China Section 301 Investigation and Actions to Address Intellectual Property Violations

MEMA Staff Contacts:  Bill Frymoyer and Leigh Merino

Background:

In 2018, the Office of the U.S. Trade Representative (USTR) took actions to impose tariffs on billions of dollars’ worth of imports from China. These tariffs are based on findings of IP theft and technology transfer in the USTR’s Section 301 investigation report.

Beginning in July 2018 and throughout 2019, the USTR rolled out tariff actions in four tranches (a.k.a. Lists 1, 2, 3 and 4A/4B). The progressive nature of the actions was aimed at keeping China at the negotiating table to work out a trade deal with the United States.

On October 11, 2019, President Trump announced a preliminary “Phase 1” agreement was reached and then on December 13, 2019, the two nations officially announced the details of the “Phase 1” agreement. Although the U.S. did decrease tariffs for List 4A and suspended taking any action on List 4B, the 25% tariffs on Lists 1, 2 and 3 remain.

What You Need to Know – Section 301 China Tariff Essentials:

To date, there are 4 tranches of tariffs on Chinese imports. On December 13, 2019, U.S. and China signed a “Phase 1” Agreement. At last update, the 25% tariffs on goods from Lists 1, 2 and 3 are still active except for a limited number of products that were granted a 12-month exclusion by the USTR. USTR approves product exclusions on a rolling basis, notifications for which are officially published in the Federal Register and posted on the USTR website.

Key Actions on Lists 1 – 4

• LIST 1 – 25% tariffs went into effect on $34 billion worth of imports on July 6, 2018

• List 1 product exclusion submissions process closed on October 9, 2018

• For more details, including product exclusion notices, visit the USTR enforcement webpage for List 1

• LIST 2 – 25% tariffs went into effect on $16 billion worth of imports on August 23, 2018

• List 2 product exclusion submissions process closed on December 18, 2018

• For more details, including product exclusion notices, visit the USTR enforcement webpage for List 2

• LIST 3 – 10% tariffs went into effect on $200 billion worth of imports on September 24, 2018. Tariffs increased to 25% and went into effect on May 10, 2019

• List 3 product exclusion submissions process closed on September 30, 2019

• For more details, including product exclusion notices, visit the USTR enforcement webpage for List 3

• Also visit the USTR Section 301 Portal to see the details of the List 3 exclusion submissions

• LIST 4 – 15% tariffs went into effect on $250 billion worth of imports on September 1, 2019

Note:The USTR split the action on List 4 into two groups – “4A” and “4B” – after which President Trump and the USTR took the following actions:

• Officials from the United States and China announced a “Phase 1” Agreement on December 13, 2019. As a result:

• List 4B tariff implementation was suspended effective December 18, 2019

• List 4A tariffs were reduced from 15% to 7.5% effective February 14, 2020

• The complete text of the Agreement was published January 15, 2020; the title is: “Economic and Trade Agreement Between the Government of the United States of America and the Government of the People’s Republic of China”

• List 4A product exclusion submissions process closed on January 31, 2020

• Visit USTR Section 301 Portal for details of the exclusion submissions.

• For more details, including product exclusion notices, visit the USTR enforcement webpage for List 4

For more general details and information about Section 301 China actions, please visit the USTR Section 301 Investigations website. From the main landing page, you can visit each of the Lists 1-4 to access all of the related notices and documentation.
https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions

NOTE:  For expiring exclusions, the USTR has published several Federal Register notices generally titled “Request for Comments Concerning the Extension of Particular Exclusions” differentiated by the expiration date. USTR has specific comment submission instructions associated with this action that submitters must heed, including the use of Form A (preferred) or Form B (business confidential information). Links to these notices, forms and related documents are all posted on the USTR website under the various Lists.

For “Section 301 Trade Remedies to be Assessed on Certain Products from China,” please visit the U.S. Customs and Border Protection website for details and links to CBP guidance documents.
https://www.cbp.gov/trade/programs-administration/trade-remedies/section-301b-trade-remedies-be-assessed-certain-products-china

NOTE: Importers should be aware that additional tariffs imposed under Section 232 and 301 are included in the calculation for continuous bond sufficiency limits. As a result, companies paying Section 232 and 301 tariffs may be getting notices from U.S. CBP requiring importers to raise the amount/coverage on their customs bond.

Additional Resources:

• Office of the United States Trade Representative Resource Page:
  “How to Navigate the Section 301 Process”

• U.S. Customs and Border Protection (CBP) Resource Page: 
  “Section 301 Trade Remedies to be Assessed on Certain Products from China”

• U.S. CBP Cargo Systems Messaging Service website for information related to Sec. 301 duties
  https://www.cbp.gov/trade/automated/cargo-systems-messaging-service

This page is not intended to be all inclusive, although MEMA makes every effort to update this page when new information and/or resources are made available. If you have questions or need other information, please contact the MEMA staffers listed at the top of the page.