On March 28, 2022, the Office of the U.S. Trade Representative (“USTR”) announced the reinstatement of Section 301 exclusions for certain products.
As a result of the Section 301 investigation initiated in 2017, USTR imposed additional duties on products of China in four tranches: List 1 (announced June 20, 2018), List 2 (announced August 16, 2018), List 3 (announced September 21, 2018 and modified on September 28, 2018), and List 4A (announced August 20, 2019, and modified December 28, 2019) of the Section 301 China tariffs. For each tranche, USTR established a process by which U.S. stakeholders could request the exclusion of particular products that were otherwise subject to the action. Exclusions were granted for each List and first expired between December 2019 and October 2020. To address the expiration issue, in November 2019, USTR established processes for submitting public comments on whether to extend particular exclusions. Pursuant to these processes, USTR extended, subject to new deadlines, 549 exclusions in total. Later on, with the exception of exclusions related to COVID-19, the extended exclusions expired again either by December 31, 2020, or in 2021, attracting significant congressional attention on the issue of further extension.
On October 8, 2021, USTR invited the public to comment on whether certain exclusions should be reinstated. USTR announced that it would consider the following factors when making its determination:
- Whether the particular product and/or a comparable product is available from sources in the United States and/or in third countries.
- Any changes in the global supply chain since September 2018 with respect to the particular product or any other relevant industry developments.
- The efforts, if any, the importers or U.S. purchasers have undertaken since September 2018 to source the product from the United States or third countries.
- Domestic capacity for producing the product in the United States.
USTR also considered whether reinstating the exclusion would “impact or result in severe economic harm to . . . U.S. interests . . . as well as the overall impact of the exclusions on the goal of obtaining the elimination of China's acts, policies, and practices covered in the Section 301 investigation.”
Following the public notice and comment process, USTR announced that it was reinstating 352 Section 301 product exclusions through December 31, 2022. The exclusions apply retroactively—specifically, to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on October 12, 2021, that are unliquidated, or to entries that are liquidated, but within the period for protest described in section 514 of the Tariff Act of 1930.
According to U.S. Customs and Border Protection (“CBP”) guidance issued on March 31, 2022, the reinstated exclusions can be claimed using Harmonized Tariff Schedule of the United States (HTSUS) classification 9903.88.67 and are available for any product that meets the description in the product exclusion as set out in Annex A to 87 FR 17380. Imported goods using the reinstated exclusions must also include the regular HTSUS classification for the imported merchandise. Refunds of Section 301 duties paid on previous imports of products now subject to the reinstated exclusions may be obtained by filing a Post Summary Correction (“PSC”) within the PSC filing timeframe, or by protesting the liquidation if within the protest filing timeframe.