International Trade Today is providing readers with the top stories from March 1-5 in case they were missed. All articles can be found by searching on the titles or by clicking on the hyperlinked reference number.
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.
The recent focus on forced labor has also created some trade facilitation problems, both of which appear unlikely to go away under the Biden administration, said Paul Rosenthal, a lawyer with Kelley Drye, during the virtual International Trade Update hosted by Georgetown Law on March 9. Rosenthal was asked about the corporate compliance difficulties following CBP forced labor enforcement actions, particularly in countries that the company isn't directly connected to. “The shift has been away from concern about U.S. manufacturing interests to social interests” involving child and forced labor, he said. “And I don't see that shifting. In fact, I see that continuing and accelerating and I think one the big issues” for the administration “will be how to balance those interests,” he said
The Office of the U.S. Trade Representative will extend exclusions on goods used to treat COVID-19 from the Section 301 tariffs on goods from China, the USTR said in a notice on its website. The exclusions were previously set to expire at the end of March (see 2012230076).
Todd Owen, former executive assistant CBP commissioner who worked in the Office of Field Operations before retiring, said during a March 3 webinar that the trade community should expect to see a lot more traditional customs work over the next few years, such as missed descriptions, undervaluation, duty evasion and import safety. Owen, who is a senior trade adviser at Diaz Trade Law, also said during the webinar that he thinks stopping goods made with forced labor is going to continue to be a priority for the Biden administration. “I don’t see this going away,” he said.
Two and a half years after the first Section 301 tariffs went on what ultimately covered the vast majority of imports from China, most of the public lobbying is about renewing exclusions, or offering another round of exclusion applications to be submitted. Lawyers and advocates differ on how they think lobbying will develop over the course of 2021, as President Joe Biden gets his trade team in place. Dan Ujczo, senior counsel at Thompson Hine, said he thinks the focus on exclusions is because businesses have gotten the message on 301s from the administration, which he described as: “brace for these to be around. These aren’t going away anytime soon.”
The following lawsuits were filed at the Court of International Trade during the week of Feb. 22-28:
First sale treatment may not be applicable to transactions involving non-market economies, including China, Court of International Trade Senior Judge Thomas Aquilino said in a March 1 decision. In a ruling on cookware imported by Meyer from Thailand and China through a Chinese middleman, the trade court found the involvement of Chinese companies made it difficult to determine whether the transaction was at arm's length and undistorted by non-market influences, as required for first sale valuation. Though he stopped short of saying imports originating in non-market economies could never receive first sale valuation, he called on the U.S. Court of Appeals for the Federal Circuit to clarify.
International Trade Today is providing readers with the top stories from Feb. 22-26 in case they were missed. All articles can be found by searching on the titles or by clicking on the hyperlinked reference number.
Across dozens of pages of written answers to Senate Finance Committee members, U.S. trade representative nominee Katherine Tai often avoided directly answering questions, instead pledging to work with senators on their priorities. One of the most common questions posed to Tai was whether she would renew Section 301 exclusions that expired last year; as well, whether she would allow companies that were denied exclusions another chance at a request; and whether she would reopen the exclusion process.
U.S. trade representative nominee Katherine Tai said that despite the president's prioritizing of the domestic economy, “I don't expect, if confirmed, to be put on the back burner at all.” Tai, a veteran of the House Ways and Means Committee trade staff, faced largely friendly questioning over a more-than-three-hour hearing in the Senate Finance Committee on Feb. 25.