U. S. importers and exporters, as well as their customs brokers, should be aware that the United States Harmonized Tariff Schedule of the United States (HTSUS) will undergo a significant change on February 3, 2007. The changes result from modifications made by the World Customs Organization to the International Convention on the Harmonized Commodity Description and Coding System (the "Harmonized System")
The Changes made to the HTSUS are intended to update the nomenclature or clarify the classification of particular goods. They represent the most significant changes to the Harmonized System in many years. The changes include several hundred amendments to 83 chapters of the HTSUS and thousands of classifications at the eight and ten-digit levels. The most significant changes are being made to the classification of high-technology and electronic goods in chapters 84, 85 and 90 of the HTSUS. While duty rates will not change, many goods previously classified in one chapter of the HTSUS may be moving to another chapter.
If U. S. importers have not done so already, they should analyze their imported goods to determine if the tariff classification of their goods will change. If U. S. importers have not done so already, they should analyze their imported goods to determine if the tariff classification of their goods will change. If changes have been made to their classifications, they should advise their customs brokers immediately so the changes can be implemented once the new classifications take effect on February 3, 2007. Importers also should consider whether previous classification rulings remain valid for goods affected by the changes.
Despite the effective date of February 3, 2007, a 17-day "grace period" for U. S. importers to implement the new version of the HTSUS has been announced by enforcing U. S. customs laws. Thus, while the 2007 HTS codes should be used on imports entering the U. S. on or after February 3, 2007, U. S. importers will have until February 20, 2007 to classify their goods correctly. CBP has stated that it will not impose penalties on importers for errors occurring during the 17-day "grace period".
Another ramification of the 2007 changes to the Harmonized System is on blanket NAFTA Certificates of Origin (COs) for goods imported into the U. S. CBP has advised that while the NAFTA product specific rules contained in Annex 401 of the NAFTA are being amended to reflect the 2007 HTS changes, they are not likely to be implemented on February 3, 2007. There fore, CBP has advised that blanket NAFTA COs (i.e., Cos covering one year) completed using the 2006 rules or origin will be valid for 2007. However those COs will need to continue to reference the 2006 HTS numbers because the product specific rules are directly related to those HTS numbers. To avoid confusion, CBP recommends that exporters in Mexico and Canada include both the old and new HTS numbers on their CO.
Finally, the changes made to the Harmonized System will also affect U. S. exporters. First, because these changes are being made by customs authorities worldwide, the HTS numbers previously reported by U. S. exporters on their commercial invoices presented to their overseas customers may change. In addition, because the Harmonized System services as the basis for Schedule B numbers reported on Shipper's Export Declarations and Automated Export System records files on exports from the U. S., the U. S. Census Bureau ("Census") will be modifying the Schedule B numbers. Census has recently issued the 2007 version of the Schedule B numbers and announced that they will go into effect on February 3, 2007. Census has not yet announced a grace period. The 2006 version of Schedule B can be found at the following website: www.census.gov/foreign-trade/schedules/b/2007/index.html