HS Code Full Form: What Does HS Code Stand For?
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HS Code Full Form
The term HS Code has many full forms, but out of which most relevant full form is-
HS Code Full Form is – Harmonized Commodity
HS code is an internationally harmonized product coding system. In the CIS, the TN VED (commodity nomenclature of foreign economic activity) is used, which almost completely coincides with HS.
The Harmonized Commodity Description and Coding System (HS) is a unified international product classifier. Its application allows you to collect reliable and accurate statistics of all world trade, uniform and understandable for all countries. It was developed by the Customs Cooperation Council. Since its entry into force in 1988, more than a hundred countries and unions have already joined the Convention of the same name.
All members of the Convention are required to:
Use the HS positions and subheadings without additions and changes;
Apply the classification rules prescribed in the HS;
Calculate and publish their statistics in accordance with the HS.
To classify a particular product, a six-digit code is used, which has the following structure:
XX – group;
XXXX- position;
XXXXXX- subheading.
For the classification of products in their countries, the member states of the Convention are allowed to use a larger number of characters, as the EAEU TN VED uses a ten-digit code.
HS consists of 21 sections and 99 groups (3 of which are reserve) and includes all products that are in the world trade turnover.
The classification is based on various distinguishing characteristics of products, such as origin, function performed, chemical composition and material of manufacture.
The purpose and basic principles of the creation of the Harmonized Commodity Description and Coding System
Due to the fact that the basis of international commodity nomenclatures was the application of various classification principles, the question arose about the development of a single international classifier that could be used in all countries when participants in foreign economic activity formalize foreign trade operations at customs, as well as analyze foreign trade by individual products, product groups and positions.
None of the previously developed international nomenclatures fully met the requirements imposed on it by individual countries and international organizations.
In other words, the international community faced the following tasks: to achieve the rationalization of data, trade documentation, in particular, to unify as much as possible the system of coding information concerning countries, units of measurement, modes of transport, and the goods themselves.
The tasks set prompted the experts of the Customs Cooperation Council, as well as representatives of other interested international organizations to begin work on the unification of international trade documents.
As a result, the Council for Customs Cooperation at the UN was instructed to study the possibilities of creating a unified international commodity classification system, which was later called the Harmonized Commodity Description and Coding System.
At the time of the beginning of the development of the Harmonized System, there were objective reasons for the need to create it:
In international trade, the same product has to be described several times when it is moved from country to country;
Various systems of description and, accordingly, coding of goods at a lower level of detail are used. This is the main source of errors that make it difficult to apply customs and freight tariffs;
Participants in international trade are forced to spend a lot of time, money and effort on checking and correcting data on goods;
The difference in the systems of description and coding of goods of different states makes it difficult to collect and compare foreign trade statistics at the international level, which in turn complicates the process of international trade negotiations;
The lack of mutually comparable and standard universally recognized codes impedes the transmission of foreign trade data from country to country through telecommunication channels, which leads to a significant slowdown in the transportation of goods, increasing the costs associated with import and export;
Different descriptions and coding of goods prevents the use of uniform forms of documents and systems for their processing using the single-entry method.
What is the Objectives of HS Code?
The objectives of the creation of the Harmonized System:
Promote the development of international trade;
Facilitate the collection, comparison and analysis of international trade statistics.
The tasks that the HS was designed to solve:
Creation of a common international classifier for all countries;
The possibility of using the system for both customs and statistical purposes in terms of simplifying the collection, comparison and analysis of statistical data;
Application of the system in conditions of constant expansion and complication of the range of goods involved in international trade;
The most complete reflection in the system of the technology of manufacturing goods, taking into account the achievements of scientific and technological progress;
The possibility of using for standardization and unification of foreign trade documentation;
The possibility of including goods with a significant volume of foreign trade turnover.
Work on the creation of the Harmonized Commodity Description and Coding System began in 1973 and lasted for about 10 years, until 1985. In Russia, it was put into effect on January 1, 1988.
Nomenclatures for HS Code
Thirteen different nomenclatures were used as the basis for the Harmonized System, i.e. on the basis of international, regional and national classification systems, nomenclatures and tariffs operating in trade, the main ones were:
Commodity nomenclature of foreign trade of the EEC countries,
Nomenclature of the Customs Cooperation Council;
United Nations Standard International Trade Classification;
Customs tariffs of a number of states (USA, Japan, Canada) and others;
Standardized commodity nomenclature of the International Union of Railways and a number of others.
Specialists from sixty countries of the world were involved in the development of the Harmonized System, including the United States, France, Germany, Japan, China, Cuba, Czechoslovakia, Ethiopia, etc., as well as twenty international and national organizations: General Agreement on Tariffs and Trade , Statistical, UN Division, European Economic Union. Economic Commission for Europe, International Civil Aviation Organization and others.
The developers of the Harmonized System set themselves the following priority tasks:
To cover most fully the goods circulating in international trade;
Reflect the manufacturing technology of goods when describing them.
Thus, the Harmonized Commodity Description and Coding System was conceived as a multipurpose commodity nomenclature, meeting the needs of customs and statistical authorities at the same time, taking into account the foreign trade and production statistics of various states as much as possible.
The Harmonized Commodity Description and Coding System is a nomenclature that includes commodity items and subheadings, related digital codes, grouped according to certain criteria into groups and sections, as well as the basic rules of interpretation of the Harmonized System.
What is the Principle of HS Code?
The main principle of the Harmonized System is the obligatory comparability of national and international data on foreign trade of a particular country.
When creating the Harmonized System, the developer was guided by two principles:
The product must have an independent distinctive feature;
The product must be of interest to at least several countries. To identify such goods, experts used data from international and national statistics of foreign trade of various countries.
Each country that took part in the work on the creation of the Harmonized System had the opportunity to make their proposals on the description of goods, their intended place in the nomenclature, digital code, notes to the nomenclature.
In addition, the Contracting Parties undertake to publish their statistics on the import and export of goods in accordance with the six-digit HS code, as well as to make changes in national nomenclatures when the HS is amended and supplemented.
In total, the HS has undergone four reprints, the last changes and additions to the HS were made in 2007.
The main provisions of the Convention define the following: individual countries or groups of countries that have acceded to it can, on the basis of the HS, develop their own commodity nomenclatures and customs tariffs with a deeper degree of detailing of commodity subheadings in additional structural elements in excess of the six-digit numerical code given in the HS Nomenclature.
What is the Classification of HS Code?
The classification scheme of the Harmonized System observes three conditions:
Goods are divided into groups in such a way that in each group they are united by one characteristic. All links of the classification are independent, and they can be subdivided within themselves;
Goods are simultaneously classified according to only one main characteristic;
The classification of goods is carried out first by more general criteria, then by narrower ones.
The number of classification steps and their digital coding are adapted to the decimal system, which is convenient for machine processing. The selected classification system provides coverage of the entire nomenclature of objects, and also takes into account the possibility of the appearance of new groups of objects, that is, it has reserves.
What Does HS Code Stand For?
HS Code stands for – Harmonized System
HS code – Harmonized Product Description and Coding System (HS) is a multi-purpose product-unified item developed and adopted in 1983 by an intergovernmental organization (Council for Customs Cooperation).
This standardized import-export system for customs classification of goods is designed for the correct identification of goods for taxation and taxes. When exporting cargo, each item receives its own individual customs code, HS number.” Each imported or exported product is given a number.
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