Request for Comments on Proposed Modifications and Machinery Exclusion Process in Four-Year Review of Actions Taken in the Section 301 Investigation: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 46252-46293 [2024-11634]

Agencies

• Office of the United States Trade Representative

[Federal Register Volume 89, Number 103 (Tuesday, May 28, 2024)]
[Notices]
[Pages 46252-46293]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-11634]


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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

[Docket Number USTR-2024-0007]


Request for Comments on Proposed Modifications and Machinery 
Exclusion Process in Four-Year Review of Actions Taken in the Section 
301 Investigation: China's Acts, Policies, and Practices Related to 
Technology Transfer, Intellectual Property, and Innovation

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

ACTION: Request for comments.

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SUMMARY: In a notice published on September 8, 2022, USTR announced 
that the July 6, 2018 and August 23, 2018 actions, as modified, in the 
section 301 investigation of China's Acts, Policies, and Practices 
Related to Technology Transfer, Intellectual Property, and Innovation 
did not terminate on their four-year anniversary dates and would 
continue. The notice also announced that the U.S. Trade Representative 
would conduct a review

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of the actions. In connection with that review, and at the specific 
direction of the President, the U.S. Trade Representative is proposing 
modifications to the actions by adding or increasing ad valorem rates 
of duty, as directed by the President, for certain products of China in 
strategic sectors. In addition, the U.S. Trade Representative is 
proposing subheadings eligible for an exclusion process by which 
interested persons may request that particular machinery used in 
domestic manufacturing be temporarily excluded from these tariffs. The 
U.S. Trade Representative also is proposing to modify the actions by 
granting 19 temporary exclusions for certain solar manufacturing 
equipment. The products subject to these proposed modifications and the 
products being proposed for the exclusion process are set out in 
annexes to this notice. USTR is seeking public comments regarding the 
proposed modifications and exclusion process.

DATES: May 29, 2024, at 12:01 a.m. EDT: The public docket on the web 
portal at https://comments.ustr.gov will open for interested persons to 
submit comments.
    June 28, 2024, at 11:59 p.m. EST: To be assured of consideration, 
submit written comments on the public docket by this date.

ADDRESSES: You must submit all comments through the online portal: 
https://comments.ustr.gov.

FOR FURTHER INFORMATION CONTACT: Philip Butler and Megan Grimball, 
Chairs of the Section 301 Committee, (202) 395-5725.

SUPPLEMENTARY INFORMATION:

A. Background

    On August 24, 2017, the U.S. Trade Representative initiated an 
investigation into certain acts, policies, and practices of the 
Government of China related to technology transfer, intellectual 
property, and innovation under section 301 of the Trade Act of 1974, as 
amended (Trade Act) (19 U.S.C. 2411). See 82 FR 40213. In a notice 
published on April 6, 2018, the U.S. Trade Representative determined 
that acts, policies, and practices of the Government of China related 
to technology transfer, intellectual property, and innovation were 
unreasonable or discriminatory, and burdened or restricted U.S. 
commerce, and thus were actionable under section 301(b) of the Trade 
Act (19 U.S.C. 2411(b)). See 83 FR 14906.
    Following a notice and comment process on the proposed action to be 
taken in the investigation, the U.S. Trade Representative took two 
actions under section 301 of the Trade Act: the July 6, 2018 action, 
covering an approximate annual trade value of $34 billion (List 1), and 
the August 23, 2018 action, covering an approximate annual trade value 
of $16 billion (List 2). See 83 FR 28710 (July 6, 2018 action) and 83 
FR 40823 (August 23, 2018 action). These actions subsequently were 
modified by imposing additional duties on supplemental lists of 
products, known as Lists 3 and 4, as well as by the temporary removal 
of duties on certain products through product exclusions.
    On May 5, 2022, USTR announced that under section 307(c)(2) of the 
Trade Act (19 U.S.C. 2417(c)(2)), the July 6, 2018 and August 23, 2018 
actions, as modified, were subject to possible termination on their 
respective four-year anniversary dates (i.e., July 6, 2022, and August 
23, 2022, respectively) and of the opportunity for representatives of 
domestic industries that benefit from the trade actions to request 
continuation of the actions during the last 60 days of such four-year 
periods. See 87 FR 26797.
    On September 8, 2022, USTR announced that the July 6, 2018 and 
August 23, 2018 actions, as modified, would remain in effect because at 
least one representative of a domestic industry that benefits from each 
action submitted to the U.S. Trade Representative a request for 
continuation of the actions. See 87 FR 55073. The notice also announced 
that in accordance with section 307(c)(3) of the Trade Act (19 U.S.C. 
2417(c)(3)), the U.S. Trade Representative would conduct a review of 
the July 6, 2018 and August 23, 2018 actions, as modified. See 87 FR 
55073.
    To aid in this review, on November 15, 2022, USTR opened a docket 
for interested persons to submit comments with respect to a number of 
considerations concerning the review. See 87 FR 62914. USTR received 
approximately 1,500 comments.
    Pursuant to section 307(c)(3) of the Trade Act (19 U.S.C. 
2417(c)(3)), and based on information obtained during the review, 
including the written submissions, USTR, in consultation with the 
Section 301 Committee, prepared a comprehensive report that included 
findings on the effectiveness of the July 6, 2018 and August 23, 2018 
actions, as modified, in achieving the objectives of the investigation, 
other actions that could be taken, and the effects of such actions on 
the United States economy, including consumers. The report, Four-Year 
Review of Actions Taken in the Section 301 Investigation: China's Acts, 
Policies, and Practices Related to Technology Transfer, Intellectual 
Property, and Innovation (the Report), was published on May 14, 2024, 
and is available on the USTR website at https://ustr.gov/sites/default/files/05.14.2024%20Four%20Year%20Review%20of%20China%20Tech%20Transfer%20Section%20301%20(Final).pdf. The Report is incorporated into this notice by 
reference.
    As detailed in the Report, the U.S. Trade Representative has found 
that:
    [ssquf] The section 301 actions have been effective in encouraging 
China to take steps toward eliminating some of its technology transfer-
related acts, policies, and practices, and have reduced some of the 
exposure of U.S. persons and businesses to these technology transfer-
related acts, policies, and practices.
    [ssquf] China has not eliminated many of its technology transfer-
related acts, policies, and practices, which continue to impose a 
burden or restriction on U.S. commerce. Instead of pursuing fundamental 
reform, China has persisted, and even become more aggressive, 
particularly through cyber intrusions and cybertheft, in its attempts 
to acquire and absorb foreign technology, which further burden or 
restrict U.S. commerce.
    [ssquf] Economic analyses generally find that the duties have had 
small negative effects on U.S. aggregate economic welfare, positive 
impacts on U.S. production in the ten sectors most directly affected by 
the duties, and minimal impacts on economy-wide prices and employment.
    [ssquf] Economic analyses, including the principal U.S. Government 
analysis published by the U.S. International Trade Commission, 
generally find that the Section 301 tariffs have contributed to 
reducing U.S. imports of goods from China and increasing imports from 
alternate sources, including U.S. allies and partners, thereby 
potentially supporting U.S. supply chain diversification and 
resilience.
    Based on these findings, the U.S. Trade Representative recommended 
to the President that section 301 tariffs on covered products be 
maintained. To further encourage China to eliminate the investigated 
acts, policies, and practices, the U.S. Trade Representative 
recommended enhancing the effectiveness of the tariff actions by adding 
or increasing section 301 tariffs on certain products in strategic 
sectors. The proposed modification includes products targeted by China 
for dominance, or are products in sectors where the United States has 
recently made significant investments.

[[Page 46254]]

    Taking into consideration the U.S. Trade Representative's findings 
and recommendations, on May 14, 2024, the President issued a Memorandum 
that directed the U.S. Trade Representative to: ``maintain, as 
appropriate and consistent with this memorandum, the ad valorem rates 
of duty and lists of products subject to the [actions] taken under the 
[s]ection 301 investigation'' and ``[t]o further encourage China to 
eliminate the acts, policies, and practices at issue, and to counteract 
the burden or restriction of these acts, policies, and practices, the 
Trade Representative shall modify the [actions taken in the 
investigation] to increase [s]ection 301 ad valorem rates of duty'' for 
certain specified products of China. See https://www.whitehouse.gov/briefing-room/presidential-actions/2024/05/14/memorandum-on-actions-by-the-united-states-related-to-the-statutory-4-year-review-of-the-section-301-investigation-of-chinas-acts-policies-and-practices-related-to-technology-transfer-intellectua/. The President's Memorandum 
specified categories of products for proposed tariff increases, tariff 
rates for those products, and year for tariff increases.
    The President also directed the U.S. Trade Representative to 
establish a process by which interested persons may request that 
particular machinery used in domestic manufacturing classified within a 
subheading under Chapters 84 and 85 of the Harmonized Tariff Schedule 
of the United States (HTSUS) be temporarily excluded from section 301 
tariffs, and that the U.S. Trade Representative prioritize, in 
particular, exclusions for certain solar manufacturing equipment.

B. Proposed Modifications to the Actions

    Pursuant to sections 307(c) and 307(a)(1) of the Trade Act (19 
U.S.C. 2417(c), (a)(1)), the U.S. Trade Representative may modify or 
terminate any action, subject to the specific direction, if any, of the 
President with respect to such action, that is being taken under 
Section 301 if the burden or restriction on United States commerce of 
the acts, policies, and practices that are the subject of such action 
has increased or decreased, or such action is being taken under section 
301(b) and no longer is appropriate. Section 301(c)(3)(B) of the Trade 
Act (19 U.S.C. 2411(c)(3)(B)) authorizes the U.S. Trade Representative 
to take action against any goods or economic sector of the foreign 
country concerned regardless of whether or not such goods or economic 
sector are involved in the act, policy, or practice subject to 
investigation. In accordance with sections 307(c) and 307(a)(1)(B) and 
(C) of the Trade Act (19 U.S.C. 2417(c), (a)(1)(B) and (C)), and in 
accordance with the specific direction of the President, the U.S. Trade 
Representative is proposing certain modifications to the actions.
    Consistent with the President's direction to increase section 301 
tariff rates on certain categories of products, included in Annex A to 
this notice are 382 HTSUS subheadings and 5 statistical reporting 
numbers of the HTSUS, with an approximate annual trade value of $18 
billion (2023). The President has directed that increases for certain 
products take effect in 2024, 2025, and 2026. The U.S. Trade 
Representative is proposing that increases in 2024 be effective August 
1, 2024, and that increases in 2025 and 2026 be effective January 1 of 
the corresponding year.
    In addition to the proposed modifications in Annex A, consistent 
with the President's direction, the U.S. Trade Representative is 
establishing an exclusion process by which interested persons may 
request that particular machinery used in domestic manufacturing and 
classified within certain subheadings under Chapters 84 and 85 of HTSUS 
be temporarily excluded from section 301 tariffs. The HTSUS subheadings 
eligible for consideration of temporary exclusion are set forth in 
Annex B to this notice. Procedures for requesting exclusions under this 
process will be published in a separate notice. Exclusions granted 
through this process will be effective through May 31, 2025.
    Finally, to support domestic production and decrease reliance on 
China in a strategic sector, the U.S. Trade Representative is proposing 
19 temporary exclusions for solar manufacturing equipment. The proposed 
temporary exclusions are set forth in Annex C to this notice. The 
proposed exclusions will be effective the date of this notice and 
through May 31, 2025.

C. Request for Public Comments

    In accordance with section 307(a)(2) of the Trade Act (19 U.S.C. 
2417(a)(2)), USTR invites comments from interested persons with respect 
to the proposed modifications. To be assured of consideration, you must 
submit written comments by June 28, 2024.
    With respect to USTR's proposed modifications to Section 301 tariff 
rates on certain products from China listed in Annex A, interested 
persons are invited to comment on:
    [ssquf] The effectiveness of the proposed modification in obtaining 
the elimination of, or in counteracting, China's acts, policies, and 
practices related to technology transfer, intellectual property, and 
innovation.
    [ssquf] The effects of the proposed modification on the U.S. 
economy, including consumers.
    [ssquf] The scope of the product description to cover ship-to-shore 
cranes under subheading 8426.19.00 (transporter cranes, gantry cranes 
and bridge cranes).
    [ssquf] With respect to facemasks, medical gloves, syringes and 
needles, whether the tariff rates should be higher than the proposed 
rates.
    [ssquf] With respect to facemasks, whether additional statistical 
reporting codes under tariff subheading 6307.90.98 should be included.
    [ssquf] Whether the tariff subheadings identified for each product 
and sector adequately cover the products and sectors included in the 
President's direction to the U.S. Trade Representative.
    With respect to the exclusion process, USTR seeks comments on 
whether the subheadings listed in Annex B should or should not be 
eligible for consideration in the machinery exclusion process and 
whether Annex B omits certain subheadings under Chapters 84 and 85 that 
cover machinery used in domestic manufacturing that should be included.
    With respect to the proposed solar manufacturing machinery 
exclusions in Annex C, USTR requests comments on the scope of each 
exclusion, including any suggested amendments to the product 
description.
    In order to facilitate preparation of comments prior to the May 29 
opening of the web portal, USTR intends to post a copy of questions for 
the docket by May 24, 2024. The questions will be posted at https://comments.ustr.gov.

D. Procedures for Written Submissions

    You must submit written comments using the appropriate docket on 
the portal at https://comments.ustr.gov/. To submit written comments, 
use the docket on the portal entitled Request for Comments: Proposed 
Modifications to the Section 301 Actions and Proposed Exclusion 
Process, docket number USTR-2024-0007.
    You do not need to establish an account to submit comments. The 
first screen of the docket allows you to enter identification and 
contact information. Third party organizations such as law firms, trade 
associations, or customs brokers, should identify the full legal name 
of the organization they represent,

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and identify the primary point of contact for the submission. 
Information fields are optional; however, your comment may not be 
considered if insufficient information is provided.
    Fields with a gray Business Confidential Information (BCI) notation 
are for BCI that will not be made publicly available. Fields with a 
green (Public) notation will be viewable by the public.
    After entering the identification and contact information, you can 
complete the remainder of the comment, or any portion of it by clicking 
`Next.' You may upload documents at the end of the form and indicate 
whether USTR should treat the documents as business confidential or 
public information.
    Any page containing BCI must be clearly marked `BUSINESS 
CONFIDENTIAL' on the top of that page and the submission should clearly 
indicate, via brackets, highlighting, or other means, the specific 
information that is BCI. If you request business confidential 
treatment, you must certify in writing that the information would not 
customarily be released to the public.
    Parties uploading attachments containing BCI also must submit a 
public version of their comments. If these procedures are not 
sufficient to protect BCI or otherwise protect business interests, 
please contact the USTR Section 301 support line at (202) 395-5725 to 
discuss whether alternative arrangements are possible.
    USTR will post attachments uploaded to the docket for public 
inspection, except for properly designated BCI. You can view 
submissions on USTR's electronic portal at https://comments.ustr.gov.

Juan Millan,
Acting General Counsel, Office of the United States Trade 
Representative.
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[FR Doc. 2024-11634 Filed 5-24-24; 8:45 am]
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