United States International Trade Commission

Investigation No. 1205-7 (Final)USITC Publication 4166June 2010

Proposed Modifications to the Harmonized Tariff Schedule of the United States

U.S. International Trade Commission

This report was prepared by the staff of the Office of Tariff Affairs and Trade Agreements

Address all communications to Secretary to the Commission

United States International Trade Commission Washington, DC 20436

COMMISSIONERS

Deanna Tanner Okun, Chairman Charlotte R. Lane Daniel R. Pearson Shara L. Aranoff

Irving A. Williamson Dean A. Pinkert

Robert B. KoopmanActing Director of Operations

David B. Beck, Director Scott Baker, Nomenclature Analyst

Naomi S. Freeman, International Trade Analyst Vanessa Lee, Nomenclature Analyst

David Michels, Nomenclature Analyst Donnette Rimmer, Nomenclature Analyst

Frederick Schottman, Nomenclature Analyst Jan L. Summers, Attorney-Advisor

U.S. International Trade CommissionWashington, DC 20436

www.usitc.gov

June 2010Publication 4166

Proposed Modifications to the Harmonized Tariff Schedule of the

United States

Investigation No. 1205-7 (Final)

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TABLE OF CONTENTS

Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Recommendations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

The Harmonized System Convention. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Executive authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Recommended Modifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Comments and changes following publication of the preliminary report. . . . . . . . . . 6 Probable economic effect of recommended changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

AppendixesA. Federal Register notices concerning this investigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1B. Recommended modifications to the HTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1C. Correlation table, sorted by proposed HTS No.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1D. Correlation table, sorted by current HTS No... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1E. Submission from the Cranberry Marketing Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1

OVERVIEW

On February 26, 2010, the U.S. International Trade Commission (the Commission) institutedinvestigation No. 1205-7, Proposed Modifications to the Harmonized Tariff Schedule of the UnitedStates, pursuant to section 1205 of the Omnibus Trade and Competitiveness Act of 1988. Section 1205requires the Commission to keep the Harmonized Tariff Schedule of the United States (HTS) undercontinuous review and to recommend to the President modifications to the HTS in order to reflectamendments to the Harmonized Commodity Description and Coding System (the Harmonized System orHS) that are periodically recommended by the World Customs Organization (WCO), formally named theCustoms Cooperation Council (CCC), for adoption by Member administrations, and as othercircumstances warrant. 1

In formulating recommendations to the President, the Commission follows a two-step process: (1) itgives notice of proposed recommendations and solicits views of interested Federal agencies and thepublic regarding those proposed recommendations, and (2) after considering the views received inresponse to that notice, it makes final recommendations to the President. This report contains theCommissions final proposed recommendations.

In addition to recommending changes reflecting those made to the international HS nomenclature bythe WCO, the Commission may recommend modifications to the HTS that are in conformance withdecisions taken by the WCOs Harmonized System Committee (HSC) that affect the classification ofparticular goods under the HTS; such modifications to the HTS may be required in order to ensure thatthe subject imported goods continue to receive existing duty treatment. In this context, it has been thepractice that other federal agencies, especially U.S. Customs and Border Protection (Customs), may bringto the Commissions attention those changes in the classification of particular goods that may likewiserequire the creation of one or more separate tariff categories in order to continue existing U.S. dutytreatment. The HTS modifications recommended in this report would, if proclaimed by the President,implement in U.S. law the amendments to the international HS nomenclature that were recommended bythe WCO in June 2009 and are to become effective as of January 1, 2012. 2

In accordance with section 1205, the Commission solicited, and gave consideration to, the views ofinterested Federal agencies and the public before recommending modifications to the HTS. This report

Since the implementation of the Harmonized System in 1988, the WCO has issued1

recommendations for amendments scheduled to take effect in 1991, 1996, 2002, and 2007. HSamendments covered by this report are scheduled for implementation on January 1, 2012.

The lead time between the issuance of the WCO recommendation and implementation of the2

amendments is required by Article 16 of the HS Convention, which provides that where therecommended amendment is notified on or after April 1, the date [of implementation] shall be the first ofJanuary of the third year following the date of such notification. This lead time is built in to allowmember administrations to translate the amendments into their national languages (the HS is legallyauthentic in French or English only) and to gain authorization from their own governments to implementthe amendments in their national tariffs.

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to the President presents the Commissions proposed recommendations, summarizes the information onwhich its recommendations are based, and presents concordances between present and proposed tariffcategories. The report also includes a statement of the probable economic effect of recommendedchanges on any industry in the United States.

The information contained in the report was obtained from, or based upon, documents of the WCO,research by the Commissions staff, consultations with and communications from Government agencies,written submissions from interested parties in the private sector, and input from other sources, asappropriate. In addition to the Commissions proposed recommendations, this report includesbackground information on the international HS and on the procedures involved in its modification, anappendix presenting all of the recommended HTS modifications (appendix B), and correlation tablesbetween present and recommended HTS subheadings (appendix C (sorted by proposed HTS subheading)and appendix D (sorted by current HTS subheading)). Following publication of the preliminary report,the Commission received one written comment from the Cranberry Marketing Committee, which isincluded as appendix E to this report.

The Commissions preliminary report (USITC Publication 4134, April 2010) was placed on theCommissions Internet website (http://www.usitc.gov/tariff_affairs/modifications_hts.htm), and this finalreport will be placed there, as well. It is anticipated that further information may be developed,particularly during the course of USTRs discussions at the World Trade Organization (WTO) inconnection with the modification of schedules of concessions, in which case it may be necessary toreconsider the derivation of certain tariff rates and possibly to address other issues under negotiation. Accordingly, the Commissions investigation will remain open as necessary to address any such mattersin order to complete the record. The recommended modifications are set out in appendix B to thisreport.

RECOMMENDATIONS

BACKGROUND

The Harmonized System Convention

Subtitle B of title I of the Omnibus Trade and Competitiveness Act of 1988 (the 1988 Act) approvedthe United States accession to the International Convention on the Harmonized Commodity Descriptionand Coding System (the Convention), which was completed in Brussels on June 14, 1983, under theauspices of the Customs Cooperation Council. The Convention established a standardized tariff3

nomenclature for goods in trade, the purpose of which was, and is, to facilitate international trade4

The Customs Cooperation Council (CCC) was renamed the World Customs Organization3

(WCO) in 1994; though it is still referred to in legal documentation as the CCC, it is commonly referredto now as the WCO.

The annex to the Convention contains the Harmonized Commodity Description and Coding4

System, commonly referred to as the Harmonized System or HS, which includes the HS structurednomenclature, rules of interpretation, and legal notes. The 1988 Act implemented the HTS, whichincorporates the structure of the HS nomenclature.

2

(http://www.usitc.gov/tariff_affairs/modifications_hts.htm

through the use of a single nomenclature structure for the description, classification, and coding ofimports and exports of the contracting parties. This nomenclature, under the requirements