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Relief from Section 301 Sanctions on Products from China

Business Law Alert Andre Fiebig

Effective July 6, 2018, the U.S. has imposed a 25% ad valorem duty on a wide array of products imported into the United States and originating in China. The list of products on which there is a 25% ad valorem duty can be found here. Another long list of products is under consideration for similar sanctions. Public hearings were held on the second list last week.

The rationale for the sanctions is based on a report issued by the U.S. International Trade Representative which concluded that China was engaged in unfair trade practices harming the United States. For many U.S. companies who source products from China, the sanctions are proving to be a significant hardship.

In recognition of the potential negative impact the sanctions are having on U.S. companies, the United States has created the possibility for companies to apply for an exemption. The exemption application must be filed by October 9, 2018 and will be effective retroactively back to July 6, 2018 if approved. Although the granting of the exception is in the discretion of the U.S. Trade Representative, there are three important arguments companies should make in their applications:

  • If you file an application, you should be able to show that the product is available only from China. If that same or a comparable product is readily available in the United States, the exemption might not be granted.

  • You should also be prepared to show that the sanctions are or will cause your company severe economic harm.

  • Finally, you will need to show that the particular product is not part of a Chinese industrial program.

Quarles & Brady has been monitoring these developments and advising clients on appropriate responses.

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