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Wednesday, October 6, 2021

USTR Issues Notice and Request for Comments on Reinstatement of Expired Section 301 Product Exclusions

On October 5, 2021, the Office of the U.S. Trade Representative (USTR) published a Notice and Request for Comments on the possible reinstatement of expired product exclusions from the Section 301 tariffs on China. Comments must be submitted to the public docket on the web portal at https://comments.USTR.gov on or before December 1, 2021. The public docket on the web portal will open for comments on October 12, 2021.

By way of background, and beginning in June 2018, USTR began imposing additional duties on products of China in four tranches, otherwise referred to as List 1, List 2, List 3 and List 4A. (Although List 4B was published, no tariffs are currently in effect.)  The additional tariffs were imposed as a result of USTR’s investigation into China’s practice of requiring U.S. companies to transfer their intellectual property rights and technologies to Chinese companies in order to obtain business licenses and approvals to invest in China.  For the goods contained in Lists 1 – 4A, the USTR established a process whereby U.S. stakeholders could request product exclusions from the tariffs. The approved product exclusions expired in December 2019 and October 2020; however, in November 2019, USTR began rolling out a process for extending certain exclusions. As a result, USTR agreed to extend 137 product exclusions under List 1, 59 product exclusions under List 2, 266 product exclusions under List 3, and 87 product exclusions under List 4 pursuant to the following Federal Register Notices:

  • List 1 Product Exclusions: 84 FR 70616 (December 23, 2019); 85 FR 15849 (March 19, 2020); 85 FR 20332 (April 10, 2020); 85 FR 29503 (May15, 2020); 85 FR 33775 (June 2, 2020); 85 FR 41267 (July 9,2020); 85 FR 59587 (September 22, 2020); 85 FR 62782 (October 5, 2020);
  • List 2 Product Exclusions: 85 FR 45949 (July 30, 2020); 85 FR 59595 (September 22, 2020); 85 FR 62786 (October 5, 2020);
  • List 3 Product Exclusions: 85 FR 48600 (August 11, 2020); 85 FR 57925 (September 16, 2020); 85 FR 63332 (October 7, 2020); and,
  • List 4A Product Exclusions: 85 FR 54616 (September 2, 2020); 85 FR 63330 (October 7, 2020).

The extended product exclusions referenced above (except for those related to the COVID pandemic) have all since expired. As noted above, USTR announced earlier this week that it is considering the possible reinstatement of previously extended exclusions granted under the Federal Register notices identified above. For ease of reference, USTR is publishing a list of the previously extended exclusions on its website.

Parties wishing to submit comments are asked to provide information as to whether to the particular exclusions should be reinstated and to comment on the appropriate length of the reinstated exclusions. The focus of USTR’s evaluation of the comments will be on whether the particular product remains available only from China; accordingly, USTR requests that comments specifically address the following:

  • Whether the particular product and/or a comparable product is available from sources in the United States and/or in third countries;
  • Any changes in the global supply chain since September 2018 with respect to the particular product or any other relevant industry developments;
  • The efforts, if any, the importers or U.S. purchasers have undertaken since September 2018 to source the product from the United States or third countries;
  • Domestic capacity for producing the product in the United States;
  • Whether or not reinstating the exclusion will impact or result in severe economic harm to the commenter or other U.S. interests, including the impact on small businesses, employment, manufacturing output, and critical supply chains in the United States; and,
  • Overall impact of the exclusions on the goal of obtaining the elimination of China’s acts, policies, and practices covered in the Section 301 investigation.

The public comment period will extend from October 12th to December 1st, after which USTR will consult with the agencies that make up the interagency Section 301 Committee, including the Small Business Administration.  Any product exclusions reinstated by USTR would be retroactive with respect to merchandise entered, or withdrawn from warehouse, for consumption on or after October 12, 2021.

In order to submit a comment (either supporting or opposing reinstatement of a particular exclusion), parties must register on the web portal, which will open on October 12, 2021. After registration, the commenter may submit its comments via the web portal to the public docket using the Exclusion Reinstatement Comment Form provided on USTR’s website. If a party wants to submit comments on more than one product exclusion, it must submit a separate comment for each exclusion.

Please contact Melissa Proctor (melissa@millerproctorlaw.com) should you have any questions about USTR’s notice and request for comments, or other international trade issues.

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