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Background to USTR Section 301 Tariff Review: On Tuesday, May 3, the USTR announced the initiation of a mandatory tariff action review under the Section 301 investigation into China’s Laws, Policies and Practices Relating to Technology Transfer, Intellectual Property and Innovation. (See the Federal Register notice here.)
Under the law, unless the USTR receives a request to prosecute and conducts a review of the case, Section 301 actions will automatically terminate after four years. The agency’s review is to examine the effectiveness of the actions in achieving the program’s goals as well as “the effects of those actions on the United States economy, including consumers.” USTR’s announcement serves as notice to domestic industries benefiting from the tariffs of their possible termination, as well as the opportunity to seek their continuation.
The USTR is considering all four bands of China’s Section 301 tariffs at the same time. Section 301 tariffs were imposed on approximately $34 billion of Chinese imports on July 7, 2018 (List 1) and an additional $16 billion on August 23, 2018 (List 2). Further changes were made in September 2018 ($200 billion; List 3) and September 2019 ($110 billion; List 4A).
Deadline for continuation request: Requests to maintain rates must be submitted before the fourth anniversary of the action, i.e. July 6, 2022 for the first action of the investigation and August 22, 2022 for the second action.
If one or more continuation requests are submitted, which appears to be a virtual certainty, the USTR will issue a subsequent notice announcing continued tariff action and conduct a tariff review. If the USTR receives no request for continuation (an outcome that seems highly unlikely), the tariffs will automatically terminate at the end of the four-year period.
Submit comments: For the July 2018 trade action, the web portal at https://comments.ustr.gov/s/ will open for applications to continue the action on May 7, 2022 and will close at 11:59 p.m. on July 5 2022.
For the August 2018 trade action, the web portal at https://comments.ustr.gov/s/ will open for applications to continue the action on June 24, 2022 and will close at 11:59 p.m. on June 22. August 2022.
Requests must “identify the specific industry affected and indicate how the domestic industry benefits from the July 6, 2018 action or the August 23, 2018 action, as amended.”
The USTR advisory indicates that entities wishing to maintain tariffs in List 3 or List 4A may submit requests through either portal. We recommend, however, that interested parties who support maintaining Section 301 rates on List 3 or List 4A items submit a letter expressing their support for maintaining rates on both portals.
Review Timeline: Assuming the USTR receives continuation requests, a formal announcement (i.e., Federal Register Notice) will be published and tariffs will remain in place while the USTR conducts the review. The review will include separate public comment opportunities for interested parties, during which the USTR will accept comments on “the action’s effectiveness in achieving the objectives of Section 301, other actions that may be taken and the effects of those actions on the United States economy, including consumers.
There is no timeline for the review or a deadline for the USTR to report its findings.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.
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