Proposed changes to the Harmonized Tariff Schedule for Canada

August 22, 2006
On the recommendations of the Minister of Finance, the Order Amending the Schedule to the Customs Tariff will become effective January 1, 2007. These changes will update the current Harmonized Tariff in tandem with the World Customs Organization (WCO) modification to the HTS.

It is important to note that the amendments were based on the parameters noted below in order to provide greater clarity and respond to changes in the international marketplace.

1. Technology
2. Trade Patterns
3. Clarification of Text
4. Adapting to reflect Trade Practices
5. Deletion of Heading and Subheadings in which represented low volumes of trade

Proposed changes
The proposed changes will be comprehensive with the deletion of 800 existing harmonized codes and the introduction of 625 new harmonized tariffs. The proposed changes will also encompass 354 sets of amendments and approximately 200 fewer subheadings.
  
In addition, there are substantial changes to chapter and subheading notes, which are reflective of additions, deletions and changes in the wording and/or descriptors.

The scope of the changes in part  will impact commodities currently imported under the following Chapters:
-Chapter 28, chemicals, compounds of precious metals, radioactive elements
-Chapter 44, wood & wood articles
-Chapter 84 & 85 machinery, electrical equipment, sound records and TV images

Amendments to be included
Technical Sector
-New heading for equipment to manufacture flat panel displays and semi-conductors with the most significant tariff changes being reflected in the amendment covering chapter 84. Chapter 84 changes will reflect the elimination of certain printers, monitors and net working equipment.  In addition Chapter 84 has been expanded to encompass all printers & copiers including multi-function machines under 84.83. 

Chapter 85
-Solid state storage devices & smart cards have been added to 85.23 and computer monitors to 85.28.

Newsprint
-This has been refined to allow for more recycled content.

Consistency in 8708
-Parts of motor vehicles to provide for “parts thereof” in each subheading.

Toys
-Simplified to one heading with no subheading from three headings and 14 subheadings.

Preparing for 2007 HTS implementation
It is important to note that the final concordance has been received outlining the changes to the 10 digit level.  We recommend that companies begin to review the anticipated changes as it pertain to their specific line of business.  It is essential to maintain continued trade compliance through the transition to the new HS. Incorrect classification could result in the assessment of an erroneous duty rate and the rejection of your cargo at time of reporting to Canada Border Services Agency.

For additional information, please contact your Livingston client service representative.