Tuesday, August 13, 2019

August 13, 2019, Update on China 301 Tariff Exclusion Requests

Frequently Asked Questions about the Exclusion Process from Section 301 Tariffs on China.

Q. How do I file for an exclusion?

A. First we need to know which of the three lists of China 301 tariffs your product is on.

Q. How can I find out which list I am on?

A. List 1 went into effect July 9, 2018, with a 301 tariff (in addition to regular tariffs) of 25%. If your imported article is on List 1, your import documentation will show the classification 9903.88.01, in addition to the regular classification number.

List 2 went into effect August 23, 2018, with a 301 tariff (in addition to regular tariffs) of 25%. If your imported article is on List 2, your import documentation will show the classification 9903.88.02, in addition to the regular classification number.

List 3 went into effect September 24, 2018, with a 301 tariff (in addition to regular tariffs) of 10%, which increased to 25% on June 15, 2019. If your imported article is on List 2, your import documentation will show the classification 9903.88.03, in addition to the regular classification number.

No exclusion request are being accepted for List 1 or List 2. The deadline for List 1 was last October, the deadline for List 2 was last December.

Note that if you missed the deadline to file for an exclusion from List 1 or 2, but someone else filed, and was granted, an exclusion for the same product, you can take advantage of that exclusion. Exclusions are specific to the article, not the importer.

If you are on List 3, the window for applying for exclusions opened on June 30, 2019, and will close September 30, 2019.

Q. What is the status of requests that have been filed?

A. Requests are processed through stages:

Stage 1 – Public Comment Period.

Stage 2 – Initial Substantive Review. Initial Substantive Review of whether the exclusion request should be granted. Requests that pass the Substantive Review will proceed to Stage 3.

Stage 3 – Administrability Review. Based on consultations with U.S. Customs and Border Protection (CBP), the request is further reviewed to determine whether an exclusion would be administrable. Requests that pass the administrability review may be granted.

Late in each week, USTR updates spreadsheets that track the status of the requests, the most recent update was August 8, 2019.

List 1. Total filed = 10,822. Granted = 2,813. Denied = 6,762. There are 1,247 pending, all in Stage 3.

List 2. Total filed = 2,920. Granted = 292. Denied = 1,484. Stage 3 = 1,143. Stage 2 = 1.

List 3. Total filed = 6,550. Granted = 15. Denied = 94. The rest are in Stage 1 or Stage 2. The deadline for filing is September 30, 2019.

Q. What is the timing of exclusions?

If the government determines to grant you an exclusion, it will be published in Federal Register. Those lists of exclusions granted have been coming out about once a month, but that frequency could change. An exclusion will be RETROACTIVE to the date the tariff went into effect and will stay in effect for ONE YEAR from the date of the Federal Register publication of the exclusion.

Q. Is it important to get my List 3 request filed soon?

No. Drafting an effective exclusion request can be time consuming. You must understand that government proposed this article for the China tariff, accepted public comment, held public hearings, and studied the comments and hearing transcripts and determined to put an article on the list. In an exclusion request you are asking the government to consider excluding some very specific subset of the articles in that tariff classification.

Also, the exclusion request form for List 3 is more detailed and requests more information than did the forms for Lists 1 and 2. Here at Agathon Associates we are studying the new exclusion request form as well as studying the results of requests filed relating to Lists 1 and 2 in order to better understand how the government is treating request and what arguments have been the most successful. Our advice at this time to clients is to wait, assemble your arguments, and file a strong petition later, rather than an imperfect one now. There is no benefit to filing early.

Q. What if I was denied an exclusion or my product is not a good candidate for an exclusion?

A. We may still be able to help you. If you subsequently re-export (whether in the same condition or advanced in condition) articles on which you paid 301 tariffs you may be able to avoid those tariffs using Foreign-Trade Zone procedures, or recover the money with duty drawback. FTZ procedures may also partially mitigate 301 tariffs on products that ultimately enter U.S. commerce.

One of the services of Agathon Associates is assistance in determining the tariff classification of goods. In some cases incorrect tariff classification may have resulted in you paying 301 tariffs on goods not actually covered by the action. Agathon Associates principal David Trumbull is licensed by the U.S. Department of Homeland Security as a Customs Broker and can assist in determine correct tariff classification. If the conclusion is that you product is subject to List 3 tariffs, we can also assist in drafting and filing an exclusion request. Of, if that is not an option, we can evaluate whether you are a candidate for duty drawback and Foreign-Trade Zone procedures. For more information email David Trumbull at david@agathonassociates.com.

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