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World Trade Organization Toolkit : Non-Tariff Barriers to Trade : Customs Administration

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Customs Classification

Duties and other customs treatment vary from product to product. It is therefore necessary to locate the product in the proper category in order to apply the appropriate customs treatment. Each country has a nomenclature which lists all goods and products. In practice, a customs tariff is published, including the nomenclature and the applicable duty or other customs treatment for each good or product. The operation of classification consists in determining for goods a particular entry in the nomenclature.

It is obvious that the use of different systems and different rules for the classification may create obstacles to trade.

This area has largely been harmonised thanks to the Customs Cooperation Council established in 1950 and which developed a common nomenclature, known as the Harmonised System ("HS"). The HS entered into force in 1988. The HS Nomenclature details product classification to a six-digit level. The following table is an excerpt of the HS:

The HS is used by all signatories to the Convention establishing the HS. Countries signatories may, however, consider introducing further subdivisions in their own nomenclature and use up to four more digits. For instance, the EC uses two more digits (Combined Nomenclature) and in some cases four more digits (TARIC). The table below is an excerpt of the EC Combined Nomenclature:

In addition to listing a series of numbers together with a product description, the HS also includes General Rules of interpretation which must be applied to determine the appropriate classification. The HS also includes notes to Sections or Chapters which are necessary for the classification in the HS and are legally binding on all signatories. These notes provide definitions of terms and phrases essential for the classification and to determine the limits between the products' categories.

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