ITDS Reports on Supplementing HTS Codes with Global Product Nos/Codes

The International Trade Data System has posted a report¹ discussing how global e-commerce data could be integrated into the decision-support process for government admission of products at international borders. The report also states that pilots using such data for high-risk shipments began in the second half of 2010.

Report Assumes HTS Numbers Are Insufficient for Jurisdiction & Risk Issues

The report is based on a concept first introduced in the ITDS April 2009 Product Information Committee report entitled “Leveraging E-Commerce Data for Smarter Cargo Management.”

The April 2009 report concluded that HTS codes, while critical in the duty assessment process, do not provide the government with sufficient product characterization information to make product jurisdiction and risk determinations efficiently.

Addition of Global Numbers/Codes Could More Efficiently Manage Trade

The integration of global e-commerce product identification numbers and codes as a supplement to HTS codes offers government an opportunity for accomplishing the goal of consistent product identification and characterization information for efficient cross-border management of imports and exports.

PGAs Investigating Use of GTINs and GPCs to Improve Product Admission

Participating government agencies (PGAs) of the ITDS, the U.S. forum for implementing a “single-window” approach to trade, are investigating the use of global e-commerce data to improve the product admission process at U.S. borders. The proposed approach would:

• Use globally unique product identification references known as Global Trade Item Numbers (GTINs)² when available to precisely identify products;
• Use global product characterization codes, specifically the Global Product Classification (GPC) codes² or the United Nations Standard Product and Service Code (UNSPSC) numbers that would be provided with each transaction or entry filed by importers or from global electronic catalogs when available;
• Use the Automated Commercial Environment (ACE) system to transmit GTINs in the Participating Government (PG) record of each entry;
• Use ACE to transmit GPC and UNSPSC codes in the PG record of each entry;
• Develop government systems that can access information in global electronic catalogs for products identified by a GTIN in the entry submission; and
• Drive voluntary adoption by creating business value for industry and government beginning with higher-risk product sets that impact public health, public safety, or environmental health.

Report Describes 2 Implementation Options (Transactional and Catalog-Based)

Since the April 2009 report, government agencies have considered a number of alternatives for integrating global e-commerce product data into the entry data stream. Two implementation approaches -- transaction and catalog-based -- have emerged.

The two implementations are complementary, so both could be used at the same time. Certain product sets such as unfinished goods are expected to best fit the transactional approach, and other product sets such as consumer goods will fit the catalog-based approach best. Thus, the selection of one implementation option over the other, or a combination of both, will depend on the maturity of the e-commerce data in the product sets of greatest interest to each individual PGA, as well as the resources available to each agency to implement either or both options.

Transactional Option -- Data Included with Each Transaction/Entry Filed

The first approach involves the importer or broker including an international product classification code in each entry submission for as many products (line items) as possible.

The product classification code information is repeated with each new transaction, and provides additional product characterization that can be used in automated or operator-assisted systems to supplement the HTS code. The provision of a globally unique product identification number, known as the GTIN, in association with the product classification code will allow for more granular product management, but its use is optional.

Catalog-Based Option -- Use of Catalogs to Access E-Commerce Data

The second approach involves the importer or broker including the GTIN in each entry submission to identify as many products in the entry as possible.

Instead of importers or brokers providing product classification code information in every entry submission, suppliers publish the product GTIN along with the international product classification code and product classification code descriptors that provide additional granularity in a global product catalog. The government uses the GTIN to access an array of detailed product classification and description information from the global catalog.

The detailed product information is then used by government in automated or operator-assisted systems to make admissibility decisions. When products are identified with a GTIN and the supplier has published information for that product in a product catalog, importers only need to provide one data element, the GTIN, for the catalog-based implementation to work. Furthermore, product information obtained from the catalog is potentially far more detailed than the product classification codes provided by the transactional implementation, which improves the accuracy of government decisions for products with complex risk factors.

Both Options Offer Greater Efficiencies According to ITDS

Both approaches offer greater efficiency in cargo admission when products in the entry are identified with GTINs. Once an agency has determined the admissibility of a specific product form identified by a GTIN, that agency could automatically enforce that same admission action every time that GTIN reoccurs in future shipments. Unique product identification allows government to learn and react from its prior experience with a product, efficiency not possible when products are identified only by their HTS code and narrative descriptions.

ITDS Pilots Being Undertaken in Second Half of 2010

ITDS notes that pilots are being undertaken by ITDS in the second half of 2010 for several higher-risk product sets and the results of these studies will be reported in 2011 to more precisely define the benefits, cost, and effectiveness -- the business case -- for the adoption of these processes.

¹The report was prepared by the ITDS Board of Directors, Product Information Subcommittee

²GTINs provide product identification (a reference to a unique supplier’s specific product that has consistent product and packaging characteristics), and global product classification codes provide product characterization (a reference to a commodity category which has a defined set of product characteristics shared by all assigned products). GTINs tell you which product it is, and classification codes tell you the characterization of a product assigned to that category. Together they tell you that a specific product as denoted by the GTIN has the product characteristics denoted by the product classification code.

(See ITT’s Online Archives or 04/24/09 news, 09042425, for BP summary of the April 2009 report.

See ITT’s Online Archives or 08/13/10 news, 09081330, for BP summary of ITDS PIC concept paper on recommendations for the use of product information codes.)