Section 301 Investigation

Photo by Vincent Guth on Unsplash;

On October 18, 2018, U.S. Senator Tim Kaine (D-VA) and ten other Democratic senators sent a letter to the Office of the U.S. Trade Representative (USTR) asking why an exclusion process was not in place for the 10 percent tariff on List 3’s $200 billion of imported Chinese goods.

On January 11, 2019, USTR replied, telling Senator Kaine an exclusion process will not be initiated on List 3 unless negotiations fail with China and the President raises the tariff on the $200 billion worth of goods from 10 percent to 25 percent. Currently, President Trump has agreed to delay the implementation of the higher tariff until March 2, 2019.

USTR’s reply also addressed Chinese goods admitted into a Foreign Trade Zone (FTZ). The letter said, “Understandably, every importer, including importers who make use of FTZs, would prefer a special exemption from the additional tariffs. As of this time, we have not found a basis for exempting U.S. importers who use FTZs from the additional duties, when those duties apply to all other U.S. importers.”

 

 

 

 

 

Photo by Allen Allen;

The USTR published a Federal Register Notice announcing its yearly “special review” to identify countries that deny adequate and effective protection of intellectual property rights (IPR) or deny fair and equitable market access to U.S. persons who rely on intellectual property protection under Section 301 of the Trade Act of 1974 (Section 301).  Based on this review, the USTR will determine whether to identify “Priority Foreign Countries” defined under Section 182 of the Trade Act of 1974.

Priority Foreign Countries are countries for which the USTR can implement an investigation pursuant to Section 301 to determine whether certain trade measures are appropriate to address a country’s restrictions on trade and intellectual property rights. The most recent investigation under Section 301 occurred in 2017 and 2018 and resulted in the USTR implementing tariffs on approximately $250 billion of imports from China.

The USTR requested that interested parties provide written comments to identify “countries whose acts, policies, or practices deny adequate and effective protection for intellectual property rights or deny fair and equitable market access to U.S. persons who rely on intellectual property protection.” The Special 301 provisions also require the Trade Representative to identify any act, policy, or practice of Canada that affects cultural industries, was adopted or expanded after December 17, 1992, and is actionable under Article 2106 of the North American Free Trade Agreement (NAFTA).

The USTR requested that interested parties file written comments that identify acts, policies, or practices that may form the basis of a country’s identification as a Priority Foreign Country or placement on the Priority Watch List or Watch List by February 7, 2019. USTR also requests that parties file notices of intent to appear at the public hearing by February 21, 2019. The public hearing will be held on February 27, 2019. Parties who testified at the hearing must submit posthearing written comments by March 5, 2019. The USTR indicated that it will publish the 2019 Special 301 Report on or around April 26, 2016.

On December 28, 2018, USTR published in the Federal Register the first Section 301 List 1 Product Exclusions. The exclusions apply as of the July 6, 2018 effective date of “List 1,” and will extend for one year after the publication of this notice. U.S. Customs and Border Protection will issue instructions on entry guidance and implementation.

Please see our earlier blog post discussing the details of this notice, as it was announced and posted by USTR on December 21, 2018.

 

 

On December 21, 2018 USTR submitted for publication a Federal Register Notice with the first list of products excluded from Section 301 Tariffs on certain products from China. The Products were originally published on the USTR’s “List 1” which included $34 Billion worth of imports from China. The USTR granted 984 individual exclusion requests involving 21 separate HTS codes. An index of all “List 1” exclusion requests and their status in the review process was also released by the USTR.

Once published in the Federal Register, the product exclusions apply as of the July 6, 2018 effective date of “List 1,” and will extend for one year after the publication of this notice. U.S. Customs and Border Protection will issue instructions on entry guidance and implementation.

Exclusions were granted in two ways.

1) Exclusions that apply to the following  8 individual 10  digit HTS codes regardless of product descriptions noted in exclusion requests:

(i) 8412.21.0075

(ii) 8418.69.0120

(iii) 8480.71.8045

(iv) 8482.10.5044

(v) 8482.10.5048

(vi) 8482.10.5052

(vii) 8525.60.1010

2) Products that meet 24 separate product descriptions sourced from language in exclusion requests.

The publication date is currently unknown due to the lapse in government funding and partial government shutdown.

 

The Office of the U.S. Trade Representative (USTR) previously announced a process to obtain product exclusions from the additional tariffs in effect on certain products imported from China under the U.S. response to China’s unfair trade practices related to the forced transfer of U.S. technology and intellectual property. The 301 lists of products subject to tariffs was determined by a 90-day process that included public hearings and a notice and comment period. You can also find an unofficial spreadsheet with the final 301 lists here.

The USTR also provided an opportunity for the public to request the exclusion of a particular product from the additional duties in order to address situations that warranted excluding a particular product within a subheading, but not the tariff subheading as a whole.

All posted exclusion requests can be found on: https://www.regulations.gov/docket?D=USTR-2018-0025.

The USTR recently announced that it is still in the process of posting exclusion requests due to the high volume of submissions, and therefore there is currently a lag between the filing of an exclusion request and the posting of an exclusion request when public and confidential versions are been filed. The date of posting is the triggering date for initial comments regarding an exclusion requests.  Permissible comments include letters of support as well as opposition.  After the comment period is closed, an additional deadline will be established for rebuttal comments.

As of the date of this report, 815 exclusion requests have been denied.

None have been granted.

We hope you find this report helpful and please contact us if you have any questions.

 

 

 

 

 

 

 

 

 

 

Last updated on 1/17/2019: India Retaliatory Tariffs on goods of US origin- effective date now 1/31/2019.

Unofficial spreadsheet with Final 301 list, partial list, and HTS’ removed added.

U.S. Trade Actions

Action Covered Products Rate Increase Effective Date
Section 232 Steel and Aluminum Steel – 25%
Aluminum – 10%
6/1/2018
Status: Steel – all countries of origin except South Korea, Brazil, and Argentina (agreed to quotas); and Australia (exempted).

Aluminum – all countries of origin except Argentina (agreed to quota); and Australia (exempted).

Beginning August 13, steel articles covered by Section 232 from Turkey are subject to an ad valorem duty rate of 50%.

On October 24, South Africa was granted exemptions on 161 aluminum and 36 steel products by the Commerce Department.

Section 232 Autos and Automotive Parts TBD TBD
Status: For the latest status, please click here.
Section 301 For the final list of products in List 1, please click here.

For the final list of products in List 2, please click here.

For the final list of products in List 3, please click here.

25%

 

25%

 

10%

25%

7/6/2018

 

8/23/2018

 

9/24/2018

TBD

Status: List 1 totaling $34 billion worth of imports is composed of 818 tariff lines, and went into effect on 7/6/2018.

List 2 totaling $16 billion worth of imports was originally composed of 284 proposed tariff lines identified by the interagency Section 301 Committee. 279 of the 284 lines went into effect on 8/23/2018.

For full details on List 2, please click here.

List 3 totaling approximately $200 billion of imports was originally composed of 6,031 tariff lines. 5,745 full and partial lines go into effect on 9/24/2018.

For full details on List 3, please click here.

Unofficial searchable and filterable spreadsheet with Current U.S. Section 301 Tariff Lists (Updated for Final List 3)

Retaliatory Actions

 

Canada For covered products, please click here. Table 1 – 25%
Table 2 – 10%
Table 3 – 10%
7/1/2018
Status: The Canadian government received over 1,000 submissions of public feedback during public consultations on its original list.

Canada is imposing countermeasures against C$16.6 billion in imports of steel, aluminum, and other products from the U.S., representing the value of 2017 Canadian exports affected by the U.S. tariffs.

EU For covered products, please click here. Annex I – 10% or 25%
Annex II – 10% – 50%
Annex I – 6/22/2018
Annex II – 3/23/2021 or 5th day after WTO Dispute Settlement Body rules against the U.S. action, whichever is first.
Status: For the latest status, please click here.
Mexico For the translated list of covered products, please click here. 7% – 25% (pages 1-4)

 

10% – 15% (page 5)

6/5/2018

7/5/2018

Status: Most retaliatory measures effective as of 6/5/2018. An “exception” list is effective on 7/5/2018.
China (Response to Section 232 Tariffs) For covered products, please click here. Annex I – 15% – 25% 4/3/2018
Status: See above.
China (Response to Section 301 Tariffs) For covered products in List 1, please click here.

(Unofficial Version)

25% 7/6/2018
For covered products in List 2, please click here.(Unofficial Version) 25% 8/23/2018
For covered products in List 3 (announced August 3), please click here.(Unofficial Version) Annex 1 and 2 – now 10%

Annex 3 – now 5%

Annex 4 – remains 5%

(Originally 1-3 were 25, 20, and 10 percent, respectively)

9/24/2018
Status: List 1 is composed of 545 tariff lines, and goes into effect on 7/6/2018.

List 2 contains 333 tariff lines on U.S. goods worth $16 billion. Start date is 8/23/2018.

List 3 contains 5,207 tariff lines on U.S. worth $60 billion. Start date is 9/24/2018.

India For covered products, please click here. Up to $10.6 billion;
Annex I – 5% – 100%
1/31/2019
Status: The U.S. declined India’s request for WTO consultations.
Japan For covered products, please click here. Up to $1.91 billion TBD – no earlier than March 23, 2021, or the 5th day following the date of a decision from the WTO DSB, whichever comes first.
Status: No update since May 18, 2018. Ambassador Lighthizer is holding trade talks with Economy Minister Motegi in July. Under Secretary McKinney is also leading a trade mission to Japan to discuss a possible bilateral trade deal.
Russia For covered products, please click here. Additional Tariffs of 25, 30, 35, or 40% 8/6/2018
Status: On August 6, 2018, Russia began imposing additional tariffs on selected U.S. products.
Turkey For covered products, please click here. Up to $1.78 billion;
Annex I – 5% – 40%Increased certain duties by 4 to 140%
 

6/21/2018

8/15/2018

 

Status:

Continue Reading Latest U.S. Trade Actions/Tariffs and Other Countries Retaliatory Measures – Updated December 4, 2018

The Office of the U.S. Trade Representative (USTR) is holding public hearings from August 20 to August 24, 2018, and on August 27, 2018, regarding the proposed tariffs on approximately $200 billion worth of Chinese products.

Click here to view a schedule of witnesses. The public hearings are being held at the following times at the U.S. International Trade Commission in Washington, DC:

  • Monday, August 20, 2018 from 9:30 AM – 6:00 PM EDT
  • Tuesday, August 21, 2018 from 9:30 AM – 6:00 PM EDT
  • Wednesday, August 22, 2018 from 9:30 AM – 6:00 PM EDT
  • Thursday, August 23, 2018 from 9:30 AM – 6:00 PM EDT
  • Friday, August 24, 2018 from 9:30 AM – 6:00 PM EDT
  • Monday, August 27, 2018 from 9:30 AM – 4:00 PM EDT

According to a USTR press release, the proposed tariffs are in response to China’s unfair trade practices related to technology transfer, intellectual property, and innovation, based on the findings in USTR’s investigation of China under Section 301 of the Trade Act of 1974.

Tariffs on $34 billion in goods from China are currently in effect, and tariffs on an additional $16 billion will take effect on August 23, 2018.

The Federal Register notice publishing the proposed tariff list and soliciting public comment can be viewed here.

 

 

NOTE – this post was updated on 9/19/2018 to reflect the change in retaliation duties on affected U.S. goods.

In a press release issued on August 1, United States Trade Representative (USTR) Robert Lighthizer announced the President directed him to consider increasing the proposed level of the additional duty on the latest Section 301 List (List 3 worth $200 billion) from 10% to 25%.

On August 3, China responded in kind and threatened to increase retaliatory tariffs on $60 billion in U.S. goods should President Trump move forward with new tariffs on imports from China.

In addition to USTR’s proposed action on List 3, the second U.S. Section 301 List (worth $16 billion) just finished a public comment process. The White House has not announced its decision on List 2 as of yet. For an overview of the current U.S. Section 301 tariff status, please click here.

On 9/19/2018, China announced the rates would be 5 or 10%, instead of 5, 10, 20, or 25%.

Please click here for an unofficial version of the HTS Subheadings for Annex 1 (10% instead of 25%).

Please click here for an unofficial version of the HTS Subheadings for Annex 2 (10% instead of 20%).

Please click here for an unofficial version of the HTS Subheadings for Annex 3 ( 5% instead of 10%).

Please click here for an unofficial version of the HTS Subheadings for Annex 4 remain set at 5%.

 

 

 

 

 

On August 16, 2018, the Office of the U.S. Trade Representative (USTR) published in the Federal Register the formal notice for the China Section 301 tariffs beginning on August 23.

The USTR published the final list of 279 Harmonized Tariff Schedule of the United States (HTSUS) subheadings known collectively as ‘List 2’ on August 7, 2018. These tariff lines will see an additional ad valorem duty of 25% on products from China and is worth $16 billion.

Unlike the notice implementing List 1 from June 20, 2018, the USTR:

  • Added to Annex A of this notice clarifications on the application of the additional duties to goods entered under certain provisions of Chapter 98 and 99 of the HTSUS;
  • In Annex C to this notice, modifies the HTSUS note in Annex A to the June 20 notice in order to reflect these clarifications; and
  • Annex C makes a conforming amendment to the HTSUS heading in Annex A to the June 20 notice, and makes a technical correction to the HTSUS note in Annex A to the June 20 notice.

The tariff subheadings in Annex A and B are the same. The latter list includes unofficial descriptions of the types of products covered in each subheading.

Regarding product exclusions, the notice states, “…the Trade Representative has determined that USTR will establish a process by which U.S. stakeholders may request that particular products classified within an HTSUS subheading listed in Annex A be excluded from these additional duties. The process will be comparable to the exclusion process established in connection with the initial, $34 billion trade action. USTR will publish a separate notice describing the product exclusion process, including the procedures for submitting exclusion requests, and an opportunity for interested persons to submit oppositions to a request.”

Check here for the latest developments on all the on-going trade actions.

 

President Trump has directed the Office of the United States Trade Representative (USTR) to consider increasing the proposed tariffs under Section 301 from 10% to 25% for the entire $200 billion list (also known as “List 3”). Because of this, the USTR has extended several of the dates in the public comment process.

The USTR circulated an e-mail on August 2 to parties that had submitted a request to appear in the upcoming Section 301 hearing for the “List 3” products. In it, the USTR clarified information provided in a press release on August 1.

To summarize:

  • The due date for filing requests to appear and a summary of expected testimony at the public hearing and for filing pre-hearing submissions is extended from July 27 to August 13, 2018.
  • The due date for submission of written comments is extended from August 17 to September 5, 2018.
  • The due date for submission of post-hearing rebuttal comments is also extended from August 30 to September 5, 2018.
  • The scheduled start date of the Section 301 hearing (August 20) has not changed.
    • The Section 301 Committee may extend the length of the hearing depending on the number of additional interested persons who request to appear. As of now, the hearing is scheduled to take place from August 20 to August 23.
    • The USTR will provide the full hearing schedule the day before the hearing, per USTR policy.