The USTR will evaluate the possible extension of each exclusion on a case-by-case basis.
On June 25, 2020, the Office of the United States Trade Representative (USTR) published two notices announcing that it would accept public comments for a short time only—ending July 30, 2020―on whether to continue or end certain Section 301 product exclusions. As discussed below, certain previously issued product exclusions are being reviewed pursuant to these two notices. If, as has recently occurred with respect to numerous other previously granted Section 301 product exclusions, the USTR determines to not continue the subject product exclusions, each product will become subject to Section 301 duties at a rate of 25 percent.
Initial Product Exclusions Granted in September and October 2019
The first notice relates to product exclusions the USTR granted on September 20, 2019. See 85 Fed. Reg. 38237 (June 25, 2020). The covered product exclusions relate to specially described products that are identified under numerous 10-digit statistical reporting numbers in the Harmonized Tariff Schedules of the United States (HTSUS). The kinds of products covered include, among other things: certain copolymers of acrylic acid (3906.90.5000), certain granular hydrocarbon resins (3911.10.0000), certain polymer strips curled in a helical fashion (3917.29.0090) and certain plastic drinking straws (3917.29.0090). 84 FR 46900.
The second notice relates to product exclusions the USTR granted on October 2, 2019. See 85 Fed. Reg. 38243. The exclusions relate to specially described products identified under numerous 10-digit statistical reporting numbers of the HTSUS. The kinds of products covered include, among other things: certain elastomeric petroleum resins (3911.10.0000); certain flexible tubes, pipes, hoses of cross-linked polyethylene (3917.32.0020); certain self-adhesive tape (3919.10.2055); and other products. 84 FR 52553.
USTR’s Criteria in Evaluating Product Exclusions
The USTR will evaluate the possible extension of each exclusion on a case-by-case basis. The USTR’s evaluation will focus on, among other things:
- Whether the product (or a comparable product) is available in the United States or from countries other than China;
- Any changes in the global supply chain for that product since August 2018 (or any other relevant industry developments);
- The efforts, if any, by affected importers or U.S. purchasers since August 2018 to source the product from the United States or third countries;
- Whether the product covered by the exclusion is subject to an anti-dumping or countervailing duty order issued by the U.S. Department of Commerce; and
- If the imposition of additional duties will result in severe economic harm to the commenter or other U.S. interests.
Importers and purchasers of a Chinese product should also be prepared to discuss whether it is sold as a final product or as an input. They should be able to identify the quantity and value of the subject imports in 2018 and 2019 and should identify whether or not the purchases are from a related company. In disclosing the value of the Chinese-origin product, parties should also be prepared to discuss whether their Chinese suppliers have lowered prices for the product following the imposition of the Section 301 duties. In addition, parties should be able to provide the values and quantities of the same or similar products purchased domestically or from third countries, if applicable.
As stated in the two notices, comments must be filed via the USTR’s web portal by July 30 at 11:59 p.m. Eastern.
Extensions Granted and Denied
On July 9, 2020, USTR announced the extension of several exclusions, including certain pump casings and bodies (8413.91.9095), certain structural components for industrial furnaces (8514.90.8000), certain aluminum electrolytic capacitors (8532.22.0085) and others. 85 Fed. Reg. 41267. While 12 products were granted extensions, many more were denied. Although there is no guarantee under any circumstances that USTR will extend any particular exclusion, companies seeking to extend exclusions must draft and submit these requests carefully.
About Duane Morris
Attorneys in the firm’s International Group have considerable experience in assisting clients in developing duty-saving strategies. Toward this end, Duane Morris attorneys have prepared numerous Section 301 product exclusion requests that have been granted by the USTR.
For More Information
If you would like further information about this Alert and the process for seeking to have Section 301 product exclusions be extended, please contact Brian S. Goldstein, Geoffrey M. Goodale, Michael E. Barnicle, J. Manly Parks, Nathan B. Reeder, any of the attorneys in our Government Contracts and International Trade Group or the attorney in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.