Keyword search

What does the Electronic Trade Documents Act mean for UK companies?

The Electronic Trade Documents Act entered into force on 20 September 2023. As a result, electronic trade documents, such as bills of lading, have the same legal basis in the UK as paper documents. In essence, the bill permits the use of electronic documents in international transactions instead of traditional paper documents.

The Act in itself doesn’t require UK companies to change the way they conduct international transactions. It gives the industry flexibility to develop and shift to new, paperless ways of trading. It paves the way for future changes outlined by the UK Government in Strategy 2025, for example, the Single Trade Window. It is a big step toward the digitalisation of cross-border trade in the UK.

One interesting element of the bill is the fact that electronic documents can now have “ownership” and “possession”. Over time, this will allow the industry to develop ways in which digital documents can move hand securely.

The Bill is based on the United Nations’ Model Law on Electronic Transferable Records and the UK is one of the first countries to adopt such law following Singapore.

Who is responsible for classifying goods and finding the correct commodity code (tariff code)?

It’s the importer and exporter that are legally liable for classifying traded goods.

The exporter is responsible for classifying exported products and submitting the code to local customs authorities via an export declaration. The importer is responsible for finding the correct commodity code for products declared to local customs authorities through an import declaration. As such, export and import commodity codes can differ.

In some cases, the customs agent submitting the customs declaration can be jointly liable. This is when the customs agent acts as an indirect representative.

What is an HS code?

An HS code is a six-digit code assigned to a group of products under the Harmonized System – a global classification system developed and maintained by the World Customs Organisation (WCO).

The Harmonised System is used in more than 200 countries worldwide and serves as the basis for classifying imported and exported goods. It is also used for various other trade policy purposes. The System is updated every five years and the WCO’s Explanatory Notes provide an official interpretation and guidance on the HS.

HS codes are NOT generally used for imports and exports. Countries develop their own classification systems by adding further digits to HS codes. For example, the EU’s Combined Nomenclature or Schedule B in the US. Since the national classification is built on the Harmonised System, the first six digits of commodity codes around the world are generally harmonised.

For more information on the Harmonised System check the WCO website (link).