Internal USTR Guidance Details Section 301 Exclusion Carve-Out Process

The Office of the U.S. Trade Representative created a detailed guidance for how to go about creating exclusions through carve-outs from the Section 301 tariff headings. The guide lays out the considerations for USTR when “drafting” such carve-outs, which can be submitted to the International Trade Commission and CBP “for approval and comments.” ProPublica posted a copy of the document, which was likely attained through a Freedom of Information Act request. The document was mentioned in a broader ProPublica story on tariff exclusions.

Among the suggestions is “to limit the application of drafts” by “using dimensional or value limits: maximums, minimums and ranges, or both,“ it said. “Try to avoid drafting language that deals with how the product will be used unless there is some aspect about the good that reveals its design or suitability for such use. I have used terms like 'fitted for incorporation into….', and 'of a kind used for….' and 'designed for use….'”

The guidance notes that multiple requests from different companies can be consolidated “into a single draft if there is a unique characteristic common among them such as voltage rating or material of manufacture.” It can also “be useful to use a unit value requirement in the draft carve-out,” the agency said. “Be aware that there have been cases when the unit value information submitted reflects an average of a range of models of the subject article and a single unit value standard does not cover all the trade intended,” it said. “In cases where the petition may embrace a variety of models with different values, avoid using value as a classification criteria."

USTR also notes the multi-agency process required for creating a new 10-digit Harmonized Tariff Schedule number, which is described as "neither quick nor easy." The ITC must review a 10-digit code to make sure "it is appropriate for that part of the tariff schedule," while CBP must "determine if goods can be uniquely classified into the new code." The Census Bureau must also "confirm that the more detailed stats do not disclose any single company's business activities."