The World Customs Organization (WCO) is responsible for managing the trade of 182 members comprising over 98% of total global trade. Canada has been a member of the WCO since 1971, as a member of the North American trade region, and is also a member of the Harmonized System Committee and the Harmonized System Review Subcommittee.
The Harmonized System Committee is responsible for setting tariff classifications to harmonize trade systems in each region. Essentially, it comes up with a uniform system of codes to describe goods and services that are traded, so that countries can more easily communicate with, and tax one another. The Harmonized System Review Subcommittee supports the Committee by, among other duties, producing Explanatory Notes which explain the various classifications which makes it easier for customs brokers, like ARGO Customs, to assist clients who import and export in Canada.
The Harmonized System (HS) is the international classification system developed by the Harmonized System Committee. The HS system is composed of approximately 5,300 product descriptions. HS allows countries to classify goods on a common business, facilitating trade and reducing “externality” costs (which refer to costs associated with doing business but aren’t related to the production of products, i.e., taxes and compliance costs). The reduction of externality costs is a key point in increasing business, generating wealth, and saving people money. HS is a six-digit code system. The six digits explain products in the following way: (1) the chapter in which the goods are classified and (2) the groupings within the chapter. Canada uses a ten-digit code system; the last four digits refer to Canada traffic laws.
The HS code is crucial to determine the duty you have to pay and to ascertain what other government regulations could apply to your goods (for example, foodstuffs or livestock). Preliminarily, there are several factors you should bear in mind when estimating your duty including, but not limited to, the country of origin and the type of good.
Let Us Help You Today
ARGO Customs Brokers are standing by to walk you through the HS system and how it applies to imports and exports in Canada. We are dedicated to providing best-in-class service to our import and export clients. If you’re expecting a new shipment, please do not hesitate to contact ARGO Customs Brokers for assistance.