U.S. Announces that Initial Section 301 Tariffs on Imports from China Will Begin on July 6 - Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP
On June 15, 2018, the Trump Administration announced that additional tariffs will be imposed on certain goods from China under Section 301 of the Trade Act of 1974. A press release issued by the Office of the United States Trade Representative (USTR), states that beginning on July 6, 2018, an additional 25% tariff will be imposed on 818 tariff lines (“List 1”) of the original 1,333 lines that were included on the proposed list originally published by USTR on April 6.
The 818 tariff lines on List 1 primarily include machinery and machinery parts and components of Chapters 84 and 85 of the HTSUS, as well as a wide range of vehicles and vehicle parts. The complete list of the covered items on List 1 can be accessed at here.
USTR also issued a second list of 284 tariff items proposed for becoming subject to the Section 301 duties (“List 2”). List 2 includes certain chemicals, plastics, metal articles, as well as additional articles of machinery and transportation. List 2 can be accessed at here.
List 2 will be subject to a notice and comment process following which USTR will make a determination as to the products from List 2 that will become subject to the additional 25% duty. Details as to the timing of the process for finalizing List 2 are expected to be issued in the coming weeks.
USTR indicated that it will be providing an opportunity for importers and other affected parties to request an exclusion of particular products from the additional duties. Details on the process for requesting these exclusions will be issued in the next few weeks.
Like other recent trade developments, the imposition of Section 301 tariffs has taken several turns since first being proposed in March. If you have any questions, please contact Joseph Spraragen or any of our attorneys.
USTR Announces Schedule for Comments on Second List of Products to be Subject to Section 301 Duties - Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP
Following recent release by the Office of the United States Trade Representative (USTR) of a second list of products from China that it proposes to become subject to an additional 25% duty under Section 301 of the Trade Act of 1974, USTR has issued a schedule for providing comments to the second proposed list. The second proposed list consists of 284 tariff items that cover goods including chemicals, plastics, metal articles, machinery, and vehicles. This list can be accessed at:
https://ustr.gov/sites/default/files/enforcement/301Investigations/List%202.pdf.
On June 20, 2018, USTR published a notice in the Federal Register with the following schedule:
- June 29, 2018: Due date for filing requests to appear and a summary of expected testimony at the public hearing and for filing pre-hearing submissions.
- July 23, 2018: Due date for submission of written comments.
- July 24, 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 9:30 a.m.
- July 31, 2018: Due date for submission of post-hearing rebuttal comments.
USTR requests that commenters address specifically whether imposing increased duties on a particular tariff item would be practicable or effective to obtain the elimination of China’s current (adverse) acts, policies, and practices that were identified in USTR’s initial Section 301 determination, and whether maintaining or imposing additional duties on a particular listed product would cause disproportionate economic harm to U.S. interests, including small or medium-sized businesses, and consumers.
A similar comment process followed the April 2018 release of the first proposed list of products for the Section 301 duties. Approximately 3,200 written comments were submitted and 121 witnessed testified during a three-day hearing. The first proposed list covered 1,333 tariff lines. Following the comment process, the final first list of products was reduced to 818 tariff items. For this reason, importers and other interested parties that may be effected by the second proposed list should consider filing comments and appearing at the public hearing on July 24 in order to make the case that particular tariff items should be excluded from the second list.
This would be a good time for importers to re-evaluate the tariff classifications that they are using to determine if certain goods might be properly classifiable in subheadings that are not on the Section 301 lists. Also, it may be worth considering whether products might be modified slightly to obtain a new classification that would not affected by the Section 301 duties. If you have any questions, please contact Joseph Spraragen or any of our attorneys.
USTR Issues Tariffs on Chinese Products in Response to Unfair Trade Practices - U.S. Trade Representative
Washington, DC – The Office of the United States Trade Representative (USTR) today released a list of products imported from China that will be subject to additional tariffs as part of the U.S. response to China’s unfair trade practices related to the forced transfer of American technology and intellectual property.
On May 29, 2018, President Trump stated that USTR shall announce by June 15 the imposition of an additional duty of 25 percent on approximately $50 billion worth of Chinese imports containing industrially significant technologies, including those related to China’s “Made in China 2025” industrial policy. Today’s action comes after an exhaustive Section 301 investigation in which USTR found that China’s acts, policies and practices related to technology transfer, intellectual property, and innovation are unreasonable and discriminatory, and burden U.S. commerce.
“We must take strong defensive actions to protect America’s leadership in technology and innovation against the unprecedented threat posed by China’s theft of our intellectual property, the forced transfer of American technology, and its cyber attacks on our computer networks,” said Ambassador Robert Lighthizer. “China’s government is aggressively working to undermine America’s high-tech industries and our economic leadership through unfair trade practices and industrial policies like ‘Made in China 2025.’ Technology and innovation are America’s greatest economic assets and President Trump rightfully recognizes that if we want our country to have a prosperous future, we must take a stand now to uphold fair trade and protect American competitiveness.”
The list of products issued today covers 1,102 separate U.S. tariff lines valued at approximately $50 billion in 2018 trade values. This list was compiled based on extensive interagency analysis and a thorough examination of comments and testimony from interested parties. It generally focuses on products from industrial sectors that contribute to or benefit from the “Made in China 2025” industrial policy, which include industries such as aerospace, information and communications technology, robotics, industrial machinery, new materials, and automobiles. The list does not include goods commonly purchased by American consumers such as cellular telephones or televisions.
This list of products consists of two sets of U.S tariff lines. The first set contains 818 lines of the original 1,333 lines that were included on the proposed list published on April 6. These lines cover approximately $34 billion worth of imports from China. USTR has determined to impose an additional duty of 25 percent on these 818 product lines after having sought and received views from the public and advice from the appropriate trade advisory committees. Customs and Border Protection will begin to collect the additional duties on July 6, 2018.
The second set contains 284 proposed tariff lines identified by the interagency Section 301 Committee as benefiting from Chinese industrial policies, including the “Made in China 2025” industrial policy. These 284 lines, which cover approximately $16 billion worth of imports from China, will undergo further review in a public notice and comment process, including a public hearing. After completion of this process, USTR will issue a final determination on the products from this list that would be subject to the additional duties.
USTR recognizes that some U.S. companies may have an interest in importing items from China that are covered by the additional duties. Accordingly, USTR will soon provide an opportunity for the public to request the exclusion of particular products from the additional duties subject to this action. USTR will issue a notice in the Federal Register with details regarding this process within the next few weeks.
Background
President Trump announced on March 22, 2018, that USTR shall publish a proposed list of products and any intended tariff increases in order to address the acts, policies, and practices of China that are unreasonable or discriminatory and that burden or restrict U.S. commerce.
These acts, policies and practices of China include those that coerce American companies into transferring their technology and intellectual property to domestic Chinese enterprises. They bolster China’s stated intention of seizing economic dominance of certain advanced technology sectors as set forth in its industrial plans, such as “Made in China 2025.” (See USTR Section 301 Report here.)
On April 3, USTR announced a proposed list of 1,333 products that may be subject to an additional duty of 25 percent, and sought comments from interested persons and the appropriate trade advisory committees.
Interested persons filed approximately 3,200 written submissions. In addition, USTR and the Section 301 Committee convened a three-day public hearing from May 15-17, 2018, during which 121 witnesses provided testimony and responded to questions. The public submissions and a transcript of the hearing are available on www.regulations.gov in docket number USTR-2018-0005.
EU Adopts Rebalancing Measures in Reaction to US Steel and Aluminium Tariffs - European Commission
Brussels, 20 June 2018
The European Commission adopted today the regulation putting in place the EU's rebalancing measures in response to the US tariffs on steel and aluminium. The measures will immediately target a list of products worth €2.8 billion and will come into effect on Friday 22 June.
The list of US imports that will now face an extra duty at the EU border includes steel and aluminium products, agricultural goods and a combination of various other products. By putting these duties in place the EU is exercising its rights under the World Trade Organisation (WTO) rules.
Commissioner for Trade Cecilia Malmström said: "We did not want to be in this position. However, the unilateral and unjustified decision of the US to impose steel and aluminium tariffs on the EU means that we are left with no other choice. The rules of international trade, which we have developed over the years hand in hand with our American partners, cannot be violated without a reaction from our side. Our response is measured, proportionate and fully in line with WTO rules. Needless to say, if the US removes its tariffs, our measures will also be removed."
Today's announcement follows the notification of the full list to the WTO and its endorsement by the College of Commissioners on 6 June, following the US application of the full tariffs on EU steel and aluminium products. EU Member States have expressed their unanimous support for this approach.
The EU will rebalance bilateral trade with the US taking as a basis the value of its steel and aluminium exports affected by the US measures. Those are worth €6.4 billion. Of this amount, the EU will rebalance on €2.8 billion worth of exports immediately. The remaining rebalancing on trade valued at €3.6 billion will take place at a later stage – in three years' time or after a positive finding in WTO dispute settlement if that should come sooner.
The EU rebalancing measures will be effective for as long as the US measures are in place, in line with the WTO Safeguards Agreement and EU legislation.
The Implementing Regulation, to be published tomorrow and entering into force on Friday, sets out the products and level of duties to be applied, both now and in the future, if necessary.
The list of products is the same as in the previous Implementing Regulation of 16 May and as notified to the WTO on 18 May.
Background
Today's decision is part of the three-pronged response outlined by the European Commission earlier this year. This also includes the launch on 1 June of legal proceedings against the US in the WTO and safeguard action to protect the European market from disruptions caused by the diversion of steel from the US market. A safeguards investigation was launched on 26 March. The Commission has nine months to decide whether safeguard measures would be necessary. If the investigation confirms the necessity for swift action, such a decision could be taken by summer. As regards aluminium, the Commission has put in place a surveillance system for imports of aluminium to be prepared in case action is required in that sector.
Philadelphia CBP Seizes 100 Counterfeit Yeti Mug - U.S. Customs & Border Protection
PHILADELPHIA – U.S. Customs and Border Protection (CBP) officers in Philadelphia announce a recent seizure of 100 counterfeit mugs branded with the popular cooler company Yeti brand.
The parcel, manifested as “fishing reel iron products” arrived from Hong Kong, China April 4 and was destined to an individual consignee. The poor packaging and substandard quality led CBP officers to detain the shipment. Further investigation determined the shipment to be counterfeit.
CBP officers routinely examine imported shipments. Working with CBP’s Consumer Products and Mass Merchandising Centers for Excellence and Expertise, the agency’s trade experts, officers verified the mugs as counterfeits through the trademark holder.
Stopping the flow of fake goods is a priority for the U.S. government and CBP has designated Intellectual Property Rights (IPR) enforcement as a Priority Trade Issue. Importation of counterfeit merchandise can cause significant revenue loss, damage the U.S. economy and threaten the health and safety of American people.
“Consumer safety and trademark protection is one of CBP’s top priorities. Our officers will continue to work closely with our trade and consumer safety partners to identify and seize counterfeit merchandise, especially those products that pose potential harm to American consumers,” said Joseph Martella, CBP Port Director for the Area Port of Philadelphia.
This is Philadelphia CBP’s fifth significant counterfeit seizure in the last three months.
On March 6, CBP officers seized $1.4 Million in counterfeit designer brand jewelry. CBP officers seized $3 Million in counterfeit jewelry during two seizures March 20 and April 3. CBP officers also seized about $233,000 in counterfeit luxury watches February 27. All shipments arrived from Hong Kong and were destined to addresses in Philadelphia.
"The seizure of counterfeit items reflects the commitment and expertise of CBP officers and import specialists, and their dedication to preventing unlawful and potentially dangerous imports into the United States," said Casey Durst, CBP Director of Field Operations in Baltimore. "We will remain vigilant and continue to advance our detection capabilities in order to secure our homeland and keep our communities safe and our economy prosperous."
CBP protects businesses and consumers every day through an aggressive Intellectual Property Rights (IPR) enforcement program.
On a typical day in 2017, CBP officers seized $3.3 million worth of products with IPR violations. Learn more about what CBP did during "A Typical Day" in 2017.
In Fiscal Year (FY) 2017, the number of IPR seizures increased 8 percent to 34,143 from 31,560 in FY 2016. The total estimated MSRP of the seized goods, had they been genuine, decreased to $1.2 billion from $1.38 billion in FY 2016. Read more 2017 IPR Enforcement Statistics.
As a result of CBP enforcement efforts, ICE Homeland Security Investigations agents arrested 457 individuals, obtained 288 indictments, and received 242 convictions related to intellectual property crimes in 2017.
If you have information concerning counterfeit merchandise illegally imported into the United States, CBP encourages you to submit an anonymous report through e-Allegations Online Trade Violation Reporting System.