USTR Releases Product Exclusion Process for Chinese Products Subject to Section 301 Tariffs

The Office of the U.S. Trade Representative (USTR) today announced a process to obtain product exclusions from the additional tariffs in effect on certain products imported from China under the U.S. response to China’s unfair trade practices related to the forced transfer of U.S. technology and intellectual property.

Today, additional tariffs of 25 percent come into effect for Chinese products imported under 818 tariff lines, covering a trade value of approximately $34 billion in 2018. These tariff lines contain products identified as benefiting from China’s industrial policies, including the “Made in China 2025” program. The list of products subject to tariffs was determined by a 90-day process that included public hearings and a notice and comment period.

USTR is providing an opportunity for the public to request exclusion of a particular product from the additional duties to address situations that warrant excluding a particular product within a subheading, but not the tariff subheading as a whole.

A Federal Register notice outlining the criteria and process for a product exclusion request will be published, and public requests, responses, and replies will be received via Regulations.gov. In making its determination on each request, USTR may consider whether a product is available from a source outside of China, whether the additional duties would cause severe economic harm to the requestor or other U.S. interests, and whether the particular product is strategically important or related to Chinese industrial programs including “Made in China 2025”.

The exclusion process has the following important dates and features:

· The public will have 90 days to file a request for a product exclusion; the request period will end on October 9, 2018.

· Following public posting of the filed request on Regulations.gov, the public will have 14 days to file responses to the request for product exclusion. After the close of the 14 day response period, interested persons will have an additional 7 days to reply to any responses received in support of or opposition to the request.

· Exclusions will be effective for one year upon the publication of the exclusion determination in the Federal Register, and will apply retroactively to July 6, 2018.

Because exclusions will be made on a product basis, a particular exclusion will apply to all imports of the product, regardless of whether the importer filed a request. The U.S. Customs and Border Protection will apply the tariff exclusions based on the product.

The tariff action on China is part of USTR’s Section 301 investigation and follows President Trump’s announcement in March that the United States would impose tariffs on Chinese imports and take other actions in response to China’s policies that coerce American companies into transferring their technology and intellectual property to Chinese enterprises. These policies bolster China’s stated intention of seizing economic leadership in advanced technology as set forth in its industrial plans, such as “Made in China 2025.”