In Focus: Hundreds of Harmonized Tariff Changes Coming in 2022

Trade Update • DECEMBER 2, 2021

The World Customs Organization amendments to the Harmonized System nomenclature will enter into force on January 1, 2022. Canada and the United States, along with almost all trading nations, are therefore making consequential adjustments to their respective tariff schedules that will take effect at the start of next year.

Background

The WCO was established in 1952 as an independent intergovernmental body whose mission is to enhance the effectiveness and efficiency of Customs administrations. Today, the organization represents 183 Customs administrations across the globe that collectively process approximately 98% of world trade.

Every five years, the WCO updates the HS Codes that are used globally to classify goods for purposes of international trade statistics and the application of customs duties. The amendments are generally made to reflect new developments in technology and changes in trade patterns, in addition to clarifying texts as needed to ensure uniform application of the HS codes.

Key Changes in HS 2022

HS 2022 contains 351 amendments affecting the classification of a wide range of products in various sectors as follows: agricultural (77); chemical (58); wood (31); textile (21); base metal (27); machinery (63); transport (22): others (52).

According to the WCO, the major features of HS2022 are “adaption to current trade through the recognition of new product streams and addressing environmental and social issues of global concern. More specifically, these include:

Environmental Impacts

Electronic waste (e-waste) — Due to the potentially harmful environmental impact of electronic articles once their useful life has ended, a new heading for e-waste and subheadings for the main categories of e-waste were added to provide greater visibility and assist WCO member countries in the task of controlling the transboundary movement of hazardous wastes and their disposal.

Changing Trade Patterns

Smartphones: A new subheading has been added for smartphones, along with a new Chapter Note to define the scope of the term.

Unmanned Aerial Vehicles (Drones): Specific provisions for these products have been added to simplify their classification.

Novel Tobacco & Nicotine-Based Products: Due to their high monetary trade value (and to address a lack of visibility in trade statistics), new provisions have been added for tobacco products intended for inhalation without combustion.

Heavy-Duty Vehicles with Electric Motors: To account for the widespread growth of electric vehicles, HS 2022 expands provisions for certain tractors and motor vehicles for the transport of goods to include new subheadings for partial and fully electric heavy-duty vehicles.

3D Printers: A new heading for “Machines for additive manufacturing” has been added to account for 3D printers, along with subheadings that differentiate the machines based on the type of deposit; i.e., metal, plastics, rubber, plaster, cement, ceramics, or glass.

Health & Medical Research

Rapid Diagnostic Kits: Recognizing the dangers that can result from delays in deploying tools for rapidly diagnosing infectious diseases, changes have been made to the provisions for test kits for detecting the Zika virus and other mosquito-borne diseases to simplify their classification.

Placebos & Clinical Trial Kits: To facilitate cross-border medical research, new provisions have been added for placebos and double-blinded clinical trial kits to enable their classification without information about placebo ingredients.

Cell Cultures & Cell Therapy: New provisions have been added for these products.

Combatting Terrorism

Dual-Use Goods: New subheadings have been added for various dual-use goods that could be diverted for unauthorized uses, such as radioactive materials, biological safety cabinets, and parts required for the construction of improvised explosive devices, such as detonators.

Controlled Materials

Given that international Conventions, agreements, and initiatives related to the movement of controlled materials often rely on the HS for practical implementation at borders, HS 2022 includes new subheadings for certain prohibited and hazardous chemicals, persistent organic pollutants, and fentanyl-opioid substances and their derivatives.

U.S. Implementation

In April 2021, the U.S. International Trade Commission submitted to the president Recommended Modifications to the Harmonized Tariff Schedule, 2021. These modifications primarily update the HTSUS in conformance with the WCO’s HS 2022, including corresponding changes to relevant general, section, and chapter notes, etc.

The USITC’s Recommended Modifications are expected to be implemented on January 1, 2022. However, under the applicable statute, the changes may only be made after the expiration of a 60-day waiting period that begins once the president submits a report to the House of Representatives Ways and Means Committee and to the Senate Finance Committee. The exact implementation date of the modifications has yet to be posted.

Canadian Implementation

Pursuant to Order SOR/2021-198 published in the Canada Gazette on Sept. 1, the Government of Canada has provided detailed information regarding amendments to the Customs Tariff (HS 2022).

To facilitate planning and implementation of the new Customs Tariff schedule, the Canada Border Services Agency has recently made available:

• A concordance table at the 8-digit level prepared by Finance Canada and at the 10-digit level prepared by Statistics Canada in Microsoft Excel format;
• the complete updated Customs Tariff schedule in PDF format; and
• A Microsoft Access database file containing the updated Customs Tariff schedule.

For participants in the Customs Automated Data Exchange system, the CBSA has also made HS 2022 available formatted for CADEX, the agency’s proprietary EDI message-formatting standard.

The CBSA advises that all changes will be active in the Customs Commercial System when the new HS 2022 Customs Tariff schedule takes effect on January 1, 2022.