USTR Launches New Exclusion Request Procedure to Address COVID-19
On Friday, March 20, 2020, in an effort to fight against the coronavirus pandemic, the U.S. Trade Representative (USTR) announced that it is accepting exclusions requests to remove tariffs imposed on Chinese origin medical-care products under Section 301 of the Trade Act of 1974 (Section 301). This process does not replace the current exclusion process, but rather serves to supplement it.
The new tariff exclusion process could cover a broad range of products. Requests may be submitted in relation to (1) products “directly used to treat COVID-19 or limit the outbreak” and/or (2) products “used in the production of needed-medical care products.” Given the latter’s vague requirements, there is a possibility that removal of Section 301 tariffs could include components and other inputs into medical equipment.
In addition, exclusion requests may be submitted regarding any Chinese product covered under the Section 301 action that arguably meets the two criteria above, regardless of the USTR tariff list it is included in and whether the product is subject to a pending or denied exclusion request. This is particularly relevant to companies that have had exclusion requests denied in the past, as this notice would provide a new basis for a Section 301 exclusion. For companies that are currently waiting for a determination on their exclusion requests, submitting comments could provide an opportunity to bolster pending requests.
The comment period will remain open until June 25, 2020, and may be extended as appropriate. Responses should be submitted within three business days after a comment is posted in the docket. As of Monday, March 23, 2020, the USTR had received over 339 comments.
This action, along with recently issued exclusions under the “regular,” preexisting exclusion process, show a willingness by the Trump Administration to ease trade restrictions on products during the COVID-19 crisis. In recent notices under the prior process, USTR granted approximately 200 separate exclusion requests for medical-care products, including protective equipment, sanitary articles, laboratory equipment, among other medical-care related products. Nonetheless, there is no indication that the Trump Administration is considering a broader lifting of tariffs, and accordingly relief must be sought on a product-by-product basis.
For more information about USTR’s exclusion request procedures in connection with Section 301 tariffs, see our analysis of List 1 and 2 here; analysis of List 3 here; and analysis of List 4 here.