Using HS Customs Codes as a Key Tool in Transforming Markets to Energy Efficient Appliances

Minimum energy performance standards (MEPS), often in combination with energy labelling, offer a highly effective means of transitioning national markets to more energy-efficient lighting, electrical equipment and appliances.

But not all MEPS and labelling schemes are created equal.  Experience shows that the approaches which stimulate the greatest shift towards higher efficiency products are those that follow proven good practices in the development and application of national programmes. Market assessments and impact analyses are critical components that provide the necessary evidence-base to design, apply and optimize MEPS and labelling policies and programmes – contributing to the selection of the most appropriate energy efficiency tiers for MEPS and labels, the decision on when to revise levels and ways to reference products so as to permit effective tracking and market monitoring, verification and enforcement activities.

In turn, these assessments are only as good as the data on which they are based, and all possible data sources should be explored.

One such ready-made source of information is available from customs, where the World Customs Organization Harmonized Commodity Description and Coding System (generally referred to as the Harmonized System or simply HS), in use by more than 200 countries, offers a globally agreed product classification that can be further tailored to individual country’s requirements.

The Harmonized System comprises of over 5,000 commodity groups, each based on a six-digit code. Each country has the option to use a further four digits (appended to the six digits of the HS code) for nation-specific information. Data on the quantities of trade in and out of a country based on their full 10-digit commodity code is freely available for analysis. The Harmonized System is therefore a universal code for goods and is an indispensable tool for monitoring the international trade of goods within scope of a regulatory framework, and provides an opportunity for enhanced monitoring of product import data, allowing countries to:

• Monitor trends over time for imported products.
• Apply real data to policy development.
• Boost regional harmonization amongst trading partners/countries by sharing import/export volume data in significant detail for products.
• Improve the effectiveness of monitoring, verification and enforcement (MVE) and Monitoring, Reporting and Verification (MRV) activities for controlled goods.
• Deploy customs/economic mechanisms, such as internal taxes, trade policies, freight tariffs, quota controls, compilation of national accounts etc.

The coding system is revised every five years. The current version is HS2022, which replaced the previous version (HS2017) and came into effect on January 1, 2022. With the rapid development of new light emitting diode (LED) lighting products over the last few years, this latest update is of particular relevance for lighting commodities.  Significant changes have been included to refine the LED product categories and improve the definitions which should facilitate more accurate reporting of commodity types and quantities in the future.

Because of the significant benefits of using HS data to support the development, implementation and monitoring of national and regional regulations for these products, UNEP-U4E has produced Guidelines on Harmonized System Customs Codes and National Statistical Codes for Energy-Efficient Lighting to provide an introduction to the structure and function of the Harmonized System for lighting products.

The guidelines:

• Highlight the important lighting product-related code updates contained in the latest WCO version, HS2022, and provide an overview of amendments from the 2017 version.
• Guide countries in the process of devising national statistical codes, showing how to separate products by technology, application, and market sector.
• Provide a step-by-step example on how to classify LED lighting products using the six-digit Harmonized System codes and four-digit national statistical codes.
• Show how the lighting data that arises from these Harmonized System codes can be analysed, including: how product import trends in time may be graphically displayed, and how apparent data discontinuities due to changes in Harmonized System code numbering for commodities between HS2022 and previous versions can be handled.

Although the main focus of the guidelines is on lighting products, the description and explanation of the structure and function of the Harmonized System is applicable to all product types.

To download a copy of the guidelines, click here.

Of course, while HS data is a key tool, it is one aspect of the requirements for coordinated and effective market and impact assessment and market intelligence gathering. Further information to support policymakers and regulators in this area can be found in the UNEP-U4E publication, Guidance on Protocols to Conduct Market and Impact Assessments, which describes the principal information needs, and data collection and analysis techniques.

To download a copy of the market and impact assessment guidance, click here.