The Harmonized Tariff Schedule (HTS) came into play on January 1, 1989, thanks to Congress, to streamline the way tariffs were handled. The World Customs Organization (WCO) took charge of putting it into action. Using the Harmonized Commodity Description and Coding System (HS), the WCO assigns codes to different commodities. The HTS builds on this system, creating unique identifiers for each category of goods. This makes it easier for importers to classify shipments and quickly figure out the duties and tariffs that apply, simplifying the whole process.
Why Use Harmonized Tariff Schedule (HTS)?
No matter what shippers prefer, the HTS plays a crucial role in assessing and collecting duties on imports. It builds on the HS system, which is widely used in international trade, to ensure that everyone involved is paying the necessary fees to customs authorities. For instance, while the HTS is mainly focused on U.S. imports, the HS helps accurately assess tariffs and duties on exports. Together, the HTS and HS work to prevent illegal trade activities, making sure everything stays above board.
Why Is HTS Important? – Primary Purpose of HTS
Compliance
Compliance becomes problematic for shippers. Importers who attempt to avoid the HTS face additional inspections, penalties, fines, or other corrective measures. The punishment could involve a ban on importing and an increase in the frequency of audits of the given importer.
Competitive Advantage
The HTS ensures a level playing field for all importers. If a company does not correctly assess the relevant duties, by the HTS, it can import the goods without properly paying the CBP. This is subsequently interpreted as smuggling. The company would then be able to sell goods at significantly lower rates compared to its competitors.
Visibility
In supply chains at a global level, complete visibility and compliance are primary concerns for all involved parties. Moreover, visibility is something that affects the perception of a company by the public. Therefore, a poor perception ultimately results in a company falling out of the public’s favor. Organizations not using the HTS are usually distrusted by the general public, which affects the overall demand for that organization’s products.
Increased Productivity
The HTS also augments the productivity of an importer. The product IDs from the HTS are unique identifiers that make the process of assessing duties and tariffs simpler and quicker. Therefore the importer can then invest more time in transporting the import rather than wait for the assessment by the CBP.
Conclusion
The Harmonized Tariff Schedule is crucial to ensuring that tariffs for American imports are accurately and fairly processed. From ensuring international trade compliance to increasing productivity, the benefits that come with the HTS far outweigh the costs of following it. However, it should be noted that the CBP is the final arbiter in determining the appropriate duty rate for a given consignment of goods; the HTS merely provides a mechanism that simplifies the process. Continue reading What is HS Code?
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