The Office of the U.S. Trade Representative is requesting comments on whether tariff exclusions on Chinese imports on Section 301 List 2 that are set to expire Oct. 2 (see 1909300041) should extend by up to another year, it said in a notice. The agency will start accepting comments on the extensions July 1. The comments are due by July 30, it said. Each exclusion will be evaluated independently. The focus of the evaluation will be whether, despite the first imposition of these additional duties, the particular product remains available only from China. The companies are required to post a public rationale.
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.
Of the 52,746 exclusion requests related to Section 301 tariffs, 75.4% have been denied, and 12.3% are still under review, a new Congressional Research Service report says. Because most exclusions are for specific products, and don't cover an entire Harmonized Tariff Schedule subheading number, it's not possible to know how much trade is covered by the exclusions, CRS said. The report noted that some Congress members complain about the Office of the U.S. Trade Representative picking winners and losers, while others feel any exclusion undermines the ability of Section 301 to address China's unfair trade practices.
The Office of the U.S. Trade Representative issued a new product exclusion for motorboats from Section 301 tariffs on the third list of products from China, according to a pre-publication copy of a notice posted to the agency’s website June 19. The exclusion will apply retroactively to Sept. 24, 2018, the date the tariffs on the third list took effect, and will remain in effect until Aug. 7, 2020. The new exclusion will fall under previously created subheading 9903.88.48.
U.S. Trade Representative Robert Lighthizer told two senators concerned about retaliatory tariffs in India that the U.S. is working on restoring India to the Generalized System of Preferences benefits program, but that it's slow going. “We’re in the process of restoring it if we can get an adequate counterbalancing proposal from them,” he told Sen. Maria Cantwell, D-Wash., who had complained that American apples are now taxed at 70% in India because of Section 232 tariffs on metals from that country.
Any future Section 301 exclusion renewals will only last until the end of the year, U.S. Trade Representative Robert Lighthizer told the House Ways and Means Committee as he testified June 17 about the administration's trade agenda, adding that “they will decide what happens after that.”
The International Trade Commission on June 12 posted new Revision 13 to the 2020 Harmonized Tariff Schedule. This latest revision implements a round of exclusions from the fourth tranche of Section 301 tariffs on products from China, under subheading 9903.88.49 and U.S. note 20(bbb) to subchapter III of chapter 99 (see 2006090018). The ITC also amended an existing exclusion from the tariffs for certain pill crushing and grinding machines of subheading 8479.82.0080, per a USTR notice issued June 8.
Rep. Suzan DelBene, a House Ways and Means Committee member who also leads on trade in the New Democrats, said she's worried that the participation of “so many countries” at the World Trade Organization in e-commerce talks -- including China -- will mean that the result will not be a high-standard agreement.
Aluminum waste recovered from a manufacturing process in a foreign-trade zone is not subject to Section 232 tariffs or to antidumping and countervailing duties upon entry, CBP said in a May 8 ruling. Shannon Fura, a lawyer with Page Fura, sought CBP's ruling on behalf of the U.S. Granules Corp. (USGC). The company buys aluminum scrap and waste from suppliers that generate recoverable aluminum from manufacturing operations within an FTZ, it said.
International Trade Today is providing readers with some of the top stories for June 1-5 in case they were missed.
The Office of the U.S. Trade Representative issued another set of product exclusions from the fourth group of Section 301 tariffs on goods from China. The new exclusions from the tariffs include "two ten-digit HTSUS subheadings and 32 specially prepared product descriptions, which together respond to 55 separate exclusion requests," according to the notice. The product exclusions apply retroactively to Sept. 1, 2019, the date the fourth set of tariffs took effect. The exclusions will remain in effect until Sept. 1, 2020.