OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
 
 
Notice of Product Exclusions: 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 exclusions.
 
 
SUMMARY: Effective July 6, 2018, the U.S. Trade Representative (Trade Representative) imposed additional duties on goods of China with an annual trade value of approximately $34 billion (the $34 billion action) 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 Trade Representative’s determination included a decision to establish a product exclusion process. The Trade Representative initiated the exclusion process in July 2018, and stakeholders have proceeded to submit requests for the exclusion of specific products. This notice announces the Trade Representative’s determination to grant certain exclusion requests, as specified in the Annex to this notice. The Trade Representative will continue to issue decisions on pending requests on a periodic basis.
 
DATES: The product exclusions announced in this notice will apply as of the July 6, 2018 effective date of the $34 billion action and will extend for one year after the publication of this notice. 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 Assistant General Counsels Arthur Tsao or Megan Grimball, or Director of Industrial Goods Justin Hoffmann at (202) 395-5725. For specific questions on customs classification or implementation of the product exclusions identified in the Annex to this notice, contact traderemedy@cbp.dhs.gov.
 
 
 
 
SUPPLEMENTARY INFORMATION:
 

1. Background

 
For background on the proceedings in this investigation, please see the prior notices issued in the investigation, including 82 FR 40213 (August 23, 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), and 83 FR 40823 (August 16, 2018), 83 FR 47974
 
(September 21, 2018), and 83 FR 65198 (December 19, 2018).
 
Effective July 6, 2018, the Trade Representative imposed additional 25 percent duties on goods of China classified in 818 8-digit subheadings of the Harmonized Tariff Schedule of the United States (HTSUS), with an approximate annual trade value of $34 billion. See 83 FR 28710. The Trade Representative’s determination included a decision to establish a process by which U.S. stakeholders may request exclusion of particular products classified within an 8-digit HTSUS subheading covered by the $34 billion action from the additional duties. The Trade Representative issued a notice setting out the process for the product exclusions, and opening a public docket. See 83 FR 32181 (the July 11 notice).
 
Under the July 11 notice, requests for exclusion had to identify the product subject to the request in terms of the physical characteristics that distinguish the product from other products within the relevant 8-digit subheading covered by the $34 billion action. Requestors also had to provide the 10-digit subheading of the HTSUS most applicable to the particular product requested for exclusion, and could submit information on the ability of U.S. Customs and Border Protection to administer the requested exclusion. Requestors had to provide the quantity and value of the Chinese-origin product that the requestor purchased in the last three years. With regard to the rationale for the requested exclusion, requests had to address the following factors:
 

• Whether the particular product only is available from China and specifically whether the particular product and/or a comparable product is available from sources in the United States and/or third countries.

 

• Whether the imposition of additional duties on the particular product would cause severe economic harm to the requestor or other U.S. interests.

 

• Whether the particular product is strategically important or related to “Made in China 2025” or other Chinese industrial programs.

 
The July 11 notice stated that the Trade Representative would take into account whether an exclusion would undermine the objective of the Section 301 investigation.
 
The July 11 notice required submission of requests for exclusion from the $34 billion action no later than October 9, 2018, and noted that the Trade Representative would periodically announce decisions. The Trade Representative regularly updates the status of each pending request and posts the status at https://ustr.gov/issue- areas/enforcement/section-301-investigations/request-exclusion.
 

1. Determination to Grant Certain Exclusions

 
Based on the evaluation of the factors set out in the July 11 notice, 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 Trade Representative has determined to grant the product exclusions set out in the Annex to this notice. The Trade Representative’s determination also takes into account advice from advisory committees and any public comments on the pertinent exclusion requests.
As set out in the Annex to this notice, the exclusions are established in two different formats: (1) as an exclusion of an existing 10-digit subheading from within an 8- digit subheading covered by the $34 billion action, or (2) as an exclusion reflected in specially prepared product descriptions. In particular, the exclusions take the form of seven 10-digit HTSUS subheadings, and 24 specially prepared product descriptions.
 
In accordance with the July 11 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 10-digit headings and product descriptions in the Annex to this notice, and not by the product descriptions set out in any particular request for exclusion.
 
The exclusions in the Annex cover approximately 1,000 separate exclusion requests: the excluded 10-digit subheadings cover 918 separate requests, and the 24 specially drafted product descriptions cover approximately 66 separate requests.
 
As stated in July 11 Notice, the exclusions will apply as of the July 6, 2018 effective date of the $34 billion action, and extend for one year after the publication of this notice. U.S. Customs and Border Protection will issue instructions on entry guidance and implementation.
 
The Trade Representative will continue to issue determinations on pending requests on a periodic basis.
 
Stephen Vaughn General Counsel
Office of the U.S. Trade Representative.
 
 
 
 
ANNEX
 
 
Effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on July 6, 2018, subchapter III of chapter 99 of the Harmonized Tariff Schedule of the United States (HTSUS) is modified:
 
 

1. by inserting the following new heading 9903.88.05 in numerical sequence, with the material in the new heading inserted in the columns of the HTSUS labeled “Heading/Subheading”, “Article Description”, “Rates of Duty 1-General”, respectively:

 

Heading/ Subheading	Article Description	Rates of Duty
		1		2
		General	Special
“9903.88.05	Articles the product of China, as provided for in U.S. note 20(h) to this subchapter, each covered by an exclusion granted by the U.S. Trade Representative . . . . . . . . . . . . . . . . . . . . .	The duty provided in the applicable subheading”

 
 
 
 

3. by inserting the following new U.S. note 20(h) to subchapter III of chapter 99 in numerical sequence:

 
“(h) The U.S. Trade Representative determined to establish a process by which particular products classified in heading 9903.88.01 and provided for in U.S. notes 20(a) and 20(b) could be excluded from the additional duties imposed by heading 9903.88.01. See 83 Fed. Reg. 28710 (June 20, 2018) and 83 Fed. Reg. 32181 (July 11, 2018). Pursuant to the product exclusion process, the U.S. Trade Representative has determined that the additional duties provided for in heading 9903.88.01 shall not apply to the following particular products, which are provided for in the enumerated statistical reporting numbers:

• 21.0075

 

• 69.0120

 

• 71.8045

 

• 10.5044

 

• 10.5048

 

• 10.5052

 

• 60.1010

 

• Spark-ignition engines for marine propulsion, outboard, each rated at not less than

29.83 kW but not more than 44.74 kW (described in statistical reporting number 8407.21.0080)
 

• Welded hydraulic linear acting (cylinders) engines and motors, each with piston bore of 12.7 mm or more but not over 34.6 mm, with stroke not over 11.43 m, overall length not over 15.24 m and rod diameter not over 1.219 m (described in statistical reporting number 21.0030)

 

• Stretchers of stainless steel, designed to move rollers to adjust tension of paper fabric to be dried, each with a pivoting arm with an actuator, linear rail movement with an actuator, and front and back units with mounting holes for tube roll bearing housings (described in statistical reporting number 90.2000)
• Roller machines with dies for embossing paper, manually powered (described in statistical reporting number 10.9080)

 

• Salad spinners of plastics, with capacity of at least 2.4 liters but not more than 3.8 liters (described in statistical reporting number 19.0000)

 

• Nonelectric water filtration apparatus consisting of three cylinder-shaped filter cartridges, each measuring 6.35 cm by 26.67 cm, having water storage tank and plastic tubing measuring 0.63 cm or more but not over 0.95 cm, presented with installation kit (described in statistical reporting number 21.0000)

 

• Winches, each having a winch frame with a corrosion resistant coating and stainless steel mandrel with nylon bushings, operated manually by a worm gear mechanism (described in statistical reporting number 39.0100)

 

• Elevators, comprising L-shaped steel buckets bolted to a steel chain, with guide rollers and a drive system (described in statistical reporting number 32.0000)

 

• Belt conveyors, each comprising a frame with leveling feet, electric motor and food grade plastic conveyor belt (described in statistical reporting number 33.0000)

 

• Belt conveyors, each comprising a welded frame with leveling feet and casters, electric motor and food grade plastic modular conveyor belt (described in statistical reporting number 33.0000)

 

• Guards of stainless steel, designed to shield operators of papermaking machines from moving or rotating equipment, each with dimensions ranging from 30 cm by 30 cm by 50 cm to 50 cm by 50 cm by 4 m, weighing 30 kg or more but not over 100 kg (described in statistical reporting number 99.1000)

 

• Scrapers (“doctors”) of stainless steel, designed to scrape impurities from the rotating roll surface of the forming and press sections of papermaking machines, each comprising a beam with a blade of non-symmetrical cross section, long aspect ratio, and mounting journals and turning devices on either end, with dimensions ranging from 50 cm by 50 cm by 8 m to 60 cm by 6 m by 11 m, weighing 1 metric ton or more but not over 3 metric tons (described in statistical reporting number 8439.99.1000)

 

• Frameworks of the forming and press section of papermaking machines, of stainless steel or cladded mild steel with stainless or acid proof steel, each with dimensions ranging from 1 m by 1 m by 1 m to 2.3 m by 2.3 m by 12 m, weighing 500 kg or more but not over 40 metric tons (described in statistical reporting number 99.1000)

 

• Guides of stainless steel, designed for locating conveyer belts on papermaking machines, each with a moving arm with an actuator and front and back units with mounting holes for tube roll bearing houses, each with dimensions ranging from 40 cm by 50 cm by 30 cm to 1 m by 1 m by 50 cm, weighing 300 kg or more but not over 500 kg (described in statistical reporting number 99.1000)

 

• Rollers of steel and cast iron (“nip rollers”) with bearing journals on either end, designed for use in paper manufacturing to mechanically compress paper web to remove water or impart desired mechanical properties in paper web, each with a polymer cover, the foregoing with length of 7 m or more but not over 12 m, with diameter of 1 m or more but not over 1.5 m, weighing 15 metric tons or more but not over 30 metric tons (described in statistical reporting number 8439.99.1000)

 

• Open containers (“savealls”) of stainless steel, designed to catch water run off generated in the papermaking process, constructed of large square shaped plates and flat constructions with mounting holes on ends, each with dimensions ranging from 50 cm by 50 cm by 50 cm to 1.5 m by 1 m by 10 m, weighing 50 kg or more but not over 2 metric tons (described in statistical reporting number 99.1000)

 

• Stretchers of stainless steel, designed to move rollers of papermaking machines to adjust tension of fabric, each with a pivoting arm with an actuator, linear rail movement with an actuator and front and back units with mounting holes for tube roll bearing housings (described in statistical reporting number 99.1000)

 

• Suction boxes of stainless steel, which remove water from paper web or papermaking fabrics during papermaking, each with dimensions ranging from 50 cm by 50 cm by 8 m to 1 m by 1 m by 10 m, weighing 1.5 metric tons or more but not over 2 metric tons (described in statistical reporting number 99.1000)

 

• Rollers of stainless steel or cast iron, designed for use in paper manufacturing to support and convey papermaking cloth (i.e. fabric) or the paper web, each weighing 7 metric tons or more but not over 20 metric tons, measuring 7 m or more but not over 12 m in length, with diameter of 40 cm or more but not over 1.5 m, presented with bearing journals on either end and a polymer cover (described in statistical reporting number 99.1000)

 

• Workstands designed to use with miter saws, each with metal tube frame, 4 metal legs and 2 metal extension arms (described in statistical reporting number 8466.92.5010)

 

• Workstands designed for use with miter saws, each with wheels to make workstand mobile and with sides that fold up to extend the work area (described in statistical reporting number 92.5010)

 

• Angle cock handle assemblies, of iron and steel, each measuring 11.43 cm by 59 cm by 5.08 cm and weighing 0.748 kg (described in statistical reporting number 8481.90.9040)

 

• Radiation therapy systems, each encased by steel-based structural shell with gantry cover comprising three pairs of plastics-based panels (described in statistical reporting number 14.0000)

 

• Thermostats designed for air conditioning or heating systems, not designed to connect to the internet, the foregoing designed for wall mounting (described in statistical reporting number 10.0030)

 
 

4. by amending the last sentence of the first paragraph of U.S. note 20(a) to subchapter III to chapter 99 by inserting after the phrase “imposed by heading 9903.88.01” the following phrase:

 
“, except products of China granted an exclusion by the U.S. Trade Representative and provided for in heading 9903.88.05 and U.S. note 20(h) to subchapter III of chapter 99”;
 

5. by amending the first sentence of U.S. note 20(b) to subchapter III to chapter 99 by inserting after the phrase “the following 8-digit subheadings” the following phrase:

 
“, except products of China granted an exclusion by the U.S. Trade Representative and provided for in heading 9903.88.05 and U.S. note 20(h) to subchapter III of chapter 99”; and
 
 
 
 

6. by amending the Article Description of heading 9903.88.01:

 

1. by deleting: “Articles the product of China,” and, “Except as provided in heading 9903.88.05, articles the product of China,”.

A Challenge to Shippers Who Would Never Dream of Controlling the Insurance
 

Shippers who rely on suppliers to furnish cargo insurance or who rely on their carriers to take responsibility for losses may be in for a big surprise. Protecting your investments by insuring your goods provides peace of mind.

Buying CIF: Who’s really responsible if your product is lost or damaged in transit? According to internationally accepted trade terms, referred to as Incoterms, suppliers selling “CIF” (Cost, Insurance, Freight) are responsible for arranging cargo insurance. But just because your supplier has the obligation to arrange insurance under CIF terms, it doesn’t mean that they are ultimately responsible if your product is lost or damaged during transit. The ultimate burden of loss falls upon you, the buyer. This is why many experts recommend importers change their buying terms to EXW, FOB, FCA, CFR or similar terms in order to control the selection, and thereby the quality, of insurance coverage.

How much is that insurance really costing you? Foreign suppliers and their forwarding agents often tack on placement fees to the insurance costs. Those added fees often inflate the cost of insurance well beyond market pricing for the same coverage purchased in the United States. Find out how much you’re really paying and then compare quotes received from BOC International.

Is the coverage your supplier purchased for you adequate? Importers relying on their suppliers to arrange insurance run the risk of having inadequate insurance coverage. Cargo insurance policies can vary widely in levels of coverage, deductibles and special restrictions. Ask your supplier for a complete copy of the insurance policy or for a certificate of insurance detailing all the policy terms and conditions

What’s the financial health of your supplier’s insurance company? Recent financial and catastrophic events have exposed the vulnerability of insurance companies to sudden economic devastation. Importers are encouraged to make certain their suppliers use insurers with a favorable financial rating supplied by a respected financial rating service. A.M. Best, Standard & Poor’s and Moody’s are among some of the world’s most respected. BOC’s insurance company, underwriters at Lloyd’s of London, has an A.M. Best financial rating of A (Excellent).

How will your claim be handled? If insurance is arranged overseas, will you be forced to  deal with an inexperienced, sub-contracted independent adjuster unfamiliar with the assessment of transportation related losses? Ask your supplier for a list of insurance claims adjusters contracted by the insurance company. Adjuster and surveyor networks approved by Lloyd’s of London and AIMA are among the most credible. BOC has a vested interest in your insurance needs and will directly handle cargo claim documentation requirements to ensure prompt processing and timely settlement.

Every Shipper Needs Cargo Insurance

Global trading involves risk; however, broad insurance coverage minimizes your financial risk. Don’t leave your livelihood up to chance! Statistics show that one ship sinks each day and you will experience a General Average loss every eight years. If you are depending on the carrier to cover losses, their responsibility is limited by law as follows:

Ocean Carriers         $500 per shipping unit
A shipping unit may be defined as one ocean container.

Air Carriers                $9.07 per pound

Truckers                     $.50 per pound

The insurance we offer is competitively priced and insures approved merchandise against physical loss or damage from external causes. By purchasing cargo insurance, you can avoid inconvenience and frustration. Contact your BOC Representative at 617-345-0050 for your free quote.

 
 
 
[Billing Code 3290-F9]
OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
 
Notice of Modification of Section 301 Action: 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 modification of action.
________________________________________________________________________
SUMMARY: In accordance with the direction of the President, the U.S. Trade Representative (Trade
Representative) has determined to modify the action being taken in this Section 301 investigation by postponing the date on which the rate of the additional duties will increase to 25 percent for the products of China covered by the September 2018 action in this investigation. As set out in this notice, the rate of additional duty for the products covered by the September 2018 action will increase to 25 percent on March 2, 2019.
 
DATES: On March 2, 2019 at 12:01 am Eastern Standard Time, the rate of additional duty will increase to 25 percent with respect to products covered by the September 2018 action.
 
FOR FURTHER INFORMATION CONTACT: For questions about this notice, contact Assistant General Counsels Arthur Tsao or Megan Grimball, or Director of Industrial Goods Justin Hoffmann at (202) 395–5725. For questions on customs classification or implementation of additional duties on products covered by the September 2018 action, contact traderemedy@cbp.dhs.gov.
 
https://ustr.gov/sites/default/files/enforcement/301Investigations/Notice_of_Modification_of_Section_301_Action.pdf
 
If you have questions or need assistance with this matter, please contact your BOC Representative.
  

  

Deal Reached for Delay in Increase of List Three Section 301 Tariffs
 
 
Although this announcement has not been published in the Federal Register at this point, the White House has announced that there is a 90 day delay from December 1 before the tariffs may increase to 25%.  Thus, there is a reprieve until March 1.  We will watch for the Federal Register formal notice confirming this, and will publish it once we see it. Meanwhile, below is an announcement from Customs attorney Paula Connelly.
Please contact your BOC Representative, if you have any questions.
 
LAW OFFICES OF PAULA M. CONNELLY
100 Trade Center
Suite 660
Woburn, MA 01801
781-897-1771, paula@connellycustomslaw.com
 
President Trump and Chinese President Xi Jinpeng reached a deal at the G20 Summit in Buenos Aires over the weekend which will suspend the proposed increase to 25% for products on “List Three” under the Section 301 investigation.   The tariffs will remain at 10% after January 1 as a result of China’s agreement to start purchasing a “very substantial” amount of agricultural, energy and industrial goods.
 
The U.S. and China will also begin negotiations on “structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture” according to the report.  The parties have agreed to try to complete the transaction within the next 90 days.  If the agreement is not reached within 90 days, the 10% duties will then increase to 25%.
 
Thus, companies faced with a potential increase in the Section 301 duties to 25% now have a 90-day reprieve which began on December 1 and will end on March 1.  Keep in mind the 10% duties remain in place. 
 
In addition, there has been no discussion on removal of the List One and List Two tariffs which remain in place.
 
At this time, there has been no announcement concerning potential exclusion requests for products on List Three.  According to a White House official, they do not believe an exclusion process will be allowed for List Three items while at the 10% rate of duty.
 
Exclusion requests for products on List Two are due by December 18.  Exclusion requests for products on List One are no longer being accepted.
 
If you have questions or need assistance with this matter, please contact our office.