20-Year Old US-EU Beef Threatens Duty Increase for Certain Rayon Fiber and Yarn

The EU bans the import of beef and beef products produced from animals to which any of six hormones have been administered for growth-promotion purposes. The effect of the EU ban is to prohibit the import of all but specially-produced U.S. beef and beef products. In February 1998, the WTO Dispute Settlement Body (DSB) in the EU-Beef case found that the ban was inconsistent with the obligations of the European Communities (now the EU) under the WTO Agreement. In July 1999, a WTO arbitrator determined that the EU import ban on U.S. beef and beef products had nullified or impaired U.S. benefits under the WTO Agreement in the amount of $116.8 million each year. On July 26, 1999, the DSB authorized the United States to suspend the application to the EU, and member States thereof, of WTO tariff concessions and related obligations covering trade in an amount of $116.8 million per year. Pursuant to that authorization, USTR announced a list of EU products that would be subject to a 100 percent rate of duty effective with respect to products entered, or withdrawn from warehouse, for consumption on or after July 29, 1999. See 64 FR 40638.

On May 13, 2009, the United States and the European Commission announced the signing of a Memorandum of Understanding (MOU) in the EU-Beef case. See 74 FR 40864.

The MOU provided for the EU to make phased increases in market access by adopting a tariff-rate quota (TRQ) for beef produced without growth-promoting hormones (termed HQB products), in return for the United States making phased reductions in additional duties the United States had imposed consistent with WTO authorization. See 74 FR 40864. Both in accordance with the MOU and as a result of a decision of the United States Court of Appeals for the Federal Circuit, USTR terminated all additional duties on EU products, effective May 2011. See 76 FR 30987.

Under the second phase of the MOU, starting in August 2012, the EU increased the TRQ to 45,000 metric tons (MT). Although the EU has maintained this 45,000 MT TRQ for HQB products, it has not in practice provided benefits to the U.S. beef industry sufficient to compensate for the economic harm resulting from the EU ban on all but specially-produced U.S. beef. In particular, non-U.S. exporters of HQB products have been able to fill a substantial part of the 45,000 MT TRQ.

In February 2016, Congress passed and the President signed the Trade Facilitation and Trade Enforcement Act of 2015. Among other things, the Act amended relevant provisions of the 1974 Trade Act to confirm that the Trade Representative may reinstate a previously terminated Section 301 action in order to exercise a WTO authorization to suspend trade concessions. In particular, the new Section 306(c) of the 1974 Trade Act permits the Trade Representative to reinstate a Section 301 action following (1) a request from the petitioner or any representative of the domestic industry that would benefit from reinstatement of action, (2) consultations under Section 306(d) of the Trade Act, and (3) a review under section 307(c) of the Trade Act.

On December 9, 2016, representatives of the U.S. beef industry invoked the new Section 306(c) of the 1974 Trade Act by filing a written request for reinstatement of action.

In order to assist in a possible reinstatement of the action in accordance with Section 306(c) of the 1974 Trade Act, and to provide information in connection with a review under Section 307(c) of the Act, the Section 301 Committee seeks public comments with respect to the specific EU products on the lists for increased import duties.

The list of products potential subject to increased duty is lengthy and includes two textile products:

• Viscose rayon staple fibers, not carded, combed or otherwise processed for spinning, provided for in Subheading 5504.10.00 HTSUS, rate of duty 4.3%.

• Single yarn (other than sewing thread) containing 85% or more by weight of artificial staple fibers, not put up for retail sale, provided for in Subheading 5510.11.00 HTSUS, rate of duty 9%.

In the case of the fiber classified at 5504.10.00, total U.S. imports in 2015 were $174 million, of which imports from the EU were:

• Germany, $40 million
• Austria, $30 million
• United Kingdom, $260,000
• Czech Republic, $17,000
• Netherlands, $2,000
• Spain, $2,000

NOTE, that this fiber is the subject of several temporary duty suspension petitions recently filed as part of the new Miscellaneous Tariff Bill process and was formerly under duty suspensions.

In the case of the yarn classified at 5510.11.00, total U.S. imports in 2015 were $41 million, of which imports from the EU were:

• Spain, $700,000
• Belgium, $410,000
• Switzerland, $151,000
• Austria, $96,000
• Slovenia, $23,000
• France, $16,000
• United Kingdom, $6,000

Comments are due by Monday, January 30, 2017. There will be a hearing in Washington on Wednesday, February 15, 2017.

To see the full text of the Federal Register notice CLICK HERE