On May 29, 2020, the Office of the U.S. Trade Representative (USTR) released a Federal Register notice seeking public comment on whether extensions for up to 12 months should be granted for particular products receiving exclusions in the China Section 301 process from the 25 percent tariff on imports from China with an annual trade value of $34 billion (List/Tranche 1). These product exclusions were listed in a September 20, 2019 Federal Register notice and included 310 specially prepared product descriptions covering 724 separate exclusion requests.
As noted in our Trump and Trade update of October 3, 2019, many of these exclusions are for products in Chapter 84 (Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof) and Chapter 85 (Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles) of the Harmonized Tariff Schedule (HTS). Additional product exclusions were granted for products in Chapter 87 (Vehicles other than railway or tramway rolling stock, and parts and accessories thereof), Chapter 88 (Aircraft, spacecraft and parts thereof) and Chapter 90 (Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof). The list of excluded products also covers certain heat exchangers, certain centrifugal pumps, pet water drinking fountains, certain compressors, certain chilling units and freezers, certain filtration devices, certain swimming pool filter cartridges, certain electric operator-riding pallet trucks and forklift trucks, certain milling machines, certain woodworking equipment, certain types of valves and bearings, numerous types of AC/DC motors, certain GPS apparatus, numerous types of switches and circuit connectors, certain transistors and certain thermostats.
The USTR states that it will evaluate the possible extension of each exclusion on a case-by-case basis. The focus of the evaluation will be “whether, despite the first imposition of these additional duties in July 2018, the particular product remains available only from China.” These issues should be addressed in any comments:
- Whether the particular product and/or a comparable product is available from sources in the United States and/or in third countries.
- Any changes in the global supply chain since August 2018 as to the particular product or any other relevant industry developments.
- The efforts, if any, the importers or U.S. purchasers have undertaken since August 2018 to source the product from the United States or third countries.
- Whether the imposition of additional duties on the products covered by the exclusion will result in severe economic harm to the commenter or other U.S. interests.
As with past extension requests, the USTR also requests certain financial data (where appropriate), including the value and quantity of the product covered by the exclusion purchased from China, from domestic and from third country sources in 2018 and 2019.
The USTR is seeking public comments from interested parties on whether to extend any particular exclusion for up to 12 months. The period for comment runs from June 8, 2020 until July 7, 2020. Comments must be submitted on the public docket on USTR’s web portal at https://comments.USTR.gov under Docket No. USTR-2020-0021 – Section 301 – China $34 Billion Trade Action (List 1). New users will first have to create an account in order to submit comments. For parties wishing to include Business Confidential Information (BCI), the USTR notes that such information will not be publicly available when comments are posted on the docket. Parties may also upload supporting documents that can also be marked as public or BCI.