SITC and HS

Umer Hassan Butt

Standard International Trade Classification

Historic Background
Search for the greater comparability of foreign trade statistics has been going on for a very long
time; it was not until the 1930s that significant development towards the solution of the problem
took place. In 1938 the League of Nations publishes the report of its committee of statistics experts,
Minimum list of commodities for international trade statistics.
Since the appearance of the Minimum List there have been many changes both in the structure of
international trade and in the need of countries for greater international comparability of trade
data. Consequently the third session of United Nations Statistical Commission recommended that a
revision of the League Minimum List be prepared to make it more suitable for trade data and
international comparability. In June 1948 the commission recommended a draft classification
prepared and a copy of it was circulated to Governments and specialized agencies for suggestion
and comments. Comments from 42 countries and 5 agencies had been received in January 1949.
These views were assembled and reviewed, and a new draft was presented to the fourth session of
the Statistical commission in April 1949, which gave general approval to the items but deferred
approval on the grouping of the items.
In the fifth session (May 1950), based upon the opinion of Governments and specialized agencies,
final revision was approved. This classification can serve as the basis of systematic analysis of
world trade and as a common basis for the reporting of trade statistics to international agencies
and thus reducing the burden on the Governments. The Standard International Trade Classification
is finally approved by Economic and Social Council.
The Standard international trade classification, abbreviated as SITC, is a product classification of
the United Nations (UN) used for external trade statistics (export and Import values and volumes of
goods), allowing for international comparisons of commodities and manufactured goods. The
groupings of SITC reflect: the production materials; the processing stage; market practices and uses
of the products; the importance of the goods in world trade; technological changes.
In the classification each item, group, division and section is identified at the left by a numeric code,
thus an item could be expand to supply detail for the components by use of supplemental code 0-9
in the sixth digit, and to cover detail for 100 components by use of 00-99 in the sixth and seventh
digit etc.
The SITC may be used by Governments either: by adoption of the classification with modification to
meet national needs, or by rearranged of data complied with the national classification for
presentation in terms of the SITC. Countries which adopt the SITC as their national classification
will benefit from the greatly improved comparability of their data with those of other countries.

SITC and HS

Umer Hassan Butt

Revisions of the SITC

1. The Standard International Trade Classification contains 2 digit coding system which
include 570 items of the SITC include all commodities of international trade in summary
form, if desired for national use, sub-divided for greater detail. These items are arranged
into 150 groups, these groups are assembled into 52 divisions which are designed to
summarize the group according to their broader characteristics. The Standard International
Trade Classification is finally approved by Economic and Social Council in May 1950. It
should be noted that the SITC includes only those items of commerce which constituted
merchandise trade. Gold and monetary items are correspondingly excluded.
2. The Standard International Trade Classification Revision 2 one to one correlation
between SITC and Brussels Tariff Nomenclature (BTN) has been made, contains 4 digit
coding system which include 1,924 items of the SITC include all commodities of
international trade in summary form, if desired for national use, sub-divided for greater
detail. These items are arranged into 233 groups, these groups are assembled into 63
divisions and the divisions are finally consolidated into 10 sections which are designed to
summarize the group according to their broader characteristics. The Standard International
Trade Classification is finally approved by Economic and Social Council in 7 May 1975.
3. There were, however, number of users who found the subdivisions of SITC revision 2
insufficient for their needs. To satisfy these needs, the Customs Co-operation Council in May
1973 undertook responsibility for the development and completion of Harmonized
Commodity Description and Coding System. The work resulted in the expansion of 4
digit categories into the Harmonized Commodity Description and Coding System,
comprising of 5019 six digit subheadings. The Standard International Trade
Classification Revision 3 had collaborated with Harmonized Commodity Description
and Coding System. The Standard International Trade Classification is finally approved by
Economic and Social Council in 28 May 1985.
4. Three amended editions of the HS had gone into force, on 1 January 1992, 1 January 1996
and 1 January 2002. The fourth amended edition of the HS (HS07) will be effective
beginning 1 January 2007. In view of accumulating changes in Harmonized Coding System
fourth Revision of Standard International Trade Classification was needed. SITC,
Revision 4, retains the overall structure of SITC, Revision 3, and consists of the same
number of sections, divisions and groups. The changes made were at the level of basic
headings and some subgroups. 238 basic headings of SITC, Revision 3, were deleted and 87
new basic headings have been introduced. As a result of those deletions and additions, SITC,
Revision 4, contains 2,970 basic headings.

SITC and HS

Umer Hassan Butt

Harmonized Commodity Description and Coding System

Historic Background
The harmonized commodity description and coding system commonly known as the harmonized
system or HS. HS is an internationally standardized nomenclature for the description, classification
and coding of goods. It is developed and maintained by the World Customs Organization (WCO),
formerly known as the Customs Co-operation Council. As of 1 September 2007, there were over 200
countries and customs or economic unions (including 131 contracting parties to the HS
Convention) representing about 98 per cent of world trade, that use the Harmonized System as the
basis for customs tariffs and for the compilation of international trade statistics.
Since entering into force on 1 January 1988, the HS has been partially amended every four to six
years. The purpose of these amendments is to bring the HS nomenclature in line with the current
international trade patterns, technological progresses and customs practices. Thus far,
amendments have been introduced in 1992, 1996, 2002, 2007 and 2012. Each of these included
several hundred changes on product codes or descriptions. The next set of amendments, which is
currently being discussed in the HS Committee of the WCO, is planned to enter into force on 1
January 2017.

Revisions of the HS
At its First Session in 1988, the HS Committee of the WCO agreed, under Article 16 of the
Harmonized System Convention, to an interval of four to five years between each amendment of the
HS. Since then, the HS Committee has undertaken periodic reviews of the HS to take into account
changes in technology and patterns in international trade, and has approved four sets of
amendments since the introduction of the HS.
The first set of amendments came into force on 1 January 1992 with mainly editorial changes. The
second set came into effect on 1 January 1996. This set contained almost 400 amendments and the
number of HS six-digit codes increased from 5,018 to 5,113. The third list of amendments came into
force on 1 January 2002. Although the number of amendments was slightly less than that of the
amendments in 1996, the number of HS codes increased again, from 5,113 to 5,224. Most recently, a
fourth set of amendments entered into force on 1 January 2007. Around 360 set of amendments
were included, including a series of mergers, which resulted in a decrease of HS codes from 5,224 to
5,052.