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EU to Drop Punitive Tax on U.S. Jeans

Tariff dropped to 12.35 percent from 26 percent.

The European Union will drop a 26 percent retaliatory tax on women’s jeans made in the U.S. to 0.35 percent on May 1.

This move, announced Wednesday by Sandler, Travis & Rosenberg, a Washington-based law firm specializing in Customs and international trade, and confirmed by the European Union, will lower the EU duty rate on such jeans to 12.35 percent a year after it saw a significant increase in an ongoing trade dispute.

The duty rate hike on jeans was part of a continuation of sanctions authorized by the World Trade Organization in retaliation for U.S. noncompliance 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 The law was found to violate WTO rules and subsequently repealed, but distributions were allowed to continue for cases initiated prior to the repeal.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 antidumping or countervailing 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 jeans to the retaliation list for 2013. However, distributions in 2013 decreased by nearly half of the 2012 amount, resulting in the drastic reduction of the retaliatory tariffs on jeans and other goods.

The action came the same day as President Obama and European leaders, while seeking to present a united front against Russian aggression, reaffirmed their commitment to a U.S.-EU free-trade agreement at a summit in Brussels. They said economic ties between the U.S. and Europe, including the Trans-Atlantic Trade and Investment Partnership that seeks to remove trade barriers between the 28-nation bloc and the U.S., would help show the strong connection and resolve between the Western allies to Russia and others that try to force a wedge between them.

Speaking at a news conference, Obama said, “I’m confident we can actually shape a trade deal” that is acceptable to critics on consumer protections and climate issues. He said those are areas that have long been a cornerstone of his policies. The leaders noted that T-TIP would also provide leverage against Russian attempts to use energy as political ransom.

The U.S. and EU said a comprehensive T-TIP deal will strengthen their economic partnership that already accounts for nearly half of global output and supports $1 trillion in annual two-way trade, almost $4 trillion in total trans-Atlantic investments and 13 million jobs on both sides of the Atlantic. The common goals of the agreement are expanding access to each other’s markets for goods, services, investment and procurement; increasing regulatory compatibility while maintaining the high levels of health, safety, labor and environmental protection, and formulating joint approaches to rules that address global trade challenges of common concern.