As part of its ongoing four-year review of tariffs imposed on Chinese goods under Section 301 of the Trade Act of 1974 (“Section 301”), described in our May 26, 2022 legal update, the Office of the United States Trade Representative (“USTR”) released a questionnaire (the “Questionnaire”) for interested parties to comment on the Section 301 tariffs.
Commenters responding to the Questionnaire can advocate for continuation, modification, or removal of the existing 301 tariffs. Interested parties can also use the Questionnaire to comment on some or all questions regarding the effectiveness of the Section 301 tariffs and other potential actions taken under Section 301 that could more be effective for achieving USTR’s goals at an (i) economy-wide, (ii) sector-wide, and/or (iii) on a Harmonized Tariff Schedule tariff-specific level. The online portal for submission of the Questionnaire will open beginning on November 15, 2022 (i.e., today, the release date of this Legal Update), through January 17, 2023.
Under Section 301, USTR is authorized to investigate and take action to respond to unfair foreign trade practices.1 After first initiating an investigation on August 27, 2017, USTR determined on April 6, 2018 that the Government of China engaged in acts, policies, and practices related to technology transfer, intellectual property, and innovation that were unreasonable or discriminatory, and burden or restrict U.S. commerce, and thus were actionable under Section 301(b).2 USTR subsequently announced Section 301 tariffs on Chinese goods in a series of actions beginning on July 6, 2018 (List 1) and August 23, 2018 (List 2),3 which were subsequently modified by supplemental lists (Lists 3 and 4) and various temporary product exclusions.
Pursuant to Section 307(c) of the Trade Act of 1974, USTR must conduct a four-year review of any “particular action” taken under Section 301, requiring a written request – from petitioners or other domestic industry representatives who benefit from the action – to USTR during the last 60 days of the four-year period in order to continue or extend the action; USTR must provide notification to these parties at least 60 days before the end date of the four-year party.4 If a continuation of the action is requested, USTR must conduct a review of the existing action’s effectiveness in achieving the objectives of Section 301, and other actions that could be taken (including against other products or services), and the effects such alternative actions would have on the US economy, including consumers. On May 5, 2022, USTR announced that it was beginning the statutory four-year review of the Section 301 tariffs on China through a two-step process, which involved:
- Notification to and opportunity to comment and request continuation for representatives of impacted domestic industries benefiting from the Section 301 tariffs on China (“Phase 1”); and
- A review of the actions for which continuation was requested during Phase 1, with additional opportunity to comment (“Phase 2”).5
Following the conclusion of the Phase 1 notice and comment period, USTR announced on September 8, 2022 that it had received 244 requests from domestic producers and 44 requests from trade associations on List 1 actions, and 114 requests from domestic producers and 32 requests from trade associations on List 2 actions, meeting the threshold of a continuation request from at least one representative of a domestic industry which benefits from each action within the 60-day window prior to the termination dates of the actions.6 Along with this announcement, USTR stated it would be publishing separate, subsequent notices detailing the Phase 2 review process, including an opportunity for comment on “among other matters, the effectiveness of the actions in achieving the objectives of the investigation, other actions that could be taken, and the effects of such actions on the United States economy, including consumers.”7 Subsequently, on October 17, 2022, USTR published a Federal Register notice announcing that the Phase 2 comment process would be open from November 15, 2022 through January 17, 2023.8
The Questionnaire was issued by USTR on November 1, 2022, to facilitate comments on the Phase 2 review process, noting that “[t]hese docket questions are being posted on November 1, in advance of the scheduled opening of the docket on November 15, in order to provide advance notice to submitters. The questions as presented on the docket may be clarified or amended.”9
Next Steps for Interested Parties
Impacted parties – including producers, importers, and other involved parties – should consider whether any of their products are impacted by the Section 301 tariffs on China. The Questionnaire can be submitted to USTR beginning on November 15, 2022, through January 17, 2023. Although comments will be public, commenters will be able to submit business confidential information.