I have asked our QA to test this on Commerce 13.16 and ServiceAPI 5.4.2 and it is working fine. What is ServiceAPI version you are using? Can you upgrade to 5.4.2?
My collegue just found out that we had written "Value" with a capital "V" in the Item element. After correcting it to a lovercase character it worked.
We are having troubles with the XML importer to Commerce V13.15. In general everything works as expected but setting the excluded markets for a variant does not seem to have any effect.
We are using the syntax we could find in multiple blog posts and community posts:
<Item value="115" />
When the catalog is imported, no markets are excluded. If we set the excluded markets directly in the Commerce UI and do an Export using the commerce manager, the above XML is outputtet.