Document

Notice of Modification: China's Acts, Policies and Practices Related to Technology Transfer, Intellectual Property and Innovation

In connection with the Four-Year Review of actions taken in the section 301 investigation of China's acts, policies, and practices related to technology transfer, intellectual p...

Office of the United States Trade Representative

AGENCY:

Office of the United States Trade Representative (USTR).

ACTION:

Notice of modification of actions.

SUMMARY:

In connection with the Four-Year Review of actions taken in the section 301 investigation of China's acts, policies, and practices related to technology transfer, intellectual property, and innovation, and in accordance with the specific direction of the President, the U.S. Trade Representative has determined to: modify the actions being taken in the investigation by imposing additional section 301 duties or increasing the rate of existing section 301 duties, on certain products of China in strategic sectors; propose increasing tariff rates for certain tungsten products, wafers, and polysilicon, with a public comment process to be set out via separate notice; provide a list of subheadings eligible for consideration of temporary exclusion under an exclusion process for certain machinery used in domestic manufacturing; and modify the actions to temporarily exclude from section 301 duties certain solar manufacturing equipment.

DATES:

Tariff increases in 2024 are applicable with respect to products that are entered for consumption, or withdrawn from warehouse for consumption, on or after September 27, 2024. Tariff increases in 2025 and 2026 are applicable with respect to products that are entered for consumption, or withdrawn from warehouse for consumption, on or after January 1 of the corresponding year. Exclusions for solar equipment included in Annex B are retroactive and applicable with respect to products that are entered for consumption, or withdrawn from warehouse for consumption, on or after January 1, 2024, and through May 31, 2025.

FOR FURTHER INFORMATION CONTACT:

For general questions about this notice, contact Philip Butler and Megan Grimball, Chairs of the Section 301 Committee at 202.395.5725. For specific questions on customs classification or implementation of the product exclusions, contact .

SUPPLEMENTARY INFORMATION: ( printed page 76582)

A. Background

On August 24, 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 under section 301 of the Trade Act of 1974, as amended (Trade Act) (19 U.S.C. 2411). See82 FR 40213. In a notice published on April 6, 2018, the U.S. Trade Representative determined that acts, policies, and practices of the Government of China related to technology transfer, intellectual property, and innovation were unreasonable or discriminatory, and burdened or restricted U.S. commerce, and thus were actionable under section 301(b) of the Trade Act (19 U.S.C. 2411(b)). See83 FR 14906.

Following a notice and comment process on the proposed action to be taken in the investigation, the U.S. Trade Representative took two actions under section 301 of the Trade Act: the July 6, 2018, action, covering an approximate annual trade value of $34 billion (List 1), and the August 23, 2018, action, covering an approximate annual trade value of $16 billion (List 2). See83 FR 28710 (July 6, 2018, action) and 83 FR 40823 (August 23, 2018, action). These actions subsequently were modified by imposing additional duties on supplemental lists of products, known as Lists 3 and 4, as well as by the temporary removal of duties on certain products through product exclusions.

On May 5, 2022, USTR announced that under section 307(c)(2) of the Trade Act (19 U.S.C. 2417(c)(2)), the July 6, 2018, and August 23, 2018, actions, as modified, were subject to possible termination on their respective four-year anniversary dates ( i.e., July 6, 2022, and August 23, 2022) and of the opportunity for representatives of domestic industries that benefit from the trade actions to request continuation of the actions during the last 60 days of such four-year periods. See87 FR 26797.

On September 8, 2022, USTR announced that the July 6, 2018 and the August 23, 2018 actions, as modified, would remain in effect because at least one representative of a domestic industry that benefits from each action submitted to the U.S. Trade Representative a request for continuation of the actions. See87 FR 55073. The notice also announced that in accordance with section 307(c)(3) of the Trade Act (19 U.S.C. 2417(c)(3)), the U.S. Trade Representative would conduct a review of the July 6, 2018 and the August 23, 2018 actions, as modified. See87 FR 55073.

To aid in this review, on November 15, 2022, USTR opened a docket for interested persons to submit comments with respect to a number of considerations concerning the review. See87 FR 62914. USTR received approximately 1,500 comments.

Based on information obtained during the review, including the public comments, USTR, in consultation with the Section 301 Committee, prepared a comprehensive report that included findings on the effectiveness of the July 6, 2018 and the August 23, 2018 actions, as modified, in achieving the objectives of the investigation, other actions that could be taken, and the effects of such actions on the United States economy, including consumers. The report, Four-Year Review of Actions Taken in the Section 301 Investigation: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation (Report), was published on May 14, 2024, and is available on the USTR website.

As detailed in the Report, the U.S. Trade Representative found that:

The section 301 actions have been effective in encouraging China to take steps toward eliminating some of its technology transfer-related acts, policies, and practices, and have reduced some of the exposure of U.S. persons and businesses to these technology transfer-related acts, policies, and practices.

China has not eliminated many of its technology transfer-related acts, policies, and practices, which continue to impose a burden or restriction on U.S. commerce. Instead of pursuing fundamental reform, China has persisted, and even become more aggressive, particularly through cyber intrusions and cybertheft, in its attempts to acquire and absorb foreign technology, which further burden or restrict U.S. commerce.

Economic analyses generally find that the duties have had small negative effects on U.S. aggregate economic welfare, positive impacts on U.S. production in the ten sectors most directly affected by the duties, and minimal impacts on economy-wide prices and employment.

Economic analyses, including the principal U.S. Government analysis published by the U.S. International Trade Commission, generally find that the section 301 tariffs have contributed to reducing U.S. imports of goods from China and increasing imports from alternate sources, including U.S. allies and partners, thereby potentially supporting U.S. supply chain diversification and resilience.

Based on the Report findings, the U.S. Trade Representative recommended to the President to maintain the section 301 tariffs on the covered products. To further encourage China to eliminate the investigated acts, policies, and practices, the U.S. Trade Representative also recommended enhancing the effectiveness of the tariff actions by adding or increasing section 301 tariffs on certain products in strategic sectors, including sectors targeted by China for dominance, or sectors where the United States recently made significant domestic investments. The U.S. Trade Representative found that “increasing or adding section 301 tariffs on products targeted by China for dominance will help encourage the elimination of investigated technology transfer-related acts, policies, and practices by encouraging alternative sourcing in strategic sectors of the economy, reducing U.S. reliance on China, while also reducing exposure to China's technology transfer-related acts, policies, and practices, and helping to maintain resilient, diverse, and secure supply chains.”

On May 14, 2024, taking into consideration the U.S. Trade Representative's findings in the Report and recommendations, the President issued a Memorandum (President's Memorandum) that directed the U.S. Trade Representative to: “maintain, as appropriate and consistent with this memorandum, the ad valorem rates of duty and lists of products subject to the [actions] taken under the section 301 investigation” and “[t]o further encourage China to eliminate the acts, policies, and practices at issue, and to counteract the burden or restriction of these acts, policies, and practices, the Trade Representative shall modify the [actions taken in the investigation] to increase section 301 ad valorem rates of duty” for certain specified products of China. See https://www.whitehouse.gov/​briefing-room/​presidential-actions/​2024/​05/​14/​memorandum-on-actions-by-the-united-states-related-to-the-statutory-4-year-review-of-the-section-301-investigation-of-chinas-acts-policies-and-practices-related-to-technology-transfer-intellectua/​. In particular, the President's Memorandum specified categories of products for proposed tariff increases, tariff rates for those products, and year for tariff increases. With respect to tariff increases, the President directed increases on the following products:

( printed page 76583)

[FR Doc. 2024-21217 Filed 9-17-24; 8:45 am]

BILLING CODE 3390-F4-P

Legal Citation

Federal Register Citation

Use this for formal legal and research references to the published document.

89 FR 76581

Web Citation

Suggested Web Citation

Use this when citing the archival web version of the document.

“Notice of Modification: China's Acts, Policies and Practices Related to Technology Transfer, Intellectual Property and Innovation,” thefederalregister.org (September 18, 2024), https://thefederalregister.org/documents/2024-21217/notice-of-modification-china-s-acts-policies-and-practices-related-to-technology-transfer-intellectual-property-and-inno.