Frequently Asked Question?

What is the Harmonized System (HS)?
The Harmonized Commodity Description and Coding System is a classification system for goods entering an importing country through Customs. The latest revision, made in 1996, contains 97 Chapters covering every kind of good that might be traded internationally. For countries using the HS System, the first 6 digits of the classification number are uniform, worldwide. For example, HS 2204.10 should correspond to "Sparkling Wine" in any country using the 1996 HS system. However, not all countries use the 1996 version of the Harmonized System. Some countries, including Bahrain, Egypt, Brunei and the Dominican Republic, use an older, 1992, version. Because of differences between the 1996 and 1992 nomenclature, classification is uniform only to the 4-digit level. Other countries may use even earlier classification systems, or none at all. Electronic Tax Data Systems presents the guidebooks to these countries, including Kuwait and Qatar, in the Harmonized System format for ease of use.

Why is my product's HS classification different in the EU-15 than in the US?
The HS classification is uniform for all countries using the system only through the first 6 digits. Any country may choose to further break down the 6-digit classification to more specifically describe a product. Eight digits is generally considered to be fully qualified for Customs purposes, but some countries may require a 9th or even 10th digit to completely describe the specific good being imported.

But the same 8-digit class can represent different products in different countries. For example, 2001.90.30 means "beans" in the US classification and "sweet corn" in the EU-15 classification.

To find a concordance between the HS classification for your product in the US and its classification in the EU-15 , start at the 6-digit level and read the descriptions to find the one which best describes your product.

What is MFN?
MFN stands for Most Favored Nation. Electronic Tax Data Systems uses the MFN applied rate as the customs duty. That is the rate most likely to be available to most countries. All member states of the World Trade Organization have agreed to offer the MFN rate to each other. Other kinds of trade agreements - multilateral - which involve several countries trading among each other, or bilateral, in which two countries make an agreement between themselves, may give countries a preferential rate, which may be lower than the MFN, on specific goods. Countries that are not WTO members, or who have not been granted MFN status by the importing country, are subject to a general rate, which may be considerably higher than the MFN rate. For example, China is not yet a member of the WTO but the United States passes legislation each year granting MFN status for Chinese goods entering the US. On the other hand, Vietnam, has neither WTO membership nor MFN status in the US and is subject to the general rate. In the US, the designation"Most Favored Nation" recently has been replaced with "Normal Trade Relations" or NTR.

What is ad valorem?
What are specific rates?
Why do Switzerland duties look different?
Duty rates can be based on a percentage of the value of the good being imported (ad valorem) or the rate can be a certain amount of money based on the weight, volume, or per piece. Many countries use primarily ad valorem rates. On some products, there may be a compound rate of a certain percentage plus a specific amount of money per item. Swiss duty rates are almost entirely specific rates, based on so many Swiss Francs (abbreviated CHF) per 100 kilograms (kg) net weight of the item being imported.

Ad valorem rates are based on the value of the goods being imported. The basis of this value can be assessed in a number of ways. Which method is used - CIF, FOB or some other valuation is determined by the importing country. WTO members are adopting a new transaction based valuation.

What does VC stand for?
Some countries have a compound rate for certain products, especially agricultural commodities which have high and low production seasons. The specific rate part of the duty is recalculated throughout the year and published regularly in official documents. Because it changes so frequently, this specific rate is marked as a variable component (VC).

What do CIF and FOB stand for?
These are Incoterms 2000, which describe the responsibilities of seller and buyer in international trade.
CFR - Cost and Freight
CIF - Cost, Insurance and Freight
CPT - Carriage Paid To
CIP - Carriage and Insurance Paid To
DAF - Delivered at Frontier
DES - Delivered Ex Ship
DEQ - Delivered Ex Quay
DDU - Delivered Duty Unpaid
DDP - Delivered Duty PaidEXW - Ex Works
FCA - Free Carrier
FAS - Free Alongside Ship
FOB - Free On Board