Hot Topics in International Trade – June 2022 – China’s Section 301 Duties: Understanding Tariffs’ Four-Year Statutory Review Period | Braumiller Law Group, PLLC

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Many importers look forward to the U.S. Trade Representative’s (“USTR”)-mandated quadrennial review of China’s Section 301 tariffs. Section 301 of the Commerce Act of 1974 grants the Bureau ‘USTR a range of responsibilities and authorities to investigate and take action to enforce US rights under trade agreements and respond to certain foreign trade practices.[1] In 2017, the USTR initiated a Section 301 investigation to determine whether China’s actions regarding technology transfer, intellectual property and innovation were actionable under US trade law. Since the original investigation, and based on the results of the investigation, the USTR has imposed Section 301 tariffs (ranging from 7.5% to 25%) on four different lists:

  • List 1: Effective on or after July 6, 2018, with an approximate annual trade value of $34 billion.
  • List 2: Effective on or after August 23, 2018, with an approximate annual trade value of $16 billion.
  • List 3: effective on or after September 24, 2018, with an approximate annual trade value of $200 billion.
  • List 4A: Effective on or after September 1, 2019, with an approximate annual trade value of $300 billion (List 4B is not effective).

Since the List 1 and 2 tariffs came into effect in 2018, the USTR is now required by law to review the need to maintain the tariffs. The statute reads as follows:

(vs)Exam of necessity: (1) Whether- (A) a particular action has been taken under section 2411 of this title during a period of 4 years, and (B) neither the Claimant nor any representative of the domestic industry who benefits from such action has submitted to the Trade Representative during the last 60 days of this 4-year period a written request for the continuation of such action, this action will end at the end of this 4-year period.[2]

Based on the four-year time limit and written application procedure noted above, the USTR recently issued an FR notice titled, Launch of the Quadrennial Review Process: Chinese Laws, Policies and Practices Related to Technology Transfer, Intellectual Property and Innovation.[3] The RF’s advice indicates that the four-year legal review will likely be split into two phases:

Phase 1: The first phase of the four-year review process includes notifying the representatives of domestic industries that benefit from the two trade measures under Section 301, as amended, of the possible cessation of the measures and the possibility for these representatives to request the continuation of the actions.[4]

Phase 2: The USTR will announce in subsequent notices whether it has received a request for extension from a representative of a domestic industry that benefits from an action. If the USTR receives such a request, the U.S. Trade Representative will announce the suit and initiate a review of the action as described in Section 307(c)(3) of the Trade Act ( 19 U.S.C. 2417(c)(3)). As part of this review, the USTR intends to open a separate portal for interested persons to submit comments on, among other things, the effectiveness of the action in achieving the objectives of Section 301. , other actions that may be taken, and the effects of such actions on the United States economy, including consumers.[5]

For List 1, any representative of a domestic industry that benefits from Section 301 action may submit a request for further action between May 7, 2022 and July 5, 2022. For List 2, any representative National industries benefiting from the action of the section Action 301 can submit a request for further action between June 24, 2022 and August 22, 2022. Comments can be submitted by following this link https:// comments.ustr.gov/s/. It is also important to note that List 3 and List 4A Won’t do have a separate comment period and instead List 3 and List 4A commentators should submit their comments in support of the tariffs during the List 1 and List 2 comment periods. It is likely that the USTR included the Lists 3 and 4A comment periods in the Lists 1 and 2 timelines to expedite its overall review.

While a majority of importers hope the Section 301 tariffs will be removed, others are in the process of preparing a Phase 1 comment requesting that the tariffs remain in effect. This may be due to the fact that some companies have sought alternative sources of supply outside of China over the past four years, due to the expected impact of tariffs, and are now sourcing from various non-associated countries. at the rates. If so, the removal of Section 301 tariffs could put this company at a competitive disadvantage relative to other companies that still source from China. On the other hand, it is likely that importers who wish to see the tariffs removed will have the opportunity to comment against the continuation of the tariffs during the Phase 2 process. As part of this process, commentators will likely be able present information regarding the effectiveness of Section 301 tariffs and other measures that could potentially be taken in lieu of tariffs. Whether a company is for or against Section 301 tariffs, it should consider taking this opportunity to submit a comment to the USTR and provide detailed information on why tariffs should be maintained or why they should be maintained. be deleted.

[1] https://crsreports.congress.gov/product/pdf/IF/IF11346.

[2] https://www.law.cornell.edu/uscode/text/19/2417.

[3] https://ustr.gov/sites/default/files/301/2022-09688.pdf.

[4] Identifier.

[5] Identifier.

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