Sri Lanka gains top slot at World Customs Organisation:

HS Code expert shines at global session

By Kurulu Kariyakarawana

At a time when Sri Lanka is being castigated by the UN and the international community for human rights violations, a Sri Lankan being appointed to a prestigious position like the World Customs Organisation is indeed an admirable feat. At this juncture it comes as a wake- up call that Sri Lanka is still in the bidding and is recognised for its achievements.

A Sri Lankan was appointed to top office in a global body. This is considered a remarkable feat achieved by a Sri Lankan

in recent history in the customs field. Sri Lanka Customs Director Tharaka Seneviratne was elected Chairman of the Harmonised Systems Committee of the World Customs Organisation(WCO) on March 13th during its 52nd session held at WCO Headquarters in Brussels, Belgium. He is the first Asian to be elected to such a high position among a membership of 179 countries. The WCO is only second to the United Nations.

Tharaka Seneviratne is the Director of the Sri Lanka Customs Policy, Planning and Research having a service record of 38 years was proposed to the slot by the representatives of the European Union. He was seconded by the Australian representative. The other contenders were an American national representing the USA who did not even come forward once Seneviratne was nominated, considering his long- standing experience and expertise in HS Codding as well as his reputation for unbiased and impartial nature of handling matters and dealing with issues.

With his return to the country last week following the appointment, the Sunday Observer spoke to Tharaka Seneviratne who spoke in detail about the Harmonised Systems Committee and its connection to the WCO.

The Harmonised Systems committee is appointed to update the Harmonised Systems Nomenclature or International Convention on Harmonised Commodity Description and Coding System. Classification of commodities that are being imported and exported to or from a country is one of the chief duties of the respective Customs department of that country which helps them to impose a tariff on the goods.

The Customs Departments world over man borders to monitor the inflow and outflow of passengers and cargo. While taxation and collecting revenue on imported and exported goods is still the primary objective of Customs administrations of the developing countries, collecting imports and exports statistics is a service common to all Customs Administrations. A Customs Tariff is used for this purpose.

In any country 'Tariff' contains thousands of lines where each line assigned for a particular kind of good, the rate of Customs duty applicable for that particular commodity (merchandise), its unit of measurement (i.e., kilos, metres, litres, etc.) and a numerical code assigned for that Tariff Line for purposes of identification. Parliament decides the tax rate on each commodity and publishes it in the gazette for the information of the public.

When goods arrive at the border ,the Customs identifies each commodity and values it according to the accepted valuation principles, selects the Tariff Line appropriate for that commodity and calculates the taxes payable on that commodity as per the tax rate indicated against that commodity in that Tariff Line. In Sri Lanka this function is known as Commodity Classification and Appraisement.

A Tariff has to have a list of commodities and taxes specified against each commodity. The list of commodities has two components. The list itself and the codes for identification of each commodity or group of commodities is known as 'Nomenclature.'

Harmonised Coding System

What happens if each Customs administration has its own nomenclature. At the time of exportation the goods will be classified by the exporting country (for example, “X”) customs in one particular code: the same commodity at the importing country (for example “Y”) customs will be identified by a different code, because that country uses a different nomenclature. If no smuggling takes place, and all goods come through Customs, the export trade volume from country “X” to country “Y” should tally with import trade volumes from country “X” to country “Y”. That comparison could be made only if both countries are using the same nomenclature in their tariffs. If individual countries use their own nomenclatures when goods are moved from one country to the other overland across several land-locked countries, that classification would vary from country to country, hindering smooth flow of international trade.

At a very early stage of development as far back as in the 1950s, the Customs Cooperation Council (Now known as World Customs Organisation) realised the need to have a common nomenclature that could be accepted by Customs administrations all over the world. The first nomenclature that was the result of their combined efforts was known as the Brussels Tariff Nomenclature (BTN). It used four Arabic numerals and an alphabetical letter to identify commodities. Subsequently it underwent a name change and was known as the Customs Cooperation Council Nomenclature (CCCN).

After using the CCCN for a considerable time its users found it lacking in many aspects, particularly in granularity, which is the ability to identify individual products rather than large groups of products. Therefore, they embarked upon a project to design a completely new nomenclature for customs taxation and statistical purposes. By that time countries like the United States and Japan were using nomenclatures showing much more details beyond the scope of CCCN and shipping, air and overland haulage companies were using their own nomenclatures for purposes of identifying and charging freight. The new customs nomenclature embodied all the beneficial aspects of those nomenclatures, hence was known as the “Harmonized Commodity Description and Coding System.” It is frequently referred to as the Harmonized System or the “HS”.

Harmonised System Committee

The Harmonized System Nomenclature was established by International Convention on June 14, 1983 and the Convention came into force on January 01, 1988. The HS Convention itself provides the means for maintaining the HS and disputes settlement. Article-6 of the HS Convention establishes the “Harmonized System Committee” (HSC) for that very purpose. The committee convenes twice a year, usually in March and September at WCO Headquarters in Brussels.

The committee is entrusted with several main duties including resolving classification disputes between countries, issuing classification opinions and preparing explanatory notes where necessary. It is also require to look into the updating of nomenclature to be in line with technical advances and changes in the trade pattern. To carry out these duties methodically the HSC is supported by two subcommittees and a working party. The two subcommittees are Review Committee and Scientific Committee, Seneviratne explained.

The Review Subcommittee (RSC) is entrusted with the work of reviewing the HS Nomenclature to keep it current by deleting obsolete Headings and Subheadings and proposing new Headings and Subheadings to embrace new products entering the market due to new inventions and technologies. For example natural animal hair was an important raw material in the past but it was soon replaced by plastic fibres and filaments which were cheaper and durable. To be recognized as a Heading in the nomenclature the commodity should have an annual global market of not less than US$ 100 million, likewise the threshold for Subheading level is US$ 50 million. When a product drops below that level the respective Subheading or the Heading is considered for deletion.

Both the HSC and the RSC are supported by the Scientific Subcommittee which handles classification of chemicals and disputes of more scientific nature and makes recommendations. The Working Party working under the HSC looks into various documentation aspects and submits working documents to the HSC. Various countries or the WCO Secretariat itself will make proposals to amend the HS Nomenclature and the RSC will meet twice annually and discuss and make proposals for amendment. Those proposals are referred to the HSC for finalization.

While the RSC and the Working Party makes decisions on consensus the HSC can vote to and takes decisions based on simple majority votes. Every five years the HSC finalizes all the proposed amendments, embodies into one single document and submits to the Council Sessions for approval. At the Council any country can object to any proposed amendment (totally or partially) in which event the amendment or the part so objected to will be kept aside and the remainder will be considered for adoption. Six months after submission to the Council Sessions if there were no further objections (reservations) the amendments so finalized will be deemed adopted and the Secretary General of the WCO will announce the amendment for adoption.

In the most recent HSC Session concluded in March this year the latest amendments to be implemented in 2017 were finalized for submission to the Council Sessions in June this year. The Nomenclature that comes into force in January 2017 will be the fifth edition of the HS Nomenclature. Presently the HS 2012 edition is in force.

Tharaka Seneviratne was elected as the Chairperson Harmonised Systems Committee, an American representative and an African representative were elected as the two Vice Chairs. The Korean Representative was elected as the Chairperson for Reviews Subcommittee. The Chinese representative was elected as the Chairperson for Working Party.

********************

[Profile]

Tharaka Seneviratne joined the Customs Department as an Assistant Superintendent on March 12, 1976. he was progressively promoted to Superintendent, Assistant Director, Deputy Director and ended up being Director of Customs.

He was Departmental Specialist Trainer in the HS Domain and Montreal Protocol. He conducted a large number of training Sessions in those two areas, for the Customs Staff as well as for the Private Sector individuals.

In November 2008, after successfully completing the examination conducted by the WCO, was selected as a “WCO Accredited Specialist Trainer in HS.”

In February 2010, conducted a “Capacity Building Session on HS” in Timor-Leste in collaboration with the WCO.

As the WCO Accredited Regional Resource Person, in November 2012, conducted a Capacity Building Session on HS in relation to “HS 2012 amendments and Green Customs Initiative” in Male, Maldives in collaboration with the WCO-ROCB, Bangkok and UNEP.

In June, 2013, conducted a Special Training Session for Customs Officers of the SAARC Region in connection with the 3rd Training Program for Mutual Customs Cooperation, under the 9th SAARC Subcommittee.

In March 2010 at the 45th Session of the HSC, elected as the Chairperson of the Working Party and the 1st Vice Chairperson of the HSC; accordingly, worked in that capacity at the 46th Session of the HSC (September 2010), 47th Session(March 2011),

********************