[Federal Register Volume 83, Number 119 (Wednesday, June 20, 2018)]
[Notices]
[Pages 28710-28756]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-13248]


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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

[Docket Number USTR-2018-0018]


Notice of Action and Request for Public Comment Concerning 
Proposed Determination of Action Pursuant to Section 301: China's Acts, 
Policies, and Practices Related to Technology Transfer, Intellectual 
Property, and Innovation

AGENCY: Office of the United States Trade Representative.

ACTION: Notice of action, request for comments, and notice of public 
hearing.

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SUMMARY: The U.S. Trade Representative (Trade Representative) has 
determined that appropriate action in this investigation includes the 
imposition of an additional ad valorem duty of 25 percent on products 
from China classified in the subheadings of the Harmonized Tariff 
Schedule of the United States (HTSUS) set out in Annex A of this 
notice. The Trade Representative has further determined to establish a 
process by which U.S. stakeholders may request that particular products 
classified within a covered tariff subheading in Annex A be excluded 
from these additional duties. Further, the Office of the U.S. Trade 
Representative (USTR) is seeking public comment and will hold a public 
hearing regarding a proposed additional action in this investigation. 
The proposed additional action is the imposition of an ad valorem duty 
of 25 percent on products of China classified in the HTSUS subheadings 
set out in Annex C of this notice.

DATES: 
    Applicable date of duties: The additional duties set out in Annex A 
to this notice are applicable with respect to products that are entered 
for consumption, or withdrawn from warehouse for consumption, on or 
after July 6, 2018.
    Comment and hearing deadline: To be assured of consideration, you 
must submit comments and responses with respect to the proposed list of 
products in Annex C to this notice in accordance with the following 
schedule:
    June 29, 2018: Due date for filing requests to appear and a summary 
of expected testimony at the public hearing and for filing pre-hearing 
submissions.
    July 23, 2018: Due date for submission of written comments.
    July 24, 2018: The Section 301 Committee will convene a public 
hearing in the main hearing room of the U.S. International Trade 
Commission, 500 E Street SW, Washington, DC 20436 beginning at 9:30 
a.m.
    July 31, 2018: Due date for submission of post-hearing rebuttal 
comments.

ADDRESSES: USTR strongly prefers electronic submissions made through 
the Federal eRulemaking Portal: http://www.regulations.gov. Follow the 
instructions for submitting comments in sections D, E, and F below. The 
docket number is USTR-2018-0018.

FOR FURTHER INFORMATION CONTACT: For questions about the ongoing 
investigation, action, or proposed additional action, contact USTR 
Assistant General Counsel Arthur Tsao at (202) 395-5725. For questions 
on customs classification or implementation of additional duties on 
products identified in Annex A to this Notice, contact 
[email protected].

SUPPLEMENTARY INFORMATION:

A. Proceedings in the Investigation

    On August 18, 2017, the Trade Representative initiated an 
investigation

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into the government of China's acts, policies, and practices related to 
technology transfer, intellectual property, and innovation. See 82 FR 
40213. The proceedings in the investigation up through the Trade 
Representative's determination that China's acts, policies, and 
practices are actionable under section 301(b) of the Trade Act of 1974 
(19 U.S.C. 2411(b)) are set out in the notice published at 83 FR 14906 
(April 6, 2018).
    The April 6, 2018 notice invited public comment on a proposed 
action in the investigation: The imposition of an additional ad valorem 
duty of 25% on products from China classified in a list of 1,333 tariff 
subheadings. As explained in the notice, the value of the products on 
the list was approximately $50 billion in terms of estimated annual 
trade value for calendar year 2018, and the level is appropriate both 
in light of the estimated harm to the U.S. economy, and to obtain 
elimination of China's harmful acts, policies, and practices. 
Interested persons were invited to provide comments on the following:
     The specific products to be subject to increased duties, 
including whether products listed in the Annex to the April 6 notice 
should be retained or removed, or whether products not currently on the 
list should be added.
     The level of the increase, if any, in the rate of duty.
     The appropriate aggregate level of trade to be covered by 
additional duties.
    In response to the notice of proposed action, interested persons 
filed approximately 3,200 written submissions. USTR and the Section 301 
Committee held a three-day public hearing on May 15-17, 2018. During 
the hearing, 121 witnesses provided testimony and responded to 
questions. Interested parties also had the opportunity to provide 
rebuttal submissions, and approximately 295 rebuttal submissions were 
filed. The public submissions and a transcript of the hearing are 
available on www.regulations.gov in docket number USTR-2018-0005.

B. Determination on Appropriate Action

    In the April 6, 2018 notice, the Trade Representative announced his 
determination that the acts, policies, and practices under 
investigation are unreasonable or discriminatory and burden or restrict 
U.S. commerce, and are thus actionable under section 301(b) of the 
Trade Act of 1974 (19 U.S.C. 2411(b)). Upon a determination of 
actionability, section 301(b) provides for the Trade Representative to 
take all appropriate and feasible action authorized under section 
301(c) of the Trade Act of 1974 (19 U.S.C. 2411(c)), subject to the 
specific direction, if any, of the President regarding such action, and 
all other appropriate and feasible action within the power of the 
President that the President may direct the Trade Representative to 
take under section 301(b), to obtain the elimination of that act, 
policy, or practice.
    On May 29, 2018, the President made the following statement:
    ``Under Section 301 of the Trade Act of 1974, the United States 
will impose a 25 percent tariff on $50 billion of goods imported from 
China containing industrially significant technology, including those 
related to the `Made in China 2025' program. The final list of covered 
imports will be announced by June 15, 2018, and tariffs will be imposed 
on those imports shortly thereafter.'' Statement on Steps to Protect 
Domestic Technology and Intellectual Property from China's 
Discriminatory and Burdensome Trade Practices (https://www.whitehouse.gov/briefings-statements/statement-steps-protect-domestic-technology-intellectual-property-chinas-discriminatory-burdensome-trade-practices).
    USTR and the Section 301 Committee have carefully reviewed the 
public comments and the testimony from the three-day public hearing. In 
addition, and consistent with the Presidential directive, USTR and the 
interagency Section 301 Committee have carefully reviewed the extent to 
which the tariff subheadings in the April 6, 2018 notice include 
products containing industrially significant technology, including 
technologies and products related to the ``Made in China 2025'' 
program. Based on this review process, the Trade Representative has 
determined to narrow the proposed list in the April 6, 2018 notice to 
818 tariff subheadings, with an approximate annual trade value of $34 
billion.
    Pursuant to sections 301(b), 301(c), and 304(a) of the Trade Act of 
1974 (19 U.S.C. 2411(b), 2411(c), and 2414(a)), the Trade 
Representative determines that appropriate and feasible action in this 
investigation includes the imposition of an additional ad valorem duty 
of 25 percent on products of China covered in the tariff subheadings 
listed in Annex A to this notice. Annex B to this notice contains the 
same list of tariff subheadings, with unofficial descriptions of the 
types of products covered in each subheading.
    In order to implement this determination, effective July 6, 2018, 
subchapter III of chapter 99 of the HTSUS is modified by Annex A of 
this notice. Products of China that are provided for in new HTSUS 
heading 9903.88.01, as established by Annex A of this notice that are 
entered for consumption, or withdrawn from warehouse for consumption, 
on or after 12:01 a.m. eastern daylight time on July 6, 2018, shall be 
subject to an additional duty of 25 percent ad valorem. The rates of 
duty applicable to products of China that are provided for in new HTSUS 
heading 9903.88.01 shall apply in addition to all other applicable 
duties, fees, exactions, and charges.
    Any product listed in Annex A, except any product that is eligible 
for admission under `domestic status' as defined in 19 CFR 146.43, 
which is subject to the additional duty imposed by this determination, 
and that is admitted into a U.S. foreign trade zone on or after 12:01 
a.m. eastern daylight time on July 6, 2018, only may be admitted as 
`privileged foreign status' as defined in 19 CFR 146.41. Such products 
will be subject upon entry for consumption to any ad valorem rates of 
duty or quantitative limitations related to the classification under 
the applicable HTSUS subheading.
    During the notice and comment process, a number of interested 
persons asserted that specific products within a particular tariff 
subheading were only available from China, that imposition of 
additional duties on the specific products would cause severe economic 
harm to a U.S. interest, and that the specific products were not 
strategically important or related to the ``Made in China 2025'' 
program. In light of such concerns, and pursuant to sections 301(b), 
301(c), 304(a), and 307(a) of the Trade Act of 1974 (19 U.S.C. 2411(b), 
2411(c), 2414(a), and 2417(a)), the Trade Representative has determined 
that USTR will establish a process by which U.S. stakeholders may 
request that particular products classified within an HTSUS subheading 
listed in Annex A be excluded from these additional duties. USTR will 
publish a separate notice describing the product exclusion process, 
including the procedures for submitting exclusion requests, and an 
opportunity for interested persons to submit oppositions to a request.

C. Proposed Determination on Additional Action

    Based on a review of the public comments and the review of tariff 
subheadings that cover industrially significant technology, USTR has 
identified additional tariff subheadings that would be appropriate for 
action in the form of the imposition of an additional 25 percent ad 
valorem duty. The list of possible additional products

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covers 284 tariff subheadings, and is set out in Annex C to this 
notice.
    The subheadings listed in Annex C have an approximate annual trade 
value of $16 billion. Including these tariff subheadings in the Section 
301 action would maintain the effectiveness of a $50 billion trade 
action. The list of products in Annex C will undergo further review in 
a public notice and comment process, including a hearing. After 
completion of this process, USTR will issue a determination on the 
additional products subject to additional duties.

D. Requests for Public Comments

    In accordance with section 304(b) of the Trade Act (19 U.S.C. 
2414(b)), USTR invites comments from interested persons with respect to 
the proposed additional action of imposing an additional 25 percent ad 
valorem duty on the products classified in the list of tariff 
subheadings in Annex C of this notice. To be assured of consideration, 
you must submit written comments on this proposed additional action in 
response to China's acts, policies, and practices by July 23, 2018, and 
post-hearing rebuttal comments by July 31, 2018.
    In this second round of comments on the proposed action to be taken 
in the investigation, USTR requests that comments be limited to the 
proposed additional action of imposing additional duties on the 
products classified in the tariff subheadings in Annex C. In other 
words, USTR is inviting comments on maintaining or removing a 
subheading currently listed in Annex C, not on the tariff subheadings 
in Annex A, or any other subheading.
    USTR requests that commenters address specifically whether imposing 
increased duties on a particular subheading listed in Annex C would be 
practicable or effective to obtain the elimination of China's acts, 
policies, and practices, and whether maintaining or imposing additional 
duties on a particular product listed in Annex C would cause 
disproportionate economic harm to U.S. interests, including small- or 
medium-sized businesses and consumers.

E. Hearing Participation

    The Section 301 Committee will convene a public hearing in the Main 
Hearing Room of the U.S. International Trade Commission, 500 E Street 
SW, Washington, DC 20436, beginning at 9:30 a.m. on July 24, 2018. You 
must submit requests to appear at the hearing by June 29, 2018. The 
request to appear must include a summary of testimony, and may be 
accompanied by a pre-hearing submission. Participation in this second 
hearing on the additional action in the investigation will be limited 
to issues involving the products covered in the tariff subheadings in 
Annex C. Accordingly, requests to appear at the hearing must identify 
the specific tariff subheadings in Annex C that the witness intends to 
address. Remarks at the hearing may be no longer than five minutes to 
allow for possible questions from the Section 301 Committee.
    All requests to appear at the hearing must be in English and sent 
electronically via www.regulations.gov. To submit a request to appear 
via www.regulations.gov, enter docket number USTR-2018-0018 on the home 
page and click ``search.'' The site will provide a search-results page 
listing all documents associated with this docket. Find a reference to 
this notice and click on the link titled ``Comment Now!''. In the 
``Comment'' field, include the name, address, email address, and 
telephone number of the person presenting the testimony. Attach a 
summary of the testimony, and a pre-hearing submission if provided, by 
using the ``Upload File'' field. The file name should include both the 
name of the person who will be presenting testimony and the entity they 
will be representing. In addition, please submit a request to appear 
and summary of testimony by email to [email protected]. In 
the subject line of the email, please include the name of the person 
who will be presenting the testimony, followed by ``request to 
appear''. Please also include the name, address, email address, and 
telephone number of the person presenting testimony in the body of the 
email message.

F. Procedures for Written Submissions

    All submissions must be in English and sent electronically via 
www.regulations.gov. To submit comments via www.regulations.gov, enter 
docket number USTR-2018-0018 on the home page and click ``search.'' The 
site will provide a search-results page listing all documents 
associated with this docket. Find a reference to this notice and click 
on the link titled ``Comment Now!'' For further information on using 
the www.regulations.gov website, please consult the resources provided 
on the website by clicking on ``How to Use Regulations.gov'' on the 
bottom of the home page. We will not accept hand-delivered submissions.
    The www.regulations.gov website allows users to submit comments by 
filling in a ``Comment'' field or by attaching a document using an 
``Upload File'' field. USTR prefers that you submit comments in an 
attached document. If you attach a document, it is sufficient to type 
``see attached'' in the ``Comment'' field. USTR prefers submissions in 
Microsoft Word (.doc) or Adobe Acrobat (.pdf). If you use an 
application other than those two, please indicate the name of the 
application in the ``Comment'' field.
    File names should reflect the name of the person or entity 
submitting the comments. Please do not attach separate cover letters to 
electronic submissions; rather, include any information that might 
appear in a cover letter in the comments themselves. Similarly, to the 
extent possible, please include any exhibits, annexes, or other 
attachments in the same file as the comment itself, rather than 
submitting them as separate files.
    For any comments submitted electronically containing business 
confidential information, the file name of the business confidential 
version should begin with the characters ``BC''. Any page containing 
business confidential information must be clearly marked ``BUSINESS 
CONFIDENTIAL'' on the top of that page and the submission should 
clearly indicate, via brackets, highlighting, or other means, the 
specific information that is business confidential. If you request 
business confidential treatment, you must certify in writing that 
disclosure of the information would endanger trade secrets or 
profitability, and that the information would not customarily be 
released to the public. Filers of submissions containing business 
confidential information also must submit a public version of their 
comments. The file name of the public version should begin with the 
character ``P''. The ``BC'' and ``P'' should be followed by the name of 
the person or entity submitting the comments or rebuttal comments. If 
these procedures are not sufficient to protect business confidential 
information or otherwise protect business interests, please contact the 
USTR Tech Transfer Section 301 line at (202) 395-5725 to discuss 
whether alternative arrangements are possible.
    USTR will post submissions in the docket for public inspection, 
except business confidential information. You can view submissions on 
the https://www.regulations.gov website by entering docket number USTR-
2018-0018 in the search field on the home page.

Robert Lighthizer,
United States Trade Representative.
3290-F8-P

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[FR Doc. 2018-13248 Filed 6-19-18; 8:45 am]
BILLING CODE 3290-F8-C