California Apparel News

Nearly one year after slapping an additional 26 percent tariff on U.S.-made women’s jeans, the European Union has decided to reduce that tariff to 0.35 percent starting on May 1.

That 26 percent tariff was on top of an already 12 percent tariff in place for women’s denim pants made in the United States, making the total tariff a whopping 38 percent. With the new ruling, the tariff on U.S.-made women’s denim will be 12.35 percent.

The EU approved the tariff reduction on March 25, and it was published in the Official Journal of the European Union on March 26.

The reduction in the steep import tax is good news for the Los Angeles apparel industry, which manufacturers about 75 percent of the premium jeans made in the United States. “It's another example of the effect of ‘pounding the table’ when action is required to remind the powers-that-be of issues that affect our industry and the region's employment,” said Ilse Metchek, president of the California Fashion Association.

The extra tariff imposed by the EU last May 1 was part of a trade dispute that centered around the Byrd Amendment, where United States collected extra duties several years ago on EU-made items that were considered to be unfairly trade goods that affected U.S. manufacturers. Even though the Byrd Amendment was rescinded, the United States continued distributing the money collected under the Byrd Amendment, to which the EU objected.

Because of this, the World Trade Organization authorized the EU to increase tariffs on certain items for a one-year period, with the option to renew the tariff.

Because the United States last year reduced by nearly 50 percent the distribution of those duties collected under the Byrd Amendment, the EU this week decided to reduce the denim tariff, which was costing some Los Angeles denim makers as much as $250,000 in the first six months of last year. The extra 26 percent tariff is rescinded after May 1, but it can be imposed again next year.

To combat the added tariff, several denim makers last year hired the international trade law firm of Sandler, Travis & Rosenberg, based in Miami, to find a technical way to get around this new tax.

In October, attorney Elise Shibles, with the law firm’s San Francisco office, filed a legal challenge with the tax and customs department in the United Kingdom about how women’s denim pants were classified. In December, she won a ruling that said women’s denim pants could be classified as women’s cotton pants if their dye is not colorfast, which is considered a denim quality. Women’s cotton pants only carry a 12 percent tariff.

Because the UK is part of the European Union, other EU countries have been honoring the new classification while U.S. denim makers have been filing paperwork to reclassify their jeans and receive refunds on the added tariff.