83 FR 40823 - Notice of Action Pursuant to Section 301: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation

OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

Federal Register Volume 83, Issue 159 (August 16, 2018)

The U.S. Trade Representative (Trade Representative) has determined that appropriate action in this investigation includes the imposition of an additional ad valorem duty of 25 percent on products from China classified in the subheadings of the Harmonized Tariff Schedule of the United States (HTSUS) set out in Annex A of this notice. The Trade Representative has further determined to establish a process by which U.S. stakeholders may request that particular products classified within a covered tariff subheading in Annex A be excluded from these additional duties.

[Federal Register Volume 83, Number 159 (Thursday, August 16, 2018)]
[Notices]
[Pages 40823-40838]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-17709]


-----------------------------------------------------------------------

OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE


Notice of Action Pursuant to Section 301: China's Acts, Policies, 
and Practices Related to Technology Transfer, Intellectual Property, 
and Innovation

AGENCY: Office of the United States Trade Representative.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: The U.S. Trade Representative (Trade Representative) has 
determined that appropriate action in this investigation includes the 
imposition of an additional ad valorem duty of 25 percent on products 
from China classified in the subheadings of the Harmonized Tariff 
Schedule of the United States (HTSUS) set out in Annex A of this 
notice. The Trade Representative has further determined to establish a 
process by which U.S. stakeholders may request that particular products 
classified within a covered tariff subheading in Annex A be excluded 
from these additional duties.

DATES: The additional duties set out in Annex A to this notice are 
effective with respect to products that are entered for consumption, or 
withdrawn from warehouse for consumption, on or after August 23, 2018.

FOR FURTHER INFORMATION CONTACT: For questions about this action, 
contact Assistant General Counsel Arthur Tsao 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 Annex A to this Notice, contact [email protected].

SUPPLEMENTARY INFORMATION: 

A. Proceedings in the Investigation

    On August 18, 2017, the Office of the U.S. Trade Representative 
(USTR) 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).
    In a notice published on April 6, 2018 (83 FR 14906), the Trade 
Representative announced a determination that the acts, policies, and 
practices of the Government of China covered in the investigation are 
unreasonable or discriminatory and burden or restrict U.S. commerce. 
The April 6 notice also invited public comment on a proposed action in 
the investigation, in the form of an additional 25 percent ad valorem 
duty on products from China classified in a list of 1,333 tariff 
subheadings, with an annual trade value of approximately $50 billion. 
As explained in that notice, the level was appropriate both in light of 
the estimated harm to the U.S. economy, and to obtain elimination of 
China's harmful acts, policies, and practices.
    The public comment process included two opportunities for the 
submission of written comments, and the opportunity to participate in a 
public hearing. USTR received thousands of submissions, and held a 3-
day public hearing with more than 100 witnesses. The public versions of 
submissions and a transcript of the hearing are available on 
www.regulations.gov in docket number USTR-2018-0005.
    USTR and the interagency Section 301 Committee carefully reviewed 
the public comments and the testimony from the public hearing. USTR and 
the Section 301 Committee also carefully reviewed the extent to which 
the tariff subheadings in the April 6 notice include products 
containing industrially significant technology, including technologies 
and products related to China's ``Made in China 2025'' industrial 
policy program.
    Based on this review process, the Trade Representative determined 
to take an initial action in the investigation, and to consider an 
additional proposed action. The Trade Representative announced the 
determination on June 15, 2018, and published a notice on June 20, 2018 
(83 FR 28710). The Trade Representative narrowed the proposed list in 
the April 6 notice to 818 tariff subheadings, with an approximate 
annual trade value of $34 billion. This initial action became effective 
on July 6, 2018. The additional proposed action was an additional ad 
valorem duty of 25 percent on products of China classified in 284 
tariff subheadings, with an annual trade value of approximately $16 
billion, as set forth in Annex C to the June 20 notice. The June 20 
notice further explained that including these tariff subheadings in the 
Section 301 action would maintain the effectiveness of a $50 billion 
trade action.
    The June 20 notice invited public comment on the additional 
proposed action. USTR requested that commenters address specifically 
whether imposing increased duties on a particular listed subheading 
would be practicable or effective to obtain the elimination of China's 
acts, policies, and practices, and whether maintaining or imposing 
additional duties on a particular listed product would cause 
disproportionate economic harm to U.S. interests, including small or 
medium-sized businesses and consumers.
    In response to the notice of additional proposed action, interested 
persons filed over 700 written submissions. USTR and the Section 301 
Committee held a 2-day public hearing on July 24-25, 2018. During the 
hearing, 82 witnesses provided testimony and responded to questions. 
Interested parties also had the opportunity to provide rebuttal 
submissions. The public submissions and a transcript of the hearing are 
available on www.regulations.gov in docket number USTR-2018-0018.

B. Determination on Appropriate Action

    USTR and the Section 301 Committee have carefully reviewed the 
public comments and the testimony from the two-day public hearing. In 
addition, USTR and the interagency Section 301 Committee have carefully 
reviewed the extent to which the tariff subheadings in Annex C to the 
June 20 notice include products containing industrially significant 
technology, including technologies and products related to the ``Made 
in China 2025'' program. Based on this review process, the Trade 
Representative has determined to narrow the proposed tariff subheadings 
in Annex C to the June 20 notice to 279 tariff subheadings. The annual 
trade

[[Page 40824]]

value of the final list remains approximately $16 billion.
    Pursuant to sections 301(b), 301(c), and 304(a) of the Trade Act of 
1974 (19 U.S.C. 2411(b), 2411(c), and 2414(a)), the Trade 
Representative determines that appropriate and feasible action in this 
investigation includes the imposition of an additional ad valorem duty 
of 25 percent on products of China covered in the tariff subheadings 
listed in Annex A to this notice. Annex B to this notice contains the 
same list of tariff subheadings, with unofficial descriptions of the 
types of products covered in each subheading.
    In order to implement this determination, effective August 23, 
2018, subchapter III of chapter 99 of the HTSUS is modified by Annex A 
of this notice. Products of China that are provided for in new HTSUS 
heading 9903.88.02, as established by Annex A of this notice that are 
entered for consumption, or withdrawn from warehouse for consumption, 
on or after 12:01 a.m. Eastern daylight time on August 23, 2018, will 
be subject to an additional ad valorem duty of 25 percent. The rates of 
duty applicable to products of China that are provided for in new HTSUS 
heading 9903.88.02 apply in addition to all other applicable duties, 
fees, exactions, and charges.
    The HTSUS note in Annex A, as compared to the HTSUS note in Annex A 
to the June 20 notice, includes clarifications on the application of 
the additional duties to goods entered under certain provisions of 
Chapter 98 and 99 of the HTSUS. Annex C to this notice modifies the 
HTSUS note in Annex A to the June 20 notice in order to reflect these 
clarifications. In addition, Annex C makes a conforming amendment to 
the HTSUS heading in Annex A to the June 20 notice, and makes a 
technical correction to the HTSUS note in Annex A to the June 20 
notice.
    Any product listed in Annex A to this notice, except any product 
that is eligible for admission under `domestic status' as defined in 19 
CFR 146.43, which is subject to the additional duty imposed by this 
determination, and is admitted into a U.S. foreign trade zone on or 
after 12:01 a.m. Eastern daylight time on August 23, 2018, only may be 
admitted as `privileged foreign status' as defined in 19 CFR 146.41. 
Such products will be subject upon entry for consumption to any ad 
valorem rates of duty or quantitative limitations related to the 
classification under the applicable HTSUS subheading.
    During the notice and comment process, a number of interested 
persons asserted that specific products within a particular tariff 
subheading only were available from China, that imposition of 
additional duties on the specific products would cause severe economic 
harm to a U.S. interest, and that the specific products were not 
strategically important or related to the ``Made in China 2025'' 
program. In light of such concerns, and pursuant to sections 301(b), 
301(c), 304(a), and 307(a) of the Trade Act of 1974 (19 U.S.C. 2411(b), 
2411(c), 2414(a), and 2417(a)), the Trade Representative has determined 
that USTR will establish a process by which U.S. stakeholders may 
request that particular products classified within an HTSUS subheading 
listed in Annex A be excluded from these additional duties. The process 
will be comparable to the exclusion process established in connection 
with the initial, $34 billion trade action. USTR will publish a 
separate notice describing the product exclusion process, including the 
procedures for submitting exclusion requests, and an opportunity for 
interested persons to submit oppositions to a request.

Robert Lighthizer,
United States Trade Representative.
BILLING CODE 3290-F8-P

[[Page 40825]]

[GRAPHIC] [TIFF OMITTED] TN16AU18.003


[[Page 40826]]


[GRAPHIC] [TIFF OMITTED] TN16AU18.004


[[Page 40827]]


[GRAPHIC] [TIFF OMITTED] TN16AU18.005


[[Page 40828]]


[GRAPHIC] [TIFF OMITTED] TN16AU18.006


[[Page 40829]]


[GRAPHIC] [TIFF OMITTED] TN16AU18.007


[[Page 40830]]


[GRAPHIC] [TIFF OMITTED] TN16AU18.008


[[Page 40831]]


[GRAPHIC] [TIFF OMITTED] TN16AU18.009


[[Page 40832]]


[GRAPHIC] [TIFF OMITTED] TN16AU18.010


[[Page 40833]]


[GRAPHIC] [TIFF OMITTED] TN16AU18.011


[[Page 40834]]


[GRAPHIC] [TIFF OMITTED] TN16AU18.012


[[Page 40835]]


[GRAPHIC] [TIFF OMITTED] TN16AU18.013


[[Page 40836]]


[GRAPHIC] [TIFF OMITTED] TN16AU18.014


[[Page 40837]]


[GRAPHIC] [TIFF OMITTED] TN16AU18.015


[[Page 40838]]


[GRAPHIC] [TIFF OMITTED] TN16AU18.016

[FR Doc. 2018-17709 Filed 8-15-18; 8:45 am]
 BILLING CODE 3290-F8-C