On December 26, 2023, the Office of the United States Trade Representative (“USTR”) announced that it will extend 352 reinstated exclusions and 77 COVID-related exclusions on goods from China until May 31, 2024.
The exclusions refer to additional duties imposed on goods from China pursuant to an earlier Section 301 investigation of China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation.
In December 2022, the agency determined to extend the exclusions and extended them again in May 2023 and September 2023 through December 31, 2023. This latest Federal Register notice announces the agency’s determination to further extend the exclusions until May 31, 2024 and open up the ability to comment on the exclusions. The public docket will open on January 22, 2024 and will close on February 21, 2024.
This latest extension provides USTR additional time to orderly phase out certain exclusions and align others with the objectives determined during the agency’s ongoing four-year review of Section 301 China tariffs.
The agency also announced that it will open a docket to gather public comments on whether to further extend particular exclusions. The focus of the evaluation will be on:
- The availability of products covered by the exclusion from sources outside China
- Efforts undertaken to source products covered by the exclusion
- Why additional time is needed
- On what timeline, if any, the sourcing of products covered by the exclusion is likely to shift outside of China
USTR will also consider whether or not extending the exclusion will impact U.S. interests.
In August 2017, USTR initiated an investigation into China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation. The agency released a report of its findings in March 2018 and in June 2018 began imposing additional duties on products of China in four tranches. The USTR established a process by which U.S. stakeholders could request the exclusion of particular products subject to additional duties. Starting in November 2019, the agency invited public comments on whether to extend particular expulsions it had granted. Through this process, 352 exclusions have been extended.
In March 2020, USTR requested public comments on proposed modifications to exclude from additional duties certain medical-care products related to the U.S. response to COVID. USTR granted exclusions for 99 products. Throughout 2021 and 2022, USTR sought and evaluated public comments and extended 77 of the COVID-related exclusions through September 30, 2023.
Statutory Four-Year Review
Under the Trade Act of 1974, the USTR is required to conduct a four-year review if they receive an appropriate request to continue an action taken under Section 301. The agency is required to review:
- (A) the effectiveness in achieving the objectives of section 301 of (i) such action, and (ii) other actions that could be taken (including actions against other products or services), and
- (B) the effects of such actions on the United States economy, including consumers.
In accordance with this requirement, USTR announced in May 2022 that it was commencing this review. The review is ongoing and there is no statutory deadline. U.S. Commerce Secretary Gina Raimondo has stated that she does not expect any revisions to the Section 301 duties until the four-year review is complete.
What Importers Should Do
Importers should continue to follow this review and prepare for revisions to the Section 301 duties. For importers being hit by additional duties it is crucial to know when the additional duties are effective and must be paid. We urge importers to clearly understand which duties their products are subject to and develop a business plan on how to prepare for additional import costs.
To make your voice heard, ensure you provide a comment to the USTR from January 22, 2024 to February 21, 2024. Contact Diaz Trade Law for assistance writing and submitting an exclusion comment and/or for assistance understanding the next steps in the implementation of Section 301.