On March 22, 2018, the Trump Administration announced that it plans to take several drastic actions to respond to certain Chinese laws, policies, practices, and actions relating to intellectual property rights, innovation, and technology development that the U.S. Trade Representative (“USTR”) concluded may be unfair and harmful to U.S. companies based on the findings of an investigation that was conducted pursuant to Section 301 of the Trade Act of 1974. The planned actions include: (1) imposing tariffs on a wide range of Chinese-origin goods; (2) bringing a dispute settlement action before the World Trade Organization (“WTO”); and (3) developing possible restrictions on Chinese investment in U.S. industries or technologies deemed important by the U.S. Government.
The new tariffs may target as much as $60 billion worth of Chinese imports into the United States. Although the proposed list of products impacted by the new tariffs is not due to be announced until on or before April 6, press reports suggest that the USTR will target sectors that include aerospace, machinery, and information communication technology. The USTR also has testified that such tariffs would focus on products easily sourced from other countries so that the effect on U.S. importers and consumers would be minimized, suggesting that Chinese apparel and footwear are also likely targets.
USTR Robert Lighthizer has recently filed a request for consultations with China at the WTO relating to China’s alleged violations of its commitments under the Agreement on Trade-Related Aspects of Intellectual Property Rights (the “TRIPS Agreement”). Specifically, the USTR has asserted that China imposes measures through various laws and regulations that separately or collectively breach Article 3 of the TRIPS Agreement (i.e., national treatment rules) and different portions of Article 28 of the TRIPS Agreement (i.e., rules that WTO members must follow regarding the exclusive rights a patent confers on its owner).
With respect to restrictions on Chinese investment, the Secretary of the Treasury must report to the President regarding his status in developing possible restrictions on Chinese investment in the United States relating to industries or technologies deemed important to the U.S. Government on or by May 21, 2018. It is expected that some of the recommendations will be consistent with some of the proposals to reform the scope and actions of the Committee on Foreign Investment in the United States (“CFIUS”) that are included in the Foreign Investment Risk Review Modernization Act of 2017 (“FIRRMA”) that is currently being considered by Congress.
Once the list of products affected by the new Section 301 tariffs is published in the Federal Register, companies will have 30 days to make comments to request exclusion or inclusion of certain products in the list of affected products. Companies importing from China should act now to assess the possible impact of these additional tariffs on their supply chains.
The FisherBroyles international trade team has extensive experience representing and advising clients dealing with retaliatory, antidumping and countervailing tariffs imposed under the U.S. trade laws. We can assist your company in reviewing your line of products to help mitigate the impact of the proposed tariffs, as well as preparing comments for exclusion or inclusion, and testimony before the relevant committees at the hearings expected after announcement of the proposed tariff lists. If you have any questions regarding the Section 301 tariffs or would like to discuss possible strategies for addressing them, please contact any of the FisherBroyles international trade attorneys listed below.
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