While the U.S.-Hong Kong Policy Act of 1992 gives the president clear authority to terminate Hong Kong's special status if China violates the island's autonomy, the fact that Hong Kong has its own membership in the World Trade Organization could complicate the matter, the Congressional Research Service says. In a June 5 “legal sidebar,” CRS said that not only is it not clear when the administration would end Hong Kong's special trade status, it's also not clear whether the U.S. would say it no longer acknowledges Hong Kong's membership in the WTO.
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.
Sharply reduced April imports of the largest TVs were the result of COVID-19 factory shutdowns in Mexico, where the supply chain for big-screen sets predominantly resides, according to newly released Census Bureau data accessed June 6 through the International Trade Commission’s DataWeb tool. Mexican President Andrés Manuel López Obrador ordered the closure of nonessential factories and businesses on March 31.
The International Trade Commission on June 4 issued Revision 12 to the 2020 Harmonized Tariff Schedule. This latest edition implements a June 2 notice from the Office of the U.S. Trade Representative that extends some exclusions from list 1 Section 301 tariffs on products from China (see 2005290020). The extended exclusions are listed in new U.S. Note 20(ccc) to Chapter 99 in the tariff schedule, and goods entered under these exclusions are classifiable under new subheading 9903.88.0050.
CBP in Detroit seized about 4,600 remote-controlled helicopter drones worth some $69,000 that didn't “meet Federal Communications Commission labeling requirements,” the agency said in a June 3 news release. The goods, which were imported from China and were subject to Section 301 tariffs, were also found to be undervalued by about $62,000, CBP said. The imports “were seized June 1 in conjunction with a previous shipment containing more than $400,000 in counterfeit merchandise” that was seized in late May, the agency said.
The Office of the U.S. Trade Representative is requesting comments on whether the set of tariff exclusions on Chinese imports on Section 301 List 1 that are set to expire Sept. 20 (see 1909180013) should extend by up to another year, it said in a notice. The agency will start accepting comments on the extensions on June 8. The comments are due by July 7, 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.
International Trade Today is providing readers with some of the top stories for May 26-29 in case they were missed.
China reportedly ordered its state-controlled companies to stop buying certain U.S. agricultural products after the U.S. certified last week that Hong Kong no longer qualifies for special trade treatment. The decision also came after President Donald Trump said the U.S. will sanction Chinese officials, increase export controls on dual-use technologies, and end the special customs territory in response to Beijing’s so-called national security law (see 2005290047), which the State Department said threatens Hong Kong’s autonomy (see 2005270026).
The Office of the U.S. Trade Representative is requesting comments on whether three sets of tariff exclusions granted to Chinese imports on Section 301 List 3 that are set to expire Aug. 7, 2020, should be extended for up to another year, it said in a notice. The agency already requested comments on 11 other sets of exclusions that expire the same day (see 2005010030). The agency will start accepting comments on the extensions on June 8. The comments are due by July 7, it said. Each exclusion will be evaluated independently. The focus of the evaluation will be whether, despite the first imposition of these additional duties in September 2018, the particular product remains available only from China. The companies are required to post a public rationale.
The International Trade Commission recently issued two more revisions to the Harmonized Tariff Schedule to implement extended and new exclusions from Section 301 tariffs on China. In Revision 11, issued May 29, the ITC implemented new exclusions from List 3 tariffs under U.S. Note 20(aaa) and subheading 9903.88.48 (see 2005220020). The agency also removed two list 4 exclusions (see 2005270022), and extended some exclusions from the first list of Section 301 tariffs that had been set to expire May 14 (see 2005130003), according to the change record.
The Office of the U.S. Trade Representative will grant extensions to 16 exclusions from the first list of Section 301 tariffs on China that were due to expire June 4, it said in a pre-publication copy of a notice posted to its website. The exclusions that weren't extended will expire June 4.