Food for Thought: Are Your Section 301 Exclusions Approaching Their Expiration Date?
As of August 5, 2020, the United States Trade Representatives (USTR) has published 37 rounds of Section 301 exclusions covering Lists 1, 2, 3 and 4a products. The exclusions include more than 2,000 possible items that, if produced in Mainland China and imported into the United States, may be eligible for an exclusion from the additional Section 301 duties imposed on many finished goods.
- List 1 has seen 10 rounds granted to date. This list covers a variety of machinery goods from Chapters 84 and 85, a handful of automobile and aircraft parts of Chapters 87 and 88, and certain optical equipment from Chapter 90. These exclusions cover items entering the U.S. on or after July 6, 2018.
- Although List 2 only covers about half of the number of products as List 1, it has still seen 4 rounds of exclusions granted since its implementation. Unlike the first, it covers an assortment of products, such as plastic items of Chapter 39, glass rods of Heading 7002, metal items of Chapter 73 and 76, machinery of Chapters 84 and 85, automobile items of Chapters 86 and 87 and additional optical equipment of Chapter 90. These exclusions cover items entering the U.S. on or after August 23, 2018.
- While List 3 has had a shorter lifespan than its two predecessors, it has already had 15 rounds of exclusions granted due to the wide range of products affected by these additional duties. Thus far, exclusions have been given for items from 46 of the 96 total possible chapters; excluded products range from fish of Chapter 03 to furniture of Chapter 94. These exclusions cover items entering the U.S. on or after September 24, 2018.
- List 4a has had 8 rounds of exclusions to date. These exclusions cover a variety of medical items ranging from certain soaps, plastic laboratory items, rubber apparel and various textile garments. These exclusions cover the items entering the U.S. on or after September 1, 2019.
Do 301 Exclusions fit in your pantry?
Before you can begin utilizing a product exclusion, you must first determine if your item is a product specific exclusion for full HTS subheading. Similar to the Miscellaneous Tariff Bill (MTB) for duty reduction, product specific exclusions require that the HTS subheading meet the excluded HTS code provided by the U.S. Trade Representative (USTR), in addition to the specific description of the product. This means that if your item matches the HTS, but does not meet the description provided, you do not qualify for the exclusion.
Like most things in your pantry, Exclusions have a limited shelf-life!
Please be aware of the expiration dates for each list; they are not all the same!
- Each product excluded from Lists 1 and 2 only has a one-year shelf life from the date it was published in the Federal Register (FR).
- List 3 exclusions have been handled differently from the first and second lists. Instead of a full year, the USTR set an expiration date of August 7, 2020 for all List 3 exclusions. (That’s a lot of expiring ingredients come August…!)
- Similar to List 1 and 2, List 4a exclusions are set to expire one year from the date the additional duties were implemented. This means that List 4a exclusions are retroactive from September 1, 2019 and extends to September 1, 2020.
If you have imported items from List 1 on or after July 6, 2018, from List 2 on or after August 23, 2018, List 3 on or after September 24, 2018 or List 4a on or after September 1, 2019 that are eligible for an exclusion, then you are able to request a refund of the additional duties paid by submitting a post entry correction (post summary correction (PSC) or protest).
Be mindful that there are specific deadlines to file PSCs and protests; time of entry and time of liquidation dictate what type of post entry correction is required and whether or not it is able to be submitted at all.
Does the chef (you) have a say in the matter?
Of course, you do!
The USTR is asking the trade community at-large to submit comments on previously granted exclusions prior to their planned expiration date. They are seeking comments from importers and other interested parties to determine if the imposition of duties will result in severe economic harm.
Much like recipes, not every exclusion will have the same result. All product exclusions are evaluated on a case-by-case basis but can be extended for up to 12 months from the date of the FR publication (if granted).
Click here to access our Section 301 Exclusion Comment Cheat Sheet.
What ingredients does the Exclusion Recipe call for?
The better the ingredients, the better the food!
In each of the Federal Register notices published thus far, the USTR has provided importers with exclusion extension comment form templates, which mirror the USTR portal where this information will be submitted. The forms ask importers to provide answers to a range of product-specific questions, which include:
- Rationale as to why you support or oppose this exclusion extension
- Are these products available to be sourced in the US? Provide support and any changes made to supply chain since July 2018.
- Any other relevant industry developments?
- Are these products or like-products available to be sourced in a third country?
- Are purchases from a related company?
- Quantity and Value of Chinese origin product from 201.
- Quantity and Value of Chinese origin product from 2019
- Quantity and Value of third country origin product from 2018
- Quantity and Value of third country origin product from 2019
- Quantity and Value of domestic origin product from 2018
- Quantity and Value of domestic origin product from 2019
- What efforts have been taken since July 2018 to source this product from the US or third country?
- Companies gross revenue in USD for 2018 and 2019
- Will these duties result in severe economic harm to your company or other US Interests? Please explain.
How long is the Prep time for commenting?
Every round of exclusion is granted a 30-day comment period for extension consideration beginning 60 days prior to the expiration of the exclusion.
If you don’t have every round of the exclusions memorized, don’t fret! You can find a breakdown of each round here:
But what makes this important information so Appetizing?
To date, Shapiro has already recovered an estimated $12 million in duties as a result of our exclusion post entry work. We believe that exclusions are something worth serving our customers; after all, it’s the perfect opportunity for importers to not only highlight the negative effects of additional duties, but to show them.
One of the most common questions we get asked by customers is should we import now or wait?
By monitoring the status of the Section 301 exclusions, you can better forecast for your future imports in both operational and financial planning. We know all too well that additional 7.5% or 25% duties can severely alter you future budgeting estimates. However, once you understand the ins and outs of each exclusion expiration, you will have a better idea of when cargo should be imported – which can be hugely beneficial for your bottom line.
No one like spoiled goods…so what are you waiting for? Let’s get cookin’!
Want to receive exclusion updates? Click here to subscribe to our Section 301 Exclusion Monitoring alerts!
Get Shap Blog via Email
We've got you covered - sign up and get the latest blog posts delivered right to your inbox.
- June 2020 (1)
- April 2020 (1)
- March 2020 (1)
- July 2019 (1)
- March 2019 (1)
- December 2018 (1)
- Show All »
- July 2018 (2)
- June 2018 (1)
- April 2018 (1)
- March 2018 (2)
- February 2018 (5)
- January 2018 (2)
- December 2017 (1)
- November 2017 (3)
- October 2017 (2)
- September 2017 (1)
- August 2017 (1)
- July 2017 (1)
- May 2017 (1)
- April 2017 (1)
- March 2017 (2)
- January 2017 (1)
- December 2016 (1)
- October 2016 (1)
- September 2016 (1)
- August 2016 (2)
- July 2016 (1)
- May 2016 (1)
- April 2016 (1)
- February 2016 (2)
- January 2016 (3)
- November 2015 (2)
- September 2015 (1)
- April 2015 (2)
- February 2015 (1)
- January 2015 (1)
- November 2014 (2)
- October 2014 (1)
- September 2014 (1)
- August 2014 (1)
- July 2014 (1)
- June 2014 (2)
- April 2014 (3)
- February 2014 (1)
- January 2014 (2)
- December 2013 (2)
- November 2013 (2)
- October 2013 (1)
- September 2013 (1)
- August 2013 (1)
- July 2013 (1)
- May 2013 (2)