Extend and Expand Definition of Athletic Footwear in the HTSUS
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Initiative to extend and expand
the athletic footwear provision of the htsus
Updated: October 30, 2014
PROBLEM
The antiquated U.S. tariff code is over-taxing U.S. outdoor footwear companies, increasing costs to American consumers, and denying U.S. outdoor enthusiasts innovative, technologically advanced performance footwear available in other parts of the world. Rapidly evolving technologies has led to lighter weight, higher performance, more comfortable outdoor footwear that protects against the elements. Because the footwear protects against the elements, the tariff schedule classifies most outdoor performance footwear as protective in nature (37.5% duty) instead of athletic in nature (20% duty).
By having to pay an additional 17.5% percentage points in tariff (the difference between protective and athletic rates) U.S. companies are not able to perpetually innovate, which in the past has made their outdoor footwear products the best in the world. It is now cost prohibitive to import the most innovative footwear into the United States. Instead, the newest innovations in outdoor footwear are going to markets in Europe and Asia, preventing U.S. consumers from accessing the best products for their outdoor recreational pursuits.
In fact, the current classification system unfairly burdens U.S. companies, making it difficult and in some cases impossible for them to invest in the development of innovative product. The European Union (EU) does not maintain the same barriers for protective athletic footwear in 6402, and does not discriminate against innovative outdoor athletic shoes in other headings of their tariff schedule. As a result, the current U.S. classification practice gives a distinctive advantage to European companies in this important segment of the outdoor recreational/athletic market. Therefore, these companies are better able and willing to invest in innovation to meet the demands of outdoor recreational consumers.
On the other hand, if the U.S. modernizes the tariff schedule to consider athletic footwear under headings 6402 (synthetic) and 6404 (textile), thus applying the lower 20% duty rate, then U.S. companies will once again have an incentive to be at the cutting edge of developing and offering the newest footwear technologies in their American product lines.
DEFINITION OF ATHLETIC
The present definition of non-sports athletic footwear in the Additional U.S. Notes to Chapter 64 of the U.S. Harmonized Tariff Schedule (HTS) is too narrow to cover many performance outdoor shoes that are essentially athletic in nature. Historically, Customs and Border Protection (CBP) has determined that various construction details in the shoe define it as non-athletic, such as:
§ Insufficient flexibility in the sole
§ Water-resistant (protective) liners or coating
§ Use of lugs
The protective provision of the tariff schedule was designed to cover footwear that protects and against water or cold and boots worn over shoes. Lightweight outdoor recreational footwear should not be classified among truly protective footwear simply because of a water resistant liner. As written, the tariff classification system places many types of footwear into the protective category. This is because it was written before the development of technologies that result in lightweight, athletic-type shoes that protect the user from water and inclement weather.
Moreover, since outdoor performance activities are not specifically mentioned in the HTS definition of athletic, CBP has declined to more broadly interpret the provision to include outdoor performance footwear. A broader interpretation would reflect the changes that have taken place in recent years relating to the nature of athletic activities, which now overlap with outdoor activities such as “hiking”, “trail walking”, “trail running” etc. and have evolved to include a wide range of largely aerobic activities in some of nature’s greatest venues.
LEGISLATIVE SOLUTION
The most effective solution would be for CBP to broaden its interpretation of the HTS’s current athletic definition, acknowledging the outdoor recreational activities that are athletic in nature, and to begin classifying outdoor performance footwear as athletic. However, CBP simply interprets the law and relies on decades of rulings and precedent to make its determinations. Therefore, absent a high-level political decision or other instructive guidance, CBP officials likely will not change their interpretations without a change to the code itself.
As a result, legislation is needed to update the athletic footwear definition in the Additional Notes to Chapter 64.
EXPANDING DEFINITION OF ‘ATHLETIC’ NEEDED IN CH 64 NOTES
Proposed Language
Amend Additional U.S. Note 2 of Chapter 64 of the HTSUS:
“2. For the purposes of this chapter, the term “tennis shoes, basketball shoes, gym shoes, training shoes and the like” covers athletic footwear other than sports footwear (as defined in subheading note 1 above), whether or not principally used for such athletic games or purposes, and whether or not the footwear provides protection against water that is imparted by the use of a coated or laminated textile fabric.”
EXTENDING DEFINITION OF ‘ATHLETIC’ TO SUBHEADING 6402
Once the definition of athletic is amended CBP would be able to properly classify water-resistant trail running footwear under subheading 6404, which has categories for athletic footwear. However, the 6402 classification hierarchy does not contain the same structure that would allow trail-running footwear to be classified as athletic. Even with a revised definition of athletic, the absence of necessary athletic provisions (20% duty) in certain subheadings of 6402 could result in the footwear’s continued classification as protective (37.5% duty).
Proposed Language
“Following subheading 6402.91.40 insert the following with the same degree of indentation as the article description for subheading 6403.91.40:
6402.91.42 Tennis shoes, basketball shoes, gym shoes, training shoes and the like which footwear provides protection against water that is imparted by the use of a coated or laminated textile fabric. 20%
20 For men
50 For women
80 Other
Following subheading 6402.99.31 insert the following with the same degree of indentation as the article description for 6403.99.23:
6402.99.32 Tennis shoes, basketball shoes, gym shoes, training shoes and the like which footwear provides protection against water that is imparted by the use of a coated or laminated textile fabric. 20%
20 For men
50 For women
80 Other”
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