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Client Alert – Is the List 3 Exclusion Request Process for Section 301 China Tariffs Around the Corner?: A Proactive Approach for Potential List 3 Exclusion Request Submissions

By V. Susanne Cook, Esq., International Trade Group Chair

The uncertainty surrounding the Section 301 tariffs on so-called List 3 products from China continues to unfold, with the Trump Administration postponing the increase in tariffs to 25%, which was scheduled for March 2, 2019, and at the same time maintaining the ongoing 10% tariffs until further notice. In a related development, in a Congressional explanatory statement accompanying appropriations legislation that was signed into law on February 15, 2019, the U.S. Trade Representative (USTR) was instructed to establish the long hoped-for List 3 tariff exclusion process, utilizing the same procedures as those for Lists 1 and 2. Congress proposed that this process should be initiated no later than March 17, 2019.

In anticipation of the proposed List 3 exclusion process, we strongly recommend that importers of List 3 products proactively review their Harmonized Tariff Schedule (HTS) classification(s) and formulate substantiation of the key elements that were required under the List 1 and List 2 exclusion processes, namely that: (1) there is no U.S. product availability and sources are only available in China, (2) the product is not strategically important or related to “Made in China 2025” or other Chinese industrial programs, and (3) the tariffs cause severe economic harm to the petitioner. C&G continues to see substantial success in our client’s exclusion request submissions. In preparation for the likely next round of exclusion requests, we have monitored the USTR’s basis for grants and denials of other petitions. We have found that a failure to establish one or more of the aforementioned key elements is a common cause for the USTR to deny an exclusion request. The List 1 and List 2 exclusion procedures do not have a denial appeal process and it is anticipated that the List 3 procedures will follow suit. Unlike the Section 232 steel and aluminum tariff exclusion requests that permit resubmission after receipt of a rejection notice, the Section 301 exclusion process to date has followed a hard filing deadline, without the possibility of correcting a defective submission after the deadline has passed. Therefore, it will be critical that all exclusion request criteria be met in accordance with the proposed, but not yet published, List 3 exclusion request criteria.

The C&G Trade Group continues to monitor Section 301 and Section 232 developments and is available to assist you with exclusion request fillings, including developing strategies to comply with the required elements, and to provide counsel on potential avenues to mitigate tariff exposure, as well as a multitude of other aspects of international trade. A common element between the Section 301 and Section 232 exclusion requests is that products for which an exclusion is sought are identified by HTS code. The C&G Trade Group is available to assist you with identifying the correct HTS classifications.

Please feel free to contact us for assistance.

If you have any questions about any of the above information, or wish to discuss a particular matter, please feel free to speak with any member of our International Business Practice by calling us at 412-297-4900 or visiting https://www.cohenlaw.com/practices/international-business. To receive future client alerts, please send an e-mail to bulletins@cohenlaw.com.

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