Without wanting to sound too dramatic, it is not, apologies to James Carville, “the economy, stupid”, but rather “international trade, stupid”. As the French economist Claude-Frédéric Bastiat once remarked, “if goods don’t cross borders, armies will”.
Which begs the question: Are you prepared for HS 2022? The HS, or Harmonised System, Nomenclature is the international customs nomenclature for the classification of goods, which is the basis for the determination of customs duties. HS 2017 is currently applied by 212 countries. Although the nomenclature undergoes a review every year, its revised iteration is introduced every five years – on January 1 – and the current version was introduced on January 1, 2017.
While January 2022 may seem far off, much work still needs to be done at the World Customs Organisation (WCO) and at national and regional levels to ensure the timely implementation of HS 2022. The WCO is developing correlation tables between HS 2017 and HS 2022 and updating its HS publications: Explanatory Notes, Classification Opinions and Alphabetical Index.
On January 8, the WCO announced that HS 2022, the seventh edition of the HS nomenclature, had been accepted by all contracting parties to the HS Convention and will come into force on January 1, 2022.
Established in 1952, the WCO is an independent intergovernmental body whose mission is to enhance the effectiveness and efficiency of 182 customs administrations that collectively process about 98% of world trade. It is the only international organisation with competence in customs matters, serving as the voice of the international customs community.
The new HS 2022 edition makes some major changes to the HS, with 351 sets of amendments covering a range of goods. In its release, the WCO highlighted the core amendments, including the recognition of new product streams and addressing environmental and social issues of global concern. Electrical and electronic waste is one example of a product class that presents significant policy concerns and a high value of trade, which is why HS 2022 includes provisions for its classification to assist countries in their work under the Basel Convention. New provisions for novel tobacco and nicotine-based products resulted from the difficulty in classifying these products, lack of visibility in trade statistics and the very high monetary value of this trade. Unmanned aerial vehicles, commonly referred to as drones, also gain their own specific provisions to simplify the classification of these aircraft. Smartphones will gain their own tariff subheading, which will also clarify and confirm the current heading classification of these multifunctional devices. Major reconfigurations have been undertaken for glass fibres and metal-forming machinery.
The recognition of the dangers of delays in deploying tools for the rapid diagnosis of infectious diseases in outbreaks has led to changes to the provisions for such diagnostic kits to simplify classification. New provisions for placebos and clinical trial kits for medical research to enable classification without information on the ingredients in a placebo will assist in facilitating cross-border medical research. Cell cultures and cell therapy are among the product classes that have gained new and specific provisions. On a human security level, a number of new provisions specifically provide for various dual-use items.
Protecting society and fighting terrorism are becoming increasingly important roles for customs. Many new tariff subheadings have been created for dual-use goods that could be diverted for unauthorised use, such as radioactive materials and biological safety cabinets, as well as for items required for the construction of improvised explosive devices.
HS 2022 introduces new tariff subheadings for specific chemicals controlled under the Chemical Weapons Convention, for certain hazardous chemicals and for certain persistent organic pollutants. Further, new tariff subheadings have been introduced for the monitoring and control of fentanyls, their derivatives and two fentanyl precursors.
•A copy of the WCO’s Amendments to the Nomenclature is available on request.