Most goods exported out of this country are assigned Schedule B export codes. Those codes, along with other detailed information, is reported to the government through the Automated Export System (AES). The codes are also utilized by importers to maintain compliance with their respective government regulations.
Schedule B codes are pretty straightforward in principle. There are more than 9,000 of them, so it really pays to know what you are doing as an exporter. Failing to assign the right codes can get an exporter into trouble with the government.
What They Are
The international community has agreed on a standardized coding system for the purposes of tracking imported and exported goods. Why track goods? There are a number of reasons, the most important being the ability to correctly assess tariffs and duties. Codes tell Customs officials, at a glance, what they are looking at. This makes it easier for them to enforce tariffs and duties at point of origin.
Schedule B codes are an extension of international codes. Those international codes are 4- and 6-digit codes established by what is known as the Harmonized System (HS). The U.S. system is a bit more detailed, so 4- and 6-digit codes do not meet our needs. We take the HS code and expand it to ten digits for Schedule B tracking.
Why We Use Them
Our system relies on Schedule B codes to track exports for statistical purposes. The Census Bureau is assigned the responsibility for such tracking, so they control Schedule B codes. They publish a complete list of codes you can find on their website.
The codes do not necessarily describe every exported good in detail. But they do divide goods into multiple categories and subcategories. When an exporter files a report through the AES, Schedule B codes are included with other information like destination country and total volume.
What Goods Require Them
Most goods exported from the U.S. in volume require Schedule B codes. But according to Vigilant Global Trade Services, any goods with a total value of under $2,500 can be exported without being coded or reported in the AES. The one exception here are those goods requiring an export license and ECCN.
Goods requiring an export license are restricted goods. Nearly all of them have military or proliferation applications. Fortunately, just 5% of exported goods require a license and number. But when licensing and ECCNs are required, the $2,500 threshold no longer applies. All licensed goods must be assigned a Schedule B code prior to export.
Who Is Responsible for Them
Finally, regulations assign responsibility for import and export classification to different parties depending on the direction of the flow of goods. Exporters are generally expected to help with assigning Schedule B codes. However, they work with importers, manufacturers, and other vendors to ensure the right codes are assigned.
The government ultimately holds the Foreign Principal Party in Interest (FPPI) accountable for ensuring the correct codes. However, FPPIs rely on information from their U.S. counterparts for accurate reporting. So really, the two work together.
In the end, schedule B codes are designed to help the Census Bureau track export data. A Schedule B code is identical to the first six digits of the corresponding U.S. HTS and international HS code. All of this coding is necessary to satisfy duties and tariffs between countries.
If you have ever thought about getting into exporting, Schedule B coding is just the start. Imports and exports are governed by strict regulations that go way beyond product classification. There is a lot to know to keep the authorities satisfied.