About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

1 1 (February 17, 2022)

handle is hein.crs/govehlf0001 and id is 1 raw text is: Congr s&on I Res ar h Servic Infon mu t Vii I ive d )aL 'e 1914 Updated February 17, 2022 Section 301 Tariff Exclusions on U.S. Imports from China In 2018, the U.S. Trade Representative (USTR) determined, pursuant to an investigation under Section 301 (Title III of the Trade Act of 1974, 19 U.S.C. §§2411-2420), that China's acts, policies, and practices related to technology transfer, intellectual property (IP), and innovation were unreasonable or discriminatory and burdened or restricted U.S. commerce. To counter them and obtain their elimination, the Trump Administration used Section 301 authorities to impose four rounds of increased tariffs on about two-thirds of U.S. imports from China. However, to avoid harm to U.S. interests, the USTR introduced a new policy allowing stakeholders to request tariff exclusions for U.S. imports that would otherwise have been subject to tariffs. Some policymakers and stakeholders have raised concerns about the implementation of the exclusion request process. In particular, some Member of Congress have questioned USTR's ability to pick winners and losers through granting or denying requests or have pushed for broad tariff relief amid concerns about the negative impact of tariffs on the U.S. economy. This has been the case particularly in the aftermath of the Coronavirus Disease 2019 (COVID-19) pandemic, which has affected the United States' ability to obtain certain products domestically or from countries other than China. Other Members oppose granting any exclusions on the ground that doing so may undermine Section 301's effectiveness at addressing China's unfair trade practices or hinder U.S. efforts to incentivize domestic manufacturing of certain critical goods. The agency established an exclusion process for each of the four stages of tariff increases under Section 301, as well as opportunities for interested parties to submit comments on whether to extend or reinstate exclusions-all of which have now closed. The Biden Administration continues to review its trade strategy for China, thus far announcing potential renewal of the Section 301 tariff exclusion process and focusing on enforcement of the U.S.-China Phase One trade agreement. However, the USTR's 2021 actions were not aimed at providing broader tariff relief. They were limited to extending unexpired exclusions on medical supplies relevant to combatting the COVID-19 pandemic and requesting comments on whether to reinstate exclusions that were previously extended. Background In August 2017, long-standing concerns over China's policies on IP, subsidies, technology, and innovation led the USTR to launch an investigation-under Section 301-into those policies and their impact on U.S. stakeholders. The investigation concluded that four broad policies or practices justified U.S. action: (1) China's forced technology transfer requirements, (2) cyber-enabled theft of U.S. IP and trade secrets, (3) discriminatory and non-market-based licensing practices, and (4) state-funded strategic acquisition of U.S. assets. Subsequently, as part of its efforts to pressure China to change these practices, the United States imposed additional tariffs, of up to 25%, on certain U.S. imports from China under four separate actions (per Lists 1-4). During the Section 301 notice, hearing, and comment period on proposed tariff increases, the USTR heard numerous U.S. stakeholders who expressed concerns about how additional tariffs could affect U.S. businesses and consumers. In response, for each Section 301 action regarding a new list of covered products, the USTR created a process whereby interested parties could request that a particular product be excluded from the tariffs, subject to certain criteria. Title III of the Trade Act of 1974 does not outline a formal process for exclusions or require the USTR to establish one. The determination to do so appears to be solely at the USTR's discretion. With the COVID-19 pandemic, the agency began to prioritize the review of exclusion requests concerning medical products in short supply. Separately, the USTR also requested public comments on whether to remove additional products covered by any list that were relevant to the U.S. response to the pandemic. As a result, in 2020 and 2021, it granted new exclusions or extensions for certain medical care products. Figure I. Section 301 Exclusions Exclusion Requests Granted Denied List I List 2 List 3 List 4 Exclusions Granted HTSUS Specifc uheading PE[94s 17 716 4 270 46 956 32 187 0 8,000 16,000 24,000 32,000 02/6(2022 Source: CRS with information from the Office of the USTR. Note: Figures may not reflect amendments to product-specific exclusions and do not include requests submitted on or after March 25, 2020, in response to 85 FR 16987. However, exclusions granted through December 2020 and noted here may have been informed by those requests. Section 301 Tariff Exclusion Process The tariff exclusion process enabled interested parties- including law firms and trade associations-to petition for an exemption from the Section 301 tariff increases for specific imports classified within a 10-digit Harmonized Tariff Schedule of the United States (HTSUS) subheading. The time window to submit requests is closed, but the USTR is reportedly reviewing all actions related to the investigation, including decisions on whether and how to accept new exclusion requests. While the USTR approved, on average, 35% of new requests under the first two

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Already a HeinOnline Subscriber?

Log In

profiles profiles most