USTR Issues List of $50bn Chinese Products for 25% Tariff

· Another List of $16bn on the Anvil

The Office of the United States Trade Representative (USTR) today released a list of products imported from China that will be subject to additional tariffs as part of the U.S. response to China’s unfair trade practices related to the forced transfer of American technology and intellectual property.

On May 29, 2018, President Trump stated that USTR shall announce by June 15 the imposition of an additional duty of 25 percent on approximately $50 billion worth of Chinese imports containing industrially significant technologies, including those related to China’s “Made in China 2025” industrial policy. Today’s action comes after an exhaustive Section 301 investigation in which USTR found that China’s acts, policies and practices related to technology transfer, intellectual property, and innovation are unreasonable and discriminatory, and burden U.S. commerce.

Said Ambassador Robert Lighthizer: “China’s government is aggressively working to undermine America’s high-tech industries and our economic leadership through unfair trade practices and industrial policies like ‘Made in China 2025.’ Technology and innovation are America’s greatest economic assets and President Trump rightfully recognizes that if we want our country to have a prosperous future, we must take a stand now to uphold fair trade and protect American competitiveness.”

The list of products issued today covers 1,102 separate U.S. tariff lines valued at approximately $50 billion in 2018 trade values. This list was compiled based on extensive interagency analysis and a thorough examination of comments and testimony from interested parties. It generally focuses on products from industrial sectors that contribute to or benefit from the “Made in China 2025” industrial policy, which include industries such as aerospace, information and communications technology, robotics, industrial machinery, new materials, and automobiles. The list does not include goods commonly purchased by American consumers such as cellular telephones or televisions.

This list of products consists of two sets of U.S tariff lines. The first set contains 818 lines of the original 1,333 lines that were included on the proposed list published on April 6. These lines cover approximately $34 billion worth of imports from China. USTR has determined to impose an additional duty of 25 percent on these 818 product lines after having sought and received views from the public and advice from the appropriate trade advisory committees. Customs and Border Protection will begin to collect the additional duties on July 6, 2018.

The second set contains 284 proposed tariff lines identified by the interagency Section 301 Committee as benefiting from Chinese industrial policies, including the “Made in China 2025” industrial policy. These 284 lines, which cover approximately $16 billion worth of imports from China, will undergo further review in a public notice and comment process, including a public hearing. After completion of this process, USTR will issue a final determination on the products from this list that would be subject to the additional duties.

USTR recognizes that some U.S. companies may have an interest in importing items from China that are covered by the additional duties. Accordingly, USTR will soon provide an opportunity for the public to request the exclusion of particular products from the additional duties subject to this action. USTR will issue a notice in the Federal Register with details regarding this process within the next few weeks.

Background

President Trump announced on March 22, 2018, that USTR shall publish a proposed list of products and any intended tariff increases in order to address the acts, policies, and practices of China that are unreasonable or discriminatory and that burden or restrict U.S. commerce.

These acts, policies and practices of China include those that coerce American companies into transferring their technology and intellectual property to domestic Chinese enterprises. They bolster China’s stated intention of seizing economic dominance of certain advanced technology sectors as set forth in its industrial plans, such as “Made in China 2025.”

On April 3, USTR announced a proposed list of 1,333 products that may be subject to an additional duty of 25 percent, and sought comments from interested persons and the appropriate trade advisory committees.

Interested persons filed approximately 3,200 written submissions. In addition, USTR and the Section 301 Committee convened a three-day public hearing from May 15-17, 2018, during which 121 witnesses provided testimony and responded to questions. The public submissions and a transcript of the hearing are available on www.regulations.gov in docket number USTR-2018-0005.

Section 301 Product List Fact Sheet

On March 22, 2018, President Trump signed a memorandum announcing that the United States would take multiple steps to protect American technology and intellectual property from certain discriminatory and burdensome trade practices by China. These actions were announced following a report by the Office of the U.S. Trade Representative (USTR) regarding China’s acts, policies and practices with respect to technology transfer, intellectual property and innovation.

China’s acts, policies and practices include coercing American companies into transferring their technology and intellectual property to domestic Chinese enterprises, and bolstering China’s stated intention of seizing economic dominance of certain advanced technology sectors, as set forth in industrial policies such as “Made in China 2025.”

On May 29, 2018, the President issued a statement in which he announced that by June 15, 2018, USTR would release a list of $50 billion of goods that are imported from China containing industrially significant technologies that would be subject to an additional 25 percent tariff.

SECTION 301 PRODUCT LIST

· On April 3, 2018, USTR announced a proposed list of approximately 1,300 tariff lines valued at an estimated $50 billion. The list was published in the Federal Register on April 6, 2018.

· To develop the initial proposed list, USTR worked with other agencies to identify products that serve to advance or unfairly benefit from China’s distortive industrial policies.

· This proposed list underwent extensive public comment. Interested persons filed approximately 3,200 written submissions. In addition, USTR and the Section 301 Committee convened a three-day public hearing from May 15-17, 2018, during which 121 witnesses provided testimony and responded to questions.

· USTR and the interagency Section 301 Committee have carefully reviewed the public comments and the testimony at the three-day public hearing. In addition, and in accordance with the President’s direction, USTR and the Section 301 Committee carefully reviewed the extent to which the tariff subheadings in the April 6, 2018 notice cover products containing industrially significant technology, including technologies and products related to the “Made in China 2025” initiative.

· Based on this review process, the list of products announced today:

o Removes 515 product lines from the initial proposed list;

o Recommends adding 284 product lines to target products that benefit from China’s industrial policies;

o Maintains 818 products lines from the initial proposed list unchanged.

· The 284 product lines being proposed will now undergo further review in a public notice and comment process, including a hearing. After completion of this process, USTR will issue a final determination on the products that would be subject to the additional duties.

· USTR will provide an opportunity for the public to request exclusion of a particular product from the additional 25 percent duty. USTR will publish the details of this product exclusion process in a subsequent Federal Register notice.

Section 301 Investigation Fact Sheet

Under President Trump’s leadership, the United States is working towards a more fair and reciprocal trade relationship with China. After years of unsuccessful U.S.-China dialogues, the United States is taking action to confront China over its state-led, market-distorting policies and practices, forced technology transfers, intellectual property practices, and cyber intrusions of U.S. commercial networks.

The goal is to mitigate Chinese mercantilist practices, change China’s behavior, and create a level playing field that will give all Americans a better chance to succeed.

1. SECTION 301 INVESTIGATION

· Under Section 301 of the Trade Act of 1974, USTR initiated an investigation to determine whether China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation are unreasonable or discriminatory, and burden or restrict U.S. commerce.

· USTR held a public hearing on October 10, 2017, consulted with private sector advisory committees, held two rounds of public comment periods, and received approximately 70 written submissions from trade associations, U.S. companies and workers, academics, think tanks, and law firms.

· Following a thorough analysis of available evidence, USTR, with the assistance of the interagency Section 301 Committee, determined that numerous acts, policies, and practices of the government of China related to technology transfer, intellectual property, and innovation are unreasonable or discriminatory, and burden or restrict U.S. commerce. Specifically, USTR found that:

o China uses joint venture requirements, foreign investment restrictions, and administrative review and licensing processes to require or pressure technology transfer from U.S. companies.

o China deprives U.S. companies of the ability to set market-based terms in licensing and other technology-related negotiations.

o China directs and unfairly facilitates the systematic investment in, and acquisition of, U.S. companies and assets to generate large-scale technology transfer.

o China conducts and supports cyber intrusions into U.S. commercial computer networks to gain unauthorized access to commercially-valuable business information.

· An interagency team of subject matter experts and economists estimated, based on a three-year annual average, U.S. damages of $50 billion annually from China’s unfair acts, policies, and practices.

· Based on the investigation findings and interagency consultations, USTR developed recommendations for responsive action to China’s unfair trade practices.

1. SECTION 301 RESPONSES

· Under Section 301 of the Trade Act of 1974, USTR has broad authority for a range of possible responsive actions to meet the goal of eliminating or otherwise resolving these unfair practices, such as the imposition of duties or other restrictions on goods or services.

· USTR has determined that appropriate actions for addressing China’s unreasonable or discriminatory acts, policies, and practices should include the following:

o 25 Percent Ad Valorem Duties: In accordance with the President’s direction, USTR has determined to impose an additional 25 percent tariff on approximately $50 billion of products from China that are strategically important to, and benefit from, the “Made in China 2025” program and other Chinese industrial policies.

o WTO Case: USTR is pursuing dispute settlement at the World Trade Organization (WTO) to address China’s discriminatory licensing practices. The United States hopes to work with other like-minded countries in pursuing this case.

· Based in part on evidence uncovered in the Section 301 investigation, the President directed the Department of Treasury to address concerns about Chinese investments in certain technology-intensive sectors. USTR is working closely with the Treasury Department and other agencies on this issue.

· These actions will best position the United States to defend U.S. innovation from unfair trade practices and to achieve greater fairness and reciprocity in the United States’ trade relationship with China.

USTR Statement on the President’s Additional China Trade Action

U.S. Trade Representative Robert Lighthizer today released the following statement in support of the President’s direction that the Office of the United States Trade Representative (USTR) identify $200 billion worth of Chinese goods for additional 10 percent tariffs to address China’s harmful trade policies and practices:

“I support the President’s action. The initial tariffs that the President asked us to put in place were proportionate and responsive to forced technology transfer and intellectual property theft by the Chinese. It is very unfortunate that instead of eliminating these unfair trading practices China said that it intends to impose unjustified tariffs targeting U.S. workers, farmers, ranchers, and businesses. At the President’s direction, USTR is preparing the proposed tariffs to offset China’s action.”

USTR will announce the additional tariffs proposed and provide a similar legal process as the proposed tariffs announced on April 3, 2018 and which are now implemented. No additional tariffs will go into effect until the legal process is complete.

US Threatens Additional USD 200bnTariff on China, Markets Bleed

Stepping up heat on China, US President Donald Trump on Tuesday threatened to impose 10 per cent tariff on $200 billion worth of Chinese goods unless Beijing stops its ‘unfair trade practices’.

Stepping up heat on China, US President Donald Trump on Tuesday threatened to impose 10 per cent tariff on $200 billion worth of Chinese goods unless Beijing stops its ‘unfair trade practices’.

“If China increases its tariffs yet again, we will meet that action by pursuing additional tariffs on another $200 billion of goods. The trade relationship between the US and China must be much more equitable,” Trump said in a statement.

China promptly hit back saying the US is making allegations to cover up its unilateral protectionist policies.

The White House, however, appeared unfazed, claiming China had much more to lose than the US in the trade war.

Global stock markets slumped on Tuesday after Trump threatened to escalate the trade war. Trump’s latest move follows tariffs applied last week on $50 billion in Chinese imports to the US.