The harmonized commodity description and coding system, or “harmonized system” (HS), is a multipurpose international product nomenclature developed by the World Customs Organization (WCO). It comprises around 5,000 commodity groups, each identified by a six-digit code, arranged in a legal and logical structure, and is supported by well-defined rules to achieve uniform classification.

The HS is used by over 200 countries and economies as the basis for their customs tariffs and for collecting international trade statistics – and 160 of these are contracting parties to the HS Convention.

Over 98% of merchandise traded internationally is classified using the HS. More than serving as a customs or statistical nomenclature, the HS is used as a multi-purpose tool by importers, exporters, freight forwarders, producers, and all other parties involved in international trade, as well as by international organizations.

The HS contributes to harmonizing customs and trade procedures, and the non-documentary trade data interchange in connection with such procedures, thus reducing the costs of international trade. It is also extensively used by governments, international organizations and the private sector for purposes such as internal taxes, trade policies, monitoring of controlled goods, rules of origin, freight tariffs, transport statistics, price monitoring, quota controls, compilation of national accounts, and economic research and analysis. The HS is thus a universal economic language and code for goods, as well as an indispensable tool for international trade.

One of the more important instruments for developing modern customs processes is the International Convention on the Simplification and Harmonization of Customs Procedures (Kyoto Convention). It consists of 31 annexes, each of which contains basic principles for customs processes such as clearance for home use, exportation, transit, postal traffic and passenger facilitation.

The Convention entered into force in 1974 and was revised and updated to ensure that it meets the current demands of governments and international trade. The WCO Council adopted the Revised Kyoto Convention (RKC) in June 1999 as the blueprint for modern and efficient customs procedures in the 21st century. It provides international commerce with the predictability and efficiency that modern trade requires. The RKC entered into force on 3 February 2006. At present there are over 130 contracting parties to the RKC.

GATT/WTO Customs Valuation (EN)  

UNCTAD Technical Assistance in Trade Facilitation

UNCTAD assists developing countries in identifying their particular trade and transport facilitation needs and priorities, and helps them program the implementation of specific trade and transport facilitation measures. UNCTAD also organizes workshops and seminars at the regional and national levels, publishes relevant information and training material, and provides technical assistance through numerous projects. Full details are available on the trade facilitation section of the UNCTAD website.

The links below provide more information about how the respective organizations enable and support trade facilitation activities.

• Trade facilitation at the World Trade Organization  
• Trade facilitation and e-business at the UN Economic Commission for Europe  
• European Commission  international trade policy

Below is a list of legal elements that should be considered prior to introducing automatic data processing (ADP) systems into customs. The list is not exhaustive since countries have their own specific laws, however, it is imperative to review customs laws and regulations to accommodate some or all of the components specified below.

The Kyoto Convention, Annex J. 1, specifies a number of recommendations concerning the definition of legal requirements. Further, the basis for the list is constituted by experience in various ASYCUDA countries.

1. Legal duty/tax point

   The point in time to determine rates of duty and taxes must be specified in the law and be configured accordingly in the ASYCUDA system. This date may also be used to define the exchange rate, the time of entry to customs warehouses and be decisive whenever a date is required to define entry under a customs regime. Usually the date when the entry is registered in the computer system will apply.

2. TIN number

   A registration number is required by ASYCUDA. In that respect, a unique taxpayer identifier number (TIN), mutually agreed with the other government authorities, should be selected. A unique identification will satisfy the needs of all the authorities involved – customs, revenue/tax departments, and licensing and statistics offices.

3. New declaration format

   In some countries, customs law sets out the exact format of the customs declaration. In such cases the law must be revised to reflect the introduction of a new format. It could be considered whether such a legal requirement is at all necessary, or if an authorization could be given to the minister to publish the revised format. This would facilitate subsequent revisions of the format.

4. DTI and EDI

   Legislation must include provision for lodgement of electronic declarations i.e. paperless transmission of the entry details.

5. Signature

   For electronic declarations, the law must provide for an alternative to handwritten signatures.

6. Computer printouts

   Customs declarations in the form of a computer printout should be legally binding for the importer/broker, thus establishing enough evidence in cases of trials between customs and the importer/broker.

7. International standards

   The ASYCUDA system will to a large extent require input of international standards and codes, e.g. for country names and currencies. Legislation must allow for the use of such codes and standards.

8. Use of data

   Legislation should provide the right for customs to retain data, use it for its own purpose and to be allowed to transfer certain data to other organizations and agencies, such as the statistics office.

9. Transaction fees

   When considered necessary by the government, customs should be authorized to collect a fee for each customs declaration. The amounts collected should be earmarked to finance renewal of hardware or to compensate for the loss of income for staff moved from areas with certain extra income to the computer centres, when the generation of such income is possible.

10. Provisional lodgement

    The ASYCUDA system contains a facility for pre-lodgement of declarations pending the arrival of vessel or documents. This should be allowed for in the legislation.

11. Computer fraud

    The law should define fraud based on the manipulation of computers as an offence to be fined according to the usual practice in the country concerned.

12. Verification of systems

    Customs should be authorized to access traders’ computer systems for verification and audit purposes. This has particular importance when using EDI transmissions.

WCO Implementing the World Trade Organization (WTO) Trade Facilitation Agreement (TFA)