The Harmonized Commodity Description and Coding System, also known as the Harmonized System (HS), is an international multipurpose nomenclature elaborated under the auspices of the World Customs Organization (WCO). The HS is governed by "The International Convention on the Harmonized Commodity Description and Coding System", which was adopted in June 1983 and entered into force January 1988.
The Combined Nomenclature of the EU is based on the Harmonized System (HS) of the WCO.
Application of HS
There are currently 163 Contracting Parties to this Convention. However, it is applied by more than 200 administrations worldwide, mostly to set up their national customs tariff and collect economic statistical data. The EU and its member states together represent a block of 28 Contracting Parties to the Convention.
The HS comprises about 5,000 commodity groups, identified by a 6-digit code and arranged according to a legal and logical structure based on fixed rules. The Combined Nomenclature of the European Union (EU) integrates the HS and comprises additional 8-digit subdivisions and legal notes specifically created to address the needs of the EU.
HS Convention
The official interpretation of the HS, which provides for its uniform interpretation worldwide, is ensured by the HS Committee which comprises representatives from Contracting Parties to the HS Convention. Other administrations, international organisations, international commerce and industry are represented as observers.
The HS Convention provides for two types of decisions taken by the HS Committee:
- Decisions which amend the Convention, including its nomenclature (procedure under Article 16)
- Decisions which ‘manage or interpret’ the Convention and which normally take the form of classification decisions, explanatory notes or classification opinions (procedure under Article 8).
For more information, see the website of the WCO.
In both cases, the EU and its member states, together, dispose of a single vote. The contracting Parties may lodge a ‘reservation’ against either type of decision. A ‘reservation’ against an amendment of the convention (Article 16 procedure) annuls the decision that was taken. On the other hand, the legal effect of a ‘reservation’ in the framework of an Article 8 procedure is limited to a suspension of the decision, which must be re-examined at a later HS Committee’s meeting. In practice, this simply means that the definitive decision is delayed by 6 to 12 months.
Amendments to the HS Convention become binding for all Contracting Parties two years after they are notified by the Secretary General of the WCO. However, decisions concerning the management and interpretation of the Convention are generally deemed to have been accepted by all Contracting Parties two months after the decision by the HS Committee.
The HS is updated by the WCO through a five-year review cycle. Such regular renewal allows for the HS to keep it up-to-date in the light of changes in technology or in patterns of international trade. See: WCO Guidance on how to submit a Harmonized System Change Proposal