USTR Requests Comments on Reinstating Sec. 301 Exclusions

Trade Update • OCTOBER 7, 2021

As part of the Biden administration’s newly announced trade approach to China, the Office of the U.S. Trade Representative on Tuesday took the first step toward restarting an exclusion process for Section 301 tariffs on Chinese goods, seeking comments from stakeholders on whether to reinstate previously extended exclusions.

“The exclusions process is a key part of the Biden-Harris Administration’s deliberative, long-term vision for realigning the U.S.-China trade relationship around our priorities and making trade work for American workers and businesses,” USTR Katherine Tai said in a statement.

Scope of Coverage

According to the draft notice, more than 2,200 exclusions were granted under the Trump administration-initiated process, with only 549 ultimately being extended beyond their initial expiration date (a list is available here). Excepting certain exclusions related to the COVID-19 pandemic, all of these product exclusions have now expired.

“As these exclusions were previously found to warrant additional time, USTR will evaluate, on a case-by-case basis, the possible reinstatement of each exclusion,” the notice states.

Considerations for Reinstatement

USTR says it will consider tariff exclusions based on:

• Whether products are available in the U.S. or third countries;
• Changes in the global supply chain since September 2018, the last time new tariffs were imposed on China;
• Efforts by importers since September 2018 to source products from the U.S. or third countries; and
• The domestic capacity for producing products.

“In addition, USTR will consider whether or not reinstating the exclusion will impact or result in severe economic harm to the commenter or other U.S. interests, including the impact on small businesses, employment, manufacturing output, and critical supply chains in the United States, as well as the overall impact of the exclusions on the goal of obtaining the elimination of China’s acts, policies, and practices covered in the Section 301 investigation,” the notice states.

Submission Instructions

USTR is accepting public comments from October 12 through December 1, 2021. All comments must be submitted via USTR’s online portal.

Additionally, USTR has provided a sample copy of the “Exclusion Reinstatement Comment Form” as a guide for commenters.

Submitted comments will be reviewed by USTR, which will also consult with other agencies as necessary. Any reinstated product exclusions will be retroactive to October 12, 2021, and apply only to entries that are not liquidated at that time.