Federal Register, Volume 89 Issue 105 (Thursday, May 30, 2024)

[Federal Register Volume 89, Number 105 (Thursday, May 30, 2024)]
[Notices]
[Pages 46948-46984]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-11904]



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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE


Notice of Extension of Certain Exclusions: China's Acts, 
Policies, and Practices Related to Technology Transfer, Intellectual 
Property, and Innovation

AGENCY: Office of the United States Trade Representative (USTR).

ACTION: Notice.

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SUMMARY: In prior notices, the U.S. Trade Representative modified the 
actions in the section 301 investigation of China's acts, policies, and 
practices related to technology transfer, intellectual property, and 
innovation by excluding from additional duties certain products of 
China. The current 429 product specific exclusions (352 previously 
reinstated exclusions and 77 COVID-related exclusions) are scheduled to 
expire on May 31, 2024. This notice announces the U.S. Trade 
Representative's determination to provide a 14-day transition period 
for all current exclusions, extending them through June 14, 2024, and 
to extend certain exclusions through May 31, 2025.

DATES: To provide a transition period, this notice extends all 
exclusions scheduled to expire on May 31, 2024, through June 14, 2024. 
Those exclusions receiving further extension are listed in Annex C to 
this notice and are extended through May 31, 2025.

FOR FURTHER INFORMATION CONTACT: For general questions about this 
notice, contact Senior Associate General Counsel Philip Butler or 
Assistant General Counsel Edward Marcus at (202) 395-5725. For specific 
questions on customs classification or implementation of the product 
exclusions, contact [email protected].

SUPPLEMENTARY INFORMATION:

A. Background

    In the course of this investigation, the U.S. Trade Representative 
has imposed additional duties on products of China in four tranches. 
See 83 FR 28719 (June 20, 2018); 83 FR 40823 (August 16, 2018); 83 FR 
47974 (September 21, 2018), as modified by 83 FR 49153 (September 28, 
2018); and 84 FR 43304 (August 20, 2019), as modified by 84 FR 69447 
(December 18, 2019) and 85 FR 3741 (January 22, 2020).
    For each tranche of additional duties, the U.S. Trade 
Representative established a process by which interested persons could 
request the temporary exclusion of particular products subject to the 
action. These exclusions were granted for a limited time and, with few 
exceptions, most expired in 2019 and 2020.

Reinstated Exclusions

    On October 8, 2021, the U.S. Trade Representative invited the 
public to submit comments on whether to temporarily reinstate certain 
exclusions previously granted and extended. See 86 FR 56345 (October 8, 
2021). On March 28, 2022, the U.S. Trade Representative determined to 
temporarily reinstate 352 expired exclusions through December 31, 2022. 
See 87 FR 17380 (March 28, 2022) (March 28 notice). The 352 exclusions 
were subsequently extended through September 30, 2023. See 87 FR 78187 
(December 21, 2022).

COVID-Related Exclusions

    On March 25, 2020, USTR requested public comments on proposed 
modifications to exclude from additional duties certain medical-care 
products related to the U.S. response to COVID. See 85 FR 16987 (March 
25, 2020). In light of ongoing efforts to combat COVID, on December 29, 
2020, USTR announced 99 product exclusions for medical-care products 
and products related to the U.S. COVID response. See 85 FR 85831 
(December 20, 2020) (December 20 notice). For additional background on 
previous COVID-related extensions, see prior notices issued in the 
investigation, including: 86 FR 13785 (March 10, 2021), 86 FR 63438 
(November 16, 2021), 87 FR 33871 (June 3, 2022), and 87 FR 73383 
(November 29, 2022). On May 17, 2023, the U.S. Trade Representative 
determined to extend 77 of the COVID-related exclusions through 
September 30, 2023. See 88 FR 31580 (May 17, 2023).

Four-Year Review

    In accordance with section 307(c)(3) of the Trade Act of 1974 (19 
U.S.C. 2417(c)(3)), on September 8, 2022, USTR announced that it would 
be conducting a review of the July 6, 2018 and August 23, 2018 actions, 
as modified. See 87 FR 26797 (May 5, 2022); 87 FR 55073 (September 8, 
2022). In a notice published on October 17, 2022 (87 FR 62914), USTR 
announced that it was opening a docket on November 15, 2022, for 
interested persons to submit comments on the review, including whether 
certain tariff headings (including those with product-specific 
exclusions) should remain covered by the actions.
    To allow for consideration under the statutory review, on September 
11, 2023, the U.S. Trade Representative determined to extend all 
current exclusions through December 31, 2023. See 88 FR 62423 
(September 11, 2023).

Consideration of Further Extension of Exclusions

    In light of public comments submitted in the four-year review, on 
December 29, 2023, USTR invited public comments on whether to further 
extend any of the current exclusions and announced an interim extension 
of the exclusions through May 31, 2024. See 88 FR 90225 (December 29, 
2023) (the December 29 notice).
    The December 29 notice provided that, in considering possible 
extensions, USTR would evaluate each exclusion on a case-by-case basis, 
with the focus of the evaluation on the availability of products 
covered by the exclusion from sources outside of China, efforts 
undertaken to source products covered by the exclusion from the United 
States or third countries, and whether further extension of a 
particular exclusion would aid in shifting sourcing outside of China. 
See 88 FR 90225. The notice also provided that USTR would consider the 
impact on U.S. interests of extending or not extending an exclusion and 
the goal of obtaining the elimination of China's acts, policies, and 
practices covered in the investigation.
    USTR opened a 30-day docket on January 22, 2024, and requested that 
commenters address the availability of products covered by the 
exclusion outside of China, plans to shift their sourcing outside of 
China in 2024, efforts undertaken to source products from the United 
States or third countries, and why additional time is needed to shift 
sourcing out of China and the timeline, if any, expected for sourcing 
to shift outside of China.

B. Determination to Further Extend Certain Exclusions

    Based on evaluation of the factors set out in the December 29 
notice, and pursuant to sections 301(b), 301(c), and 307(a) of the 
Trade Act of 1974, as amended, the U.S. Trade Representative has 
determined to further modify the action to extend the exclusions listed 
in Annex C to this notice through May 31, 2025. The U.S. Trade 
Representative has found that extending these exclusions will support 
efforts to shift sourcing out of China, or provide additional time 
where, despite efforts to source products from alternative sources, 
availability of the product outside of China remains limited.
    The U.S. Trade Representative has determined not to extend the 
remaining exclusions beyond the 14-day transition period. These 
exclusions are listed in

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Annex D to this notice. The list includes 102 exclusions where no 
public comments requested further extension. For the remaining 
exclusions, public comments do not demonstrate that further extending 
the exclusion would aid efforts to shift sourcing out of China in the 
near term or do not demonstrate that products covered by the exclusion 
are unavailable outside of China.
    For example, the U.S. Trade Representative has declined to further 
extend exclusions where comments indicated that importers had no plans 
to shift sourcing out of China in 2024 (or at all). Similarly, the U.S. 
Trade Representative has declined to further extend exclusions where, 
despite more than four years of temporary exclusion, commenters 
reported that they had taken few or no steps to shift sourcing out of 
China. This includes comments that, without further explanation, 
asserted that they were considering alternative sources, or reported 
plans to shift sourcing, but failed to adequately explain efforts 
undertaken or why additional time was needed.
    The U.S. Trade Representative also declined to further extend 
exclusions where opposing comments indicated availability from domestic 
sources or third country sources. This includes opposing comments from 
domestic producers reporting available capacity and opposing comments 
from importers who previously benefitted from the exclusion reporting 
successful efforts to shift to alternative sources. Extending these 
exclusions may undercut those efforts, including recent investments in 
domestic capacity.
    The U.S. Trade Representative also declined to extend exclusions 
where claims of unavailability were based on the product being 
unavailable at the price of Chinese sources. In many instances, 
comments simply asserted that products were unavailable because China 
remained the lowest cost source. Extending those exclusions would 
likely delay the commenters' efforts to find alternative sourcing and 
continue their dependence on Chinese suppliers and products, which 
undermines the goal of obtaining the elimination of China's acts, 
policies, and practices covered in the investigation.
    Similarly, many comments asserted that a product was unavailable 
outside of China due to costs associated with finding alternative 
sources or based on the limited availability of certain product 
specifications or comparable quality outside of China. Without 
additional explanation of efforts undertaken or how further extending 
the exclusion would aid efforts to shift sourcing, the U.S. Trade 
Representative declined to extend these exclusions.
    The U.S. Trade Representative's consideration to extend certain 
exclusions takes into account public comments submitted in response to 
the December 29 notice, public comments submitted in the four-year 
review, confidential import data provided by U.S. Customs and Border 
Protection, the advice of advisory committees, and the advice of the 
interagency section 301 Committee.
    As stated above, to provide a transition period for the expiring 
exclusions, the U.S. Trade Representative has determined to extend all 
current exclusions through June 14, 2024. See Annex A and Annex B to 
this notice. The exclusions listed in Annex C to this notice are 
further extended through May 31, 2025. The exclusions listed in Annex D 
are not being extended beyond the 14-day transition period.
    The extensions announced in the notice are available for any 
product that meets the description in the product exclusion. Further, 
the scope of each exclusion and modification is governed by the scope 
of the ten-digit Harmonized Tariff Schedule of the United States 
(HTSUS) subheadings and product descriptions in the Annexes of this 
notice. U.S. Customs and Border Protection will issue instructions on 
entry guidance and implementation.

Juan Millan,
Acting General Counsel, Office of the United States Trade 
Representative.
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[FR Doc. 2024-11904 Filed 5-29-24; 8:45 am]
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