The Office of Management and Budget should restart consideration of a proposal to end the de minimis exemption for goods subject to Section 301 tariffs, the National Council of Textile Organizations said in an April 14 letter to acting OMB Director Robert Fairweather. The review of the proposal began at OMB last year (see 2009040026) but was removed as part of a broad regulatory freeze after President Joe Biden took office (see 2101210039). OMB should reopen the review and “grant approval to this much needed change in CBP regulations,” NCTO said.
Section 301 Tariffs
Section 301 Tariffs are levied under the Trade Act of 1974 which grants the Office of the United States Trade Representative (USTR) authority to investigate and take action to protect U.S. rights from trade agreements and respond to foreign trade practices. Section 301 of the Trade Act of 1974 provides statutory means allowing the United States to impose sanctions on foreign countries violating U.S. trade agreements or engaging in acts that are “unjustifiable” or “unreasonable” and burdensome to U.S. commerce. Prior to 1995, the U.S. frequently used Section 301 to eliminate trade barriers and pressure other countries to open markets to U.S. goods.
The founding of the World Trade Organization in 1995 created an enforceable dispute settlement mechanism, reducing U.S. use of Section 301. The Trump Administration began using Section 301 in 2018 to unilaterally enforce tariffs on countries and industries it deemed unfair to U.S. industries. The Trump Administration adopted the policy shift to close what it deemed a persistent "trade gap" between the U.S. and foreign governments that it said disadvantaged U.S. firms. Additionally, it pointed to alleged weaknesses in the WTO trade dispute settlement process to justify many of its tariff actions—particularly against China. The administration also cited failures in previous trade agreements to enhance foreign market access for U.S. firms and workers.
The Trump Administration launched a Section 301 investigation into Chinese trade policies in August 2017. Following the investigation, President Trump ordered the USTR to take five tariff actions between 2018 and 2019. Almost three quarters of U.S. imports from China were subject to Section 301 tariffs, which ranged from 15% to 25%. The U.S. and China engaged in negotiations resulting in the “U.S.-China Phase One Trade Agreement”, signed in January 2020.
The Biden Administration took steps in 2021 to eliminate foreign policies subject to Section 301 investigations. The administration has extended and reinstated many of the tariffs enacted during the Trump administration but is conducting a review of all Section 301 actions against China.
At a time when hurricane damage, violence and poverty are driving more Central Americans to the U.S., consultants, advocates and former diplomats say the Central America Free Trade Agreement, or CAFTA, needs changes to spur development in Guatemala, Honduras and El Salvador. Those Northern Triangle countries are the ones sending large numbers of asylum seekers to the U.S. in the last few years. Kellie Meiman Hock, a McLarty Associates managing partner who led the April 14 panel hosted by the Washington International Trade Association, noted that when CAFTA was ratified more than 15 years ago, the hope was that it would bring more economic development to Central America. But instead, trade from the region has been flat.
The president of the U.S.-China Business Council told an online audience of customs brokers that he sees them as the problem solvers in trade, and that they're going to continue to have plenty of problems to tackle over the next few years. Craig Allen, who spoke to the National Customs Brokers and Forwarders Association of America April 14, said that the U.S.-China relationship, while intensely interdependent economically, is marked by mistrust and antagonism, and “the trend lines are not good.”
International Trade Today is providing readers with the top stories from April 5-9 in case they were missed. All articles can be found by searching on the titles or by clicking on the hyperlinked reference number.
Broad disagreement separates the HMTX-Jasco plaintiffs from the government in the massive Section 301 litigation over the issue of whether importers who prevail on the merits of the case would be entitled to tariff refunds on customs entries for which liquidations become final, according to a joint status report filed April 12 with the Court of International Trade.
The following lawsuits were filed at the Court of International Trade during the week of April 5-11:
Christopher Kane, partner at Simon Gluck, expressed optimism over a recent U.S. Court of International Trade ruling striking down an extension of President Donald Trump's Section 232 tariffs to aluminum and steel derivatives (see 2104050049). He believes the ruling spells good news for the massive litigation involving more than 3,700 companies challenging the expansion of the Section 301 tariffs on goods from China. Although based on a different law, Kane believes CIT's April 5 ruling demonstrates the court's willingness to hold the president to account over laws and regulations. In the case of the derivatives, the tariff expansion was eliminated because it was imposed after a 105-day period during which the president can impose Section 232 tariffs after receiving a report on the need for the duties from the Commerce Department.
Chipmakers and Chip Purchasers Tell Commerce Department More US Production Needed, but Imports Vital
A wide range of companies and trade groups told the Commerce Department that the semiconductor supply is vulnerable because of over-concentration in Taiwan, China and Japan in particular, and because packaging and testing is becoming more concentrated in China. Comments in docket BIS-2021-0011 closed April 5, but some comments were not published until April 6. The comments were sought to flesh out policy to follow an executive order on the semiconductor shortage (see 2103110048).
Commerce Secretary Gina Raimondo, speaking at a White House press conference April 7, argued that America's infrastructure needs are broader than roads, bridges and ports, and touted the president's proposal to invest $50 billion in semiconductor manufacturing and research, as well as spending to carry broadband to rural areas. She also argued that spending on elder care will prevent people from having to drop out of the workforce to care for relatives.
The following lawsuits were filed at the Court of International Trade during the week of March 29 - April 4: