HARMONIZED SYSTEM (HS)

5.15 The HS was adopted by the World Customs Organization (WCO) in June 1983 and it entered into force on 1 January 1988. Australia began using the HS on that date as the basis for the AHECC and the Customs Tariff and for the compilation and dissemination of international merchandise trade statistics. The HS is used by over 200 countries or economies as the basis for their Customs Tariffs and for their international merchandise trade statistics. Approximately 98% of world merchandise trade is classified in terms of the HS.

5.16 The HS is a hierarchical classification and is arranged in a logical structure and supported by well-defined rules and explanatory notes to assist in classification decisions and to clarify the scope of the particular headings or sub-headings. As part of the classification the WCO provides Section Notes, which have information relevant to classifying goods in that section, and Chapter Notes, which outline the broad structure of that chapter and provide information specific to classifying goods within that chapter. Where appropriate the DIBP add Additional Notes to the Chapter Notes, further clarifying which goods should be classified to that chapter. The HS generally groups commodities according to their degree of manufacture, material of which the goods are composed and by similar generic description. For example, live animals are classified within Chapter 1, animal hides and skins within Chapter 41 and leather footwear within Chapter 64.

5.17 The HS is reviewed every five years and updated by the WCO to ensure it remains relevant given developments in technology and changes in patterns of international merchandise trade. There have been four revisions to the HS since the first edition was implemented in January 1988, with the latest revision being implemented by Australia on 1 January 2012. More information on the 2012 revision can be found in the Information Paper: Changes to AHECC and Customs Tariff, 2012 (cat. no. 5368.0.55.017). The previous revisions to the HS by the WCO were implemented in Australia in 1996, 2002 and 2007, there were also minor amendments in 1992. The next revised edition is scheduled for implementation in January 2017.

5.18 Australia has expanded the HS to create the AHECC and the Customs Tariff to provide further commodity detail for exports and imports.


AUSTRALIAN HARMONIZED EXPORT COMMODITY CLASSIFICATION (AHECC)

5.19 Since 1 January 1988, all goods requiring an export declaration have been classified according to the 8 digit AHECC code. The first 6 digits of the AHECC are taken from the HS, with the 7th and 8th digits (i.e. statistical code) added by the ABS to satisfy Australian statistical requirements.

5.20 AHECC codes provide the most detailed breakdown of exported goods and are used to analyse exports of particular commodities. The ABS has responsibility for maintaining the AHECC documentation. Due to the smaller number of statistical codes, the absence of duty, and the comparatively less diverse export trade, amendments to the AHECC are made less frequently than to the Customs Tariff.

5.21 The ABS generally only releases updates to the AHECC in January and July each year. Before updates to the AHECC are released they are advertised on the ABS website under Topics @ a Glance - Economy - Foreign Trade - Noticeboard.

5.22 The DIBP also release a notice on their website advising of updates to the AHECC. These notices can be accessed through their website: http://www.border.gov.au/Busi/Cust/Aust. Advice is also provided if there are no impending updates for January and July.

5.23 An example of the hierarchical structure of the AHECC is included below:

Level Code Description Chapter 08 Edible fruit and nuts; peel of citrus fruit or melons Heading 0808 Apples, pears and quinces, fresh HS code 0808.10 - Apples Export statistical item 0808.10.01 -- Delicious (red, ordinary, golden, earlidel) 0808.10.90 -- Other

5.24 The detailed AHECC is available electronically on the ABS website in the publication Australian Harmonized Export Commodity Classification (AHECC) - Electronic Publication, Jan 2012 (cat. no. 1233.0) by selecting the 'Downloads' tab.

5.25 The electronic publication contains a number of tables. Table 1 contains the following separate worksheets:

• Summary of Classification (HS chapter labels)
• Units of Quantity (UQ)
• Abbreviations
• Free on Board (FOB) Currency Codes
• Countries.

5.26 Table 2 is a Key of Changes which shows all AHECC codes which have closed since January 1988 and the code or codes which replaced them. Tables 3 to 23 are the detailed classification by section. For each section there are separate worksheets for section notes, chapter notes and the detailed classification for each chapter. These spreadsheets are in a printable format.

5.27 Table 24 is a complete file which includes the complete AHECC, with 2, 4, 5, 6, 7 and 8 digit codes and labels in different columns. It has been designed for use by exporters and agents to upload into their own computer systems. It also includes Free Standing Descriptors (FSDs) at the 8 digit level. FSDs are written by the ABS as stand alone labels for the code and are used for dissemination purposes. In the example of the AHECC above (Table 5.3) code 0808.10.90 has a label which says 'Other'. The ABS FSD for this code is 'Fresh apples (excl. delicious apples being red, ordinary, golden and earlidel types)'. Using the FSD, rather than 'Other', on ABS outputs allows users of ABS data to better understand what goods are contained in this code. The FSDs have limitations, such as the use of abbreviations, due to a constraint in the number of characters allowed for this field. Table 24 is designed to be used on-line and is not in a printable format.


COMBINED AUSTRALIAN CUSTOMS TARIFF NOMENCLATURE AND STATISTICAL CLASSIFICATION (CUSTOMS TARIFF)

5.28 Since 1 January 1988, all goods requiring a full customs declaration for import into Australia are classified according to the 10 digit Harmonized Tariff Item Statistical Code (HTISC) of the Customs Tariff. The first 6 digits of the code are taken from the HS and match the first 6 digits of the AHECC codes. The 7th and 8th digits are added by the DIBP to allow for different rates of duty applied to particular goods. The 9th and 10th digits (statistical codes) are added by the ABS to satisfy Australian statistical requirements, and, in some instances, the information needs of regulatory or supervisory agencies (e.g. the Department of Agriculture) who are authorised to access the DIBP's data.

5.29 HTISCs provide the most detailed breakdown of imported goods and are used to analyse imports of particular commodities. The DIBP has responsibility for maintaining the HTISC documentation and distributes replacement pages containing classification amendments. The Customs Tariff can be accessed through this link, or via the DIBP website.

5.30 The ABS generally only updates statistical codes in the Customs Tariff in January and July each year but changes at the 7 and 8 digit level by the DIBP (to satisfy their legislative requirements) can occur more frequently. Most updates to the Customs Tariff are advertised on the ABS website under Topics @ a Glance - Economy - Foreign Trade - Noticeboard and on the DIBP website.

5.31 An example of the hierarchical structure of the Customs Tariff is included below:

Level Code Description Chapter 08 Edible fruit and nuts; peel of citrus fruit or melons Heading 0808 Apples, pears and quinces, fresh HS code 0808.10 Subheading 0808.10.00 Statistical code 0808.10.00.03 - Apples

CHANGES TO AHECC AND CUSTOMS TARIFF STATISTICAL CODES

5.32 The ABS has responsibility for the maintenance of all aspects of the statistical code components of the AHECC and the Customs Tariff. This includes updating the classifications after evaluating requests from users for changes to the level of commodity information made available. The ABS does not make changes to either classification at the 2, 4 or 6 digit levels which are part of the HS, or to the 8 digit level of the Customs Tariff which is maintained by the DIBP through their relevant legislation. The only exceptions are the inclusion of two extra commodity codes for the Broad Commodity Details confidentiality restrictions and the use of non-HS Chapters 98 and 99.

5.33 In attempting to satisfy the statistical needs of a wide range of users, the ABS strives to keep these classifications comprehensive, detailed and current. At the same time, it is necessary to limit the size and complexity of the classifications in order to minimise reporting problems and compliance costs for importers, exporters and their agents. Account must also be taken of the ongoing costs to the ABS associated with editing and processing the data and in maintaining the classifications.

5.34 To balance these requirements, criteria have been developed to assess requests for changes to the classifications.

5.35 Requests received by the ABS for the creation of new statistical codes are only considered where they are deemed to be in the interests of the industry concerned, as well as in the public interest. Requests of a purely market research nature are not considered.

5.36 Each request must, therefore, have the written support of a relevant government department, government authority or industry association. Statements of support should include the reasons for that support and, in the latter case, a list of the current members of the association. Higher priority is given to requests which enable government policy to be better formulated, administered or monitored, or from an industry experiencing or threatened with disruption from imports, where the statistics required would be significant in submissions to, for instance, the Productivity Commission.

5.37 Requests to change classifications do not require government or industry support when the request is:

• clarifying or correcting a classification structure where it is possible to classify a commodity to more than one statistical code or where a commodity cannot be allocated to any statistical code
• correcting a classification structure to remove incorrectly allocated statistical codes
• updating a classification structure to reflect current terminology.

5.38 When a request is received, an initial feasibility study is undertaken to determine the likelihood of the proposed changes being implemented. Factors such as size and trends in trade and likelihood of confidentiality concerns are considered. Based on its findings, the ABS advises the person or organisation making the request whether the ABS is willing to undertake a more detailed Classification Feasibility Study (CFS). Charges apply for both the initial investigation and the detailed CFS (where one is undertaken).

5.39 The conduct of the detailed CFS involves consultation with a representative selection of customs brokers, exporters or importers trading in the commodities proposed for separate identification. Once sufficient responses have been received, the proposal is evaluated in terms of the above criteria (see paragraphs 5.35-5.38 above) and a recommendation based entirely on the results of the CFS is made. ABS agreement to undertake a CFS does not mean that the proposed classification changes will necessarily be implemented.

5.40 Statistical code changes by the ABS are made twice each year, in January and July. Generally, in order for a proposal to be considered for January implementation it must be received by the ABS by early September and for July implementation it must be received by early March. This allows sufficient time to survey the brokers, exporters or importers, and to incorporate any new codes into the ABS and the DIBP systems for the update of the AHECC or Customs Tariff. It also allows for the distribution and advice of the changes to users before the implementation date.

5.41 The Information Paper: International Trade Classification Feasibility Studies, 2001 (cat. no. 5499.0.55.001) contains more information about the CFS process.