U.S.-Chile Free Trade Agreement Short Supply Petition Filed for Filament Rayon

On March 7, 2023, the Committee for the Implementation of Textile Agreements published in the Federal Register (88 FR 14149) Commercial Availability Request under the United States-Chile Free Trade Agreement. Filament rayon is already exempt from the yarn forward requirement in some U.S. free trade agreements, such as DR-DAFTA, Colombia, Peru, and USMCA.

USTR Announces Next Steps in Statutory Four-Year Review of China 301 Tariffs

The Office of the United States Trade Representative today announced the next steps in the statutory four-year 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 following requests for continuation from representatives of domestic industries

As explained in a formal notice, USTR is seeking public comments, consistent with the statutory directive, to consider the effectiveness of the actions in achieving the objectives of the investigation, other actions that could be taken, and the effects of the actions on the United States economy, including consumers.

USTR is establishing an electronic portal, scheduled to open on November 15, 2022, that will include more detailed questions on these issues, including questions about the impact of the actions on U.S. workers, U.S. small businesses, U.S. manufacturing, critical supply chains, U.S. technological leadership, and possible tariff inversions (i.e., where additional tariffs on goods are lower than additional tariffs on inputs used to produce those goods). To facilitate the public’s preparation of comments, USTR intends to post the questions by November 1, in advance of the docket opening.

In May 2022, USTR commenced the statutory four-year review process by notifying representatives of domestic industries that benefit from the tariff actions of the possible termination of those actions and of the opportunity for the representatives to request continuation. In September 2022, USTR announced that because requests for continuation were received, the tariff actions had not terminated and USTR would conduct a review of the tariff actions.

USTR Issues Notice Regarding Statutory Four-Year Review Of China 301 Tariffs

On May 3, 2022, The Office of the U.S. Trade Representative commenced the statutory process required leading up to the four-year anniversaries of the tariff actions in the Section 301 investigation of China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation.

The first step in the process is to notify representatives of domestic industries that benefit from the tariff actions of the possible termination of those actions and of the opportunity for the representatives to request continuation. If a request for continuation is received, USTR will conduct a review of the tariff actions.

Background: USTR is providing notice to representatives of domestic industries that benefit from the tariff actions through letters to interested parties that previously submitted comments in support of the tariff actions and through the issuance of a Federal Register notice. Requests for continuation must be submitted prior to the four-year anniversary of the action, which is July 6, 2022, for the first action in the investigation. If one or more requests for continuation are submitted, USTR will publish an additional notice after July 6 announcing the continuation of the tariff action and will proceed with a review of the tariffs. The review will include an opportunity for all interested persons to provide comments.

This action relates to List 1 and List 2.

Additional information is available through the Federal Register notice, which can be accessed HERE.

Section 301 actions terminate automatically after four years, unless the USTR receives a request for continuation and conducts a review of the case. In addition, in some cases, the USTR may reinstate a previously terminated Section 301 action.

Here is the relevant regulation--

"19 U.S. Code § 2417 - Modification and termination of actions

"(c)Review of necessity

"(1)If—

"(A)a particular action has been taken under section 2411 of this title during any 4-year period, and

"(B)neither the petitioner nor any representative of the domestic industry which benefits from such action has submitted to the Trade Representative during the last 60 days of such 4-year period a written request for the continuation of such action, such action shall terminate at the close of such 4-year period.

"(2)The Trade Representative shall notify by mail the petitioner and representatives of the domestic industry described in paragraph (1)(B) of any termination of action by reason of paragraph (1) at least 60 days before the date of such termination.

"(3)If a request is submitted to the Trade Representative under paragraph (1)(B) to continue taking a particular action under section 2411 of this title, or if a request is submitted to the Trade Representative under section 2416(c)(2) of this title to reinstate action, the Trade Representative shall conduct a review of—

"(A)the effectiveness in achieving the objectives of section 2411 of this title of—

"(i)such action, and

"(ii)other actions that could be taken (including actions against other products or services), and

"(B)the effects of such actions on the United States economy, including consumers."

U.S.-Chile FTA to Allow Third-Country Filament Rayon in Certain Woven Fabrics

On September 23, 2016, the Committee for the Implementation of Texile Agreements ("CITA") released (Publication Number: 4632 Investigation Number: U.S.-Chile FTA-103-029) Probable Economic Effect of Certain Modifications to the U.S.-Chile FTA Rules of Origin.

U.S. negotiators have reached agreement in principle with representatives of the government of Chile on certain modifications to the ROOs in Chapter 3 and Annex 4.1 of the Agreement.

The current Chile FTA rule allows woven fabrics of artificial filament yarns (including rayon yarns) classified in heading 5408 to receive the preferential duty treatment only (1) if they are made with originating artificial filament yarns (or with originating cotton, wool/fine animal hair, or other manmade filament yarns) and (2) if all other non-originating inputs are classified in other tariff chapters.

The proposed modification would create a separate rule for fabrics classified in subheadings 5408.22–5408.23. The modification would be liberalizing because it would allow covered dyed and yarn-dyed woven fabrics to be eligible for preferential duty treatment under the Chile FTA even if they are made of non-originating rayon filament yarns. However, even for those fabrics classified in subheadings 5408.22–5408.23, the rule would still require non-rayon artificial filament yarns (e.g., cellulose acetate) or any other manmade fiber filament yarns to be originating in order to qualify for the FTA preferences. Moreover, the existing rule’s criteria would remain the same for fabrics classified in HTS subheadings 5408.10–5408.21 and 5408.24–5408.34, even though new individual ROOs would be established for these two groups of HTS provisions.

The proposed modification would likely have a negligible effect on U.S. imports under the Chile FTA and on total U.S. imports. In 2015, 74 percent of U.S. imports from Chile under subheadings 5408.22–5408.23 qualified for the preferential rate of duty under current Chile FTA provisions. The trade-weighted average tariff rate on U.S. imports from Chile was less than 0.5 percent ad valorem for goods covered by the proposed modification. U.S. imports from Chile accounted for less than 0.7 percent of total U.S. imports of these goods in 2015.

The effect of the proposed modification on total U.S. exports would also likely be negligible. The United States did not export the subject fabrics of rayon yarns to Chile in 2015; in 2014, U.S. exports of these goods represented less than 1 percent of total U.S. exports of such goods. Chile imposes a 6 percent ad valorem MFN rate of duty on its imports under subheadings 5408.22 and 5408.23.15

The effect on U.S. production would likely be negligible because the net effect on total U.S. trade in the subject fabrics is expected to be negligible. In addition, U.S. industry sources indicated there is no domestic production of rayon yarns used in the subject fabrics; therefore, there would be no effect on U.S. producers of the subject yarns.

Proposed Chile FTA Exception from Yarn Forward Rule for Certain Filament Rayon

The United States International Trade Commission ("USITC") is seeking input on a new investigation concerning proposed modifications to the United States-Chile Free Trade Agreement ("FTA") rules of origin.

The investigation, Probable Economic Effect of Certain Modifications to the U.S.-Chile FTA Rules of Origin, was requested by the U.S. Trade Representative ("USTR") in a letter received on May 24, 2016. The letter included an attachment detailing the articles affected by the proposed modifications. The request covers woven fabric of artificial filament yarns.

As requested by the USTR, the USITC, an independent, nonpartisan, factfinding federal agency, will provide advice on the probable economic effect of the proposed U.S.-Chile FTA rules of origin modifications on U.S. trade under the Agreement, total U.S. trade, and on domestic producers of the affected articles.

The USITC expects to submit its advice to the USTR by August 24, 2016. A public version of the report, with all confidential business information deleted, will be released as soon as possible thereafter.

The USITC is seeking input for its new investigation from all interested parties and requests that the information focus on the articles for which the USITC is requested to provide information and advice. The USITC will not hold a public hearing in connection with the investigation; however, the USITC welcomes written submissions for the record. Written submissions should be addressed to the Secretary, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436 and should be submitted at the earliest practical date but no later than 5:15 p.m. on July 11, 2016.

The change would allow non-originating rayon yarn (subheadings 5403.10, 5403.31, 5403.32, and 5403.41 Harmonized Tariff Schedule of the United States ("HTSUS") in the production of woven fabric containing 85 percent or more by weight of artificial filament in the case of fabric that is dyed (5408.22 HTSUS) or is of yarns of different colors (5408.23 HTSUS).

Clients of Agathon Associates and subscribers to Agathon Associates' Trade Advisor Service can learn more abut the U.S.-Chile FTA at www.agathonassociates.com/textile-pri/chile/fta.htm. You will need to enter your username and password. If you do not know your username and password email David Trumbull at david@agathonassociates.com.

Chile Asks to Exempt Rayon Filament Yarn from FTA Rules of Origin

On Friday, July 24, 2015, the Committee for the Implementation of Textile Agreements (CITA) published in the Federal Register Request for Public Comment concerning a request for modification of the U.S.-Chile Free Trade Agreement rules of origin for certain woven fabrics of artificial filament yarn.

On June 11, 2015, the Government of the United States received a request from the Government of Chile to modify the U.S.-Chile Free Trade Agreement's (FTA) rules of origin for woven fabrics of artificial filament yarn in subheadings 5408.22-5408.23 of the Harmonized Tariff Schedule of the United States (HTSUS) to allow the use of non-U.S. or Chilean filament yarn of viscose rayon classified in subheadings 5403.10, 5403.31, 5403.32, and 5403.41 of the HTSUS. As provided in Article 3.20.3-3.20.5 of the U.S.-Chile FTA, the Parties shall consult to consider whether the rules of origin applicable to particular textile and apparel goods should be revised to address issues of availability of supply of fibers, yarns or fabrics in the territory of the Parties. The United States-Chile Free Trade Agreement Implementation Act provides the President with the authority to proclaim a modification to the U.S.-Chile FTA rules of origin necessary to implement an agreement with Chile on the modification. CITA hereby solicits public comments on this request, in particular with regard to whether filament yarn of viscose rayon classified in subheadings 5403.10, 5403.31, 5403.32, and 5403.41 can be supplied by the domestic industry in commercial quantities in a timely manner. Comments must be submitted by August 24, 2015.