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EU Raises Retaliatory Tariffs on U.S. Jeans, Other Goods in Long-Running AD/CV Dispute

Friday, May 01, 2015
Sandler, Travis & Rosenberg Trade Report

Effective May 1, a European Union retaliatory tariff on women’s jeans made in the U.S. will be increased from 0.35 percent to 1.5 percent, bringing the total duty on such goods to 13.5 percent. Retaliatory duties on sweet corn, crane trucks and spectacle frames from the U.S. will see similar increases. All are related to an uptick in antidumping and countervailing duties distributed to U.S. producers under a law struck down by the World Trade Organization.

The duty rate hike on jeans was part of a continuation of sanctions authorized by the WTO in retaliation for the United States’ failure to fully comply with a WTO ruling against the Continued Dumping and Subsidy Offset Act of 2000. Commonly referred to as the Byrd Amendment, this law allowed the U.S. to distribute AD and CV duties collected on foreign-made goods to affected domestic industries.

The law was found to violate WTO rules and repealed in 2005, but distributions were allowed to continue for entries of goods made prior to Oct. 1, 2007. In response, the WTO allows each affected country to raise its tariffs on goods imported from the U.S. in direct relation to the amount of AD and/or CV duties on goods from that country that were distributed during the previous year.

When CDSOA distributions spiked to $121.7 million in 2012, so did the value of U.S. exports the EU could target, prompting Brussels to add women’s jeans to the retaliation list for 2013 and impose a retaliatory tariff of 26 percent on all listed goods. However, distributions in 2013 plummeted to $68.2 million, resulting in a reduction of the retaliatory tariffs to 0.35 percent. U.S. Customs and Border Protection recently reported that CDSOA distributions were back up again in 2014, rising nearly 20 percent to $81.7 million, prompting the increase in the EU retaliatory duties.

CBP’s report also indicated that, with respect to AD/CV duty orders on products from EU member countries: (a) the amount of AD/CV duties on CDSOA eligible entries filed prior to Oct. 1, 2007, and liquidated during FY 2014 that went uncollected totaled $1.19 million, and (b) $7.72 million in AD and CV duties filed with the entry prior to Oct. 1, 2007, on CDSOA eligible cases remained in the CDSOA clearing account as of Oct. 1, 2014. If these amounts were to also be made available for distribution in FY 2015, the effect could be an additional rise in EU retaliatory duties.

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