Tax & Trade Blog
WCO Prompts 2022 Amendments Canada’s Customs Tariff!
The World Customs Organization (“WCO”) revises its Nomenclature of Harmonized Commodity Description and Coding System used for the uniform classification of goods traded internationally (“Harmonized System” or “HS Codes”), every five years. This is done to adapt to technological advancements and emerging global changes. As this nomenclature forms the basis for the Tariff Schedules of around 211 WCO member countries worldwide (including US and Canada), these changes are important!
Canada is expected to implement these changes in 2022, and importers will need to re-evaluate their tariff classification, declaration, and HS Coding systems to ensure conformity with the new Canada Tariff.
The Harmonized System nomenclature is comprised of an extensive list of internationally traded commodity goods, ranging from non-manufactured goods to manufactured or highly processed goods. These goods are grouped into “Sections” based on the product categories which are further sub-divided into Chapters of related goods. The goods in each Chapter are further divided and identified through Headings (i.e., the first 4-digits), Subheadings (i.e., the first 6-digits), and finally even more specific Tariff Classification Numbers (which are 8-digit numbers, with two more “statistical” numbers affixed to the end).
The Subheadings of Canada’s tariff (i.e., the first 6-digits) remain uniform amongst all WCO member countries, with countries able to use the last 4-digits (i.e., the full tariff classification numbers) for their own statistical reporting and trade data purposes.
This system is reviewed and possibly revised every five years, at the Headings and Sub-headings levels.
Expected 2022 Changes
Among other things, the 2022 HS amendments will include new headings and subheadings, modified article descriptions, and new or revised legal notes. These changes ensure recognition of new product streams highlighting some high-profile products, addressing the global environmental and social issues and compliance with international trade agreements and conventions.
Notably, the following goods will be sure to be impacted:
- Electrical & Electronic Waste: A new sub-heading will make end-of-life electronics more visible on import (allowing compliance with the Basel Convention).
- Novel Tobacco & Nicotine Products: New provisions will make tobacco vaping products more visible.
- Unmanned Aerial Vehicles (Drones): Specific provisions will be added to “simplify” classification.
- Smartphones: A new sub-heading has been introduced.
- Glass Fibre & Metal Forming Machinery: Specific provisions will be added to “simplify” classification.
- Health & Safety Products & Diagnostic Kits: New provisions will facilitate cross border trade.
- Electric Heavy-Duty Vehicles: New sub-headings will be introduced.
The WCO changes are going to result in a variety of Canadian changes, and could possibly change the applicable tariff rates!
These changes require Importers, owners and brokers to re-evaluate their import/export systems, to avoid corrections and penalties associated with incorrect tariff classifications – particularly the obligations to self-correct for errors withing 90-days, under section 32.2 of the Customs Act.
Expert customs advice from a trade lawyer is recommended before these WCO changes form part of the Canadian Customs Tariff!
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