On March 29, 2019, the Office of the United States Trade Representative released the 2019 National Trade Estimate Report
Here are a few highlights that may be of interest to readers of Textiles and Trade.
ARGENTINA
Argentina subjects imports to automatic or non-automatic licenses that are managed through the Comprehensive Import Monitoring System (SIMI)…The SIMI system requires importers to submit detailed information electronically about goods to be imported into Argentina. … As of December 2018, Argentina maintained non-automatic import license requirements on 10,571 12-digit tariff lines, including on products the government deems import-sensitive, such as automobiles, paper and cardboard, iron and steel, nuclear reactors, electrical and construction materials and parts, toys, textiles and apparel, and footwear.
Certificates of origin have been a key element in Argentine import procedures to enforce trade remedy measures, reference prices, and certain geographical restrictions. Argentina requires certificates of origin for certain categories of products, including certain organic chemicals, tires, bicycle parts, flat-rolled iron and steel, certain iron and steel tubes, air conditioning equipment, wood fiberboard, most fabrics (e.g., wool, cotton, other vegetable), carpets, most textiles (e.g., knitted, crocheted), apparel, footwear, metal screws and bolts, furniture, toys and games, brooms, and brushes. To receive the MFN tariff rate, a U.S. product’s certificate of origin must be authenticated by an Argentine embassy or consulate, or carry a U.S. Chamber of Commerce seal.
Argentina restricts entry points for several classes of goods, including sensitive goods classified in 20 Harmonized Tariff Schedule chapters (e.g., textiles; shoes; electrical machinery; iron, steel, metal, and other manufactured goods; and watches), through specialized customs procedures for these goods.
BOLIVIA
Bolivia’s MFN tariff structure consists of seven rates ranging from zero percent to 40 percent. The rates in principle apply according to the category of the product: … 40 percent for clothing and accessories, alcoholic beverages, wooden furniture, and footwear.
Bolivian law authorizes prohibitions on the import of goods on the basis that the goods may affect human and animal life or health, or are harmful to the protection of plants, morality, the environment, the security of the state, or the nation’s financial system. … Prohibited items included: radioactive residues; halogenated derivatives of hydrocarbons; arms, ammunition, and explosives; worn clothing; and some types of vehicles and motor vehicles…
Other products require prior authorization before they can be imported. In 2018, prior authorization was required for 719 ten-digit tariff lines. Prior authorization (such as the import prohibitions discussed above) is generally presented as a way to protect human and animal health or life, to protect plants and conserve exhaustible natural resources, or to protect the security of the state. Bolivian law also permits the use of prior authorization to protect domestic industry from import competition. … Examples of products requiring prior authorization include: mineral products; chemical products; plastics and rubber; pulp and paper; textiles; footwear and headgear; precious stones; machinery and appliances; precision equipment; arms and ammunition; and some miscellaneous manufactures.
BRAZIL
Brazil imposes relatively high tariffs on imports across a wide range of sectors, including automobiles, automotive parts, information technology and electronics, chemicals, plastics, industrial machinery, steel, and textiles and apparel.
Brazil generally prohibits imports of used consumer goods, including automobiles, clothing, …
U.S. footwear and apparel companies have expressed concern about the extension of non-automatic import licenses and certificate of origin requirements for footwear, textiles, and apparel from non-MERCOSUR countries. They also note additional monitoring, enhanced inspection, and delayed release of certain goods, all of which negatively impact the ability to sell U.S.-made and U.S.-branded footwear, textiles, and apparel in the Brazilian market.
COTE D’IVOIRE
To protect national industries, Cote d’Ivoire imposes special taxes on imports of … certain textile products (20 percent)…
Textile imports are subject to some authorization requirements by the External Trade Promotion Office, but the market is generally open.
Imports of cotton and products consisting of 100 percent cotton, such as the “Wax and Resin” textile cloth most often used in traditional African clothing, require an import license from the External Trade Promotion Office.
ECUADOR
Ecuadorian law (INEN 013) requires footwear companies to make a special label on every pair of shoes imported into Ecuador, including content information and an Ecuadorian tax ID number. U.S. footwear companies need to make production runs specifically for Ecuador, to attach labels to the shoe upper during manufacture or attach a label after manufacture. These requirements far exceed typical local language labeling requirements. In 2017 this requirement was modified to require sewn labels to include only the material composition (percentage), country of origin, and safety instructions. For all other labeling requirements an adhesive tag suffices. Ecuador is working with other CAN members to issue a regional labeling policy for footwear, apparel, and accessories, among others, based on international standards.
EUROPEAN UNION
The EU regulation concerning the production, marketing, and use of chemicals known as REACH entered into force on June 1, 2007. REACH imposes extensive registration, testing, and data requirements on chemicals manufactured or imported into the EU in quantities greater than one metric ton. The restriction process limits or bans certain substances on the EU market. It also requires manufacturers or users of certain hazardous chemicals to obtain authorizations for those chemicals. Furthermore, REACH impacts virtually every industrial sector because each entity registering a chemical under the legislation must account for the uses of that chemical in the products it places or intends to place on the EU market.
The United States agrees on the importance of regulating chemicals to ensure environmental and health safety. The United States is concerned, however, that REACH appears to impose requirements that are either more onerous for foreign producers than EU producers or simply unnecessary. For example, stakeholders have raised concerns that they must provide data as part of the registration process under REACH that is irrelevant to health and environmental concerns. Additionally, there appears to be inconsistent and insufficiently transparent application of REACH by Member States. The United States and many other WTO Members have raised concerns regarding various aspects of REACH at nearly every WTO TBT Committee meeting for years. WTO Members have emphasized the need for greater transparency in the development and implementation of REACH requirements and frequently cite the need for further information and clarification, as well as problems producers have in understanding and complying with REACH’s extensive registration and safety data information requirements.
INDIA
India maintains several export subsidy programs, including exemptions from taxes for certain export- oriented enterprises and for exporters in Special Economic Zones. Numerous sectors (e.g., textiles and apparel, steel, paper, rubber, toys, leather goods, and wood products) receive various forms of subsidies, including exemptions from customs duties and internal taxes, which are tied to export performance. India not only continues to offer subsidies to its textiles and apparel sector in order to promote exports, but it has also extended or expanded such programs and even implemented new export subsidy programs. As a result, the Indian textiles sector remains a beneficiary of many export promotion measures. In July 2016, India announced subsidies intended to encourage employment generation in the garment sector in addition to providing refunds for state levies.
INDONESIA
In September 2018, Indonesia issued MOF Regulation 110/2018, increasing the “withholding tax” rates for 1,147 imported products, including from: 1) 2.5 percent to 7.5 percent for 719 consumer goods (e.g., audio- visual equipment, textiles); 2) 2.5 percent to 7.2 percent for 218 daily necessities (e.g., shampoos, cosmetics); and 3) 7.5 percent to 10 percent on 210 luxury goods.
MOT Regulation 87/2015 on the Import of Certain Products requires pre-shipment verification on a broad range of products (including electronics, textiles and footwear, toys, food and beverage products, and cosmetics) by designated companies (known in Indonesia as “surveyors”).
JAPAN
Japan maintains high tariffs on leather, footwear, and travel goods, ranging from 3.5 percent to an ad valorem equivalent of approximately 189 percent. In particular, Japan continues to apply TRQs to a limited and tightly controlled volume of leather footwear imports.
KENYA
For certain products and commodities deemed “sensitive,” Kenya applies ad valorem rates above 25 percent. This includes rates of 60 percent for most milk products, 50 percent for corn and corn flour, 75 percent for rice, 60 percent for wheat flour, 100 percent for sugar, and 50 percent for textiles.
In March 2016, Kenya and other EAC heads of state, in an EAC summit communique, directed EAC partner states to ban the importation of used clothing and footwear to support the development of the EAC’s textile and apparel and leather industries. In particular, they directed EAC partner states “to procure their textile and footwear requirements from within the region where quality and supply capacities are available competitively, with a view to phasing out importation of used textile and footwear within three years.” In addition, they directed partner states to ensure that “all imported second hand shoes and clothes comply with sanitary requirements, in the Partner States.” In June 2016, Kenya doubled the import duty rate on articles of used clothing to $0.40/kg or 35 percent ad valorem, whichever is higher, as a first step to implement the import ban. According to the Secondary Materials and Recycled Textiles Association (SMART), an industry association, Kenya is an important market for U.S. exports of used clothing. SMART estimates that at least 40,000 U.S. jobs in collection, processing, and distribution would be negatively impacted once Kenya and other EAC partner states fully implement the ban on imports of used clothing and footwear. In July 2017, Kenya reverted the import duty rate on articles of used clothing to the pre-June 2016 rates of $0.20/kg or 35 percent ad valorem, whichever is higher, in response to stakeholder concerns. In 2018, Kenya continued to apply the pre-June 2016 import duty rates.
KOREA
The Registration and Evaluation of Chemicals (K-REACH) Act entered into force on January 1, 2015. K- REACH requires manufacturers and importers of chemical substances to register and comply with annual reporting requirements. The United States has raised a number of concerns, centering on the lack of guidance around implementation, the insufficient time for companies to implement the requirements, and K-REACH’s lack of protection for confidential business information. The United States has raised these concerns repeatedly through meetings under KORUS and the WTO Committee on Technical Barriers to Trade.
A low volume exemption from K-REACH applies to companies importing under 100 kg; however, the Ministry of Environment (MOE) proposed changes to the Presidential Decree that would narrow application.of low volume exemptions by requiring registration of compounds exceeding 1,000 kg imported country- wide on an aggregate basis. This newly proposed criterion introduces uncertainty to business planning and adds a further compliance burden on chemical importers.
In 2018, MOE proposed an amendment to the Chemical Control Act that requires disclosure of the full composition of chemical mixtures by importers and manufacturers in line with its new “Universal Chemical Tracking System.” However, U.S. exporters contend that full composition disclosure fails to protect confidential business information and compliance would be difficult in declaring contents of third-party supplied materials. If U.S. exporters cannot fulfill the requirements, exports to Korea will likely be restricted. The United States continues to urge Korean ministries to base regulations on scientific evidence and will engage Korean authorities as implementation progresses.
MEXICO
Mexico applies several regulations governing the importation of footwear, apparel, and textile goods, including the creation of reference prices and the establishment of an import licensing system. According to the Mexican government, the measures are designed to enhance the productivity and competitiveness of Mexican footwear and apparel producers and protect Mexico’s domestic footwear and apparel industries from the importation of undervalued goods. Beginning in December 2018, the Ministry of Economy abruptly canceled automatic import licenses for several U.S. companies based on “inconsistencies” that have not been adequately explained. In addition, U.S. exporters expressed a number of concerns with regard to the schemes, including a lack of transparency in how reference prices are determined and uneven enforcement by Mexico’s customs and tax authorities.
NIGERIA
The Nigerian government continues to ban the import of nearly 50 different product categories, citing the need to protect local industries or promote health and safety. The list of prohibited imports currently includes, among other products: … textiles, apparel, footwear, and travel goods; used motor vehicles more than ten years old; most types of furniture; ball point pens; pistols and air pistols; cartridge reloading implements; used clothing; and certain spirits and alcohols.
OMAN
The United States raised concerns that pre-market testing could have a large negative impact on the U.S. electrical and electronic equipment industries (such as information and communications technology, medical equipment, machinery, and smart fabrics), especially as the practice differs from common practice for RoHS regulations, which typically allow self-declaration of conformity.
PARAGUAY
Paraguay requires import licenses on personal hygiene products, cosmetics, perfumes and toiletries, textiles and clothing, shoes, insecticides, agrochemicals, soy grains, barbed wire, wire rods, and steel and iron bars. … The import license process usually takes 10 days, but for goods that require a health certification, it can take up to 30 days. Once issued, the health certification is valid for only 30 days, and imports must therefore be made within this 30-day window. This can be difficult if there are shipment delays, which are fairly common in Paraguay, a landlocked country largely dependent on riverine shipment that can slow during dry seasons. Due to these delays, importers may need to reapply for an import license or health certification.
PERU
Peru currently restricts imports of certain used goods, including clothing and shoes (except as charitable donations), medical devices (except by individual physicians for their own use), tires, cars over five years old, vehicles with more than eight seats and a gross weight over five tons, and trucks more than two years old weighing more than 12 tons.
SRI LANKA
The Export Development Board (EDB) levy, often referred to as a “cess”, ranges from 10 percent to 35 percent ad valorem on a range of imports identified as “nonessential” or as competing with local industries. Further, when calculating the EDB levy, an imputed profit margin of 10 percent is added to the import price. With some products, such as biscuits, chocolates, and soap, the levy is charged not on the import price, but instead on 65 percent of the maximum retail price. In an attempt to rationalize the tariff structure, the 2017 and 2018 government budgets removed the EDB levy on 350 items.
Textiles are subject to an EDB levy of Rs. 100 per kg (approximately $0.57). In addition, starting September 17, 2018, textiles are subject to a 5 percent VAT. Sri Lanka does not have import duties on textiles. Nations Building Tax (NBT) and PAL are not applicable on textiles.
Apparel is subject to a VAT of 15 percent or an EDB levy of 15 percent or Rs. 200 ($1.14) per unit, whichever is higher, and an NBT of 2 percent. Sri Lanka does not have import duties on articles of apparel and clothing accessories. The PAL is not applicable on these items.
THAILAND
High tariffs in many sectors … continue to hinder access to the Thai market for many U.S. products. The highest ad valorem tariff rates apply to imports competing with locally-produced goods, including automobiles and automotive parts, motorcycles, beef, pork, poultry, tea, tobacco, flowers, wine, beer and spirits, and textiles and apparel.
TUNISIA
Tunisia maintains a number of nontariff barriers. Approximately three percent of imported goods, including agricultural products, automobiles, and textiles, require an import license issued by the Ministry of Trade.
TURKEY
Turkey recently has taken advantage of substantial differences between its applied and WTO bound tariff rates to increase tariffs significantly across multiple sectors. Since mid-2014, Turkey has increased tariffs by an average of 26 percent on products classified in 50 Harmonized System chapters, affecting a wide range of sectors, including furniture, medical equipment, tools, iron, steel, footwear, carpets, and textiles.
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