Notice of Product Exclusions: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 35975-35981 [2020-12672]

Agencies

• Office of the United States Trade Representative

[Federal Register Volume 85, Number 114 (Friday, June 12, 2020)]
[Notices]
[Pages 35975-35981]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-12672]


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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.

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SUMMARY: On August 20, 2019, at the direction of the President, the 
U.S. Trade Representative determined to modify the action being taken 
in the Section 301 investigation of China's acts, policies, and 
practices related to technology transfer, intellectual property, and 
innovation by imposing additional duties of 10 percent ad valorem on 
goods of China with an annual trade value of approximately $300 
billion. The additional duties on products in List 1, which is set out 
in Annex A of that action, became effective on September 1, 2019. On 
August 30, 2019, at the direction of the President, the U.S. Trade 
Representative determined to increase the rate of the additional duty 
applicable to the products covered by the action announced in the 
August 20 notice from 10 percent to 15 percent. On January 22, 2020, 
the U.S. Trade Representative determined to reduce the rate from 15 
percent to 7.5 percent. The U.S. Trade Representative initiated a 
product exclusion process in October 2019, and interested persons have 
submitted requests for the exclusion of specific products. This notice 
announces the U.S. Trade Representative's determination to grant 
certain exclusion requests, as specified in the Annex to this notice. 
The U.S. Trade Representative will continue to issue decisions on 
pending requests on a periodic basis.

DATES: The product exclusions announced in this notice apply as of 
September 1, 2019, the effective date of List 1 of the $300 billion 
action, and extend to September 1, 2020.

FOR FURTHER INFORMATION CONTACT: For general questions about this 
notice, contact Associate General Counsel Philip Butler, Assistant 
General Counsel 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 [email protected].

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 40823 (August 16, 2018), 83 
FR 47974 (September 21, 2018), 83 FR 49153 (September 28, 2018), 84 FR 
20459 (May 9, 2019), 84 FR 43304 (August 20, 2019), 84 FR 45821 (August 
30, 2019), 84 FR 57144 (October 24, 2019), 84 FR 69447 (December 18, 
2019), 85 FR 3741 (January 22, 2020), 85 FR 13970 (March 10, 2020), 85 
FR 15244 (March 17, 2020), 85 FR 17936 (March 31, 2020), 85 FR 28693 
(May 13, 2020), and 85 FR 32098 (May 28, 2020).
    In a notice published on August 20, 2019, the U.S. Trade 
Representative, at the direction of the President, announced a 
determination to modify the action being taken in the Section 301 
investigation by imposing an additional 10 percent ad valorem duty on 
products of China with an annual aggregate trade value of approximately 
$300 billion. 84 FR 43304 (August 20, 2019) (the August 20 notice). The 
August 20 notice contains two separate lists of tariff subheadings, 
with two different effective dates. List 1, which is set out in Annex A 
of the August 20 notice, was effective September 1, 2019. List 2, which 
is set out in Annex C of the August 20 notice, was scheduled to take 
effect on December 15, 2019.
    On August 30, 2019, the U.S. Trade Representative, at the direction 
of the President, determined to modify the action being taken in the 
investigation by increasing the rate of additional duty from 10 to 15 
percent ad valorem on the goods of China specified in Annex A (List 1) 
and Annex C (List 2) of the August 20 notice. See 84 FR 45821. On 
October 24, 2019, the U.S. Trade Representative established a process 
by which U.S. stakeholders could request exclusion of particular 
products classified within an eight-digit Harmonized Tariff Schedule of 
the United States (HTSUS) subheading covered by List 1 of the $300 
billion action from the additional duties. See 84 FR 57144 (the October 
24 notice). Subsequently, the U.S. Trade Representative announced a 
determination to suspend until further notice the additional duties on 
products set out in Annex C (List 2) of the August 20 notice. See 84 FR 
69447 (December 18, 2019). The U.S. Trade Representative later 
determined to further modify the action being taken by reducing the 
additional duties for the products covered in Annex A of the August 20 
notice (List 1) from 15 percent to 7.5 percent. See 85 FR 3741 (January 
22, 2020).
    Under the October 24 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 eight-digit subheading covered by the $300 billion action. 
Requestors also had to provide the ten-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 were asked 
to provide the quantity and value of the Chinese-origin product that 
the requestor purchased in the last three years, among other 
information. With regard to the rationale for the requested exclusion, 
requests had to address the following factors:
     Whether the particular product is available only 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 October 24 notice stated that the U.S. Trade Representative would 
take into account whether an exclusion would undermine the objectives 
of the Section 301 investigation.

    The October 24 notice required submission of requests for exclusion 
from List 1 of the $300 billion action no later than January 31, 2020, 
and noted that the U.S. Trade Representative periodically would 
announce decisions. In March 2020, the U.S. Trade Representative 
granted an initial set of exclusion requests. See 85 FR 13970. The U.S. 
Trade Representative granted additional exclusions in March and May 
2020. See 85 FR 15244, 85 FR 17936, 85 FR 28693, as modified by 85 FR 
32098. The Office of the United States Trade Representative regularly 
updates the status of each pending request on the Exclusions Portal at 
https://exclusions.ustr.gov/s/docket?docketNumber=USTR-2019-0017.

B. Determination To Grant Certain Exclusions

    Based on evaluation of the factors set out in the October 24 
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 U.S. Trade Representative has determined to grant the product 
exclusions set out in the Annex to this notice. The determination also 
takes into account advice from advisory committees and any public 
comments on the pertinent exclusion requests.

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    As set out in the Annex, the exclusions are reflected in two ten-
digit HTSUS subheadings and 32 specially prepared product descriptions, 
which together respond to 55 separate exclusion requests.
    In accordance with the October 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 subheading as described in the Annex, and not by the product 
descriptions set out in any particular request for exclusion.
    Paragraph A, subparagraphs (3)-(4) of the Annex contain conforming 
amendments to the HTSUS reflecting the modifications made by the Annex.
    The U.S. Trade Representative will continue to issue determinations 
on pending requests on a periodic basis.

Joseph Barloon,
General Counsel, Office of the United States Trade Representative.
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[FR Doc. 2020-12672 Filed 6-11-20; 8:45 am]
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