Section 301 Exclusion Request Process Information

The U.S. Trade Representative’s Office (USTR) has announced that importers or other interested parties may file requests for exclusions from the Sec. 301 additional duties on products of Chinese origin that are listed on Sec. 301 List 3. Products on this List are currently subject to an additional 25% duty if they are made in China in addition to the regular duty rate that applies to the product’s HTS classification. This e-mail is meant to provide you with some facts regarding Sec. 301 and the exclusion request process so that you can determine whether or not your company wishes to pursue an exclusion.

What is Section 301?

Section 301 of the Trade Act of 1974 provides the United States with the authority to enforce trade agreements, resolve trade disputes, and open foreign markets to U.S. goods and services. It is the principal statutory authority under which the United States may impose trade sanctions on foreign countries that either violate trade agreements or engage in other unfair trade practices. When negotiations to remove the offending trade practice fail, the United States may take action to raise import duties on the foreign country’s products as a means to rebalance lost concessions.

When did the additional duties under Section 301 take effect for items on List 3?

Products on Section 301 List 3 were originally assessed an additional duty of 10% effective Sept. 24, 2018. On May 10, 2019 this additional duty amount increased from 10% to 25% and remains at 25% at this time.

Can we expect these additional duties to go away any time soon?

The U.S. and Chinese Governments continue to negotiate in hopes of settling their “trade war” however no one knows if or when the “war” will be settled and if or when the additional duties will end. Many believe that these additional duties may remain in effect for many months and even into 2020 or beyond.

What is the Section 301 exclusion request process?

Importers or other interested parties may file a request with the USTR asking for the exclusion of their product or products from the additional duties. The process is quite complex (see the information found at https://exclusions.ustr.gov/s/) and while importers can file their own exclusion requests it may be wise to use a party experienced in this process to assist you.

What are my options in this process?

1. Do it yourself. While the exclusion can be filed through the online portal found at exclusions.ustr.gov it is a complex process. If your request is denied it may not be possible to have that decision overturned later.
2. Use an experienced trade consultant to file your exclusion request. We have partnered with a consultant with experience in the process and can offer you a referral if needed. Please note, the “average” cost for an exclusion request is a minimum of $2,500 – $3,000 or more per product and you must file an individual exclusion request for each type of product you would like considered for an exclusion.
3. Hire an attorney to assist you in the exclusion request filing process. You may have an attorney you use or we can offer a referral for you. Please note that using an attorney will likely cost $8,000 – $10,000 or more per item.

If I file an exclusion request what are the odds my request will be approved?

No one can answer that question for certain. In previous rounds of exclusion requests for items on List 1 and List 2 the approval rate has varied. The key is to write a request that gives clear facts for USTR to consider and hopefully to allow your exclusion. Using a reliable and experienced partner to file the exclusion request for your company could make all the difference.

Does it make sense to try to get an exclusion from these high duties?

This would be a business decision based on many factors including the potential long-terms costs of paying the additional duties versus the cost of filing for an exclusion request. Do you plan to continue to source products from China, if so filing a request may be a wise choice for your company.

We’re here to help and to answer any questions you may have. Please email me with your questions and I’ll usually be able to respond in 48-72 hours. Please note that due to the large volume of exclusion requests expected to be filed and the workload of the experienced companies who can file these requests it is better to act quickly. Requests must be filed by no later than Sept. 30^th to be considered and it can take 30 days or more to research and prepare an exclusion request.

Please contact me if you have questions or need assistance. Email me info@tradelogicintl.com.