JPMorgan Chase Vastera, a leading provider of global trade management solutions, is warning importers and exporters to prepare now for mandatory tariff code changes that go into effect 1 January 2007. The company urges international shippers to start the process of updating their product classifications immediately in anticipation of changes to the Harmonized Tariff System (HTS) to avoid supply chain bottlenecks, possible sanctions and unexpected duty increases. In addition, JPMorgan Chase Vastera reports that it expects to reclassify more than 700,000 components on behalf of its existing customers by year’s end.

Every 5 years or so, the World Customs Organization updates the HTS nomenclature at the international (6-digit sub-heading) level to reflect changes in trade patterns and technology. The new updates are massive. The changes will likely revise companies' import cost structures, and will require significant administrative effort to implement. If that effort is not timely, it will result in cash flow difficulties and has the added potential for increased import costs and sanctions as well as disruptions to the supply chain. Of the 97 HTS chapters, changes will be made to 83.

"More than 85% of the sections of the HTS will have changes. Assuming a company does nothing prior to 1 January 2007, its whole database of classifications may become unusable," said Bernie Hart, global product executive, JPMorgan Chase Vastera. "We provide companies with instant access to global trade experts with in-depth expertise in every country in which they do business. In addition, by outsourcing product classification to trade experts, organizations are freed to focus on their core competencies instead of the complexities of global trade operations."

"In previous HTS updates the changes were typically minor or involved an entire classification. This allowed ‘one-for-one mapping’ when updating of HTS classifications. However, one-for-one mapping will not always be possible with the new changes," said Hart. "Most importers and exporters will need to review each material and good to determine the appropriate classification.  For an organization with 5000 parts, such a review is a significant burden. For an organization with 50,000 parts or more — that's a nightmare." For a free copy of JPMorgan Chase Vastera's white paper "2007 HTS Updates.

Prepare Now!"please visit: www.jpmorganchase.com/visit/vastera/whitepapers.