AAFA Echoes Industry Sentiment in Letter to CBP Regarding Proposed Footwear Duty
Escalating current tariff and trade drama, the United States Department of Homeland Security’s Customs and Border Protection proposed a revocation of two previous rulings on the definition of athletic footwear, widening the range of these types of shoes, which will thereby increase costs for these products that were previously not subject to athletic-footwear duties.
Representing the interests of the footwear industry, on Nov. 15, Rick Helfenbein, president and chief executive officer of the American Apparel & Footwear Association, addressed the CBP proposal, predicting the dire consequences the industry could suffer should the ruling change. Noting changes to the needs of the consumer and demands on the footwear industry, Helfenbein made a clear distinction between athletic footwear and fashion pieces that blend style with comfort.
“Today’s consumer no longer wants fancy dress shoes or fashion pumps, where comfort is sacrificed for the sake of style. Instead, they want comfort and style, leading to immense growth in the so-called fashion-sneaker category,” he wrote. “At the same time, the consumer wants performance out of their athletic footwear and is willing to pay for it, leading to an explosion in high-performance, lightweight, technical athletic footwear.”
According to the footwear definitions outlined in an Oct. 25, 1993, notice, CBP described athletic footwear as “Shoes usable only in the serious pursuit of a particular sport, which have or have provision for attachment of spikes, cleats, clips or the like … ski, wrestling and boxing boots, cycling shoes and skating boots [without] skates attached … tennis shoes, basketball shoes, gym shoes (sneakers), training shoes (joggers) and the like whether or not principally used for such games or purposes.”
Additionally, the ruling identified products that would not be included under the category of athletic footwear. These types of shoes were described as footwear manufactured with design features that were obviously not intended for use in sports. “Examples include sneakers with sequined or extensively embroidered uppers … a ‘slip-on,’ except gymnastic slippers … skate boots with ice or roller skates attached,” explained the notice.
Now CBP is seeking to overturn New York Ruling letters N285583, from June 6, 2017, and N299433, from Aug. 23, 2018, which made provisions exempting certain footwear that included components often found in athletic footwear but would not be used in sporting activities. The exemption was based on namely embroidery and sequins that yielded a more fashionable shoe.
According to the Oct. 16 proposal noted in “Customs Bulletin and Decisions,” Vol. 53, No. 37, CBP reversed course. Explaining that features such as embroidery, sequins and other embellishments are insufficient reasoning for exemptions from athletic status, the agency moved to redefine and expand this category, saying, “We find that embroidery alone does not preclude footwear from being classified as ‘sports footwear, tennis shoes, basketball shoes, gym shoes, training shoes and the like’ of subheading 6404.11, HTSUS.”
Addressing CBP to expand on the differences found in fashion footwear, Helfenbein listed the differences between the two types of footwear while noting the similarities.
“While fashion sneakers and high-performance athletic footwear might share some basic traits—flexible outsoles with traction, cushioned insoles and a secure closure—the similarities stop there,” he wrote. “The fashion sneakers in the rulings in question—and fashion sneakers overall—are not intended for athletic purposes, and there are at most only a handful of examples of fashion sneakers being used for athletic purposes.”
Footwear-industry experts agree with Helfenbein, noting that the letter addressed the major problems that could stem from reclassification. At Sandler, Travis & Rosenberg, a New York law firm, attorney-member William Maloney has been classifying footwear for 40 years. He feels the move by CBP is simply based on a plan to generate additional revenue on imports of footwear that falls under the athletic category.
“A safe harbor for us was the decision that had been published by customs with their footwear definitions,” he said. “With the athletic footwear, there has always been some tension between folks who want to call their footwear fashion footwear and customs wanting to call it athletic footwear because if it’s over $12 a pair the duty rate goes up from 9 percent to 20 percent.”
Thinking about the needs of the footwear industry, Maloney also sees this proposal as a movement away from the needs of the footwear industry. He sees no public benefit; to the contrary, he feels that this ruling would hurt consumers. As fashion footwear has moved toward more-comfortable designs, brands and importers have expressed a desire for a narrower definition of athletic footwear, yet this recent proposal would widen the definition should it become the rule.
“AAFA expanded on the argument because the footwear industry has wanted, for a long time, customs to narrow its athletic provision so it did not include casual sneakers that are not used in athletic competition,” he said. “Of course, customs is now narrowing that. They are going the other way and expanding it.”
Echoing this sentiment, Tom Gould, vice president of customs and trade advisory at the San Francisco freight-forwarding firm Flexport, feels that a new classification would cause confusion. He also notes that the advice of footwear experts—those within the industry that make and sell footwear—is being ignored by the government agency.
“Over the last 25 years, shoes have evolved significantly. There is a specific class of shoes or footwear that is specifically designed for athletic pursuits: running, playing basketball or playing soccer,” he explained. “There is a whole other class that looks like athletic shoes but are not designed to be athletic shoes. They are shoes that in most of the industry’s opinion should not be classified as athletic.”
In his note, Helfenbein cites the risks to consumers should CBP expand the definition of athletic footwear. Consumers who purchase footwear that is meant to be fashionable and wear such pieces to engage in sport would be susceptible to injury due to the lack of support found in these products. If this type of footwear is not intended to be used in sport, it should not be subjected to the duties of an athletic shoe.
“[It] would be a mistake to wear fashion footwear for an unintended purpose because it would leave the owner at risk of injury or harm because the shoe was clearly not designed for athletic use (think of the multitude of fashion sneakers that contain heel wedges),” he wrote. “At the same time, most owners would never even consider using fashion sneakers for athletic purposes for fear of ‘destroying’ the look, the style, of the shoe.”
To support this point, Helfenbein noted that wearing dress shoes to engage in sports activities is not how consumers use their non-athletic footwear.
“Under CBP’s reasoning, however, virtually all shoes sold on the market today should be classified as ‘athletic footwear,’” he said. “However, I don’t see anyone playing soccer in their dress shoes or going running in their pumps. And they never would. The same applies to the fashion sneakers in question. The average consumer would never wear fashion sneakers for a long walk, or short run, or to play basketball or soccer.”