Proposal for a COUNCIL DECISION on the position to be taken on behalf of the European Union in the World Customs Organization Council in relation to a WCO Article 16 Recommendation amending the Harmonised System
Date: 2019-06-03
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: Combined Nomenclature, World Customs Organisation, customs cooperation, customs harmonisation, international convention, revision of an agreement

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   EUROPEAN COMMISSION  Brussels, 3.6.2019  COM(2019) 262 final  Proposal for a COUNCIL DECISION on the position to be taken on behalf of the European Union in the World Customs Organization Council in relation to a WCO Article 16 Recommendation amending the Harmonised System  
 
 
EXPLANATORY MEMORANDUM 

1. 

SUBJECT MATTER OF THE PROPOSAL 

This proposal concerns the decision establishing the position to be taken on the Union's behalf 
in the Council of the World Customs Organization in connection with the envisaged adoption 
of  a  draft  Recommendation  concerning  the  amendment  of  the  Harmonized  System  (HS) 
Nomenclature. 

2. 

2.1. 

CONTEXT OF THE PROPOSAL 

The International Convention on the Harmonized Commodity Description and 
Coding System 

The International Convention on the Harmonized Commodity Description and Coding System 
(‘the  Agreement’)  aims  to  facilitate  international  trade  and  the  collection,  comparison  and 
analysis of statistics, in particular those on international trade. It includes as an Annex the HS 
Nomenclature which is an international harmonized system enabling participating countries to 
classify  traded  goods  on  a  common  basis  for  customs  purposes.  In  particular,  the  HS 
Nomenclature  includes  the  description  of  the  goods,  which  appear  as  headings  and 
subheadings,  and  their  related  numerical  codes,  based  on  a  6-digit  code  system.  The  HS 
Nomenclature  is  revised  every  five  years1.  It  is  applied  by  more  than  190  administrations 
worldwide;  consequently,  more  than  98%  of  all  goods  traded  in  the  world  are  classified 
according to it.  

The Agreement entered into force on 1 January 1988. 
The European Union and all Member States are parties to the Agreement2. 

2.2. 

The World Customs Organization (WCO) 

The World Customs Organization (WCO), established in 1952 as the Customs Co-operation 
Council,  is  an  independent  intergovernmental  body  whose  mission  is  to  enhance  the 
effectiveness  and  efficiency  of  Customs  administrations.  The  WCO  offers  its  Members  a 
range of Conventions and other international instruments, as well as technical assistance and 
training services. Today, the WCO represents 182 Customs administrations across the globe. 

The  WCO’s  governing  body  is  the  Council,  which  relies  on  the  competence  and  skills  of  a 
Secretariat and a range of technical and advisory committees to accomplish its mission.  

The technical Committee, in the WCO, which is in charge of the preparatory work related to 
the Agreement is the HS Committee. The main tasks of the HS Committee are the following: 

 

 

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2 

To  ensure  uniform  interpretation  and  application  of  the  Harmonized  System  legal 
texts, including by settling  classification disputes between Contracting Parties, thus 
facilitating trade;  

To  propose  amendments  and  updates  to  the  Harmonized  System  to  reflect 
developments in technology and changes in trade patterns as well as other needs of 
Harmonized System users;  

Since  when  it  was  introduced,  in  1988,  the  HS  Nomenclature  has  been  revised  five  times.  These 
revisions entered into force in 1996, 2002, 2007, 2012 and 2017. 
Council Decision 87/369 of 7 April 1987 concerning the conclusion of the International Convention on 
the Harmonized Commodity Description and Coding System and of the Protocol of Amendment thereto 
(OJ L 198 of 20.7.1987, p.1). 

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 

To promote widespread application of the Harmonized System and examine general 
questions and policy matters relating to it. 

The  WCO  Council  examines  proposals  for  amendments  to  the  Agreement,  prepared  by  the 
HS  Committee,  and  may  recommend  them  to  the  Contracting  Parties.  Amendments 
recommended by the WCO Council are deemed to be accepted if no Contracting Party enters 
an objection within a period of six months after notification to them. 

The  positions  to  be  taken  by  the  Union  in  the  WCO  on  the  HS  are  coordinated  with  the 
Member States. The Union and its Member States have together only one vote in the WCO 
Council. 

The envisaged act of the WCO Council 

2.3. 
On  its  133rd/134th  sessions  (27-29  June  2019),  the  WCO  Council  is  to  adopt  the  HS 
Convention  Article  16  Recommendation  concerning  amendments  to  the  HS  Nomenclature 
('the envisaged act'). The revised HS Nomenclature will enter into force in 2022. 

The  preparation  of  the  Recommendation  was  conducted  on  19-29  March  2019,  during  the 
sixty-third session of the HS Committee.  

The draft Recommendation includes 355 sets of amendments to the HS Nomenclature which 
are aimed at reflecting the evolution of trade patterns, the development of new technologies 
and  the  need  to  modernise  or  adapt  the  nomenclature  to  its  environment.  In  particular,  the 
proposed amendments: 

– 

– 

– 

– 

Simplify the Nomenclature by deleting headings and subheading with a low volume 
of trade, hence keeping the HS up to date and in line with the evolution of products. 

Facilitate the classification in coherence with the international standards applicable, 
or  by  taking  into  account  new  products  or  the  evolution  of  the  composition  of 
products  (cell  therapy  products,  3D  printers,  flat  panel  displays,  yoghourts,  insect 
food products, virgin olive oil, novel tobacco  products, drones, semiconductors and 
transducers, etc.). 

Better align the French and English versions of the Nomenclature in order to ensure 
uniform application and reduce existing or potential divergences in classification. 

Facilitate  the  fight  against  fraud  and  illegal  trade  and  the  protection  of  health  and 
environment  by  creating  headings  and  subheadings  in  various  areas  (synthetic 
diamonds, chemicals, cultural goods, fentanyl, waste, etc.). 

Proposals were presented by International Organisations (Kimberley Process, FAO, Basel and 
Rotterdam  Conventions,  International  Olive  Oil  Council,  etc.),  Contracting  parties  and  the 
WCO  Secretariat.  Among  those  amendments  are  several  proposals  presented  by  the  EU 
(photo-  and  thermosensitive  plates,  laminated  fabrics,  inflatable  boats,  electronic  textiles, 
glass  fibres,  3D  printers,  refractory  ceramics,  forging  machines,  yoghurt,  Note  3  to  Chapter 
27, bendy pencils, for example). 
The draft Recommendation is included as Annex R to the report of the 63rd meeting of the HS 
Committee in March 2019 (Doc. NC2626B1b-HSC/63/March 2019). 

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3. 

POSITION TO BE TAKEN ON THE UNION'S BEHALF 

The proposed position aims at expressing support for the draft Recommendation concerning 
the amendment of the HS Nomenclature. 

It  is  important  for  the  EU  that  such  Recommendation  is  adopted  as  it  aims  at  updating  and 
modernising  the  HS  Nomenclature  and  at  simplifying  and  facilitating  the  classification  of 
products.  It  is  also  important  to  note  that  the  EU  was  one  of  the  major  contributors  to  this 
modernisation exercise as it submitted a large part of proposals in that respect in this review 
cycle. 

Consultations were constantly carried out with the Member States within the Customs Expert 
Group  –  HS/WCO  Coordination,  and  within  the  Council,  and,  where  needed,  with 
Commission services. 

In  relation  to  the  amendment  concerning  novel  tobacco  products,  the  EU  position  was 
established by a Council Decision before the above HS Committee session3. As the Council 
Decision  deviated  from  the  Commission  proposal,  a  declaration  was  made  by  the 
Commission4  recalling the work currently carried out by the WHO Framework Convention 
on Tobacco Control regarding the nature of emissions produced by novel  tobacco products, 
and that the results may need to be addressed at a later stage if there is new evidence relevant 
for the assessment of the objective characteristics and properties of such products for customs 
purposes. 

The proposed position is therefore as follows: 

– 

– 

the  Recommendation, 

On 
Recommendation. 

the  Union  should  support 

the  adoption  of 

the 

As the case may  arise, the Union should also  support further editorial  amendments 
that may be proposed by the WCO Secretariat. 

The proposed EU position is in line with the established Customs policy and the case law of 
the Court of Justice of the European Union to classify goods at importation according to their 
objective characteristics and properties.  

The  proposed  position  is  necessary  so  that  the  EU  is  able  to  express  a  position  at  the  next 
WCO Council.  

4. 

LEGAL BASIS 

4.1.1.  Principles 

Article 218(9) of the Treaty on the Functioning of the European Union (TFEU) provides for 
decisions establishing ‘the positions to be adopted on the Union’s behalf in a body set up by 
an  agreement,  when  that  body  is  called  upon  to  adopt  acts  having  legal  effects,  with  the 
exception of acts supplementing or amending the institutional framework of the agreement.’ 

The concept of ‘acts having legal effects’ includes acts that have legal effects by virtue of the 
rules of international law governing the body in question. It also includes instruments that do 

3  ST  7138  2019  INIT,  Council  Decision  on  the  position  to  be  taken  on  behalf  of  the  European  Union  in  the 

World Customs Organization in relation to the Harmonized System. 

4  ST 7208 2019 ADD 1, Council  Decision on the position to be taken on behalf of the European Union in the 
World  Customs  Organization  in  relation  to  the  Harmonised  System  –  Adoption  –  Statement  by  the 
Commission. 

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not  have  a  binding  effect  under  international  law,  but  that  are  ‘capable  of  decisively 
influencing the content of the legislation adopted by the EU legislature’5. 

Therefore, the procedural legal basis for the proposed decision establishing the position to be 
adopted on the Union`s behalf and concerning the envisaged act is Article 218(9) TFEU. 

4.1.2.  Application to the present case 

The WCO Council is a body set up by an agreement, namely the Convention  Establishing a 
Customs  Cooperation  Council  of  15  December  1950.  It  is  the  body  responsible,  under  the 
International Convention on the Harmonized Commodity Description and Coding System, for 
issuing recommendations to the Contracting Parties for amending this Convention. 

The  WCO  Council  is  expected,  in  accordance  with  Article  16  of  the  HS  Convention,  to 
recommend  to  HS  Contracting  Parties  an  amendment  of  the  Annex  to  the  said  Convention 
(the  HS  Nomenclature)  at  its  June  meeting,  that  will  be  deemed  to  be  accepted  within  six 
months  unless  a  Contracting  Party  objects.  Accepted  amendments  are  binding  under 
international  law  on  all  Contracting  Parties  once  entered  into  force  and  the  tariff/statistical 
nomenclature of each Contracting Party has to be brought into conformity with the amended 
Harmonized  System.  Once  accepted,  the  Recommendation  will  thus  be  incorporated  in  the 
EU legislation, namely: Annex 1 to Council Regulation (EEC) No 2658/87 on the tariff and 
statistical nomenclature and on the Common Customs Tariff. This is because Article 2. (a) of 
the  said  Regulation  states  "2.  The  combined  nomenclature  shall  comprise:  (a) the 
harmonized system nomenclature;"  

The  envisaged  act  does  not  supplement  or  amend  the  institutional  framework  of  the 
Agreement. 

Therefore, the procedural legal basis for the proposed decision is Article 218(9) TFEU. 

4.2. 

Substantive legal basis 

4.2.1.  Principles 

The  substantive  legal  basis  for  a  decision  under  Article  218(9)  TFEU  depends  primarily  on 
the objective and content of the envisaged act in respect of which a position is taken on the 
Union's behalf.  If the envisaged act  pursues two  aims or has two components  and if one of 
those  aims  or  components  is  identifiable  as  the  main  one,  whereas  the  other  is  merely 
incidental, the decision under Article 218(9) TFEU must be founded on a single substantive 
legal basis, namely that required by the main or predominant aim or component. 

4.2.2.  Application to the present case 

As  the  main  objective  and  content  of  the  envisaged  act  relate  to  the  Customs  Union,  the 
substantive legal basis of the proposed decision is Article 28(1) TFEU. 

4.3. Conclusion 

The legal basis of the proposed decision should be Article 28(1) TFEU, in conjunction with 
Article 218(9) TFEU. 

5. 

BUDGETARY IMPLICATIONS  

The proposal has no implication for the European Union budget.  

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Judgment  of  the  Court  of  Justice  of  7  October  2014,  Germany  v  Council,  Case  C-399/12, 
ECLI:EU:C:2014:2258, paragraphs 61to 64.  

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6. 

PUBLICATION OF THE ENVISAGED ACT 

None 

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2019/XXX (NLE) 

Proposal for a 

COUNCIL DECISION 

on the position to be taken on behalf of the European Union in the World Customs 
Organization Council in relation to a WCO Article 16 Recommendation amending the 
Harmonised System 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 28(1), in conjunction with Article 218(9) thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

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The International Convention on the Harmonized Commodity Description and Coding 
System  (‘the  Agreement’),  concluded  by  the  Union  by  Council  Decision  87/3691, 
entered into force on 1 January 1988.  

Pursuant  to  Article  7  of  the  Agreement,  the  Harmonized  System  Committee  may 
prepare  for  the  WCO  Council  proposals  for  amendment  to  the  HS  Nomenclature. 
Under  Article  16  of  the  Agreement,  the  WCO  Council  may  recommend  this 
amendment to the Contracting Parties.   

The  WCO  Council  is  expected  to  decide  on  a  Recommendation  to  the  Contracting 
Parties  for  an  amendment  to  the  HS  Nomenclature  at  its  June  sessions.  Such  a 
Recommendation  will  be  adopted  on  the  basis  of  a  proposal  prepared  by  the 
Harmonized System Committee and finalised during its 63rd meeting on 19-29 March 
2019. It will enter into force on 1 January 2022. 

It is of utmost importance that the HS Nomenclature is kept up-to-date and in line with 
the  evolution  of  trade  patterns,  the  development  of  new  technologies  and  reflect  as 
closely  as  possible  the  needs  of  the  users.  The  proposed  Recommendation  includes 
numerous  sets  of  amendments  that  take  into  account  the  need  to  modernise  or  adapt 
the nomenclature to its environment.  

Since  that  Recommendation  for  an  amendment  to  the  HS  Nomenclature  is  to  be 
adopted by the WCO Council, it is appropriate to establish the position to be taken on 
the  Union's  behalf,  as,  once  accepted  under  Article  16  of  the  Agreement,  the 
Recommendation will be binding on the Union and capable of decisively influencing 
the content of Union law, namely Annex I to Council Regulation (EEC) No 2658/872. 

Council  Decision  87/369/EEC  of  7  April  1987  concerning  the  conclusion  of  the  International 
Convention  on  the  Harmonized  Commodity  Description  and  Coding  System  and  of  the  Protocol  of 
Amendment thereto (OJ L 198, 20.7.1987, p. 1). 
Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on 
the Common Customs Tariff (OJ L 256, 7/9/1987, p.1) 

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(6) 

7) 

A partial EU position to be taken in the WCO was established already before the 63rd 
meeting of the Harmonised System Committee3. 

It  is  appropriate  to  support  the  draft  amendment  to  the  HS  Nomenclature,  and  any 
minor  editorial changes that may be deemed necessary, 

HAS ADOPTED THIS DECISION: 

Article 1 

The position to be taken on the Union's behalf in the June 2019 sessions of the WCO Council 
shall  be  to  support  the  draft  Article  16  Recommendation  concerning  the  amendment  to  the 
Harmonized System as set out in Annex R to Document NC2626B1b (Report HSC/63/March 
2019). 

The representatives of the Union may agree to minor editorial changes to the draft Article 16 
Recommendation  in  the  light  of  developments  at  the  upcoming  WCO  Council  sessions,  in 
consultation  with  Member  States,  or  during  on-the-spot  coordination  meetings,  without  a 
further decision of the Council.  

This Decision is addressed to the Commission. 

Done at Brussels, 

Article 2 

For the Council 
The President  

3 

ST 7138 2019 INIT, Council Decision on the position to be taken on behalf of the European Union in 
the World Customs Organization in relation to the Harmonized System; ST 7208 2019 ADD 1, Council 
Decision  on  the  position  to  be  taken  on  behalf  of  the  European  Union  in  the  World  Customs 
Organization in relation to the Harmonised System – Adoption – Statement by the Commission. 

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