Proposed Harmonized Tariff Schedule (HTS) Changes for January 1, 2007

The United States International Trade Commission (ITC) has proposed changes to the Harmonized Tariff Schedule of the United States (HTSUS). The proposed changes to the HTSUS are scheduled to become effective January 1, 2007 and will update the current HTSUS to reflect the World Customs Organization (WCO) recommended HTS modifications. 

Proposed Tariff Classification Changes Will be Comprehensive

The proposed modifications contain several hundred amendments that include 83 chapters and 240 headings of the HTSUS.  Many current HS headings and subheadings are being deleted, added, broken up, or merged into new tariff headings. The chapters most affected are those dealing with industrial and high-technology products (chapters 84,85,87 and 90).  For example, changes in the tariff classification of semiconductor manufacturing equipment will place these articles under one heading (8486), and multifunctional office machinery will be included under the heading for printing machinery (8443).

Effect of HTSUS Changes on U.S. Duty Rates and Free Trade Agreements

The proposed classification amendments to the HTSUS will not impact an item’s duty rate.  However, the changes may affect an item’s eligibility for preferential treatment under the various U.S. Free Trade Agreements that are based in large part on tariff shift. Modifications to the HTSUS will be implemented at the 8-digit level and typically carry over from the old system to the new system at the 10-digit level.

 The Proposed Modifications to the HTSUS (ITC Publication 3851) is undergoing review by the Office of the United States Trade Representative (USTR) and has not yet been forwarded to Congress. Upon receipt of the report, Congress is granted a minimum 60 legislative days to review the report. Following Congressional approval of the legislation, there is a 15-day window prior to the Presidential Proclamation.

However, since it is anticipated that there will not be significant changes made to the ITC’s proposed draft, we recommend companies begin reviewing the anticipated changes to ensure continued trade compliance.  Incorrect classifications could result in lost duty benefits, and rejection of shipments by Customs.  The ITC final report on the proposed amendments to the HTSUS can be found at: 

http://hotdocs.usitc.gov/docs/tata/hts/Pub3851.pdf

For additional information contact us at USRegAffairs@livingstonintl.com.