On October 9, 2019, the Office of the US Trade Representative (USTR) published in the Federal Register its Notice of Determination and Action Pursuant to Section 301: Enforcement of U.S. WTO Rights in Large Civil Aircraft Dispute [Docket No. USTR-2019-0003] (originally posted by USTR on its website on October 4 as an advance copy). The notice states that USTR has determined that the European Union (EU) and certain member States have denied US rights under the World Trade Organization (WTO) Agreement and have failed to implement WTO Dispute Settlement Body recommendations concerning certain subsidies to the EU large civil aircraft industry. USTR has determined to take action in the form of additional duties on products of certain member States of the EU, as specified in Annex A to the notice. The additional duties set out in Annex A are applicable with respect to products that are entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on October 18, 2019.
In a Federal Register notice published on April 12, 2019 (84 Fed. Reg. 15028 (April 12 notice)), USTR announced the initiation of an investigation pursuant to sections 301 and 302 of the Trade Act of 1974, to enforce US rights in the WTO dispute against the EU and certain EU member States addressed to subsidies on large civil aircraft. The April 12 notice contains background information on the investigation and the dispute settlement proceedings, as well as the website where you can find the WTO reports. It also contained a preliminary list of covered products that were being considered for additional duties and solicited comments as well as announcing a public hearing. USTR received over 600 submissions, and held a 2 day public hearing where 47 witnesses provided testimony.
In response to these public comments, and upon further analysis, USTR published a notice (84 Fed. Reg. 32248 (July 5 notice)) inviting public comment on a second list of products also being considered for an additional ad valorem duty of up to 100 percent. USTR received nearly 1,900 submissions in response to the July 5 notice, and held a hearing on August 5, 2019, where 31 witnesses provided testimony. The public versions of submissions received in response to the April 12 and July 5 notices, as well as transcripts of both hearings, are available on www.regulations.gov under docket number USTR-2019-0003.
New HTSUS modifications
In order to implement this determination, effective October 18, 2019, subchapter III of chapter 99 of the HTSUS is modified by Annex A of this notice. Products provided for in new 5 HTSUS subheading 9903.89.05 will be subject to an additional ad valorem duty of 10 percent. Products provided for in new HTSUS subheadings 9903.89.10, 9903.89.13, 9903.89.16, 9903.89.19, 9903.89.22, 9903.89.25, 9903.89.28, 9903.89.31, 9903.89.34, 9903.89.37, 9903.89.40, 9903.89.43, 9903.89.46, and 9903.89.49, will be subject to an additional ad valorem duty of 25 percent.
Duties are in addition to any regular duties/ADD/CVD/safeguard duties
The additional duties provided for in the new HTSUS subheadings established by Annex A apply in addition to all other applicable duties, fees, exactions, and charges, and shall continue to be subject to antidumping, countervailing or other duties (including duties imposed by other provisions of subchapter III of this chapter and safeguard duties set forth in provisions of subchapter IV of this chapter), as well as to the additional imposed by the notice.
Foreign Trade Zone treatment
Any product listed in Annex A, except any product that is eligible for admission under ‘domestic status’ as defined in 19 C.F.R. 146.43, which is subject to the additional duty imposed by this determination, and is admitted into a US foreign trade zone on or after 12:01 a.m. eastern daylight time on October 18, 2019, only may be admitted as ‘privileged foreign status’ as defined in 19 C.F.R. 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.
Products subject to temporary suspensions or reductions
If any products listed that are classified in the subheadings enumerated in new Note 21(a) are eligible for temporary duty exemptions or reductions under subchapter II to chapter 99 shall be subject to the additional duties imposed by subheadings 9903.89.05 through 9903.89.49, and any such duty exemption or reduction shall apply only to the permanent general rate prescribed in provisions of chapters 1 through 97 of the tariff schedule.
Chapter 98 treatment
The additional duties imposed by subheadings 9903.89.05 through 9903.89.49 do not apply to goods for which entry is properly claimed under a provision of chapter 98 of the HTSUS, except for goods entered under subheadings 9802.00.40, 9802.00.50 and 9802.00.60 and heading 9802.00.80. For subheadings 9802.00.40, 9802.00.50 and 9802.00.60, the additional duties apply to the value of repairs, alterations or processing performed in one or more of EU Member States. For heading 9802.00.80, the additional duties apply to the value of the article less the cost or value of such products of the United States, as described in heading 9802.00.80.
USTR said that it will continue to consider the action taken in this investigation. In determining whether future modifications may be appropriate, USTR will take into account the public comments and testimony previously provided in response to the April 12 and July 5 notices. USTR said it remains open to discussing matters related to this investigation with the EU and EU member States.