Harmonized Codes –
Classifying Your Export Product
from “The Global Entrepreneur: Taking Your Business International” by James F. Foley, 1999, Dearborn Publishing
This may seem an early point at which to discuss the rather technical issue of classifying your
export products by their harmonized codes. Most people think of the harmonized code as a
documentation issue and relegate the problem to their freight department or outside freight
companies.
In fact, the harmonized code is an important tool for international planning. It will be
used to identify potential foreign markets, the activities of competitors, and foreign import
tariffs. Before you can proceed with the issues discussed in the following chapters, you'll need to
determine the harmonized code of the products you plan to export.
Even if your company is involved with providing services rather than manufacturing
products, knowing about harmonized codes will be helpful. Research on international service
opportunities is often more limited than information relating to product opportunities. However,
much can be learned about providing international services if research is done on products that
complement the services. For example, a company involved in software design and development
may be interested in research on the exports of computers and related equipment. In this way,
knowing how to find the harmonized codes for computers would be important.
This chapter covers the background of harmonized codes, how to use the system to
classify products, and where to get assistance. I will also compare the harmonized code system to
the Standard Industrial Classification (SIC) system, the North American Industry Classification
System (NAICS), and the Standard International Trade Classification (SITC) system.

WHY HARMONIZED CODES ARE NEEDED
Imagine the potential problems of shipping goods internationally if the exporter considers
its product one thing, but the foreign customs authority considers it another - especially if the
foreign authority's opinion leads to a significantly higher import duty. For example, suppose a
U.S. manufacturer exports bicycle seats made out of leather to Brazil. Let's further assume Brazil
wants to give their local producers of leather seats protection from cheap imports by enforcing a
30 percent duty on leather seats of all types. However let's further assume Brazil does not care
about protecting its bicycle industry, so a bicycle seat has no duty applied. The U.S.
manufacturer considers its product a bicycle seat, and indicates as such on the export
documentation. But when the items are imported, the customs agents in Brazil consider them
leather seats. The answer is Brazil slaps on a 30 percent duty. Clearly there is a significant
impact on the export potential if the product receives a 30 percent duty rather than duty-free
status.
Though these sorts of disagreements still occur between countries, they have been greatly
reduced through the implementation of the Harmonized Commodity Description and Coding
System (harmonized system). Internationally it is known as the International System of
Numbering or International Harmonized Codes. Essentially most trading nations have agreed on
a system of describing all products through the use of a ten-digit number. By agreeing on both
the format of the numbers, and most importantly, how to classify products, disagreements such
as the bicycle seat example should no longer occur.

HOW THE HARMONIZED SYSTEM WORKS
All products are described by a ten-digit number that is broken down by chapter, heading,
subheading, and commodity code. The chapter represents the first two digits. The heading
represents the first four digits. The subheading is the first six digits. And finally, the full ten-digit
number is called the commodity code. These distinctions will become clearer to you as you work
with the harmonized system.
The first step to understanding the system is to recognize the breakdown of the ten-digit
number by chapter, heading, subheading, and commodity code. Figure 3.1 breaks down the
harmonized code.
Figure 3.1
Code
03
0302
0302.12
0302.12.0012
Breakdown of Harmonized Codes
Definition
Example
Chapter in which a
Fish and crustaceans,
commodity is classified
molluscs and other aquatic
invertebrates
Represents the heading in
that chapter
Fish, fresh or chilled,
excluding fish fillets and
other fish meat of heading
0304
Represents the harmonized Pacific salmon, Atlantic
system code subheading
salmon and Danube salmon
Represents statistical
Commodity code for Chinook
subdivisions
(king) Salmon
Sections and Chapters
The harmonized system consists of 22 sections divided into 97 chapters that correspond
to the International System of Numbering. Chapter 97 is blank. Each section and chapter is a
very general grouping of common products. For example, Section 1 is "Live Animals and
Animal Products." As shown in Figure 3.2, Section 1 is then broken into five chapters.
As you can see from the chapter titles in Section 1 shown in Figure 3.2, a live sheep
would probably be in Chapter 1, but lamb meat would probably be in Chapter 2. And though you
might consider salmon a live animal, you can see that it would belong in Chapter 3, not Chapter
1.
These examples demonstrate some of the principles used when choosing the harmonized
code for a product. First, you must look at all chapters that might apply to a product before
deciding on a particular chapter. For example, you might misclassify salmon as belonging to
Chapter 1, but upon further review, it is clear that salmon belongs in Chapter 3. The chapter and the descriptions within each chapter - with the best description of a product is the one to be
used. Fish and crustaceans better describes salmon than live animals. If you were to look at the
introductory notes for Chapter 1 you would find the notice:
This chapter covers all live animals except:
(a) Fish and crustaceans, molluscs and other aquatic invertebrates, of heading 0301,
0306, and 0307;
(b) Cultures of microorganisms and other products of heading 3002; and
(c) Animals of heading 9508.
Figure 3.2
Breakdown of Harmonized Code by Chapters
Section 1 - Live Animals and Animal Products
Chapters 1-5:
01 Live animals
02 Meat and edible meat offal
03 Fish and crustaceans, molluscs and other aquatic invertebrates
04 Dairy produce; birds' eggs; natural honey; edible products of animal
origin, not elsewhere specified or included
05 Products of animal origin, not elsewhere specified or included
The notes help you avoid the mistake of placing salmon in Chapter 1 by pointing out that
it really belongs in Chapter 3.
The second point to observe are the dreaded words not elsewhere specified or included.
You will sometimes see these words abbreviated as n.e.s.o.i. I say they are dreaded because
often you will have a product that never really has a place in the harmonized code except to be
lumped into this catch-all category.
Headings
After finding the correct chapter for a product, the next step is to identify the correct
heading. The heading incorporates the first four digits of the ten-digit code; the first two denote
the chapter. For example, in Chapter 3, there are seven headings:
0301
0302
0303
0304
Live fish
Fish, fresh or chilled, excluding fish fillets and other fish meat of heading 0304
Fish, frozen, excluding fish fillets and other fish meat of heading 0304
Fish fillets and other fish meat (whether or not minced excluding fish steaks), fresh,
chilled, or frozen
0305 Fish, dried, salted, or in brine; smoked fish, whether or not cooked before or during the
smoking process, flours, meals, and pellets offish, fit for human consumption
0306 Crustaceans, whether in shell or not, live, fresh, chilled, frozen, dried, salted, or in brine;
crustaceans, in shell, cooked by steaming or by boiling in water, whether or not chilled,
frozen, dried, salted, or in brine; flours, meals, and pellets of crustaceans, fit for human
consumption
0307 Molluscs, whether in shell or not, live, fresh, chilled, frozen, dried, salted, or in brine;
aquatic invertebrates other than crustaceans and molluscs, live, fresh, chilled, frozen,
dried, salted, or in brine; flours, meals, and pellets of aquatic invertebrates other than
crustaceans, fit for human consumption
By looking at the headings, you get a sense of the priorities in a chapter, and thus some
general direction as to how to classify a product in that chapter. For example, by reviewing the
seven headings in Chapter 3, you can see that classification of products in this chapter can be
broken down into two general rules:
1. Fish is classified in headings 0301 through 0305, crustaceans are under heading 0306,
and molluscs and other aquatic invertebrates are under heading 0307.
2. The state of the fish (live, whole, in fillets, or dried) will determine which of the five fish
headings to use (crustaceans are always in 0306 and molluscs in 0307).
From this simple analysis, you can already get a pretty good idea of where to classify
salmon. Salmon will be in headings 0301 - 0305 depending on its condition. Live salmon will be
in 0301, whole nonfrozen salmon in 0302, whole frozen salmon in 0303, salmon fillets in 0304,
and dried, salted, or smoked salmon in 0305.
This also illustrates another consideration. There appears to be an emphasis placed on
products that are fit for human consumption because this wording is used in three of the seven
headings. This raises the question, where would crustaceans not fit for human consumption be
classified? There does not seem to be any heading that would be appropriate.
When you came across these types of inconsistencies, it is important to read the chapter
notes. It is good practice to always read the chapter notes when you begin researching a
particular chapter. The chapter notes for Chapter 3 state:
This chapter does not cover:
(a) Marine mammals (heading 0106) or meat thereof (heading 0208 or 0210);
(b) Fish (including livers and roes thereof) or crustaceans, molluscs, or other aquatic
invertebrates, dead and unfit or unsuitable for human consumption by reason of either their
species or their condition (chapter 5); flours, meals, or pellets offish or of crustaceans,
molluscs, or other aquatic invertebrates, unfit for human consumption (heading 2301); or
(c) Caviar or caviar substitutes prepared from fish eggs (heading 1604).
From these notes it is clear that any fish, crustaceans, or molluscs that are unfit for human
consumption cannot be classified in Chapter 3. Generally, the notes will give you some
indication of where to classify these exceptions. For example, the notes indicate that Chapter 5
would be the correct chapter for crustaceans not fit for human consumption. In Chapter 5, you
can find heading 0511 Animal products not elsewhere specified or included; dead animals of
Chapter 1 or 3, unfit for human consumption. If you neglect to read the chapter notes, you risk
incorrect classification.
When you see a reference to an exception in the chapter notes, it is crucial to read the
reference heading to make sure you understand the exceptions. For example, the notes in Chapter
1 mention, "This chapter covers all live animals except ... animals of heading 9508." Heading
9508 covers:
Merry-go-rounds, boat-swings, shooting galleries, and other fairground amusements;
traveling circuses, traveling menageries, and traveling theatres; parts and accessories
thereof.
What does that have to do with Chapter 1, live animals? Well, if you had horses or lions that
were part of a traveling circus, they would be classified in 9508, not Chapter 1. It may seem
strange, but for whatever reason, traveling circuses are treated separately from live animals on
their own. This demonstrates that the chapter notes are important parts of the harmonized code
system.
Subheading
Once you have found the heading, you move on to the subheading. The subheading
incorporates the first six digits of the ten-digit code, the first two of which is the chapter and the
first four of which is the heading. When writing the subheading, it is the convention to place a
period between the heading and the last two digits of the subheading.
Returning to the salmon example, let's assume we are exporting whole, fresh salmon,
which would fall under heading 0302. Under this heading, there are a number of subheadings:
Salmonidae, excluding livers and roes:
0302.11 Trout
0302.12 Pacific salmon, Atlantic salmon, and Danube salmon
0302.19 Other
Flatfish, excluding livers and roes:
0302.21 Halibut and Greenland turbot
0302.22 Plaice
0302.23 Sole
0302.20 Other
Tunas, skipjack, or stripe-bellied bonito, excluding livers and roes:
0302.31 Albacore or longfinned tunas
0302.32 Yellowfin tunas
0302.33 Skipjack or strip-bellied bonito
0302.30 Other
0302.40
Herrings, excluding livers and roes
0302.50
Cod, excluding livers and roes
Other fish, excluding livers and roes:
0302.61 Sardines, sardinnella, brisling, or sprats
0302.62 Haddock
0302.63 Atlantic pollock (coalfish)
0302.64 Mackerel
0302.65 Dogfish and other sharks
0302.66 Eels
0302.69 Other
0302.70
Livers and roes
As you can see in the subheadings for 0302, once you reach the level of subheading, the
descriptions are pretty complete. In our example, the correct subheading would be 0302.12 Pacific salmon, Atlantic salmon, and Danube salmon. The heading includes all fish, but the
subheading details the specific type of fish.
International harmonization of codes. The fairly specific nature of the subheading is not a
coincidence. It is at the level of subheading that the codes have been harmonized globally. In
other words, no matter what the exporting or importing country, all whole, fresh Atlantic salmon
would be under the subheading 0302.12. This is the basic concept behind the international
harmonized codes - the first six digits of the ten-digit code are the same for all products in all
countries that have adopted the international harmonized code system.
The Commodity Code
So what about the final four digits that make up the ten-digit commodity code? This is
where the classifications for each country will vary. Each country may choose four digits to
round out the commodity code. If the country doesn't care for additional classification to detail
products beyond the subheading, they will simply add four zeros. Other countries create many
different commodity codes under a particular subheading.
For example, the full ten-digit U.S. commodity codes for exporting fresh, whole salmon
are:
0302.12.0003
0302.12.0004
0302.12.0012
0302.12.0022
0302.12.0032
0302.12.0042
0302.12.0052
0302.12.0062
Atlantic - farmed
Atlantic – not farmed
Chinook (king)
Chum (dog)
Pink (humpie)
Sockeye (red)
Coho (silver)
Other
When exporting fresh, whole salmon, you must be able to further classify by one of seven
types. If your salmon is not on the list, then you would export it under the catchall other code of
0302.12.0062.
In contrast, the subheading 0302.21 Halibut and Greenland turbot has only one
commodity code, 0302.21.0000. When exporting whole, fresh halibut or Greenland turbot, the
U.S. government does not care whether it is Greenland turbot or any other type of turbot.
To complete your harmonized code you will need to determine what commodity codes, if
any, are under the particular subheading. Whether there is no commodity code or several codes,
remember that only the subheading will be consistent from country to country.
The commodity code - importing versus exporting. As previously discussed, the subheadings
in the harmonized system are the same between countries, but the commodity codes will vary.
Not only can the commodity codes be different between countries, but they may also vary
between codes used for exporting products and those used for importing products. In the U.S.,
for example, the purpose of the codes is different for importing and exporting. For import
purposes, the commodity code is used to determine what import duty, if any, is applied to the
product, as well as tracking import statistics. Because no duty is applied to U.S. exports, the
primary use of the commodity code for exporting is statistical reporting. Most shipments leaving
the U.S. are accompanied by the Shippers Export Declaration, which includes the commodity
code, so the U.S. is able to track each product that has been exported and to which country.
The U.S. has established two sets of commodity codes to distinguish between commodity
codes for exporting and importing. Both are based on the harmonized system, so they share
identical chapters, headings, and subheadings. The differences are in the full ten-digit
commodity codes. This distinction between exporting and importing often leads to confusing
terminology, but it is important to understand the differences.
When exporting from the United States, the system of classification is called the
Schedule B. The system is managed by the U.S. Census Bureau. Schedule B refers to the actual
book in which the export classification codes are published. The precise wording of the
classification number you will use when exporting is called your Schedule B number. The
Shipper's Export Declaration has a section labeled Schedule B Description of Commodities
where you type in the description of what you are exporting.
When importing into the United States, the system of classification is called the
Harmonized Tariff Schedule (HTS). The HTS is managed by the Office of Tariff Affairs and
Trade Agreements within the U.S. International Trade Commission. The primary purpose of the
HTS system is to assist in the application of import duties and track import statistics. These
import statistics are used to determine the impact of imports on U.S industries.
If you import and export the same product, it will actually have two harmonized codes.
Its HTS number is used when the product is imported, while the Schedule B number is used
when exporting. Under subheading 0301.12 - Pacific salmon, Atlantic salmon and Danube
salmon, the following are the HTS and Schedule B commodity codes:
0302.12.0003
0302.12.0004
0302.12.0013
0302.12.0014
0302.12.0022
0302.12.0032
0302.12.0042
0302.12.0053
0302.12.0054
0302.12.0062
HTS
Atlantic - farmed
Atlantic - not farmed
Chinook (king) - farmed
Chinook (king) - not farmed
Chum (dog)
Pink (humpie)
Sockeye (red)
Coho (silver) - farmed
Coho (silver) - not farmed
Other
0302.12.0003
0302.12.0004
0302.12.0012
0302.12.0022
0302.12.0032
0302.12.0042
0302.12.0052
0302.12.0062
Schedule B
Atlantic - farmed
Atlantic - not farmed
Chinook (king)
Chum (dog)
Pink (humpie)
Sockeye (red)
Coho (silver)
Other
Note that there are two differences between the Schedule B and HTS numbers for
subheading 0302.12. In Schedule B, it didn't matter if Chinook and Coho were farmed or not
farmed. But for the HTS code, you must distinguish between farmed or not farmed Chinook and
Coho. The U.S. government is indicating that when importing, it is important to maintain such a
distinction.
In practice the distinction between a product's Schedule B and HTS number is often lost
on an exporter. Exporters frequently refer to the Schedule B number as the harmonized code,
because it is more descriptive. But in fact, simply saying harmonized code doesn't clarify if it is
the Schedule B or HTS number. To be precise, you should refer to your export harmonized code
as your Schedule B code.

LOCATING THE CORRECT HARMONIZED CODE
Having clarified the distinction between a product's Schedule B and HTS number, we
return to the task of classifying products. It is important to emphasize that properly classifying
products can at times be a difficult task. To learn all of the various intricacies involved in
choosing the correct code takes practice. Don't assume that you will be able to find the correct
code the first time without some outside help. Fortunately, there is plenty of assistance available.
Obtaining Copies of the Schedule B or HTS
Whether you are searching for the Schedule B number (when exporting), or the HTS
number (when importing), the process is the same though you will be using a different source for
each number. The Schedule B number is located in the Schedule B book, which is published by
the Census Department within the U.S. Department of Commerce. The HTS book is published
by the Office of Tariff Affairs and Trade Agreements within the U.S. International Trade
Commission. Both can be purchased through your nearest U.S. government printing office.
The Schedule B and HTS numbers are also available on the Internet. The advantage of
this source is immediate access and no cost. However, I highly recommend purchasing one or
both of the books in the printed format. Not only will the books always be handy, but the process
of classifying products is much easier if you can flip through a book rather than looking at your
computer screen or printouts. The key to correctly classifying products is not only finding what
you think is the correct number, but also eliminating what is not correct. This process of going
back and forth, reading notes, and cross referencing chapters is much easier when the whole of
the book is in front of you.
For the sake of immediate access, however, the Web versions can be found at:
Schedule B: www.census.gov/foreign-trade/schedules/b/index.htmi
HTS: www.customs.ustreas.govlimp-exp/rulings/harmoniz/index.htm
From these sites you can download chapters and other miscellaneous information. If you
are attempting to classify your products without the full book, be sure to download enough of the
Schedule B or HTS to ensure you have all the relevant information.
First Step - Check the Index
To find your harmonized code, you may be tempted to look at all of the chapter titles to
find a category that fits your product. However, you can potentially save a lot of time by first
looking at the cross-referenced indexes that have been prepared. Both Schedule B and the HTS
have product descriptions listed alphabetically, rather than by chapter. For example, when
looking for the correct Schedule B number for salmon, you can look at the index and see that
many of the various types and states of salmon are all presented in one area, which can be used
for the sake of comparison. However, it is important to understand the index is only a guide. You
should use it to refer to the specific number in either Schedule B or the HTS to confirm that it is
accurate for your product. The indexes only refer to the correct subheading, not the full ten-digit
commodity code. You will need to refer to the subheading in the book to get the full number.
Still, the indexes offer a quick method of getting an idea of where your product is classified.
The index of Schedule B is particularly helpful because it includes many of the everyday
words for products that may not appear in the body of Schedule B. For example, the word
billfold does not occur anywhere in the actual Schedule B classifications. However, it is included
in the index where it indicates billfolds are likely classified under either 4202.31 or 3202.32.
These are subheadings for articles of a kind normally carried in the pocket or in the handbag,
which would include billfolds. Even though the word billfold does not appear in the
classification, the index guides you to the likely proper classification.
The Internet versions of Schedule B and the HTS include the ability to search for key
words. For example, the Schedule B site offers a screen for searching both Schedule B and the
index.
Schedule B versus HTS Subheadings
Another trick to finding your correct harmonized code is to remember that you can use
either Schedule B or the HTS to find the subheading. Because both systems are harmonized to
the subheading level, products must have the same subheading in either classification. Thus, if
you are having problems finding the right Schedule B number, refer to the HTS book, and vice
versa. For example, neither the HTS nor its index includes the word billfold, but it is included in
the Schedule B index. Thus you can use each as a tool, as well as their respective Web sites.
I've also used this trick when calling for assistance from the various government
agencies. For example, if I'm having trouble classifying a product for export, I'll call the census
help line for their advice because they answer Schedule B questions. I'll also call customs for
their advice. The commodity code may vary between agencies, but the subheading will be the
same.
Resolving Difficult Classifications
It may seem odd that you have to call more than one department for assistance in
classifying your products, but it is important to remember that classification of products under
the harmonized system is kind of like a puzzle; you have to piece all the bits of information
together to arrive at a definite answer. Not all classifications are as easy as the salmon or billfold
example. There are six guiding rules, listed in the Schedule B book, that will help you determine
difficult classifications. Figure 3.3 summarizes these six rules.
Some examples may help to clarify the rules in Figure 3.3.
Product: the metal base plate of a clothes iron
Issue: classified as a miscellaneous metal part or as an iron for pressing clothes?
Based on rule 2, the metal base of an iron for pressing clothes is classified as an iron
(Schedule B number 8516.40.0000). This is because the only real use of this part is for it to be
made into a full iron. Thus the metal base is still classified as a clothes iron because it maintains
the essential character of an iron.
In contrast, metal screws shipped to a manufacturer of irons are not classified as an iron.
Even though the screws will be used in the manufacturing of the iron, and thus become an iron,
they clearly do not retain the essential character of an iron. There are many purposes for such
screws, which would instead be classified under the heading 7318 Screws, bolts, nuts, coach
screws.
Product: a jar of ½ peanut butter and ½ jelly
Issue: classified as peanut butter, jelly, or something else?
Schedule B numbers: peanut butter - 2008.11.1000
jams, fruit jellies - 2007.10.0000
This example involves rule 3. If the jar contains exactly one-half peanut butter and onehalf jelly, you cannot use rule 3a because no one heading is more specific. In other words, peanut
butter is no more specific a description than fruit jellies. Nor could you use rule 3b because who
is to say a jar of half peanut butter and half jelly is more peanut butter or jelly? Neither the
peanut butter nor the jelly gives the contents its essential character. So in the end, the good
would be classified as 2008.11.1000, peanut butter, because according to rule 3c, it is the last
numerical heading.
Figure 3.3
Six Guiding Rules for Classifying Products under the Harmonized Code System
1. The titles of sections and chapters are only a guide. Classification should first be based on
the wording of the heading (four-digit number).
2. Incomplete or unfinished articles are to be classified as if they are completed or finished, as
long as the item has the essential character of the complete or finished article. Goods made of
mixtures or composites should refer to Rule 3.
3. When a good is classifiable under two or more headings, classification is as follows:
a. The heading that provides the most specific description shall be preferred to a heading
providing a more general description.
b. If both headings are equally descriptive, the heading of the material component that gives
the essential character should be used.
c. Goods that cannot be classified by rule 3a or 3b should be classified under the heading that
occurs last in numerical order among those that equally merit consideration.
4. Goods that cannot be classified through rules 1-3 should be classified as you would a good
that is the most similar that does have a clear Schedule B number.
5. Packing and containers:
a. Specifically shaped and/or fitted, suitable for repetitive use, and presented with the goods,
classified with the good. Otherwise on their own merit.
b. Normal packing classified with the goods.
6. Rules 1-4 are to be used to determine the heading. You would then repeat the process to get
the subheading.
Seek Assistance in Classifying Your Goods
These two examples illustrate that classifying goods can be a tricky issue. When your
exact product is listed in the index or the body of the Schedule B or HTS, your harmonized code
is clearly correct. When the description of the commodity code exactly describes a product, I call
it a good harmonized code because it unequivocally describes the product. For example,
8418.69.0020 is Drinking water coolers, self-contained, and 9201.20.0000 is Grand pianos.
Such good harmonized codes are not only good because they are easy to find and confirm, but
also because if you use that harmonized code for marketing research, the results will track well
with your product.
But more often than not, you will find your product and the exact Schedule B or HTS
commodity code are not a perfect fit. Or worse, it fits into Not elsewhere specified or included
(n.e.s.o.i) or an Other category. In these cases, your product is grouped into a catchall category
that does little to precisely describe it.
When classifying your products, be sure and get outside assistance. Some suggested
contacts are:



Schedule B: U.S. Census Bureau of the U.S. Department of Commerce. As the Census
Bureau has the responsibility of managing Schedule B, they must assist exporters in
locating correct Schedule B numbers. I find they can be extremely helpful, especially if
you get them to take the time to really answer all your questions about why they would
suggest a particular commodity code. Be sure and do as much research as possible before
you call so you have a better idea of what to expect and what questions to ask.
HTS: U.S. Customs. Though the HTS is managed by the U.S. International Trade
Commission, I find U.S. Customs, which has offices throughout the U.S., a better source
for HTS assistance. Be sure and realize before you call that when you are looking for an
HTS number, you are looking for the import commodity code. Don't forget the distinction
between importing and exporting commodity codes. Also remember that the first six
digits of your HTS number should match the first six digits of your Schedule B number.
When I have a really difficult product to classify, I call both census and customs to
double check that the numbers agree.
Local international trade resources. You should also consider contacting your local
resources, such as a state international trade center or similar export assistance center.
They will normally not only have a copy of Schedule B, but will have experience in
dealing with classifying goods. They can also do some of the phone work to get you
additional assistance.
Binding Rulings
What do you do if you still can't find a Schedule B or HTS number that seems
appropriate? Or what if you feel your commodity code is correct, but your foreign buyer's
government is insisting it should be a different commodity code?
One option is to obtain a binding ruling. This is a free service of U.S. Customs in which
they review your literature and all relevant product information to make a final determination of
what the commodity code should be. It will be a determination of your HTS number because that
is the domain of U.S. Customs. This is a service primarily for importers that have difficult goods
to classify. Each time the customs agent questions the HTS number can lead to delays. The
advantage of a binding ruling is that once a manufacturer receives such a ruling, all future
imports reference the binding rulings and the customs agent won't question the validity of the
commodity code. Such a ruling can also be useful to exporters to determine the subheading.

HARMONIZED CODE VERSUS SIC, NAICS, AND SITC
We have looked at the harmonized code in some detail because it is generally the most
important product code number used by U.S. companies involved in international trade. But
there are some other important product and industry classifications that you may encounter in
your international documentation or research requirements. The most important are the Standard
Industrial Classification (SIC), the North American Industry Classification System (NAICS), the
Standard International Trade Classification (SITC), and the Export Control Classification
Number (ECCN).
Standard Industrial Classification (SIC). The SIC system has been around for some time. In
fact, it has now been replaced by the NAICS, but most people are still accustomed to the SIC
code. The Standard Industrial Classification for a company is a four-digit number used to
describe the type of activity in which they are engaged. Where the harmonized code describes
products, the SIC code describes what a company does. For example, 7378 is the SIC code for
companies "primarily engaged in the maintenance and repair of computers and computer
peripheral equipment." Such a company may not have a harmonized code because they don't
produce anything, whereas 0273 is the SIC code for companies "primarily engaged in the
production of finfish and shellfish." In other words, 0273 would include companies that grow
fish. If the company raises salmon, regardless of the type of salmon, their SIC code remains
0273. Thus, a company with one SIC code may have many harmonized codes.
If you want to search for the SIC code for your company, you can search the SIC
database at this Web site: www.osha.gov/oshstats/sicser.html.
North American Industry Classification System (NAICS). A new system has been adopted
that replaces the SIC system. It was developed jointly by the United States, Canada, and Mexico.
One benefit of the NAICS system (pronounced "nakes") is that it identifies many new industries
not included in the SIC system. The code also has been expanded from a four-digit system to a
six-digit system. This offers a larger number of sectors and allows more flexibility in designating
subsectors.
An example of this increased flexibility would be the classification of casino. The SIC
system did not have a code for casinos. Instead such establishments were classified under the
catchall SIC code 7011 - Hotels and motels. The NAICS not only has a separate category for
casinos (713210), it also has one for casino hotels (721120). This increase in subsectors greatly
improves the usability of the data tracked by NAICS versus that of the old SIC system.
A final benefit is the comparability of data between the U.S., Canada, and Mexico
because all three countries share the NAICS. Though not all codes are common to all three
countries, the NAICS offers much greater comparability than the SIC system.
For further information on the NAICS, consult the census site which includes tables
showing both the NIACS codes and the correspondence between NAICS and SIC:
www.census.gov/naics
or www.ntis.gov/business/sic.htm
Standard International Trade Classification (SITC). The SITC was developed by the United
Nations in 1950 and is used by international organizations for reporting international trade
statistics. Thus the SITC system is similar to the harmonized code system in that it classifies
products. However, don't confuse the two systems. The harmonized code system is much more
detailed because it goes to the ten-digit level. The SITC only goes to a five-digit level and many
of the statistics are only reported at the two- or three-digit level.
About 100 countries report their import and export trade statistics to the United Nations.
Though the data is not as current as the equivalent data for U.S. imports and exports, it can be
helpful in identifying the import and export levels of other countries. Sometimes this information
also is helpful in identifying the sales activities of competitors in foreign markets. The data is
summarized in various reports, the most of important of which is the United Nations
International Trade Statistics Yearbook, available in many libraries and export assistance
centers. For a more detailed explanation of this report, see Chapter 6. Much of the data is also
available at a gopher site maintained by the United Nations International Computing Center at:
gopher://gopher.unicc.org /11/itc/dir3.
Chapter 3 from “The Global Entrepreneur: Taking Your Business International” by
James F. Foley, 1999, Dearborn Publishing