United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 2001 HQ Rulings > HQ 964723 - HQ 964837 > HQ 964764

Previous Ruling Next Ruling
HQ 964764

March 2, 2001

CLA-2-42: RR: CR:TE 964764 JFS


Port Director
Port of Philadelphia
Second and Chestnut Streets
Philadelphia, PA 19106

RE: Application for Further Review of Protest Number 1101-00-100103; Matters not Protestable; Sanctions on Designated Products of the European Union; and Pillow Shams.

Dear Sir or Madam:

The above-referenced protest was forwarded to this office for further review. We have considered the protest and our decision follows.


The record indicates that the subject protest was timely filed on May 11, 2000, by Barthco International, Inc., on behalf of IKEA Wholesale, Inc. The goods at issue, pillow shams, were entered by the Protestant under subheading 6302.21.9050, Harmonized Tariff Schedule of the United States Annotated (HTSUSA). Ordinarily, the pillow shams would be classified under 6302.21.90, HTSUSA. However, subheading 9903.08.13, HTSUSA, requires that all goods from the European Union (EU) that are provided for in 6302.21.90, HTSUSA, are subject to a 100% duty. Accordingly, Customs reclassified the goods under 9903.08.13, HTSUSA, and rate advanced the goods.

The Protestant does not contend that Customs improperly reclassified the goods in question. The Protestant explained the basis of its protest as follows:

The importer protests the imposition of the 100% duties for the following tariff numbers: 6302.21.9050. The importer states that the imposition of these 100% duties for retaliatory purposes is both capricious and arbitrary and that the rates of duty in the normal trade relations column (Column 1, General) should be used.

The Protestant questions the legality of the imposition of the 100% duty, not the enforcement of the law by the Customs Service.


Are the retaliatory duties levied by the United States against certain goods from the European Union arbitrary and capricious?


This protest arises from a trade dispute dating back to 1992 between the United States and the European Union (EU) over bananas. The United States, joined by Guatemala, Honduras, Mexico and Ecuador, challenged the EU’s banana import policy in the World Trade Organization (WTO). The import policy or regime was designed, among other things, to take away a major part of the banana distribution business of U.S. companies.

On September 27, 1995, pursuant to section 302(b)(1) of the Trade Act, the Office of the United States Trade Representative (USTR) initiated an investigation into the EU banana regime. In accordance with several WTO agreements, the USTR requested consultations with the EU. 60 Fed. Reg. 52026 (1995). Subsequently, a WTO dispute settlement panel was formed to examine the regime. On May 22, 1997, the panel found the EU banana regime to be in violation of the General Agreement on Tariffs and Trade 1994 (GATT). The finding of the panel was adopted by a Dispute Settlement Body (DSB), and was subsequently upheld by the Appellate Body of the WTO. The DSB recommended that the EU bring the measures that were in violation of GATT into conformity with GATT. An arbitrator recommended that the EU comply with the recommendations by January 1, 1999. The EU adopted a new regime by January 1, 1999, however, the regime continued the violations identified by the WTO panel.

Accordingly, the United States sought WTO authorization to apply retaliatory duties with respect to certain products from the EU. The value of the retaliatory action was to be the equivalent of the financial harm sustained by the United States. In response, the EU exercised its right to request arbitration concerning the amount of the suspension. On April 6, 1999, WTO arbitrators determined the level of suspension to be $191.4 million. On April 19, 1999, the Dispute Settlement Body of the WTO authorized the United States to implement retaliatory duties against the EU and its member nations. The USTR immediately imposed a 100 percent ad valorem duty on selected EU products.

In preparation for the potential trade sanctions, the USTR, on November 10, 1998, sought public comment on a preliminary list of European Union products to be subject to the retaliatory duty. 63 Fed. Reg. 63099 (1998). On December 9, 1998, the USTR conducted a public hearing to receive testimony on the preliminary list. Notice for this hearing was published in 63 Fed. Reg. 63099 (1998). On December 21, 1998, the USTR published a revised list of European Union products to be subject to the retaliatory duty. Effective April 19, 1999, the USTR suspended tariff concessions under the GATT and imposed a 100% ad valorem rate of duty on selected articles imported from the EU.

The USTR implemented the retaliatory duties by adding a 100% ad valorem rate of duty on goods covered by selected provisions of the HTSUSA. The provisions of the sanctions are contained in subchapter III of chapter 99, HTSUSA. The subheadings of the HTSUSA selected for the retaliatory duties are as follows:

Product Description
Bath preparations, other than bath salts
Handbags, with or without shoulder straps or without handle, with outer surface of sheeting of plastics 4202.32.10
Articles of a kind normally carried in the pocket or handbag, with outer surface of reinforced or laminated plastics 4805.50.00
Uncoated felt paper and paperboard in rolls or sheets 4819.20.00
Folding cartons, boxes and cases of noncorrugated paper or paperboard 4911.91.20
Lithographs on paper or paperboard, not over 0.51 mm in thickness, printed not over 20 years at time of importation 6302.21.90
Bed linen, not knit or crochet, printed, of cotton, not containing any embroidery, lace, braid, edging, trimming, piping or applique work, not napped 8507.20.80
Lead-acid storage batteries other than of a kind used for starting piston engines or as the primary source of power for electric vehicles 8516.71.00
Electrothermic coffee or tea makers, for domestic purposes (Except Italy)

The goods affected by the retaliatory duties were selected by the USTR in light of the comments it received in response to notices published on October 22, 1998, November 10, 1998, and December 23, 1998, and the testimony presented at the public hearing held on December 9, 1998. It was during this comment period that the Protestant had the opportunity to influence what goods would be subject to the retaliatory duty. The Protestant contends that the imposition of the retaliatory duties was arbitrary and capricious. However, “[b]oth Supreme Court and Court of Customs and Patent Appeals precedent have established that the Executive’s decisions in the sphere of international trade are reviewable only to determine whether the President’s action falls within his delegated authority.” Florsheim Shoe Co. v. United States, 744 F.2d 787, 795 (Fed. Cir. 1984). Congress may delegate its authority to impose duties to the President. United States v. Yoshida International, Inc., 63 C.C.P.A. 15, 526 F.2d 560 (1975). “After it is decided that the President has congressional authority for his action, ‘his motive, his reasoning, his finding of facts requiring the action, and his judgment, are immune from judicial scrutiny.’” Id. 744 F.2d at 796, quoting United States Sugar Refiners’ Assoc. v. Block, 683 F.2d 399, 404 (CCPA 1982). Accordingly, the USTR’s decision to impose retaliatory duties is only reviewable to determine whether it acted within the authority delegated to it by Congress. Florsheim Shoe Co. v. United States, 744 F.2d 787, 795 (Fed. Cir. 1984).

In this case, the authority to impose retaliatory duties was delegated to the USTR in the Trade Act of 1974 (Trade Act). 19 U.S.C. § 2101 et. Seq. The Trade act requires the USTR to take necessary actions to protect U.S. interests when it has determined that (1) the rights of the United States under a trade agreement are being denied, (2) a foreign country has violated a trade agreement, or (3) a foreign country restricts U.S. trade. 19 U.S.C. § 2411(a). The USTR investigated the banana regime imposed by the EU and found that the EU was in violation of the GATT, to which the U.S. is a member. The USTR estimated the damage to U.S. trade to be $520 million. As required by the trade act, the USTR suspended trade benefits and imposed retaliatory duties on selected goods from the EU. 19 U.S.C. § 2411 (c).

The USTR clearly acted within the authority delegated to it by Congress in the Trade Act. Upon finding that the EU was in violation of the provisions of the GATT, the USTR was required by law to take retaliatory actions. The actions taken by the USTR – the imposition of retaliatory duties – was fully authorized by Congress in the Trade Act. Furthermore, the selection of goods subject to the duty was made after ample opportunity for those affected to provide advice and comment. Finally, because the USTR acted within its scope of authority, a suit in the Court of International Trade, contesting the imposition of the retaliatory duties by the USTR, would fail. Thus, the Protestant’s protest contending that the imposition of 100% retaliatory duties on the subject pillow shams is arbitrary and capricious must fail.


The USTR acted within its scope of authority by imposing a 100% duty on goods from the European Union that are provided for in 6302.21.90, HTSUSA. The Protest should be denied.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, Revised Protest Directive, dated August 4, 1993, a copy of this decision attached to Customs Form 19, Notice of Action, should be provided by your office to the protestant no later than 60 days from the date of this decision. Since there are no reliquidations involved in this protest, you should be able to accomplish this direction prior to the 60 day period.

Sixty days from the date of this decision the Office of Regulations and Rulings will take steps to make this decision available to Customs personnel, and to the general public on the Customs Home Page on the World Wide Web at www.customs.ustreas.gov, by means of the Freedom of Information Act and other public access channels


John Durant, Director

Previous Ruling Next Ruling

See also: