USTR Amends Section 301 Policy to Avoid Double Counting in New Exclusion Notice
The Office of the U.S. Trade Representative is publishing three new sets of product exclusions from the 25 percent Section 301 tariffs on goods from China (see 1909180004). The product exclusions apply retroactively to when each tranche initially took effect. That was July 6, 2018, for the first tranche, Aug. 23, 2018, for the second tranche and Sept. 24, 2018, for the third tranche. The notice for the third tranche also includes "technical amendments" to lists three and four of the Section 301 tariffs that appear to end double counting of Section 301 tariffs on goods tariffed at a rate that comes from another subheading.
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USTR said the "technical amendments to the $200 billion and $300 billion trade actions" (i.e., list 3 and list 4 tariffs in effect from Sept. 24, 2018, and Sept. 1, 2019, respectively) mean that "the additional duties do not apply to entries under certain subheadings if the applied rate of duty for an entry is derived from another subheading, and if the entry for this reason already is subject to the additional duties." In other words, for the listed subheadings, list 3 and list 4 tariffs don't apply if the subheading that gives the provision its duty rate is already covered by list 1 or list 2 tariffs, and the provision would otherwise be covered by list 3 or list 4.
Among other things, the USTR's change in the technical amendments appears to resolve an issue with how tool sets from China can be subject to multiple Section 301 tariffs (see 1908060034). In a ruling on tools imported by Stanley Black & Decker, CBP had found the tool sets under subheading 8206.00.00 were classifiable according to the component with the highest rate of duty. That component was covered by list 1 tariffs, while subheading 8206.00.00 itself was covered by list 3 tariffs, resulting in 50% in additional Section 301 tariffs on the item. Customs lawyer Marilyn-Joy Cerny, whose client was affected by the ruling (see 1907310052), said the technical amendment was a "pleasing result."
Annex B to USTR's notice says the "technical amendments" cover subheadings 2202.99.36, 2202.99.37, 5810.91.00, 5810.92.10, 5810.92.90, 5810.99.10, 5810.99.90, 8205.90.60, 8206.00.00, 8215.20.00, 9017.90.01, 9620.00.15, and 9620.00.30; as well as subheadings 2106.90.52, 2106.90.54, 6103.22.00, 6103.23.00, 6103.29.05, 6103.29.10, 6103.29.20, 6104.22.00, 6104.23.00, 6104.29.05, 6104.29.10, 6203.22.30, 6203.29.10, 6203.29.15, 6203.29.20, 6203.29.30, 6204.21.00, 6204.22.30, 6204.23.00, 6204.29.20, 8215.10.00, 9005.90.40, 9005.90.80, 9110.11.00, 9110.90.20, and 9608.50.00.
Otherwise, the three lists of exclusions include a total of 437 subsets of tariff numbers in chapters 39, 40, 42, 44, 46, 48, 54, 55, 59, 73, 76, 83, 84, 85, 86 87, 88, 90, and 94. USTR is creating Harmonized Tariff Schedule subheading 9903.88.14 for the set of first tranche exclusions; 9903.88.17 for the second tranche; and 9903.88.18 for the third tranche. The new exclusions cover a total of 1,170 separate exclusion requests, the agency said.
While the first two sets of exclusions apply for a year following publication in the Federal Register, the third tranche exclusions will expire on Aug. 7, 2020, the agency said. The USTR did that because allowing for a full year of those exclusions "would have resulted in disparities in the effective periods between exclusions granted early in the exclusion process and those granted later," the agency said. As a result, USTR is "amending the exclusion process so as to adopt a uniform expiration date for exclusions granted for the $200 billion trade action, subject to special circumstances," it said.