[Editor’s Note: A version of this article first appeared in the March 16, 2017, issue of the Advisor, a weekly publication of the STR-TAP service, which provides news and analysis vital to professionals in the textile and apparel industry. Click here for more information or to subscribe.]
The European Commission is proposing to increase from 0.45 percent to 4.3 percent, effective May 1, the EU’s retaliatory duty on women’s and girls’ jeans classified under HTSEU 6204.62.31 that are made in the United States. This duty was 26 percent during the year beginning May 1, 2013, but was lowered to 0.35 percent during the year beginning May 1, 2014, raised to 1.5 percent during the year beginning May 1, 2015, and again lowered to 0.45 percent during the year beginning May 1, 2016.
The additional duty on jeans is part of a continuation of sanctions authorized by the World Trade Organization 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 antidumping and countervailing duties collected on foreign-made goods to affected domestic industries. The law was found to violate WTO rules and subsequently repealed, but distributions were allowed to continue for cases initiated prior to the repeal.
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 the amount distributed in 2012 with respect to EU goods spiked, so did the value of U.S. exports the EU could target, prompting Brussels to add women’s and girls’ jeans to the retaliation list for 2013 and impose an additional 26 percent duty. However, distributions decreased substantially in 2013 and have remained lower every year since, resulting in varying but fairly modest retaliatory duties.
Sandler, Travis & Rosenberg, P.A., has been actively working since the EU originally imposed the retaliatory duty on jeans to obtain relief for affected U.S. manufacturers. For example, the United Kingdom’s customs and tax department accepted a legal argument crafted by ST&R attorney Elise Shibles that certain jeans, despite being made of denim as that term is used in the apparel industry, do not fall within the legal definition of denim under the Harmonized Tariff Schedule because the dye used to make them is not colorfast. The alternative classification of the subject jeans is only subject to the basic 12 percent tariff.