Looking to go into the shoe importing business? Be prepared to pay more to get women’s shoes across the border. Or maybe you have an itch to sell cotton shirts? Be prepared to pony up more for the men’s variety. Unfair, you say? Take it up with whoever regulates tariffs.
That’s actually quite tricky, as New York City-based lawyer Michael Cone has discovered in his decade-long quest to end gendered tariffs.
Earlier this year, Ms. spotlighted the gender pricing gap: goods or services that cost more when targeted to a particular gender. One example is women’s haircuts, which are often priced higher than men’s haircuts, regardless of actual hair length. Fortunately, many states, such as California, already have laws against such discriminatory practices.
But while state laws can keep individuals and corporations honest, what happens when the U.S. government tries to exploit gender for financial gain through tariffs? In 1999, lawyer Michael Cone was doing work for a footwear importer when he opened the U.S. tariff schedule and noted something that made his jaw drop. Footwear tariffs, described as “leather soles and leather uppers,” were divided into two sections: men and boys–8.5 percent tax, women and girls–10 percent tax.
Cone didn’t even have to think about what to do next. He did have to go from law firm to law firm to find a home for the case, so it took him until 2007 before he was able to make his first filing. Initially, the U.S. Court of International Trade (CIT) told him that the case wasn’t “discriminatory on its face”—meaning he hadn’t been able to prove who the affected parties were and how they had been hurt.
Cone argues that consumers are affected: When importers pay higher prices, the cost is eventually passed on to consumers. So gendered tariffs lead to gendered pricing discrimination at the cash register. But for him, there are bigger issues of the principle of gender-discrimination law at stake:
Equal protection is an evolving, aspirational concept that is supposed to keep pace with modern norms. And in my view, modern norms condemn the antiquated tariff structure imposing different rates of duty depending on the gender of the people goods are imported for. I’m interested in gender issues. I’m interested in discrimination—that’s something I’ve always been sensitive to. I immediately recognized that this is wrong. Of course the federal judiciary hasn’t agreed with me, but I still believe it’s wrong.
U.S. tariff law has a long history, dating back to one of the first Acts of Congress signed into law by George Washington, the Tariff Act of 1789. Tariffs bring in money for the government and help protect domestic industries from foreign competition. That means any issue regarding tariffs involves big money at stake.
After punching his calculator, Cone estimates the extra revenue from discriminatory duties adds up to a whopping $300 million per year–half of which is collected on women’s shoes alone. (Other items affected included men’s cotton shirts, women’s silk shirts and … men’s Speedos). Cone shows no surprise at which gendered goods are targeted–it’s those for which the government believes there’s high demand based on gender. “Like they say in the playground, they kick you where it counts,” he says.
After the 2007 dismissal, Cone took his case to the United States Court of Appeals for the Federal Circuit. He recalls, not fondly,
They said ‘in taxing areas, Congress had very wide discretion. And men’s goods are different from women’s goods, they move in different channels and trades, and it’s not facially discriminatory—we’re not going to presume that Congress tried to hurt anybody.’
The CIT eventually allowed the importers to amend their claims to show that the government is intentionally discriminating against people and importers based on gender. The new claim represents Forever 21, Rack Room Shoes and Cones’ company, Skiz Imports.
On Wednesday, the government filed papers (PDF) asking the U.S. Court of International Trade to dismiss the new and amended complaints in the second round of this litigation. Cone’s team will respond in September, and a decision from the trial court is expected in early 2012.
And what about outside the U.S.? For starters, our northerly neighbors somewhat quietly replaced gender-specific descriptions for tariffs with gender-neutral descriptions back in 2006. However, a read through Canada’s 2011 Customs Tariff schedule shows that there are still plenty of gender-specific descriptions that result in sex-based import taxes on clothes and shoes.
Looking to Europe and Asia’s tariff law, Cone thinks their discrimination policies could very well be as bad or worse as the ones stateside. He calls for action from the World Trade Organization banning tariff rates based on gender and offers a warning if this remains unresolved: “If you permit countries to implement rates of duty purely based on gender, you create the opportunity for mischief.”
With $300 million per year (and over a $1 billion total since the case began) at stake for over 100 importers, and the essence of equal protection under fire, it is evident why so much rests on this case. Though Cone’s efforts have largely fallen off the media map since the New York Times provided front page coverage of his progress in 2007, the time seems right to, as Cone put it, kick Congress where it counts.
Michael Cone is a partner in the New York office of McCullough, Ginsberg, Montano & Partners LLP.
This article is cross-posted on The Good Men Project.
Webcomic via Watching From Afar.