The transportation of trillions of dollars worth of goods globally is a complex task that requires proper regulation. The Harmonized Commodity Description and Coding System (HS code) is designed to meet this challenge.
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It provides an extensive classification of all physical goods crossing international borders, ensuring proper categorization of different products.
Chemicals, which are transported in massive quantities daily, are largely governed by the World Customs Organization (WCO) HS Chapters 28 and 29.
No chemical shipment can take place without an HS code, commonly referred to as a commodity code in Europe. While the guidance is available, Chapters 28 and 29 of the HS codes alone encompass a wide range of organic and inorganic compounds, precious metals, rare-earth metals, radioactive elements, and isotopes.
The HS code guidelines are intricate, and navigating them can be a challenge. Surprisingly, the responsibility often falls on individuals with limited scientific or chemical expertise, leading to delays and high costs for obtaining HS codes and trade information.
Pitfalls of manually finding HS codes
Manually coding chemicals for international trade can be both time-consuming and expensive, proving costly to the sum of thousands of dollars in avoidable taxes. It is essential to have a comprehensive understanding of the chemical substance and the permutations of HS Chapters 28 and 29.
Identifying the correct HS codes for chemical compounds can be challenging, even for relatively simple ones. The HS codes are largely based on chemical structures, not names, which can be numerous and may not be listed in Chapters 28 and 29.
To determine the correct HS code, the rules regarding chemical structures outlined in the chapters must be applied. Simply looking up the name of a chemical is rarely enough or possible.
The WCO considers the harmonized system to be a universal language for international trade, but discrepancies in terminology can still cause difficulties.
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To simplify the process of coding chemicals for international trade, databases like the European Customs Inventory of Chemical Substances (ECICS) provided by the EU are available. However, the database only includes a limited number of common chemicals, making the classification process challenging for most substances.
The difficulty is further amplified when dealing with proprietary compounds, as determining the appropriate HS code requires applying the complex rules outlined in Chapters 28 and 29. This process is technically challenging and prone to errors.
In cases where manual coding is not feasible, there are two primary options: hiring trade compliance and chemical specialists or disclosing the chemical structure to customs authorities. The former can be expensive, costing hundreds of dollars per hour, while the latter may take weeks to receive results.
Additionally, each country or region can customize the rules of the WCO HS Chapters 28 and 29, resulting in variations in HS codes for the same chemical across different countries.
An automated alternative for HS coding
Scitegrity offers a solution to the difficulties in determining HS/commodity codes for chemicals through its platform, ExpediChem.
This platform eliminates the problem of semantics by enabling searches by structure or name using an automated application of HS chapter rules.
Obtaining an HS code and its associated tax information is made easy with ExpediChem, as users can simply select the desired shipping country and search by name, identifier, or structure without the need for chemical knowledge or understanding of HS chapters.
The platform stands out for its ability to allow for direct upload or drawing of chemical structures, enabling chemically-based searches for both common and novel chemicals.
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