Fashion Intel & Analysis

While the trade talks seem to be more positive this week, Trump Administration officials have acknowledged that they are working on an Executive Order to increase inspections on imports from China.  In the Financial Times, Peter Navarro, the White House trade and manufacturing policy advisor, says “Options are being evaluated through the inter-agency process to address a significant problem that steals our intellectual property, harms our manufacturers and workers, and kills Americans with deadly drugs.”  In other press reports, the Administration is also raising concerns about abuse of the Section 321 provision covering de minimus shipments.  According to Pro Publica U.S. Customs & Border Protection reports the number of small packages coming into the U.S. increased 46% in fiscal year 2018 and the agency is processing 1.8 million items per day. 

The 2019 Miscellaneous Tariff Bill (MTB) cycle is slated to begin this week. The U.S. International Trade Commission (ITC) will open its portal and begin accepting MTB petitions at 8:45 AM ET on October 11, 2019 and the portal will remain open for 60 days, until December 10, 2019. Under the MTB process, U.S. importers may petition for duty-free or reduced-duty treatment of certain imported products by submitting an MTB petition to the ITC. If you filed MTB petitions back in 2016 you may be familiar with the process and ready to submit a renewal. Regardless, ITC has published a handful of resources to help you prepare for the 2019 process. 

Background: What Is the MTB? 

The Miscellaneous Tariff Bill (MTB) Act temporarily reduces or suspends the import tariffs on specified products that are not available domestically.  U.S. importers may petition for duty-free or reduced-duty treatment of certain imported products under the MTB process. In general, MTB requests should be “non-controversial”, meaning there should be no domestic U.S. production or opposition from domestic U.S. producers and requests should not create substantial revenue losses for the United States. 

How To Prepare Your Petition 

Before you sit down to submit your petition, it’s important to have gathered all the required information, because you must complete your petition in a single session. Click here to see ITC’s full petition checklist. Crafting specific article descriptions is critical for success during the MTB process. ITC encourages you to check CROSS rulings for your tariff heading and seek an e-ruling from CBP to include with your petition. In addition, the petition requires information on the product and the market for the product, domestic production, and an estimate number of imports and market share. Finally, prepare early and file early. Time and resources permitting, if ITC spots an issue with an early filing, they can contact the petitioner to address the issue. 

Again, as you prepare to write an article description, know where Customs classifies your product and look at the tariff line’s coverage and descriptive language. Plan to create a verbal snapshot that distinguishes your product, considering visible physical characteristics and using precise language. For additional guidance, you can access ITC’s training sessions, including a workshop on writing an article description for textiles, apparel, footwear, and headwear articles and writing a description for travel goods, handbags, sporting goods, and overlapping article descriptions

If you want to renew a MTB that is already in effect, remember that anyone can file for a renewal.  The request to renew need not be from the 2016 petitioner. The renewal is of the 9902 provision not the prior petition and undergoes the same review process. 

If you filed in 2016, you can expect a similar process this year, though anticipate some MTBPS enhancements and updated guides from ITC. One important thing to note is that this year’s petition requires additional information from domestic producers for comments on petitions.  Here is the list of accessories, textiles, home textiles and apparel products that currently are eligible for MTB benefits.  

Additional MTB information and guidance can be found on ITC’s website.  USFIA will also be hosting a webinar on October 21st to help prepare for the MTB cycle, stay tuned for more details and registration. 

Today, U.S. Customs and Border Protection (CBP) issued holds on imports of products from five countries, including garments from Xinjiang, suspected to have been made with forced labor. Importers have the opportunity to either re-export the detained shipments at any time or to submit information to CBP demonstrating that the goods are not in violation, according to the CBP announcement. 

The agency issued five Withhold Release Orders (WROs), effective immediately, on the following products: 

  • Garments produced by Hetian Taida Apparel Co., Ltd. in Xinjiang, China; produced with prison or forced labor.
  • Disposable rubber gloves produced in Malaysia by WRP Asia Pacific Sdn. Bhd.; produced with forced labor.
  • Gold mined in artisanal small mines (ASM) in eastern Democratic Republic of the Congo (DRC); mined from forced labor.
  • Rough diamonds from the Marange Diamond Fields in Zimbabwe; mined from forced labor.
  • Bone black manufactured in Brazil by Bonechar Carvão Ativado Do Brasil Ltda; produced with forced labor.

As a reminder, forced labor determinations are not limited to production of the final product. They can cover inputs. For example, a garment incorporating fabric made using forced labor could be the subject of detention order. This emphasizes the necessity of making sure that there is no forced labor throughout the supply chain.

The United States will impose 10 percent tariffs on aircraft and 25 percent tariffs on an array of consumer goods, including certain apparel products, from the European Union in retaliation for illegal aircraft subsidies following a WTO ruling granting the U.S. the right to retaliate annually on $7.5 billion worth of European goods. 

According to USTR, the United States will begin applying the WTO-approved tariffs on certain EU goods beginning October 18.  The full tariff list is available here and will be posted in an upcoming Federal Register notice. Of note to our industry, the following products of the United Kingdom are subject to additional import duties of 25 percent: 

  • 6110.11.00 Sweaters, pullovers, sweatshirts, waistcoats (vests) and similar articles, knitted or crocheted, of wool
  • 6110.12.10 Sweaters, pullovers, sweatshirts, waistcoats (vests) and similar articles, knitted or crocheted, of Kashmir goats, wholly of cashmere
  • 6110.20.20 Sweaters, pullovers and similar articles, knitted or crocheted, of cotton, nesoi 
  • 6110.30.30 Sweaters, pullovers and similar articles, knitted or crocheted, of manmade fibers, nesoi 
  • 6202.99.15 Rec perf outwear, women's/girls' anoraks, wind-breakers & similar articles, not k/c, tex mats (not wool, cotton or mmf), cont < 70% by wt of silk 
  • 6202.99.80 Women's/girls' anoraks, wind-breakers & similar articles, not k/c, of tex mats (not wool, cotton or mmf), cont < 70% by wt of silk,
  • 6203.11.60 Men's or boys' suits of wool, not knitted or crocheted, nesoi, of wool yarn with average fiber diameter of 18.5 micron or less
  • 6203.11.90 Men's or boys' suits of wool or fine animal hair, not knitted or crocheted, nesoi
  • 6203.19.30 Men's or boys' suits, of artificial fibers, nesoi, not knitted or crocheted
  • 6203.19.90 Men's or boys' suits, of textile mats(except wool, cotton or mmf), containing under 70% by weight of silk or silk waste, not knit or croch 
  • 6208.21.00 Women's or girls' nightdresses and pajamas, not knitted or crocheted, of cotton 
  • 6211.12.40 Women's or girls' swimwear, of textile materials(except mmf), containing 70% or more by weight of silk or silk waste, not knit or crocheted 
  • 6211.12.80 Women's or girls' swimwear, of textile materials(except mmf), containing under 70% by weight of silk or silk waste, not knit or crocheted
  • 6301.30.00 Blankets (other than electric blankets) and traveling rugs, of cotton
  • 6301.90.00 Blankets and traveling rugs, nesoi 
  • 6302.21.50 Bed linen, not knit or crocheted, printed, of cotton, cont any embroidery, lace, braid, edging, trimming, piping or applique work, n/napped 
  • 6302.21.90 Bed linen, not knit or croc, printed, of cotton, not cont any embroidery, lace, braid, edging, trimming, piping or applique work, not napped

There is positive news on the trade front. U.S. and Chinese trade negotiators are confirmed to meet on October 10th and 11th. Some analysts are wondering whether it is good news that the Administration has not yet published the Federal Register notice to increase 301 tariffs to 30% on Tranches 1, 2 and 3. But that bit of optimism is tempered by reports from several news outlets that the Trump Administration is seriously considering new ways to pressure China that would go beyond tariffs. The White House is floating the idea of limiting U.S. investment in China. This could include delisting Chinese firms from U.S. stock exchanges and banning the inclusion of Chinese equities in U.S. government pension funds. The response from Wall Street is negative. There is some support from Congress to restrict capital flows, with Senator Marco Rubio (R-FL) taking the lead. At this point, it is not clear if the Administration will follow through with this idea, but it suggests that they are looking for more pressure points than tariffs.