The Harmonized System from every angle

92 Pages·2017·13.25 MB·English

June 2018 | n° 86 | mag.wcoomd.org
WCO news
The Harmonized System
from every angle
World Customs Organization
Harmonized System
Nomenclature and Classification
of Goods
Special
O
F
F
E
R
on Pack Option
PACK OPTION HS 2017
CONTENT OF PACK PUBLIC PRICE MEMBER PRICE
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HS 2017 ONLINE DATABASE BENEFITS
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YEAR YEARS
ü Creation of favourites
ü Personal notes
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WCO news N° 86 June 2018
Harmonized System
Content
Nomenclature and Classification
50
04 Flash Info
of Goods
Special 46
O 08 Dossier
F
FE WCO C-RED Project:
R
37 Panorama Brazil’s new integrated risk developing a more effective
on Pack Option management solutions response to epidemics
69 Interview
PACK OPTION HS 2017
74 Focus
89 Events 65
57
CONTENT OF PACK PUBLIC PRICE MEMBER PRICE
1,520 € 955 €
E-commerce: Korea tests
ü Nomenclature
11,,669900 €€ 11,,006600 €€ Assessing the clearance new analytical tools to root
ü Amendments to the Nomenclature
process: India’s experience out fraud
ü HS Classification Handbook
BENEFITS
ü Explanatory Notes + Updates
DOSSIER: HARMONIZED SYSTEM FOCUS: ILLICIT FINANCIAL FLOWS INTERVIEW
ü Compendium of Classification Opinions + Updates - 10 % 1 YEAR
ü Alphabetical Index on the prices of free access to the 09 Introduction by the WCO 75 Wrap-up of the WCO 69 Storage and destruction of
the publications HS Database Secretary General Conference on Illicit Financial counterfeit goods: the safety
Flows and Trade Mis-Invoicing and environmental challenges
14 Personal reflections from an
HS expert 78 Overview of German
Customs’ fight against illicit
ONLINE OPTION 17 Is the HS still fit for purpose?
financial flows
22 Ghana’s experience in
82 Trade in minerals: Ghana,
building a classification
Liberia and Sierra Leone launch
infrastructure
a Customs verification portal
HS 2017 ONLINE DATABASE BENEFITS
26 The HS and the UN 2030
86 Burkina Faso: the problem of
Agenda for Sustainable
gold smuggling
Development
SUBSCRIPTION SUBSCRIPTION ü All HS contents 2017/2012/2007
ü Updated 2 times/year 29 Thoughts from the
International Federation of
1 5 ü 24/7 access
Customs Brokers Associations
ü Multilingual
YEAR YEARS 32 How the HS adapts to
ü Creation of favourites
product developments
ü Personal notes
35 How industry engages on
classification matters at the WCO
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FLASH INFO
More WCO tools to assist revenue collection
to be launched soon
THE WCO’S REVENUE PACKAGE (RP) is nearing An understanding of trade facilitation
the completion of its third phase, which measures is also a key consideration.
will see the launch in June 2018 of a Facilitating the trade of compliant
number of new tools and material for businesses is in fact compatible with
Customs administrations. the goal of effective revenue collection.
By using risk management techniques
The motto of the RP is “fair and efficient to determine the compliance levels of
revenue collection,” the objective being individual businesses, Customs is able
to strengthen the capacity of Customs to allocate its resources more effectively
administrations to identify and collect all to targeting low compliant operators
revenue that is legally due. This requires and reducing checks on those with a
Customs, and the business community, high compliance record, thus facilitating
to have deep technical knowledge of the legitimate trade.
building blocks for establishing duty
liability – namely, Customs valuation, In respect of Customs valuation,
classification, and preferential origin. emphasis is placed on developing
These classic Customs work areas control programmes and strengthening
should be supported by dynamic risk infrastructure. One new document –
management and post-clearance audit Practical Implementation of the WTO
programmes. Valuation Agreement: A Brief Guide
for Least Developed Countries (LDCs)
– provides advice to LDCs which
typically face particular challenges
in implementing the WTO Valuation
Agreement. Examples are also provided
About the
of the control programmes of national
administrations, including those which
Revenue
utilize a valuation database, such as the
system developed by UNCTAD to be used
Package
in conjunction with ASYCUDAWorld. A
valuation database can be a very useful
tool for developing countries who have
The Revenue Package was initiated yet to fully develop their post-clearance on how to qualify for preferential
in 2009 as a response to WCO audit function. However, it is essential treatment and detailed explanations
Members’ concerns over declining that the database is used in line with of the elements in the Decision. In
revenue returns in the context of WCO recommendations, which stress addition, five new e-learning modules
the global financial crisis of 2008, that database prices are to be used only have been developed on the topics of
and falling duty rates in general. In for comparison and risk assessment certification, cumulation, origin criteria,
Phases I and II (finalized in 2012 and purposes – they may not be used as direct transportation, and verification.
2015 respectively), a series of tools substitute Customs values.
and material was developed on a full In the area of classification, the Customs
range of revenue-related topics. All New origin tools have been developed, Laboratories Guide has been updated. A
the material is available to Customs including the Practical Guide to the new appendix adds contact information
administrations via the WCO 2015 Nairobi Ministerial Decision on for the Regional Customs Laboratories
website (Phase III material will be Rules of Origin for LDCs, which will (RCLs) and links to relevant information.
released following the meeting of contribute to facilitating preferential RCLs play a vital role in enhancing
the WCO Policy Commission in market access for these countries. The regional capabilities by providing
June 2018). Guide provides practical information information and training. Appendix V
4
WCO news N° 86 June 2018
Global Montreal Protocol Award
APPLICATIONS FOR THE Global Montreal require import/export licences for
Protocol Award are now being HCFC shipments;
accepted.
• HFCs contribute to global
Eligible nominees include Customs warming. They will be controlled
and enforcement officers or their and gradually phased down by the
respective organizations. Parties to the Montreal Protocol
once the Kigali Amendment
Nominees must have successfully enters into force for them.
prevented illegal or unwanted National legislation might already
trade in hydrochlorofluorocarbons require import/export licences for
(HCFCs) and hydrofluorocarbons HFC shipments, which are already
(HFCs) as well as equipment or restricted in the EU.
products containing or relying on
the use of these chemicals. Deadline for applications: 31
December 2018.
Both groups of chemicals are widely
used as refrigerants and foam Visit the UN Environment
blowing agents: OzonAction website for more details
on the award and the application
• HCFCs contribute to ozone layer process.
depletion and global warming.
They will gradually be phased out More information
by 2030, and are already banned http://web.unep.org/ozonaction/
in the European Union (EU). news/launch-global-montreal-proto-
Traders in HCFCs are subject to col-award-customs-and-enforcement-
annual import/export quotas and officers
Save the date!
also contains the “Procedures and
Requirements for Establishing a WCO PICARD Conference
Regional Customs Laboratory,” which Malatya, Turkey
is intended to assist WCO Members 9 to 11 October 2018
that are considering whether they are in
a position to join the network of RCLs. A Call for Papers was disseminated in February 2018 inviting
practitioners, academics and anyone with a keen interest in Customs
Last but not least, a number of tools to submit any research that has been done on one of the following topics:
developed under earlier phases of the securing the business environment; data analysis; trade facilitation;
RP have been updated under Phase III cross-border e-commerce; connectivity in Customs; and Customs and
and supplemented by new country case the fourth industrial revolution. The research work selected by the WCO
studies. will be presented at the Conference.
More information More information
[email protected] http://etouches.com/picard2018
5
FLASH INFO
WCO steps up efforts to promote
gender equality and diversity
By Johanna Törnström,
To further strengthen its efforts, the
PROJECT COORDINATOR, CAPACITY BUILDING
WCO Secretariat has started gathering
DIRECTORATE, WCO
examples of good practices from
ACCORDING TO A WCO survey from 2016, several Customs administrations with
gathering approximately 60 responses the long-term objective of developing
from WCO Members, on average around a compendium that will complement
36% of officers employed by Customs the GEOAT. These practices touch
administrations are women, with figures on developing Gender Equality and
varying from 8% to 60% depending on Diversity Action Plans (Finland,
the country. Moreover, the statistics Sweden, United States), establishing
showed that on average around 30% Women’s rights and gender equality
of senior management positions are through focused committees or
held by women. These figures indicate departments (Ethiopia, Vietnam),
that in terms of equal representation in recruiting dedicated gender equality
Customs administrations, there is still officers (Germany, Guatemala), and on
room for improvement. specific measures such as preventing
sexual harassment (India, Swaziland) or
Promoting gender equality and job advertisements are formulated, at the promoting work-life balance (Indonesia).
diversity within Customs is not just facilities provided, and the requirements
a question of fundamental rights, but set for different positions. However, In addition, the Secretariat has started
also a prerequisite for achieving efficient promoting gender equality goes beyond developing a training package for WCO
administrations adaptable to the fast- the issue of equal representation. To Members, which is structured into two
moving challenges that globalization enable sustainable change, organizations tracks: the first is a one week workshop
and modern society bring. The WCO need to proactively and continuously targeting middle and senior managers,
recognizes this and has stepped up engage in such matters to ensure that and focuses on how to implement gender
its efforts to promote gender equality gender equality is considered in everyday equality in overall management; and the
and diversity among its Members by policies, from communication to human second is an e-learning module targeting
launching various initiatives in 2017. resources and in relations with external all Customs officers, and focuses on
stakeholders. raising general awareness on gender
Gender equality within equality and how to integrate the gender
administrations To promote deeper engagement, the perspective into everyday practices. The
To encourage gender equality, Customs WCO launched, in 2017, the Virtual development of the training package
can play an active role, for instance, Working Group on Gender Equality and is funded under the Finland East and
by promoting equal opportunities in Diversity, which is currently composed Southern Africa (ESA) Programme II,
recruitment, in career development of representatives from around 20 primarily targeting countries in that
and by improving work-life balance Customs administrations. Using the region. However, once fully developed,
through offering more flexible working WCO CLiKC! Platform, members of the training package will be available
hours. Although many administrations the Working Group share experiences, to all Members while the e-learning
have already made significant documents and presentations, and gather module will be accessible via the CLiKC!
progress in achieving a more balanced examples of good practices. They also Platform.
representation, women still tend to work discuss how to use and implement the
more frequently in certain professional WCO Gender Equality Organizational Maximizing the potential of women
roles, such as administrative support or Assessment Tool (GEOAT), which traders
office based work, while men are more was launched in 2013 and provides According to a report by the International
frequently employed in management guidance on how to assess policies and Trade Centre (ITC) from 2015, based
positions and in functions related to practices from a gender perspective. The on data from 20 developing countries,
enforcement and field-based work. meetings organized so far have provided women-owned businesses are more
an opportunity for WCO Members likely to face different kinds of barriers
This situation can be improved by to tackle topics related to the GEOAT, to trade. The challenges include a lack
assessing the recruitment process and including human resource issues, career of access to finance, to formal business
working conditions from a gender development, work-life balance, and networks and to market information,
perspective, looking, for instance, at how stakeholder relations. as well as the higher probability of
6
WCO news N° 86 June 2018
being exposed to non-tariff measures1. trade, and to remove trade barriers for increased focus on gender equality
Another report from the World Bank women. echoes its theme for 2018, “A secure
from 2011, presenting survey results business environment for economic
from the Great Lakes region in Africa, Customs can play an important role development,” which encourages WCO
shows that women traders more in supporting women’s economic Members to build an environment for
frequently lack information about their empowerment, thereby generating a traders that is enabling, safe, fair and
rights, as well as information on trade positive impact on the economy as sustainable, all wrapped into one.
regulations and procedures. Moreover, a whole. By consulting with a broad
they often face additional difficulties: for range of external stakeholders including Join the discussion
example, having to deal with corruption women’s business associations, taking When the WCO Secretariat presented its
and sexual harassment2. their needs related to safety, for instance, latest initiatives on gender equality and
into particular consideration – and diversity at the WCO Capacity Building
It is also worth noting that, in December by providing clear and transparent Committee in March 2018, participants
2017, a Joint Declaration on Trade and information on Customs procedures, showed a big interest in this issue. The
Women’s Economic Empowerment was administrations can constructively Secretariat would, therefore, like to
endorsed by 118 member states of the facilitate women’s involvement in encourage administrations to implement
World Trade Organization (WTO). This international trade. the GEOAT and to closely follow or
WTO Declaration acknowledges the participate in the work of the Virtual
importance of adopting gender sensitive This issue is also addressed in the Working Group on Gender Equality
and inclusive trade policies as a means GEOAT, which provides concrete and Diversity.
to achieve sustainable development. In examples of how Customs can improve
addition, it addresses the importance of their procedures, paying particular More information
promoting female entrepreneurship and consideration to the needs of women [email protected]
traders. In this regard, the WCO’s
1 http://www.intracen.org/uploadedFiles/intracenorg/Content/Publications/women_in_trade_web(1).pdf
2 http://documents.worldbank.org/curated/en/358501468192868232/pdf/629920ESW0P1180al0Report0210June011.pdf
WCO launches its online academy
for the trade community
THE BRAND NEW WCO e-learning portal • Customs Valuation (two courses)
aimed at building the Customs skills of - Valuation concepts and
trade professionals is now live. transaction value Moreover, companies wishing to
- Advanced valuation methods upskill the knowledge of more than
Courses currently address the one of their workers, or Universities
following topics: More courses will be added in the wishing to offer access to the courses
coming months. Even though the to their students, can benefit from
• Harmonized System (five sector courses are currently available in customized solutions.
specific courses) English and French only, more
- Agriculture & Agrifood languages will be available in the Last but not least, professionals
- Chemicals future. interested in contributing to the
- Industry & Construction development of the courses by
- Textiles Learners can either take standalone providing feedback can join the WCO
- Art & Jewellery online courses, or purchase complete Academy’s Test Group. They will be
solutions (bundles), which include given free access to courses now under
• WCO Data Model (two courses) access to the online courses on their development and discount coupons for
- Managers topics of interest, the purchase of future purchases.
- Practitioners corresponding publications, and access
to online tools such as the Harmonized More information
System Database. [email protected]
7
DOSSIER
Dossier:
The Harmonized System
from every angle
8
WCO news N° 86 June 2018
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©
The Harmonized System,
30 years old and still
going strong!
By Kunio Mikuriya,
how it can be improved and whether a
SECRETARY GENERAL, WCO
structural revision is now necessary. In
THE HARMONIZED COMMODITY Description this article, I briefly introduce the history
and Coding System, generally referred of the HS, as well as its maintenance
to as "Harmonized System" or simply system, achievements, and challenges,
the "HS", is seldom mentioned in the which I hope will be enlightening.
pages of this magazine. It is, however,
one of the WCO’s flagship instruments. History
One can even say that it is the backbone The concept of a nomenclature for
of the WCO. Being a nomenclature of goods is the outcome of a long process
transportable goods, it has become rooted in the ancient world. According
over the years a universal language for to Professor Hironori Asakura of Japan,
identifying and coding merchandise the first Customs tariff known to us was
being traded internationally, with established by the Customs authorities
almost all the world’s economies using of the Roman Empire. Roman senators
it as a basis for their Customs tariffs and in the oasis city of Palmyra in the Syrian
for the collection of trade statistics. desert invented a system of Customs
tariffication, which listed different
Governments use it to assess duties merchandise with different rates of duty,
and taxes, and for the application known as the Customs tariff of Palmyra.
of Customs laws and regulations.
Businesses use it to manage their trade In his book, World History of the
regulatory obligations, and to oversee Customs and Tariff, Professor Asakura
their supply chains. Trade negotiators says that, “although Customs duties
use it when formulating multilateral and had certainly existed before the time
regional trade agreements. International of Rome, for example, in ancient Egypt
organizations working on topics as and ancient Greece, they had generally
diverse as food security, environmental been levied at a single rate applied across
protection, and even world security the board to all kinds of merchandise.”
depend on HS coded data to report Where a single rate is applied, there is
progress in achieving goals or to monitor no need for a Customs tariff in which
trade in goods that are regulated or different kinds of merchandise are
prohibited. assigned different rates of duty.
Although the HS is a technical subject The Customs tariff of Palmyra as well
that readers may find difficult to grasp as almost all the nomenclatures in the
at first, it is a fascinating one. As the HS West that were drawn up before the 18th
celebrates its 30th anniversary this year, Century were alphabetical. But in the
we decided to gather together a number 19th Century, some countries switched
of articles explaining how the HS is to a nomenclature based on systematic
managed and used, and questioning classification. The French Customs
9
DOSSIER
tariff of 1822, for example, grouped gave a set of four-digit headings for account the evolution of technology
goods mainly according to their nature international use, but the need for more and changes in consumer habits, there
(live animals, flours, stone, earth and granularity led many actors to go beyond is a serious risk of having difficulties,
other minerals, etc.). Thus, the basis the four digits in light of the fact that, in if not disputes, when classifying
of the international Customs tariff some instances, a commodity could be products. Only Contracting Parties
nomenclature, developed at a later date, designated up to 17 times in the course can take part in the administration
was born. of a single trade transaction from the and maintenance of the HS and
moment it left the manufacturer to its its related materials and propose
The post-World War I period marked arrival at the importer’s destination. amendments to the nomenclature. Let
the opening of the age of international The HS, which defined goods at six-digit me quickly explain how this is done.
cooperation in respect of Customs and level, solved this problem.
tariffs. A need for the simplification and To ensure the relevancy of the HS,
unification of tariff nomenclatures was Birth of the HS since 2002 it has been revised every
seen as essential to improve revenue Early in 1970, it was agreed five years to take into account changes
collection, facilitate trade, and improve internationally that the Customs in technology and in patterns of
trade statistics. The first international Co-operation Council (now known as international trade. This has served the
Customs tariff nomenclature, known the WCO) should conduct exploratory WCO well, and HS users even more so.
as the Geneva Nomenclature, was studies around the issue of a new Headings and subheadings for which
developed under the League of Nations, nomenclature. The preparatory work there is a low trade volume would
and incorporated the structure of carried out since 1973 resulted, some generally be deleted (Gramophones
certain 19th Century tariffs, including, 13 years later, in the completion of are just one example), but exceptions
in particular, the French tariff. the HS, and the establishment of a do occur (records seemed to be on
new international convention for its their way out, but the tide seems to
Later, the drive for economic implementation. The WCO Council, the be turning as consumers find a new
reconstruction and the desire for Organization’s highest decision-making interest in collecting them once
greater freedom of trade following body, adopted the HS Convention in again). In addition, newly developed
World War II created favourable June 1983, and its Explanatory Notes in products that cannot be identified
conditions for the standardization of June 1985. in the structured nomenclature are
Customs tariffs, and the need for an also added, as their trade has to be
internationally recognized common On 22 September 1987, 26 countries monitored too.
goods nomenclature. This resulted in participated in the signing ceremony,
the adoption of the Convention on including the European Economic After being amended six times, the
Nomenclature for the Classification Community (EEC), the forerunner to seventh amendment of the HS is
of Goods in Customs Tariffs in 1950, today’s European Union (EU). The HS currently underway, and will enter
which was strongly influenced by the finally came into force on 1 January 1988 into force on 1 January 2022. In this
basic structure of the French tariff and with 37 Contracting Parties. The number regard, the WCO is extremely busy
that would also shape various other of countries using the HS has continued with its preparations for HS 2022,
tariff and/or statistical nomenclatures, to grow. Today, it counts 157 Contracting preparations that not only include a
such as the United Nation’s Standard Parties and, if we add the countries and revised nomenclature, but also the
International Trade Classification, as Customs and/or economic unions using revision of all its “help” instruments
well as those that would follow. the HS while not having ratified the such as the Explanatory Notes among
Convention, one can with certainty say others. This is no easy task, but I am
Finally entering into force in 1959, that it truly is an instrument of global proud to say that the WCO soldiers
the text of the 1950 Convention was application. on in its usual focused fashion with a
initially known as the Brussels Tariff view to producing a nomenclature that
Nomenclature (BTN), but later renamed Maintenance and updates can serve international trade until the
the Customs Co-operation Council When a nomenclature remains next revision cycle.
Nomenclature (CCCN). The CCCN unchanged, i.e. not taking into
• Mainly editorial • 374 sets of • 225 sets of
amendments amendments amendments
• 5018 HS Codes • 5224 HS Codes • 5205 HS Codes
1988 1992 1996 2002 2007 2012 2017 2022
• HS Implementation • 393 sets of • 354 sets of • 233 sets of
• 5019 HS Codes amendments amendments amendments
• 5113 HS Codes • 5052 HS Codes • 5387HS Codes
10