1. Harmonized System By Ree Russell US Commercial Service

2. What is the HS number? It’s like a Social Security Number, uniquely explains your product. Helps others who are not familiar with your product. HS is a Product Classification. A Harmonized System is used because Customs officials worldwide don’t speak the same language. With everyone using the same “songbook,” we can watch the flow of goods in and out of countries.

3. Classifying your Product Classify your good on WHAT IT IS, not on its end use, nor its destination (like Mexico or Malaysia.) Example: A bolt by itself may be a part of a machine, but it is first and foremost a bolt, and it should be classified as such. Example: Grass seed and fertilizer mix. Classify the mixture as being primarily grass seed, if it is.

4. HSystem Harmonized System The World HS number is 6 digits longThe World HS number is 6 digits long US schedule B number is 10 digits longUS schedule B number is 10 digits long The whole world only recognizes the first 6 digits (everybody has the same songbook)The whole world only recognizes the first 6 digits (everybody has the same songbook) THE MORE NUMBERS, THE MORE DESCRIPTIVE

5. HS Sections are usually arranged in order of degree of manufacture Section 1Raw material, a cow Section 2Semi manufactured, such as rawhide Section 3Finished product, like a handbag or leather shoes

6. What is the HS number? Chapter: 82 Tools, Implements, Cutlery, Spoons and Forks, of Base Metal Heading: 8208 Knives and cutting blades Subheadings: 820810 for Metalworking 820820 for Woodworking 820830 for Food Industry Machines 820840 for Agricultural, Forestry Machines: includes a LAWNMOWER BLADE) The world recognizes the first six digits. Notice the US does not further define this particular Lawnmower Blade,as the US last four 4 digits are zeroes. US Schedule B Number: 8208400000

7. Where to find the HS code: Where to find the HS code: The Harmonized Tariff Schedule of the US is online, but can be purchased at the government bookstore: U.S. Department of Commerce Schedule B Classification of Exports CALL your US Commercial Service/Export Assistance Center 704 333 4886 –or- our “sister” agency the U.S. Census Bureau, Foreign: Trade Division. For “Assistance with Classifying Products” OR “Finding a Schedule B Number,” call any of the phone numbers below: (an upgrade from “Durable Goods,” Non-Durable Goods, or “Don’t Know”) (301) 763-3259; (301) 763-3484; (301) 763-3047 Census On-line: www.census.gov/trade (NEW! eff. Mar 8, 2010)www.census.gov/trade - choose Schedule B Search Engine from tool bar -or select Search and type in a key word(s) -Remember: the US-specific number Schedule B is 10 digits long; the first 6 digits is a world recognized HS number

13. The Classification Challenge Let’s look for classifying a Generator Suggested because of the market potential for countries that are logistically close to North Carolina exporters! And the product is in Demand in the Caribbean, CAFTA countries, and African countries! Thank you, Electricity!

19. Select 2 Numbers At A Time Find your Chapter: Chapter 1 (Live Animals) to Chapter 98 (Special Classifications) Chapter 85 is Electrical Machinery and Equipment and Parts Thereof

20. Select the Chapter Heading Next 2 numbers is the Chapter Heading. Chapter Heading 8501 is Electric motors and generators “Look around” or “further” to the 4-digit codes ONLY in this area: 8502 - Electric generating sets and rotary converters 8503 - Parts suitable for use solely or principally with Machines in 8501 or 8502 8504 - Transformers

21. Proceed to Add Another 2 numbers 8501.10 - Motors with a certain wattage output 8501.21 – “Universal” AC/DC Motors 8501.31 – “Other” DC Motors and DC Generators not exceeding 750 W 8501.32 - “Other” DC Motors and DC Generators of output 750 W but not exceeding 75 kW

22. Stay on Track by just Adding 2 numbers at a time. 8501.33 - Generators exceeding 75 kW (which is 100 hp) but not exceeding 375 kW 8501.34 - Generators exceeding 375 kW 8501.40 - “Other” AC Motors

23. If you see.0000 at the end, try to focus on the 5 th and 6 th digits only HS Code 8501.32 refers to DC Generators of an output of 750 W but not exceeding 75 kW – just like the Generator in the Lowe’s catalog page (see handout)

24. Final 7 th, 8 th, 9 th, 10 th #s Represent the HS Statistical Subdivisions Full 10 digits (sometimes these last four “Final” numbers are just “0”s! The Statistics can be very Specific – or still rather Vague!

25. So…. We have a “medium output” Generator – (a full 10 digits and even more descriptive) = 8501.32.6000 -- the U.S’s Schedule B! HS + 4 = 10 digit Sched B

43. Other Classification Challenges The same process for Lawnmower Blades and Generators is applied for additional Audience Requests of EU 201 Class #2 (last week): Forklifts Hardwood Living Room Furniture Scrap Metal, ferrous and non-ferrous Plywood Motor Fuel Additive

44. If you’re still awake… GRI Explanatory Notes Found at the US Customs website, the Explanatory Notes go into greater detail concerning General Rules of Interpretation. –Go to www.customs.gov –Select Trade –On the right hand side, select Harmonized Tariff Schedule of the United States –On right, select Current HTSA Edition by chapter –Select General Notes, General Rules of Interpretation, General Statistical Notes –Click General Rules of Interpretation –Scroll through to your product area

45. General Rules of Interpretation Found in the beginning of the Harmonized Tariff Schedule, GRIs lay the ground work for Product Classification overall, including systems, sets, mixtures and composites, repetitive uses, etc. If in doubt, call us: your Charlotte US Commercial Service (704) 333-4886. We interface w/our “sister” Federal agencies like US Customs (now part of US Customs & Border Protection - CBP) on your behalf.

53. Containers and Cases General Rules of Interpretation If a container is suitable for repetitive use, it must be classified on its own. Example: If you are exporting propane in a tank to Canada, you actually have to classify the propane in its own classification and the tank in its classification, because the tank itself is reusable in Canada.

54. Containers and Cases General Rules of Interpretation Full cartons of eggs are classified under eggs, 040700. Without the eggs, the carton is made of paperboard, 482370. A can of Coke falls under beverage, 220210. A violin case without the violin is HS 4202xx, but if shipped with the violin inside, it is HS 920210, a stringed musical instrument.

55. General Rules of Interpretation GRIs form part of the Customs Tariff legislation and have been designed to ensure uniformity in classification decisions GRIs are essential for classifying.

56. NOW GET READY FOR THE FUN PART! ANSWERING THE QUESTION: WHAT ARE MY TOP 10 MARKETS?

57. Harmonized System HS numbers are “drivers” of the import duties that foreign importers pay for your product. Foreign Customs authorities determine what your product is by the numerical product code – the Ninja Turtle! HS numbers also determine US export statistics – you can watch product flows in and out of countries. CAN BE great for Marketing Managers, but not always!

58. Determining AND Using I look forward to helping YOU to DETERMINE and to USE the HS number (s) or the Schedule B number (s) These Numbers are for myriad Export Docs uses and -- when the number (or related number) is specific -- to help you Target Markets and/or determine your MARKET SHARE in those countries!

59. Finding Export Statistics After determining your HS code, the US Department of Commerce/US Commercial Service/Charlotte Export Assistance Center (me!)* can help you tap into the export statistics by country market. Helps to determine “Top Ten” Markets for your product! WWW.USATRADEONELINE.GOV *or my Charlotte co-workers and intern

60. Determining AND USING THE FOLLOWING ARE CURRENT AND REAL LIFE EXAMPLES OF DETERMINING AND USING YOUR HS CODES TO TARGET YOUR TOP 10 MARKETS and/or DETERMINE YOUR MARKET SHARE in those countries!

65. So…Top 10 markets for Coniferous (Pine) flooring under Schedule B Code 4409102000 (HS is 6 digits 440910) Are: Mexico, China, Canada, UK, Sweden, Russia, BERMUDA (interesting), Czech Republic, Bahamas, UAE. Continuing…

71. “Current” Top 10 Markets for: Electric DC Generators in the Lowe’s Catalog (>750 W but <75 KW) HS 850132; Schedule B 8501326000 are: Canada, UK, Trinidad & Tobago, Venezuela, Germany, Costa Rica Mexico, Panama, Dominican Republic, Guatemala

72. “Current” Top 10 Markets for: Chairs, household, of wood, Upholstered: HS 940161; Schedule B 9401613000 Canada, Mexico, Saudi Arabia, Taiwan, UK, Macao, Israel, Germany, Kuwait, UAE Seats with Wooden Frames, Upholstered, NESOI (Couches and other seats) HS 940161; Schedule B 9401616000 Canada, Mexico, Saudi Arabia, Venezuela, UAE, Kuwait, Chile, Israel, Honduras, China

73. “Current” Top 10 Markets for: Fork Lifts (all three types): HS 872710 Fork Lift Trucks, self-propelled, electric powered, operator riding or walking; HS 842720 Fork Lift Trucks, self-propelled, gasoline powered, operator riding or walking HS 842790 Fork Lift Trucks, NESOI (not elsewhere specified or indicated Top 10 markets for 8427 (note: there are no further 6-digit codes beyond the above):

74. “Current” Top 10 Markets for: FORKLIFT TRUCKS HS 8427 ARE: Canada, Mexico, Brazil, Australia, Colombia, Singapore, Netherlands,Belgium, Chile, Venezuela

75. “Current” Top 10 Markets for: HS 720410-50 Scrap, ferrous are: China, Taiwan, S. Korea, India, Canada, Turkey, Mexico, Finland, Hong Kong, Egypt

76. “Current” Top 10 Markets for: HS 740400 Scrap, non-ferrous copper scrap are: China, Canada, Hong Kong, S. Korea, Japan, Germany, Belgium, Spain, Greece, Mexico

77. “Current” Top 10 Markets for: HS 2701011 Light Oils & Preparations (non- crude) from Petro & Bitum are: Mexico, Brazil, Canada, Venezuela, Ecuador, Chile, Japan, Netherlands Antilles, Costa Rica, Guatemala

78. “Current” Top 10 Markets for: HS 4412 Plywood are: Canada, Mexico, Australia, Germany, India, Grenada, Belgium, Dominican Republic, Bahamas

79. HOMEWORK EVERYONE GO TO www.census.gov/trade and determine your HS Code – I will pull your one product’s HS-based current US export statistics to know your Top 10 target markets or market share (where possible)

80. Make $ … then let us know about your EXPORT SUCCESS Thank You! - Ree Russell