U.S. export laws are complex, but there is one piece that is fairly straight-forward and easy to understand: the Schedule B. The Schedule B is the export classification system of the United States, and is administered by the Foreign Trade Division of the Census Bureau, which is part of the U.S. Department of Commerce.
A Schedule B code is 10 digits long, and there is a Schedule B code for every product. The codes are used by the Census Bureau to collect and publish U.S. export statistics.
Differences Between Schedule B, HS Codes, and HTS Codes
In casual conversation, exporters tend to use Schedule B code, HS code, and HTS code interchangeably. That’s because they understand that these codes are used to classify their products for customs. However, it’s important to understand the differences.
The Harmonized System (HS) classification codes are six digits long and are the basis most countries use for assigning duties and taxes for imports into their countries. HS codes are administered by the World Customs Organization and serve as the foundation for the import and export classification systems used in the United States.
For exporters, that means trade is easier. Instead of learning hundreds of types of customs nomenclature for exporting, most exporters need to understand only the HS system, upon which HTS codes and Schedule B codes are built.
This code takes the same form as an HS code for the first six digits, then has four additional digits. If you are a U.S. importer, this is the code you must use. As the United States (U.S.) import classification system, the Harmonized Tariff Schedule (HTS) is administered by the U.S. International Trade Commission (USITC).
Schedule B Codes
The U.S. export classification system, the Schedule B, is administered by the U.S. Census Bureau, Foreign Trade Division. If you are an exporter, you should be more concerned with Schedule B than HTS or HS codes. They are among the Electronic Export Information (EEI) data elements that exporters must file through AESDirect on most shipments valued at $2,500 or more by Schedule B number.
The Schedule B codes are also based on the HS codes but are not usually as detailed as the HTS codes used for imports. You can use the Schedule B search tool on the Census Bureau website or browse through the Schedule B chapters to find the appropriate codes for your products.
It’s important to understand that the Schedule B and HTS codes are often updated at the beginning of every year and, to a lesser extent, at some point in the middle of the year. These changes may not be large, but exporters should watch for these updates and determine if any of their products are affected by the change.
The World Customs Organization publishes a much more extensive list of changes to the Harmonized System every five to seven years. Since the HTS and Schedule B codes are based on the HS codes, importers and exporters can expect much more substantial updates to their product classifications during those years.
Components of the Schedule B Code
The Schedule B has three pieces of information that you need: the number, the description, and the unit of quantity (or unit of measure).
Below is a page from Chapter 9 of the Schedule B. When you look at the column called Schedule B No. and Headings, you must find the appropriate 10-digit code. The four-digit and six-digit codes are headings and are not actual Schedule B codes. So using the sample below, the first Schedule B number shown is 0901.11.0000. The 09 and 09.01 preceding it are only headings.
Once you have found the correct Schedule B number, you must decide what to use for your Commodity Description. You must provide a detailed-enough description of the item being exported so that the Schedule B number can be verified. Sometimes that means you can use the description listed right next to the number.
For example, the description, “Coffee husks and skins,” is sufficient for Schedule B number 0901.90.1000. However, the description next to Schedule B number 0901.11.0000, which is “Not decaffeinated,” is not a clear-enough description. So instead, you could build a description using the heading description plus the number description such as, “Coffee, not roasted, not decaffeinated.”
The next column is Unit of Quantity, which also means unit of measure. You must report the item in this unit of measure for AES/EEI purposes. This is something many exporters do incorrectly, because they are used to completing commercial invoices.
On a commercial invoice, you report items based on how you sell them, whether that’s in boxes, kits, gross, etc. However, the Schedule B tells you what unit of quantity the item needs to be reported on for AES/EEI purposes. Be aware that sometimes, this unit of quantity (or unit of measure) is different than the one you would report on a commercial invoice.
The example below shows that you must report coffee in kilograms (kg) even if you sell it in a different unit of measure, like cans. You may have a situation where the quantity shown on your commercial invoice is different than the quantity shown in your EEI if you sell your coffee in cans, for example.
The final column is the Second Quantity. Some items require you to report your item using two different units of measure. The example below does not show any of those items, but if you look in Chapter 32, you will see that certain kinds of paint need to be reported in liters and kgs (see Schedule B number 3208.10.0000). To learn more about units of measure, see my previous blog post on the topic.
HS Codes and the Automated Export System
Speaking of the Automated Export System (AES), if you’re an exporter, you’re interested in the Schedule B because of AES. AES is the system U.S. exporters use to electronically file their export data, known as EEI, to the Census Bureau to help compile U.S. export and trade statistics. It is also used by other government agencies for trade enforcement purposes.
An AES filing is often submitted by the U.S. Principal Party in Interest (USPPI), which is typically the U.S. exporter. It can also be submitted by an authorized agent of the USPPI, such as a freight forwarder.
In a routed export transaction—one in which the Foreign Principal Party in Interest (FPPI), typically the ultimate consignee, arranges transportation of the goods out of the U.S.—the FPPI’s agent typically submits the EEI.
If the exporter or the foreign buyer is relying on a third party to file a submission through AES, they must present this third party with a written limited power of attorney or some other written authorization.
Schedule B Codes on Your Export Documents
There are several places the Schedule B code may appear in your export documentation:
- The first six numbers of the code (the HS code) typically appear on both the proforma and commercial invoice.
- The 10-digit Schedule B code should be on the Shipper’s Letter of Instruction (SLI) if a freight forwarder is filing on your behalf.
- It may also be required on certificates of origin.
However, sometimes it’s not appropriate to include the HS code on your documents; find out when not to include them in our article: Why You Shouldn't Include HS Numbers on a Commercial Invoice.
Identifying the Correct Schedule B Codes
Exporters must properly classify their goods for export with the correct Schedule B code, and the Shipping Solutions online Product Classification Wizard helps you do just that. In addition, the Wizard helps you find the correct HS and HTS codes as well as the Export Commodity Classification Number (ECCN) or U.S Munitions List (USML) classification of your goods, which you need for export compliance purposes. Read the article USML vs. ECCN: What’s the Difference? for more information.
In addition to Shipping Solutions, these resources will help you choose the appropriate Schedule B code:
- The Schedule B codes can be found on the Census Bureau website. You can use their Schedule B search tool or browse through the chapters of the most current codes.
- A variety of seminar and webinar options are available for getting the training you need to properly classify your products for export.
- The U.S. Commercial Service offices. Your local office can help you properly classify your products for international trade.
This post was originally published in March 2016 and has been updated to include current information, links and formatting.