Global Classification is the process of
classifying products for the purpose of complying with customs authorities, qualifying for
free trade agreements
A free-trade agreement (FTA) or treaty is an agreement according to international law to form a free-trade area between the cooperating states. There are two types of trade agreements: bilateral and multilateral. Bilateral trade agreements occur ...
and filing entries to customs during the importation or exportation of those products. A slight difference in classification can mean a huge difference in the duties that are paid.
[Solomon, Mark. March 200]
"Not Playtime Anymore"
DC Velocity
Classification data includes:
*
Harmonized Schedule Numbers
* Special
tariff
A tariff is a tax imposed by the government of a country or by a supranational union on imports or exports of goods. Besides being a source of revenue for the government, import duties can also be a form of regulation of foreign trade and poli ...
preference programs
* Product descriptions and pictures
*
Schematics
A schematic, or schematic diagram, is a designed representation of the elements of a system using abstract, graphic symbols rather than realistic pictures. A schematic usually omits all details that are not relevant to the key information the sc ...
*
Material Safety Data Sheet
A safety data sheet (SDS), material safety data sheet (MSDS), or product safety data sheet (PSDS) is a document that lists information relating to occupational safety and health for the use of various substances and products. SDSs are a widely ...
s (MSDS)
* Toxic Substance Control Act (TSCA) documentation
*
Country of origin
Country of origin (CO) represents the sovereign state, country or countries of manufacture, production, design, or brand origin where an merchandise, article or product comes from. For multinational brands, CO may include multiple countries wit ...
credentials
*
Value
Value or values may refer to:
Ethics and social
* Value (ethics) wherein said concept may be construed as treating actions themselves as abstract objects, associating value to them
** Values (Western philosophy) expands the notion of value beyo ...
Information
With the growing complexity of
supply chain
In commerce, a supply chain is a network of facilities that procure raw materials, transform them into intermediate goods and then final products to customers through a distribution system. It refers to the network of organizations, people, acti ...
s as well as the increasing number of government regulations around importing and exporting, companies are realizing the need to proactively manage trade compliance data in order to minimize risk, such as the inaccurate classification of data. Providing classification data on imported and exported products is required, regardless of an organization's global location and classifying products is typically a manual and time-consuming process. Companies need to establish data management standards to help reduce inaccurate classification, strengthen the exchange of data between trading partners, and provide version control in order to track all changes that take place.
Automation
With an automated Global Classification solution, companies can collect, store, and access classification data in one centralized located at both a global level using the
World Customs Organization
The World Customs Organization (WCO) is an intergovernmental organization headquartered in Brussels, Belgium. The WCO works on customs-related matters including the development of international conventions, instruments, and tools on topics suc ...
(WCO) 6-digit
Harmonized Schedule Numbers and with multiple country specific views tailored to the country of interest. As a result, the
centrally controlled classification database reduces errors, increases internal and external communication, strengthens compliance, and improves the timeliness of the information shared with external trading partners.
Using an automated solution, companies can:
* Set up an approval process to ensure data integrity
* Perform mass updates for easy maintenance of product data such as
Harmonized Tariff updates
* Reduce time and resources spent on managing product classifications and related data
* Eliminate duplicate data entry through interfaces with inventory processing systems
* Manage key classification data required by various countries
* Link to
other government agencies to receive product updates
* Store binding rulings
More than just a product classification database, an automated Global Classification solution allows companies to manage a global database that includes all forms of data, increasing visibility into changes such as additions or deletions of classification data.
[Perry, Clay. (July 5, 2009]
"7 Reasons Why Organizations Need a Global Classification Platform"
http://www.sourcinginnovation.com Sourcing Innovation] Organizations will also improve compliance across the supply chain. Providing on-demand availability to the classification database, via the web, ensures that every trading partner has access to and uses the same classification data at every stage in the supply chain, minimizing risks and/or delays or possible fees from Customs. With an automated solution, companies will have everything they need to manage global trade management throughout the organization captured in a
data consolidation, consolidated relational database
A relational database is a (most commonly digital) database based on the relational model of data, as proposed by E. F. Codd in 1970. A system used to maintain relational databases is a relational database management system (RDBMS). Many relatio ...
.
Challenges in classification for companies
# Variety of products---Companies who do import and export meet challenges of how to classify products with the growing varieties of products. Classification and restrictions, to some extent, has a bad effect on free trading and growing of business.
# Risk of loss caused by difference in classification---Firstly, the proper classification of your item is essential to determine any licensing requirements under the Export Administration Regulations(EAR). And subsequently exporters and importers need to be aware of how to classify the products accordingly and which category should be classified to. And finally they may be required to obtain a license. A slight difference in classification can mean a huge difference in the duties that are paid.
So a proper classification can save huge amount of money for the company which is why nowadays importers and exporters are dying to find a perfect way to solve those problems above.
References
Resources
US Census BureauUS Food and Drug AdministrationBureau of Alcohol, Tobacco, Firearms and ExplosivesEnvironmental Protection Agency7 Reasons Why Organizations Need a Global Classification Platform
{{Webarchive, url=https://web.archive.org/web/20110713044333/http://www.integrationpoint.com/documents/ReasonsforGlobalClassification_2009.pdf , date=2011-07-13
Product classifications