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China Section 301 List 3 Exclusion Process to Commence June 30, 2019

USTR Publishes Details on New Exclusion Request Process
On June 20, 2019, the Office of the United States Trade Representative (USTR) published a notice outlining the procedure for requesting exclusions from List 3 of the Section 301 tariffs on Chinese imports via a new web portal.

The new web portal can be accessed here. The portal will open for submissions on June 30 at 12:00 PM EDT, and submissions will be due by September 30, 2019. Granted exclusions will be retroactive to the Section 301 effective date of September 24, 2018. Please see our previous alert for additional information on how to preserve your rights to refunds. The notice includes a sample of the new exclusion request form to facilitate the preparation of exclusion request information prior to the June 30 opening of the web portal.

Section 301 List 3

Section 301 List 3 covers $200 billion worth of Chinese goods and 5,745 product lines defined at eight-digit level of the Harmonized Tariff Schedule of the United States (HTSUS). Major product categories include, amongst other things, automotive, chemicals, base metals, textiles, machinery, electronics, tooling, wood, and paper. Pursuant to a May 9, 2019 notice published by the USTR, the tariff rate applicable to List 3 was increased from 10 percent to 25 percent on May 10, 2019. Please see our previous alert for additional information on List 3.

Dates and Deadlines

  • Opening of web portal for submission of exclusion requests: June 30, 2019 at noon EDT.
  • Deadline for submission of exclusion requests: September 30, 2019.
  • Deadline for responses to individual requests: 14 days after the request is posted to the public on the online portal.
  • Deadline for replies to responses to individual requests: 7 days after the close of the 14-day response period, or 7 days after the posting of a response (whichever is later).

Exclusion Process for Section 301 List 3

As with the prior Section 301 exclusion processes, the List 3 exclusion process still requires providing the following information:

  • 10-digit HTSUS subheading.
  • Detailed product description (e.g., dimensions, material composition, weight, function, etc.).
  • Annual quantity and value of the Chinese-origin product that the requester purchased in each of the last three years.
  • Percentage of gross sale or total cost that subject import accounted for.
  • Information relating to the product’s availability, economic impact, and relation to “Made in China 2025” or other Chinese industrial programs.

Web-Based Form and Other Changes from Previous 301 Exclusion Processes

Among the various changes to the exclusion request process, it appears that the request data will be entered via a web-based form rather than via PDF form. The web-based form consists of 17 questions, which are further broken down into 56 entry fields where responses to the questions are entered. From 56 fields in the web-form, 33 fields are “required” and requestors will be unable to submit the form until all required information is entered.

Additionally, the fields on the request form are all designated as either “Business Confidential Information (BCI) only”, “Public information only,” or provide the requestor with the option to designate the information as BCI or Public. Thus, requestors will not need to submit separate BCI and Public versions of the same exclusion request. These BCI, Public, and optional designations on the new web-based form include the following:

  • BCI: 36 fields are designated BCI by default, which means any information entered into these BCI fields will not be visible to the general public (e.g., recent purchasing values and volumes)
  • Public: 16 fields are designed Public by default, including information relating to the product description
    • USTR has asserted that they “will not consider requests that identify the product using criteria that cannot be made available to the public”
    • Attachments which help distinguish the product, such as photos and specification sheets must be made available to the public and may not contain BCI
  • Submitter Determined BCI or Public: 4 fields provide the option for the requestor to designate the information as BCI or Public, including explanations relating to product availability

Furthermore, unlike the exclusion process for List 1 and List 2, the new process for List 3 exclusions would include:

  • All arguments must be included in the web-form itself, and separate written arguments are not allowed to be submitted as attachments. There is no word or space limitation in the field allowed for presenting these arguments and the USTR will still consider requester’s substantive comments regarding availability, harm to US interests, and Made in China 2025 in ruling upon requests.
  • Annual quantity and value of the product that the requester purchased from third country sources in each of the last two years and first quarter of 2019.
  • Annual quantity and value of the product that the requester purchased from domestic sources in each of the last two years and first quarter of 2019.
  • Requestor’s gross revenue information for fiscal year 2018, first quarter 2018 and first quarter 2019.
  • Information relating to List 1 and List exclusion requests filed by the requestor
  • Information on whether the imposition of additional duties on the product you are seeking to exclude has resulted in severe economic harm to your company or other US interests.
  • Additional contact information, including the importer of record and third-party submitter (if applicable).

Preparing for the Implementation of the List 3 Exclusion Process

Companies are urged to be strategic in considering a request for exclusion as there are several factors to be considered apart from the data required, including the number of exclusion requests to be made and product groupings within each exclusion request. Our experience with the List 1 applications is that the USTR will create a “carve out” for specific products within a 10-digit subheading based on the product description provided in a granted exclusion request.

Arent Fox has developed an internal process to help clients efficiently apply for List 3 exclusions, as well as a program to determine the impact from Section 301 tariffs on companies and assist them in developing strategic duty mitigation alternatives.

Senior Paralegal Amy Couchoud co-authored this alert.

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