USTR ANNOUNCEMENT ON U.S.- CHINA TRADE RELATIONS

Today the U.S. Trade Representative (USTR), Katherine Tai, announced the initial steps of a new approach to China trade relations.  This will include a new China Section 301 product exclusion process.  Overall, the USTR indicated in her remarks that the U.S. will take a “new, holistic, and pragmatic approach” in U.S. relations with China, including the use of bilateral and multilateral tools working with allies and partners.

First, the USTR plans to engage her Chinese counterpart to hold Beijing accountable for the U.S.-China Phase One agreement signed on January 15, 2020.  The Phase One agreement includes China purchase commitments for U.S. goods and a variety of intellectual property, technology transfer, agriculture and seafood, financial services, currency and other provisions.  The USTR vowed “to hold the PRC to the commitments it made” in the Phase One agreement. 

Second, the USTR will restart the China Section 301 product exclusion process to mitigate the effects of China Section 301 tariffs.  The USTR has yet to provide details on the mechanism and timelines for the new “targeted” China Section 301 product exclusion process, including whether it will resemble the previous product exclusion process.  During today’s Q&A, the USTR simply noted the impact on small and medium enterprises (SMEs) as a consideration.  Although product exclusion request procedures have not yet been announced, it makes sense for clients to take immediate steps to quantify their spending on China Section 301 duties and gather details on products to support product exclusion requests, such as developing information on why sources outside China are unavailable, despite best efforts to re-source.

Third, the USTR expressed “serious concerns” with other topics not covered by the Phase One deal, specifically related to “Beijing’s non-market policies and practices which distort competition by propping up state-owned enterprises, limiting market access, and other coercive and predatory practices in trade and technology.”  During Q&A, the USTR would not rule out further Section 301 actions.

CHINA SECTION 301 COVID PRODUCT EXCLUSIONS
On September 29, the USTR announced a 45-day interim extension of ninety nine (99) China Section 301 product exclusions related to medical care and COVID response products from September 30, 2021 to November 14, 2021. The interim extension is needed for the USTR to consider public comments previously filed.

The product exclusions from China Section 301 duties are available for any importer for any product that falls within the specific product descriptions and enumerated ten-digit HTSUS classifications. This is true regardless of whether the importer filed the initial product exclusion request. Clients may also benefit by filing Post-Summary Corrections (PSCs) or Protests for entries of goods covered by a product exclusion to secure refunds plus interest. Unless liquidation extensions are granted, Protests may be required for liquidated entries.

Please contact Marshall Miller, Brian Murphy, Sean Murray, or Bryan Brown with questions or for assistance. Clients may contact Brenda Zeller to obtain an updated version of the comprehensive spreadsheet we have prepared of all China Section 301 product exclusions, including expiration dates.