How can the Harmonized System Ensure Hassle-Free International Shipments?

How can the Harmonized System Ensure Hassle-Free International Shipments?

Are you an eCommerce retailer trying to sell your product in the global market who is finding it difficult to deal with custom taxes and duties? If yes, read on to learn how to simplify your international shipping process.

International shipping is a colossal challenge one has to face while trying to sell products in the international market. From payment processing, logistics, and regulations to the organizational infrastructure, challenges that accompany overseas shipping are numerous. Besides, with over US $15 trillion worth products being shipped globally, it is critical to know what is essentially crossing the borders of these countries. This is why WCO (World Customs Organization) has come up with a system called the Harmonized System (HS), also known as “the language of international trade.”

What Is the Harmonized System?

The Harmonized Commodity Description and Coding System that is popularly known as the Harmonized System is a nomenclature used to address the fundamental need of governments to categorize what products are being traded in the international markets, collect import duties and taxes, and also to facilitate international trade and regulation.

How Does the Harmonized System Help in Hassle-Free International Shipping?

The ability of the HS system to categorize the products being traded has resulted in approximately 98% of the international trade adopting the HS tariff code. The HS code does more than just create tariffs for duty collection. Different departments of regulation and business practices under the government such as internal taxes, monitoring controlled products, freight tariffs, statistical reporting as well as quota controls are all monitored effectively with the HS code.

Additionally, the HS code provides critical statistical data to enhance national and international trade decisions such as trade policies, economic research and analysis, and in making effective corporate decisions.

How Can the Harmonized System Be Used?

The HS is a structured nomenclature that contains a series of 4-digit headings, with most of them being further sub-divided into 5-digit and 6-digit sub-headings. The 4-digit headings were first created for grouping related products. Further sub-division was done to perform more detailed and specific grouping of these products.

The HS code is made up of 5300 product descriptions and is displayed as headings and sub-headings within 99 different chapters and 21 different sections.

The Harmonized System, in a nutshell, includes the following:

  • General Rules for the interpretation of the Harmonized System
  • Section and Chapter Notes along with the Sub-heading notes.
  • A list of headings in a systematic order that are further divided into sub-headings as required.

The HS can thus be used for the following purposes:

  • As a base for deciding custom tariffs
  • As a base to collect international trade statistics
  • As a base to collect international trade statistics
  • As a base to learn about the rules of origin
  • To collect internal taxes
  • As a base to negotiate trade, such as for tariff concessions and free trade agreements
  • To monitor controlled goods such as narcotics, weapons and endangered species
  • To learn about custom controls and procedures such as risk assessment, information technology, and compliance.

The Benefits of Using A Harmonized Code for International Shipping

eCommerce retailers can leverage the benefits of the HS code in the following ways:

  • Faster shipping
  • Simpler evaluation of customs and duties
  • Easier collection of trade information
  • Improved productivity in the shipping process
  • Simplifying employee training

International Shipping Made Better with the HS Code

It is to be noted that if HS codes are not utilized accurately, it can levy incorrect duty and taxes on your business. This can also turn out to be expensive for consumers. Since the last digits following the HS code are different for different countries, it is important to correctly document it on your commercial invoice to prevent defining a different product of a different country. This can also be constituted as a fraud. With HS code, both sellers, as well as the authorities, find it easier to ship the products as well as understand the duties levied for their products, making international shipping an easy task.

To learn more about how the Harmonized System can generate your customs forms and documents efficiently and make international shipping a smooth ride for your business, reach out to us.

To know more about MAI's expertise in contact center and fulfillment services, please drop in an email now!

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