Companies Advised to Continue in Section 301 Tariff Exclusion Pursuits

Despite the Trump administration's pause (see 1805200002) in adding Section 301 tariffs on goods from China, it's too early to end efforts toward product exemptions, Baker & McKenzie lawyer Ted Murphy said in a blog post. "While this is a positive development, it is also subject to change," he said. "As a result, for now, we are recommending that companies continue to pursue exclusions just in case."

Murphy also noted "positive feedback at a number of levels" in response to an argument that the tariffs shouldn't apply to goods made in China by wholly foreign-owned enterprises. "We requested that the USTR categorically exempt from any Section 301 duties articles produced in China by a WFOE," Murphy said. "We also pointed out that such an exemption would be easily administrable from a customs perspective. A new ‘special program indicator’ could be created that, when used, meant that the importer was certifying that the articles being imported were produced by a WFOE (similar to how claims are made now under our more recent free trade agreements). Such a certification would be subject to audit/verification by U.S. Customs and Border Protection. The manufacturer identification (or MID) codes could also be used to help ensure that only articles produced (not just sold) by the WFOE were entered under the exemption. "

This approach could have better chance of gaining exemptions because it's consistent with goals of the Section 301 tariffs, he said. Also, "this exemption request is a lot easier to justify than picking and choosing among the large number of compelling stories U.S. companies told in the context of their HTS-specific requests" and it's administrable, Murphy said. General Electric was among the companies that made that argument during a hearing on the tariffs (see 1805160031).