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Every five years, the World Customs Organization updates says the Harmonized Tariff System nomenclature at the international level, and the updates that go into effect Jan. 1, 2007, are massive, according to JPMorgan Chase Vastera. The changes will likely revise a company's import cost structure, and will require significant administrative effort to implement. If that effort is not timely, it will result in cash flow difficulties and has the potential for increased import cost as well as disruptions to the supply chain.
Accurate HTS code assignment is critical as it determines how a product is taxed when shipped across borders. Vastera, which offers the TradeSphere global trade management suite, warns that manufacturers must start preparing now for these changes as key processes such as product classifications, special trade program qualifications and certificate of origin solicitations will be affected.
Virtually all sections of the HTS will see changes, according to Vastera, though many are intended to eliminate confusing language.
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