USTR LIST 3 TARIFF EXCLUSIONS Prepare now to file LIST 3 exclusion applications.

Feb. 2019: Importers should immediately embark on preparations to file applications for section 301 LIST 3 tariff exclusions. (If granted, an exclusion from the tariffs would apply from the initiation of the LIST 3 tariffs for a period of one year; i.e., from September 26, 2018 to September 26, 2019. Approved exclusions would mean such importers would receive duty refunds (with interest) for all entries cleared during this period.)

Until recently the U.S. Trade Representative (USTR) stated that it would not open an exclusion process to aid importers subject to the 10% section 301 LIST 3 tariffs until rates reached the 25% level. Recently, Congress inserted a mandate into the federal budget which now requires USTR to promptly open the LIST 3 exclusion process in March, 2019. Hence, USTR is obligated to made exclusions an option for importers, regardless of whether LIST 3 rates increase to 25%, or not. An increase to 25% appears likely, since the ratchet-up is scheduled to automatically occur after March 1. While President Trump has indicated that he might intervene to delay the increase, that action is conditioned that China making substantive offers to remedy their adverse policies on IP and forced technology transfers in the bilateral U.S.-China trade negotiations. Thus far, China itself has not publicly indicated a willingness to undertake such reforms in the manners required by the Trump Administration.

The application process for these tariff exclusions can be complex, and importers only have one opportunity to apply. It is therefore critical to articulate and support the strongest arguments concisely, while also following all of USTR's unique procedures. It is recommended that importers work with an international trade attorney already experienced with the entire section 301 exclusion process.

The international trade attorney will develop and support the narrative arguments required to support the exclusion request. The USTR asks that these narrative arguments be responsive to st criteria that tie to the purpose of the section 301 tariffs. Our analysis of USTR the approvals and denials previously issued, has revealed that the USTR favors certain arguments and criteria, over others. The attorney will also assist in the formulation of the proposed language of the tariff exclusion (this language is required in the application, if approved this language then appears as a statutory amendment to the tariff schedule). This language must be carefully drafted to accord with certain objective standards. Customs officials vet this language and are to object to any poorly or improperly drafted exclusions which might not be "administrable" by field and port personnel. Trade and financial data will also be required in the application relative to prior sales over a three year period (2016, 2017, 2018). The attorney will help the importer to organize, present, and support all of this information, data and arguments in the best light possible.

For immediate assistance with section 301 issues, please contact Matt Nakachi, esq. via email at matt@TradeLawCounsel.com.

Mr. Nakachi has already represented numerous companies and has personally filed scores of section 301 exclusion requests in both the LIST 1 and LIST 2 proceedings. Additional information about Mr. Nakachi and the firm is available at www.TradeLawCounsel.com

Content may constitute attorney advertising per Bar Association rules and should not be considered legal advice. Publication date Feb., 19, 2019. All rights reserved, copyright 2019.
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Matt Nakachi

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