Harmonized System (HS) code is a multipurpose international product nomenclature developed by the World Customs Organization.
We are living in a world where day by day the amount and frequency of international trade is increasing. This is the sphere that develops rapidly. The enormous volume and infinite variety of goods being shipped across international borders has driven Customs authorities to look for new ways of assuring regulatory and revenue compliance.
There are three main functions of the HS Code:
- Import / Export statistic instrument
- Monetary (trade taxes)
- Regulative (Conformity Assessment)
HS Code is the common standard worldwide for describing the type of commodity. Every commodity that enters or crosses most international borders have to be declared to customs by means of this code. This helps in standardizing the codes worldwide. Sometimes codes can differ from one country to another by several last digits. For example, Customs Union HS codes (the codes that are to be used in Russia, Kazakhstan, Belarus, Armenia, and Kyrgyzstan) usually differ from the European ones by the last two digits. But the core classification idea is the same worldwide and it is encrypted in the first 4 or 6 digits in the HS code which determines the product type, industry, destination etc.It comprises about 5,000 commodity groups. The system is used by more than 200 countries and economies as a basis for their Customs tariffs and for the collection of international trade statistics. Over 98 % of the merchandise in international trade is classified in terms of the HS.
HS Code is also extensively used by governments, international organizations and the private sector for many other purposes such as internal taxes (giving the idea of what taxes should be paid to the government while import or export of the products) , trade policies, monitoring of controlled goods, rules of origin, freight tariffs, transport statistics, price monitoring, quota controls, compilation of national accounts, and economic research and analysis.The regulative function can be clearly traced in the Customs Union certification system (EAC) because almost all Technical Regulations of the Customs Union are connected to the HS code system. It means that the certification procedure depends on the applied HS code for a certain product - the HS code influence the approval document type whether it will be the Declaration of Conformity or Certificate of Conformity. So, it is highly important to take care of the correct HS Coding before applying with a request for certification.
The HS is thus a universal economic language and code for goods, and an indispensable tool for international trade.