On May 3, 2022, the Office of the United States Trade Representative (USTR) announced a process for considering the extension of Section 301 tariffs against Chinese goods, pursuant to a provision of Section 301 of the Commerce Act of 1974 that requires such tariffs to expire on the fourth anniversary of their imposition (July 6, 2022 and August 23, 2022) unless the national beneficiaries of the tariffs request their extension.
The USTR has also published a draft Federal Register notice outlining the process for filing a rate extension request. The two documents state that, to the extent the USTR receives tariff extension requests, it will conduct a review of the necessity and effectiveness of Section 301 tariffs on Chinese goods – and open a separate comment process for interested parties to submit information on these issues.
- Since July 6, 2018, the U.S. government has imposed additional tariffs on four separate lists of goods of Chinese origin, identified by their classification in the U.S. Tariff Schedule, pursuant to Section 301 of the China Commerce Act. 1974. The law provides that the tariffs must end at the end of four years unless a national beneficiary of the tariffs requests their extension within 60 days of the fourth anniversary of the tariffs. The law also requires the USTR to notify domestic recipients of the next application deadline. When an extension is requested, the USTR maintains the tariffs while it conducts a “necessity review” in which it examines the effectiveness of the tariffs.
- Prior to the four rounds of Section 301 tariffs imposed on China, Section 301 was rarely used. There was therefore very little clarity on how the Biden administration intended to administer and implement the statutory “necessity test” with respect to the Section 301 action against China. For example, it was unclear whether the Biden administration would view the four successive rounds of tariffs as requiring individual reviews of necessity (that is to say, four in total). Further, it was unclear whether the Administration would allow domestic recipients to request an extension of tariffs in general, or whether it would allow the expiration of duties on specific items – as identified by their tariff classification – at unless a company applying for an extension can show that it has benefited from the maintenance of duties on those specific goods.
- The announcement and the draft of May 3 Federal Register the notice confirms that the USTR intends to conduct two necessity reviews. The USTR explains that it views its imposition of tariffs on July 6, 2018 and August 23, 2018 as the “original” Section 301 actions against China and that those actions were simply modified or amended by the subsequent imposition of the third and fourth series of tariffs. September 24, 2018 and September 1, 2019. The USTR announcements also require domestic recipients to identify the industry they belong to and explain why continuing the tariffs would benefit them, but do not appear to require the company /industry files a tariff extension application advocate for the benefit of tariff extension on individual and specific tariff classifications.
- USTR press release and project Federal Register the notice also states that, to the extent the USTR receives requests for tariff extensions, it will conduct a review of the necessity and effectiveness of Section 301 tariffs on Chinese goods – and open a separate comment process for interested parties to submit information on these issues.