Issue 300, April 19, 2001
The United States, and almost all of its trading partners, use the harmonized tariff system established under the World Customs Organization as a uniform method of classifying imported goods. But the complexity of this system has caused many importers to have difficulty classifying their products and to question whether the harmonized tariff system has kept up with changes in technology and import patterns. The problem has been particularly acute for companies targeted by the U.S. Customs Service for compliance reviews. The government is aware of these concerns and has sought to address them through two ongoing projects led by the U.S. International Trade Commission (ITC) that could result in the ?simplification? of tariff classification requirements. The first of these is the regular review process of the international harmonized system, and the second is a special project addressing the additional classification requirements that are specific to the United States.

The international harmonized system is reviewed periodically by a committee representing the participating countries, to determine what changes may be necessary to reflect changes in technology and trade patterns. Last year, the ITC published a preliminary report of changes due to take effect in 2002, and is currently considering comments submitted by the public on what further changes should be considered in the next review (to take effect in 2007).

Along with its review of the international system, the ITC is also investigating how the Harmonized Tariff Schedule of the United States (HTSUS) can be simplified. The HTSUS reflects U.S. tariff classification requirements, and is much more detailed and complex than the international harmonized system. While the international system provides classification breakouts to the so-called ?six-digit? level, the HTSUS subdivides most of those categories into numerous additional eight-digit subheadings and ten-digit statistical breakouts. The ITC began this investigation in 1997, and its final report came out in June 2000. By consolidating subheadings with the same duty rate, the ITC proposed to reduce the overall number of eight-digit subheadings in the HTSUS by 20 percent. It also proposed to reorganize the General Notes, for example by moving the lengthy NAFTA tariff shift rules into the individual chapters they cover. Congress will have the final say in whether to adopt any of the ITC?s recommendations.

In both of these efforts by the ITC, public input has been critical. Importers have a high stake in the success of tariff simplification, and should take advantage of every opportunity to participate in the government?s efforts on this important issue. Visit www.customs.ustreas.gov for updates on this issue.

Our contributing writers, Richard H. Abbey and Sarah M. Nappi, are attorneys at Ablondi, Foster, Sobin & Davidow PC in Washington DC. They can be reached for comment at 202-296-3355 or via email at rabbey@ablondifoster.com or snappi@ablondifoster.com respectively.

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.