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Does Schedule B vs HS code confusion have you swimming in a pool of confusing numbers? Tracking products in a global economy would be easy if everyone used the same number systems, but that simply isn’t the reality. Successful exporters must learn to properly code products to avoid issues when products leave or arrive in a country.
The U.S. Census Bureau’s Foreign Trade Division publishes and tracks Schedule B numbers to account for all exported shipments over $2,500. The Harmonized System (HS) of codes is an international standard that is managed by the World Customs Organization (WCO). Both codes are routinely updated to include new trade products.
We’ll provide you with a direct comparison of both classification systems and why it’s crucial for exporters to avoid getting them confused.
A retail business with mismanaged inventory is going to get in trouble sooner rather than later. Although national economies are much more complex, the same basic principles still apply.
In many ways, Schedule B numbers and HS codes are how the U.S. and authorities around the world take a basic inventory of items coming in and out of the country. Exporters have to follow product classification procedures or risk a series of penalties in the U.S. and abroad.
To properly manage your exports, it’s important to understand a few key points about both of these systems:
Schedule B codes and HS codes will have many similarities, and sometimes a product will have the same Schedule B and HS code. While confusing, if exporters just start assuming that all their products will be like that, it’s only a matter of time before it becomes an issue.
Let’s break down some clear differences so that this never happens to you.
A Schedule B number is a unique 10-digit code issued to products by the U.S. Census Bureau’s Foreign Trade Division. These numbers are specific to products produced, manufactured, or otherwise originating in the U.S. and being sent elsewhere.
In many ways, the Census Bureau is the one in charge of national inventory. Using Schedule B numbers on export documentation allows both the Bureau and the Department of Commerce (DOC) to monitor U.S. exports.
Records dating back to 1989 are available to the public through the U.S. International Trade Commission and their data web library.
New exporters who want a better idea of product movement can find things such as:
Knowing a product’s Schedule B number makes it easier to look up these trade statistics. Depending on your findings, you can adjust your export business plan for maximum efficiency.
More specific information is available in our article, “What is a Schedule B Number?”
Yes, among the required documentation for exporting U.S. products, the Schedule B number must be stated for each product leaving.
Anytime you ship out more than $2,500 worth of merchandise, you have to notify U.S. Customs and Border Protection by filing the Electronic Export Information (EEI). If the products aren’t worth that much, but they need a validated export license to leave the country, the CBP still needs to be notified.
The EEI and other needed information is filed with the CBP through the Automated Export System (AES). If it’s been a while since you’ve exported anything, realize that the EEI is the new version of the Shipper’s Export Declaration (SED) document.
The Census Bureau uses this information to track the following information:
If exporters want to do this themselves, they need to make sure each unique product is correctly matched to its Schedule B code. The Census Bureau provides an online look-up tool for the public, or you can consult with an experienced export specialist.
For shippers focused on exports to any U.S. territories, there is still an EEI requirement for these locations:
These are either under direct management or were formerly managed by the U.S. government. Oddly enough, exports to Canada do not need an EEI filed unless it happens to be a product that requires an export license.
The same does not extend to our trading partner on our southern border, Mexico. All standard export laws and EEI filings must be followed.
An HS code is a four to six digit classification for products that are administered by the World Customs Organization (WCO).
It’s the most comprehensive product classification system in the world. Initially put into effect in 1988, the WCO has a committee that amends and updates HS numbers every five to six years.
The Harmonized System classifications have an impressive array of applications across many nations:
These are examples of ways nations are using HS codes on their own. In fact, even countries that aren’t members of the WCO have applied it. By the numbers, it’s a very impressive system.
| WCO Membership | 184 |
| Nations Using HS Code Systems | 200+ |
| Percentage of Classified International Merchandise | 98% |
| Number of Commodity Categories | 5,000+ |
| Update Schedule | 5 – 6 years |
The United States is one of many nations that uses it as the basis for their own systems. It’s the reason Schedule B numbers and HS codes are so similar; however, it doesn’t mean that the systems themselves are interchangeable.
HS codes stop after six digits for international classification. The U.S. and other nations create unique identifiers for their own use that get added on to the end, creating the 10-digit codes that exporters and importers, alike, are so familiar with.
The U.S. chose to use a different classification system for its imports and exports, but decided that both would be based on the HS numbers released by the WCO.
Schedule B codes, which we’ve already reviewed, are used for exports. HTS codes are used to set tariff rates on imported products. HTS is actually a further abbreviation of HTSUS, or Harmonized Tariff Schedule of the United States.
HS codes serve as the base for the HTS system, but are managed by the WCO.
HTS codes are administered by the U.S. International Trade Commission (ITC) rather than by the Census Bureau. Schedule B and HTS codes are both unique to the U.S. but cannot be used interchangeably.
HS codes and HTS codes may share the same initial six digits, just like Schedule B numbers do. However, the final four digits of the HTS codes will set it apart from the HS code.
The six digit HS codes cannot be used for exporting because they are managed by the WCO rather than the United States.
As we mentioned earlier, HS codes and Schedule B numbers can sometimes be the same, but it isn’t a guarantee. Since the HS code is shorter, the missing numbers could actually misidentify the product being exported.
The HS code is also not a substitute for a destination country’s import codes. Much like with Schedule B numbers, there’s likely to be many similarities between foreign codes and HS codes, but they’re not interchangeable.
Only Schedule B numbers are meant to classify physical goods for shipment to a foreign country.
To simplify the process, you can authorize a forwarder to assist with export documentation and file the EEI on your behalf.
To do so, you need to supply specific shipping documents, including:
Export specialists at Cargo Export USA may be able to assist you with these documents. Even if you weren’t using a forwarder, these would still be required.
Most goods leaving the U.S. don’t require exporters to pay an exit tax. Schedule B numbers are mostly used by the Census Bureau for record keeping purposes.
Even though they aren’t used for tax purposes, the AES system needs to be fed accurate information. The EEI you file through AES is going to have the Schedule B numbers of any and all products in a set shipment.
These numbers are used by the agency to make sure that the product isn’t on the Commerce Control List (CCL). If it is, and you have incorrectly labeled the product as No License Required (NLR) through the AES, you are in violation of export law.
Penalties for violating U.S. export laws include:
The severity of the penalty depends on the nature of the products and the final investigations by U.S. customs authorities.
Whether you’re set on exporting or are determined to import into the United States, following all documentation required will keep your business on the right side of the law.
Until the world finishes figuring out a standard numerical method of classifying traded products, exporters need to master the individual systems already in place. Schedule B vs HS codes aren’t a matter of debate – they each serve a distinct purpose.
The specialists at Cargo Export USA are here to help you keep it straight and get your exports out hassle-free with a variety of services.
Give us a call at (866) 301-0635 to speak with a representative. Can’t stay to chat? Complete a risk-free online form now and someone will be in touch with you soon.
