If the USTR determines to not continue the exclusions, each product will become subject to Section 301 duties at a rate of 25 percent.
On April 30, 2020, the Office of the United States Trade Representative (USTR) published two notices in which it announced that it would accept public comments for one month only―May 1, 2020 to June 1, 2020―on whether to continue or end certain Section 301 product exclusions that it granted in July 2019. As discussed below, more than 175 previously issued product exclusions are being reviewed pursuant to these two notices. If the USTR determines to not continue the exclusions, each product will become subject to Section 301 duties at a rate of 25 percent.
Initial Product Exclusions Were Granted in July 2019
The first notice relates to product exclusions the USTR granted on July 31, 2019. See 85 Fed. Reg. 24076 (Apr. 30, 2020). The covered product exclusions relate to 69 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: various polyethylene film; certain polyvinyl chloride film; certain spark-ignition rotary motors; certain gasoline or liquid propane engines; certain spark-ignition internal combustion engines; certain bearing housings; certain antenna amplifiers; certain thermometers; and certain fingertip pulse oximeters. The full list of products can be found in the Annex of the notice published July 31, 2019.
The second notice relates to product exclusions the USTR granted on July 9, 2019. See 85 Fed. Reg. 24081 (Apr. 30, 2020). The exclusions relate to 110 specially described products identified under numerous 10-digit statistical reporting numbers of the HTSUS. The kinds of products covered include, among other things: heat exchangers; water tanks for certain boilers; certain compression-ignition engines; aircraft gas turbine compressor cases of steel and Inconel alloy; numerous types of power and water pumps and related parts and assemblies; certain compressors; propane powered forklift trucks; certain shovel loaders; parts of passenger or freight elevators; certain counterweights for industrial equipment; certain parts and assemblies for seeders or spreaders; certain check or pressure-reducing valves; certain electric AC/DC motors; furnace casings and structural components for industrial furnaces; certain capacitors; and certain contactors and rotary switches. The full list of products can be found in the Annex of the notice published July 9, 2019.
Criteria to Be Used by the USTR in Evaluating Whether to Continue 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 on the product. 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 from April 30, comments must be filed via the web portal that the USTR has established by June 1 at 11:59 p.m. Eastern.
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 International 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.