There is a lot of confusion when it comes to imports and exports. Some of the things that always get confused are the Harmonized Tariff Schedule of the United States (HTS), Schedule B, Export Control Classification Number (ECCN), and the United States Munitions List (USML).
We will break down this post into two sections HTS and Schedule B and the ECCN and USML and tell you when you can use each of these numbers.
HTS (Harmonized Tariff Schedule of the United States):
All goods entering the United States have to be assigned a 10 digit classification number called the Harmonized Tariff Schedule of the United States. The HTS is published by USITC (Office of Tariff Affairs and Trade Agreements) and available for free on their website. It is based upon the international Harmonized Commodity Description and Coding System (HS), administered by the World Customs Organization in Brussels. It is harmonized because it “should” be harmonized up to the 6th digit with the tariff number used in the exporting country, of course, that is not always the case but it is a great starting point for determining what the HTS for your import will be.
The Harmonized Tariff Schedule of the United States is broken down into 99 chapters under 22 sections:
- Live Animals; Animal Products
- Vegetable Products
- Animal or Vegetable Fats and Oils and Their Cleavage Products; Prepared Edible Fats; Animal or Vegetable Waxes
- Prepared Foodstuffs; Beverages, Spirits, and Vinegar; Tobacco and Manufactured Tobacco Substitutes
- Mineral Products
- Products of the Chemical or Allied Industries
- Plastics and Articles Thereof, Rubber and Articles Thereof
- Raw Hides and Skins, Leather, Fur skins and Articles Thereof; Saddlery and Harness; Travel Goods, Handbags and Similar Containers; Articles of Animal Gut (Other Than Silkworm Gut)
- Wood and Articles of Wood; Wood Charcoal; Cork and Articles of Cork; Manufacturers of Straw, of Esparto or of Other Plaiting Materials; Basket ware and Wickerwork
- Pulp of Wood or of Other Fibrous Cellulosic Material; Waste and Scrap of Paper or Paperboard; Paper and Paperboard and Articles Thereof
- Textile and Textile Articles
- Footwear, Headgear, Umbrellas, Sun Umbrellas, Walking Sticks, Seat sticks, Whips, Riding-Crops and Parts Thereof; Prepared Feathers and Articles Made Therewith; Artificial Flowers; Articles of Human Hair
- Articles of Stone, Plaster, Cement, Asbestos, Mica or Similar Materials; Ceramic Products; Glass and Glassware
- Natural or Cultured Pearls, Precious or Semiprecious Stones, Precious Metals, Metals Clad With Precious Metal, and Articles Thereof; Imitation Jewelry; Coin
- Base Metals and Articles of Base Metal
- Machinery and Mechanical Appliances; Electrical Equipment; Parts Thereof; Sound Recorders and Reproducers, Television Image and Sound Recorders and Reproducers, and Parts and Accessories of Such Articles
- Vehicles, Aircraft, Vessels and Associated Transport Equipment
- Optical, Photographic, Cinematographic, Measuring, Checking, Precision, Medical or Surgical Instruments and Apparatus; Clocks and Watches; Musical Instruments; Parts and Accessories Thereof
- Arms and Ammunition; Parts and Accessories Thereof
- Miscellaneous Manufactured Articles
- Works of Art, Collectors’ Pieces and Antiques
- Special Classification Provisions; Temporary Legislation; Temporary Modifications Proclaimed pursuant to Trade Agreements Legislation; Additional Import Restrictions Proclaimed Pursuant to Section 22 of the Agricultural Adjustment Act, As Amended
Once you determine the HTS for your product, the HTS, along with the country of origin and value, is used by U.S. Customs to determine the rate of duty for the product you are importing.
The HTS is primarily used for imports into the United States but it can also be used for exports from the United States. The “Notice to Exporters” informs exporters that the HTS can be used for exports with some exceptions noted in the notice. You can find a copy of the notice here and which HTS numbers are not authorized for used for exports by clicking here and scrolling down to the “Notice to Exporters”.
There is an HTS number for every product imported into the United States and it is the responsibility of the importer to understand the product and regulations and assign the correct HTS number.
The Schedule B is the export classification system used by the United States to classify exports from the United States. It is called the Schedule B: Statistical Classification of Domestic and Foreign Commodities and is based on the International Harmonized System and like the HTS it is divided into 22 sections. Each number contains 10 digits, the first six digits of a Schedule B code are the same as an HTS number; while, the last four digits are different.
The Schedule B is used when filing the Electronic Export Information (EEI). An exporter is required to file the EEI when the value of the commodity classified under each individual Schedule B number is over $2,500. The EEI is also required under the following circumstances, The EEI must always be filed, regardless of the value for the following circumstances:
1. Shipments requiring an export (ITAR or EAR) license;
2. Shipments of rough diamonds;
3. Commodities subject to ITAR (including ITAR exemptions);
4. Shipments of used self-propelled vehicles;
5. Exports under License Exception Strategic Trade Authorization (STA);
6. Exports of “600 series” items enumerated in paragraphs .a through .x of a “600 series” Export Control Classification Number (ECCN);
7. Shipments to countries listed in Country Group E (EAR 15 CFR 740) unless shipped under one of the exemptions.
The Schedule B is used by the Census Bureau, Foreign Trade Division, to help compile U.S. trade statistics.
The right Schedule B number can be found on the U.S. Census Bureau website (www.census.gov/trade) via a search engine.
As previously mentioned, the HTS can also be used for exports from the United States.
ECCN and USML
One of the things we notice when speaking with companies that are new to exporting is that they believe a product can have both an ECCN and a USML category and it is one of the things we try to work with our clients to understand early on. A product can either be controlled under the Export Administration Regulations and have an ECCN or under the International Traffic in Arms Regulations and have a USML category. Some of the more experienced exporters will bring up the products controlled under the EAR that are licensed through an ITAR license but we won’t discuss that here in order not to complicate things further.
ECCN stands for Export Control Classification Number and it is a number assigned to items controlled under the United States Department of Commerce, Bureau of Industry and Security (BIS), through the Export Administration Regulations. It is an alphanumeric code assigned to items such as items, software, and technology controlled by the EAR for commercial and dual-use purposes. The Commerce Control List (CCL) under Export Administration Regulations (EAR) lists ECCNs under 10 categories and 5 product groups.
|Commerce Control List Categories||Five Product Groups|
|0 Nuclear & Miscellaneous||
|1 Materials, Chemicals, Microorganisms and Toxins|
|2 Materials Processing|
|5 Part 1 Telecommunications
5 Part 2 Information Security
|6 Sensors and Lasers|
|7 Navigation and Avionics|
|9 Aerospace and Propulsion|
The ECCN helps an exporter determine if a license is required based on the end-use, end-user, and country where their item will be exported to or if a license exception is available for the export.
The United States Munitions List (USML) is assigned to defense articles, defense services, and related technical data. The USML can be found in Part 121 of the International Traffic in Arms Regulations and is made of 21 categories.
The 21 categories of USML are:
- Firearms, Close Assault Weapons and Combat Shotguns
- Guns and Armament
- Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs, and Mines
- Explosives and Energetic Materials, Propellants, Incendiary Agents, and Their Constituents
- Surface Vessels of War and Special Naval Equipment
- Ground Vehicles
- Aircraft and Related Articles
- Military Training Equipment and Training
- Personal Protective Equipment
- Military Electronics
- Fire Control, Range Finder, Optical and Guidance and Control Equipment
- Materials and Miscellaneous Articles
- Toxicological Agents, Including Chemical Agents, Biological Agents, and Associated Equipment
- Spacecraft and Related Articles
- Nuclear Weapons Related Articles
- Classified Articles, Technical Data, and Defense Services Not Otherwise Enumerated
- Directed Energy Weapons
- Gas Turbine Engines and Associated Equipment
- Submersible Vessels and Related Articles
- Articles, Technical Data, and Defense Services Not Otherwise Enumerated
Based on the USML, an exporter is able to determine if a license exemption applies or if a license or agreement needs to be obtained from the U.S. Department of State to export the defense article, defense service, or related technical data.