HS 2017 – Keeping Pace with WCO Changes

January 1, 2017 marked the date when the World Customs Organization (WCO) Harmonized System (HS) reform went into effect for many locations. For importers, exporters, manufacturers and Logistics Service Providers (LSPs), now is an excellent opportunity to review current classifications against individual country tariff updates as the world works to re-harmonize with WCO changes. While this will take time, many countries have already published updates.

Updated approximately every 5 years, the HS is an international classification standard that is in current or anticipated use by 207 customs administrations worldwide. Every business with affected items must act by reviewing tariff codes, duty rates and customs data for hundreds, thousands or even tens of thousands of items in their parts master databases or Enterprise Resource Planning (ERP) systems. These items must also be updated for every country where business is transacted on the effective date each country activates its changes.

To highlight the scope of the changes, HS 2017 includes:

• 233 amendments
• 30 different HS chapters impacted
• 95 different headings
• 2,937 10-digit HTSUS expected to be impacted
• 339 subheadings affected
• 266 subheadings added
• 66 subheadings changed
• 77 subheadings deleted

Although the move to HS 2017 is extensive, meeting the challenge with the right solution is essential to minimize risk and boost productivity. In order to effectively move to HS 2017, companies must unite two factors:

1. Accurate trade content – Manually reviewing the individual modifications to each national tariff schedule would be a significant drain on available resources.
2. Augmenting trade compliance expertise with better tools – Since classification is subjective, trade compliance expertise is never going out of style. Placing the right tools into the hands of expert classifiers is critical to reduce labor and risk as well as increase visibility, automation and collaboration.

As mentioned above, a manual review of each national tariff schedule would be inefficient given the effects of the changes to multiple countries. Member countries do not re-harmonize in the same way or at the same time. Importers with large item lists may need the help of the right technology platform and accurate trade content to offset the challenges posed by the transition.

How does this work? Generally, it involves a two-pronged approach including the most up-to-date trade information and automated methods to notify compliance experts of how and when the changes affect their specific items. Some companies may find that a simple web-based delivery system is adequate for their needs, while others may require a more robust online workbench that can re-validate and map items to the updated codes across multiple countries.

Market leaders are also thinking about HS 2017 strategically. They view the changes as an opportunity not only to reclassify and review the impact to existing item classifications, but also as a mechanism to institute meaningful operational changes. The key here is to meet the challenge with the right solution to cost effectively minimize risk and boost productivity. You know your business better than anyone. Where are there opportunities for continuous improvement inside of your compliance processes?

HS 2017 Complimentary White Paper

Register to download a free HS 2017 interactive white paper that covers basic-to-advanced topics including:

• Details about the update and why the system is changing
• An overview of expected changes in the US and the EU
• The scale of the update and what executives, supply chain and compliance professionals need to know
• The need to update HS data in business systems such as SAP, Oracle and ecommerce platforms
• The top 10 steps required to take action

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