Interested parties (including trade associations) are now able to submit exclusion requests seeking an exemption for "List 3" products from the significant Section 301 (China) tariffs. List 3 products include the approximately US$200 billion (5,747 product lines) in products that are subject to Section 301 tariffs pursuant to the September 2018 actions by the United States Trade Representative (USTR). Eligible products are identified in Annex A of the September 21, 2018 USTR notice (83 FR 47974) (as amended and modified by 83 FR 49153).
List 3 products are currently subject to a 25 percent tariff rate but were subject to a lower 10 percent tariff rate if in transit before May 10, 2019 and entered prior to June 1, 2019. Successful requests will be retroactive to the day the tariffs came into effect (i.e., September 24, 2018). All requests must be submitted by September 30, 2019.
The exclusion process differs from requests for the prior two product tranches in that the USTR is now requesting that interested parties submit their requests through the USTR's newly created "web portal" and also provide additional information. Parties may submit the request themselves or have a third party (law firm, trade association, or customs broker) submit it on their behalf.
All requests must identify:
- The HTSUS classification for the products for which an exemption is sought.
- The product name and detailed description (e.g., dimensions, weight, material composition etc…).
- The product's function, application, principal use, and any unique physical features that distinguish it from other products within the same HTSUS subheading.
- The relationship between the party submitting the request and the product (e.g., importer, US producer, purchaser, industry association, other).
- Specific data on the annual quantity and value of the Chinese-origin product, domestic product, and third-party product the requestor purchased in 2017, 2018, and the first quarter of 2019.
- The requestor's gross revenues for at least 2018 and the first quarter of 2019.
- For imports used in the production of final products, requestors must identify: (i) what percentage of the total cost of producing the final product(s) the Chinese-origin input accounts for; and (ii) what percentage the final product(s) accounted for in relation to the requestor's 2018 gross sales.
Parties must also provide a rationale for the requested exclusion, including:
- Whether the product is available only from China and whether a comparable product is available from sources in the US and/or third countries.
- Whether the requestor has attempted to source the product from the US or third countries.
- Whether the imposition of additional duties (since September 2018) on the particular product has or will cause severe economic harm to the requestor or other US interests.
- Whether the product is strategically important or related to "Made in China 2025" or other Chinese industrial programs.
Once a request is submitted, interested persons will have 14 days to object, support, or otherwise respond to, the submission. Requestors will have seven days to reply to any such responses.
Interested parties should submit requests as soon as possible in order to increase the possibility of obtaining a timely decision. By way of example, well over 10,000 exclusion requests were submitted for the prior to lists of products subject to Section 301 tariffs that involved fewer products. Many of those prior requests remain pending.
Experienced Norton Rose Fulbright lawyers are able to efficiently advise and assist interested parties in seeking exclusion requests for their products as well as on other potential avenues to mitigate the impact of these, and other, tariffs.
Global asset management quarterly
Welcome to the twelfth edition of Global asset management quarterly.