As volumes of data become larger and larger, an increasing need for classifications of goods and services, as well as for systems to compare among different regions has emerged for solving several purposes: standardize names of goods, analyse trends, establish fees or for generating local and/or international statistics.
Organizations such as the United Nations (UN), World Customs Organization (WCO), and United Nations Economic Commission for Europe (UNECE) have created different classifications in order to seek harmonization and standardization of data among countries.
International classifications can be divided into three groups, whether they are defined by goods, services, or industries. These identified classifications are the following:
|HS||Harmonized Commodity Description and Coding System||Goods||World Customs Organization|
|SITC||Standard International Trade Classification||Goods||United Nations|
|CPC||Central Product Classification||Product (Good+Service)||United Nations|
|ISIC||International Standard Industrial Classification||Industry (Economic activity)||United Nations|
The international classifications (HS, SITC, ISIC and CPC) have been established as references of the different categories of products and services. The diagram below shows the relationship among these classifications. The blue lines represent classifications that were used as reference to generate others and green lines to show if there is compatibility (correlation) between codes. A correlation table is a chart that translates a given code from one classification to the other. For example: when CPC was generated, it used as reference the HS and the SITC. Additionally, CPC has correlation tables with the HS, SITC and ISIC.
This table shows a typical example of the same commodity classified using all four categorizations.
The Harmonize System (HS) is an international good nomenclature used by customs authorities around the world to identify products for the application of duties, taxes and regulations, and as a basis for the collection of international trade statistics. Over 98% of the world’s merchandise is classified in terms of the HS.
Since 2013, Panama has joined the Central American Customs Union, aligning itself with the Central American Harmonize System (SAC).
The Central American Harmonize System (SAC) constitutes the nomenclature for the official classification of goods at the Central American level and is based on the nomenclature of the Harmonized System (HS), designation and codification of goods.
In November 2016, through Cabinet Decree No. 35, Panama adopts the sixth amendment approved by the World Customs Organization and the codes of the Central American Harmonize System (SAC) are extended to ten digits.
The Ministry of Economy and Finance (MEF) has available on the website the National Tariff of the Sixth Amendment of the World Customs Organization. For its part, SIECA (Secretariat of Central American Economic Integration) has the SAC Correlation Table detailing changes from one amendment to another.
HS Code throughout the Supply Chain
HS codes can be used to track product demand across the supply chain. In the example below, two different products are imported, each with a different HS code. After the manufacturing process, both product turn into one and the new product to be exported receives a new HS code.
By using trade data classified into HS coding, researchers can identify how much product is imported, manufactured, and exported.