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Victory on Sontara and Evolution duties: industry victories insure that a lower 5.6% duty will continue for Dupont, Kimberly-Clark and other manufacturers' disposable surgical drapes and gowns.

Victory On Sontara And Evolution Duties

A double victory was celebrated recently in the nonwovens industry. A threatened significant increase in duties paid by several of INDA's member companies and other importers of disposable surgical drapes and gowns has been defeated in the regulatory arena and, for now, on the legislative front as well.

These two victories are a direct result of the combined efforts of INDA member companies, including Baxter, Clopay, Dexter, DuPont, Kimberly-Clark, Johnson & Johnson Medical and Veratec working together to promote a common interest.

The 5.6% duty on disposable surgical drapes and gowns had been threatened by two developments. The first was a Customs Service determination handed down in late 1989 that would have increased the duty on drapes and gowns made from "Sontara," a DuPont product, to 17%; the second was the pending expiration of temporary statutory provisions affecting the duty rate for drapes and gowns made from "Evolution," a Kimberly-Clark product.

Sontara and Evolution are both nonwoven fabrics that are extensively used in the production of disposable surgical drapes and gowns. INDA members export domestically-produced roll goods or pre-cut pieces of these materials to Mexico or other locations for conversion into finished products. The finished goods are then sent back to the U.S. and subject to U.S. duties for final sale.

The Cases Of

Sontara And Evolution

In the March, 1990 Capital Comments column, INDA reported on a Customs Service ruling that jeopardized the 5.6% duty rate that had been applied since 1983 to disposable surgical drapes and gowns made from Sontara. The ruling, which INDA opposed, was the result of the conversion from the old Tariff Schedule of the United States (TSUS) to the new Harmonized Tariff Schedule of the United States (HTSUS) and would have resulted in a 17% duty on these products.

Under the TSUS, Sontara was considered to be a paper because a majority of the fibers used to make the material are wood pulp-based. When the HTSUS was adopted, however, Customs determined that the type of fiber used in manufacturing Sontara was not as important a consideration as the manufacturing process itself in determining whether products made from Sontara would be classified as paper or textile. Under this new ruling, items made from Sontara would have been classified as textiles and subject to a 17% duty.

Evolution is similar to Sontara in many ways, but is made from synthetic fibers. In fact, based in part on its similarities to Sontara, Kimberly-Clark has waged a successful legislative effort since the early 1980's to have the duty lowered on products made from Evolution so that it is the same as that placed on products manufactured from Sontara. Legislation granting the lower duty to Evolution has been adopted by Congress on a temporary basis, however, and has had to be renewed every two years (the current law covering these products was scheduled to expire on Dec. 31, 1990).

Preserving A 5.6% Duty

Since the beginning of this year, INDA has been working with representatives from Baxter, Clopay, Dexter, DuPont, Kimberly-Clark, Johnson & Johnson Medical and Veratec to determine what should be done to preserve the 5.6% duty applied to products made from Evolution and Sontara.

After much consideration, a two-track approach was agreed upon. On one track, INDA and its member companies would work together to broaden the legislative language that applied specifically to Evolution so that it would apply to other nonwovens as well and then join together in an effort to get the bill enacted into law. On the other track, INDA and its members would work together to have the Customs Service decision on Sontara overturned.

Industry efforts with the Customs Service were successful and late last spring Customs reversed its 1989 decisions on Sontara products. In a decision handed down in May, Customs held that products made from Sontara should not be considered to be strictly paper or textile, they (HTSUS Subheading 6210.10.2000) and subject to a duty of 5.6%.

On the legislative track, proposed language to broaden the Evolution bill was discussed with each of the coalition members and was eventually agreed upon. The new language was designed to apply a 5.6% duty to disposable surgical drapes and gowns made from either Evolution or Sontara.

Armed with the new legislative language, INDA coalition members met with members of Congress and their staffs in both the House and the Senate and urged them to adopt the agreed upon provision. After much work, legislation was eventually approved by both chambers of Congress in August. The bill was then sent to the White House where President Bush signed it into law.

Future Efforts

INDA is committed to a 5.6% duty for disposable surgical drapes and gowns manufactured from nonwoven materials. In reversing its 1989 position on Sontara, the Customs Service has virtually assured that the 5.6% duty on items made from that product will continue indefinitely (barring a change resulting from multinational negotiations such as those currently being conducted under the Uruguay Round of the GATT).

This assurance does not, however, carry over to the legislation that protects the 5.6% duty for surgical drapes and gowns made from Evolution. This legislation is temporary and will expire on Dec. 31, 1992. Furthermore, the legislation does not apply to other disposable surgical garments - such as scrub suits and warm-up jackets - that are also made entirely from synthetic fibers.

For these reasons, INDA will continue working on the issue to ensure that the 5.6% duty continues to apply to all disposable surgical garments imported by INDA member companies in the future, whether they are made from Evolution, Sontara or other nonwovens.

Peter Mayberry is the director of government affairs for INDA, Association of the Nonwoven Fabrics Industry. He works out of the Washington, DC offices of Keller & Heckman, INDA's legal counsel. This Capital Comments column appears monthly in Nonwovens Industry.
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Author:Mayberry, Peter
Publication:Nonwovens Industry
Date:Nov 1, 1990
Previous Article:Looking back at IDEA '90 and ahead into the nonwovens future.
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