On June 8, 2021, the Senate voted 68 to 32 to approve The American Innovation and Competition Act. Among other pieces of legislation, the omnibus package includes The Trade Act of 2021 which contains provisions to reestablish a Section 301 tariff exclusion and renewal process. Specifically, Division G (The Trade Act of 2021), Title III, Section 73001, creates a process and procedures for USTR to follow when imposing tariffs related to Section 301 investigations. Notably, the provisions within Section 73001 would not apply to investigations under Section 301 pursuant to a WTO dispute settlement case.

These changes are achieved by amending the Trade Act of 1974 to include a new section entitled Section 305A. The new section requires USTR to gauge the impact of proposed actions on consumers, establishes and outlines an exclusion process, sets specific criteria for implementation of the exclusion process, establishes a renewal process, and provides retroactive tariff relief.

 

Outline of Section 301 Provisions

Analysis and Alternative Action

  • Before taking action under section 301(b), the Trade Representative shall analyze the impact of the action on United States entities, particularly small entities, and consumers in the United States with a goal of mitigating the impact of duties on United States entities and consumers in the United States, including by evaluating alternatives or modifications to particular actions.

Process for Exclusion from Duties

  • The Trade Representative shall establish and maintain a process for exclusion requests from duties under section 301(b) unless the Trade Representative determines and certifies to the appropriate congressional committees that maintaining an exclusion process—
    • (A) Would impair the ability of the United States to maintain effective pressure to remove unreasonable or discriminatory practices burdening commerce in the United States; or
    • (B) Is impractical due to the low value of the duties imposed.

Criteria for Implementation of the Exclusion Process

  • Criteria for consideration in implementing the exclusion process include:
    • (A) Whether the failure to grant the exclusion would result in severe economic harm to the requester. 
    • (B) Whether the article or a reasonable substitute is not commercially available to the requester.
    • (C) Whether the imposition of the duty with respect to the article would unreasonably increase consumer prices for day-to-day items consumed by low- or middle-income families in the United States.
    • (D) Whether the imposition of the duty would have an unreasonable impact on the manufacturing output of the United States.
    • (E) Whether the imposition of the duty would have an unreasonable impact on the ability of an entity to fulfill contracts or to build critical infrastructure.
    • (F) Whether the failure to grant the exclusion is likely to result in a particular entity or entities having the ability to abuse a dominant market position.
  • Not later than 90 days after imposing any duty under section 301(b), the Trade Representative, in consultation with such other Federal agencies as the Trade Representative considers appropriate, shall publish a notice in the Federal Register regarding the criteria that the Trade Representative will apply and the evidence it will evaluate in determining whether a request for exclusion from such duty satisfies the requirements of the exclusion process under subsection

Timeframe of Exclusion and Renewal

  • Exclusion of an article requested under paragraph (1) from duties described in paragraph (2)—(i) shall be for a period of 18 months; and (ii) shall be decided—(I) not later than 90 days before the duty is due to be paid; or (II) if the Trade Representative determines that the request presents exceptionally complex issues or requires additional evidence, not later than 120 days before the duty is due to be paid.
  • The Trade Representative shall allow applications for renewal of an exclusion under paragraph (1) to be submitted not later than 90 days before the exclusion is set to expire.

Retroactive Tariff Relief

  • USTR will reinstate all exclusions for entries filed on or before December 31, 2022, with retroactivity for certain liquidations and reliquidations.
  • Any entry of a covered article on which duties were paid under section 301(b) of the Trade Act of 1974 (19 U.S.C. 2411(b)) and to which a covered duty exclusion would have applied if the entry were made on December 31, 2020, that was made—(i) after December 31, 2020, and (ii) before the date of the enactment of this Act, shall be liquidated or liquidated as though such entry occurred on such date of enactment.

The full text of Title III, Section 73001 is available here on pages 100 to 115.

A full analysis of American Innovation and Competition Act is available here.

For more information on the omnibus package of legislation or Section 301 please contact our team or review our previous posts below.

Section 301 Exclusion Process Archives | International Trade Law (cmtradelaw.com)

Section 301 Investigation Archives | International Trade Law (cmtradelaw.com)

Section 301 Tariffs Archives | International Trade Law (cmtradelaw.com)