Refunds available? USTR Announces Reinstatement of Section 301 Exclusions – International Law


United States: Refunds available? USTR Announces Reinstatement of Section 301 Exclusions

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Since the end of 2020, almost all businesses have been forced to start paying Section 301 fees because most of the available exclusions have expired. This was a blow to companies that relied on the exclusions, as the additional duty was either 25% (List 1, 2 and 3) or 15% (List 4A). In August 2021, the Office of the United States Trade Representative (“USTR”) released a process to reinstate certain exclusions that were previously valid.1 After months of review, on March 28, 2022, the USTR released the list of Section 301 exclusions that would be reinstated.2 If a business can use one or more of the reinstated exclusions, that means they no longer have to pay the additional tariffs for those specific products. With that in mind, here are some of the notable tidbits from the recent FR review:

  • List 1: A total of six complete United States Harmonized Tariff Schedule (“HTS”) headings have been excluded. These fall under Chapters 84, 85 and 90. Eighty-three product-specific exclusions have also been reinstated. Most of these reinstatements also fell under Chapters 84, 85 and 90.

  • List 2: Although no complete HTS positions were excluded, thirty-four specific product exclusions were approved. Most of these product-specific exclusions fall under Chapters 39, 84, 85, 87 and 90.

  • List 3: A total of nineteen complete HTS headings were excluded. Most of them fall under Chapters 03, 56 and 87. One hundred and sixty-eight product-specific exclusions have also been reinstated. These fell under various chapters of the tariff, the majority being in chapters 84, 85 and 94 (furniture).

  • List 4A: A total of eight complete HTS rubrics were excluded. Thirty-four product-specific exclusions have also been reinstated. These fell under various chapters of the tariff, the majority being in chapters 39, 61 and 90.

The newly reinstated exclusions are valid until December 31, 2022. It is likely that an additional reinstatement process will be opened at this time where importers can request that the same exclusions be reinstated for the following calendar year. In addition to exclusions valid through 2022, importers can request refunds dating back to the date the comment period for reinstatements occurred (October 12, 2021). It is important to note that any importer can use the reinstated exclusion and a company does not need to be the original author of the reinstatement comment to request refunds.

If a business identifies goods previously imported between October 12, 2021, and the goods are covered by one of the reinstated Section 301 exclusions, they can work with their broker or attorneys to get the money. This can be done through a protest if the entries have been liquidated, or the most likely scenario, a post-summary correction, if the entries have not been liquidated. In March 28and EN Notice, the USTR has provided new subheading 9903.88.67 which can be used in the future (and to obtain refunds) to show that a product qualifies for one of the Section 301 exclusions restored.

Footnotes

1. There were a total of 549 exclusions eligible for comment. To be eligible, the exclusion had to have been previously extended by the USTR. To see https://ustr.gov/sites/default/files/files/Notices/Section%20301%20China%20Request%20for%20Comments/Index%20of%20549%20Previously%20Extended%20Exclusions.pdf.

2. https://ustr.gov/sites/default/files/notices/87%20FR%2017380.pdf

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