GLOSSARY
Harmonized System (HS)
The WCO's six-digit international classification for traded goods. Every product crossing a customs border is classified under an HS code that drives duty rates, restrictions, and statistical reporting.
The Harmonized System is the World Customs Organization's standardised classification, governing roughly 98% of global merchandise trade. It's hierarchical: 21 sections → 99 chapters → 4-digit headings → 6-digit subheadings. Member countries extend the 6-digit base with national digits (10 digits in the US HTS, 8 in the EU CN, 10 in China).
Why it matters
The HS code on a customs declaration determines duty rate, applicable trade-defence measures, FTA eligibility, and export-control treatment. Mis-classification — even by a single digit — creates duty under-payment liability, AEO risk, and potential criminal exposure on dual-use goods. It's why HS classification is the most-discussed AI-trade use case.
Related terms
- HS Code Classification
- HTS (US)
- Combined Nomenclature (EU)
- AEO