Thursday, December 29, 2011

Spiderman and the X-Men have met their match: International Trade Lawyers have stripped them of their Humanity...Why is Marvel Inc NOT upset with this development? Two words "$$"

Radiolab
In their quest to be accepted for their humanity in light of their super-natural powers, the likes of Spiderman and the X-men have been foiled by mighty International Trade Lawyers.  In this case, the Marvel brand is VERY happy for this outcome.

Imported "Dolls" have a much higher import tariff than items classified as "Toys".  Marvel action figures imported from China are  classified as "Dolls".  What is the Big Deal??

 Read the following from Matthew Yglesisias at MoneyBox to find out why this is significant:

""Marvel-licensed action figures are generally made abroad and imported into the United States. But "dolls" (which are representations of people) face a higher import duty than "toys" (which are representations of non-humans), so it's in the interests of Marvel to argue that X-Men action figures should be taxed at the low non-tarrif rate. Here's a sample of litigation:
Plaintiff Toy Biz, Inc. ("Toy Biz") brings this action to challenge the tariff classification by the United States Customs Service ("Customs" or "Defendant") of various items imported from China and entered at the ports of Seattle and Los Angeles in 1994. The items are action figures from various Marvel Comics series, including the "X-Men," "Spider-Man," and the "Fantastic Four," and an additional item called "Jumpsie," which is not an action figure. The items are packaged in boxes or blister packs attached to colorful cardboard backing covered with printed illustrations and writing. The packaging of a number of items includes small accessories, such as weapons and other equipment. Customs classified the items as "Dolls representing only human beings and parts and accessories thereof: Dolls whether or not dressed: Other: Not over 33 cm in height," under subheading 9502.10.40 of the HTSUS (1994), dutiable at 12% ad valorem. Toy Biz contends that the action figures at issue are properly classifiable as "Toys representing animals or other non-human creatures (for example, robots and monsters) and parts and accessories thereof: Other," under subheading 9503.49.00, HTSUS (1994), dutiable at 6.8% ad valorem. Toy Biz further contends that "Jumpsie" should be classified as a "toy set," under HTSUS (1994) subheading 9503.70.80, dutiable at 6.8% ad valorem.
It's remarkable, incidentally, the extent to which the politics of "trade deals" have gotten away from the fundamental issues of free trade as seen in an economics textbook. What we have here is a federal 12% sales tax on dolls, but only if the dolls are made in foreign countries, and a different -- arbitrarily lower -- 6.8% federal sales tax on toys, but again only if the toys are made in foreign countries. There's no good reason to have special higher sales taxes on toys made in foreign countries, and there's certainly no good reason to tax dolls and non-doll toys at different rates. It's nuts and it could and should be addressed by a unilateral acts of congress. The amount of revenue that would be lost to the federal government by repealing these taxes would be tiny, and it's trivial to think of better ways to raise the money. And yet this core -- and quite simple -- trade policy issue is a world away from the incredible complexity of the trade deals of the past decade.""

Tariffs on imported goods are levied for a variety of reasons, but the main one is to protect domestic producers from low-price foreign competition.  I am not aware of a significant domestic producer of action figure toys/dolls that needs protecting. Perhaps there was one in the past, but not now.
 Listen to a very interesting Podcast about this issue (starts at 3:00 minute mark).

So...Why is the tariff still in place to protect a non-existent industry? Just askin'...
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