01-32231. Determination of Action To Increase Duties on Certain Products of Ukraine Pursuant to Section 301(b): Intellectual Property Laws and Practices of the Government of Ukraine

AGENCY:

Office of the United States Trade Representative.

ACTION:

Notice

SUMMARY:

The United States Trade Representative (Trade Representative) has determined that appropriate action to obtain the elimination of the acts, policies, and practices of the Government of Ukraine that result in the inadequate protection of intellectual property rights includes the imposition of prohibitive duties on the annexed list of Ukrainian products.

EFFECTIVE DATES:

A 100 percent ad valorem rate of duty is effective with respect to the articles of Ukraine described in the Annex to this notice that are entered, or withdrawn from warehouse, for consumption on or after January 23, 2002. In addition, any merchandise subject to this determination that is admitted to U.S. foreign-trade zones on or after January 23, 2002 must be admitted as “privileged foreign status”.

FOR FURTHER INFORMATION CONTACT:

Kira Alvarez, Office of Services, Investment and Intellectual Property, Office of the United States Trade Representative [phone]; David Birdsey, Office of European Affairs, Office of the United States Trade Representative, [phone]; or William Busis, Office of the General Counsel, Office of the United States Trade Representative, [phone]. For questions concerning product classification, please contact the General Classification Branch, Office of Regulations and Rulings, U.S. Customs Service, [phone], and for questions concerning entries, please contact Yvonne Tomenga, Program Officer, Office of Trade Compliance, U.S. Customs Service, [phone].

SUPPLEMENTARY INFORMATION:

In a notice published on April 6, 2001 (66 FR 18,346), the Office of the United States Trade Representative (“USTR”) announced the initiation of an investigation under sections 301 to 309 of the Trade Act of 1974, as amended (the Trade Act), regarding the Government of Ukraine's intellectual property protection laws and practices, including the Government of Ukraine's failure to use existing law enforcement authority to stop the ongoing unauthorized production of optical media products and failure to enact an optical media licensing regime that would preclude the piracy of such products. See 66 FR 18,346 (April 6, 2001). In a notice published on August 10, 2001, USTR announced that the Trade Representative had determined that these acts, policies, and practices of Ukraine with respect to the protection of intellectual property rights are unreasonable and burden or restrict United States commerce and are thus actionable under section 301(b) of the Trade Act. See 66 FR 42,246 (Aug. 10, 2001). The notice also announced that the Trade Representative had determined that appropriate action to obtain the elimination of such acts, policies, and practices included the suspension of duty-free treatment accorded to products of Ukraine under the Generalized System of Preferences.

The August 10, 2001 notice announced that further action might include the imposition of prohibitive duties on products of Ukraine to be drawn from a preliminary product list. USTR invited interested persons to submit written comments and to participate in a public hearing on September 11, 2001. Because the development of the final product list involved complex and complicated issues that required additional time, the Trade Representative determined under section 304(a)(3)(B) of the Trade Act to extend the investigation by 3 months, or until December 12, 2001. The public hearing was postponed and held on September 25, 2001. See 66 FR 48,898 (Sep. 24, 2001).

On December 11, 2001, the Trade Representative determined under section 304(a)(1)(B) of the Trade Act that appropriate action under section 301(b), in addition to the prior suspension of GSP benefits, included the imposition of 100 percent ad valorem duties on Ukrainian products with an annual trade value of approximately $75 million. The level of sanctions is based on the level of the burden or restriction on U.S. commerce resulting from Ukraine's inadequate protection of U.S. intellectual property rights.

The Ukrainian parliament was scheduled to vote on an Optical Disc Licensing (ODL) law on December 20, 2001, and the Government of Ukraine assured in writing that it would make best efforts to ensure passage of the law. In light of these developments, the Trade Representative determined under section 305(a)(2)(A) of the Trade Act that substantial progress was being made and that a delay was necessary or desirable to obtain a satisfactory solution, and postponed implementation of the action until December 20, 2001.

On December 20, 2001, however, the Ukrainian parliament voted down the ODL law. Consequently, on that same day the Trade Representative announced that he was imposing prohibitive duties on Ukrainian products with an annual trade value of approximately $75 million, and announced the final product list on the following day.

Imposition of Prohibitive Duties

The Trade Representative has determined that appropriate action under section 301(b) of the Trade Act is to impose a 100% ad valorem rate of duty on the articles of Ukraine described in the Annex to this notice, effective with respect to goods entered, or withdrawn from warehouse, for consumption on or after January 23, 2002. Accordingly, effective January 23, 2002, the Harmonized Tariff Schedule of the United States (HTS) is hereby modified in accordance with the Annex to this notice. In addition, any merchandise subject to this determination that is admitted to U.S. foreign-trade zones on or after January 23, 2002 must be admitted as “privileged foreign status” as defined in 19 CFR 146.41.

The scope of this action under section 301 is governed by the HTS nomenclature for the preexisting HTS subheadings identified in parentheses for each of the new Chapter 99 subheadings in the Annex to this notice. The verbal product descriptions for the new Chapter 99 subheadings in the Annex are not definitive. Issues regarding the classification of particular products would be decided by the U.S. Customs Service under its usual rules and procedures for product classification.

William L. Busis,

Chairman, Section 301 Committee.

Annex

The Harmonized Tariff Schedule of the United States (HTS) is modified by adding in numerical sequence the following superior text and subheadings to subchapter III of chapter 99 to the HTS. The subheadings and superior text are set forth in columnar format, and material in such columns is inserted in the columns of the HTS designated “Heading/Subheading”, “Article Description”, and “Rates of Duty 1-General”, respectively.

	“Articles the product of Ukraine:
9903.27.01	Distillate and residual fuel oils (including blended fuel oils) and wastes of distillate and residual fuel oils (whether or not blended) (provided for in subheading 2710.19.05, 2710.19.10,2710.99.05 or 2710.99.10)	100%
9903.27.02	Rare gases, other than argon (provided for in subheading 2804.29.00)	100%
9903.27.03	Germanium oxides and zirconium dioxide (provided for in subheading 2825.60.00)	100%
9903.27.04	Carbides of silicon (provided for in subheading 2849.20.10 or 2849.20.20)	100%
9903.27.05	Other mineral or chemical fertilizers, containing nitrates and phosphates (provided for in subheading 3105.51.00)	100%
9903.27.06	Pigments and preparations based on titanium dioxide (provided for in subheading 3206.11.00 or 3206.19.00)	100%
9903.27.07	Other uncoated, unbleached kraft paper and paperboard, in rolls or sheets, weighing 225 g/m2 or more (provided for insubheading 4804.51.00)	100%
9903.27.08	Other footwear with outer soles of rubber, plastics or composition leather and uppers of leather (provided for in subheading 6403.99.60, 6403.99.75 or 6403.99.90)	100%
9903.27.09	Other footwear with outer soles of rubber or plastics and uppers of textile materials, with open toes or open heels, or of the slip-on type (provided for in subheading 6404.19.35)	100%
9903.27.10	Diamonds, unsorted (provided for in subheading 7102.10.00)	100%
9903.27.11	Diamonds, nonindustrial (provided for in subheading 7102.31.00 or 7102.39.00)	100%
9903.27.12	Catalysts in the form of wire cloth or grill, of platinum (provided for in subheading 7115.10.00)	100%
9903.27.13	Unrefined copper; copper anodes for electrolytic refining (provided for in heading 7402.00.00)	100%
9903.27.14	Other unwrought aluminum alloys (provided for in subheading 7601.20.90)	100%
9903.27.15	Other refrigerating or freezing equipment; heat pumps (provided for in subheading 8418.69.00)	100%”