The Wall Street Journal
Copyright (c) 1991, Dow Jones & Co., Inc.
Wednesday, July 31, 1991
The Customs Service's Fickle Philosophers
By James Bovard

Few people realize that the U.S. Customs Service is
perhaps the most philosophic of all government agencies.
Customs Service employees routinely wrestle with such age-old
questions as "Is a popcorn popper an electrothermic appliance
or an electrical article?" and "Is a jeep a truck or a car?"
The U.S. has 8,753 different tariff classifications, with
tariffs ranging from zero to 458%. Naturally, tariff
classification rulings are often disputed with a passion that
would have made St. Thomas Aquinas proud.

Take tariff classification ruling 89-27(6), which could
have a major impact on some Americans' social lives. Customs
decreed in 1989 that condoms imported from Mexico that are
electronically tested must carry a higher import tax than
condoms that are not tested. Customs also ruled that
importers must pay more for condoms that include a spermicide
than they would for condoms without spermicide. (It is not
known whether this decision was part of a secret plan to
boost the revenues of family planning clinics.)

The arbitrariness of such customs decisions can devastate
importers and destabilize international trade. Here are a few
more examples from the Customs casebook:

-- Girls' jackets. The Customs Service in 1988 boosted the
tariff on a shipment of 33,000 girls' ski jackets to 27.5%
plus 17 cents a pound from 10.6% because the jackets had
small strips of corduroy trim on the sleeves. Customs ruled
that the strips, amounting to roughly 2% of the jacket's
composition, changed the tariff category from "garments
designed for rainwear, hunting, fishing, or similar uses"
(such as skiing) to "other girls' wearing apparel, not

Famous Raincoat Co., the importer, appealed the Customs
ruling to the U.S. Court of International Trade. Judge Kenton
Musgrave observed, "During the trial, government counsel . .
. relied on the 'philosophical' meaning of the word 'or' . .
. as opposed to 'and.' " The judge threw out the government's
case and ordered Customs to refund the tariff surcharge.

-- Shoes. More than 3,600 of the U.S.'s 8,753 tariff
categories are restricted by import quotas. When Customs'
decisions change a product's tariff classification from
unrestricted to restricted, the ruling can effectively ban
imports. In 1989, a Customs inspector decreed that a box of
athletic shoes could not contain an extra pair of
shoestrings. Shoestring imports are covered by textile import
quotas; Customs' decision, by requiring importers to have a
federal license to import the extra shoestrings, blocked the
import of tens of thousands of athletic shoes from Asia. None
of the athletic shoe importers were thinking of the extra
shoestrings as anything but part of the athletic shoes, many
of which had eyelets for more than one set of shoestrings.

Customs modified the ruling in 1990, permitting an extra
pair of strings as long as the extra shoestrings were laced
into the athletic shoes and were color coordinated with the
shoe. But Customs warned importers, "We note that where
multiple pairs of laces of like colors and/or designs are
imported . . . a presumption is raised" that the shoelaces
are not actually part of the shoe.

-- Lingerie. The U.S. government has been drubbed in
repeated court battles for trying to block imports of
lingerie and nightgowns by claiming that the lingerie is
actually a blouse or long shirt. As the U.S. Association of
Importers of Textiles and Apparel complained in 1988,
"Customs resistance to a decision which distinguished
nightwear from daywear has left importers in limbo. Importers
who believe they are following the dictates of the Court
continue to have merchandise seized as non-complying."

-- Steel. In the 1980s, the U.S. strong-armed 28 nations
into signing so-called Voluntary Restraint Agreements (VRAs)
to restrict their steel exports. Each VRA specified which
tariff classifications of steel would be restrained. Though
happy with the VRAs, the U.S. steel industry was aghast at
the prospect of any freely imported steel remaining and
lobbied Customs to solve this problem.

On Dec. 6, 1988, Customs reversed three previous rulings
dating back to 1974 and announced that it was reclassifying
steel wire rope with beckets from an uncontrolled tariff
category into a tariff classification restricted by the VRAs.
On Aug. 31, 1989, at the behest of Bethlehem Steel, Customs
reversed three rulings since 1978 and moved scroll-cut
tin-free steel sheet into a restricted tariff classification.

-- Sweeteners. In the early 1980s, Canadian firms were
exporting sugar-corn-sweetener blends to the U.S. These
blends were 35% cheaper than pure sugar, for which there are
quotas. The U.S. government created a separate import quota
and classification for the blended product in 1985. Even
though the quota limited Canadian sales to 2% of the U.S.
market, the imports still gave heartburn to American sugar
growers. In 1988, the Cane Sugar Refiners Association
contacted its good friend, Sen. Jesse Helms; the North
Carolina Republican repeatedly called his good friend,
Customs Commissioner William von Raab, for sweet talk,
according to Greg Rushford of the Legal Times.

In early 1989, the Customs Service redefined sugar and
banned all Canadian blended imports. The first time Canadian
companies learned of the new sugar definition was when four
trucks carrying their products were stopped at the
U.S.-Canada border and prohibited from entering the U.S. The
Customs' change in definition devastated an Ohio firm that
relied on the Canadian blend as its primary product, as Mr.
Rushford reported.

The combination of thousands of tariff categories and
endless redefinitions of products is turning importing into a
crapshoot. Tariff classification disputes are the ultimate
"reductio ad absurdum" of enlightened 'managed trade.' If the
government cannot even intelligently decide what an athletic
shoe or an item of lingerie is, how likely is it that
government trade restrictions will actually benefit America
as a nation?


Mr. Bovard is a Cato Institute associate analyst and the
author of the forthcoming "The Fair Trade Fraud" (St.
Martin's Press).