The German Court of Appeal recently lodged a reference for a preliminary ruling in the case J.E. Tyson Parketthandel GmbH hanse j. v Hauptzollamt Bremen (Reference number C-134/08) regarding the question of whether products exported from the US prior to the date of first application of the additional customs duties, but after the date of entry into force of the applicable Regulation, are subject to additional customs duties.

Background

On 20 March 2000, at the request of the European Community, the Dispute Settlement Body of the World Trade Organization ("WTO") adopted the panel and the appellate body reports which established that the tax treatment of foreign sales corporations ("FSC") by the United States of America ("US") constituted a prohibited export subsidy under the WTO Agreement.

On 15 November 2000, the US enacted the FSC Repeal and Extraterritorial Income Exclusion Act of 2000 ("Act"). On 29 January 2002, the WTO Dispute Settlement Body adopted the panel and appellate body reports which established that the Act also constituted a prohibited export subsidy under the WTO and that it did not amount to withdrawal of the FSC subsidy. Consequently, on 7 May 2003, the European Community was authorised by the Dispute Settlement Body to impose countermeasures up to a level of US $4,043,000 in the form of additional duties on certain products originating in the US.

On 8 December 2003, the European Council adopted Council Regulation (EC) No. 2193/2003 establishing additional customs duties on imports of certain products originating from the United States of America ("Regulation"). These products include, amongst others, articles of apparel and clothing accessories, footwear, iron and steel, etc.

Regulation

Consideration (6) of the Regulation reads as follows:

"products for which it can be proved that they have been exported from the United States of America to the Community prior to the date of first application of the additional customs duties should not be subject to these additional customs duties."

Article 4(2) of this Regulation, however, establishes that:

"products listed in the Annex for which it can be demonstrated that they are already on their way to the Community on the date of entry into force of this Regulation, and whose destination cannot be changed, shall not be subject to the additional duty."

Question referred for a preliminary ruling

In a recent German court case, the question was raised whether an additional customs duty of 5% imposed by the German customs authorities on top of the 'normal' customs duty already applicable, was justified. The case concerned the export of products mentioned in the Annex to the Regulation. The products were exported from the US on 20 February 2004 and declared for import into the European Union on 5 March 2004.

On the basis of Article 4(2) of the Regulation, products are not subject to additional customs duties if they have been on their way to the Community on the date of entry into force of this Regulation, i.e. 17 December 2003 (in addition the requirement that the destination of the goods cannot be changed applies).

According to Consideration 6 to the Regulation, however, what is determinative for the products not be subjected to additional customs duties, is that the products have been exported from the US to the Community prior to the date of first application of the additional customs duties, i.e. 1 March 2004.

If the latter definition would indeed apply, the additional duty that was imposed in the aforementioned case is not legally due and could, therefore, be reclaimed.

The German Court of Appeal therefore referred the following question for a preliminary ruling to the European Court of Justice:

"Is Article 4(2) of Council Regulation (EC) No. 2193/2003 of 8 December 2003 establishing additional customs duties on imports of certain products originating in the United States of America to be interpreted, contrary to its wording, as meaning that products for which it can be demonstrated that they are on their way to the Community on the date of first application of the additional duties and whose destination cannot be changed are not affected by the additional duty?"

Conclusion

The outcome of this reference for a preliminary ruling should be closely watched by any US exporter who had additional customs duties imposed under the Regulation for goods that were on their way to the Community before 1 March 2004 and whose destination could not be changed. If the European Court of Justice rules in the Tyson case that the additional customs duties are not legally due, US exporters have a possibility to reclaim the paid additional customs duties under EC law.