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Harmonized System Changes
Several other classifications, such as the Standard International Trade Classification (SITC) and the Classification of Broad Economic Categories (BEC), are used for the presentation of broader level statistics in this publication, in line with international standards and practice. The statistics presented for these classifications are prepared by translating the data collected according to the HS via concordances between the classifications. In this way the varying requirements and interests of traders and users of the information can be met efficiently and effectively.
The WCO is introducing the third revision to the international HS on 1 January 2002. The HS was introduced on 1 January 1988 and subsequently revised in 1990 and 1996. The 2002 revisions affect 68 of the 98 chapters in the classification, either through note changes, classification changes or both. Extensive revisions have been made to Petroleum (chapter 27), Chemicals (chapter 29), Hides and skins (chapter 41), and Paper and paper products (chapter 48). In these chapters, the structure of the classification has been altered. In some instances, the WCO has kept the same codes even where there has been a change in the content of that category in the 2002 version. Users of the classification need to be aware of such instances.
In the hierarchy of the HS there were no changes made to either the description or the number of chapters. There has been an increase of 3 in the number of 4-digit HS headings and an increase of 111 in the number of 6-digit HS headings. As a signatory to the HS convention, it is mandatory for Australia to implement the revised international classification in its entirety on 1 January 2002.
Chapter 27, Petroleum, now separately identifies waste oils. In chapter 29, Chemicals, the basis of the classification has changed from a chemical composition description to a mixture of end-use and chemical composition descriptions. In both chapters there has been no reuse of classification codes where categories have changed content.
Chapter 41, Hides and skins, now incorporates the concept of reversible tanning. Reversible tanning means a hide or skin, which after being washed returns to an unprocessed state and without further tanning processes will begin deteriorating. In industry terms this means a hide or skin that has had no further processing past alum sulphating, leaving the reverse side of the hide or skin coloured white (or close to white). The statistical codes now distinguish between raw skins, not processed beyond drying or salting, and those skins which are partially processed, that is, not a raw skin.
In chapter 48, Paper and paper products, the WCO has placed emphasis on identifying types of paper and the level of processing the paper has undergone, for example bleaching, in the 6-digit structure. In chapters 41 and 48, several of the 1996 HS classification headings have been reused for the 2002 HS version, even though a change in scope of those classification headings has occurred.
Any changes made at the 6-digit level of the international HS necessarily impact on the extensions to the HS for Australian requirements. Accordingly, Customs and the ABS have undertaken reviews of the Australian extensions. Customs has reviewed the 8-digit tariff extensions for imports and the ABS has reviewed the 10-digit extensions for import statistical codes and the 8-digit extensions for export statistical codes.
Proposals for the detailed import and export classifications were developed by the ABS after implementing the WCO changes to the 6-digit level and, in the case of imports, the changed 8-digit tariff codes determined by Customs. The initial extensions to the classifications for statistical purposes were developed by applying the previous dissections wherever possible. The ABS determined areas of the classification where further assistance was required from industry experts. It consulted relevant industry organisations where significant changes were proposed or technical advice and assistance was required with the classification.
Initial classification proposals have been made available on the ABS website and have been distributed as paper copies where this was requested. All known stakeholders were advised by letter of the ABS proposals and an Australian Customs Notice was issued. All submissions made were considered and where necessary further industry advice sought.
The review team contacted organisations who had requested current confidentiality restrictions which were affected by the changes. The organisations were asked to assess their potential level of exposure under the new classification. These assessments have been used to apply restrictions which will be reviewed in the first six months of operation of the new classification. Subsequently, the restrictions will be reviewed every two years, unless there are changes in trading patterns, in accordance with normal procedures.
Throughout the review process the ABS worked closely with the other government agencies involved and consulted with several international and overseas agencies on aspects of the review. Industry experts were consulted on the final structures. Finally the ABS allocated the statistical codes, wrote descriptions of the classifications and prepared the classification manuscript.
In conjunction with the review, the ABS examined trade reported for the existing statistical codes in the import and export classifications. It examined low value trade to determine whether continued use of these dissections was warranted. The ABS limits the level of detail to that which can be reasonably provided by importers and exporters and justified by the uses made of the information. 342 import codes and 173 export codes were identified for investigation.
These categories were assessed against the following criteria:
The result of these investigations was to close 111 import codes and 47 export codes, less than 1% of the total number of statistical codes. It should be noted that a substantial review of these codes was previously undertaken relatively recently (in 1999). The changes resulting from these investigations will also be implemented on 1 January 2002.
Table F1 shows the number of categories in the import and export classifications before and after the review. The number of 8-digit export statistical codes increased by 125, or 2.4%, largely the same as the increase in the number of 6-digit HS headings resulting from the WCO review. The number of 10-digit import statistical codes increased by 766 or 9.8 %.
TABLE F1: NUMBER OF CATEGORIES IN HS CLASSIFICATIONS,
Before And After Review
Users of detailed international merchandise trade statistics may be affected by these changes. There will be some breaks in time series for categories, or combinations of categories, where there is no direct translation between the two versions of the classification. The ABS will not be backcasting any data, but the classification concordances are available for users who wish to do their own modelling. Most series will be unaffected by the changes. There will be no impact on trade statistics classified to the SITC or the BEC, as there are no concordance changes between the HS and these classifications.
The Appendix to this article examines the relationship between the structure and levels in the HS based classifications with Australian trade classified to them. It uses the previous HS classifications, as it will be some time before trade data will be available on the new bases.
The detailed Australian classifications for exports and imports change in response to international and national requirements, as determined over time by the WCO, Customs and the ABS. The ABS will continue to update the classifications six monthly, in response to requests from clients for investigations. The next WCO review is scheduled for implementation on 1 January 2007. An Australian Customs Notice has been issued requesting input for this process.
AHECC release practices will change after the release of the 2002 edition on 13 December 2001. Future issues of replacement pages and new editions will be released electronically from the ABS web site. The AHECC Replacement pages (Cat. no. 1233.0.00.001) will be released electronically from 1 July 2002. As a general guide to International Trade developments, readers should check the International Trade theme page on the ABS web site for up-to-date information elating to changing release practices and Australia's trade statistics (www.abs.gov.au, see Themes, International Trade).
APPENDIX: THE HS CLASSIFICATIONS AND AUSTRALIAN TRADE
This Appendix examines the value of Australian trade reported against the chapters of the AHECC and Customs Tariff. It also examines the relationship between Australian trade and the additional categories created in the Australian extensions of the HS.
The first six digits of the HS classification broadly reflect international trade requirements. Patterns of Australian trade do not necessarily accord well with those for international trade, nor do Australian requirements for detailed information necessarily accord well with international requirements. The Australian extensions of the HS classification are designed to overcome such deficiencies, while maintaining international comparability at the 6-digit level.
Readers should note that the AHECC has one more chapter than the Customs Tariff. In the AHECC chapter 98 is used to classify Special transactions and commodities not classified according to kind and is maintained by the ABS. It is not an international HS classification chapter. The difference between the number of 6-digit headings in the AHECC and Customs Tariff, is also due to the additional headings in chapter 98 of the AHECC.
Table F2 shows that 54% of Australia's total exports in 2000-01 were classified to just 7 of the 98 chapters: Petroleum, Metal ores and concentrates, Precious and semi-precious stones and metals, Meat, Cereals, Machinery and mechanical appliances, and Aluminium. A further 32% of total exports were classified to the next 17 most significant chapters, bringing the combined total to 86% for the top 24 chapters.
The number of 6-digit headings for these chapters was only 39% of the total number, indicating, not surprisingly, that Australian exports are significant in only a small proportion of a classification system designed to meet international trading requirements. However these chapters account for 61% of the additional categories established to meet Australian statistical requirements. On average, these chapters have 2.4 times the proportion of additional categories per 6-digit heading than the remaining chapters of the classification.
Table F3 shows that 51% of Australia's total imports in 2000-01 were classified to just 4 chapters: Machinery and mechanical appliances, Electrical machinery and equipment, Vehicles and Petroleum. A further 28% of total imports were classified to next 14 most significant chapters, bringing the combined total to 80% for the top 18 chapters.
The number of 6-digit headings for these chapters was 45% of the total number, but accounted for 61% of the additional categories established to meet Australian tariff and statistical requirements. On average, these chapters have 2 times the proportion of additional categories per 8-digit heading than the remaining chapters of the classification.
TABLE F2: THE HS CLASSIFICATION AND AUSTRALIAN TRADE, Exports 2000-01
TABLE F3: THE HS CLASSIFICATION AND AUSTRALIAN TRADE, Imports 2000-01
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