Study Guide

The HS Nomenclature is the Annex to the Convention. Under Article 1 of the Convention, the Nomenclature comprises four components:

·    Heading: 4-digit classifications and their goods descriptions

·    Subheadings: specific 5- and 6-digit classifications and their goods descriptions

·    Legal notes: Notes applicable to headings and subheadings

·    Interpretation or Interpretative rules: rules for the classification of goods

The headings and subheadings of the HS are grouped into 97 two digit chapters (01–97), which are further arranged into 21 sections. The legal notes are located at the beginning of nearly all the chapters and some of the sections.

How HS headings were derived from the CCCN

During HS development in the 1970 and early 80s, the CCCN headings were revised, amended and updated in line with international trading patterns, technological developments as well as broader regulatory and statistical needs such as improving visibility of agricultural and fisheries products and distinguishing emerging industrial goods (e.g. plastics, electronics) more clearly. 

Goods relegated ↓ Under the CCCN: Described within their own headings. Under the HS: Moved into residual headings. Why: Overtaken by new technology; no longer a major contributor to reporting patterns within international trade.

Goods elevated ↑ Under the CCCN: Usually classified within residual headings. Under the HS: Given their own specific descriptive heading or subheading. Why: Became a more regular feature within international trading circles.

Subheadings: a new feature of the HS

Subheadings are a feature of the HS that was absent in the CCCN. During HS development, the structure of these subheadings was aligned with the third revision of the Standard International Trade Classification (SITC), a statistical classification maintained by the United Nations. It is important to note that although the SITC is related to the HS for statistical comparability, it remains a separate and distinct system and is not used by customs administrations for tariff classification purposes. 

The subheadings also consider the requirements of those bodies that were involved in the development of the HS. Apart from the already mentioned US and Japanese Customs departments and the International Air Transport Association, others included the Customs administrations of Australia, Canada, the Customs administrations of countries that are members of the European Union, the Latin America Free Trade Association, the International Chamber of Commerce, the International Chamber of Shipping, and the International Union of Railways.

The scale of the HS

The subheadings have made the HS a more detailed and descriptive document than its predecessor. The CCCN had about 1,200 headings; the HS retains a similar number of headings but adds nearly 4,000 subheadings on top, meaning more goods are described in the legal texts.

More descriptions mean more goods being classified by Interpretation Rules 1 and 6 (discussed in Part 3), the more straightforward of the classification rules. This leads to greater accuracy in the classification of goods and more accurate data recording for statistical purposes.

Note: 2022 version The Nomenclature comprises some 5,000 groups of goods identified by a 6-digit code. We will go into greater detail of the structure of the Nomenclature in Part 2.

From customs documents to multipurpose trading document

The involvement of many non-Customs authorities emphasizes an important feature of the HS — it is a multipurpose document. The CCCN was a customs document; the HS is a document for the overall movement of goods.

CCCN	HS
Essentially a customs document.	A document for the overall movement of goods.
Developed by customs administrations, for customs purposes. (e.g. for the determination of import duties, taxes and quotas, etc.)	A trading document for use by all parties involved in the movement of goods.
Single audience: customs.	Customs administrations use it as the basis for their national tariff documents and it also supports the needs of other border agencies involved in regulating cross border trade.