Background on USTR’s Section 301 Tariff Review: On Tuesday, May 3, USTR announced the initiation of a statutorily-required review of the tariff actions in the Section 301 investigation of China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation. (See Federal Register notice here.)
Under the statute, unless USTR receives a request for continuation and conducts a review of the case, Section 301 actions will automatically terminate after four years. The agency’s review must examine the effectiveness of the actions in achieving the objectives of the program as well as “the effects of such actions on the United States economy, including consumers.” USTR’s announcement serves as notice to domestic industries that benefit from the tariffs of their possible termination, as well as the opportunity to request their continuation.
USTR is considering all four tranches of Section 301 China tariffs at the same time. Section 301 tariffs were imposed on approximately $34 billion worth of Chinese imports on July 7, 2018 (List 1) and on another $16 billion on August 23, 2018 (List 2). Further modifications were made in September 2018 ($200 billion; List 3) and September 2019 ($110 billion; List 4A).
Deadline for Request for Continuation: Requests for continuation of the tariffs must be submitted prior to the four-year anniversary of the action, which is July 6, 2022, for the first action in the investigation and August 22, 2022 for the second action.
If one or more requests for continuation are submitted, which appears to be almost a certainty, USTR will publish a subsequent notice announcing the continuation of the tariff action and will proceed with a review of the tariffs. If USTR does not receive any requests for continuation (an outcome that appears highly unlikely), the tariffs would automatically terminate at the end of the four year period.
Submitting Comments: For the July 2018 trade action, the web portal at https://comments.ustr.gov/s/ 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 2018 trade action, the web portal at https://comments.ustr.gov/s/ will open for requests to continue the action on June 24, 2022, and close at 11:59 pm on August 22, 2022.
Requests 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.”
The USTR notice says that entities who wish for the continuation of tariffs under List 3 or List 4A may submit requests through either portal. We recommend, however, that interested parties that support continuation of Section 301 tariffs on List 3 or List 4A items submit a letter expressing support for continuation of the tariffs to both portals.
Review Timeline: Assuming USTR receives requests for continuation, a formal announcement (i.e., Federal Register Notice) will be published and the tariffs will remain in place while USTR conducts the review. The review will include separate public comment opportunities for interested parties, during which USTR will accept comments on “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.”
There is no timeline for the review and no deadline for USTR to report its results.