CBP Adopts and Clarifies Footwear Classification Test, Likely Ending Lengthy Process

The testing method, effective Nov. 13, will be used to administer Additional Note 5 to HTS Chapter 64, which requires textile materials that don't include the characteristics usually required for normal use of an outer sole, including durability and strength, to be disregarded when determining the constituent material for classification purposes. This is meant to help CBP ensure that a textile outer sole on footwear is actually a textile outer sole, rather than a rubber outer sole with textile fabric. Additional Note 5 was added to Chapter 64 of the HTS by Proclamation 8742, and is effective for goods entered or withdrawn from warehouse for consumption on or after December 3, 2011 (see 11110303). CBP released its proposed test method in the March 27 Customs Bulletin (see 13032615) and received six comments on the issue (see 13061908).

CBP will rely on the International Organization for Standardization (ISO) test method for abrasion resistance on outer soles, known as ISO 20871. In order to demonstrate that "the terms of Note 5 have been met, either as part of a request for prospective ruling under the CBP regulations (19 CFR Part 177) or in response to a request for information via CBP Form 28, importers should present independent laboratory reports applying ISO 20871," said CBP. ISO 20871 tests the performance of footwear outer soles by taking three samples from the outer sole and subjecting their surface areas to the specified abrasion machine. CBP is proposing to decide on the classification characteristics based on whether the textile material subjected to ISO 20871 is still present on the samples after testing.

New Clarifications

CBP clarified that the three samples taken for the purposes of the ISO 20871 protocol must be taken from "portions of the outer sole that come into contact with the ground within the meaning of Note 4(b) to Chapter 64," it said. "CBP has not determined the depth at which point recessed material is no longer 'in contact with the ground'. Such a determination will be made on a case-by-case basis. Where it is determined that the material does not come in contact with the ground, the textile material will be disregarded. Furthermore, we note that in many cases, footwear features outer soles that are patterned in their entirety, thus making the collection of a flat sample impracticable."

Several commenters also asked CBP to clarify the interpretation of the results to ISO 20871 and whether textile material must be present on all three samples or on only one sample after the abrasion test. CBP said in response that the textile material must only be present on one of three samples in order for "the textile material to be determined to possess the characteristics usually required for normal use of an outer sole."

CBP also withdrew its proposal to presume that footwear that falls under the definition of "house slippers" in Statistical Note 1(d) to Chapter 64 would satisfy Note 5 requirements. It withdrew the proposal because that definition "does not accurately capture the universe of so-called 'indoor footwear,'" CBP said. "While importers may always submit data from the ISO 20871 test to illustrate the physical characteristics of textile outer soles on footwear worn exclusively indoors, CBP will determine on a case-by-case basis whether testing is required to assess whether certain articles of footwear are considered 'indoor footwear' and thus do not need to be subjected to testing for the purposes of Note 5."

Industry Glad to Have Regulatory Certainty

While the final decision is pretty similar to CBP's proposal, "customs does reserve the right to test footwear in its own labs regardless of what an importer's independent lab may state, and that is potentially important," said Marc Fleischaker, a lawyer with Arent Fox who represents Rubber and Plastic Footwear Manufacturers Association, which is largely made up of domestic producers. The publication likely marks the end of a long process has been a source of disagreement between foreign and domestic footwear companies. "I think it is the end of the administrative process, at least for the time being," he said. "The final rule is somewhere between what we urged and what the importing interests generally urged. We are very pleased to see the process completed, and will be watching closely to see if the new test program results in implementing Presidential and legislative intent, or if certain importers try to rig the process to undermine the new rules."

The end of the process is good news for the footwear industry, agreed Matt Priest, president of the Footwear Distributors and Retailers of America. Although "this doesn't provide 100 percent certainty, but it does close a chapter in what's been a very long process," said Priest. While the CBP decision "looks good on paper," it will be important to watch the implementation and make sure later decisions or rulings align with what CBP said, Priest said. It will be interesting to see what the footwear industry will develop outside of the fabric bottom in order "to bring in product at a reduced duty," he said. "At the end of the day, not a whole lot will change for us" because most of the products FDRA members companies do import do not fall in categories "deemed needing protection," he said.