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COMMISSION
OFTHE
EUROPEAN COMMUNITIES
G'-ncrolSecretar¡ofCOM(82)220 final
Brussels,29thApril1982
FOROFFiCIAL 11(
HARMONIZED COMMODITYDESCRIPTION ANDCODINGSYSTEM
(Communication fromtheCommissiontotheCouncil)
/
COM(82)220final

SUMMARY
1.Since1973theCommunityhasbeenparticipating innegotiations
intheCustomsCooperation Council(CCC)onthedevelopmentcfthe
so-calledHarmonized CommodityDescription andCodingSystem
(HarmonizedSystem),anewinternational goodsnomenclature which
isintendedtobeusedasabasisforcustomstariffsandinternaticr aI
tracestatistics from1985onwards.
2.TheCommissionhasnegotiatedfortheCoir.mur.ityurderthe"adhoc"
procedureandsucceededingettingthemajorityoftheCorwnurit >'s
requirements incorporated intothenewnomenclature .Aproblemhas,
however,arisenconcerningthesignatureofthenew"conventionwhich
willsupersedethepresentCCCMonenclature Convention ,
3.All.theMemberStatesaresignatories totheexistingConvention and
themajorityareinsistingthattheyshouldalsosigntherowagreement
(iethatitshouldbetreatedasanixedone)-*nordertoretain10
votesinthemanagement committeewhichwill,superset -thepresert
Nomenclature Committee .
4.Ithasbeenindicatedthatthiswouldjeopardise USacceptancecf
theConvention whichisseenasoneoftheprincipalbenefitsto
theCommunitycfadoptingtheH.S.Forlegalandpoliticalreasons,
therefore,itisconsideredthatthenewConventionshouldbesigned
onbehalfof.theCommunityalone.. '

Harmonized CommodityDescription andCodingSystem
1.Introduction
1.1TheCustomsCooperation Council(CCC)hasbeendevelopingthe
Harmonized CommodityDescription andCodingSystem,otherwise
knownastheHarmonizedSystem,since1973.Thesystemisintendedto
replacetheCustomsCooperation CouncilNomenclature (CCCN)as
thebasisforcustomstariffsandinternational tradestatistics .
Thedevelopment workisnearingcompletionanditiscurrentlyen­
visagedthattheHarmonizedSystemwillbethesubjectofanew
CCCConventionenteringintoforceon1.1.85.ThisConventionwill
replacethe1950Convention onNomenclature fortheclassification
ofgoodsinCustomstariffstowhichallMemberStatesarecon­
tractingparties.
1.2TheCommission wasauthorized bytheCounciltonegotiateinthe
CCConthedetailsoftheHarmonizedSystemundertheso-called
'adhoc'procedure.Ifthe"Communityistobecomeacontracting
partytotheproposednewConvention,thenaformaldecisionto
thiseffectbytheCouncilwillberequiredinduecourseonthe
basisofaproposalbytheCommission.However,discussions ona
firstdraftofapossiblefutureconvention havealreadyrevealed
aproblemconcerningthesignatureoftheconvention.Thisproblem
affectsthequestionofvotesintheproposedHarmonized System
management committeeandhasanimpactonotherprovisionsofthe
draftconvention.Theissuethereforeneedstobesettledifpossible
beforethenextdiscussion ofthedraftconvention intheCCC
startingon17thMay1982.
1.3ThepurposeofthisnoteistoinformtheCouncilofthecurrent
situationregardingtheHarmonizedSystem,toseekadecision
inprincipleconcerningsignatureofafutureconvention and
guidanceontheconductoffurthernegotiations onthedraft
convention .
2.Description oftheHarmonized System
2.1TheHarmonized Systemisanomenclature designedfordescribinggoods
ininternational trade.Itconsistsessentially oftwolevelsof
description .ThefirstlevelisamodernizedversionoftheCustoms
Cooperation CouncilNomenclature andwillhavesome1200headings.
Thesecondlevelconsistsofsomethingover3,000subdivisions of
themainheadings.Thewholewillprovidesome4,500detaileddes­
criptionsofgroupsorclassesofgoods,eachofwhichwillbe
identified byaunique6digitnumber.AnexampleisatAnnexeA.
2.2Thesystemidentifiesthe4,500orsogroupsorclassesofgoods
whicharemostcommenlytradedinternationally .Itisdesigned
primarilytoprovidethebasisforintegratedcustomstariffs/trade
statisticsnomenclatures .Additionaldetailwhichmayberequired
byuserscanbeaddedbymakingfurthersub-divisions belowthe
HarmonizedSystem6-digitlevel.Inadditiontoitscustoms/trade
./.•

-2-
statistics uses,itisexpectedthatpartsofthesystemwillbe
used,induecourse,asthebasisfortransporttariffsandto
provideclosercorrelations betweentradeandproductionstatistics .
Itisalsoexpectedthatproducerswillincorporate theHarmonized
Systemdescriptions andcodesintotheircommercial -information
systemsandquotethemoninvoiceswhenexportingtheirgoods.
3.Background
3.1TheCustomsCooperation CouncildecidedtodeveloptheHarmonized
Systemin1973following atwoyearfeasibility study.Pressureto
developsuchasystemcameoriginally fromanumberoforganisations
concernedwiththefacilitation ofinternational trade.Theywere
concernedwiththemultiplicity ofdifferent commoditydescriptions
andcodesusedbythemanyparties-customs,tradestatistics,
carriers,portauthorities ,banks,insurance companies,etc.-
involvedininternational trade.Theserequiredimporters andex­
porterstoredescribe andrecodethesamegoodsmanydifferent ways
inasingleinternational tradetransaction andaddedsignificantly
tothecostofimporting andexporting.Theywerethereforelooking
foranagreedinternational standardcoveringatleastthemost
importantclassesorgroupsofgoodstradedinternationally .
3.2TheCommission andtheMemberStatessupportedtheprojectfromthe
outsetfortwomainreasons.Firstly,theysawitasanimportant
tradefacilitation measure.Secondly,andequallyimportantly,they
sawtheprojectasameansofbringingtheUnitedStatesandCanada,
whicharenotsignatories totheexistingConvention andwhichhave
entirelydifferentnomenclatures ,toadoptthesamebasisfortheir
customstariffsandtradestatistics astheCommunity,
3.3Thedevelopment workhascontinuedsince1973intheHarmonized
SystemCommitteeoftheCCC.Ithasbeenlongandpainstaking but
theCommunity hasmanagedtohavethevastmajorityofitsnomen­
claturerequirements accepted.Communitypositions havebeenestab­
lishedinclosecollaboration betweentheCommission,theMember
Statesandrepresentatives ofEuropeanindustries .Theresultsofthe
technicalnegotiations cantherefore beconsideredsatisfactory from
aCommunitypointofview.
3.4Itwasoriginally envisagedthatthenewsystemwouldbeintroduced
throughaCCCRecommendation .Lateintheday,theUnitedStates
representatives tooktheviewthatCongresscouldonlybepersuaded
toapproveadoptionofthesystembytheUSifitwereenshrinedin
anewCCCConvention .ThiscouldthenbepresentedtoCongressas
anentirelynewinternational instrumentdevelopedwiththefull
participation oftheUSratherthanarevampedversionofanold
Europeansystem.Aconvention wouldalsobemorerigorouslybinding
thanarecommendation .
3.5TheCommission andtheMemberStateshaveacceptedtheideaofa
newconvention andthevastmajorityofthemembersoftheHarmonized
SystemCommitteealsosupportthisproposal.However,MemberStates
havebeenpreoccupied withtheconsequences forvotingrightsinthe
management committeewhichwillsucceedtheHarmonized System
Committee .

-3-
3.6ALLtheMemberStatesarecurrentLysignatoriestotheCCCNConvention,
whichwiLLberepLacedbytheHarmonizedSystemConvention,andas
sucheachhasavote.ForhistoricaLreasons,inpLenarysessions
oftheHarmonizedSystemCommitteeonLytheCommission,Franceand
theUnitedKingdomhavevotes.IntheworkingpartyofthatCommittee
eachdeLegationpresenthasbeenaLLowedtovote.Thus,intheory,
theCommunityhashadtherighttoeLevenvotes-CommissionpLus
10MemberStates,aLthoughinpracticethenumberofdeLegationspresent
hasinvariabLybeenLower.ThemajorityofMemberStatesarecurrentLy
insistingthattheCommunityshouLd,inonewayoranother,beaLLowed
anumberofvotesequaLtothenumberofitsMemberStatesifitbe­
comesaPartytothenewConvention .
3.7TheUnitedStatestaketheviewthattheCommunityshouLdhaveone
vote.TheyhavefrequentLybeenoutvotedontechnicaLmattersduring
thedeveLopment ofthesystemthroughtheuse'ofthe'Community 's
bLockvote.ThisisamatterofgreatconcerntoofficiaLsand
Congressisawareofthissituation.USnegotiators cLaimthatCongress
wiLLnotapproveUSacceptanceofthenewconventionunLessthisunfair
situation is.corrected.TheUSconsiderstheCommunityasasingLe
entityhavingacommontariffandtradestatisticssystemandseesno
reasonwhytheCommunity'svotingpowershouLdbetentimesas
greatasitsown.TheypointtothefactthattheCommunityhasa
singLedeLegation andasingLevoteinthetechnicaLCommitteeon
customsvaLuationsetupintheCCCundertheGATTVaLuationAgreement
andconsiderthatthesamesituationshouLdprevaiLintheareaof
tariffnomencLature.FinaLLy,theUSnegotiators considerthatthe
acceptanceofasingLevoteisaverysmaLLpricetopayforthe
substantiaL improvements totheUSandCanadiantariffnomencLatures
whichtheCommunityhasbeenseekingformanymanyyears.
4.Participation intheConvention
4.1TheCommission andtheMemberStateshavebeenpressingforaprovision
intheConvention whichwiLLgivetheCommunity,andothercustoms
oreconomicunions,anumberofvotesequaLtothenumberofMember
States.SupportfortheCommunityintheHarmonized SystemCommittee
onthequestionofvoteshasbeennegLigeabLe anditisnowrecog­
nisedthatthisisnotareaListicnegotiatingposition.Member
Stateshave,therefore,proposedthatthey,asweLLastheCommunity,
shouLdbecomecontractingpartiessoastoachieveindirectLy an
objectivewhichcannotbeattaineddirectLy.
4.2InexaminingthequestionofsignaturebyMemberStatesitisusefuL
toexaminefourquestions.FirstLytheLegaLsituation,secondLy,
thepoLiticaLimpLications ,thirdLytheimportanceoftheobjective
tobeachievedandfinaLLyrepresentation oftheCommunityinthe
Harmonized SystemManagement Committee.
4.3LegaLSituation
4.3.1ALthoughitisexpectedthattheHarmonizedSystemwiLLbe
wideLyusedbycommerciaLinterests,thecommitments which
contractingpartieswiLLberequiredtoenterintoreLate
tonomencLaturesforcustomstariffsandinternationaL trade
statistics.UndertheTreatyandthejurisprudence oftheCourt
ofJusticeoftheEuropeanCommunity,competenceforthese
mattershaspassedtotheCommunity.Asaconsequence,itis
noLongeropentotheMemberStatestoenterintointernationaL
commitments intheirrespect.
4.3.2CertainMemberStateshavearguedthattheresiduaLMemberState
competenceforECSCproductsgivesthemtherighttobecomecon­
tractingparties,itshouLdnotbeoverLooked,however,that:

-L-
_Thenomenclature Laid down intheECSC Treaty isnotused forthe
purposes ofthe Common Customs Tariff orNIMEXE .Thenomenclature
hasbeen transposed into these twoinstruments andwill ,similarly ,
betransposed into anewCommunity customs tariff /trade statistics
nomenclature based upon theHarmonized System .
Theborderlines between ECSC andEECproducts areoften very fine
anddepend upon technical criteria notnecessarily found inthe
Harmonized System .When nomenclature questions relating tocoal or
steel products arebeing examined intheHarmonized System Committee
itwill often beimpossible -jnpractice tomake adistinction
between EECand ECSC products .
4.4Political implications .The idea that theMember States should sign
theConvention inorder toobtain 10votes haspolitical implications
which make itunacceptable tothe Commission .
4.4.1 Firstly ,toaccept such anapproach would betodisregard akey
area ofthe Customs -Union .Acommon customs tariff was introduced
in1968 after many years ofgreat effort .This isafundamental
instrument ofthe Customs Union which isacornerstone ofthe
Community .The Community negotiates its common tariff inthe
GATT and initsbilateral andplurilateral agreements and
subsequently enters into tariff agreements asasingle body .
This approach hasnever been questioned inthese contexts .To
accept that theCommunity should appear as10independent states
inanew convention relating totariff nomenclatures inthe
Customs Cooperation Council isinconsistent with theprinciple
ofacommon customs tariff and trade statistics system .Signature
bytheCommunity alone would not,however ,prejudice theright of
theMember States tovote inplenary sessions ofthe
Customs Cooperation Council (seeparagraph 5.3.2 .).
4.4.2 Secondly ,thequestion ofvotes raises political problems
vis-a-vis theUnited States aspreviously indicated .One of
the benefits oftheimplementation oftheHarmonized
System will bethat theUnited States will base itscustoms
tariff and trade statistics nomenclatures onthe same interna­
tional nomenclature astheCommunity .Thecomplexities ofthe
„current UStariff and its lack ofclear explanatory notes have
been asource ofgreat difficulty forCommunity exporters .
Atpresent ,theCommunity hasnosay inUStariff classification
decisions whereas under thenew Convention decisions ,atleast
atthe level oftheHarmonized System ,will beopen tointerna­
tional review intheHarmonized System Committee .Inreturn
forthis benefit the USisseeking merely aparity invoting
rights with theCommunity .This problem wasrecently discussed
once again with senior USofficials inthe light ofMember
State reactions tothedraft Harmonized System Convention .They
emphasized thecommitment ofthe USAdministration tothe
adoption oftheHarmonized System butstressed thedifficulties
which they arehaving inobtaining political support forthe
complete change intheUStariff andtrade statistics schedules
which itsadoption implies .They were sympathetic tothe
concerns oftheMember States over thepotential loss ofvotes
but sawnoway inwhich Congress could bepersuaded toadopt
theHarmonized System unless theUnited States had asimilar
status intheHarmonized System Committee ,including similar
voting rights ,totheCommunity .

-5-
4.5.Importance :Intheabsenceofaconsensus,theHarmonized System
Committee maybeexpectedtotakevotesonthreematters-the
classification ofgoodswithinthesystem,theadoptionof
explanatory notes,andproposalstoamendthenomenclature
anditslegalnotes.
4.5.1Classification decisions andExplanatory Notes:
TheCommunitywill,likeothercontracting parties,beincon­
veniencedifaclassification decisionoranexplanatory note
adoptedintheCCCisnotconsistentwithitscurrenttariff
situation.Itwillbefree,however,toadjustitstariffby
introducing newsubheadings soastoavoidanyconsequences
whichareconsidered unacceptable .Thisiswhatisdonecurrently
ifdecisionsofthepresentCCCNomenclature Committeeorthe
EuropeanCourtofJusticeproduceresultsinconsistent with
Communitypolicyrequirements .
4.5.2Amendments :Sofarasproposedamendments areconcerned,itis
envisagedthatthenewconventionwillcontainaprovision,
similartotheoneinthepresentCCCNomenclature Convention,
whichenablesanycontracting partytopreventtheadoptionof
anyproposedamendmenttothenomenclature orlegalnoteswhich
isobjectionable :
TheCommission sympathises withthedesireoftheMemberStatestohave
tenvotesandagreesthatinsomeareasofinternational negotiations
theremaybeoverwhelming groundsforensuringthatthevotingpowerof
theMemberStatesisnotdiminished byparticipation asCorrunity.
However,inthecaseoftheproposedHarmonized System'Conventionitis
impossible.toargue,giventhesituationoutlinedabove,thatten
votesareessentialtoprotectimportant Communityinterests.
4.6Representation Ifthenewconvention weresignedonbehalfofthe
CommunityalonethiswouldnotmeanthatMemberStatesexpertswould
beexcludedinfuturefromparticipation intheworkofthe
Harmonized Systemmanagement committee.Thesituationwouldbe
similartothatatpresentunderthe'adhoc'procedure.Commonpositions
wouldbearrivedatinpreparatory meetingsbetweentheCommission
andthreMemberStates.Thesepositionswouldbepresented bya
spokesman whowouldnormallybetheCommissionrepresentative .When
aMemberStaterepresentative hadaparticularinterestorexpertise
hecould,bycommonaccord,presenttheCommunityposition.
Inworkingparties,wheredelegateswererequiredtopresentarguments
basedupontheirexperience orspecialexpertise,MemberStateex­
pertscould,onceagainbycommonaccord,participate freely.A
commonpositionwouldonlyberequiredwheredecisionsaffecting
theCommunitytarifforstatistical systemweretobetaken.Suchan
arrangement hasworkedsatisfactorily fornearlytwoyearsforthe
preparation ofandrepresentation oftheCommunityinmeetingsof
theTechnical Committee onCustomsValuationoftheCCC.

-6-
5.Conclusion
5.1Oncethenegotiations arecompletedtheCommission expects
toproposetotheCouncilthattheCommunityshouldbecome
acontracting partytoanewconvention ontheHarmonized System.
ThisconventionwillcommittheCommunitytousetheHarmonized
Systemasthebasisforanewintegrated customstariff/statistical
nomenclature .TheCommissionwillalsohavetoseekauthorisation
toundertakeconsequential negotiations oftheCommunity'sGATT
tariffschedules.TheCommissionwillonlymakeitsproposalsif
andwhenitissatisfiedthattheCommunity'smajortradingpartners
arealsopreparedtobecomecontracting .partiestotheproposednew
convention withthesameobligations astheCommunity.
5.2Inordertocontinuethenegotiations onthedraftHarmonized
SystemConvention theCommission needsfurtherguid.ance fromthe
Councilonthedirectiontobefollowed.TheCommissionfully
recognises thatinsomeinternational forathequestionofthevoting
strengthoftheCommunityisofgreateconomicorpolitical im­
portance.However,inthecaseoftheHarmonized Systemmanagement
committeethequestionofvotesisoflessersignificance Thequestions
dealtwitharelargelytechnicalones,asinthecaseoftheCCC's-Tech­
nicalCommittee onCustomsValuationwheretheCommunity hasasingle
delegation withonevote.Inthesecircomstances,itisnotrealisticto
expectthattheCommunityshouldreceivetenvotesunderthenewconvention .TheCorarn'ssiqn proposes,, J .,. ^,'therefore,thattheCouncilshoulddecidethatintheeventofthe
Communitydecidingtobecomeacontracting partytoaconvention
ontheHarmonized SystemwhichcommittedittousingtheHar­
monizedSystemasthebasisforanintegrated customstariff/trade
statistics nomenclature ,theConvention wouldbesignedon
behalfoftheCommunityalone.
Suchadecisionwouldofcourse,bewithoutprejudicetodecisions
onthequestionofsignatureofotheragreements wherethequestion
ofvotesmaybeofgreatereconomicorpoliticalsignificance .
5.3EveniftheagreementistobesignedonbehalfoftheCommunity'itmaybepossibletonegotiateprovisions inthenewConvention
whichwould,tosomeextent,offsetthelossofvotes.Themain
possibilities areasfollows:
5.3.1Weightedvoting.Anattemptcouldbemadetointroduce asystem
ofweightedvoting.Itwould,however,probablybedifficult
tofindagenerallyacceptable basisfortheweighting
ofvotesandthepossibilities wouldhavetobediscussed
widelywithbothdevelopedanddevelopingcountriesbefore
anyfirmproposals weremade.
5.3.2RoleofCCCCounciI.Underoneversionofthecurrentdraft
ofthenewconvention,theHarmonized SystemConvention
istobesupervised bytheCCC.TheConventionsettingup
theCustomsCooperation Councilprovidesthateachsignatory
hasavoteinmatterswhichconcernit.Thiswillnotbeaf­
fectedbytheHarmonized SystemConvention andallMember
StateswillcontinuetohavetheirvotesintheCouncil
oftheCCC.TheversionwhichplacestheHarmonized System
underthesupervision oftheCounciloftheCCChasconsiderable
supportamongstthepartnerstothenegotiations onthe
Harmonized SystemotherthantheUnitedStateswhoarepressing

-7-
foranautonomous convention .Itmaybepossibletonegotiate
provisions underwhichalldecisionsoftheHarmonized
SystemCommitteearesubjecttoapprovaloftheCouncilof
theCCC.IfthiscanbeachievedthentheMemberStateswill
haveagreatdealofinfluenceovertheultimatedecisions
onallmattersconcerning theHarmonized System.
5.3.3Consensus .TheCommunity andtheUnitedStateswouldbeon
thesamefootingifdecisions -weretakenbyconsensus in
theHarmonized SystemCommitteei.e.nosignatory would
haveavote.Since,however,theCommitteewillbedealing
withalargevolumeofhighlytechnicalquestionsthereis
aseriousriskthatallprogresswillbeblockedifa
consensus hastobereachedbeforeanydecisioncanbetaken.
Suchanapproachshould,therefore,r-ilybe.contemplated
asalastresort.
5.4TheCouncilisinvitedto.:
5.4.1Mppr-ovetnetornmission 1sposition thattheCommunity
aloneshouldbethesignatorytotheproposedHarmonized
SystemConvention,and
5.4.2NotetheCommission'sintentiontoexplorethepossibilities
ofnegociation outlinedatparagraph5.3.

ANNEX A
Code number
CCCN
70.01
70.02
70.03
70.04H.S.
7001.00
7002 .10
7002.20
7002.31
7002 .32
7002.39
7003 .11
7003 .19
7003.20
7G03 .30
7004.10
7004.90Title
Cullet and other waste and scrap of
glass ;glass inthe mass .
Glass inballs (other than microspheres
of heading No.70.18 ),rods ortutors ,
unwork'jcj . 1
-Glas sinballs
-Rods
-Tubes :
–Offused quartz orother fused silica
–Ofother glass having alinear
coefficient ofexpansion not exceeding
5x10-6 per Kelvin within a
temperature range of0°C to300°C
–Other
Cast glass and rolled glass ,insheets
orprotiles ,whether ornot naving an
anr -orpcnt orreflecting layer ,but not
othc. -rwi. -eworked .
–r.on-wirf 'dsheets :
–Coloured throughout the mass (body
opacified ,flashed orhaving
andiinorbont orreflecting layer
–Other
–Wired sheets
-Profiles
Drawn glass and blown glass ,insheets ,
whi■tlu'rornot having anabsorbent or
FiTIf ctTng layer ,but not otherwise
worked .
-Glass ,coloured throughout the mass
(body tinted ),opacified ,flashed or
having anabsorbent orreflecting
layer
-Other glass
I