On December 30, 2020, the US Trade Representative (USTR) posted on its website an advance copy of a Federal Register notice [Docket No. USTR-2020-0042] that USTR has determined to revise the action being taken in the Section 301 investigation, “Enforcement of US WTO Rights in Large Civil Aircraft Dispute,” to mirror the approach taken by the European Union (EU) in exercising its World Trade Organization (WTO) authorization in the Boeing dispute. In implementing this approach, the USTR has determined to revise the action by adding certain products of certain EU member States to the list of products subject to additional duties.
Although the EU has represented that its retaliatory action mirrors the action taken by the United States in this investigation, that is not accurate. Specifically, the EU’s action does not mirror the US action because the methodology used by the EU to exercise its $4 billion authorization relies on a benchmark reference period affected by the economic downturn caused by the COVID pandemic. Under this methodology, the EU was able to cover a greater volume of imports than if, like the United States, it had used data from a period when trade was not affected by the pandemic. In addition, 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 US exports to the United Kingdom. Therefore, the value of US exports subject to tariffs is greater than the trade value the EU ascribes to the various covered tariff lines. The United States has expressed its concerns to the EU and has given the EU an opportunity to address these issues. The EU has declined to do so.
The USTR has determined to mirror the EU approach to exercising its WTO authorization by adjusting the reference period used for the US trade action to mirror the August 2019 to July 2020 reference period used by the EU. 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 US trade action as last revised on August 12, 2020, is well below the $7.5 billion level authorized by the WTO.
USTR has determined to add additional goods of France and Germany to the list of products currently subject to additional duties, while otherwise maintaining the trade action as last revised on August 12, 2020. France and Germany have provided the greatest level of WTO-inconsistent large civil aircraft subsidies. The articles subject to the duties are aircraft manufacturing parts from France and Germany, certain non-sparkling wine from France and Germany, and certain cognac and other grape brandies from France and Germany.
The revisions in Annex I to the notice 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 standard time on January 12, 2021.
Annex I to the 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.