Navigating the 8-digit HS Code into universal 6-digit HS Code Classification: Its process using STATA

The uniform Harmonized system (HS) code used across the world is defined by the 6-digit HS Code. However, many countries use the 8-digit HS Code as well. South Asian countries like Nepal, India, Pakistan and Bangladesh among others also use the 8-digit HS Code parameter. Hence, while playing around with the data concerning the international trade categorized in 6-digit code might create confusion and data discrepancy, if the logics behind 6 and 8-digit codes are mismatched. This article is a result of an effort to refrain from making that mistake. 

The overarching idea is that the first two digit of the 8-digit HS Code denotes “chapter”, first four digit denotes “sub-chapter” and the final 8 digit is the code for the product. For example, 02023000 is the HS Code for “Meat of bovine animals, frozen, boneless”. The first two digit (02) of this product is identified under the chapter as “Meat and edible meat offal” and the first four digit (0202) is identified under the sub-chapter as “Meat of bovine animals, frozen”. 

Now, in order to classify the products with the universal 6 digit HS Code, first, we need to distinguish the 8 digit code into 6 digit code. Then, we need to merge it with the uniform nomenclatures used across the world while trading. 

Here is the process;

As usual, like in the previous blog articles, I have used the data from Nepal’s Trade and Export Promotion Centre (TEPC) data portal, for the year 2020-21 (2077-78) as a reference for this article. 

Firstly, we need to download the data from the TEPC portal. My last article shows halfway work to what we are going to explore in this blog. Hence, I request you to follow my last article. Especially, check the final STATA command as it is pertinent to make sure that you don’t do double counting. After you run the code mentioned in the earlier article, you should get the data as such;

Secondly:  with the world wide used HS Code (6-digit)

The uniform nomenclatures classification can be found on World Integrated Trade Solution (WITS) data portal. You will have to login to the WITS portal and click on the tab “support materials” and click the “Product Nomenclature and Concordances”.  Now, for the latest HS Code classification, on the Nomenclature option, you will have to choose HS2017 and sub-heading (all 6 digit HS Code) on the level option. There are a total of 5388 product classification for 6 digit HS Code. You can download the excel version. The data will look somewhat like this: 

Now, we need to merge these two files used above to generate the final version of the trade value in 6 digit HS Code. Here, we need to understand a couple of things. Since, we are trying to see our trade value in universal Harmonise System, we need to delete the variable “Commodity” and “ValuesRs” from the TEPC data. Use the STATA command mentioned below; 

drop Commodity

drop ValuesRs

Here, we are dropping the variable "ValueRs" also because the total value in amount for each HS Code is created in other variable named “total_75”. The data should look somewhat like this after you delete Commodity; 

Now, we need to merge these two data. But before merging these data, we need to make sure that the names of both datasets have one common variable. Hence, the Nomenclature dataset should have it’s variable name with product identification as “HSCode” which is to say that we have to change the name from “HS2017 Product Code” to “HSCode”. Now use the following command: 

merge m:1 HSCode using “the file name.dta”

The data should look somewhat like this;

This gives us our HS Code classification and commodity description used commonly across the world. 

As simple as that!!!