The Office of the United States Trade Representative (USTR) has determined that the acts, policies, and practices of the Government of China related to technology transfer, intellectual property, and innovation covered in the investigation are unreasonable or discriminatory and burden or restrict U.S. commerce.
As a result, on April 3, 2018, USTR published a “Notice of Determination and Request for Public Comment Concerning Proposed Determination of Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation” .
The notice lists 1,333 8-digit US Harmonized Tariff Schedule codes that are potentially subject to an additional 25% duty for applicable products with a country of origin of China on or after an effective date that is to be determined.
Any goods subject to the increased tariffs admitted into a U.S. foreign trade zone on or after the effective date of the increased tariffs will be admitted as “privileged foreign status”, as defined in 19 CFR § 146.41, and upon entry for consumption will be subject to the additional duty.
The categories of goods covered includes:
• Steel Articles
• Aluminum Articles
• Various Machines
• Electrical Devices and Appliances
• Optical Devices
• Measurement Apparatus
Note: For a complete listing, please refer the Annex included in the USTR Notice.
The USTR had previously filed a request for consultation with the World Trade Organization (WTO) to address China’s discriminatory technology licensing requirements. Such consultations are the first step in the WTO dispute settlement process. If the United States and China are unable to reach a solution through consultations, the United States may request the establishment of a WTO dispute settlement panel to review the matter.
How the list was established
The list of products covered by the proposed action was developed using the following methodology:
- Trade analysts from several U.S. Government agencies identified products that benefit from Chinese industrial policies, including Made in China 2025.
- The list was refined by removing specific products identified by analysts as likely to cause disruptions to the U.S. economy, and tariff lines that are subject to legal or administrative constraints.
- The remaining products were ranked according to the likely impact on U.S. consumers, based on available trade data involving alternative country sources for each product.
- The proposed list was then compiled by selecting products from the ranked list with lowest consumer impact.
- The value of the list is approximately $50 billion in terms of estimated annual trade value for calendar year 2018.
- This level is appropriate both in light of the estimated harm to the U.S. economy, and to obtain elimination of China’s harmful acts, policies, and practices.
All products that are classified in the 8-digit subheadings of the Harmonized Tariff Schedule of the United States (HTSUS) that are listed in this Annex are covered by the proposed action. The product descriptions that are contained in this Annex are provided for informational purposes only, and are not intended to delimit in any way the scope of the proposed action.
Have your say
The USTR is seeking public comment and will hold a public hearing regarding a proposed determination on appropriate action in response to these acts, policies, and practices.
The key dates for comments are as follows:
April 23, 2018: Due date for filing requests to appear and a summary of expected testimony at the public hearing, and for filing pre-hearing submissions.
May 11, 2018: Due date for submission of written comments.
May 15, 2018: The Section 301 Committee will convene a public hearing in the main hearing room of the U.S. International Trade Commission, 500 E Street SW Washington DC 20436 beginning at 10:00 am.
May 22, 2018: Due date for submission of post-hearing rebuttal comments.
The USTR requests comments with respect to any aspect of the proposed action, including:
- The specific products to be subject to increased duties, including whether products listed in the Annex should be retained or removed, or whether products not currently on the list should be added.
- The level of the increase, if any, in the rate of duty.
- The appropriate aggregate level of trade to be covered by additional duties.
- In commenting on the inclusion or removal of particular products on the list of products subject to the proposed additional duties, the USTR requests that commentators address specifically whether imposing increased duties on a particular product would be practicable or effective to obtain the elimination of China’s acts, policies, and practices, and whether maintaining or imposing additional duties on a particular product would cause disproportionate economic harm to U.S. interests, including small- or medium-size businesses and consumers.
The USTR strongly prefers electronic submissions made through the Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments in sections F and G below. The docket number is USTR-2018-0005.
For alternatives to online submissions, please contact Sandy McKinzy at (202) 395-9483.
For further information
For questions about the ongoing investigation or proposed action, contact Arthur Tsao, Assistant General Counsel, at (202) 395-5725.
For questions on customs classification of products identified in the Annex to this Notice, contact Evan Conceicao at Evan.M.Conceicao@cbp.dhs.gov.