A tea blog that translates legal jargon.
Hello and good day to all of you tasty tea peeps. Today is, well it is an interesting day. I’ve been musing over this podcast topic for about a month now and I’ve finally had the time to sit down, write, and flush out my thoughts on this matter.
For those of you who don’t know, I have a degree in international trade wherein I got to study import and export legislation. A truly exciting subject, nothing can get you off more quickly than burying your face in NAFTA tariff shifts. It’s one of those strange fields of work that acts as the background cogs to living. It happens every day and you’d never know but if it suddenly stopped, your life would become infinitely more difficult. If you sense a twinge of titillation in my voice it’s because I find these types of industries and careers fascinating. Forget becoming a pop star, let me get my hands dirty with actuary tables. Dear god, what am I doing with my life.
What I’m going to talk about with myself in the basement of my parent's house for the next half hour or so concerns anyone who imports tea. Which, is probably everyone listening. Though I imagine as I type this script any tea store owners who import tea themselves and have to deal with customs on a frequent basis will find what I’m about to divulge of even more interest. Littered throughout the podcast, scattered around the teapot, will be some useful insights into the legal world of tea.
What do I mean by the legal world of tea? Well, there is a vocabulary that applies to the industry, the real tea world, the language used on the ground by distributors, and sources and the casual buyer. This, of course, varies from country to country. There’s the black tea scale, Orange Pekoe, Broken Orange Pekoe, Flowery Tippy, Dust, Fannings… yes, this is a thing! Oh my goodness, Orange Pekoe is a grade of tea not a type of tea. Then you have grades of Long Jing, whether it was harvested before or after the rains. Japan has different harvests, labeled as different bancha harvests. This categorization goes on and on. But what I want to get across is that this is daily vernacular, it’s the lingo and jargon people use every day. And at the end of it, we have black tea, white tea, green tea, oolong tea, yellow tea, and Pu’er/post-fermented tea. And who am I kidding, even that is up for debate? Nevertheless, the common consensus is that there are 6 types of tea. I’m TJ Williamson, this is the World Tea Podcast, and today I’m going to tell you why, legally, there are only three types of tea.
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Well first off, when I say legally what I am referring to is the legal word of the Harmonized Tariff System, in the USA you call it the Harmonized Tariff Schedule or Schedule B. Perhaps a little bit of history is important here to bring you up to speed.
In Brussels, Belgium there exists the Headquarters of the World Customs Organization. It was formed in 1952. We’re not really concerned with any other that, what we are concerned with, where our focus lies, is with the International Convention on the Harmonized Commodity Description and Coding System. We will call this the HS Convention to keep things tidy. The overarching goal of this convention, which has been signed and implemented by over 150 countries, is a nomenclature for goods.
Anything and everything that is imported into a country that has signed and implemented this system is given a 6 digit code. I guess you can think of it as a phone book for goods. Dial these six digits and you’ll get a specific good.
It gets better. Countries have the ability to assign to goods an additional 4 numbers, so up to a total of 10. This allows as you can imagine, more specific classifications. I’ll provide some examples shortly. Beware, this can get very nitty-gritty. Not so much in the case of tea, but in terms of textiles……oh god…..
Now, before you jump onto your computer and start trying to find classifications, you should know that there is a host of rules in place. You cannot simply search up an item and hope to find it. Chances are the number will be wrong. You need to follow the, and here is another long and winded phrase, the General Rules for the Interpretation of the Harmonized System. Now you may be thinking, "Oh this seems unnecessary. if every good has its own number I can just hit Ctrl+F and find it". Well, yes..but no. Yes because if you are importing Fresh Potatoes there is a code and it is easy to find. But if you are importing garbage (this does happen) it’s not as easy. What constitutes garbage? What is the main constituent? If it’s a bunch of scrap wood….is that not wood? What type of wood? Birch, Maple, Oak? If your garbage is a bundle of broken steel…..is this now steel? You can understand how complicated classifications can get.
Why is this important? Well, duties. These are taxes paid on goods coming into a country. Some country’s do tax exports, but I’m not going to get into that here. Duties are crucial as they can range from non-existent to upwards of 300%. Yes, a 300% tax on an imported good. Does tea have an import duty? Yes. Mostly in countries where the industry exists and the government wants to protect the domestic industry from foreign competition. Canada has no tea industry and so we have no import duties on tea. China and Japan on the other hand do. As for the USA, not yet. But as the tea industry grows, I’d be interested to see what lobbyists can or will do.
Back to the HS System. There are 99 chapters. Remember those six digits? Well, the first two go from 01 to 99. Each pair is a door of sorts to a commodity. 01 is Live Animals, 52 is cotton (but only cotton as it pertains to textiles), 45 is cork and articles of cork, and 09 is where we are concerned Coffee, Tea, Mate, and Spices.
I have with me, the Canadian Customs Tariff, the harmonized schedule. So as a bench mark, let me introduce it. If you are importing tea into Canada, there are only three types of teas. Green Tea, Black Tea, and other partly fermented tea. There is no such thing as white tea. So if you were to import it, you’d be forced to use the General Rules of Interpretation to resolve the issue. In which case you’d be forced to classify white tea as a Green Tea (not fermented) unless you are importing them in immediate packings for individual serving which is a different number. Oh, and you’d further break it down by certified organic or not certified organic. This, of course, is totally tossed out the window, if like me, you argue that white tea is in fact partly fermented as there is fermentation during the withering process. More so in Shou Mei and Bai mu dan….silver needle has it too I suppose. See how tricky this is getting.
Also a side tangent…I find it wholly interesting that the classification refers to fermentation and not oxidation. That’s some acute insight into tea and the fact that it is made without putting a classification for white, oolong, yellow, or pu’er is rather interesting. Excuse me while I jerk myself off to these minuscule observations.
Before I jump to another topic if you are importing tea into Canada, there is no real need to worry. All tea comes in duty-free, no matter the location. Unless it is North Korea, in which case I believe there is a 35% duty as they are not within the Most Favored Nation designation.
Tea coming into Canada should have the six digit code of 09.02.10 or 09.02.20 for green tea and 09.02.30 or 09.02.40 for black tea or partly fermented tea. If you want a really specific 10 digit code than 0902301020 is the code used to classify Black Tea (fermented) and partly fermented tea, in immediate packings of a content not exceeding 3kg, in bags for individual servings, and decaffeinated. I did warn you that these codes get very nitty gritty. Oh, and of an interesting note, the official unit of measure for tea is in Kilograms. So you better weigh your tongs of pu’er or rather your tongs of partly fermented non-decaffeinated tea whether or not flavored.
If you are in Australia and you wanted to import Black Tea (fermented) and partly fermented tea, in immediate packings of a content not exceeding 3kg, in bags for individual servings, this code would differ slightly. The first six digits would be the same 090230 but the last four, instead of being 10.20 like in Canada, it would instead be 00.10. I cannot find if this refers to decaffeinated. Australia may not even bother to classify tea as such. However, you can grasp the fact that different countries alter the last four digits. This is typically done for statistical information. I imagine the Tea and Herbal Association of Canada provides, for its membership, a consolidated ranking of Statistics Canada’s information. Though, and this is coming from a guy who worked for several years processing these shipments and classifying goods….I wouldn’t trust the information and if I had to I’d take it with a large grain of 2501.00, that being salt.
Now, for many of you who do import tea what I am bringing to light should not scare you. Yes, it is complicated, but your courier does this for you. If you ever receive an order through Fedex, DHL, or UPS, you are typically charged for this service. It sometimes appears as Broker Fee on your invoice. You can typically avoid these costs if you have your goods shipped through the public postal service, and I’ll leave that decision up to you to decide.
Now, many of you will never see this. I encourage you to do a search in your own country to find out what the Low-Value Import threshold is. In Canada, any importation under $2500 is considered low value. This means that the documentation submitted to customs is informal. Once over $2500, the documentation submitted is formal and is more likely to be analyzed by a customs agent for accuracy. This is where the codes come into play, the origin of the goods is crucial, the methods of shipment, etc. Suffice it to say I do not see many companies aside from the larger corporations having to worry about this, especially since the duties are zero, well at least in Canada.
But what about a country that produces tea? For the meantime, the USA has no duties on teas being imported. But what about China and Japan? And how do they classify tea? My research has turned up some very interesting results.
Let’s start with Japan. The six digit codes are, again, the same. What is interesting is the duties applied to them. This is, of course, to be expected. Japan has a long history of producing tea and I’m most certain that the farmers there would not be at all happy to see foreign tea flooding the market and undercutting their prices. Green tea coming into Japan, for example, has an import duty of 20%, so too does black tea. I’m going to casually ignore the exact codes here as things are about to get confusing.
You see, while I say the duty rate is 20%, that’s only partially true. It is 20%, generally, and life is anything but general. If you want more information on this I encourage you to look upon MFN or most favored nation as a duty category.
Now, you must realize that duties are inherently politically motivated and are subject to change as governments engage in Trade Agreements. Not all trade agreements are free-trade agreements and not all free-trade agreements are free. Also, countries are classified into different groups which grant certain benefits. Namely for Least Developed Countries. That 20% duty on green tea? Least Developed Countries have that waived, a Japanese person can import green tea from an LDC without any duties charged, pending of course they have the proper documentation and certificates of origin upon import. Green tea from Singapore comes in at 6.4%, Malaysia at 5.3%, Indonesia at 7.4%, you see what I mean.
And my thesis still stands here. Unless I am missing something in translation Japan recognizes only green, black, and partly fermented tea as appropriate tea categories Though, and Im not too sure what they mean here, but they do extend their HS code to a category named Waste, Unfit for Beverage. Maybe that is dust or fannings? I don’t have any supplementary notes to reference, however, the duty on this waste is zero, so that’s a bonus I guess. Now if you were to import black tea as a loose leaf and not within individual packages, the duty rate drops from 20% to 5%. This is interesting to see as no matter the green tea, the general import duty remains at 20%. It’s an interesting piece of insight into where the Japanese tea priorities lie.
If we travel a bit more west from Japan, over the Sea of Japan, past Korea, and over on into China, well things get much more interesting.
Out of all the countries I’ve researched for this podcast, China has proven the most interesting and diverse. And this is to be expected. Although it’s not what you may initially think. You see, China recognizes five types of tea. Green, Black, Oolong, Pu’er and partly fermented. Again this follows the categorization of “are the teas in immediate packaging not exceeding 3kg “ or are they simply loose leaf. What perplexes me the most is if they offer a category for oolong, pu’er and black tea, what do they mean for partly fermented? Is this a catch all for white tea, yellow tea, and heicha. Oh lordy, that’s a whole other discussion. They identify Pu’er as a category even though it is a sub category of heicha. Well, maybe now it isn’t? Is pu’er so famous that it has it’s own category? I’ve been saying that it has been so this entire time, but it seems odd when you reflect on it. True, yellow tea may just be a sub category of green tea and not a sixth tea type on its own. Referring to alcohol, Scotch, Rye and Bourbon have their own categories in Canada but there are no categories for Cognac or Champagne. You can now see how confusing this all is. Very interesting, very confusing, a whole lot of fun.
Now what is pertinent to this discovery is that all teas imported into China have a 15% duty to all countries within the Most Favored Nation (MFN) umbrella. Again, this is more or less every single country. What I have failed to find, and not for a lack of searching, is a comprehensive list of the Chinese Harmonized Tariff Schedule. Every other country has offered this information quite readily which leads me to suspect China does not want this information available or that there is no official English translation currently available.
I’d love to see and be able to report to you if China has any trade agreements that allow for a decrease in the current flat rate duty of 15%. I have seen what looks to be a planned and systematic decrease in duty levies, though this information has proven ambiguous and contradictory. Unfortunately I am left without an answer. So as it stands, China taxes all imported teas at 15%.
So, to summarize, the tea industry claims to have many types of teas. Green, Black, White, Yellow, Pu’er Oolong, Heicha. All have their proponents. And yet, when it comes to a legal, and dare I say an official declaration, even the countries that produce tea reflect only the teas they deem important or of note. As times change perhaps so too will the government’s regulations. Japan is developing oolongs, maybe they will incorporate this into their custom codes. Will the USA do the same as its tea industry blossoms? It will certainly be an interesting development to note.
And finally, before I set the microphone down, for those of you curious about where Herbal teas fall within this mess, well, they are in an entirely different chapter. Chapter 12 actually, under 12.11 “Plants and parts of plants (including seeds and fruits)”. This becomes a lot more complicated as you can have them in Chapter 9 if the Herbal tea is solely of one plant or not in individual servings. Of course this is beyond the six digits and so applies only to Canada, unless another country has done similar. But it can make all the difference between importing for free or at a 3% duty. If you are importing, I’d suggest contacting your carrier and seeing exactly what they are classifying your good as. I think you’d be very surprised by what you saw.
Thank you once more for joining me here on the World Tea Podcast! Providing you with insight into tea’s culture and technology. I’m your host, TJ Williamson and if you want get a hold of me, be it for question or query, email@example.com is the best way to do so. If you want to get some amazing deals on tea. I’m talking wholesale prices here. Why not consider being a Patron on my Patreon. Plenty of monthly tea goodies are yours to be had. Ever want 10 cakes of pu’er for storing and aging? $180 will get them to your door.
In a few weeks time I will once again be at the Toronto Tea Festival. I’ll be launching a new business adventure. Tea infused face and body scrubs, with fnb tea co. Be sure to stop by my booth and say hello! I’d love to meet each and everyone of you amazing tea people. I’ll be posting on Twitter and Instagram @worldteapodcast during the day as well, so be sure to follow me there.
Until next time my friends, keep those cups warm.