People use custom brokerage software when they need to simplify the classification of HS codes, which are part of the coding system for tariff nomenclature. The Harmonized Commodity Description and Coding System, also known as Harmonized codes, exist to serve the purpose of standardizing the classification of traded products developed and maintained by the World Customs Organization, or WCO. The codes consist of names and numbers that are standardized by the WCO, which is a Brussels-based independent intergovernmental organization offering global customs compliance to more than 170 member countries across the globe.
HS codes are universally standardized, which is why they are referred to as “Harmonized.” They are six-digit nomenclatures with the first four digits serving as the heading and the first six digits serving as the subheading. WCO member countries are not allowed to modify the heading descriptions, subheading descriptions, four-digit codes or six-digit codes of Harmonized codes whatsoever.
HS codes can sometimes be customized, however, by extending them to eight or ten digits for customs or export purposes. A total of 200 various countries, customs and economic unions comprising more than 98 percent of world trade using Harmonized codes as a basis for numerous global customs compliance purposes. These include customs tariffs, international trade statistics collection, rules of origin, internal tax collection, trade negotiations, tariff and statistic tariffs, controlled goods monitoring, and various customs control and procedure areas such as risk assessment, information technology and compliance.
It is important to note that Harmonized codes have been modified a few times over the years. So if you are making reference to HS codes from trade issues that came up several years ago, you will want to be sure that the definition set in question actually matches the code. But as long as you are using current codes it will always be a universal system that is harmonized across the globe for customs purposes.
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