2020-17509. Notice of Product Exclusion Extensions: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation

AGENCY:

Office of the United States Trade Representative.

ACTION:

Notice of product exclusion extensions.

SUMMARY:

Effective September 24, 2018, the U.S. Trade Representative imposed additional duties on goods of China with an annual trade value of approximately $200 billion as part of the action in the Section 301 investigation of China's acts, policies, and practices related to technology transfer, intellectual property, and innovation. The U.S. Trade Representative initiated the exclusion process on June 24, 2019, and has granted 15 sets of exclusions under the $200 billion action. These exclusions will expire on August 7, 2020. On May 6, 2020 and June 3, 2020, the U.S. Trade Representative established a processes for the public to comment on whether to extend particular exclusions granted under the $200 billion action for up to 12 months. This notice announces the U.S. Trade Representative's determination to extend certain exclusions through December 31, 2020.

DATES:

The product exclusion extensions announced in this notice will apply as of August 7, 2020, and extend through December 31, 2020. U.S. Customs and Border Protection will issue instructions on entry guidance and implementation.

FOR FURTHER INFORMATION CONTACT:

For general questions about this notice, contact Associate General Counsel Philip Butler or Assistant General Counsel Benjamin Allen, or Director of Industrial Goods Justin Hoffmann at [phone]. For specific questions on customs classification or implementation of the product exclusions identified in the Annex to this notice, contact [e-mail].

SUPPLEMENTARY INFORMATION:

A. Background

For background on the proceedings in this investigation, please see prior notices including 82 FR 40213 (August 24, 2017), 83 FR 14906 (April 6, 2018), 83 FR 28710 (June 20, 2018), 83 FR 33608 (July 17, 2018), 83 FR 38760 (August 7, 2018), 83 FR 47974 (September 21, 2018), 83 FR 49153 (September 28, 2018), 83 FR 65198 (December 19, 2018), 84 FR 7966 (March 5, 2019), 84 FR 20459 (May 9, 2019), 84 FR 29576 (June 24, 2019), 84 FR 38717 (August 7, 2019), 84 FR 46212 (September 3, 2019), 84 FR 49591 (September 20, 2019), 84 FR 57803 (October 28, 2019), 84 FR 61674 (November 13, 2019), 84 FR 65882 (November 29, 2019), 84 FR 69012 (December 17, 2019), 85 FR 549 (January 6, 2020), 85 FR 6674 (February 5, 2020), 85 FR 9921 (February 20, 2020), 85 FR 15015 (March 16, 2020), 85 FR 17158 (March 26, 2020), 85 FR 23122 (April 24, 2020), 85 FR 27489 (May 8, 2020), 85 FR 32094 (May 28, 2020), 85 FR 38000 (June 24, 2020), and 85 FR 42968 (July15, 2020).

Effective September 24, 2018, the U.S. Trade Representative imposed additional 10 percent ad valorem duties on goods of China classified in 5,757 full and partial subheadings of the Harmonized Tariff Schedule of the United States (HTSUS), with an approximate annual trade value of $200 billion. See 83 FR 47974, as modified by 83 FR 49153. In May 2019, the U.S. Trade Representative increased the additional duty to 25 percent. See 84 FR 20459. On June 24, 2019, the U.S. Trade Representative established a process by which stakeholders could request exclusion of particular products classified within an eight-digit HTSUS subheading covered by the $200 billion action from the additional duties. See 84 FR 29576 (June 24 notice). The U.S. Trade Representative issued a notice setting out the process for the product exclusions and opened a public docket. The exclusions the U.S. Trade Representative granted under the $200 billion action expire on August 7, 2020. See, e.g., 84 FR 38717 (August 7, 2019).

On May 6 and June 3, 2020, the U.S. Trade Representative invited the public to comment on whether to extend by up to 12 months, particular exclusions granted under the $200 billion action. See 85 FR 27011 (May 6, 2020); 85 FR 34279 (June 3, 2020) (the $200 billion extension notices).

Under the $200 billion extension notices, commenters were asked to address:

• Whether the particular product and/or a comparable product is available from sources in the United States and/or in third countries.
• Any changes in the global supply chain since September 2018 with respect to the particular product, or any other relevant industry developments.
• Efforts, if any, importers or U.S. purchasers have undertaken since September 2018 to source the product from the United States or third countries.

In addition, commenters who were importers and/or purchasers of the products covered by an exclusion were asked to provide information regarding:

• Their efforts since September 2018 to source the product from the United States or third countries.
• The value and quantity of the Chinese-origin product covered by the specific exclusion request purchased in 2018 and 2019, and whether these purchases are from a related company.
• Whether Chinese suppliers have lowered their prices for products covered by the exclusion following the imposition of duties.
• The value and quantity of the product covered by the exclusion purchased from domestic and third country sources in 2018 and 2019.
• The commenter's gross revenue for 2018 and 2019.
• Whether the Chinese-origin product of concern is sold as a final product or as an input.
• Whether the imposition of duties on the products covered by the exclusion will result in severe economic harm to the commenter or other U.S. interests.
• Any additional information in support of or in opposition to extending the exclusion.

The May 6, 2020 notice required the submission of comments no later than June 8, 2020. The June 3, 2020 notice required the submission of comments no later than July 7, 2020.

B. Determination To Extend Certain Exclusions

Based on evaluation of the factors set out in the June 24 notice and the $200 billion extension notices, which are summarized above, pursuant to sections 301(b), 301(c), and 307(a) of the Trade Act of 1974, as amended, and in accordance with the advice of the interagency Section 301 Committee, the U.S. Trade Representative has determined to extend certain product exclusions granted under the $200 billion action, as set out in the Annex to this notice.

The $200 billion extension notices provided that the U.S. Trade Representative would consider extensions of up to 12 months. In light of the cumulative effect of current and possible future exclusions or extensions of exclusions on the effectiveness of the action taken in this investigation, the U.S. Trade Representative has determined to extend the exclusions in the Annex to this notice for less than 12 months—through December 31, 2020. To date, the U.S. Trade Representative has granted more than 6,700 exclusion requests, has extended some of these exclusions, and may consider further extensions of exclusions. Furthermore, more than 200 requests are pending on the products covered by the action taken on August 20, 2019. The U.S. Trade Representative will take account of the cumulative effect of exclusions in considering the possible further extension of the exclusions covered by this notice, as well as possible extensions of exclusions of other products covered by the action in this investigation. The U.S. Trade Representative's determination also takes into account advice from advisory committees and any public comments concerning extension of the pertinent exclusion.

In accordance with the June 24 notice, the exclusions are available for any product that meets the description in the Annex, regardless of whether the importer filed an exclusion request. Further, the scope of each exclusion is governed by the scope of the ten-digit HTSUS headings and product descriptions in the Annex to this notice, and not by the product descriptions set out in any particular request for exclusion.

Joseph Barloon,

General Counsel, Office of the United States Trade Representative.