“All squares are rectangles, but not all rectangles are squares.”
That idea really confounded me as a child learning geometry. How could one belong to another, yet the inverse not be true? As my teacher explained, the difference lies in specificity.
A similar concept applies in exporting: If you’re new to exporting, the difference between Harmonized System (HS) numbers and Schedule B codes may be vexing. You may be wondering, are they the same? Can they be used interchangeably? What’s the difference?
Here’s how you can distinguish between the two to make sure you’re using the right code at the right time.
What Are HS Numbers?
The Harmonized System classification is a six-digit standard, called a subheading, for classifying traded products. HS numbers are used by customs authorities around the world to identify products for duties and taxes. Here’s a little more about HS numbers:
- There are six digits* in an HS number;
- HS numbers are uniform across the globe;
- HS numbers are administered by the World Customs Organization.
- HS numbers are used in most international export documentation and commercial invoices (unless your product falls into one of these categories).
(*Many governments add additional digits to the HS number to further distinguish products in certain categories. These additional digits are typically different in every country.)
What Are Schedule B Codes?
The Schedule B is a code built upon the first six digits that make up the HS code. Additionally, the Schedule B code is a U.S.-specific coding system used by the U.S. government to monitor U.S. exports. According to the export.gov website, “There is a Schedule B number for every physical product, from paperclips to airplanes.” Here’s a little more about Schedule B codes:
- There are 10 digits in each Schedule B code;
- Schedule B codes are used exclusively in the United States;
- They are administered by the Census Bureau’s Foreign Trade Division for export statistics.
- Schedule B numbers are required to be reported in the Automated Export System (AES) for shipments valued at more than $2,500 or when your export requires a license.
Why Is the Difference Important?
It’s important to understand the variations in HS numbers and Schedule B codes because the four-digit difference could change the classification of your international export. For exports, you can’t simply use a Schedule B number in place of an HS number. (Check out our comprehensive resource for all exporters, Export Procedures and Documentation: An In-Depth Guide, for more information.) Consider this example:
Imagine you’re exporting parts for umbrellas. In the United States, they are identified by the Schedule B Code 6603.20.3000. If you’re exporting these to Germany, and you complete the commercial invoice using all 10 digits of that code, the German importer’s paperwork will be rejected—in Germany, the correct number is 6603.20.0000.
As you can see, the first six digits (the HS numbers) are identical. The difference comes in the last four digits. Though the HS code subheading is the same, the U.S. Schedule B code for exporting the umbrellas is one digit different than the German code, making it incorrect.
Though this example is simplified, you can see how finding and documenting the correct description can be a headache. With just a few clicks, you can use Shipping Solutions’ Product Classification Wizard to take the headache out of the confusing rules of trade compliance.
For help with finding Schedule B Numbers, you can use the free online Schedule B Search or read John Goodrich’s article on product classification. For personalized help, you can contact your local Export Assistance Center.