In post-hearing comments over the argument that Vietnamese imports of illegal timber hurt U.S. furniture manufacturers, several parties said the Office of the U.S. Trade Representative is not following the law, because it provided no concrete evidence of illegal timber in furniture exporters' supply chains.
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 head of the American Chamber of Commerce in Vietnam said businesses there don't know whether U.S. Trade Representative Robert Lighthizer will conclude that Vietnam has been a trade cheat through currency manipulation but not put a tariff number on it; put a tariff number but not start collecting; or implement tariffs before the new administration takes over Jan. 20.
CBP was correct when it found against an importer's use of price paid to a related factory in China, rather than the price paid by the importer's customers, the agency found in a Sept. 9 ruling. The director of the Industrial and Manufacturing Materials Center of Excellence and Expertise (CEE) requested an internal advice ruling after Mayer Brown asked for a further review of protest on behalf of the importer, World Wide Packaging. The import entry involved two line items of “plastic tubes used for personal care products, which were the subject of purchase orders from two unrelated U.S. customers of WWP.”
International Trade Today is providing readers with the top stories from Dec. 28-31 in case they were missed. All articles can be found by searching on the titles or by clicking on the hyperlinked reference number.
The following lawsuits were filed at the Court of International Trade during the week of Dec. 28 - Jan. 3:
The International Trade Commission posted the 2021 Preliminary Edition of the Harmonized Tariff Schedule. The new HTS implements the removal of GSP benefits for many Thai products, as well as the redesignation of the Democratic Republic of the Congo as eligible for African Growth and Opportunity Act benefits, and the extension of the Caribbean Basin Trade Partnership Act until 2020. New statistical breakouts are also added for many medical products, including those used in the treatment of COVID-19, as well as for industrial turbines and hemp seed, among other goods. Changes take effect Jan. 1, 2021, unless otherwise noted.
The International Trade Commission posted the 2021 Preliminary Edition of the Harmonized Tariff Schedule. The new HTS implements the removal of GSP benefits for many Thai products, as well as the redesignation of the Democratic Republic of the Congo as eligible for AGOA, and the extension of the Caribbean Basin Trade Partnership Act until 2020. New statistical breakouts are also added for many medical products, including those used in the treatment of COVID-19, as well as for industrial turbines and hemp seed, among other goods. Changes take effect Jan. 1, 2021, unless otherwise noted.
Witnesses overwhelmingly argued against tariffs on Vietnamese imports, during a virtual hearing Dec. 29 hosted by the Office of the U.S. Trade Representative, with numerous business representatives saying it was the choice not to sign the Trans-Pacific Partnership, not any kind of currency issue, that makes it harder for U.S. exports to penetrate Vietnam. Trade groups representing importers from Vietnam noted that their members moved sourcing from China to Vietnam precisely to avoid Section 301 tariffs, and some said putting comparable tariffs on Vietnamese imports would cause companies to relocate back to China.
The following lawsuits were filed at the Court of International Trade during the week of Dec. 21-27:
The 22-person witness list for the Dec. 29 virtual Section 301 investigative hearing into allegations that Vietnam deliberately undervalued its currency to thwart U.S. economic growth is stacked heavily with people on record as opposing remedial tariffs on Vietnamese imports. Prehearing submissions in docket USTR-2020-0037 foretell some will also testify that the Office of the U.S. Trade Representative is singling out the wrong country for Section 301 currency manipulation review and is doing so for ulterior motives.