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27 July 2018
On 6 July 2018, the implementation day for the Section 301 List 1 duties, the United States Trade Representative (USTR) released the procedures for filing exclusion requests for List 1 products subject to the 25% tariff pursuant to Section 301 of the Trade Act 1974.
On the same day, China confirmed its retaliatory tariffs, prompting the Trump administration to publish a new list of products (List 3), proposing an additional 10% tariff on 6,031 product lines worth approximately $200 billion.
Companies are urged to be strategic in considering a request for exclusion, as there are several factors to be considered apart from the data required.
Pursuant to the findings based on Section 301 of the Trade Act (19 USC §2411), on 15 June 2018 the USTR released two product lists that would be subject to an additional 25% ad valorem tariff (for further details see "USTR publishes final Section 301 duty list with eye towards adding more"):
According to the procedures outlined in the USTR's 6 July 2018 notice, granted exclusions for List 1 products will apply retroactively to the date on which the additional duties were imposed (ie, 6 July). Exclusions for List 1 products will be valid for one year after the publication of the determination in the Federal Register. Exclusion requests must be filed by 9 October 2018.
All exclusion requests for List 1 products must include the following information:
The USTR has confirmed that it wants targeted exclusions and has recommended that parties seeking exclusions for their products submit separate requests for each 10-digit HTSUS subheading covering products for which exclusions are being sought. USTR officials have noted that this is the preferred manner for submitting requests, even if it results in repetitive requests for similar products that fall into different HTSUS subheadings.
The USTR will evaluate each request on a case-by-case basis and periodically announce decisions on pending requests. In making determinations, the USTR will consider whether the exclusion would undermine the objective of the Section 301 investigation based on the following criteria:
Parties may submit public and business confidential versions of exclusion requests. The public version will be posted to docket number USTR-2018-0025 on www.regulations.gov. After the requests have been posted, the parties will have 14 days to file responses or objections to the requests. Any rebuttal comments are due seven days after the conclusion of the 14-day response period.
Published on 10 July 2018, the proposed modification to the Section 301 tariffs via List 3 is a supplemental action. It maintains the 25% ad valorem tariff on List 1 and List 2 products and adds a 10% ad valorem tariff on List 3 products.
List 3 consists of approximately 6,031 product lines defined at the eight-digit subheading of HTSUS in the attached annex. The proposed tariffs apply only to goods of Chinese-origin and cover products and parts within 81 chapters of the HTSUS (ie, Chapters 2-5, 7-8, 10-12, 14-17, 19-29, 31-48, 50-60, 65, 67-91, 94 and 96-97). The commodities include:
The Section 301 tariff applicable to List 3 products will not become effective until after a notice and comment period, which will include a public hearing. The USTR's notice includes the following timeline:
Due to the significant potential impact that these additional duties may have on a wide range of products from China, importers are urged to review their imports from China. If they are importing any of the products on List 1, List 2 or List 3, they should consider – at a minimum – filing written comments and possibly appearing at the public hearing.
For further information on this topic please contact David R Hamill, Nancy A Noonan, Teresa Polino or John Gurley at Arent Fox LLP by telephone (+1 202 857 6000) or email (firstname.lastname@example.org, email@example.com, firstname.lastname@example.org or email@example.com). The Arent Fox LLP website can be accessed at www.arentfox.com.
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