USTR Considers "Targeted" Reinstatement of Section 301 Exclusions on Certain Chinese Products

The Office of the U.S. Trade Representative (USTR) has published a Federal Register notice seeking public comments on whether to reinstate 549 previously extended tariff exclusions. If reinstated, exclusions will apply retroactively to merchandise entered on or after Oct. 12, 2021. Interested parties can submit written comments through Dec. 1, 2021.

As background, beginning in 2018, the Trump Administration developed a process to review requests for exclusions from Section 301 tariffs on Chinese imports. Of the approximately 53,000 requests for exclusion, 2,200 were granted. Once granted, exclusions were extended for 549 of those products. Most of these expired on Dec, 31, 2020.

In evaluating the comments, USTR will consider 1) whether the particular product remains available only from China; 2) the economic impact of granting or denying an extension – on 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 3) the 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 USTR, in its consideration, will "work to ensure the China 301 tariffs align with the Biden-Harris Administration's economic priorities."¹ In an Oct. 4, 2021, speech outlining the Biden Administration's China trade policy, Ambassador Katherine Tai made clear that she "intend[s] to deliver on President Biden's vision for a worker-centered trade policy in the U.S.-China trade dynamic."² As such, it is expected that USTR will focus heavily on the impact of potential exclusion extensions on the U.S. workforce.

USTR is separately addressing the possible extension of certain COVID-19-related exclusions.³

What's Next?

In her Oct. 4, 2021, speech, Ambassador Tai laid out four initial steps to realign U.S. trade policies toward China:

• First, discussing with China its performance under the Phase One Agreement
• Second, starting a targeted Section 301 exclusion process for certain products from China
• Third, raising concerns with China that were not addressed in the Phase One Agreement, especially China's state-centered and nonmarket trade practices
• Fourth, coordinating with allies and partners to shape the rules for fair trade.

While USTR has begun the process of considering extensions of the 549 previously granted exclusions, USTR has not yet announced whether it intends to consider any new tariff exclusions. It is expected that decision will depend heavily on progress made in points one, three and four of the "initial steps" that Ambassador Tai set out. Holland & Knight will continue to track developments in this area and provide timely insights.

Please contact the authors of this alert if you have questions or need assistance preparing comments for USTR.

Notes

¹ USTR Requests Comments on Reinstatement of Targeted Potential Exclusions of Products of China Subject to Section 301 Tariffs, Oct. 5, 2021.

² Remarks As Prepared for Delivery of Ambassador Katherine Tai Outlining the Biden-Harris Administration's "New Approach to the U.S.-China Trade Relationship," Oct. 4, 2021.

³ Request for Comments on Certain Products Exclusions Related to COVID-19: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, Federal Register, Aug. 27, 2021.

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