US Imposes additional tariffs on EU goods

On Wednesday, January 6, 2021, the Office of the United States Trade Representative (USTR), announced the revision of its Section 301 Action: Enforcement of U.S. WTO Rights in Large Civil Aircraft Dispute (86 FR 674).

The revision, which added additional items to the list of European products subject to import duties, is the most recent increase of tension between the United States and the European Union (EU), in regards to their WTO dispute over Boeing and Airbus.

Background

The US and EU have been disputing the other illicitly subsidizes their airplane manufacturers since as early as 2006. In 2006, the US filed a case with the WTO that accused EU member states of providing Airbus with roughly $22 billion in illegal subsidies. Over the next 14 years, both members have brought various suits against the other via the WTO, in order to settle this international trade dispute.

Recent Timeline

Recent Developments

The decision to include additional products to the list of 301 tariffs is in direct response to the EU’s actions in November 2020. In November 2020, the EU imposed tariffs with an annual trade value of $4 billion against products from the U.S. Specifically, the EU levied additional import duties of 15 percent on large civil aircraft and of 25 percent on other U.S. goods. The action followed  a decision by the WTO arbitrator in the United States— Measure Affecting Trade in Large Civil Aircraft (DS353), and a corresponding WTO authorization to suspend WTO concessions to the U.S

According to USTR, while the EU claims its retaliatory action mirrors the action taken by the United States in this investigation: that is not accurate. USTR explains that the benchmark reference period used by the EU was impacted by the economic fallout from COVID-19, whereas the U.S. had used trade data from an unaffected period. The EU’s skewed methodology allowed it to cover a greater volume of imports in its action.  Further, ” up to and until the exit of the United Kingdom from EU customs territory is finalized, goods of the United States are subject to additional EU duties when entering the United Kingdom. However, the EU’s trade action valuation does not account for U.S. exports to the United Kingdom. Therefore, the value of U.S. exports subject to tariffs is greater than the trade value the EU ascribes to the various covered tariff lines.”

Despite the U.S. informing the EU of these claims and providing it with an opportunity to respond, the EU has declined to do so. Following the EU’s lack of response, USTR announced the January 6^th Revision of Action. In order to establish an equitable playing field, the U.S. has decided to mirror the EU approach to exercising its DSB authorization by adjusting the reference period for the action to be from August 2019 to July 2020, the same reference period used by the EU and stated:

In adopting this approach, the United States has made appropriate adjustments to ensure that the trade data from the revised reference period does not reflect reductions in trade resulting from the October 2019 trade action in the investigation. Using the estimated trade values from this reference period, the value of the U.S. trade action as last revised on August 12, 2020, is well below the $7.5 billion level authorized by the DSB. In order to exercise the DSB authorization to the United States, the U.S. Trade Representative has determined to add products to the list of products currently subject to additional duties, while otherwise maintaining the trade action as last revised on August 12, 2020.

Specifically, as detailed in the annexes of the Notice, the revision adds products of France and Germany to the list of EU products subject to additional duties. USTR reviewed the proposed lists in the April 12, 2019 notice (84 FR 15028) and chose products from France and Germany, “as these countries have provided the greatest level of WTO inconsistent large civil aircraft subsidies”.

Additionally, USTR explicitly states that it will continue to consider the action taken by the investigation. Effectively, if the dispute changes in nature, the scope of this action may either increase or decrease. Diaz Trade Law will continue to provide the public with updates to this matter if and when USTR announces its future actions.

**SECTION BELOW IS DIRECTLY FROM THE FEDERAL REGISTER NOTICE** 

Annex I to this notice identifies the products affected by the revised action, the rate of duty to be assessed, and the current or former EU member States affected. Annex II, section 1, contains the unofficial descriptive list of the revisions made by this Notice. Annex II, section 2, contains an unofficial, consolidated description of the action, reflecting the changes in Annex I.

In order to implement this determination, effective January 12, 2021, subchapter III of chapter 99 of the HTSUS is modified by Annex I to this notice. The additional duties provided for in the HTSUS subheadings established by annex I apply in addition to all other applicable duties, fees, exactions and charges.

Any product listed in annex I to this notice, except any product that is eligible for admission under ‘domestic status’ as defined in 19 CFR 146.43, which is subject to the additional duty imposed by this determination, and is admitted into a U.S. foreign trade zone on or after 12:01 a.m. eastern standard time on January 12, 2021, only may be admitted as ‘privileged foreign status’ as defined in 19 CFR 146.41. Such products will be subject upon entry for consumption to any ad valorem rates of duty or quantitative limitations related to the classification under the applicable HTSUS subheading.

ANNEX I

A. “Effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern standard time on January 12, 2021, U.S. note 21 to subchapter III of chapter 99 of the Harmonized Tariff Schedule of the United States is modified as provided herein:

1. U.S. note 21(a) to such subchapter is modified by deleting “9903.89.55” each place that it appears and inserting “9903.89.63” in lieu thereof.
2. U.S. note 21 to such subchapter is modified by inserting in alphabetical order: “(s) Subheading 9903.89.57 and superior text thereto shall apply to all of the following products of France and Germany:
   • 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 (provided for in subheading 2208.20.40); and
   • Products classified in the following 8-digit subheadings:

(t) For purposes of subheading 9903.89.61:

1. “Fuselages and fuselage sections” means: (a) the complete, tube-like structure comprising the central body portion of an airplane, including accommodations for crew, passengers, and/or cargo, whether or not containing systems, insulation, or other articles; and (b) sections of articles described in (a) that have exterior side surfaces attached to exterior top/crown and bottom/keel surfaces, whether or not designed to be pressurized, and whether or not there are additional articles attached. The term “fuselages and fuselage sections” shall not cover airplane parts, components, or subassemblies (e.g. aft pressure bulkheads, floor panels, seats) when imported unattached to the articles described in (a) and (b) of this subdivision.
2. “Wings and wing assemblies (other than wings having exterior surfaces of carbon composite material)” means: (a) left or right-handed outboard wing structures with fixed structures, whether or not also including moveable structures, having exterior surfaces of other than carbon composite material; (b) center wing boxes having exterior surfaces of other than carbon composite material; and (c) wing assemblies that combine an outboard wing structure with a fixed structure (whether or not having moveable structure) and a center wing boxes, having exterior surfaces of other than carbon composite material. The term “wings and wing assemblies (other than wings that have exterior surfaces of carbon composite material)” shall not cover airplane parts, components or subassemblies when imported unattached to the articles described in (a), (b), or (c) of this subdivision.
3. “Horizontal and vertical stabilizers” means a horizontal or vertical stabilizer, whether or not attached to elevators or fuselage/tail cone/empennages structures. The term “horizontal and vertical stabilizers” does not cover elevators or rudders when imported unattached to a fuselage, tail cone, or empennage structure.

Such subheading shall not cover other parts of airplanes or helicopter not covered by the definitions set forth in this subdivision.”.

B. Effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern standard time on January 12, 2021, the following new tariff provisions are inserted in numerical sequence in subchapter III of chapter 99, with the material in the following new tariff provisions inserted in the columns entitled “Heading/Subheading”, “Article Description”, and “rates of Duty 1- General”, respectively:

ANNEX II

Section 1 – Descriptive List of Changes from Annex II

Note: The product descriptions that are contained in this Annex are provided for informational purposes only, and are not intended to delimit in any way the scope of the action, except as specified below. In all cases, the formal language in Annex 1 governs the tariff treatment of products covered by the action. Section 1 of this Annex describes the changes to the action that were undertaken as a result of Annex 1, as reflected in the informal list presented in Section 2 of this Annex.

Any questions regarding the scope of particular HTS subheadings should be referred to U.S. Customs and Border Protection. In the product descriptions, the abbreviation “nesoi” means “not elsewhere specified or included”.

The following changes are made effective January 12, 2021.

a) The following products of France and Germany have been added to the action, and included in Part 18, which has been inserted in the descriptive list in Section

**Only a portion of HS8 digit is to be covered

b) The following Products of France and Germany have been added to the action, and included in Part 19, which has been inserted in the descriptive list in Section

**Only a portion of HS8 digit is to be covered

Section 2- Descriptive List of Action, reflecting changes as described in Annex 1

Note: The product descriptions that are contained in this Annex are provided for informational purposes only, and are not intended to delimit in any way the scope of the action, except as specified below. In all cases, the formal language in Annex 1 and the notices published at 84 FR 54245 (October 9, 2019), 84 FR 55998 (October 18, 2019), 85 FR 10204 (February 21, 2020), 85 FR 50866 (August 18, 2020), governs the tariff treatment of products covered by the action.

Any questions regarding the scope of particular HTS subheadings should be referred to U.S. Customs and Border Protection. In the product descriptions, the abbreviation “nesoi” means “not elsewhere specified or included”.

Part 1 – Products of France, Germany, Spain, or the United Kingdom described below are subject to additional import duties of 15 percent ad valorem.

Note: For purposes of the 8-digit subheading of HTS listed below, the product description defines and limits the scope of the proposed action.

**Only a portion of the HS8 digit is to be covered

Part 2- Products of Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, or the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Part 3 – Products of Germany, Spain, or the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Part 4 – Products of Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, or the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Part 5 – Products of Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, or the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Part 6 – Products of Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, or the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Part 7 – Products of Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, or the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Part 8 – Products of Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, or the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Part 9 – Products of Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, or the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Part 10 – Products of France, Germany, Spain, or the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Part 11 – Products of Germany described below are subject to additional import duties of 25 percent ad valorem:

Part 12 – Products of Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, or the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Part 13 – Products of Germany or the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Part 14 – Products of Germany, Ireland, Italy, Spain, or the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Part 15 – Products of the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Note: For purposes of 2208.30.30, the product description defines and limits the scope of the proposed action.

** Only a portion of HS8 digit is to be covered

Part 16 – Products of France or Germany described below are subject to additional import duties of 25 percent ad valorem:

Part 17 – Products of Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, or the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Part 18 – Products of France or Germany described below are subject to additional import duties of 25 percent ad valorem:

Note: For purposes of 2208.20.40, the product description defines and limits the scope of the proposed action.

**Only a portion of HS8 digit is to be covered

 Part 19 – Products of France or Germany described below are subject to additional import duties of 15 percent ad valorem:

Note: For purposes of the 8-digit subheadings of HTS listed below, the product description defines and limits the scope of the proposed action.

**Only a portion of HS8 digit is to be covered

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