As concerns surrounding coronavirus (COVID-19) escalate, U.S. trade policy is aligning with the country's medical needs. On March 10, 2020, the United States Trade Representative (USTR) announced new Section 301 exclusions for certain kinds of Chinese-origin medical products. Although the USTR previously levied Section 301 duties as high as 15 percent against these products, the announced exclusions exempt them from Section 301 duties until September 1, 2020. Significantly, the new exclusions are retroactive in nature so that entities can seek refunds of the Section 301 duties that they have paid on the excluded products dating back to September 1, 2019. Assuming the USTR continues prior procedures, it is expected that the importing community will be allowed to submit written comments to support extensions of the exclusions.
This round of exclusions follows previous rounds granted by the USTR, but it represents the first since the coronavirus has taken center stage for the Trump administration. Although the USTR did not identify the coronavirus or the nation's healthcare infrastructure as a factor in deciding to grant certain exclusions, these most recent exclusions may have been influenced by the current medical emergency. Additionally, a prime consideration was whether a particular product is only available from China, among other reasons.
The new product exclusions relate to certain kinds of soaps, laboratory equipment, sanitary articles (e.g., face masks), rubber gloves, surgical drapes, nonwoven apparel designed for use in hospitals and certain other medical wares. The new product exclusions are available for any product categorized under the HTSUS numbers listed in the Annex of the Federal Register notice relating to the product exclusions published on March 10, 2020, regardless of whether a company filed for an exclusion request. Companies should examine the relevant HTSUS classifications for their products, as the exclusions only apply to products listed under the relevant 10-digit HTSUS numbers in the Annex.
U.S. Customs and Border Protection has stated that "[t]o request a refund of Section 301 duties paid on previous imports of products granted duty exclusions by the USTR, importers may file a Post Summary Correction (PSC) if within the PSC filing timeframe. If the entry is beyond the PSC filing timeframe, but within 180 days of the liquidation action, importers may protest the liquidation." See CSMS #41878462.
About Duane Morris
Attorneys in the firm's International Group have considerable experience in assisting clients in developing duty-saving strategies. Toward this end, Duane Morris attorneys have prepared numerous Section 301 product exclusion requests that have been granted by the USTR, and they have experience in assisting clients in filing submissions with CBP to obtain refunds on Section 301 duties that had previously been paid prior to the product exclusions being granted by the USTR.
For More Information
If you would like further information about this Alert or the procedures for seeking refunds from CBP relating to Section 301 product exclusions or the process for seeking to have Section 301 product exclusions be extended, please contact Brian S. Goldstein, Geoffrey M. Goodale, J. Manly Parks, Patrick C. Gallagher, Ph.D., Nathan B. Reeder, any of the attorneys in our International Group, attorneys in our Life Sciences and Medical Technologies Industry Group or the attorney in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.