartridges for rifles and pistols. Is not the international trade in small weapons and their ammunition of concern to border security agencies the world over, especially in the trouble spots we read about daily? New, unique HS sub-headings for such products would provide for accurate data acquisition and steer global policy for a much safer and cleaner world.

The Harmonized System Nomenclature to enter into force on 1 January 2012 is published on WCO's Public Web Site: http://www.wcoomd.org/files/1.%20Public%20files/PDFandDocuments/HarmonizedSystem/HS%20Overview/HS2012E.pdf

The WCO web site is http://www.wcoomd.org/

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