How to File for a China Tariff Exclusion

China Tariff Exclusions

The U.S. Trade Representative (USTR) recently announced revised instructions for filing a China tariff exclusion on the latest round of products targeted in the ongoing trade war with China. However, to file, you will need to act fast. The process covers specific products (List 3) named in the latest $200 billion worth of Chinese products targeted by Washington. This list covers products that recently had their tariff rate increased from 10% to 25% starting on May 10, 2019. If you are lucky enough to have your List 3 exclusion request approved, it will be effective from September 24, 2018, when the original 10% tariffs were first imposed.  Any granted exclusions will be valid for one year from the date the exclusion grant is published in the Federal Register.

If you plan on filing for a China tariff exclusion, the key dates for the List 3 product exclusion requests are as follows :

June 30, 2019, noon EDT – USTR will open a web portal for exclusion requests to be filed.  Note that the USTR is now requiring all parties to register through the portal before filing their exclusion request.

September 30, 2019 – Filing deadline to submit List 3 product exclusion requests.

Per the USTR, after a product exclusion request is posted on their Web portal, interested parties will have fourteen (14) days to comment on that request, either by expressing their support for or their opposition to it. Any replies to responses must then be filed within seven (7) days of the posting of the response.

If your product exclusion is granted, it will be effective for one year from the date your exclusion is published in the Federal Register and it will be retroactive to September 24, 2018.

Unlike the previous List 1 and List 2 tariffs exclusion requests, List 3 product exclusion requests will require additional information before they will be considered. Specifically, China tariff exemption requests must cover only a single product, and must include the following information:

  • The 10 digit subheading of the HTSUS applicable to the particular product requested for exclusion.
  • The physical characteristics (e.g., dimensions, material composition, or other characteristics) of the product that distinguish it from other products within the covered 8-digit subheading.
  • The product function, application, and principal use.

The USTR will not consider requests that identify the product with criteria that cannot be made available to the public.

In addition, the USTR will now require businesses to provide more detailed sales and financial information about their company, including the following:

  • The company’s gross revenue for fiscal year 2018, first quarter 2018, and first quarter 2019.
  • The percentage of the company’s 2018 total US gross sales that were accounted for by the Chinese products.
  • The quantity and value of the company’s purchases for 2017, 2018 and first quarter 2019, not only for the Chinese imports, but also from domestic and third-country suppliers.
  • Whether the Chinese product is a final product or an input. If an input, companies will need to report the percentage of the total cost of the finished product that is accounted for by the imported Chinese input.
  • Whether your company is a “small business,” as defined by the Small Business Administration.
  • Your relationship to the product. Whether you are an importer, U.S. producer, purchaser, industry association, or “other.”

When submitting your China tariff exclusion request, you should also address the following factors:

  • Whether or not the particular product is available only from China.  In addressing this factor, requesters should address specifically whether the particular product and/or a comparable product is available from sources in the United States and/or in third countries. You will be asked to discuss any attempts to source the product from the United States or third countries.
  • Whether the imposition of additional duties on the particular product would cause severe economic harm to your business or to other U.S. interests.
  • Whether the particular product is strategically important or related to the “Made in China 2025” or related Chinese industrial programs.
  • Any other information or data that they consider relevant to an evaluation of the request.

As you can see, this latest round of exclusion requests requires a lot more work and information before your request will be considered. If you intend to file for an exemption, you would be well advised to seek out the advice of an international trade attorney who is familiar with China. It can be a lengthy process, so if you intend to file, you should act immediately.

What are your chances of success? On Lists 1 and 2, the average approval rate was approximately 49%. Now, it appears that Washington intends to make qualifying significantly more difficult. However, if you are successful, the advantages to your business could be very significant. Again, if you think your request has merit, you should act quickly.

For more information on filing for a China tariff exclusion, please contact our Customer Service team at team@airandsurface.com

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