While the phase one deal is a welcome pause in trade war hostilities between China and the U.S., the president of the Asia Society Policy Institute said a conclusion to phase two -- which presumably would lift Section 301 tariffs -- won't come this year. The think tank's president, Kevin Rudd, who also is a former prime minister of Australia, said at a program Jan. 28, “I think the best way to look at the phase one deal is that it's a ceasefire. I wouldn't go beyond that, to be honest.” He added, “I don't think it's in either side's political interest to see phase two conclude or fail on this side of a presidential election.”
Section 301 (too broad)
A domestic manufacturer filed petitions on Jan. 22 with the Commerce Department and the International Trade Commission requesting new antidumping duties on difluoromethane (R-32) from China. Commerce will now decide whether to begin an AD duty investigation on the refrigerant. The investigation was requested by Arkema.
International Trade Today is providing readers with some of the top stories for Jan. 21-24 in case they were missed.
The Customs Rulings Online Search System (CROSS) was updated on Jan. 28. The following headquarters rulings not involving carriers were modified on Jan. 27 or 28, according to CBP:
If TCL North America does not get the exclusions it seeks from the 15 percent List 4A Section 301 tariffs it has paid since Sept. 1 on flat-panel TV imports from China, it wants the Trump administration to weigh “reallocating” TVs to List 4B where there’s no current tariff exposure, the vendor said. TCL filed three separate exemption requests Jan. 23 at the Office of the U.S. Trade Representative public docket on tariff schedule subheadings 8528.72.64.30, 8528.72.64.40 and 8528.72.64.60, covering TV imports that vary by screen size. The “sole available source of LCD panels and supporting material components is China,” it said in all three applications.
CBP is awaiting official guidance from the Office of the U.S. Trade Representative for how to handle goods from China that fall under the six extended Section 301 exclusions (see 1912190060), a CBP official said during a Jan. 23 conference call. While USTR extended those exclusions beyond the Dec. 28, 2019, expiration date, the Harmonized Tariff Schedule code for those exclusions, 9903.88.05, became unusable after that date. A Federal Register notice from USTR will be necessary, the official said.
A pump assembly assembled in Mexico is subject to Section 301 duties, even though the electric motor that powers the pump is the only Chinese component and all of the other parts are Mexican, CBP said in a recent ruling. The assembly process in Mexico does not result in a substantial transformation of the motor, so the pump assembly remains a product of China, CBP said in HQ H303864, issued Dec. 26 and posted to the agency's CROSS database Jan. 9.
The International Trade Commission on Jan. 21 issued Revision 1 to the 2020 Harmonized Tariff Schedule. This latest version includes updates needed to implement the latest set of exclusions from list 3 of Section 301 tariffs on products from China (see 2001020035). The new exclusions are listed in new U.S. Note 20(pp) to subchapter III of chapter 99. New subheading 9903.88.37 is created for products entering under the exclusions, and conforming changes are made to other provisions throughout subchapter III. The exclusions take retroactive effect as of Sept. 24, 2018, the date that the list 3 tariffs took effect.
The Justice Department is adding new lawyers to its international trade office, indicating that there could be an uptick in Section 592 penalty cases against importers, according to Crowell & Moring’s 2020 Litigation Forecast. The hiring comes amid increased scrutiny on valuation and country of origin issues as Section 301 tariffs incentivize importers to find ways to reduce duty liability. “This likely means that CBP has already determined that a significant amount of penalty cases are not going to be resolved administratively and will proceed to litigation,” said David Stepp, a customs lawyer with the law firm.
The volume of imports from China fell about 20 percent across the fourth quarter, Flexport executives noted during a webinar Jan. 21 -- which represents both shifting to other categories of goods and re-orienting supply chains. Ryan Petersen, CEO of the freight forwarder, said 64 percent of its clients are paying additional tariffs because of the Trump administration policies.