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If you haven’t already done so, be sure to read parts 1 & 2 in our export documentation series.
Classifying Your Products for International Export
Classification of export products can be a bit confusing at first. However, it’s critical to get it right because you, as the exporter, are responsible for reporting to the U.S. government—therefore, you are also liable for any errors. If goods are classified in error, you could face fines and even criminal fraud charges.
Here’s an overview of what you should know about export classification codes:
- HS codes (harmonized system codes) are six-digit codes used internationally. Many countries also add their own codes onto the HS code for products in certain categories, but the number of digits differs from country to country. HS codes are required on commercial invoices and are usually updated every few years, so it’s vital to ensure you have the correct code.
- HTS codes or HTSUS codes (harmonized tariff schedule/U.S.) is a 10-digit import classification system for the United States. The first six digits match the H.S. code. It is the importer’s responsibility to classify their goods accurately. Codes are updated every year and occasionally mid-year.
- Schedule B codes are a 10-digit classification system for all goods exported out of the U.S. Used for statistical purposes and reported to the U.S. Census Bureau, the first six numbers match the HTS code, and code updates occur annually. Exporters are required to submit their Schedule B codes electronically through the Automated Export System (AES).
If you are shipping something that does not have a classification, you can use the Schedule B Search Engine to determine the closest possible number. Certain exports, such as items of a military nature, require an export license before shipping.
The Role of Licensed Customs Brokers in Facilitating International Trade
Export Compliance
The first step in the export compliance process is to figure out who has jurisdiction over your shipments. It’s vital to know which set of guidelines to follow as they will tell you whether there are any export restrictions and if you need a special license.
As many goods are considered “dual-purpose” (in other words, they could be destined for commercial use but have an alternate military or defense application), it is recommended to work with a 3PL with experience in export classification. Fines for violations in this area can be as high as $1 million per violation plus potential jail time and suspension of export privileges.
Procedures
Partnering with a 3PL like DTS reduces your risk and ensures you don’t overlook any details when preparing your goods for export. However, that doesn’t mean you shouldn’t be keenly aware of the export documentation and classification process and what’s at stake.
You need to ensure that:
- Your items are classified properly
- You have the appropriate export licenses (if applicable)
- You are not shipping to countries restricted under the U.S., U.N., and E.U. regulations
- You know how the buyer will use your product
- You understand document compliance
Continuous risk assessment is necessary in all cases, as is proper training and awareness, compliance monitoring, and regular audits to ensure all systems are on track.
How DTS Helps
DTS offers full-service import and export, e-filing, and compliance assurance for all manufacturers and suppliers looking to export goods internationally. Whether you are launching a new venture or scaling your current operations, we can help you navigate every export and documentation process from A to Z. Reach out today; we’d love to show you how we can help you grow.
