The global trade landscape is complex and there are so many codes that you need to decode. Well, they do sound extensive but they are meant to simplify the trade business as this industry operates on such a massive scale. One such code in global trade is the HS Code. Before we dive into the importance of the HS Code in imports and exports, let’s first understand what HS code means.
The World Customs Organization (WCO) developed the HS code which stands for Harmonized System. The code was designed as a multipurpose global product nomenclature that describes what type of good is being shipped. In the present types, it is mandatory for customs officials to use the HS code system in clearing every product that enters, leaves, or crosses international borders. In a way, you can look at the HS code as a final exam that goods go through in the shipping journey, to arrive at the final destination.
Importance of HS Code in Import-Export Business
Widely Used in International Trade:
The very fact that 98% of goods that pass through international trade are classified in terms of HS code, speaks volumes about its crucial role in the industry. 200 countries and other economies around the world are using the HS code for import and HS code for shipping, to gather global trade statistics. Furthermore, it is fundamentally being used as a basis for customs tariffs.
Used by Public & Private Companies:
Not only the government organizations but the private firms and global companies are also following this system. Right from monitoring, updating, optimizing controlled goods, trade policies, freight tariffs, price monitoring, quota controls, to economic research and analysis, HS codes are widely utilized.
You can refer to the HS codes as a universal economic language and an indispensable tool for global trade. This further emphasizes the importance of HS code in importing and exporting.
HS Code: A Legal Responsibility for Importers & Exporters
No business would want to risk its reputation, particularly in a global market. If you are indulging in shipping goods without assigning an HS code, you are only asking for trouble. In such a case, all parties involved have to pay a heavy price – not just in monetary terms. You must consider these aspects and understand how there is a legal responsibility link with HS code classification.
Concerns with Duty Tariffs:
Duty Tariffs are a critical point in the shipping process and they are closely connected to the HS codes. Not assigning HS codes can be extremely risky for your business. Nobody likes antidumping and countervailing duties as well, which are also related to HS codes.
Importer Security Filing (ISF):
When it comes to Importer Security Filing, one of the most effective ways to comply with its requirements is to provide the HS code for import within the purchase order.
Risk of Delays in Shipment:
Delays and storage charges are too great a risk for businesses as they might lead to damaging the goods altogether. This happens only when customs officials are unable to classify shipment correctly when the corresponding HS codes are missing.
Compliances & Regulations:
As the trade regulations get stringent to ensure fairness and safety, missing HS codes can reflect inaccuracy which would further cost a heavy amount of duty for the importers.