China Section 301 Investigation and Actions to Address Intellectual Property Violations

Date: October 3, 2019

Background:

Beginning in March 2018, the Office of the U.S. Trade Representative (USTR) began taking action against China to impose tariffs on billions of dollars’ worth of imports. These tariffs, which have been rolled out in four tranches, are based on findings of IP theft and technology transfer in the Office of the U.S. Trade Representative’s (USTR) Section 301 investigation report. Tariffs are one of a set of various planned remedies.
 

What You Need to Know:

To date, there are 4 tranches of tariffs on Chinese imports. AS OF OCTOBER 11, PRESIDENT TRUMP SUSPENDED TARIFF INCREASES TO 30% FOR TRACHES 1, 2 AND 3 AFTER THE U.S. AND CHINA REACHED A "PHASE ONE" TRADE DEAL.

  • 25 percent tariffs went into effect on $34 billion worth of imports on July 6, 2018

    • On December 28, 2018, USTR issued a notice of product exclusions will apply as of the July 6 effective date and will extend for one year after the publication of the notice. U.S. Customs and Border Protection issued instructions on entry guidance and implementation. 

  • 25 percent tariffs went into effect on $16 billion worth of imports on August 23, 2018. 

  • 25 percent tariffs went into effect on roughly $200 billion worth of imports on September 24, 2018. These tariffs were originally set at 10%, however, they increased on May 5, 2019, after Trump stated the negotiations between the U.S. and China were moving too slowly. The Federal Register Notice of the increase can be found here

  • 15 percent tariffs with two effective dates: Sept 1. (List A) and Dec. 15 (List B) and roughly $300 billion worth of imports. 


On March 23, the USTR also launched a new WTO challenge against China.

President Trump announced Sept. 11 a pause in the action. Talks between U.S. and China to take place in D.C. week of Sept. 16

 

USTR Section 301 Investigations web page here.

Note: Importers should be aware that additional tariffs imposed under Section 232 and 301 are included in the calculation for continuous bond sufficiency limits. As a result, companies paying Section 232 and 301 tariffs may be getting notices from U.S. CBP in the coming months requiring importers to raise the amount/coverage on their customs bond.

 

MEMA Staff Contacts: Ann WilsonCatherine Boland, and Leigh Merino

 

 

1st Tariff List - $34 Billion

25 percent tariffs went into effect on July 6, 2018 on $34 billion worth of Chinese imports

  • View list here – Annex A/B

  • China concurrently announced 25 percent retaliatory tariffs on 545 American items.

  • U.S. Customs posted guidance about the Sec. 301 25 percent tariffs on its website.

 

Product Exclusions Process:

The product exclusion process for the 1st list of tariffs closed on October 9, 2018. 

Responses to a request for exclusion of a particular product are due 14 days after the request is posted in docket number USTR-2018-0025 on www.regulations.gov. Any replies to responses to an exclusion request are due 7 days after the close of the 14 day response period.  USTR is not notifying companies of exclusion request responses, so please remember to check the docket regularly. 

Any exclusion granted will apply retroactively to the July 6 date of the imposition of the duties.  

 

Exclusion Notices for List 1 ($34 billion) have been published as follows:

December 28, 2018 Federal Register Notice

March 25, 2019 Federal Register Notice

April 18, 2019 Federal Register Notice

May 14, 2019 Federal Register Notice

June 4, 2019 Federal Register Notice

July 9, 2019 Federal Register Notice

September 20, 2019 Federal Register Notice

October 2, 2019 Federal Register Notice

 

2nd Tariff List - $16 Billion

25 percent tariffs went into effect on August 23, 2018 on $16 billion worth of Chinese imports

 

Product Exclusions Process:

Companies can file for product exclusions from the second round of China 301 tariffs through the USTR.

USTR must receive requests to exclude a particular product by December 18, 2018 (this will be the only opportunity for members to submit exclusion requests for the second tranche, it's not a rolling submissions process like steel and aluminum).

Responses to a request for exclusion of a particular product are due 14 days after the request is posted in docket number USTR-2018-0032 on www.regulations.gov.  Any replies to responses to an exclusion request are due 7 days after the close of the 14 day response period. 

Any exclusion granted will apply retroactively to the August 23 date of the imposition of the duties.  

 

Exclusion Notices for List 2 ($16 billion) have been published as follows:

September 20, 2019 Federal Register Notice

July 31, 2019 Federal Register Notice 

October 2, 2019 Federal Register Notice

 

3rd Tariff List - $200 Billion

10 percent tariffs went into effect on September 24, 2018 on roughly $200 billion worth of Chinese imports.  These tariffs were increased to 25 percent starting May 10, 2019. The Federal Register Notice can be found here

  • View Federal Register notice here; The final list has 5,745 full or partial lines of the original 6,031 tariff lines proposed back in July. The Federal Register notice does not mention an exclusions process.  

  • The President indicated in his announcement of the tariffs that "if China takes retaliatory action … we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports."  

  • China has announced 5 / 10 percent tariffs on $60 billion worth of U.S. goods on Sept. 24, the same day the third round of Sec. 301 tariffs went into effect.

 

Product Exclusions Process: 

June 24, 2019, a Federal Register Notice regarding the list 3 exclusion process was published. The portal was opened from June 30 to September 30 and can be found here.

  • IMPORTANT - PLEASE NOTE: All granted exclusions from the List 3 ($200 Billion) tranche will be effective September 24, 2018 to August 7, 2020. See September 20, 2019 Federal Register Notice below for more information.
  • Even though USTR permits trade associations to file requests or responses, MEMA did not file responses on behalf of members.

 

Exclusion Notices for List 3 ($200billion)  are being published in batches on a rolling basis. Here is what has been published to date:

August 7, 2019 - Federal Register Notice. 

September 20, 2019 Federal Register Notice

 

4th Tariff List - $300 Billion

On May 17th, USTR published a Federal Register Notice requesting comments of the Fourth Tranche of Tariffs. The list of tariffs effected is 140+ pages long, however, there is less of an impact on the supplier industry compared to List 3. 

On August 1, Trump tweeted that he would impost 10% tariffs on the remaining imports from China starting September 1, 2019. This list later on separated into two lists: List A (Effective Sept 1.) and List B (Effective December 15th)

On August 23rd, the President announced a modification to the tariffs, increasing the rate from 10% to 15%. A link to the Notice of Modification can be found here

  • Noteworthy products include batteries, locks for motor vehicles,  springs for motor vehicle suspensions, hinges for motor vehicles, and parts of seats for motor vehicles
  • Hearings began June 17 and ended June 25. Ann Wilson testified on behalf of MEMA on June 21. MEMA's comment can be found here

 

 

Additional Resources:

 

 

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