USTR Increases Tariffs on Aircraft Parts and Certain Wines and Distilled Spirits from France and Germany

January 5th, 2021 Robert Stang and Emily Lyons Leave a comment

Since October 18, 2019, the U.S. has imposed additional duties on various European origin goods (including aircraft, certain textiles and wearing apparel, hardware, cheeses, and other agricultural goods) due to the ongoing Large Civil Aircraft (LCA) dispute with the European Union (EU).

On December 30, 2020, the U.S. Trade Representative (USTR) announced that in response to certain EU actions involving duties imposed on U.S. goods in related litigation at the World Trade Organization, the U.S. was adding LCA-dispute tariffs to certain products imported from the EU; specifically, certain aircraft manufacturing parts, non-sparkling wines, and cognacs and other grape brandies, but only if the goods are from France or Germany. All previously announced LCA-dispute tariffs remain in effect.

The additional duties for the newly listed goods will go into effect when entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern standard time January 12, 2021.

The additional goods subject to LCA-dispute tariffs and their corresponding tariff provisions are as follows:

Additional goods (wine and spirits) from France and Germany subject to 25% tariff to duties effective January 12, 2021:

-Effervescent grape wine, in containers holding 2 liters or less (subject to subheading 2204.21.20).

-Tokay wine (not carbonated) not over 14% alcohol, in containers not over 2 liters (subject to subheading 2204.21.30).

-Marsala wine, over 14% vol. alcohol, in containers holding 2 liters or less (subject to subheading 2204.21.60).

-Grape wine, other than Marsala, not sparkling or effervescent, over 14% vol. alcohol, in containers holding 2 liters or less (subject to subheading 2204.21.80).

-Wine of fresh grapes, other than sparkling wine, of an alcoholic strength by volume <=14% in containers holding over 2 liters but not over 4 liters (subject to subheading 2204.22.20).

-Wine of fresh grapes, other than sparkling wine, of an alcoholic strength by volume >14% in containers holding over 2 liters but not over 4 liters (subject to subheading 2204.22.40).

-Wine of fresh grapes, other than sparkling wine, of an alcoholic strength by volume <=14% in containers holding over 4 liters but not over 10 liters (subject to subheading 2204.22.60).

-Wine of fresh grapes, other than sparkling wine, of an alcoholic strength by volume >14% in containers holding over 4 liters but not over 10 liters (subject to subheading 2204.22.80).

-Wine of fresh grapes, other than sparkling wine, of an alcoholic strength by volume <=14% in containers holding >10 liters (subject to subheading 2204.29.61).

-Wine of fresh grapes, other than sparkling wine, of an alcoholic strength by volume >14% in containers holding >10 liters (subject to subheading 2204.29.81).

-Grape must, nesoi, in fermentation or with fermentation arrested otherwise than by the addition of alcohol (subject to subheading 2204.30.00).

-Spirits obtained by distilling grape wine or grape marc (grape brandy), other than Pisco and Singani, in containers each holding not over 4 liters, valued over $38 per proof liter (subject to subheading 2208.20.40**).

Additional goods (aircraft parts) from France and Germany subject to an additional 15% duty effective January 12, 2021:

-Fuselages and fuselage sections, wings and wing assemblies (other than wings having exterior surfaces of carbon composite material), horizontal stabilizers, and vertical stabilizers as defined in U.S. note 21(t), suitable for use solely or principally with new airplanes and other aircraft of an unladen weight over 30,000 kg as described in subheading 9903.89.05 (described in statistical reporting number 8803.30.0030) (subject to subheading 8803.30.00**).

USTR stated in its announcement that the additional LCA-dispute duties were being implemented “in a restrained way” to counter what is believed to be the unfair use of certain trade data. Specifically, the WTO authorized the U.S. to impose LCA-dispute tariffs on $7.5 billion of EU goods. Thereafter, the WTO authorized the EU in related litigation to impose tariffs affecting up to $4 billion in U.S. trade. When calculating the duty impact to achieve the permitted $4 billion, the EU used trade data from a time period (August 2019 – July 2020) during which trade was substantially diminished due to the COVID-19 public health emergency. As such, when the EU tariffs are applied to trade volumes in a more normal period, the resulting duties exceed the permitted $4 billion.

In response, the U.S. is mirroring the EU’s time period, the result being that current LCA-dispute tariffs applied to goods during that time period result in additional duties substantially less than the $7.5 billion authorized by the WTO. Consequently, the USTR’s recently announced tariffs on additional goods from France and Germany are designed to raise the LCA-dispute duties on EU goods during the August 2019 – July 2020 time period to approximately $7.5 billion.

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Robert Stang is a Washington, D.C.-based partner with the law firm Husch Blackwell LLP. He leads the firm’s Customs group.

Emily Lyons is an attorney in Husch Blackwell LLP’s Washington, D.C. office.

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USTR Announces Additional Duties on Cosmetics and Handbags from France, Delays Effective Date Until January 2021

July 14th, 2020 Robert Stang and Emily Lyons Leave a comment

On July 10, 2020, the U.S. Trade Representative (USTR) announced that it would impose a 25 percent additional duty on certain cosmetics, soaps and cleansing products, and handbags that are products of France, valued at $1.3 billion, due to the French Digital Services Tax (DST). Nevertheless, USTR delayed the application of the duties for as long as 180 days, which means that at the earliest, the additional duties would go into effect January 6, 2020. USTR stated that the tariffs could go into effect sooner than the 180-day suspension period, but if this change were to occur, USTR would issue a subsequent Federal Register Notice amending the effective date of implementation for the tariffs.

In July 2019, USTR opened an investigation directed at the Government of France under Section 301 of the Trade Act of 1974, because of France’s new DST, which imposed a 3 percent revenue tax on companies providing certain online services directed at French customers. In December 2019, USTR found that the French DST was “unreasonable, discriminatory, and burdens U.S. commerce” and was expected to collect over $500 million in taxes for activities in 2021. USTR accepted comments from interested parties in early 2020 on a proposed list of goods targeted for additional tariffs, which included French cheeses, wines, cosmetics, and handbags. However, prior to the imposition of additional duties, the U.S. and French governments were able to negotiate a truce that temporarily delayed the implementation of the DST until December 2020 and obviated the need for USTR to take immediate action.

USTR has stated that this action concerning tariffs on certain French goods is not intended to escalate trade tensions with France but instead was necessitated by Section 304(a)(2)(B) of the Trade Act of 1974 requiring that USTR announce the action to be taken within 12 months of the initiation of the Section 301 investigation. The 180-day delay of the imposition of the tariffs is intended to provide USTR and France additional time to continue discussions, which could lead to a satisfactory resolution of the DST matter.

USTR has stated that it will continue to monitor the effect of the trade action and may modify the list of affected goods necessary to ensure resolution of the matter with the Government of France.

This action comes on the heels of USTR announcing a similar action into digital service taxes involving India, the European Union and several other countries. Over the last few years, various governments have enacted or considered taxes on revenues generated by digital services companies within the different jurisdictions. Proponents of DSTs argue that the tax corrects corporate taxation to cover previously untaxed or undertaxed revenues. Alternatively, the position of the Trump administration is that DSTs unfairly discriminate against “large, U.S.-based tech companies” such as Amazon and Google.

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Robert Stang is a Washington, D.C.-based partner with the law firm Husch Blackwell LLP. He leads the firm’s Customs group.

Emily Lyons is an attorney in Husch Blackwell LLP’s Washington, D.C. office.

Archives, Global Trade Daily, Imports/Exports, International Trade

USTR Opens Online Portal to Solicit Input on Products to Carousel, Duty Rate in Large Civil Aircraft Section 301 Tariff Action

June 25th, 2020 Robert Stang and Emily Lyons Leave a comment

The U.S. Trade Representative (USTR) issued a draft Federal Register notice outlining its process to review the Section 301 duties imposed on imported goods pursuant to the Large Civil Aircraft Dispute with the European Union (EU). This review is required by statute (Section 306(b)(2) of the Trade Act of 1974) and may result in goods being added to or removed from the list of products subject to Section 301 tariffs. It may also result in a change in the tariff level.

To collect comments USTR has created a new electronic portal. The portal opens Friday, June 26, 2020, and we anticipate will close July 26, 2020. We further anticipate a USTR review decision on or about August 12, 2020. We strongly recommend that clients and companies interested in submitting comments not wait until the last day of the comment period to submit comments through the electronic portal. USTR is expecting approximately 25,000 comments and heavy last-minute traffic may slow the electronic portal considerably.

As previously reported, the initial assessment of Section 301 duties in this dispute occurred in October 2019 when the U.S. imposed a 10 percent tariff on new European large civil aircraft and a 25 percent tariff on certain EU agricultural goods and other products, including products Irish whiskey, various European cheeses, and certain apparel. USTR received nearly 26,000 comments in response to its review announced on December 12, 2019, which resulted in certain revisions to the list of tariffed goods on February 14, 2020.

In this most recent review, USTR is seeking comments on the following topics:

-Whether products listed in Annex I of the Notice should be removed from or remain on the list of goods subject to Section 301 duties;

-Whether Section 301 duties on specific products should be increased, up to a level of 100 percent;

-Whether additional duties should be imposed on specific products listed in Annex II or Annex III of the Notice; and

-The rate of additional duty (up to 100 percent) to be applied to any products drawn from Annex II or Annex III of the Notice.

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Robert Stang is a Washington, D.C.-based partner with the law firm Husch Blackwell LLP. He leads the firm’s Customs group.

Emily Lyons is an attorney in Husch Blackwell LLP’s Washington, D.C. office.

USTR Increases Tariffs on Aircraft Parts and Certain Wines and Distilled Spirits from France and Germany

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