To find a quick answer to one
of the Frequently Asked Questions below, click on that question.
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General Questions
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What are WCO Explanatory Notes?
How do I access WCO Explanatory Notes?
What is the
Harmonized System (HS)?
Why
is my product´s HS classification different in other countries than it is in the
U.S.?
What is MFN?
What do the terms "ad
valorem" and "specific rates" mean?
What does VC stand for?
What is "duty paid
value"?
What do CIF and
FOB stand for?
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General Questions
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What are WCO Explanatory Notes?
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The World Custom’s Organization’s Explanatory Notes provide the official interpretation of the WCO Harmonized System at the international (six- digit) level. The Explanatory Notes outline the scope of each Chapter, and Heading, providing examples of products included or excluded and technical descriptions where needed. The Notes can be extremely useful in commodity classification.
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How do I access WCO Explanatory Notes?
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To access the Explanatory Notes on WorldTariff.com, click on the WCO icon located here
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What is the Harmonized
System (HS)?
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The Harmonized Commodity Description and Coding System (HS) is a
classification system for goods entering an importing country through
Customs. Its 97 Chapters can be used to classify every commodity traded among
countries. Periodically, the Customs Co-operation Council recommends
revisions to the HS system to reflect changes in technology or patterns of
trade. The latest revision entered into force 1 January 2012, and the next
revision will be HS 2017. While most countries use the most current revision
of the HS, some continue to use an earlier version.
For countries using the same HS classification system, the first
6 digits are uniform; for example, HS 2204.10 should correspond to
"sparkling wine" in any country using the 2012 HS system. However,
certain classifications used in earlier versions of the HS system may not correspond
to the 2012 HS.
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Why is my
product´s HS classification different in other countries than it is in the US?
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The HS classification is uniform for all countries only through
the first 6 digits. Any country may choose to further break down the 6-digit
classification to more specifically describe a product. Eight digits is
generally considered to be fully qualified for Customs purposes, but some
countries may require a 9th, 10th or further digits to completely describe
the specific good being imported.
But the same 8-digit class can represent different products in different
countries. For example, 2001.90.30 means "beans" in the US
classification and "sweet corn" in the EU classification.
To find an equivalence between the HS classification for your product in the
US and its classification in another country, start at the 6-digit level and
read the descriptions to find the one which best describes your product.
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What is MFN?
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MFN stands for Most Favored Nation. WorldTariff uses the MFN
applied rate as the customs duty. The MFN applied rate includes any temporary
or contingent rate changes and is the rate most likely to be available to
most countries. All member states of the World Trade Organization (WTO) have
agreed to offer their MFN rates to each other. Other trade agreements,
bilateral or multilateral, may give certain countries a preferential rate on
specific goods which may be lower than the MFN. In the U.S., the designation
"Most Favored Nation" has been replaced with "Normal Trade
Relations" or NTR.
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What do the terms "ad
valorem" and "specific rates" mean?
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Duty rates can be based on a percentage of the value of the good
being imported (ad valorem) or the rate can be a certain amount of money
based on the weight, volume, or per piece. Many countries use primarily ad
valorem rates. On some products, there may be a compound rate of a certain
percentage plus a specific amount of money per item.
Ad valorem rates are based on the value of the goods being imported. WTO
members use transaction based valuation. For customs valuation. In general,
this may be CIF or FOB. Please see GATT Rules for Customs Valuation for a further
discussion of transaction value.
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What does VC stand for?
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Certain processed agricultural goods entering the European Union
(EU) are assessed a specific duty based on the fat, sugar and milk protein
content. Because this specific rate can vary, WorldTariff uses the
abbreviation "VC" to mean "variable component".
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What is "duty paid value"?
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Many taxes are assessed on the value of the product after the
customs duty has been determined and applied. Thus, if the customs value of
the product is US$100 and the customs duty is assessed at 10%, the duty paid
would be $10. The duty paid value would be the original customs value ($100)
plus the duty paid ($10), or $110.
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What do CIF and FOB stand for?
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These are Incoterms 2010:
CFR
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Cost and
Freight
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CIF
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Cost,
Insurance and Freight
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CPT
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Carriage
Paid To
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CIP
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Carriage and
Insurance Paid To
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DAP
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Delivered at
Place
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DAT
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Delivered at
Terminal
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DDP
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Delivered
Duty Paid
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EXW
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Ex Works
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FCA
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Free Carrier
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FAS
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Free
Alongside Ship
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FOB
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Free On
Board
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