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UK Ruling Exempts Many Women’s Jeans from EU Tariff Hike

Thursday, December 05, 2013
Sandler, Travis & Rosenberg Trade Report

A recent ruling by the United Kingdom’s customs and tax department could open the way for U.S. manufacturers of premium women’s jeans to avoid  a 200% tariff hike the European Union imposed earlier this year in a trade dispute with the U.S. The ruling agrees with a legal argument crafted by Sandler, Travis & Rosenberg attorney Elise Shibles that the jeans at issue are properly classified under the tariff provision for cotton women’s trousers other than denim and corduroy, placing them outside the scope of the EU tariff. While these jeans “are definitely made of denim as the term is used in the apparel industry,” Shibles said, “they don’t fall within the legal definition of denim within the Harmonized Tariff Schedule.”

As a result of the ruling, all 28 EU member states will be required to accept the alternative classification of the subject jeans, which is only subject to the basic 12% tariff. In addition, importers that have been paying the higher 38% duty on these jeans since it took effect May 1 may be able to secure refunds.

The UK’s ruling is only binding as to the company to whom it was issued and women’s jeans of chief weight cotton, 3-thread or 4-thread warp faced twill made of true indigo fugitive (not colorfast) dye in the warp and filling yarns unbleached, bleached, dyed grey or colored a lighter shade of the color of the warp yarns. However, the ruling could bode well for other U.S. producers of jeans adversely affected by the EU tariff as advisory guidance on the classification of like garments. ST&R Managing Partner Tom Travis notes that the firm is working with such companies, which are predominantly located in southern California, to seek refunds and review the tariff classification of their garments.

The EU duty hike was authorized under a World Trade Organization grant of authority for retaliation against the United States’ continued distribution of tariffs levied on unfairly traded foreign-made goods to affected U.S. producers. The U.S. law prescribing that system (the Continued Dumping and Subsidy Offset Act, more familiarly known as the Byrd Amendment) was repealed years ago in response to an adverse WTO ruling, but duties collected previously are still being handed out as requisite legal or administrative procedures are concluded. When the amount distributed in 2012 spiked, so did the value of U.S. exports the EU could target, prompting Brussels to add women’s jeans to the retaliation list.

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