Issue 269, August 22, 2000
Beginning in September, 2000, the Harmonized System Committee of the World Customs Organization (WCO) will begin convening bi-annual meetings to discuss major revisions to the Harmonized Tariff and the accompanying Explanatory Notes. These meetings will span a period of five years. The deadline for publication of the revisions to the Harmonized Tariff is in the year 2007. The United States, through the efforts of the International Trade Commission, has been actively preparing for these meetings and, in fact, released a proposed redraft to the Harmonized Tariff Schedules of the United States in June, 2000. This draft contains one-third fewer separate breakouts than the current tariff, thus collapsing a number of provisions into simpler subheadings. However, as a result, the duty rates on numerous provisions will change, both upwards and downwards.

A number of companies and trade associations in the United States are also preparing to participate in the discussions to rewrite the tariff. Since the WCO does not accept comments directly from the private sector, all industry input to the U.S. position must be channeled through the International Trade Commission, which has been meeting regularly with interested parties.

In addition to requesting simplification or clarification of existing tariff provisions, this is also an opportunity to request additional breakouts for articles, which have been difficult to classify because of constant changes in technology or the duality of function inherent in the article. Many such articles require that a determination be made of its "principle function." For example, most recently, Customs revoked several rulings that had been issued in 1995 and 1996, which had classified LCD projectors as automatic data processing units under subheading 8471, based on its ability to receive and process computer signals. In revoking these rulings, Customs determined that since the units also had the capability to receive and process video signals, the principle function of the unit could not be determined, absent the submission of extensive evidence in support of the use of the article in one manner or another. As a result, the units were reclassified under GRI 3(c) as video projectors under subheading 8528, which, in a number of instances, carries a higher duty rate. GRI 3(c) instructs that when principle function cannot be determined, the article is to be classified under that competing tariff provision which appears last in the tariff schedules. The resort to GRI 3(c) invariably result in uncertainty for the importer.

For those companies who are involved in marketing such products, this rewrite project presents a good opportunity to suggest that a separate tariff provision be written that would specifically describe such articles. Although this project will extend over the next five years, all proposals should be submitted as early as possible in order to be seriously considered. This will help to ensure that the needed support in the U.S., as well as globally, can be mustered.

Our contributing writer, Sandra Liss Friedman, is a partner in the Customs and international trade firm of Barnes, Richardson & Colburn in New York and can be reached via email or at (212) 725-0200.

Please note that due to the complex nature of the subject matter, Danzas AEI cannot be responsible for actions taken by the reader in reliance on the information contained herein without prior consultation with Danzas AEI.