HTS 2007 updated draft chapters have been published on The USITC (Office of Tariff Affairs and Trade Agreements) website, with links to the 2007 HTSA Draft - by chapter.
Implementation of 2007 Harmonized Tariff Schedule
On January 4, 2007 Presidential Proclamation 8097 was published in the Federal Register updating the U.S. Harmonized Tariff Schedule. The changes still identified as "DRAFT" will go into effect on February 3, 2007. The changes being implemented constitute one of the most extensive modifications made to the tariff in years. Of the 21,428 classifications listed in the HTS, changes will be made to 3,214 of the tariff provisions.
The changes involve four scenarios:
- change from a single classification in the 2006 tariff to a different single classification in the 2007 tariff
- consolidation of several classifications in the 2006 tariff to a single classification in the 2007 tariff
- change from a single classification in the 2006 tariff to several classifications in the 2007 tariff
- change in the text only of a tariff provision (classification number remains unchanged)
Some Chapters have undergone significantly more changes than others. For example, Chapters 44, 84 and 85 have undergone 129, 220 and 273 changes respectively. Many ADP units have been removed from Heading 8471 and classified under their specific classification provision, e.g. printers were moved to Heading 8443. In addition, a new heading 8486 was created to cover most semiconductor manufacturing equipment, while the distinction between recorded and unrecorded software media was eliminated and with it the deletion of heading 8524. These are only a few of the many significant changes incorporated by the new tariff. Although the vast majority of the changes are "duty neutral," 66 changes did result in a corresponding change in the duty rate.
Due to the enormous scope of the tariff change CBP will provide importers a 17 day "Grace Period," i.e. until February 21, 2007, in order to implement the new classifications. However, importers should be aware that the "Grace Period" relates only to the assessment of penalties for using an incorrect classification. As the Customs ABI system will only accept the new 2007 HTS provisions, entries which identify classifications that have been deleted in the new tariff will be rejected during this "Grace Period." Customs has published a helpful resource on their website: Questions and Answers Regarding the Conversion.
The tariff changes being implemented on February 3 will have a ripple effect for issues beyond the initial import entry including:
- Binding Rulings issued for a classification that has been deleted will have no effect and importers will be required to obtain a new ruling for the new classification.
- Certificates of Origin issued for preferential trade programs that are based on classification determinations, e.g. NAFTA, U.S.-Chile, etc. will have to be reviewed and may have to be reassessed to ensure continued eligibility and if necessary the certificate will have to be reissued using the new classification. Since importers are required to have the Certificate in hand before making the claim, companies should coordinate these matters carefully with their suppliers.
- Using an incorrect or deleted HTS classification on an SED/AES submission could expose the exporter to a potential violation for providing incorrect information which could result in export delays and penalties.
We advise all importers to carefully review the new "DRAFT" tariff on the ITC website (2007 HTSA Draft - by chapter), determine whether any of the changes affect their products, make the necessary changes and coordinate these changes with their Customs brokers, vendors and suppliers. We also suggest that importers anticipate potential delays as the government and the trade community implement all of these changes.