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COVID-19 Tariff Relief

March 25, 2020, Covington Alert

USTR may exclude tariffs on Chinese imports related to COVID-19 response

In response to COVID-19, the Office of the U.S. Trade Representative ("USTR") announced on March 20, 2020, that it is inviting comments on possible modifications to the list of goods from China subjected to additional tariffs under Section 301 of the Trade Act of 1974 (“Section 301 Tariffs”).

The Section 301 Tariffs are based on the U.S. Administration’s determination in March 2018 that China’s technology transfer and intellectual property (“IP”) policies are harming U.S. companies. The United States has imposed several rounds of escalating tariffs on imports from China starting in mid-2018, which were followed by retaliatory Chinese tariffs. U.S. tariffs on some $360 billion Chinese imports remain in place despite the “Phase One” agreement that the parties reached earlier this year.

The Administration has had an exclusion process in place since it began imposing tariffs on China in 2018, and has already excluded from Section 301 Tariffs certain Chinese-origin personal protective equipment products and other healthcare-related items (e.g. medical gloves, soaps, bedsheets, and sanitary paper products), in response to the COVID-19 outbreak. The specific exclusions can be found in the following Federal Register notices:85 Fed. Reg. 13,970 (Mar. 10, 2020); 85 Fed. Reg. 15,015 (Mar. 16, 2020); and 85 Fed. Reg. 15,24 4(Mar. 17, 2020).

USTR has now established a new channel for comments regarding exclusions for “additional medical-care products” needed to combat the rapid spread of the virus.

Overview of USTR’s Notice

The March 20, 2020 notice invites “members of the public, businesses, and government agencies” to submit comments on whether a particular medical-care product covered by Section 301 Tariffs is needed to respond to the COVID-19 outbreak.

Each comment “specifically must identify the particular product of concern.” To the extent available, each comment must include the ten-digit HTSUS applicable to the product and the identity of the particular product in terms of its functionality and physical characteristics (e.g., dimensions, material composition, or other characteristics). While comments “may provide information concerning the producer, importer, ultimate consumer, or trademarks or tradenames,” USTR explains that such information “is less helpful.”

Each comment must further explain “precisely how the product relates to the response to the COVID-19 outbreak.” In particular, the comment can “address whether a product is directly used to treat COVID-19 or to limit the outbreak, and/or whether the product is used in the production of needed medical-care products.”

Comments will be accepted even on products “subject to pending or denied exclusion requests.” The process is designed to supplement, not replace, existing exclusion procedures for Section 301 Tariffs.

USTR strongly encourages comments to be submitted “as promptly as possible,” to enable timely responses to requested modifications.

The window for comments will remain open until at least June 25, 2020, although USTR strongly encourages comments to be submitted “as promptly as possible.” USTR intends to collect these comments and issue exclusions on a “rolling basis.” Any responses to posted comments should be submitted within three business days.

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Covington’s diverse trade policy teams in Washington and Beijing, which include former senior government officials, are uniquely positioned to provide thoughtful strategic advice to clients seeking to monitor, prepare for, and react to the evolving Section 301 developments. We count among our ranks:

  • Chris Adams, former Senior Coordinator for China Affairs at the U.S. Department of Treasury and Minister Counselor for Trade Affairs at the U.S. Embassy, Beijing;
  • Marney Cheek, former Associate General Counsel in the Office of the USTR;
  • Alan Larson, former Under Secretary of State for Economic, Business and Agricultural Affairs;
  • Timothy Stratford, former Assistant USTR for China Affairs; and
  • John Veroneau, former Deputy USTR and former USTR General Counsel.

If you have any questions concerning the material discussed in this client alert, please contact the following members of our International Trade practice.

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