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New tariff classification system to be implemented by July 2003

New Development. The Philippine government has recently announced that it will finally adopt the ASEAN Harmonized Tariff Nomenclature (AHTN) by July of this year. With this new development, it is expected that the Philippines will deepen its integration into the regional economy and further boost its intra-ASEAN trade.

The AHTN will effectively prescribe a uniform set of at least 10,700 tariff lines to be used by all the ASEAN member countries – Indonesia, Malaysia, Singapore, Thailand, Brunei Darussalam, the Philippines, Laos, Cambodia and Myanmar. Last year, the 10-member ASEAN agreed to adopt the new tariff system by January 2003, although member countries were given until July 2003 to implement the same. We have previously written an article on AHTN in this column. The discussion below should further provide more details and insights on this latest customs and trade development.

ASEAN Harmonized Tariff Nomenclature (AHTN) – A Review. As a background, the AHTN is an 8-digit commodity nomenclature adopted in principle by the member countries of ASEAN and is based on the 6-digit Harmonized System (HS). The new system will involve the alignment of the national tariff nomenclature of each member country with the AHTN. Specifically, the AHTN will revise Sections 103 and 104 of the Tariff and Customs Code of the Philippines (TCCP).

The Harmonized System (HS) is the international product nomenclature based on the Customs Cooperation Council Nomenclature and the Standard International Trade Classification (SITC) Revision 2. Similar to the present tariff nomenclature contained in Volume 1 of TCCP, the AHTN will have the same structure as follows:

  1. General Rules for the Interpretation of the System;
  2. Section and Chapter Notes, including subheading Notes; and
  3. A list of headings arranged in systematic order (i.e., degree of processing) and, where appropriate, subdivided into subheadings.

Difference between AHTN and the present system. Among the ASEAN countries, the Philippines is one of those with the least number of tariff lines at 5,658 while Malaysia has 10,393 lines, Thailand, 9,210 lines, Indonesia, 7,285 lines, Brunei, 6,492 lines, and Singapore, 5,859 lines. Thus, the Philippines will be adding at least 5,000 to its present system.

What is then the main difference between the present system and the AHTN? Under the AHTN, the seventh- and eighth-digit codes are assigned to ASEAN subheadings that comprise at least 10,700 tariff lines and beyond the 8-digit level, member countries are allowed to create new national subheadings. In other words, the present system provides at least 5,000 tariff lines at 8-digit level while AHTN provides at least 10,700 lines at 8-digit level with possible increase to 10-digit level for additional national subheadings.

Implications to the Trading Community. With the adoption of at least 5,000 new lines, there are concerns that the AHTN may result in confusion when declaring the description and classification of imported goods to customs. This concern is certainly not without basis considering that some of the old tariff lines have been assigned to different headings and sub-headings under the AHTN. To help the trading community, the Tariff Commission (TC) as well as the Bureau of Customs (BOC) have been providing seminars and trainings on AHTN in recent months. As an added resource material, several publications are being issued to complement the AHTN, that is:

  1. Supplementary Explanatory Notes (SEN) – a compilation of the official interpretation of the ASEAN subheadings.
  2. Alphabetical Index – an alphabetical electronic list of the articles mentioned in the AHTN and the SEN to facilitate the location of the references to any of the products mentioned in both AHTNA and SEN.

Importers and Customs Brokers Should Prepare for AHTN. As a risk management measure, importers and customs brokers should now start securing advance copies of the AHTN and its complementary publications (SEN and Alphabetical Index). Thereafter, existing products lines being imported should be confirmed and verified against the new tariff classification. Although this may seem like a straightforward activity, some companies import products, which involve hundreds of tariff lines and as such, advance preparation should help minimize the possibilities of misclassification or misdeclaration in the customs entries filed with the BOC. Similarly, the same degree of diligence should be exercised when exporting products particularly to member countries of ASEAN.

Together with the forthcoming implementation of the AHTN, the BOC is reportedly preparing a new set of rules to govern the description and classification of products when declaring in the customs entry. The proposed new rules accordingly provide stricter guidelines to ensure that the description of products in the commercial documents (invoice and packing list) and import entries adhere closely to the specific tariff line provided in the AHTN.

Under existing customs rules and regulations, errors and mistakes in the classification of imported articles may be treated as an offense under Section 2503 (Undervaluation, Misclassification and Misdeclaration in the Entry) of the TCCP. Against the backdrop of the Post Entry Audit (PEA) system, these developments should provide greater impetus for customs brokers and importers to ensure compliance with the existing rules particularly with regard to the proper classification and description of imported goods.

The author is an international trade, indirect tax (customs) and supply chain expert. He is the Editorial Board Chairman of Asia Customs & Trade, an online portal on customs and trade developments affecting global trade and customs compliance in Asia. He was also Bureau of Customs Deputy Commissioner for Assessment and Operations Coordinating Group (2013-2016). For questions, please email at and 


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