An HS expert shares some personal reflections

16 October 2018
By Jørn Hindsdal, Denmark

While the Harmonized System, or HS, celebrates its 30th anniversary this year, it is, in fact, much older because it was developed over several years starting in the 1970s. Having worked on HS matters for at least 40 years, both within Danish Customs and at the WCO Secretariat, I have been in the fortunate position to have closely followed its development, implementation, maintenance and use for a long time, up until my official retirement in 2017. This article provides me with an opportunity to share some personal reflections on the HS.

Development of the HS

The HS Nomenclature replaced the Customs Co-operation Council Nomenclature (CCCN) in 1988. This previous nomenclature as well as several national Customs tariffs served as the starting point for the work of the many Customs administrations who gathered in Brussels over the course of numerous meetings to comment on proposed texts or to assist in the drafting of alternative texts, with the support of the WCO Secretariat.

Once the HS Nomenclature was finalized, several years were then spent on the development of its corresponding Explanatory Notes, a tedious, but very important task. The thousands of pages that are stored in the WCO Secretariat’s Documentation Centre testify to the fact that an enormous body of work lay behind the development of the HS. All those pages were prepared using typewriters and, ironically, heading 84.69 for “typewriters” disappeared from the HS with effect from 1 January 2017!

The HS at national level

The HS forms the basis for Customs tariffs and statistical nomenclatures around the world. This means that in most countries the HS is, more likely than not, unknown because traders apply the national Customs tariff and statistical nomenclature of the countries where they import and export goods. The European Union (EU), which up until 1988 applied a separate Customs nomenclature (the Common Customs Tariff) and a separate statistical nomenclature (NIMEXE), merged the two into one single instrument, called the “Combined Nomenclature” (CN).

At the time, I was attending joint Customs and statistical meetings in Luxembourg, where EU Member States had to decide which statistical subdivisions should be retained in the CN from 1 January 1988. One of my battles, together with my Danish statistical colleague, was to ensure that the subdivision for “Christmas trees,” which was important to Denmark, was retained; this we managed to do, and it still appears in the CN today.

In the lead up to implementation, I also conducted, together with a colleague, several HS training sessions in Denmark for my Customs colleagues, as well as for our traders and Customs brokers. Switching to the HS was not too complicated, although our information technology (IT) systems had to be updated. During the training sessions, I often told the audience that the HS was “old wine in new bottles; perhaps magnum bottles.”

In some countries the implementation of the HS Nomenclature was more complicated. One of those countries was the former Soviet Union, where I had the pleasure of being part of an EU team that assisted the Soviet’s with the implementation of the HS. This assistance enabled us to travel to several parts of this vast country, culminating in a three-hour prime time presentation on state television. It must have been a nightmare for television viewers!

Work of the HS Committee

The HS Committee (HSC) plays an important role in interpreting the HS legal texts to secure the uniform classification of goods, including the settlement of classification disputes between Contracting Parties to the HS Convention. To that end, the HSC has classified more than 1,000 specific commodities since 1988 and, together with the WCO Scientific Sub-Committee, has determined the classification of several thousand international nonproprietary names (INN) for pharmaceuticals linked to the Agreement on Trade in Pharmaceutical Products (concluded by the World Trade Organization) and the Programme on INN for Pharmaceutical Substances (administered by the World Health Organization). Based on proposals by Customs administrations or the WCO Secretariat, the Committee also amends the HS Explanatory Notes to facilitate the interpretation of the legal texts.

I had the pleasure of attending more than 50 sessions of the HSC, four of which as Chairperson. In general, there has always been a very good working spirit in the Committee. Since one of its tasks is to settle disputes between two or more Contracting Parties, delegates often have to argue their different viewpoints strongly, sometimes resulting in proceedings becoming somewhat tense before voting takes place. Fortunately, most of Committee’s decisions are followed by administrations; if not, a reservation will be filed. In fact, I clearly remember a case many years ago, where a country “lost” the vote and the delegate immediately stated that his administration would enter a reservation – some delegates did not appreciate this action, and as an outcome, it was later agreed that reservations should not be entered before the meeting had been concluded.

At the end of each meeting, HSC delegates “read” the draft report of the meeting before approving it and, in most cases, this is a smooth process, mainly resulting in minor changes to statements by various delegations. However, I can recall a situation when I was chairing my first HSC meeting. The reading went well at the beginning, but on a specific issue there were suddenly different views on the statements made by some delegations. After some discussion, I had to call a break and after 45 minutes of “negotiations” with the involved delegations, we managed to come to an “agreement.” After that incident, I considered handing over the reading of the report to the Vice-Chairperson at the next meeting if discussions went on too long, but this did not happen and from then on readings went smoothly.

Classification issues

HS classifications are governed by General Interpretative Rules (GIRs) 1 to 6, but, before classifying a product, it is important to apply what I call GIR 0, that is the “what is it” or the “wii” rule. To provide some perspective, here is an example from real life where a consignment was accompanied by three documents, each of which described the product in question slightly differently:

  • Document 1 – “Labels”.
  • Document 2 – “Printed labels”.
  • Document 3 – “RFID bag tag labels”.

When examining the consignment, it turned out to be labels (“tags”) used in a “radio-frequency identification” (RFID) system. Based on the descriptions in Documents 1 and 2, classification could easily have ended up in heading 48.21 (paper or paperboard labels of all kinds, whether or not printed), instead of heading 85.23 (discs, tapes, solid-state non-volatile storage devices, “smart cards” and other media for the recording of sound or of other phenomena, whether or not recorded, including matrices and masters for the production of discs, but excluding products of Chapter 37), as correctly indicated by the exporter in Document 3.

The HSC has classified many different products and, in my view, some of the products have been rather peculiar. Below are a small selection of some of the more peculiar products:

  • a “domestic barbecue” of stainless steel, operating by means of steel mirrors and using only solar energy for cooking – not a best-seller in rainy Denmark! In this case, the HSC had to apply GIR 4 (“most akin”), and it subsequently decided to amend the HS Nomenclature to facilitate the classification of “solar barbecues” – heading 73.21;


  • “Roller shoes” with uppers of leather and outer soles of rubber, incorporating two permanently attached, retractable wheels that fit into special cavities in the outer sole, thus providing the option of using the footwear as in-line skates (roller blades) when the wheels are pulled out – heading 95.06;


  • a “chemical product,” consisting of a solution of glycerine and flavouring substances, saturated within the pores of natural mineral stones (“Shisha-Steam-Stones”) via a pressure injection method. The product is free of nicotine, and the stones are used in a water pipe, which heats the stones and boils the solution to produce a vapour steam that is inhaled by the user of the water pipe – heading 38.24;


  • a “rug made of a whole grizzly bear furskin, with head, tail and paws,” fixed to an underlay of textile materials. The head is taxidermy mounted, and its eyes and tongue had been replaced by artificial ones – heading 43.03;


  • a “woman’s shoe, with a textile upper and an outer sole of plastic, a portion of which is covered with flocking.” The surface area of the outer sole in contact with the ground (excluding the separately attached heel) is approximately 67.5 percent textile material and 32.5 percent plastics. However, the textile material was considered to be an accessory or reinforcement and was therefore not taken into account in determining the constituent material of the outer sole having the greatest surface area in contact with the ground – heading 64.05;


  • a “motorcycle, specially modified and equipped with fire-fighting equipment,” such as two interconnected 25 litre tanks for premixed water and foam, a 6.8 litre tank filled to 300 bars pressure for delivering compressed air, a 30 metre hose, a hose reel, nozzles and a lance attachment, and emergency lights and sirens – heading 87.11;


  • a “laundry ball,” with a diameter of approximately 10 cm, consisting of two perforated casings of plastics which are joined together and containing two magnets and four types of small ceramic “pellets” (beads), intended to be used in a washing machine of the household-type to clean clothes by a physical process – heading 69.12;


  • a “non-woven adhesive article,” cut to a specific shape and intended to be stuck onto the skin after removal of a protective piece of paper, to fit perfectly round the lower part of the breast like the cup of a brassiere – heading 63.07.

At the national level, I have also come across many interesting products. One in particular was “flour made of crickets” (an insect) to be used as protein enrichment in various food preparations. Could it be regarded as edible flour of meat? Danish Customs came to the conclusion that “crickets” did not have any “meat” and ruled out heading 02.10 (meat and edible meat offal, salted, in brine, dried or smoked; edible flours and meals of meat or meat offal). Instead, we opted to classify it in heading 04.14 (edible products of animal origin, not elsewhere classified or included).

Another interesting product was “bang sticks,” classified under heading 39.26 as per an EU decision. These are inflatable sticks of plastic sheeting of various lengths, for example 60 cm, incorporating a plastic straw to inflate the sticks. They may be printed with various motifs, such as the name of a sports club, logos, slogans (“Go team!” or “Goal!”) and advertisements. The sticks are normally used at sporting events, where the spectators use them for waving or bang them together to make a noise.

Tariff engineering

There are no duty rates in the HS, but they do appear in national Customs tariffs. Of course, traders, in particular importers, are always interested in paying a low duty rate and, as a result, may classify goods incorrectly or adjust the goods to that end. While incorrect classification by an importer could sometimes occur, wilful misclassification should be regarded as an attempt to commit fraud.

Motor vehicles for the transport of more than 10 persons are classified in heading 87.02 and usually attract lower Customs duty rates, including, more often than not, other specific taxes such as registration and road taxes among others, compared to passenger vehicles. To avoid paying such costs, in some countries a “normal” passenger vehicle is modified before importation to appear as if it is able to accommodate 10 persons or more, and is then later transformed back into a passenger vehicle after importation and payment of taxes! Fortunately, the HSC has developed guidelines to deal with such issues, which are set out in the HS Explanatory Notes to Chapter 87.

Some years ago, I had a meeting with an importer who was importing adjustable stands for office desks mounted with an actuator (lifting/lowering mechanism). The stands were imported without the table tops, which were purchased from a local company. Customs did not agree with the importer’s decision to classify the goods as “parts for furniture” because they could be used for a number of purposes, as imported. After the classification rules had been explained, including GIR 2, which motivated the decision of Customs, the importer started importing the stands together with a similar number of “cheap” table tops, declaring the product as “unassembled office desks” that attracted a “zero” duty rate. After importation, the “cheap” table tops were replaced by those manufactured locally.

The future

The HS is still relatively young. Although it has been challenged every now and then, it has always “survived.” Customs and traders are now familiar with the system and want to retain it. Of course, updating the HS is crucial, and this is an ongoing task that falls mainly on the shoulders of the HS Review Sub-Committee (RSC). The Sub-Committee is currently busy finalizing the 2022 edition’s amendments, and has to deal with a whole host of topics.

Many classification issues arise from multi-function machines/apparatus, and the development of such products is on the increase all over the world. I firmly believe that it might be a good idea to create new headings or subheadings for such products, e.g., products used in the IT area. In addition, the classification of novelty food products (e.g., “functional foods” and “veggie” preparations), prepared meals, and food supplements is also often disputed, so clarification around these products would definitely be desirable.

With these reflections, I wish the HS all the best in the future and hope that it will continue to serve the Customs and trade community according to their expectations.

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