USTR Announces Procedures for
Mandated Four-Year Review of Section 301
Punitive Duties on Goods from China

May 10, 2022

On Thursday, May 5, 2022, the U.S. Trade Representative (USTR) announced in the Federal Register (87 FR 26797) that it is commencing the mandated statutory four-year review of the Section 301 punitive duties on goods from China.

The actions under review are those which were effective, respectively, on July 6, 2018, and August 23, 2018, and subsequently modified by imposing additional duties on supplemental lists of products (lists 3 and 4a), as well as by the temporary removal of duties on certain products through product exclusions.

As a first step in the process the USTR is notifying representatives of domestic industries, which benefit from the trade actions, of the possible termination of the actions and that they have an opportunity to request continuation of the actions.

Requests for continuation must be received in the 60-day window prior to the four-year anniversary of the respective action:

• Between May 7, 2022, and July 5, 2022, for the July 6, 2018 action, and
• Between June 24, 2022, and August 22, 2022, for the August 23, 2018 action.

If the actions continue as a result of one or more requests from representatives of domestic industries that benefit from the trade actions, the USTR will proceed with the next phase (Phase II) of the review. The second phase of the review will be announced in one or more subsequent notices and will provide opportunities for public comments from all interested parties, including those opposed to the continuation of duties.

For the July 6, 2018, trade action, the web portal will open for requests to continue the action on May 7, 2022, and close at 11:59 pm on July 5, 2022.

For the August 23, 2018, trade action, the web portal will open for requests to continue the action on June 24, 2022, and close at 11:59 pm on August 22, 2022.

• The action effective July 6, 2018, refers to those products on List 1 (83 FR 28710) (additional duties of 25 percent ad valorem on 818 of the proposed tariff subheadings, with an approximate annual trade value of $34 billion).
• The action effective August 23, 2018, refers to those products on List 2 (83 FR 40823) (additional ad valorem duties of 25 percent on a list of 279 tariff subheadings with an approximate annual trade value of $16 billion).

The USTR subsequently modified the July 6, 2018, and August 23, 2018, actions. These modifications were in the form of additional duties on supplemental lists of products and the temporary removal of duties on certain products through product exclusions.

In part, the additional product modifications to the July 6, 2018, and August 23, 2018, actions that are currently in effect are as follows:

• List 3 – 83 FR 47974 (September 21, 2018), as modified by 84 FR 20459 (May 9, 2019), and as amended by 84 FR 21892 (May 15, 2019), 84 FR4 26930 (June 10, 2019), 86 FR 22092 (April 26, 2021), and 84 FR 9785 (February 22, 2022)
• List 4A – 84 FR 43304 (August 20, 2019), as modified by 84 FR 45821 (August 30, 2019), 84 FR 69447 (December 18, 2019), and 85 FR 3741 (January 22, 2020)

According to the May 5th FR notice, to ensure comprehensive coverage of the review, the USTR will consider the List 3 and List 4A modifications as applicable to both the July 6, 2018, action and August 23, 2018, action. This means that domestic industries benefiting from the List 1, as well as 3 or 4A actions will be able to submit requests for continuation of those actions beginning on May 7, 2022. Domestic industries benefiting from the List 2 action will be able to submit requests for continuation of that action beginning on June 24, 2022, along with requests for continuation of list 3 and 4a actions.

A request by a domestic party to continue the action should identify the specific industry concerned and should address how the domestic industry benefits from the July 6, 2018, action or August 23, 2018, action, as modified. Requests to continue the action will not be posted immediately but will be summarized in the notices announcing whether the two trade actions under Section 301 will be continued. If the USTR receives such a request, the USTR will announce the continuation of the action and, as a part of Phase II, will undertake a review of the action.

As part of the Phase II review, the USTR intends to open a separate portal for interested persons to submit comments on, among other matters, the effectiveness of the action in achieving the objectives of Section 301, other actions that could be taken, and the effects of such actions on the United States economy, including consumers.

The law related to section 301 provides that the tariffs can remain in place for only 4 years unless renewed. With inflation rising fast, there is a general belief that  the Biden administration will be looking for way to lower costs to consumers. This could be achieved by allowing the China tariffs on non-strategic products and materials to lapse or otherwise modify the sanctions on list 3 and 4 products.

What is noticeably absent from the notice, however, is any discussion of the criteria and requirements about the process to maintain a product on the list. For example, the notice does not clarify how the USTR will determine whether an entity is a "representative of a domestic industry”, and what information is necessary in order maintain that product on the list.

For additional information on this or other Customs matters, contact George R. Tuttle, III at geo@tuttlelaw.com or (415) 986-8780.

The information in this article is general in nature and is not intended to constitute legal advice or to create an attorney-client relationship with respect to any event or occurrence and may not be considered as such.

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