In a July 6th press release, the Office of the U.S. Trade Representative (USTR) announced an application process for product exclusions from the additional Section 301 tariffs imposed by the United States on certain products imported from China. These tariffs were imposed in response to allegations of unfair trade practices by China related to the forced transfer of U.S. technology and intellectual property.
By way of background, there are three Section 301 retaliatory duty lists that are each at various stages in the administrative pipeline:
- List 1 took effect on July 6th – The 818 tariff lines, which are subject to an additional 25% tariff, cover largely machinery, parts and components of Chapters 84 and 85 of the HTSUS, as well as a wide range of vehicles and vehicle parts and miscellaneous other industrial products. List 1 can be accessed at: https://ustr.gov/sites/default/files/enforcement/301Investigations/List%201.pdf.
- List 2 (not yet in effect) – The proposed List 2 (which would also be subject to an additional 25% tariff) includes certain chemicals, plastics, metal articles, as well as additional articles of machinery and transportation (and other miscellany). List 2 can be accessed at: https://ustr.gov/sites/default/files/enforcement/301Investigations/List%202.pdf. List two is currently under consideration in a notice and comment process (details at: https://www.gdlsk.com/ustr-announces-schedule-for-comments-on-second-list-of-products-to-be-subject-to-section-301-duties/).
- List 3 – The USTR announced that it is preparing a List 3 which, if implemented, would be subject to a 10% tariff.
In its July 6th press release, the USTR announced a process for interested persons to request the exclusion of a particular product from the 301 additional tariffs (i.e., List 1 at this point). The USTR will consider requests for the exclusion of a particular product within a subheading (but not a subheading as a whole).
A separate Federal Register notice outlines the criteria and process for product exclusion requests (which are very different from those that apply to requests for exclusion from the additional tariffs recently assessed under Section 232). Factors that will be considered include:
- whether a product is available from a source outside of China;
- whether the additional duties would cause severe economic harm to the requestor or other U.S. interests; and,
- whether the particular product is strategically important or related to Chinese industrial programs including “Made in China 2025”.
The exclusion process is characterized by the following dates and features:
- Requests may be filed until October 9, 2018.
- The public will have 14 days from the posting of a request to file responses (in support or in opposition).
- Interested persons will have 7 days to reply to any responses (after the close of the 14-day period).
- Exclusions will be effective for one year from publication and will apply retroactively to July 6, 2018.
- The exclusions will be made on a product-basis (and will apply to all importations of the product, not just those of the requestor).
Please do not hesitate to contact our office for additional details on the 301 exclusion process as well as to discuss strategies for navigating the current environment of additional tariffs assessed by the U.S. and retaliatory tariffs being assessed by U.S. trade partners.