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Client Alert – USTR Moves Ahead with Development of Exclusion Process for List 3 Section 301 Tariffs on Chinese Products (totaling $200 Billion)

EXCLUSION PROCESS FOR LIST 3 IMPORTS FROM CHINA TARGETED TO COMMENCE ON JUNE 30: In a notice dated May 21, 2019, the U.S. Trade Representative (“USTR”) submitted a proposed List 3 Exclusion Request form to the Office of Management and Budget (“OMB”) to comply with the Paperwork Reduction Act and solicit public comments regarding the Section 301 exclusion procedures for tariffs imposed on Chinese imports of products on List 3. The notice sets June 30, 2019 as the target date for the commencement of the List 3 exclusion process. This is a much welcome development for U.S. importers of List 3 items, as well as other “U.S. stakeholders,” who now see a path forward for requesting exclusions, and reimbursement, for tariffs previously paid on imports of List 3 items imposed pursuant to Section 301.

PREPARATION OF LIST 3 EXCLUSION REQUESTS: While the final details of the List 3 Exclusion Request form’s information fields remain subject to change in response to the public comment process, the May 21, 2019 announcement contains sufficient detail for importers and other “U.S. stakeholders” to proceed with List 3 exclusion request preparation, including the following tasks:

  1. Confirmation of the Harmonized Tariff #s (“HTS #”) assigned to the respective List 3 imports, since the exclusion review process involves U.S. Customs confirmation of the HTS # identified on the exclusion request. Approvals are also HTS # specific and the product description on the entry documentation must match the description set forth in the exclusion request. The Cohen International Business Group has extensive experience in this area and is happy to assist in this process of reviewing and verifying the applicable HTS #.
  2. Collection of a significant amount of data, including the following:  historic data related to the quantity and value of the List 3 products of concern imported from China during the years 2017, 2018 and 2019, as well as purchased from other countries and from U.S. sources. In addition, as for prior Section 301 exclusion requests, the importer or “U.S. stakeholder” must develop a narrative that supports the claim that the product is not available outside of China, that the product is not related to the “Made in China 2025” program, and that the imposition of the Section 301 tariffs of 25% have caused “severe economic harm” to the petitioner or other U.S interests. In support of this last claim, it is helpful to secure letters of support from local politicians and economic development agencies.

LIST 3 PRODUCT EXCLUSION PROCESS APPEARS TO PROVIDE RELIEF FOR TARIFFS PAID FROM SEPTEMBER 21 ONWARD:  List 3 tariffs were initially imposed on September 21, 2018 at the rate of 10%. Then on May 10, 2019, the applicable rate was increased to 25%. The May 21, 2019 announcement seems to indicate that duties may be reclaimed on entries of List 3 items imported any time after September 21, 2018. This is a great development as this is the first written guidance relating to the scope of the List 3 exclusion process.

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.

This information is accurate at the time of distribution and is subject to changes made by the administration. We will provide updates as they occur.

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