   
  
G/MA/W/142  
 
2 May 2019 
(19-3015) Page: 1/13 
Committee on Market Access   
 
THE HARMONIZED SYSTE M AND THE WORK OF TH E  
WORLD TRADE ORGANIZA TION  
WCO CONFERENCE ON THE FU TURE OF THE HARMONIZ ED SYSTEM  
Communication from the WTO Secretariat1 
Executive Summary  
• The large majority of  Members to the Wold Trade Organization (WTO) are contracting parties 
to the International Convention on the Harmonized Commodity Description and Coding System 
(HS) of the World Customs Organization (WCO).  The HS has played a critical role in allowing 
WTO Members to define the product coverage or scope of certain agreements and has facilitated 
the conduct of negotiations on tariffs and rules of origin.   
 
• Several WTO agreements make use of, or include, references to the HS, including thousands of 
pages of the Schedules of concessions that embody the results of tariff and other negotiations.  
These legal instruments define the treatment that each WTO Member agrees to "accord to the 
commerce of other WTO Members", including the so -called “bound duties”, i.e. maximum tariffs 
that a Member is allowed to apply on a particular product, as well as other non -tariff 
concessions.   
 
• The WTO Secretariat uses the HS as the standard nomenclature to identify tradeable goods in 
its databases on tariff and non -tariff measur es, which has in turn allowed for their 
interconnection.  
 
• WTO Members have used the HS to define the product coverage of certain agreements, 
including multilateral agreements (e.g. the Agreement on Agriculture) and plurilateral sectoral 
initiatives.  Examp les of the latter include the 1994 Agreement on Trade in Pharmaceuticals and 
its reviews (the so -called "Pharma"), the 1996 Information Technology Agreement (ITA) and 
the 2015 Expansion of the Information Technology Agreement (ITA Expansion). While the HS 
proved to be a strong basis on which to base these negotiations, there have also been instances 
in which Members had recourse to alternative or complementary product designation 
approaches, narrative product descriptions that may capture multiple HS codes,  and even 
end-use type of criteria.  
 
• Each time the WCO has amended the HS (i.e. 1992, 1996, 2002, 2007, 2012 and 2017), it has 
been necessary for WTO Members to take steps to review and update some of its legal 
instruments, to ensure that their legal obli gations can be compared to the measures that are 
applied in practice.  This has included transposing thousands of pages of Schedules of 
concessions, the transposition of draft harmonized non -preferential rules or origin, and 
negotiating protocols to update the product coverage of the Agreement on Trade in Civil Aircraft.  
This is a difficult, time and resource -intensive work. For instance, despite considerable progress 
over the last decade, the large majority of WTO Members ' Schedules of concessions remain 
expressed in a version of the HS that lags behind HS2017, i.e. the one currently being applied 
by Members.  
 
                                                
1 This document has been prepared under the Secretariat's own responsibility and is without prejudice 
to the positions of Members or to their rights and obligations under the WTO.  Submitted to the WCO  
Conference on the Future Direction of the Harmonized System, Brussels, 2 -3 May 2019.  G/MA/W/142  
 
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  • Amendments to the HS nomenclature are unavoidable due to the changing nature of trade and 
the fast pace of technological innovation, and they have a n enormous potential in terms of 
facilitating trade and simplifying the day -to-day life for traders. However, given the impact that 
HS amendments have on WTO Members' applied trade regimes and the work of the WTO, it 
would be advisable for the Harmonized S ystem Committee (HSC) of the WCO to endeavour to 
agree, to the extent possible, on exhaustive correlation tables that provide clear guidance on 
the nature of such changes each time such changes are introduced. The WTO Secretariat stands 
ready to strengthen  the collaboration with the WCO on this issue.  
1  INTRODUCTION  
The WTO and its predecessor, the General Agreement on Tariffs and Trade (the GATT), have enjoyed 
a longstanding and close relationship with the Harmonized System Convention (HS) since it entered 
into force on 1  January  1988.  Despite efforts by the League of Nations in the late 1920s and 1930s 
to harmonize the tariff nomenclature used around the world2, it was still common for countries to 
apply different nomenclatures at the national level when th e GATT was negotiated in 1947. This 
situation progressively changed over the years with the wider adoption of the 1955 Brussels Tariff 
Nomenclature (BTN) and the introduction of the 1976 Customs Cooperation Council Nomenclature 
(CCCN).  
 
The lack of a defa ult international tariff nomenclature complicated tariff negotiations, in particular 
by made it difficult to quantify the scope of proposed concessions in terms that would be comparable 
across countries. In addition, trade negotiators often had a hard time  developing negotiating 
positions because import and export data were usually recorded using a different nomenclature: the 
Standard International Trade Classification (SITC), a statistical nomenclature developed by the 
United Nations derived from previous work by the League of Nations.3  Considerable resources were 
required to regroup these data in a manner that would allow for a comparison of the statistical and 
tariff nomenclatures. GATT contracting parties eventually concluded that a "harmonized" 
nomencl ature, that could be used for organizing and applying tariffs as well as for recording trade 
statistics, was needed to enhance their ability to monitor and protect the value of tariff concessions, 
more accurately analyse international trade flows, and asse ss the level of "reciprocity" in trade 
negotiations.   
 
GATT contracting parties welcomed the HS Convention as a positive development precisely because 
it met all these needs.  In June 1983, only a few days after the HS Convention had been concluded 
in Bru ssels, GATT contracting parties adopted detailed procedures with a view to transposing their 
Schedules of concessions into the new HS nomenclature before it entered into force in 19884.  Later, 
in 1986, participants to the 1979 Agreement on Trade in Civil Aircraft decided to transpose the 
products coverage into the HS through a Protocol. Reliance on the HS as the go -to nomenclature 
continued to increase and, during the 1990s, trade negotiators involved in the Uruguay Round used 
it to establish new multilate ral definitions and to hold tariff negotiations. Since then, and although 
26 WTO Members are not contracting parties to the HS Convention5, it has continued to play an 
important role in the day -to-day work of the WTO.   
 
This paper by the WTO Secretariat provides a general overview of the relationship between the 
Harmonized System (HS) and the World Trade Organization (WTO).  The second section describes 
the way the HS was used to define certain aspects of the WTO agreemen ts, Members’ Schedules of 
concessions, and the collection of international tariff and trade statistics.  The third section provides 
an overview of selected disputes which have interpreted WTO obligations expressed in terms of the 
HS nomenclature. The fourt h section examines the role that the HS has played in the context of 
selected WTO multilateral and plurilateral negotiations. Finally, the last section describes how 
                                                
2 See League of Nations, Economic Committee, Sub -Committee of Experts for the Unification of Tariff 
Nomenclature, Draft Customs Nomenclature, document C.921 M.486, 28 December 1931.  
3 The SITC was based on the 1938 "Minimum List of Commodities for Internati onal Trade Statistics" by 
the League of Nations, which was in turn based on the 1937 "Draft Customs Nomenclature". See United 
Nations, Department of Economic and Social Affairs, Statistics Division, Standard International Trade 
Classification, Revision 4, document ST/ESA/STAT/SER.M/34/REV.4, 2006.  
4 See GATT document L/5470/Rev.1 of 30 June 1983.   
5 Antigua and Barbuda; Barbados; Belize; Dominica; El Salvador; the Gambia; Grenada; Guyana; 
Honduras; Hong  Kong, China; Jamaica; Lao People's Republic; Liechten stein; Macao, China; Nicaragua; 
Samoa; Seychelles; Solomon Islands; St. Kitts and Nevis; St. Lucia; St. Vincent and the Grenadines; 
Suriname; Chinese Taipei; Tonga; and Trinidad and Tobago.   G/MA/W/142  
 
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  different WTO legal instruments, and in particular Schedules of concessions, have been upd ated to 
take account of HS amendments.  
2  THE HS AND THE WTO  
2.1  References to the HS in WTO agreements and plurilateral sectoral initiatives  
During the Uruguay Round of multilateral trade negotiations, which took place between 1986 and 
1994, negotiators agreed t o include several references to the HS into WTO agreements. For example, 
the HS was used to define the scope of some  multilateral agreements in terms of product coverage, 
including the definition of agricultural products in Annex 1 of the Agreement on Agri culture6 and the 
products covered by the Agreement on Textiles and Clothing (Article  2 and Annex). The methodology 
to convert non -tariff border measures into tariff equivalents (tariffication) employed by Members in 
the Uruguay Round and also included in A nnex 5 of the Agreement on Agriculture required that such 
tariff equivalents " shall primarily be established  at the four -digit level of the HS " or at a " more 
detailed level of the HS " as appropriate. Article 27.6 of the Agreement on Subsidies and 
Counterva iling Measures provides that the definition of " export competitiveness " by a developing 
country should be calculated based on their participation in a " section heading of the Harmonized 
System ".  Article 9 :2(c) of t he Agreement on Rules of Origin envisaged  that the work programme to 
harmonize non -reciprocal preferential rules of origin would be conducted on a product sector basis 
"as represented by various Chapters or sections of the Harmonized System (HS) nomenclature ".  
Article 2(a)(i) of the same Agreeme nt also makes an indirect reference to the HS by stating that, in 
cases where the criterion of change of tariff classification is applied "s uch a rule of origin, and any 
exceptions to the rule, must clearly specify the subheadings or headings within the ta riff 
nomenclature that are addressed by the rule".  More recently, Article  7.4.4 of the Trade Facilitation 
Agreement, which entered into force in February  2017, provides that one of the possible selectivity 
criteria for assessing risk includes the "Harmoni zed System code".  
 
At the plurilateral level, the HS was used during the Uruguay Round to update the product coverage 
of some pre -existing plurilateral sectoral agreements, including the Agreement on Trade in Civil 
Aircraft, the International Dairy Agreem ent, and the International Bovine Meat Agreement. It was 
also used to negotiate a new Agreement on Pharmaceuticals and several other plurilateral sectoral 
initiatives, the results of which were included in the WTO Schedules of concessions.7 Shortly after 
the Uruguay Round, in 1996, it was used to define many of the products covered by the Information 
Technology Agreement8. 
 
Despite these references, the WTO agreements do not contain any obligation for its Members to use 
the HS nomenclature nor to implement its amendments. Rather, WTO provisions either assume that 
Members use the HS in practice or provide for actions to be taken in case HS amendments are 
introduced. For example, if a Member introduces an amendment to the HS at the national level, a 
series of Decisions by the WTO General Council provide that the Member in question must also 
transpose its Schedule of concessions to this new version.  
 
2.2  Use of the HS in WTO Members’ schedules of concessions  
The HS is most visible in the WTO Schedule of concessions , which are legal instruments used to 
record the treatment that each WTO Member agrees to "accord to the commerce" of the other WTO 
                                                
6 Article 2 of the Agreement on Agriculture provides that provis ions apply to agricultural products as 
defined by Annex 1, which in turn lists HS92 Chapters 1 -24 (less fish and fish products), as well as a number 
of HS headings and subheadings in Chapters 29, 33, 35, 38, 41, 43, 50, 51, 52 and 53. The scope of  the 
excluded category of "fish and fish products" has not though been defined using the references to the HS 
leaving some scope of a differing view among Members on the definitional scope of agricultural or non -
agricultural products. More generally, the Agreement  on Agriculture and subsequent agricultural negotiations 
refer to "agricultural products" in various instances.  Although this Annex has not been updated since 1992, the 
distinction between agricultural and non -agricultural products in the Schedules of con cessions has been as part 
of the general transposition of Schedules of concessions.  
7 For more on this issue, see TN/MA/S/13.  
8 The Information Technology Agreement was concluded by 29 participants at the Singapore Ministerial 
Conference in December 1996. Since then, the number of participants has grown to 82, representing about 
97% of world trade in IT products. At the Nairobi Ministerial Conference in December 2015, over 50 Members 
concluded the expansion of the Agreement, which now covers an additional 2 01 products valued at over 
$1.3 trillion per year.  G/MA/W/142  
 
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  Members9.  They are an integral part of the GATT and include negotiated concessions such as the 
"bound duties", i.e. the maximum tariff level that a WTO Member commits to apply on imports from 
the other WTO members, as well as other non -tariff concessions. Since t he Uruguay Round, 
Schedules also include commitments limiting the subsidization of agricultural products. They form 
part of the binding commitments made by WTO Members and only exist in one of the three WTO 
languages:  English, French or Spanish.   
 
Althou gh there is no requirement to use a specific template or format, most WTO Schedules have a 
series of columns that include: the tariff item number, description of the product, rate of duty (base 
rate and bound rate), implementation period (period of time ov er which the tariffs are reduced), 
initial negotiation rights (INR) and other duties and charges (ODCs), as well as any special 
qualifications, usually in the form of footnotes and head notes, setting up "other terms and 
conditions" on the concession.  
 
Practically all WTO Members have defined the first (tariff item number) and second (description of 
the products) columns of their Schedules in terms of the HS nomenclature, but at different levels of 
disaggregation. While some of the Members include concessio ns at an aggregated level, others list 
HS subheadings. It is also relatively frequent for Schedules to express concessions based on 
Members' regional or national HS -based nomenclature, e.g. at the 8, 9 or 10 -digit level. With 
successive HS amendments adopt ed by the WCO throughout the years, it has become standard 
practice for Members to indicate the specific HS version used in the specific legal instrument (e.g. 
HS2007, HS2012, etc.), which provides useful context in interpreting the scope of those legal 
commitments.  
 
2.3  The HS and WTO databases  
2.3.1   A key component to identify tradable goods  
The HS is also an important component of the two main sources of tariff and import data maintained 
by the WTO Secretariat, namely the Consolidated Tariff Schedule Database (CT S) and the Integrated 
Data Base (IDB). The CTS, which was established by the Committee on Market Access in 199810, is 
an electronic database that compiles, in a standardized database format, the information in the 
Schedules of concessions. The term "consoli dated" means that it contains all tariff concessions to 
date for a Member, in a single file and in the latest version of the HS nomenclature that has been 
approved by Members. It contains Members' tariff commitments (bound tariffs, other duties and 
charges  and initial negotiating rights) and, if applicable, specific commitments in agriculture 
(domestic support, export subsidies and tariff quota information11 as well as the identification of 
products in respect of which Special Safeguards (SSG) provision coul d be invoked).  
The IDB is the main database used by the WTO Secretariat to compile official tariff and import data 
submitted by Members on an annual basis.  While the GATT Secretariat had collected tariff and trade 
data since the 1970s12, and following the  Punta del Este Declaration to launch the Uruguay Round, 
GATT contracting parties decided in  1987 to establish an "Integrated Data Base".13  A "PC version" 
of the database was established by the WTO General Council in 1997.14  One of the main advantages 
of the IDB versus other tariff and trade databases is that the tariffs and bilateral imports are matched 
at the national tariff line level, using the actual applied MFN tariff nomenclature for each year as the 
base data, which allows for improved analysis.  
 
                                                
9 Article II of the GATT, entitled “Schedules of concessions”, requires WTO Members to accord to the 
commerce of other Members “ treatment no less favourable than that provided for in the appropriate Part o f the 
appropriate Schedule annexed to this agreement ”. 
10 See G/MA/63 of 27 November 1998 . 
11 Schedules also include references to HS codes in the case of export subsidies and tariff rate quota 
commitments, which are typically used to define the scope of the  commitments . 
12 The first data collection was entitled the "data study" and was used to assess the results of the 
Kennedy Round. Similar information was used by the GATT Secretariat to assess the result of the Tokyo 
Round, which was published in a four -volume publication  entitled "Basic Documentation for a Tariff Study".  
See L/6073 of 27  October  1986.  
13 Decision of the GATT Council of 10 November 1987, GATT document L/6290.  
14 Decision of the WTO General Council of 16 July 1997, document WT/L/225.  G/MA/W/142  
 
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  Data collected by the WTO Secretariat is "pooled" and shared with a number of international 
organizations, including the International Trade Centre (ITC), UNCTAD, World Bank, etc.15  Many of 
these organizations disseminate the data through their own website s and analytical tools (e.g. ITC's 
MacMap, World Bank WITS). By one estimate, approximately 78%16 of the pooled tariff data have 
been collected and processed by the WTO Secretariat.  
 
IDB and CTS data are widely used in the context of WTO negotiations, publications, reports and 
other activities by the WTO Secretariat, including:  
 
a. WTO Trade Policy Reviews.  
b. Simulations during the Doha Development Agenda (DDA), relating to Agricultural and n on-
agricultural market access negotiations.  
c. Assisting Members in the context of negotiations under Articles XXIV and XXVIII of the 
GATT (establishment of regional trade agreements and renegotiation of concessions).  
d. Support Members on plurilateral tariff ne gotiations, such as the ITA Expansion and the 
Environmental Goods Agreement (EGA).  
e. Prepare the World Tariff Profiles, an annual joint publication with ITC and UNCTAD.  
f. Provide information to Members for the HS transposition of their applied and bound 
sched ules. 
g. Widely used by other international organizations and the academia to undertake research.  
h. Some national administrations use the WTO tools to access and analyse their own data.  
i. Provide market access statistics related to the indicators of the United Na tions Sustainable 
Development Goals (SDGs).  
j. Serve a wide range of audiences including journalists, NGOs, students, business 
community, and the general public on tariff and trade information.  
The WTO also maintains a number of other databases on specific no n-tariff measures, such as anti -
dumping duties, countervailing duties, government procurement, import licences, quantitative 
restrictions, sanitary and phytosanitary measures, technical barriers to trade, etc. most of which 
include information on the speci fic products on which they are applied.  Largely thanks to the 
common identification of these products based on the HS, the WTO was able to develop an 
Integrated Trade Intelligence Portal (I -TIP), which provides a single -entry point for information 
compile d by the WTO on trade policy measures, including both tariff and non -tariff measures.   
 
2.3.2   Challenges in analysing the data  
In term of the tariff and trade -related databases, one frequent challenge faced by the WTO 
Secretariat in preparing analytical inputs is that tariff and import data are expressed in different HS 
versions and are, on occasions, not directly easily matched or aligned. Although informal correlations 
and other statistical methods could be used to overcome these limitations, it has, at times,  proved 
challenging when Members expect and require a high degree of precision in the calculations (e.g. to 
determine whether a "critical mass" of trade value is covered or not in the context of a plurilateral 
tariff initiative).  
 
The HS classification is  used by economists and statisticians alike to compile information for 
monitoring and surveillance of trade agreements and economic development. For example, UNCTAD, 
UNSD, and WTO are in the process of harmonizing their methodology to produce HS -based trad e 
statistics by product, origin and destination. In addition, the WTO Secretariat is currently in the 
process of trying to connect its different databases on tariff and non -tariff information, which will be 
                                                
15 See G/MA/238/Add.1/Re v.1. 
16 Estimate based on the data sources used in the World Tariff Profiles 2018.  G/MA/W/142  
 
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  partly done through the HS codes. The HS is also a building block for the SITC, currently available 
in its fourth version, but most trade flow statistics are still based on SITC Rev.3. In addition, the HS 
classification links up with the Central Product Classification (CPC) as a general -purpose 
classific ation. The CPC, in turn is a reference classification for the Extended Balance of Payments 
Classification (EBOPS).  
 
In compiling trade statistics, especially in a digital context, the international community is 
increasingly facing issues related to the blu rriness of goods and services within the national accounts. 
Not only has technological convergence led to multi -functional devices, but it has also led to new 
technologies being added and transforming ordinary goods. For example, sensors added to 
conventio nal products as part of the "internet of things" transforms them into "digital". However, 
the way in which the HS is structured does not make it possible to measure them separately.   
3  THE HARMONIZED SYSTE M AND WTO DISPUTES  
Even though the Harmonized System  is not formally part of the WTO Agreement, some disputes 
under the Dispute Settlement Understanding (DSU) have dealt with concessions expressed using 
the HS.  For example, i n EC – Chicken Cuts17, the Appellate Body elaborated on the link between 
the WTO ag reements and the Harmonized System by noting that, during and after Uruguay Round 
negotiations, Members had reached a "broad consensus " to use the Harmonized System as a basis 
for their goods schedules.  In the same dispute, as well as in China -Auto parts18 and EC — IT 
Products19, the Appellate Body acknowledged that the Harmonized System was relevant "context " 
for interpreting the WTO covered agreements, as well as the products covered by bound tariff rates 
expressed in HS terms in Members' Schedules.  
 
The WTO dispute settlement has also had regard to the HS to assist in the interpretation of Members' 
Schedules of concessions. More generally, the Appellate Body in both EC – Chicken Cuts  and 
EC – Computer Equipment20 noted that, in order for the appropriate im port duty to be levied, a 
Member would first need to determine the proper customs classification of the product at issue.  In 
EC – Computer Equipment , the Appellate Body explicitly referred not only to the Harmonized System, 
but also to the Harmonized System's Explanatory Note ("HSEN") as a tool that could be used as part 
of the "proper interpretation " of a Schedule of concessions.  In EC — IT Products , the Panel 
considered that the HSEN was relevant for understanding the ordinary meaning of the language  
used in a chapter or headings in a WTO Schedule of concessions.  
4  THE HS AND WTO TARIF F NEGOTIATIONS  
4.1  The HS has been the standard used to define product coverage  
Negotiations at the WTO can deal with different types of measures and take different forms in terms 
of their participation, i.e. multilateral agreements, where all WTO Members participate, and 
plurilateral agreements, in which only a subset of Members do. Two routine tasks in tariff 
negotiations include defining the product scope of the negotiation , as well as determining the specific 
tariff level applicable to each negotiated product. In a typical negotiation, products are defined  in a 
list of relevant HS codes, which could be expressed in terms of chapters (2  digits), headings 
(4 digits), or subhe adings (6  digits), or a combination of the three.   
But what can be done if negotiators only want to cover some of the products falling within a particular 
HS subheading?  In general terms, there are two possible techniques that could be used.  A first 
possibility is to rely on the national tariff structure of the countries concerned, at the eight -digit level 
or higher. While this method is frequently used in the context of regional trade agreements, it is 
typically avoided at the WTO, precisely because tho se breakouts beyond the HS subheading level 
are not standardized across countries. Using national tariff codes in negotiations involving a large 
group of countries that implement vastly different national nomenclatures could easily lead to 
misunderstanding s in the scope of the negotiation. Thus, in the context of WTO negotiations, the 
preferred method has been rather to use the so -called "ex -outs" to define a subset of products within 
a particular HS subheading.   
                                                
17 DS269, 2005.  
18 DS342, 2009.  
19 DS375, 2008.  
20 DS62, 1998.  G/MA/W/142  
 
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  For example, if HS subheading 0901.11 relat es to "coffee, not roasted nor decaffeinated". an ex -out 
could be used by trade negotiators to indicate that only Arabica coffee beans are covered. This could 
be expressed as "ex0901.11 Arabica coffee beans." Although negotiating HS codes is relatively 
straightforward since these would either be "in" or "out" of the negotiation, negotiating the specific 
description of an "ex -out" could be a lengthy and technically difficult process. Not only must the 
description be commonly agreed by all the relevant partie s, but it also has to be precise enough to 
allow customs officers to identify the products at the border based on their objective characteristics.   
4.2  But it has sometimes been necessary to complement it  
There have also been situations in which parties to a negotiation have considered that the HS was 
insufficient to meet their objectives. The Agreement on Trade in Pharmaceuticals ("Pharma")  
is a good example. In 1994, representatives of 12 GATT contracting parties agreed to liberalize trade 
in pharmaceutical products, including some of the chemical substances used to produce them.  
Negotiators initially struggled to identify the "pharmaceutical products" to be covered by the Pharma 
because the HS definition was not detailed enough for the thousands of substanc es involved.  
Negotiators eventually agreed on a mixed approach that included a list of HS codes to be fully 
covered plus four specialized annexes listing a number of chemical compounds that should receive 
duty-free treatment " wherever they are classified in the HS ". One of these annexes listed a number 
of pharmaceutical active ingredients that bear an "international non -proprietary name" (INN), i.e. 
generic names that facilitate the identification of pharmaceutical substances or active pharmaceutical 
ingredients.   Each INN is a unique name that is globally recognized by the medical community, e.g. 
“paracetamol”.  This nomenclature has been coordinated by the World Health Organization (WHO) 
since 1953 and has resulted in at least one new INN list per year.  Another annex included active 
ingredients identified using "CAS numbers", which are unique and widely used numerical identifiers 
for chemical compounds, polymers, biological sequences, mixtures and alloys, assigned by 
the Chemical Abstracts Service (CAS). To  take account of this mixed approach, Pharma participants 
modified their WTO schedules in two ways.  First, they bound the HS codes listed at duty -free levels 
in the "traditional" part of the Schedules of concessions. Second, they also included specialized 
annexes that defined thousands of specific chemical substances listed in the four annexes to the 
Pharma.  Unlike other Uruguay Round sectoral initiatives, which were quite informal in nature and 
were not recorded, Pharma participants submitted a formal comm unication that provided details on 
the agreement reached, as well as the options for the national implementation. It also stated that 
each national customs authority may require importers to provide specific additional information to 
"certify" that the pro duct is really covered by the Pharma.   
A second example of a negotiation in which the HS codes were considered to be insufficient was the 
Information Technology Agreement (ITA) . This plurilateral sectoral initiative was announced on 
the margins of the Sing apore Ministerial Conference in 1996 and was initially sponsored by 
29 participants, which increased to 42 participants by the time of its implementation in 1997.  
Although the ITA negotiators were able to define most of the relevant "IT products" in terms  of HS 
codes, they faced a peculiar problem for 55 of them: their customs experts could not agree where 
to classify them in the HS. The disagreement for some of these products stemmed from rapid 
technological convergence, whereby two or more single -functio n apparatus had been incorporated 
into a new “multi -function” device. At the time, the HS Committee of the WCO (HSC) had not reached 
an agreement on how to classify them.  This problem affected products such as computers with 
multimedia capabilities. Some n egotiators considered these to still be classified as computers 
(84.71) while others considered these to be classified as TV reception apparatus (85.28). This also 
affected LAN equipment which could be classified either as telecommunications or computer 
equipment. Other products, such as certain semiconductor manufacturing equipment, could also be 
used for the production of other goods, and it was not always clear where such equipment should 
be classified in the HS. Finally, some parts and intermediate prod ucts had dual use and could also 
be used to manufacture products not meant to be covered by the ITA. For example, an LCD screen 
could be used to produce a computer monitor, which negotiators wanted to include, but it could also 
be used to manufacture a tel evision, which they did not want to be covered by the agreement.  
Like the Pharma, ITA negotiators used a mixed approach which included defining some products in 
terms of HS codes and ex -outs, i.e. those in which the HS classification was clear, while other s were 
defined with terms of narrative product descriptions, on the understanding that the tariffs would be 
eliminated " wherever they are classified in the HS" .  The second category of products is referred to 
in ITA jargon as the "Attachment  B" products.  Like in the Pharma, the results were incorporated in 
the WTO schedules of concessions using separate sections and including a specialized Attachment  B 
section, which lists the national tariff lines in which the products are classified, plus a headnote G/MA/W/142  
 
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  stating that duty -free treatment will be provided to those products wherever they are classified in 
the HS.   
Mindful of the long -term importance of finding a common classification of these products, and 
narrowing down those classification differences over tim e, ITA participants committed to work in 
different fora, including the HSC.  ITA Participants referred the classification of a number of products 
to the HSC, including that of “ set-top boxes which have a communication function ”, which decided 
that they should be classified as a “reception apparatus for television” under HS1996 subheading 
8528.12.21 It later agreed that they were classifiable in HS2007 subheading 8528.7122.  In another 
matter, the HSC also established HS2007 heading 84.86, where most of the  semiconductor 
manufacturing equipment covered by the ITA is classified.  
This mixed approach, i.e. defining some products in terms of HS codes and an "Attachment B" with 
narrative product descriptions, was used again in 2015 to define the products covered by the 
ITA Expansion . One of these Attachment B products involved certain advanced semiconductors, 
referred to multi -component integrated circulates (MCOs), for which the HSC amended Note 9 (b)(iv) 
to Chapter 85 in the 2017 version of the HS nomenclature.  It is worth mentioning that the definition 
of MCOs was simultaneously negotiated in the WTO and the WCO.  
The Agreement on Trade in Civil Aircraft (TCA)  was initially negotiated during the GATT Tokyo 
Round (1973 -79) and in 1995 became a plurilateral agreem ent under Annex 4 of the WTO 
Agreement, which requires participants to incorporate the relevant duty -free or duty -exempt 
treatment of the covered products into their respective Schedules. In other words, the TCA 
concessions are also incorporated in the WTO  Members’ Schedules of concessions.   One challenge 
faced by TCA negotiators was that many products used in the production and maintenance of civil 
aircraft could also be used in the manufacture or maintenance of other goods (i.e. dual use).  For 
example, pr oducts such as tubes, pipes and gaskets could have many uses besides using them to 
manufacture a plane.  Although the product coverage annex of the TCA includes a list of HS codes 
with ex -outs to be covered, paragraph 2 of the annex makes it clear that prod ucts shall only be 
accorded duty -free treatment or be duty -exempted " if such products are for use  in civil aircraft or 
ground flying trainers and for incorporation therein, in the course of their manufacture, repair, 
maintenance, rebuilding, modification o r conversion " (emphasis added).  The Agreement also 
clarifies that three categories of products will not be covered: 1) an incomplete or unfinished product, 
unless it has the essential character of a complete or finished part, component, sub -assembly or 
item of equipment of a civil aircraft or ground flying trainer (e.g. an article which has a civil aircraft 
manufacturer's part number); 2) materials in any form (e.g. sheets, plates, profile shapes, strips, 
bars, pipes, tubes or other shapes) unless they have  been cut to size or shape and/or shaped for 
incorporation in a civil aircraft or a ground flying trainer (e.g. an article which has a civil aircraft 
manufacturer's part number), and 3) raw materials and consumable goods. Participants to the TCA 
seem to ha ve adopted different ways to implement these tariff concessions with an end -use 
condition, including control systems based on import licensing schemes.  
Participants to this agreement seem to have adopted different ways to implement these end -use 
concessio ns. For example, some of them use import licenses or a self -certification scheme 
complemented with post -clearance audits, while others do not seem to check the end -use 
requirement. It goes without saying that these end -use concessions might become difficul t for 
customs to deal with if there is a large number of importers to control.  
4.3  Review clauses  
A final consideration that has been taken into account in some, but not all, of these agreements is 
the constantly changing nature of at least some of the covered  products. No matter how well -
informed negotiators are when they are defining the scope of an agreement, it is impossible for them 
to foresee all future changes in technology. While some key products will eventually lose relevance, 
or even disappear from t he market, some completely new products may acquire an unforeseen 
importance. Mindful of this, negotiators have sometimes agreed to include "review clauses", where 
they agree to meet again in the future to review and possibly expand the product coverage.   But 
this does not mean that an agreement will necessarily be reached.  
The Pharma and the ITA provide an interesting point of comparison in this respect. While both 
sectoral initiatives were finalized within two years of one another and included review clau ses, the 
                                                
21 The Classification Opinion was agreed during the 37th Session of the HSC (Annex O/21 to WCO 
document NC10592b).  
22 HSC Classification Opinion 8528.71/4 entered into force on 1 January 2017.  G/MA/W/142  
 
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  Pharma has been reviewed and updated on four occasions, whereas ITA participants were not able 
to do so until a sub -group of participants agreed on the "ITA Expansion".   
5  IMPACT OF HS AMENDME NTS ON THE WTO AGREE MENTS  
The preamble to the Harmonized  System Convention places priority on "ensuring that the 
Harmonized System is kept up -to-date in the light of changes in technology or in patterns of 
international trade".  Since its entry into force on 1 January 1988, the Harmonized System has been 
partia lly amended on 1  January  1992 (HS1992), 1  January  1996 (HS1996), 1  January  2002 
(HS2002), 1  January  2007 (HS2007), 1  January  2012 (HS2012) and 1  January  2017 (HS2017). In 
practice, not all WTO Members have implemented these amendments on those dates.  Each  of these 
amendments to the HS have required adjusting different aspects of WTO work, including the 
transposition of the Schedules of concessions, updating the work programme for the harmonization 
of non -preferential rules of origin and, for some of them, or preparing an Amendment Protocol to 
update the product coverage of the Agreement on Trade in Civil Aircraft.  
 
5.1  Transposition of Schedules of concessions  
Once a WTO Member has implemented an HS amendment at the national level, it is required to 
"transpose " its WTO Schedule of concessions into the new version of the HS nomenclature. This is a 
legal procedure that seeks to ensure that WTO Members’ Schedules of concessions are up to date, 
thereby allowing a comparison of a Member's applied tariff regime with its WTO obligations. The 
latest Decision by the General Council for the HS2017 transposition explains that, " to the extent 
possible, the scope of the concessions and other commitments shall remain unchanged "23. The 
transposition of each Schedule is approved  by consensus, which means that any Member can object 
to it. This exercise can be particularly difficult when HS amendments include structural changes in 
the way certain products are defined and classified. It is also worth noting that, given the legal 
nature of WTO Schedules, the transposition work at the WTO often requires a higher level of precision 
and accuracy.  
 
Since each set of HS amendments has been partial, each of them affecting approximately 10 % of 
the total number of subheadings, the WTO Schedul es of concessions are also partially amended to 
accommodate those changes.  There are two main types of changes faced in the process of 
transposition:  
• “Clarifying changes ”, which are textual or editorial in nature. These are HS amendments that 
do not resu lt in a change of the scope of the products classified within a particular 
subheading; and  
• “Structural changes ”, which are amendments to the HS that change the scope of the 
coverage of products that could be classified within a particular subheading. These changes 
could be further subdivided in:  
o Renumbering :  an HS code is renumbered in the new version of the nomenclature 
while maintaining same coverage;  
o Splits :  one HS code is divided into several separate new HS codes;  
o Mergers :  several HS codes are merged into a single HS code in the new version of 
the nomenclature; and  
o Complex changes :  a combination of splits and mergers.  
Examples of a one -to-one correlation (renumbering) of HS codes, a split and a merger are provided 
in the Appendix to this pape r. Although they are considered non -binding guidance by the WCO and 
do not have legal status, the correlation tables that are regularly prepared by the HSC are a key 
component of the transposition work at the WTO. It is for this reason that, with the autho rization of 
the WCO Secretariat, the relevant HSC documents are recirculated as WTO documents.  
 
Over the years, the transposition work has proved to be particularly difficult in situations where the 
guidance by the HSC has been limited including, for examp le, situations where:  
                                                
23 "Procedure for the Introduction of Harmonized System 2017 Changes to Schedules of Concessions 
Using the Consolidated Tariff Schedules (CTS) Database", Decision of the General Cou ncil of 7 December 2016, 
paragraph 4  (WT/L/995) . G/MA/W/142  
 
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  • No consensus has been reached by the HSC on certain correlations, e.g. the classification of 
apparatus with multiple functions in HS2007 heading 84.43 and the HS2012 classification of 
some hides and skins under 41.01;  
• The HSC concorda nce table is limited to examples, e.g. the concordance for HS2017 note 9 
(b)(iv) to Chapter 85 (MCOs) refers to " in particular, but not limited to " certain codes; and  
• The HS amendment has involved a large number of complex changes, e.g. the creation of 
HS2012 heading 96.19 for " sanitary towels (pads) and tampons, napkins and napkin liners 
for babies and similar articles, of any material ". 
To retain Members' concessions precisely in the new nomenclature, the transposition process could 
sometimes result in an  unnecessary topological structure with multiple breakouts, which virtually 
contain only de minimis  scope of products. While some of the more complex situations have been 
handled on a case -by-case basis, in others, Members have agreed to simplified transpo sitions 
proposed by the WTO Secretariat. These simplifications have sought to avoid maintaining minor 
differences among newly created breakouts, including overly complicated structures or arcane 
descriptions that do not correspond to the existing national nomenclatures.24  
 
Since the introduction of revised HS2002 transposition procedures in 2004, the WTO Secretariat has 
been tasked with undertaking the initial technical work for most Members and with reviewing the 
transpositions prepared by the remaining Me mbers. Once the files have been discussed with the 
Member concerned, all other Members have the opportunity to review the draft transposition file in 
the context of “multilateral review” sessions of the WTO Committee on Market Access. In case any 
Member co nsiders that its market access conditions have been affected by another Member’s 
transposition, it can block the adoption of the file or request that the Member concerned enters into 
a re-negotiation under Article XXVIII of the GATT 1994. In the absence of  any objections, and after 
the process of the multilateral review is completed, the newly transposed schedules are circulated 
for certification under the 1980 Procedures for Modification and Rectification of Schedules of Tariff 
Concessions25.  The lack of a n official transposition of the tariff concessions may result in uncertainty 
on the scope of the legal obligations by Members and has occasionally been the source of controversy 
among Members.  
 
Despite a considerable investment of time and resources by Mem bers since 2004, including the 
adoption of a new methodology mandating the Secretariat to undertake most of the technical work, 
practically none of the WTO Schedules of concessions are up to date with the latest version of the 
HS nomenclature. As of 10 Apr il 2019, the status of the different transposition procedures that have 
been undertaken under the WTO framework are as follows:  
• HS1996 : One Schedule remain pending.  
• HS2002 : One Schedule remains pending and two are in the process of certification.  
• HS2007 : 15 Schedules remain pending.  
• HS2012 : 38 Schedules remain pending.  
• HS2017 : the technical work by the WTO Secretariat will begin later in 2019.  
 
5.2  Transposition of the non -reciprocal rules of origin  
Another major task which results from HS amendments involves updating the outcome of the Work 
Programme for the Harmonization of Rules of Origin. Under this work programme, Members 
negotiated draft harmonized rules of origin for non -preferential purposes, which were largely 
conducted by Members in the HS96 version o f the nomenclature.  As for Schedules of concessions, 
Members considered it necessary to transpose the technical work that had been undertaken into a 
newer version of the HS. The WTO Secretariat, with the assistance of the WCO Secretariat, 
conducted the tr ansposition of draft harmonized non -preferential rules of origin into HS2002, 
                                                
24 See for example, "Transposition of Members' CTS Files to the HS201 7 Nomenclature: Notes on 
Methodology", Adopted by the Committee on Market Access on 10 April 2017, document G/MA/3 66. 
25 Decision of 26 Marc h 1980, GATT document L/4962.  G/MA/W/142  
 
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  HS2007 and HS2012, including recommendations for the simplification of the more complex cases 
resulting from the mechanical transposition exercises.  
5.3  Transposition of the product coverage of the Agreement on Trade in Civil Aircraft  
The Agreement on Trade in Civil Aircraft (TCA) was initially negotiated during the GATT Tokyo Round 
(1973 -79)26 and its product coverage was expanded in 198427. The product coverage was transposed 
into the  HS through the Protocol (1986) Amending the Annex to the Agreement on Trade in Civil 
Aircraft28.  During the Uruguay Round, the TCA became one of the plurilateral agreements under 
Annex  4 of the WTO Agreement.  The product coverage was then transposed to t he HS 2002 through 
the Protocol (2001) Amending the Annex to the Agreement on Trade in Civil Aircraft29, and into 
HS2007 through the Protocol (2015) Amending the Annex to the Agreement on Trade in Civil 
Aircraft30. At its meeting of 29 October 2018, the Comm ittee on Trade in Civil Aircraft discussed the 
possibility of a combined HS transposition exercise to bring the TCA product coverage in line with 
HS 2012 and HS 2017.31 
6  CONCLUSIONS  
The HS plays an important and inextricable role in the work of the WTO, whet her through references 
in the different WTO agreements, the interpretation of certain legal obligations at the WTO, or by 
serving as the foundation for tariff negotiations and the collection of tariff and trade data. It is for 
this reason that every amendm ent to the HS inevitably leads to technical and legal work necessary 
to adapt and update a number of legal instruments. Despite significant progress in streamlining 
these procedures, work remains outstanding in some areas and WTO Members face the continued  
challenge of fully and accurately reflecting the changes stemming from the most recent HS 
amendments. A case in point is the transposition of WTO Schedules, which remains a particularly 
demanding and resource intensive task for both WTO Members and the WT O Secretariat.   
 
Reviewing the HS in order to reflect the new commercial realities and the latest changes in 
technology could bring about an enormous potential in terms of facilitating trade and simplifying the 
day-to-day life for traders. It would, howev er, be necessary to do so in a way that bears in mind the 
adjustments that will be needed in the national and international legal frameworks. Given the 
profound impact that HS amendments have on WTO Members' applied trade regimes and the work 
of the WTO, i t would be advisable for the HSC to endeavour to agree, to the extent possible, on 
exhaustive correlation tables that provide clear guidance on the nature of such changes each time 
such changes are introduced. The WTO Secretariat stands ready to strengthen  the collaboration with 
the WCO on this issue.  
 
  
                                                
26 See GATT BISD, 26S/162.  
27 See GATT BISD, 31S/281.  
28 See GATT BISD, 34S/22.  
29 WTO document TCA/4.  
30 WTO document TCA/9.  
31 See TCA/M/35 . G/MA/W/142  
 
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  APPENDIX  
Table 1: Example of a one -to-one relationship between HS2012 and HS2017 codes  
2017 
version  2012 version  
Remarks in WCO's correlation table  
2939.71  2939.91  Expansion of the scope of heading 29.39 to include other alkaloids obtained, 
for example, from animal origin.  
 
At the same time, subheadings 2939.91 and 2939.99 have been renumbered  
for the creation of a new subheading 2939.80 for "Other". The new 
subheading 2939.80 covers all the alkaloids of n on-vegetal origin.  
 
Expansion of the scope of heading 29.39 entails the transfer of certain 
products currently covered by other headings of the Nomenclature (for 
example, heading 29.33, heading 29.34) to the new subheading 2939.80.  
 2939.79  2939.99  
2939.80  Applicable 
subheadings, 
such as 
subheadings of 
headings 29.33 
and 29.34  
 
HS 2017  Product description   HS 2012  Product description  
2939 Alkaloids, natural or reproduced 
by synthesis, and their salts, 
ethers, esters and other 
derivatives.   2939 Vegetable alkaloids, natural or 
reproduced by synthesis, and their 
salts, ethers, esters and other 
derivatives.  
29391  - Alkaloids of opium and their 
derivatives; salts thereof:   29391  - Alkaloids of opium and their 
derivatives; salts thereof:  
2939.20  - Alkaloids of cinchona and their 
derivatives; salts thereof   2939.20  - Alkaloids of cinchona and their 
derivatives; salts thereof  
2939.30  - Caffeine and its salts   2939.30  - Caffeine and its salts  
29394  - Ephedrines and their salts:   29394  - Ephedrines  and their salts:  
29395  - Theophylline and aminophylline 
(theophylline -ethylenediamine) 
and their derivatives; salts 
thereof:   29395  - Theophylline and aminophylline 
(theophylline -ethylenediamine) and 
their derivatives; salts thereof:  
29396  - Alkaloids of rye ergot and their 
derivatives; salts thereof:   29396  - Alkaloids of rye ergot and their 
derivatives; salts thereof:  
29397  - Other, of vegetal origin:   29399  - Other:  
2939.71  -- Cocaine, ecgonine, 
levometamfetamine, 
metamfetamine (INN), 
metamfetamine  racemate; salts, 
esters and other derivatives 
thereof   2939.91  -- Cocaine, ecgonine, 
levometamfetamine, 
metamfetamine (INN), 
metamfetamine racemate; salts, 
esters and other derivatives thereof  
2939.79  - - Other   2939.99  -- Other  
2939.80  - Other     
 
  G/MA/W/142  
 
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  Table 2: Example of a split between HS2012 and HS2017 codes  
2017 
version  2012 
version  Remarks in WCO's correlation table  
0805.21  ex0805.20  Creation of new subheadings 0805.21 and 0805.22 to provide separately for 
mandarins (including tangerines and satsumas) and clementines, 
respectively.  
Amendment adopted as a result of the FAO proposal to enhance the 
monitoring of the global food security.  0805.22  ex0805.20  
0805.29  ex0805.20  
 
HS 20 17 Product description   HS 20 12 Product description  
0805 Citrus fruit, fresh or dried .  0805 Citrus fruit, fresh or dried.  
0805.10  - Oranges   0805.10  - Oranges  
 - Mandarins (including 
tangerines and satsumas); 
clementines, wilkings and 
similar citrus hybrids   0805.20  - Mandarins (including 
tangerines and satsumas); 
clementines, wilkings and similar 
citrus hybrids  
0805.21  -- Mandarins (including 
tangerines and satsumas)     
0805.22  -- Clementines     
0805.29  -- Other     
0805.40  - Grapefruit , including pomelos   0805.40  - Grapefruit, including pomelos  
0805.50  - Lemons ( Citrus limon, Citrus 
limonum ) and limes ( Citrus  
aurantifolia, Citrus latifolia )  0805.50  - Lemons (Citrus limon, Citrus 
limonum) and limes (Citrus 
aurantifolia, Citrus latifolia)  
0805.90  - Other   0805.90  - Other  
 
Table 3: Example of a merger between HS2012 and HS2017 codes  
2017 version  2012 version  Remarks in WCO's correlation table  
3705.00  3705.10  Subheadings 3705.10 and 3705.90 have been deleted because of the low 
volume of trade.   3705.90  
 
HS 20 17 Product description   HS 20 12 Product description  
3705.00  Photographic plates and film,  
exposed and developed, other 
than cinematographic film   3705 Photographic plates and film, 
exposed and developed, other 
than cinematographic film.  
  3705.10  - For offset reproduction  
  3705.90  - Other  
 
 
__________  