Initiation of Section 301 Investigation; Hearing; and Request for Public Comments: China's Acts, Policies, and Practices Related to Targeting of the Semiconductor Industry for Dominance, 106725-106726 [2024-31306]

Agencies

• Office of the United States Trade Representative

[Federal Register Volume 89, Number 249 (Monday, December 30, 2024)]
[Notices]
[Pages 106725-106726]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-31306]



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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

[Docket Nos. USTR-2024-0024 and USTR-2024-0025]


Initiation of Section 301 Investigation; Hearing; and Request for 
Public Comments: China's Acts, Policies, and Practices Related to 
Targeting of the Semiconductor Industry for Dominance

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

ACTION: Notice of initiation of investigation and a hearing, and a 
request for comments.

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SUMMARY: The U.S. Trade Representative has initiated an investigation, 
of China's acts, policies, and practices related to targeting of the 
semiconductor industry for dominance. The inter-agency Section 301 
Committee is holding a public hearing and seeking public comments in 
connection with this investigation.

DATES: 
    December 23, 2024: The U.S. Trade Representative initiated the 
investigation.
    January 6, 2025: USTR will open dockets for submission of written 
comments and requests to appear at the hearing.
    February 5, 2025, at 11:59 p.m. EST: To be assured of 
consideration, submit written comments by this date.
    February 24, 2025, at 11:59 p.m. EST: To be assured of 
consideration, submit requests to appear at the hearing, along with a 
summary of the testimony, by this date.
    March 11-12, 2025: Public hearing.
    Seven calendar days after the last day of the public hearing: Due 
date for submission of post-hearing rebuttal comments.

ADDRESSES: Submit documents in response to this notice, including 
written comments, hearing appearance requests, summaries of testimony, 
and post-hearing rebuttal comments through the online USTR portal: 
https://comments.ustr.gov/s/.

FOR FURTHER INFORMATION CONTACT: For procedural questions concerning 
comments or participating in the public hearing, contact the USTR 
Section support line at 202.395.5725. Direct all other questions 
regarding this notice to Philip Butler and Megan Grimball, Chairs of 
the Section 301 Committee; Brian Janovitz, Chief Counsel for Trade 
Enforcement Strategy and Competitiveness; or Erin Biel, Assistant 
General Counsel at 202.395.5725.

SUPPLEMENTARY INFORMATION:

I. China's Acts, Policies, and Practices

    Evidence indicates that the People's Republic of China (the PRC or 
China) has adopted acts, policies, and practices related to targeting 
of the semiconductor industry for dominance. China apparently seeks to 
dominate domestic and global markets in the semiconductor industry and 
undertakes extensive anticompetitive and non-market means, including 
setting and pursuing market share targets, to achieve indigenization 
and self-sufficiency. The PRC's acts, policies, and practices also 
appear to have and to threaten detrimental impacts on the United States 
and other economies, undermining the competitiveness of American 
industry and workers, critical U.S. supply chains, and U.S. economic 
security.
    Evidence indicates that the PRC's acts, policies, and practices 
have been reflected in various economic and industrial plans issued by 
the PRC. For example, Made in China 2025 set numerical targets for the 
PRC's domestic semiconductor capacity and production that reflect 
China's targeting of the semiconductors sector for dominance. Evidence 
further indicates that the PRC pursues its targeting of the 
semiconductor industry through an extensive range of anticompetitive 
and non-market means, including through Chinese Communist Party 
guidance, directives, and control within state and private enterprises; 
activities of state-owned or state-controlled enterprises; market 
access restrictions; opaque regulatory preferences and discrimination; 
wage-suppressing labor practices; massive and persistent state 
financial support of industry, including government guidance funds; and 
forced technology transfer, including state-directed cyber intrusions 
and cybertheft of intellectual property.
    Evidence indicates that the PRC's targeting of the semiconductor 
industry for dominance is leading to significant capacity expansion, 
artificially and unsustainably lower domestic and global prices, a 
protected domestic market, and emerging overconcentration of production 
capacity in the PRC. Evidence indicates that in just six years, China 
has nearly doubled its global share of foundational logic 
semiconductors production capacity. Based on announced new fabrication 
plants (fabs), China's share is projected to reach approximately half 
of the world's capacity by 2029. In addition, projections show that 
China will lead in production capacity for other types of legacy 
semiconductors, such as power chips. Evidence further suggests that the 
PRC's non-market-oriented expansion of capacity is already discouraging 
investment by market-oriented actors.

II. Initiation of Section 301 Investigation

    Section 302(b)(1)(A) of the Trade Act of 1974, as amended (Trade 
Act), authorizes the U.S. Trade Representative to initiate an 
investigation to determine whether an act, policy, or practice of a 
foreign country is actionable under section 301 of the Trade Act. 
Actionable matters under section 301 include acts, policies, and 
practices of a foreign country that are unreasonable or discriminatory 
and burden or restrict U.S. commerce. An act, policy, or practice is 
unreasonable if, while not necessarily in violation of, or inconsistent 
with, the international legal rights of the United States, it is 
otherwise unfair and inequitable.
    On December 23, 2024, the U.S. Trade Representative initiated a 
section 301 investigation of China's acts, policies, and practices 
related to targeting of the semiconductor industry for dominance. 
Pursuant to section 302(b)(1)(B) of the Trade Act, USTR has consulted 
with appropriate advisory committees and the inter-agency Section 301 
Committee. Pursuant to section 303(a) of the Trade Act, USTR is 
requesting consultations with the Government of China.
    Pursuant to section 304 of the Trade Act, USTR must determine 
whether the act, policy, or practice under investigation is actionable 
under section 301. If that determination is affirmative, the U.S. Trade 
Representative must determine whether action is appropriate, and if so, 
what action to take.
    This investigation initially will focus on PRC manufacturing of 
foundational semiconductors (also known as legacy or mature node 
semiconductors), including to the extent that they are incorporated as 
components into downstream products for critical industries like 
defense, automotive, medical devices, aerospace, telecommunications, 
and power generation and the electrical grid. The investigation also 
will initially assess whether the impact of the PRC's acts, policies, 
and practices on the production of silicon carbide substrates (or other 
wafers used as inputs into semiconductor fabrication) contribute to any 
unreasonableness or discrimination or burden or restriction on U.S. 
commerce. In addition, the investigation will examine the relationship 
between the PRC's acts, policies, and practices and existing or 
threatened non-market excess capacity or overconcentration of 
semiconductor production in the PRC,

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and resulting dependencies and vulnerabilities that create risks for 
certain critical downstream industries, as well as harm to U.S. 
semiconductor producers and foundries.

III. Request for Public Comments

    You may submit written comments on any issue covered by the 
investigation. In particular, USTR invites comments regarding:
     China's acts, policies, and practices related to its 
targeting of the semiconductor industry for dominance.
     Anticompetitive and non-market means employed by the PRC 
in pursuit of its semiconductor industry targeting objectives, 
including political guidance, directives, and control within state and 
private enterprises, activities of state-owned or state-controlled 
enterprises, market access restrictions, opaque regulatory preferences 
and discrimination, wage-suppressing labor practices, massive state 
support of industry (including government guidance funds), and forced 
technology transfer (including state-directed cyber intrusions and 
cybertheft of intellectual property).
     Whether China's acts, policies, and practices are 
unreasonable or discriminatory.
     Whether China's acts, policies, and practices burden or 
restrict U.S. commerce, and if so, the nature and level of the burden 
or restriction. This would include economic assessments of the burden 
or restriction on semiconductors, semiconductor manufacturing including 
foundries, silicon carbide substrates or other wafers, and downstream 
products, with a particular focus on critical industries, such as 
defense, automotive, medical devices, aerospace, telecommunications, 
and power generation and the electrical grid.
     Whether China's acts, policies, and practices are 
actionable under section 301(b) of the Trade Act, and what action, if 
any, should be taken, including tariff and non-tariff actions.
    To be assured of consideration, USTR must receive written comments 
by 11:59 p.m. EST on February 5, 2025. Additional instructions on how 
to submit written comments are provided below in Part V.

IV. Hearing Participation

    The Section 301 Committee will convene a public hearing on March 
11, 2025, and if needed, the hearing will continue on March 12, 2025. 
To testify at the hearing, you must submit a request to appear using 
the electronic portal at https://comments.ustr.gov/s/, following the 
instructions in Part V below. Requests to appear must include a summary 
of testimony, and may be accompanied by a prehearing submission. 
Remarks at the hearing are limited to five minutes to allow for 
possible questions from the Section 301 Committee. All submissions must 
be in English. To be assured of consideration, USTR must receive your 
request to appear and summary of the testimony by February 24, 2025.
    Post-hearing rebuttal comments, which should be limited to 
rebutting or supplementing testimony presented at the hearing, may be 
submitted within seven calendar days after the last day of the public 
hearing. Rebuttal comments must be submitted using the electronic 
portal at https://comments.ustr.gov/s/, following the instructions in 
Part V below.

V. Submissions Instructions

    Interested persons must submit written comments, requests to appear 
at the hearing, summaries of testimony, and post-hearing rebuttal 
comments using the appropriate docket on the portal at https://comments.ustr.gov/s/. To make a submission, use the docket on the 
portal entitled `Request for Comments on the Section 301 Investigation 
of China's Acts, Policies, and Practices Related to Targeting of the 
Semiconductor Industry for Dominance,' docket number USTR-2024-0024. 
Interested persons wishing to provide testimony at the hearing must 
submit a notification of intent and summary of testimony using the 
docket entitled `Request to Appear at the Hearing on the Section 301 
Investigation of China's Acts, Policies, and Practices Related to 
Targeting of the Semiconductor Industry for Dominance,' docket number 
USTR-2024-0025.
    You do not need to establish an account to submit comments or a 
notification of intent to testify. The first screen 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 and identify the 
primary point of contact for the submission. Information fields are 
optional. However, USTR may not consider your comment or request if 
insufficient information is provided. Fields with a gray Business 
Confidential Information (BCI) notation are for BCI information 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/s/.

Juan Millan,
Acting General Counsel, Office of the United States Trade 
Representative.
[FR Doc. 2024-31306 Filed 12-27-24; 8:45 am]
BILLING CODE 3390-F4-P