The Ukrainian Classification of Commodities of Foreign Economic Activity (UCC FEA) is based on the Harmonized Commodity Description and Coding System (HS) and the Combined Nomenclature of the European Union (CN EU).
The HS came into force January 1, 1988. Presently, more than 100 countries in the world are applying it. It is a multipurpose classificator of the commodities that are circulating in the international trade.
For the provision of the practical use of the HS, for the majority of the countries the International Convention on the HS was signed June14, 1983 in Brussels. In the Convention, the aim of establishing the HS and the shere of its application have been considered; the legal mechanism of application of the HS by the contracting parties of the Convention has been worked out, as well as their obligations, and the order of the work on further development of the system.
In the Preamble to the Convention, its main objectives are specified: promotion of the international trade, facilitation of the collection and comparison of statistical data, in particular those on international trade, the standardisation and unification of foreign trade documentation, etc.
According to the text of the Convention, the HS is the Annex to the Convention and forms its integral part. At that, the HS should be understood to mean the Nomenclature of the Harmonized System (HSN) that contains commodity items, subitems and the related numerical codes, notices to sections, groups and subitems and the main rules of interpretation of the HS.
Besides the components of the HS, there are so called supplementary publications, having no legal validity (effect) which provide for the correct search of the place of a commodity in the HS and correct coding of the commodities. The given materials include the following: explanations to the HS, the аlphabetical index to the HS and explanations, the collection of the decisions associated with coding and the keys for transition.
The Convention on the HS sets up that the countries which apply it, do not have the right to change classification of commodities and their codes in the framework of the first six signs (figures). The importance of this rule lays in the fact that it establishes the basis for the exact description of commodities upon their objective characteristics which are contained in the HSN. These characteristics can be applied by customs authorities for strengthening their control over the goods that are transferred across the customs borders. Moreover, the enforcement of this principle opens a possibility to substential decreasing the number of errors while preparing a FEA documentation as well as enhancing the processing and transmision of the statistical data on the foreign trade turnover.
At the present moment, the HS is used by many countries as a unified classificator of commodities, complying to the modern requirements of the customs authorities, commercial and transport agencies and statistical services.
Until 1998, eighty six states accessed to the Convention on the HS which develop their commodity nomenclatures and customs tarrifs on the basis of this international agreement. This process is to a large extent promoted by the fact that the classification system allows a profound detalisation of subitems by each separate country (or a union of countries, for instance, by the European Union that accessed to the Convention). The main requirement which the Convention sets up in this case is that the subsections of the national nomenclatures may be extended and coded above the six valued numerical codes specified in the HSN.
Тhus, for example, the Combined (Tariff/Statistical) Nomenclature of the European Union (CN ЕU) is designed on the basis of the HS, at that, the six valued code of the commodity under the HS is supplemented with the seventh and the eighth signs. As the result, the CN EU contains the numerical eight valued codes of a subitem, the first six of which are similar with the appropriate codes of the HS.
With the aim to providing for the due level of participation of Ukraine in the international trade and economic relations and approximation of the legal regulatory framework of Ukraine to the system of generally recognised rules of the international law, Decree of the President of Ukraine On the Accession of Ukraine to the International Convention on Harmonized Commodity Description and Coding System (HS) was issued May 17, 2002.