Just weeks before the European Union and the United States are slated to begin historic free trade agreement talks, some U.S. manufacturers were jolted by the EU's recent decision to dramatically increase tariffs on specific US-made goods, including high end women's denim jeans manufactured by a recently revitalized southern California garment industry.
The EU announced that tariffs on women's denim trousers will jump from 12 percent to 38 percent, effective May 1, 2013. For many EU fashionistas, the resulting rise in cost is likely to put their favorite U.S.-made jeans out of financial reach.
"Blue jeans were created in California!" says Tom Travis , managing partner of international trade law firm Sandler, Travis & Rosenberg, P.A. "Now, just as this traditionally American manufacturing sector is making its way back to home-grown profitability, the industry is facing a significant blow to an important and growing export market."
This duty rate hike on jeans and other U.S. exports is a continuation of sanctions authorized by the World Trade Organization in retaliation for the U.S. failure to fully comply with a WTO ruling against the Continued Dumping and Subsidy Offset Act of 2000. Commonly referred to as the Byrd Amendment, this law allowed the U.S. to distribute the additional duties collected on imports of unfairly traded goods to the U.S. industries affected by such practice. The law was found to be a violation of WTO rules and despite a repeal of the law its effects were allowed to continue. As a result, the WTO allows other countries to raise tariffs on goods imported from the U.S. up to a certain amount, which varies each year.
"The immediate issue for U.S. jeans manufacturers affected by this action is to figure out how to preserve their EU export business through this crisis," Travis explains. "We are working closely with both our EU and U.S. offices to formulate both short-term tactical and long-term strategic options," he says.
