Trade Associations and Retail Executives Call on CBP to Update HTS

There is a "real opportunity" to update the Harmonized Tariff Schedule codes so that "potential tariff benefits" go toward products that are trying to reduce environmental impacts, Recreational Equipment, Inc. Vice President of Sustainability Matthew Thurston said during a panel discussion June 11.

Speaking during CBP's Green Trade Innovation and Incentives Forum, Thurston said REI has required all of its vendors to "eliminate unnecessary chemicals from" REI products. "Making sure that we are not accidentally creating incentives to use potentially hazardous chemicals, when those chemicals do not need to be used," can help reduce negative environmental impacts, he said.

Other panelists also expressed their dismay at the tariff schedule's purported misincentives. Chelsea Murtha, director of sustainability for the American Apparel and Footwear Association, in the public comments section of the forum said that in the tariff schedule, the definition of water-resistant requires the use of per-and polyfluoroalkyl substances (PFAS) as a treatment for water-resistant products in order to get a duty reduction.

"That doesn't make any sense when our industry is actively trying to phase out the use of PFAS in our products and our members are being penalized for using more environmentally friendly" chemicals or "greener chemistry in creating new products," Murtha said. She added that "we were deeply excited to see" Sens. Angus King and Susan Collins of Maine "introduce legislation to fix this definition and we would really encourage agencies that this is relevant to, to support that fix." King and Collins introduced the legislation in May (see 2305150053).

AAFA would like to see more discussion about establishing a policy that supports the industry's effort to "utilize materials that are more environmentally preferred, or with lowered environmental impacts," Murtha said. "At present, goods that are made with less environmentally impactful materials are treated exactly the same as their conventional counterparts" by the tariff schedule, Murtha said. "We would encourage the creation of new HTS subheadings, breakouts, or indicators attached to the HTS for the classification or qualification of used goods or goods made with environmentally preferred materials such as recycled," regeneratively, or "organically grown materials," Murtha said.

"Creating trade benefits to duty reductions for products utilizing such materials would incentivize additional sourcing and remove barriers to further scaled adoption of these materials," Murtha said. "It would also crucially provide a new and key source of data about industry sustainability outcomes."

Blake Harden, vice president of international trade for the Retail Industry Leaders Association, also called on CBP to support these kinds of amendments to the tariff schedule. "Despite the existence of a safer alternative, the HTS continues to incentivize the use of PFAS chemicals and that it requires a rubber or plastic coating or application for certain water resistant products to achieve the incentivized duty rate," Harden said. "CBP should support changes to allow the use of safer alternatives to PFAS."

Michael Levine, the vice president and chief sustainability officer for Under Armour, also said updates to the HTS classifications could recognize products that are "produced at tier one, tier two factories that participate in recognized efficiency programs, like" the Apparel Impact Institute or the Carbon Leadership Program. These institutions "look at how to reduce energy, pivot to renewable energy, and reduce other impacts," Levine said.