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October 20, 2022 USTR announces next steps in statutory four-year review of China 301 tariffs
Executive summary On 12 October 2022, the Office of the United States Trade Representative (USTR) announced the next steps in the statutory four-year review of the tariff actions in the Section 301 of the Trade Act of 1974 (Section 301) investigation of China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation.1 The notice represents the initiation of a public docket for interested persons to submit comments on the effects of actions taken under the Section 301 investigation following requests for continuation from representatives of United States (US) domestic industries.2 The public docket web portal will open on 15 November 2022. Interested parties should submit comments no later than 17 January 2023. This Alert also provides an update to the Section 301 litigation that is on-going at the US Court of International Trade (CIT). Detailed discussion Section 301 comment period Pursuant to 19 U.S.C. 2417(c)(1)(b), action taken under Section 301 shall terminate after the close of a four-year period if a representative of the domestic industry has not filed a written request for the continuation of such action. On 8 September 2022, the USTR announced the 6 July 2018 action [List 1], as modified, and the 23 August 2018 action [List 2], as modified, would remain in effect, as a result of at least one representative of a domestic industry having submitted to the USTR a request for continuation of the action, as modified.3 Following receipt of an appropriate request to continue an action taken under Section 301, Section 307(c) requires the USTR to conduct a review of: (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.4 To aid in this review, the USTR is opening a docket via web portal on 15 November 2022 for interested persons to submit comments. Submissions should include remarks on the effectiveness of the actions in countering China’s trade practices, effects on the US domestic economy including whether the actions have resulted in higher additional duties on manufacturing inputs, as well as the impact of these actions on the US critical supply chains as outlined in Executive Order 14017.5 To facilitate such comments, the USTR intends to post a copy of questions for the docket by 1 November 2022. Section 301 CIT litigation update On 1 August 2022, the USTR filed a Remand Determination, a 90-page court-mandated report, explaining the rationales for imposing Section 301 List 3 and List 4A punitive tariffs, in accordance with Administrative Procedures Act (APA) requirements. The report is in response to the CIT’s remand order issued on 1 April 2022 to the USTR to further explain the agency’s reasons for retaining, removing, or including certain products on the lists, the steps taken to address more than 9,000 public comments targeting List 3 and List 4A products, and considerations for impact of punitive duties on the US economy among other factors to justify its decisions. The report provides explanations of the USTR’s decisions to include or remove certain commodities, comments on efforts to mitigate damage to the US economy and refutes assertions suggesting that negotiations with China would have yielded a better outcome. From the updated court schedule, the USTR’s remand determination will be subjected to further discussions and scrutiny through the remainder of the year. It thus appears unlikely that the CIT will reach a final decision by the end of 2022. Actions for businesses Companies importing goods from China or US domestic companies impacted by competition with Chinese imports are encouraged to review the USTR notice and submit comments when the web portal opens. Companies should continue to monitor the USTR’s review of Section 301 punitive tariff actions including the issuance of questions to guide comments for the public docket. While the Section 301 litigation continues its course, preserving the right to refund by filing protests remains the appropriate strategy until an ultimate final resolution of the court case is determined. Additionally, companies importing articles subject to these tariffs should consider other mitigation strategies such as:
_________________________________________ For additional information with respect to this Alert, please contact the following: Ernst & Young LLP (United States), Global Trade
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