Companies importing products from China that are classified under the Harmonized Tariff Schedule of the United States (HTS) subheadings included on Tranche/List 3, which are currently subject to a Section 301 25% tariff, have until September 30, 2019 to submit exclusion requests to the Office of the U.S. Trade Representative (USTR). In June, the USTR announced the opening of an electronic portal for importers to submit exclusion requests for products included on Tranche/List 3, which have an annual trade value of approximately $200 billion. Once a product exclusion request is posted to the portal, companies supporting or objecting to the request have 14 days to file responses. Replies to these responses will be due the later of seven days after the close of the 14-day response period, or seven days after a response is posted on the portal. While both the process and the exclusion request form for submission to the USTR are like those implemented for USTR’s Tranches/Lists 1 and 2 of HTS subheadings, this exclusion request process requires additional information. In addition to providing the applicable 10-digit HTS subheading, product name, and specific description and function, along with supporting data and the rationale for the requested exclusion, the requesting party must submit:
- Specific data on the annual quantity and value of the Chinese-origin product, domestic product and third-country product purchased in 2017, 2018 and the first quarter of 2019. The requirement to identify and report domestic and third-country product data is new.
- Gross revenues for 2018, the first quarter of 2018 and the first quarter of 2019.
- For imports sold as final products, the Chinese-origin product’s percentage of 2018 total gross sales.
- For imports used in the production of final products, the percentage of the total cost of producing the final product the Chinese-origin input accounts for and the final product’s percentage of 2018 total gross sales.
As with previous exclusion requests, the USTR requires that all requests clearly address whether the particular product is available only from China or can be sourced from the United States or third countries; whether the requesting party has sought to source the product from the United States; whether the additional duties have caused or will cause severe economic harm to the requesting party or U.S. interests; and whether the product is strategically important or related to the “Made in China 2025” initiative or other Chinese industrial programs.
Granted exclusions will be retroactive to September 24, 2018, when 10% tariffs were implemented on this tranche of HTS subheadings (which have since been raised to 25%), and will be valid for one year from the date the exclusion determination is published in the Federal Register.