The Customs Tariff Commission ("CTC") of the Ministry of Finance of the PRC on 11 September 2019 announced its first batch of tariff exemptions (List 1 and List 2, "Exemption Lists") for 16 U.S. products, including some lubricants and anti-cancer drugs, as well as animal feed ingredients such as whey protein, fish meal, and shrimp and prawn seedlings.
In response to the Section 301 duties imposed by United States Trade Representative ("USTR"), the Chinese government to date has imposed tariffs on selected U.S. import goods in the following three batches of lists:
- 25 percent ad valorem rate of duties on US$ 34 billion of U.S. goods listed in List 1A, effective on 6 July 2018, per the CTC's notice on 16 June 2018;
- 25 percent ad valorem rate of duties on US$ 16 billion of U.S. goods listed in List 1B, effective on 23 August 2018, per the CTC's notice on 8 August 2018;
- 5 to 25 percent ad valorem rate of duties on US$ 60 billion of U.S. goods listed in List 2, effective on 1 June 2019, per the CTC's notice on 13 May 2019;
- 5 or 10 percent ad valorem rate of duties on US$ 75 billion of U.S. goods listed in List 3A effective on 1 September 2019, and List 3B, effective on 15 December 2019, per the CTC's notice on 23 August 2019.
According to the CTC's announcement on 13 May, 2019, it has implemented a tariff exclusion procedure through which qualified organizations and companies can submit exclusion requests at CTC's designated portal (https://gszx.mof.gov.cn/) within below time periods of two launched phases.
- Phase One, 3 June – 5 July, 2019: Qualified entities can apply for an exclusion from Chinese tariffs imposed on U.S. import products in Lists 1A and 1B;
- Phase Two, 2 September – 18 October, 2019: Qualified entities can apply for an exclusion from Chinese tariffs imposed on U.S. import products in List 2.
Tariff Exemption Lists
The Chinese government has begun accepting applications for tariff exemptions in May. It is the first time they have stated which products will be excluded. The two Exemption Lists took effect on 17 September 2019 and are valid for a year through 16 September 2020. Products on these two Exemption Lists will not be subject to additional duties imposed by China on U.S. goods. According to the CTC's announcement, Chinese importers can apply to China Customs within 6 months from the issuance date of the Exemption Lists for a refund of tariffs already levied on 12 of the products in List 1. Four products in List 2, including whey protein, are eligible for the exemption but not for refunds.
Although the Exemption Lists do not include major U.S. goods subject to tariffs, like soybeans or meat, these lists could still be seen as a positive signal by the Chinese government to show a gesture of sincerity towards the U.S. ahead of minister-level talks in the forthcoming October. CTC further in its announcement stated that it will continue to review exemption requests and announce new lists in the future.
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