Notice of Modification of Section 301 Action: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation
| Published date | 30 August 2019 |
| Record Number | 2019-18838 |
| Section | Notices |
| Court | Trade Representative Office Of The United States |
Federal Register, Volume 84 Issue 169 (Friday, August 30, 2019)
[Federal Register Volume 84, Number 169 (Friday, August 30, 2019)]
[Notices]
[Pages 45821-45823]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-18838]
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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
Notice of Modification of Section 301 Action: China's Acts,
Policies, and Practices Related to Technology Transfer, Intellectual
Property, and Innovation
AGENCY: Office of the United States Trade Representative.
ACTION: Notice of modification of action.
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SUMMARY: In accordance with the specific direction of the President,
the U.S. Trade Representative has determined to modify the action being
taken in this Section 301 investigation by increasing the rate of
additional duty from 10 to 15 percent for the products of China covered
by the $300 billion tariff action published on August 20, 2019.
DATES: For products covered by Annex A of the August 20, 2019 notice
(84 FR 43304), the rate of additional duty will be 15 percent on the
current effective date of September 1, 2019. For products covered by
Annex C of the August 20 notice, the rate of additional duty will be 15
percent on the current effective date of December 15, 2019.
[[Page 45822]]
FOR FURTHER INFORMATION CONTACT: For questions about this action,
contact Associate General Counsel Arthur Tsao or Assistant General
Counsel Megan Grimball, or Director of Industrial Goods Justin Hoffmann
at (202) 395-5725. For questions on customs classification or
implementation of additional duties on products identified in the
Annexes to this notice, contact [email protected].
SUPPLEMENTARY INFORMATION:
A. Prior Determinations in the Investigation
On August 18, 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. 82 FR 40213 (August 23, 2017). In April 2018,
the U.S. Trade Representative published a notice of a determination
that the acts, policies, and practices of China under investigation are
unreasonable or discriminatory and burden or restrict U.S. commerce,
and are thus actionable under Section 301(b) of the Trade Act of 1974,
as amended (Trade Act). 83 FR 14906 (April 6, 2018).
Up through early May 2019, the U.S. Trade Representative, at the
direction of the President, determined to take actions resulting in the
imposition of an additional 25 percent ad valorem duty on products of
China with an aggregate annual trade value of approximately $250
billion in order to obtain the elimination of China's acts, policies,
and practices covered in the investigation. As explained in prior
notices, the actions do not relate to China's acts, policies, and
practices involving technology licensing, which are being addressed
separately in a WTO dispute settlement proceeding.
The U.S. Trade Representative imposed these additional duties in
three tranches. Tranche 1 covered 818 tariff subheadings, with an
approximate annual trade value of $34 billion. See 83 FR 28710 (June
20, 2018). Tranche 2 covered 279 tariff subheadings, with an
approximate annual trade value of $16 billion. See 83 FR 40823 (August
16, 2018). Tranche 3 covered 5,733 tariff subheadings, with an
approximate annual trade value of $200 billion. See 83 FR 47974
(September 21, 2018); 83 FR 49153 (September 28, 2018); and 84 FR 20459
(May 9, 2019).
As of mid-May 2019, China's statements and conduct indicated that
action at a $250 billion level was insufficient to obtain the
elimination of China's unfair and harmful policies. Accordingly, the
President directed the U.S. Trade Representative to consider a possible
modification of the action being taken in the form of additional duties
of up to 25 percent on products of China with an annual aggregate trade
value of approximately $300 billion. In a notice published on May 17,
2019 (84 FR 22564), the Office of the United States Trade
Representative invited public comments and announced a public hearing
with regard to the possible imposition of additional duties of up to 25
percent on a specific list of tariff subheadings with an approximate
annual trade value of $300 billion. The notice and comment process
concluded in early July 2019.
In August 2019, the U.S. Trade Representative, at the direction of
the President, determined to modify the action being taken in the
investigation by imposing an additional 10 percent ad valorem duty on
products of China with an annual aggregate trade value of approximately
$300 billion. 84 FR 43304 (August 20, 2019). The August 20 notice
contains two separate lists of tariff subheadings, with two different
effective dates. List 1, which is set out in Annex A of the August 20
notice, is effective September 1, 2019. List 2, which is set out in
Annex C of the August 20 notice, is effective December 15, 2019.
B. Modification of Action
The Section 301 statute (set out in Sections 301 to 308 of the
Trade Act) (19 U.S.C. 2411-2418) includes authority for the U.S. Trade
Representative to modify the action being taken in an investigation. In
particular, Section 307(a)(1) authorizes the U.S. Trade Representative
to modify or terminate any action taken under Section 301, subject to
the specific direction, if any, of the President, if the burden or
restriction on United States commerce of the acts, policies, and
practices that are the subject of the action has increased or
decreased, or the action is being taken under Section 301(b) and is no
longer appropriate.
The burden or restriction on United States commerce of the acts,
policies, and practices that are the subject of the Section 301 action
continues to increase. China's unfair acts, policies, and practices
include not just its technology transfer and IP polices referenced in
the notice of initiation in the investigation, but also China's
subsequent defensive actions taken to maintain those unfair acts,
policies, and practices as determined in that investigation. China has
determined to impose tariffs on a substantial majority of U.S. goods
exported to China, with the goal of pressuring the United States to
cease its efforts to obtain the elimination of China's unfair policies.
China has further taken or threatened to take additional
countermeasures, including non-tariff measures, against commerce of the
United States. For example, China has taken concrete steps to devalue
its currency. See https://home.treasury.gov/news/press-releases/sm751.
Most recently, shortly following the August 2019 announcement of the
$300 billion action, China responded by announcing further tariffs on
U.S. goods, starting September 1, 2019. In short, instead of addressing
the underlying problems, China has increased tariffs and adopted or
threatened additional retaliation to further protect the unreasonable
acts, policies, and practices identified in the investigation,
resulting in increased harm to the U.S. economy.
China's most recent response of announcing a new tariff increase on
U.S. goods has shown that the current action being taken is no longer
appropriate. The United States is engaging with China with the goal of
obtaining the elimination of the acts, policies, and practices covered
in the investigation. The leaders of the United States and China met on
December 1, 2018, and agreed to hold negotiations on a range of issues,
including those covered in this Section 301 investigation. See https://www.whitehouse.gov/briefings-statements/statement-press-secretary-regarding-presidents-working-dinner-china. Since the meeting on
December 1, 2018, the United States and China have engaged in
additional rounds of negotiation on these issues, including meetings in
March, April, May, and July 2019. At certain times in these
discussions, China has offered specific commitments that were
constructive towards reaching a resolution of this matter. However,
China more recently has retreated from these commitments, indicating
that the action currently being taken is not effective in obtaining the
elimination of the unfair acts, policies, and practices covered in the
investigation. And as noted, China's specific response to the $300
billion action at a 10 percent rate of additional duty was not to
address U.S. concerns, but rather to impose further retaliatory tariffs
on U.S. commerce.
For these reasons, and in accordance with the specific direction of
the President, the U.S. Trade Representative has determined to modify
the action being taken in the investigation by increasing the rate of
additional duty from 10 percent ad valorem to 15 percent ad valorem on
the goods of China specified in Annex A and Annex C of the August 20
notice.
[[Page 45823]]
As noted above, the May 17, 2019 notice invited public comments on
duties of up to 25 percent on the products covered by the proposed $300
billion action. The current modification in the rate of additional duty
takes into account the public comments and testimony, as well as advice
from advisory committees and the interagency Section 301 committee,
concerning the action proposed in the May 17 notice.
The Annex to this notice amends the Harmonized Tariff Schedule of
the United States to provide that the rate of additional duties for the
products covered in Annex A and Annex C of the August 20 notice will be
15 percent. This increase in the rate of duty does not change the
effective date of Annex A (September 1, 2019) or of Annex C (December
15, 2019).
Annex
Effective with respect to goods entered for consumption, or
withdrawn from warehouse for consumption, on or after 12:01 a.m.
eastern daylight time on September 1, 2019, subchapter III of chapter
99 of the Harmonized Tariff Schedule of the United States (HTSUS) is
modified:
1. By amending U.S. Note 20(r) to subchapter III of chapter 99, as
established by the U.S. Trade Representative in a determination
contained in 84 Federal Register 43304 (August 20, 2019), by deleting
``10 percent'' each place that it appears, and inserting ``15 percent''
in lieu thereof; and
2. by amending the Rates of Duty 1-General column of heading
9903.88.15, as established by the U.S. Trade Representative in a
determination contained in 84 Federal Register 43304 (August 20, 2019),
by deleting ``10%'', and inserting ``15%'' in lieu thereof.
Effective with respect to goods entered for consumption, or
withdrawn from warehouse for consumption, on or after 12:01 a.m.
eastern daylight time on December 15, 2019, subchapter III of chapter
99 of the Harmonized Tariff Schedule of the United States is modified:
1. By amending U.S. Note 20(t) to subchapter III of chapter 99, as
established by the U.S. Trade Representative in a determination
contained in 84 Federal Register 43304 (August 20, 2019), by deleting
``10 percent'' each place that it appears, and inserting ``15 percent''
in lieu thereof; and
2. by amending the Rates of Duty 1-General column of heading
9903.88.16, as established by the U.S. Trade Representative in a
determination contained in 84 Federal Register 43304 (August 20, 2019),
by deleting ``10%'', and inserting ``15%'' in lieu thereof.
Joseph Barloon,
General Counsel, Office of the U.S. Trade Representative.
[FR Doc. 2019-18838 Filed 8-27-19; 4:15 pm]
BILLING CODE 3290-F9-P
