Updating the Harmonized Commodity Description and Coding System

Information regarding the adoption of the Seventh Edition of the Harmonized System (HS2022)

Released
26/10/2021

The Australian Bureau of Statistics (ABS) is partnering with the Department of Home Affairs and Australian Border Force (ABF) to implement the Seventh Edition of the Harmonized Commodity Description and Coding System (HS2022). This update of Australia’s customs operations and international merchandise trade statistics is due to commence on 1 January 2022.

Key Information

  • The World Customs Organisation is updating the Harmonized System which provides the basis for classification for Australia’s customs activities and the ABS’ international trade in goods statistics
  • The update will commence on 1 January 2022, and is expected to impact approximately 1500 import commodities and 1000 export commodities
  • This paper provides advance notice of changes to statistical items (for both imports and exports) and the anticipated statistical impact of these changes
  • Concordances between HS2022 and the current edition (HS2017) can be found in the data downloads section of this paper

What is the Harmonized System?

The Harmonized Commodity Description and Coding System (Harmonized System, or HS) is a multipurpose international nomenclature for goods, developed and maintained by the World Customs Organisation (WCO).

The HS is used by over 200 countries as the universal basis for Customs tariffs and international trade in good statistics.

In addition, the HS is used for:

  • internal taxes;
  • trade policies;
  • monitoring of controlled goods;
  • rules of origin;
  • freight tariffs;
  • quota controls; and,
  • transport statistics.

The HS provides a coding system, based on a hierarchical structure to classify international traded products (goods). The building blocks of the HS are sub-headings, identified by six-digit codes.

Why does the HS need an update?

Since the HS came into effect in 1998, it has been under cyclic review with new editions released approximately every five years.

These reviews account for:

  • new products (e.g. drones and 3D printers);
  • changes in global trading patterns; and,
  • environmental and social issues of global concern.

Currently, as countries prepare to implement the 2022 edition, the review cycle for the 2027 edition is underway.

Scope of HS2022

The HS2022 includes major changes across over 300 sets of amendments.

Major features of the seventh edition include:

  • new product streams: including for e-waste, novel tobacco and nicotine products, unmanned aerial vehicles (drones), for cell cultures and cell therapy, and for fentanyls (including their derivatives and precursors);
  • extended coverage for sectors with significant technological advances (e.g. glass fibres and metal forming machinery), and for multi-purpose immediate assemblies (e.g. flat panel display modules);
  • simplified classification for the deployment of tools for the rapid diagnosis of infectious diseases, placebos and clinical trial kits;
  • further detail for dual use items related to human security (including for toxins, laboratory equipment and items required for the construction of improvised explosive devices);
  • identification of goods controlled under various international conventions (e.g. Rotterdam Convention, Chemical Weapons Convention, and Montreal Protocol); and,
  • clarification of text to ensure uniform application of the nomenclature, including for example additional explanatory notes, and changes for the clarification and alignment between French and English.

How is the update implemented?

The Department of Home Affairs are responsible for HS matters in Australia. These include classification, rulings by the WCO HS Committee, matters of general policy, as well as representing Australian interests in the cyclic HS review process.

The six-digit subheadings are the most detailed level of the HS, but many countries, including Australia, subdivide the HS into even more specific levels by adding additional digits.

For imports, the HS is extended to ten digits in the Harmonized Tariff Item Statistical Codes (HTISC). Tariff duties are designated in the seventh and eighth digits, while the ninth and tenth digits provide further detail for trade statistics.

Likewise, for exports, the HS is extended using the last two digits (seventh and eighth digits) to provide supplementary information for international trade statistics (import duties do not apply). The 8-digit extended HS classification for exports is called the Australian Harmonized Export Commodity Classification (AHECC).

Changes at the international level (six-digit HS subheading) are first mapped to the existing Australian classifications, and then impacts to the tariff and statistical levels are resolved. This work is undertaken in partnership by the Department of Home Affairs and the ABS.

Once the Department of Home Affairs has approved the changes to the tariff and statistical levels of the classifications, relevant legislation is updated, and the changes are advertised.

From here, IT infrastructure, and other procedures and agreements, are updated across government and the private sector. This includes the Integrated Cargo System which is used by Australian traders to submit customs declarations. All systems, processes and protocols must be updated by 1 January 2022 when the new codes take effect.

Updates of the HS are a significant cost for both government and the private sector. Changes to the HS affect trade agreements, permits, government activities including food safety and biosecurity measures, and result in (often manual) changes to IT systems, communication tools, and websites.

The Department of Home Affairs and the ABS have committed to streamlining tariff and statistical product streams where practical – reducing the burden on Australian traders and brokers, improving trade efficiency, while continuing to maintain the quality of customs and statistical processes.

Statistical impact of HS2022

The HS2022, extended to the AHECC and HTISC, is the basis of the customs collection in Australia, which in turn provides the input data for the ABS' international trade in goods (merchandise trade) statistics.

Statistical items of the AHECC and HTISC are mapped to other economic and industry classifications that are used in ABS international trade statistics (see International Merchandise Trade: Concepts, Sources and Methods for more information). These include other international classifications:

  • Standard International Trade Classification (SITC)
  • Broad Economic Categories (BEC)

as well as Australian standards and classifications including:

Any statistical item that is created, closed, or amended because of HS2022 must be (re-)mapped to these other classifications. Definitional changes to the inclusions/exclusions of categories in these classifications may result in breaks to time series, and care must be taken when comparing statistics from prior to the HS2022 update to those available after the update.

The collapsible sections below provide further detail on the conceptual changes within each HS Section as a result of HS2022. The downloadable Tables provide more detailed concordance and classification mapping information.

Section I Live animals; animal products

The amendments to Section I include conceptual treatment changes, increased detail for several commodities and new notes to clarify or otherwise aid classification. As the values of trade in impacted items is reasonably small, no significant statistical impact is expected to result from the HS2022 changes to Section I.

For example, edible insects have been transferred from meat (chapter 2) to edible products of animal origin (heading 0410). As Australia does not currently have significant trade in edible insects, the statistical impact of this change is expected to be negligible. 

Other changes in Section I include new categories to increase the detail available for “flours, meals and pellets of fish and crustaceans, molluscs and other aquatic invertebrates, fit for human consumption” (0309), and streamlined treatment and references for scallops (0307.2), Alaska Pollock and bonito, and “yoghurt with added spices, coffee, plants, cereals or bakers wares” (0403).

Section II Vegetable products

The amendments to Section II are expected to have negligible statistical value impact but will increase the detail available for some products.

Classification changes include a restructure of subheadings to streamline treatment of broccoli (0704), and to increase the available detail for fresh and dried mushrooms (0709.59, 0712.34), pine nuts (0802.90) and bark of African Cherry (1211.60).

Section III Animal, vegetable or microbial fats and oils and their cleavage products; prepared edible fats animal or vegetable waxes

The amendments to Section III include identification of new products, and alignment of definitions and classifications for goods with considerable global trade volumes. The aggregate statistical impact of these changes is anticipated to be negligible. 

Significant changes within Section III include:

  • Separate provision for microbial fats and oils (1515.60) - noting that the Section, chapter 15 and other classification headings have been renamed to explicitly refer to microbial fats and oils. 
  • The classification treatment of olive oil will shift from how the product is transported (bulk or packaged) to the designation of the product itself (e.g. virgin or pomace olive oil). This change will align the HS with existing International Olive Council (IOC) Trade Standards. 

Section IV Prepared foodstuffs; beverages, spirits and vinegar; tobacco and manufactured tobacco substitutes; products containing nicotine

Section IV has been re-structured and renamed to streamline the classification of products containing tobacco and/or nicotine, including for e-cigarettes. This includes the cross-chapter transfer of products from manufactured tobacco (24.03), chemical products and preparations (38.24), and food preparations (21.06) to chapter 24.

The full new title of Section IV is: Prepared foodstuffs; beverages, spirits and vinegar; tobacco and manufactured tobacco substitutes; products, whether or not containing nicotine, intended for inhalation without combustion; other nicotine containing products intended for the intake of nicotine into the human body.

The most significant transfer of goods, by value, is for chewing gum containing nicotine (intended to assist smokers to stop smoking) and other like products – transferring from food preparations to Products containing tobacco, reconstituted tobacco nicotine, or tobacco or nicotine substitutes, intended for inhalation without combustion; other nicotine containing products intended for the intake of nicotine into the human body (24.04)  – worth over $60m/year for imports.

Other changes, with negligible anticipated statistical impact, include the streamlined treatment of:

  • "yoghurt with added spices, coffee, plants, cereals or bakers wares" and edible insects (see Section I);
  • placebos and blinded clinical trial kits (see Section VI); and,
  • fruit, nut and vegetable juices (chapters 20 and 22).

Section V Mineral products

The most significant change in Section V is the closure of the dolomite ramming mix subheading (2518.30). These goods are being transferred to chapter 38 (miscellaneous chemical products) so that all refractory raw materials are classified under the same heading (see Section VI). The current value of trade in dolomite ramming mix is less than $1m/year for both imports and exports. 

Section VI Products of the chemical or allied industries

Section VI includes a number of amendments to provide extra detail, or streamline the treatment, for various products. While these changes necessitate a number of new sub-headings and statistical items – including transfer of goods between chapters – the statistical impact on the macroeconomic narrative, as the result of these changes, is anticipated to be negligible. 

Section VI is being amended to provide extra detail to facilitate the monitoring and control of:

  • dual use items containing certain radioactive isotopes and high activity radioactive sources,
  • goods required for the production and use of Improvised Explosive Devices, and,
  • substances controlled by the Montreal Protocol, Chemical Weapon Convention, Rotterdam Convention and the United Nations Single Convention on Narcotic Drugs.

There is very little existing trade in these items, and therefore there is negligible anticipated statistical impact as a result of these changes.

Pharmaceutical products (chapter 30) has also been restructured to:

  • facilitate the monitoring and control of dual use items (e.g. toxins) within the new sub-heading for vaccines (excluding for human and veterinary medicine), toxins, cultures of micro-organisms (excluding yeasts) and similar products (3002.49);
  • clarify the classification of cell cultures (including cell therapy products) in new headings for cell cultures, whether or not modified (3002.51 and 3002.59); and,
  • streamline the treatment of placebos and blinded (or double-blinded) clinical trial kits for a recognised clinical trial, put up in measured doses (new sub-heading 3006.93) – including through the transfer of products from 17.04, if made of sugar; 21.06, if made of starch or other foodstuff; 22.02, if in a liquid form for oral intake; 30.04, if kits containing medicaments; and 38.24, if containing other chemicals.

Other changes in Section VI include:

  • the streamlined treatment of dolomite ramming mix so that all refractory raw materials are under the same heading (see Section V); and,
  • new subheadings for malaria diagnostic kits, and immunological products (mixed and unmixed).

Section VII Plastics and articles thereof; rubber and articles thereof

Under HS2022, Section VII includes amendments to facilitate the monitoring and control of substances controlled under the Chemical Weapon Convention. This is achieved through the closure of subheading 3907.20 (Other polyethers) and the creation of new subheadings to identify specific products:

  • Bis(polyoxyethylene) methylphosphonate 3907.21; 
  • Polyethers, in primary forms (excluding polyacetals and Bis(polyoxyethylene) methylphosphonate) 3907.29; and,
  • Poly(1,3-phenylene methylphosphonate) 3911.20.

The other significant change within Section VII is for gloves, mittens and mitts of vulcanised rubber. Currently these products are classified according to their intended use for surgical, sports (imports only), or other, purposes. Under HS2022, vulcanised rubber gloves, mittens and mitts will be classified based on their use for:

  • medical, surgical, dental or veterinary purposes;
  • sport purposes (imports only); or,
  • other purposes. 

Section VIII Raw hides and skins, leather, furskins and articles thereof; saddlery and harness, travel goods, handbags and similar containers; articles of animal gut (other than silk-worm gut)

There are no changes to statistical items in Section VIII as a result of HS2022.

Section IX Wood and articles of wood; wood charcoal; cork and articles of cork; manufactures of straw, of esparto or of other plaiting materials; basketware and wickerwork

All of the changes to statistical items in Section IX are confined to chapter 44 Wood and articles of wood; wood charcoal. These changes should result in a greater level of detail for items of global interest to be available for statistical analysis.

Products which will now have separate provisions include:

  • Wood briquettes 4401.32, Sawdust 4401.49, Wood charcoal of shell or nut 4402.20, S-P-F 4407.13 and Hem-fir 4407.14, as well as wooden coffins 4421.20;
  • Laminated Veneered Lumber (LVL) and blockboard, laminboard and battenboards (to enhance global monitoring of the trade of these products); and,
  • Teak and other tropical woods throughout the chapter (as a result of the Food and Agriculture Organization of the United Nations (FAO) proposal to enhance the data on global tropical wood trade).

HS2022 also requires changes to the classification structure for:

  • subheadings under 44.03 Wood in the rough (whether or not stripped of bark) to align the English HS with the existing French text with regards to dimensions of cross-sections; and,
  • certain engineered structural timber products, which will now be divided based on manufacturing process and size (including new specific subheadings for glulam, X-lam and I-beams).

 

Section X Pulp of wood or of o​​​ther cellulosic material, recovered (waste and scrap) paper and paperb​​oard, and articles thereof

The most significant change in Section X is the deletion of subheading 4905.10 (globes) due to low volumes of international trade. This is achieved through a restructure of heading 49.05 Maps and hydrographic charts, atlases, maps and globes. Australia's trade in globes is valued at approximately $1 million per year for imports, and less than $1 million per year for exports.

Sections XI Textiles and textile articles

Changes to Section XI reflect changes in global volumes of trade for specific products – and therefore the need to aggregate, or disaggregate product streams.

These changes include new, separate, provisions for:

  • filament tow of aramid (e.g. Kevlar) under the new heading 5501.1;
  • turf, within carpets and other textile floor coverings (57.03); and
  • gloves, mittens and mitts (knitted or crocheted) that are laminated with plastics or rubber (6116.10).

And aggregations of:

  • textile floor coverings of coir, sisal, jute or cotton with textile floor coverings of other natural materials (5703.90, with a combined total import value of ~$20m/year)
  • Terry towelling and other similar woven Terry fabrics (5802.11 and 5802.19, with a combined value of less than $1m/year for both imports and exports).

HS2022 also introduces a streamlined classification approach to overcoats (not knitted or crocheted), for both men’s and women’s apparel (62.01 and 62.02). These garments will now be classified by material only (rather than the type of garment) as is the existing structure for knitted or crocheted men’s and women’s overcoats.

Section XII Footwear, headgear, umbrellas, sun umbrellas, walking-sticks, whips, riding-crops, and parts thereof; prepared feathers and articles made therewith; artificial flowers; articles made of human hair

Section XII has no changes to statistical items, for either imports or exports.

Section XIII Articles of stone, plaster, cement, asbestos, mica or similar materials, ceramic products, glass and glassware

Amendments to Section XIII largely result from changes in volumes of global trade for particular products – prompting either an amalgamation, or separation of existing sub-headings. These changes include the:

  • new aggregation of paper, millboard and felt of asbestos, and compressed asbestos fibre joining in sheets or rolls, amalgamating these goods with other fabricated asbestos fibres (6812.99);
  • separation of carbon fibres, fabrics of carbon fibres, and other articles of carbon fibres (for non-electrical uses) from the existing sub-heading Non-electrical articles of graphite or other carbon (6815.10);
  • separation of magnesia in the form of periclase and dolomite in the form of dolime within articles of stone or of other mineral substances, containing magnesite, dolomite or chromite, not elsewhere specified or included (6815.91); and,
  • restructure of Glass fibres (including glass wool) and articles thereof (for example, yarn, woven fabrics), 70.19, to clarify the classification of certain articles of glass fibres based on manufacturing process.

These changes are not anticipated to have significant statistical impact – but should increase the available detail for some products.

Section XIV Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal, and articles thereof; imitation jewellery; coin

The most significant change to Section XIV is new sub-headings to accommodate for the separate provision of synthetic and natural diamonds under Synthetic or reconstructed precious or semi-precious stones, whether or not worked or graded but not strung, mounted or set; ungraded synthetic or reconstructed precious or semi-precious stones, temporarily strung for convenience of transport (71.04). These new product streams were adopted as a result of the proposal by Kimberly Process (of which Australia is a participant) to enhance the monitoring of the global trade in natural and synthetic diamonds.

Section XV Base metals and articles of base metal

The most significant change within Section XV is for chapter 73 - Articles of iron and steel - and chapter 81 - Other base metals; cermets; articles thereof. This amendment clarifies that goods specially designed for use exclusively in implants in medicine, surgery, dentistry or veterinary sciences should be reported to chapter 90 - Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus. 

This change initiates significant structural and cross-chapter changes. Currently, Australia imports over $650m/year of nails, screws, nuts, washers, bolts and cotter-pins. It is difficult to ascertain what percentage of these are used for medical purposes, although it is anticipated that most would not be imported exclusively for medical use.

Other changes include:

  • Loss of detail for items with low global trade volumes - copper chain and cadmium waste and scrap
  • Increased detail available for crucibles of tantalum; and for articles and waste and scrap of bismuth, zirconium and halfnium.

 

 

Section XVI Machinery and mechanical appliances; electrical equipment; parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles

This Section of the Harmonized System includes a number of items that rapidly develop through technological development, as well as items that experience significant declines in trade volumes (often due to being obselete). As a result, these chapters of the HS evolve much more rapidly than others. These amendments ensure that the HS (and international merchandise trade statistics) remain relevant, and capable of tracking items of new, or developing interest. 

Significant changes across the section include re-structures of existing items and new detail. These are further detailed below.

Streamlined treatment of:

  • combined refrigerator-freezers (8418.10);
  • machines used for the extraction or preparation of animal or fixed vegetable or microbial fats or oils (8479.20);
  • machine tools (including presses) for working metal by forging, hammering or die forging; machine tools for working metal; presses for working metal (84.62), to reflect the technological developments and increasing commercial significance of certain machines;
  • drones (to chapter 88, see Section XVII); and,
  • waste and scrap of batteries and accumulators (moving from across the classification) to a new heading, Electrical and electronic waste and scrap (85.49).

New subheadings to facilitate the monitoring and control of dual use items, or to enhance environmental protection monitoring efforts for:

  • gas-tight biological safety cabinets (8414.70);
  • lyophilization apparatus, freeze drying units and sprays (8419.33)
  • catalytic converters or particulate filters (8421.32)
  • industrial robots (8428.70)
  • hot isostatic presses (8514.11);
  • electron beam (8514.31), plasma and vacuum arc (8514.32) furnaces; and,
  • high speed (8525.81) and radiation-hardened or radiation-tolerant (8525.82) television, digital and video camera recorders

New items, or increased detail for items including:

  • 3D printers (machines for additive manufacturing, 84.85);
  • solar energy products including solar water heaters (8419.12), photovoltaic generators (8501.7 and 8501.8) and photovoltaic cells (8541.42 and 8541.43);
  • smart phones (8517.13) - note smartphones account for most of the trade currently assigned to telephones for cellular or other wireless networks, with a current import value of over $5.5 billion per year;
  • Flat panel display modules (85.24) - note goods are transferred from over 80 existing subheadings;

  • LEDs, LED modules and LED lamps (8541.41 and 8539.51); and,

  • e-cigarettes and similar personal electric vaporising devices (8543.40).

And removal of nickel-iron accumulators and telephone answering machines as specific items, due to low volumes of global trade.

Section XVII Vehicles, aircraft, vessels and associated transport equipment

The main changes to Section XVII are the inclusion of new items to increase the specificity of vehicle, or part, type. These changes include new subheadings for:

  • hybrid and electric vehicles (under headings 8701 and 8704)
  • windows for the motor vehicles of chapter 87
  • parts of areoplanes, helicopters, unmanned aircraft, balloons, dirigibles, gliders, hang gliders and other non-powered aircraft (under 88.07)
  • inflatable boats, sailboats and motorboats (under 89.03)

These changes are anticipated to increase the level of detail and specificity available for statistical analysis.

Section XVIII Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; clocks and watches; musical instruments; parts and accessories thereof

The most significant change to Section XVIII is the transfer of orthopaedic or fracture appliances from chapter 73 - see Section XV. Chapter 90 will now include base metals articles specially designed for use exclusively in implants in medicine, surgery, dentistry or veterinary sciences.

A new subheading has been created to facilitate the monitoring and control of dual use items - mass spectrometers (9027.81).

Additionally, clock or watch springs and cameras for roll films have been removed as a separate items in recognition of low global trade volumes.

Section XIX Arms and ammunition; parts and accessories thereof

Section XIX has no changes to statistical items, for either imports or exports.

Section XX Miscellaneous manufactured articles

The majority of changes to Section XX are via notes - to further clarify classification or reporting requirements - rather than to the structure of the classification itself.

The major amendments to Section XX include the restructure of:

  • light-emitting diode (LED) products, across chapter 94, including a new subheading for solar energy LED products (9405.41); and,
  • travelling circuses and travelling menageries; amusement park rides and water park amusements; fairground amusements; travelling theatres (95.08)

 and separate provision for:

  • wooden articles of furniture, including seats of wood (9401.30, 9401,.40 and 9401.9) and furniture parts (9403.90);
  • quilts, bedspreads, eiderdowns and duvets (9404.40); and,
  • modular building units of steel (9406.20).

These changes are anticipated to increase the level of detail and specificity available for statistical analysis.

Section XXI Works of art, collectors' pieces and antiques; special transactions and commodities not classified according to kind; commodities and transactions not included in merchandise trade

The main change in Section XXI is the restructure of all headings under chapter 97 - Works of art, collector' pieces and antiques - to provide for cultural articles (based on 100-year age criterion, or 250-years for antiques). This change is designed to facilitate the monitoring of their global trade, and to assist in the countering of illicit trade and trafficking of these goods.

In addition, change to the Section also include streamlining the treatment of ships' and aircraft stores and changes to the scope of specific mixed goods items.

These changes are anticipated to have negligable statistical impact, but may provide further detail for analysis.

Data downloads

Concordance tables

Post-release changes

17/12/2021 - Details for all remaining sections (IV-VI and XI-XXI) were included in the paper.

26/10/2021 - This paper was first published on October 26, 2021. The initial issue included general information about HS2022 as well as statistical impact analysis and correspondences for Sections I-III and VII-X only.