Notice of Revision of Section 301 Action: Enforcement of U.S. WTO Rights in Large Civil Aircraft Dispute, 674-691 [2020-29225]

Agencies

• Office of the United States Trade Representative

[Federal Register Volume 86, Number 3 (Wednesday, January 6, 2021)]
[Notices]
[Pages 674-691]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-29225]


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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

[Docket Number USTR-2020-0042]


Notice of Revision of Section 301 Action: Enforcement of U.S. WTO 
Rights in Large Civil Aircraft Dispute

AGENCY: Office of the United States Trade Representative (USTR).

ACTION: Notice.

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SUMMARY: The U.S. Trade Representative has determined to revise the 
action being taken in this Section 301 investigation to mirror the 
approach taken by the European Union (EU) in exercising its World Trade 
Organization (WTO) authorization in the Boeing dispute. In implementing 
this approach, the U.S. Trade Representative has determined to revise 
the action by adding certain products of certain EU member States to 
the list of products subject to additional duties.

DATES: The revisions in Annex I are applicable with respect to products 
that are entered for consumption, or withdrawn from warehouse for 
consumption, on or after 12:01 a.m. eastern standard time on January 
12, 2021.

FOR FURTHER INFORMATION CONTACT: For questions about the investigation 
and revisions announced in this notice, contact Associate General 
Counsel Megan Grimball, at (202) 395-5725, or Director for Europe 
Michael Rogers, at (202) 395-3320. For questions on customs procedures 
or the classification of products identified in the annexes, contact 
[email protected].

SUPPLEMENTARY INFORMATION

A. Proceedings in the Investigation

    On April 12, 2019, the U.S. Trade Representative announced the 
initiation of an investigation to enforce U.S. rights in the WTO 
dispute against the EU and certain EU member States addressed to 
subsidies on large civil aircraft. See 84 FR 15028 (April 12 notice). 
The April 12 notice contains background information on the 
investigation and the dispute settlement proceedings.
    The April 12 notice solicited comments on a proposed determination 
that, inter alia, the EU and certain member States have denied U.S. 
rights under the WTO Agreement, and in particular, under Articles 5 and 
6.3 of the Agreement on Subsidies and Countervailing Measures and the 
General Agreement on Tariffs and Trade 1994, and have failed to comply 
with the WTO Dispute Settlement Body (DSB) recommendations to bring the 
WTO-inconsistent subsidies into compliance with WTO obligations. The 
April 12 notice invited public comments on a proposed action in the 
form of an additional ad valorem duty of up to 100 percent on products 
of EU member States to be drawn from a list of 317 tariff subheadings 
and 9 statistical reporting numbers of the Harmonized Tariff Schedule 
of the United States (HTSUS) included in the annex to that notice.
    On July 5, 2019, USTR published a notice inviting public comments 
on a second list of products also being considered for an additional ad 
valorem duty of up to 100 percent. See 84 FR 32248.
    On October 2, 2019, the WTO Arbitrator issued a report concluding 
that the appropriate level of countermeasures in response to the WTO-
inconsistent launch aid provided by the EU or certain member States to 
their large civil aircraft domestic industry is approximately $7.5 
billion annually.
    On October 9, 2019, the U.S. Trade Representative published a 
determination that the EU and certain member States have denied U.S. 
rights under the WTO Agreement and have failed to implement DSB 
recommendations concerning certain subsidies to the EU large civil 
aircraft industry. The U.S. Trade Representative determined to take 
action in the form of additional duties on products of certain current 
or former member States of the EU, at levels of 10 or 25 percent ad 
valorem, effective October 18, 2019. See 84 FR 54245 (October 9, 2019) 
and 84 FR 55998 (October 18, 2019).
    On December 12, 2019, the U.S. Trade Representative announced a 
review of

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the action and invited public comments regarding potential revisions. 
See 84 FR 67992. As part of that review, on February 14, 2020, the U.S. 
Trade Representative announced a determination to revise the list of 
non-aircraft products subject to 25 percent additional duties and to 
increase additional duties on certain large civil aircraft from 10 to 
15 percent, effective March 5 and March 18. See 85 FR 10204 (February 
21, 2020) and 85 FR 14517 (March 12, 2020). The U.S. Trade 
Representative also determined that ``going forward, the action may be 
revised as appropriate immediately upon any EU imposition of additional 
duties on U.S. products in connection with the Large Civil Aircraft 
dispute or with the EU's WTO challenge to the alleged subsidization of 
U.S. large civil aircraft.''
    On June 26, 2020, the U.S. Trade Representative published a notice 
announcing another review of the action and establishing a docket to 
receive public comments. See 85 FR 38488 (June 26 notice). The June 26 
notice included a proposal to impose additional duties of up to 100 
percent on a new list of products of France, Germany, Spain and the 
United Kingdom, covered by an additional 30 tariff subheadings with an 
approximate annual trade value of $3.1 billion in terms of estimated 
import trade value for calendar year 2018. See June 26 notice, as 
amended by 85 FR 39661 (July 1, 2020).
    On August 12, 2020, the U.S. Trade Representative announced certain 
revisions to the action. See 85 FR 50866 (August 18, 2020). The notice 
reiterated the U.S. Trade Representative's prior determination that 
``the action may be revised as appropriate immediately upon any EU 
imposition of additional duties on U.S. products.''
    On November 9, 2020, the EU announced that it would impose 
additional duties on goods of the United States, effective November 10, 
2020. Specifically, the EU determined to impose additional duties of 15 
percent on imports of certain large civil aircraft of the United 
States, and additional duties of 25 percent on other U.S. goods. The EU 
stated that its action has an annual trade value of $4 billion. The 
EU's action followed a decision by the WTO arbitrator in United 
States--Measure Affecting Trade in Large Civil Aircraft (DS353), and a 
corresponding WTO authorization for the EU to suspend WTO concessions 
to the United States.
    The EU has represented that its retaliatory action mirrors the 
action taken by the United States in this investigation, but that is 
not accurate. Specifically, the EU's action does not mirror the U.S. 
action because the methodology used by the EU to exercise its $4 
billion authorization relies on a benchmark reference period affected 
by the economic downturn caused by the COVID pandemic. Under this 
methodology, the EU was able to cover a greater volume of imports than 
if, like the United States, it had used data from a period when trade 
was not affected by the pandemic.
    In addition, up to and until the exit of the United Kingdom from EU 
customs territory is finalized, goods of the United States are subject 
to additional EU duties when entering the United Kingdom. However, the 
EU's trade action valuation does not account for U.S. exports to the 
United Kingdom. Therefore, the value of U.S. exports subject to tariffs 
is greater than the trade value the EU ascribes to the various covered 
tariff lines.
    The United States has expressed its concerns to the EU and has 
given the EU an opportunity to address these issues. The EU has 
declined to do so.

B. Revision of Action

    In light of these developments, the U.S. Trade Representative 
determined to make a further revision of the action in this 
investigation as part of the ongoing efforts toward a satisfactory 
resolution of the dispute. The revision takes account of public 
comments received in the investigation, advice of advisory committees, 
and advice of the interagency Section 301 Committee.
    In particular, the U.S. Trade Representative has determined to 
mirror the EU approach to exercising its DSB authorization by adjusting 
the reference period used for the U.S. trade action to mirror the 
August 2019 to July 2020 reference period used by the EU. In adopting 
this approach, the United States has made appropriate adjustments to 
ensure that the trade data from the revised reference period does not 
reflect reductions in trade resulting from the October 2019 trade 
action in the investigation. Using the estimated trade values from this 
reference period, the value of the U.S. trade action as last revised on 
August 12, 2020, is well below the $7.5 billion level authorized by the 
DSB.
    In order to exercise the DSB authorization to the United States, 
the U.S. Trade Representative has determined to add products to the 
list of products currently subject to additional duties, while 
otherwise maintaining the trade action as last revised on August 12, 
2020. In considering actions most likely to result in the EU's 
implementation of DSB recommendations or a mutually satisfactory 
resolution of the dispute, the U.S. Trade Representative has determined 
that the additional products should be goods of France and Germany, as 
these countries have provided the greatest level of WTO-inconsistent 
large civil aircraft subsidies.
    As specified in the annexes to this notice, additional goods of 
France and Germany are subject to additional duties. These goods were 
drawn from the proposed lists in the April 12, 2019 notice.
    In accordance with section 306(b)(2)(F) of the Trade Act (19 U.S.C. 
2416(b)(2)(F)), the action includes reciprocal goods of the affected 
industry. The annual trade value of the tariff subheadings subject to 
additional duties under the revised action remains at approximately 
$7.5 billion, which is consistent with the WTO Arbitrator's finding on 
the appropriate level of countermeasures in the United States' dispute 
against the EU involving large civil aircraft.
    Annex I to this notice identifies the products affected by the 
revised action, the rate of duty to be assessed, and the current or 
former EU member States affected. Annex II, section 1, contains the 
unofficial descriptive list of the revisions made by this Notice. Annex 
II, section 2, contains an unofficial, consolidated description of the 
action, reflecting the changes in annex I.
    In order to implement this determination, effective January 12, 
2021, subchapter III of chapter 99 of the HTSUS is modified by annex I 
to this notice. The additional duties provided for in the HTSUS 
subheadings established by annex I apply in addition to all other 
applicable duties, fees, exactions and charges.
    Any product listed in annex I to this notice, except any product 
that is eligible for admission under `domestic status' as defined in 19 
CFR 146.43, which is subject to the additional duty imposed by this 
determination, and is admitted into a U.S. foreign trade zone on or 
after 12:01 a.m. eastern standard time on January 12, 2021, only may be 
admitted as `privileged foreign status' as defined in 19 CFR 146.41. 
Such products will be subject upon entry for consumption to any ad 
valorem rates of duty or quantitative limitations related to the 
classification under the applicable HTSUS subheading.
    The U.S. Trade Representative will continue to consider the action 
taken in this investigation.

Joseph Barloon,
General Counsel, Office of the United States Trade Representative.

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[FR Doc. 2020-29225 Filed 1-5-21; 8:45 am]
BILLING CODE 3290-F0-P