ITDS Final Report on Supplementing HTS Codes with Global Product Nos/Codes

The ITDS Product Information Subcommittee’s Board of Directors has issued the final version of its guidance report discussing how global e-commerce data could be integrated into the decision-support process for government admission of products at international borders.

A draft copy of this report was distributed for trade consultation in October 2010. (See ITT’s Online Archives or 11/18/10 news, 10111819, for BP summary.)

(The International Trade Data System program supports the Participating Government Agencies (PGAs) contributing to the development of the Automated Commercial Environment (ACE). The ITDS program assists these agencies in identifying, documenting, and executing their plan to leverage ACE to improve business operations and further agency missions.)

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.

Global Numbers/Codes Could Allow Better Product Identification for Imports and Exports

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.

ITDS is Investigating GTIN/GPC Approach for Product Admission

PGAs of the ITDS 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)¹ when available to precisely identify products;
• Use global product characterization codes, specifically the Global Product Classification (GPC) codes¹ or the United Nations Standard Product and Service Code (UNSPSC) numbers that would be provided with each entry filed by importers or from global electronic catalogs when available;
• Use the Automated Broker Interface to transmit GTINs and global classification codes to participating government agencies;
• 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 Complementary Options (Transactional and Catalog-Based)

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

The two options are complementary, so both could be used for different lines of the same entry. Certain product sets such as unfinished goods are expected to best fit the transactional option, while finished product sets such as consumer goods will best fit the catalog-based option. Thus, the selection of one implementation option over the other will depend upon the nature of the product set as well as the availability of electronic product catalog data to each agency.

Transactional Option -- Product Code Included with Each Transaction/Entry Submission

The first option involves the importer or broker including an international product classification code (specifically the GPC or UNSPSC) 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 additional provision of a globally unique product identification number, known as the GTIN, allows products to be managed at the brand and model level instead of the product type level. This option works best for raw products or products for further processing or assembly that have a fairly simple risk profile.

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

The second option involves the importer or broker including the GTIN in each entry submission to identify as many products in the entry as possible by brand and model.

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 code attributes that describe complex risk factors 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 examiner-reviewed 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. This option works best for finished products that are commonly identified by a GTIN.

Approach Offer Greater Efficiencies According to ITDS

The ability to identify any product in an entry creates a powerful new efficiency. Once an agency has determined the admissibility of a specific product brand and model using this approach, that agency can apply that same admission action by default for future shipments (subject to periodic verification). 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, Studies to be Reported in 2011

ITDS notes that pilots are being undertaken by ITDS 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.

¹GTINs provide product identification (a reference to a unique supplier’s specific product that has consistent product features and packaging characteristics), and global product classification codes (the GPC or UNSPSC) 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 brand and “model” it is, and classification codes tell you the characterization of a product assigned to that category. Together they tell you that the product brand and model denoted by the GTIN has the 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.)