Vilin Lin
vilin@xmhealthcare.com
13459298648
Vilin Lin
vilin@xmhealthcare.com
13459298648
The USTR has started an exclusion process for Chinese products on the US$300 billion list from October 31, 2019 to January 31, 2020.
A total of 15 exemption lists have been granted by the USTR to Chinese imports on the previous tariff lists.
While the US has imposed additional tariffs on Chinese imports in the course of the US-China trade war, the Office of the US Trade Representative (USTR) has put in place a tariff exclusion process to exempt certain Chinese imports from additional tariffs.
Chinese goods in either one of the following four Section 301 lists are allowed to apply for tariff exemption through the USTR.
List 1 – US$34 billion worth of Chinese products, effective from July 6, 2018;
List 2 – US$16 billion worth of Chinese products, effective from August 23, 2018;
List 3 – US$200 billion worth of Chinese products, effective from September 24, 2018;
List 4A – US$120 billion worth of Chinese products, effective from September 1, 2019. (List 4, including List 4A and 4B, originally covered US$300 billion worth of Chinese products, scheduled to be effective from September 1, 2019 and December 15, 2019. However, after the US and China announced their Phase One Trade Agreement on December 13, 2019, the tariffs scheduled to take effect December 15 have been suspended)
So far, the exclusion process for products on List 1, 2, and 3 have been closed and a total of 15 lists of exemptions have been granted.
Announced by the USTR on October 18, the exclusion process for products on List 4A (List 4 Annex A), which went into effect on September 1, 2019, had started from October 31, 2019 to January 31, 2020.
This article provides the most updated US tariff exclusion status and a guide to apply for US tariff exclusion.
Background: Fifteen batches of product exclusion granted
So far, 15 exclusion lists have been released on the USTR website.
For List 1 (US$34 billion trade action) – nine batches of exclusions have been granted:
Exclusions Granted December 21, 2018 (Federal Register: 83 FR 67463);
Exclusions Granted March 25, 2019 (Federal Register: 84 FR 11152);
Exclusions Granted April 18, 2019 (Federal Register: 84 FR 16310);
Exclusions Granted May 14, 2019 ( Federal Register: 84 FR 21389);
Exclusions Granted June 4, 2019 (Federal Register: 84 FR 25895);
Exclusions Granted July 9, 2019 (Federal Register: 84 FR 32821);
Exclusions Granted September 20, 2019 (Federal Register: 84 FR 49564);
Exclusions Granted October 2, 2019 (Federal Register: 84 FR 52567); and
Exclusions Granted December 17, 2019 (Federal Register: 84 FR 69016) (The 84 FR 69016 also includes amendments to exclusions granted July 9, 2019 and September 20, 2019)
For List 2 (US$16 billion trade action) – three batches of exclusions have been granted:
Exclusions Granted July 31, 2019 (Federal Register: 84 FR 37381);
Exclusions Granted September 20, 2019 (Federal Register: 84 FR 49600); and
Exclusions Granted October 2, 2019 (Federal Register: 84 FR 52553).
For List 3 (US$200 billion trade action) – three batches of exclusions have been granted:
Exclusions Granted August 7, 2019 (Federal Register: 84 FR 38717);
Exclusions Granted September 20, 2019 (Federal Register: 84 FR 49591);
Exclusions Granted October 23, 2019.
According to media reports from The Hill and the Wall Street Journal, overall, the USTR has denied 61 percent of more than 13,000 requests under the first two rounds of tariffs – under the List 1 and 2 (US$34 billion and US$16 billion lists) and granted 31 percent – the rest still pending.
More than 2,500 US companies were seeking tariff exemptions on about 31,000 products under List 3 (US$200 billion list). By October 10, the USTR has ruled on 439 requests and denied 86 percent of them.
The application for products in List 4A has started from October 31, 2019 at noon EDT and will end on January 31, 2020 at 11:59 pm EDT. Interested parties in the US can request for exemption at the USTR website https://exclusions.ustr.gov when the portal opens.
As with all previous exclusion request processes, businesses will be asked to identify a specific product, the supporting data, and the rationale for the requested exclusion.
The USTR will evaluate the exclusion application case-by-case and regularly updates the status of each pending request on the Exclusions Portal at https://exclusions.ustr.gov/s/PublicDocket.
Businesses can refer to the Exclusion Request Procedures published by the USTR on October 18 to learn the procedures to request the exclusion of products and download the exclusion request form.
Those seeking to exclude two or more products must submit a separate request for each product, that is one product per request.
Interested persons in the US, including third parties (such as law firms, trade associations, and customs brokers) can submit requests for exemption from additional duties.
The products eligible for tariff exemption requests are classified within the Harmonized Tariff Schedule of the United States (HTSUS) subheadings in Annex A of the August 20, 2019 action (Federal Register: 84 FR 43304), or in the short List 4A.
The August 20 action (List 4) contains two separate lists of tariff subheadings, with two different effective dates – September 1, 2019 and December 15, 2019 – and imposes additional tariffs on US$300 worth of Chinese goods.
Of the August 20 action, Annex A (List 4A) is the list which is effective from September 1, 2019 and implemented tariffs on more than US$125 billion worth of Chinese imports.
The US government will consider the following when processing tariff exemption requests:
Whether the particular product is available only from China, and whether the company made any efforts to source the product from non-Chinese suppliers.
Whether the imposition of additional duties (since September 2018) on the particular product has or will cause severe economic harm to the requester or other US interests.
Whether the particular product is strategically important or related to ‘‘Made in China 2025’’ or other Chinese industrial programs.
In addressing each factor, the requester should provide support for their assertions.
To submit an exemption request, applicants must first register on the USTR portal at http://exclusions.USTR.gov.
After registration, the applicant can fill out and submit one or more exclusion request forms.
The three major steps during the process include:
The applicant fills out the Exclusion Request Form and submits requests in the period between the opening of the portal on October 31, 2019 and January 31, 2020 deadline;
Other interested parties fill out the Exclusion Response Form to respond to those requests indicating their support or opposition and providing reasons for their respective views – within 14 days after the requests are posted online; and
The applicant fills out the Exclusion Reply Form to reply to a response within seven days after the close of the 14-day response period, or seven days after the posting of a response.
Three forms must be submitted using the same USTR online portal: http://exclusions.USTR.gov. The exclusion response/reply form can be accessed here.
Information and documents that will need to be prepared include:
Requester information;
10-digit HTSUS item number of the product of concern;
A complete and detailed deion of the particular product;
Requestor’s relationship to the product;
Product substitutability in the US;
Product substitutability in the third country;
Requester’s attempts to source this product from the US or other third countries;
The value in US dollars and quantity (with units) of the Chinese-origin product of concern that was purchased in 2017, 2018, and the first quarter of 2019;
The value in US dollars and quantity (with units) of the product of concern that was purchased from any third-country source in 2017, 2018, and the first quarter of 2019;
The value in US dollars and quantity (with units) of the product of concern that was purchased from US sources in 2017, 2018, and the first quarter of 2019;
Information regarding the company’s gross revenue in US dollars for 2018, the first quarter of 2018, and the first quarter of 2019;
If the Chinese-origin product of concern is sold as a final product or as an input used in the production of a final product;
Whether the imposition of additional duties (since September 2018) on the product has resulted in severe economic harm to the company or other US interests;
Whether the requester has submitted exclusion requests for the Section 301 – US$34 billion and/or US$16 billion – tariff actions;
Whether the particular product is strategically important or related to “Made in China 2025” or other Chinese industrial programs;
Any additional supporting information; and
Any additional supporting attachments.
