Trade Compliance Flash: USTR Announces Product-Specific Tariff Exclusion Process for List 4A
In a statement released on October 18, 2019, the Office of the United States Trade Representative (USTR) announced that it will begin accepting product-specific tariff exclusion requests for Chinese-origin imports covered by the first half of the fourth tranche of tariffs imposed under Section 301 of the Trade Act of 1974 (i.e., List 4A). Products covered by List 4A, which went into effect on September 1, 2019, are subject to an additional 15 percent tariff. The key takeaways are as follows:
- Like the List 3 exclusion process, List 4A exclusion requests must be submitted through USTR's web portal (https://exclusions.ustr.gov), which will become active for submissions on October 31, 2019. The deadline to submit List 4 exclusion requests is January 31, 2020.
- If not already registered, requestors will be required to register on USTR's portal. Requestors will then be permitted to fill out USTR's online Exclusion Request Form, which we provide here.
- Exclusion requests must be product-specific and administrable, which means that U.S. Customs and Border Protection (CBP) must be able to consistently identify and correctly classify the covered product at the time of entry. USTR notes that it will not consider requests that (1) "identify the product using criteria that cannot be made available to the public" and (2) identify more than one unique product.
- Specifically, USTR's Exclusion Request Form asks for a "complete and detailed description of the particular product of concern," which includes, but is not limited to:
- The product's physical characteristics (e.g., dimensions, weight, material composition, etc.);
- Whether the product is designed to function in or with a particular machine (application);
- The unit value of the product (ranges are permissible);
- Any unique physical features that distinguish it from the products within the covered eight-digit HTSUS subheading; and
- The product's principal use.
- USTR will only consider arguments in favor of an exclusion submitted in answer to the 18 questions on the Exclusion Request Form, or in an accompanying attachment, which focuses on the following themes:
- Whether the product, or a comparable product, is available from sources in the United States or a third country;
- Whether the imposition of additional duties since September on the product has resulted in severe economic harm to the requestor or other U.S. interests; and
- Whether the particular product of concern is strategically important or related to "Made in China 2025" or other Chinese industrial programs.
- If an exclusion is granted, it will be effective for a period of one year from the implementation date of List 4A (i.e., until September 1, 2020). This contrasts with USTR's previous approach, which provided for a one-year exclusion from the publication date of the exclusion determination in the Federal Register with retroactive application to the tariff enactment date.
Based on our experience seeking exclusion requests for Lists 1, 2, and 3, we anticipate that requestors will have the greatest chance for success when they can demonstrate that a product is effectively available only from China, despite efforts to find alternative sourcing. In addition, requestors will be required to demonstrate severe economic harm to their company, such as decreases in revenue, market share, U.S. employment, and U.S. investment. Small businesses are likely to enjoy an advantage in requesting exclusions as well.
Finally, USTR has indicated that it will publish details regarding the application process in the Federal Register next week. In the meantime, click here for additional information on the Section 301 tariff exclusion request process.
We will continue to monitor USTR's action in connection with the List 4A exclusion process and update this Trade Flash as appropriate.
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*Former Miller & Chevalier law clerk
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