Wednesday, July 22, 2020

Trump increased the trade tariff for Prints by 25%

I had an interesting enquiry on my art business news blog - which struck me as potentially relevant to a lot of people. Or at least those producing prints.....

Here's the question
can I please ask whether you are currently aware of the latest situation regarding the recently imposed 25% US import tax on printed works from the EC, including on lithographs and photographs?

I work with the photographer [name] and we have contacted several sources regarding this, including our own government, and none have been able to confirm whether this tax still applies now that the UK has left the EC.

We would therefore very much appreciate your understanding of the situation.
Bottom line it appears that prints and postcards will now attract 25% import tax when imported into the USA.  Making them 25% more expensive.

I won't go into the whys and wherefores bit it appears that this is a retaliatory trade tariff strike by Trump who is annoyed that the EU subsidised the airbus and undermined the competition from whatever aircraft the US was producing. Which is ironic given that airlines have grounded so many planes recently and many people are completely rethinking the wisdom of air travel in relation to the planet.

Anyway....

I started to look into this and found various articles with some alarming headlines and content
A decision in a 15-year trade dispute between the United States and the European Union about the manufacturing of airplanes could result in a price hike for American buyers of certain types of photographs and prints.
Starting October 18, the U.S. will impose a 25 percent import duty on all of the following coming in from the U.K. and Germany: printed books, brochures, leaflets, printed matter in single sheets, lithographs on paper or paperboard created in the last 20 years, and pictures, designs, and photographs printed in the last 20 years. Such import costs could potentially be passed along to buyers. (Art News)
Now the trade tariff applies to the EU (as I understand it) but the UK has left the EU - so does it apply to UK prints, photos?

Moreover should it apply to UK prints and photos made in the last 20 years?

I wasn't entirely certain about this - primarily because the website of the US Office of the United States Trade Representative is opaque beyond a joke and how anybody makes any sense of anything is beyond me. Any official publications seem to delight in saying what they mean in plain English as opposed to tortuous legalese (which has its place - but as the only explanation is a complete nonsense!)

However I'm an ex-government bod used to inspecting, auditing and digging around in official documents to work out what's going on and it would appear that there is indeed a very real issue of substance.....

....and maybe a way out!

I'm reproducing below extracts from the documents I finally tracked down. (Thank goodness for press releases! 2019-10-02 U.S. Wins $7.5 Billion Award in Airbus Subsidies Case)

The penalty paragraph relating to lithographs and prints


This identifies very clearly that the UK is in the frame for penalties relating to certain products including various printed items.

extract of Federal Register / Vol. 84, No. 196 / Wednesday, October 9, 2019 / Notices 54249 
OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
[Docket No. USTR–2019–0003]
Notice of Determination and Action Pursuant to Section 301:
Enforcement of U.S. WTO Rights in Large Civil Aircraft Dispute

Harmonized Tariff Schedule of the United States (2020) Revision 15 re. trade tariff 4911


This is the document which explains the additional penalty being imposed by the US in relation to the enforcement of WTO right relating to the large Civil Aircraft Dispute.

Basically they are seeking a VERY long list of PENALTY trade tariffs to make-up for the damages they have been awarded amounting to $7.5 billion.

The award of $7.5 billion annually is by far the largest award in WTO history—nearly twice the largest previous award. The Arbitrator calculated this amount based on WTO findings that EU launch aid for Airbus is causing significant lost sales of Boeing large civil aircraft, as well as impeding exports of Boeing large aircraft to the EU, Australia, China, Korea, Singapore, and UAE markets. Under WTO rules, the Arbitrator’s decision is final and not subject to appeal.

The United States today has requested that the WTO schedule a meeting on October 14 to approve a U.S. request for authorization to take countermeasures against the EU. Pursuant to WTO rules, the WTO will provide this authorization automatically at that meeting. The EU is not allowed to retaliate against WTO-authorized countermeasures.
The tariffs will be applied to a range of imports from EU Member States, with the bulk of the tariffs being applied to imports from France, Germany, Spain, and the United Kingdom – the four countries responsible for the illegal subsidies. Although USTR has the authority to apply a 100 percent tariff on affected products, at this time the tariff increases will be limited to 10 percent on large civil aircraft and 25 percent on agricultural and other products. The U.S. has the authority to increase the tariffs at any time, or change the products affected. U.S. Wins $7.5 Billion Award in Airbus Subsidies Case
 This is how it gets explained in legal terms. You have to
  • read the tariff code which applies to the products on the left and 
  • then see what it applies to in the article description.

From this it can be seen that within the item 4911 relating to Other printed matter, including printed pictures and photographs
  • 4911.91.40 which is described as "Other" will receive a penalty of 25% of trade value.  
  • 4911.91.20 and 4911.91.30 (Lithographs and posters) will be penalised on the basis of weight - at number of cents for every kilo.
(PS Those selling postcards and calendars also need to pay attention to this directive)

Harmonized Tariff Schedule of the United States (2020) Revision 15 re. trade tariff 4911
- detailing PENALTY TRADE TARIFFS(see Chapter 49 - Printed books, newspapers, pictures and other products of the printing industry; manuscripts, typescripts and plans)

This explains the articles sounding off at length on the impact on selling printed matter to the USA

An alternative perspective - 9702.00.00.00


I suggested to the chap who sent me the query that items which are created by artists are not manufactured i.e. another trade tariff (9702) applies to
"original engravings, prints and lithographs, framed or not framed"
In other words, if created in an original format, by hand, in a limited edition signed by the artist I don't see why trade tariff 9702.00.00.00 should not apply - especially since this is not included in the penalty list and has no percentage charge on trade value.

Whether that applies to photos as well would I imagine depend on the nature of the production and printing. Clearly
  • 4911 relates to manufactured products produced in bulk 
  • whereas 9702 relates to items executed entirely by hand.



In other words, I think the commercial producers of art posters and various other manufactured forms of "art" and photos might well be stuffed by the 25% trade tariff - BUT those producing items of ART by HAND should be OK.

Quite why nobody has spotted this is beyond me.  It was art dealers and art fairs which were sounding off - and they should be aware of 9702.

Anyway I'm no expert - apart from having crawled all over trade tariff codes periodically to check the correct tariff for an item in the last few years - but it seems to me that genuine original art which is not being manufactured seems safe whereas commercially produced prints are going to be rather more expensive in future.


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