Products Classification for International Trade

For exporting and shipping products all over the world producers and sellers have to take into consideration the main rules of international trade. Classification of the products is one of the important steps in the whole import and export process. It is a basic task to export, import or even for domestic trading.

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Standard International Trade Classification (SITC) is a classification of goods used to classify the exports and imports of a country to enable comparing different countries and years. The classification system is maintained by the United Nations.
The SITC is recommended only for analytical purposes – trade statistics are recommended to be collected and compiled in the Harmonized System instead.
Harmonized Commodity Description and Coding System or simply Harmonized System (HS) is effective since 1988 and is maintained by the World Customs Organization (WCO) and currently over 200 countries and economies make use of it.

HS Code is widely used in every international trade process. As an importer or exporter, it’s necessary to fully understand and make proper use of it.

Harmonized System proposes a logic organization of products classification, going from products economically less elaborated to ones with most added value. Therefore live animals are found at the beginning while machinery and precision instruments are listed in subsequent chapters.  The composition, form and function of the product are part of the classification model. The HS is structured in 21 sections and 97 chapters and those subdivided in approximately 5.000 headings and subheadings.

All references of HS to a given product are expressed by six digits. The first two digits indicate the HS chapter; the second two digits designate the headings and the next pair of digits the subheadings. Under the Harmonized System, all goods are subject to unique and unambiguous classification. It allows the classification even for merchandises yet to be produced.

Most of the countries that adopted the HS added two or four more digits to the initial six to accommodate specific needs of customs tariffs or for statistical purposes as well as to add their own Explanatory Notes.

Regional agreements or specific international commerce treaties may use other forms of product classification. That is the case of Mercosul the Southern Common Market, sub regional bloc formed by Argentina, Brasil, Uruguai, Paraguai and Venezuela. Mercosul uses the Mercosul Common Nomenclature (MCN), with eight digits, where the first six come from the Harmonized System and the two last digits are specific attributions within the Mercosul countries.

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3 thoughts on “Products Classification for International Trade

  1. Thanks for this useful article! It’s great for those who want to start an import/export business, because traders should be aware of the basic rules and regulations of the international trade, such as customs duties, harmonized systems, government regulations etc.

  2. Especially for those who do not know how to export, this article shows this is not that hard, it is indeed a harmonized process, you actually do not need to know everything, you just take what is specifically for your type of business. The article is both simple and good, thank you.

  3. That is an amazing post, especial for those, who aims to open new Export business. Products classification for international trade is a good technique to feel free, using different online markets and expand your business without limits. Being a good seller does not mean just to get money for the products you buy. Being a seller or an exporter means to think as a real businessman/businesswoman.
    Hope to find new articles here in a short period of time.
    Thank you one more time for useful info!I a going to use it in my business!

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