[Federal Register Volume 89, Number 241 (Monday, December 16, 2024)]
[Notices]
[Pages 101682-101684]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-29462]
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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
Notice of Modification: 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 of modification of actions.
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SUMMARY: In a notice published on September 18, 2024, the U.S. Trade
Representative proposed additional modifications to the actions taken
in the Section 301 investigation of China's acts, policies, and
practices related to technology transfer, intellectual property, and
innovation. Specifically, the U.S. Trade Representative proposed
increasing Section 301 tariff rates on five subheadings of the
Harmonized Tariff Schedule of the United States (HTSUS) covering
certain tungsten products, wafers, and polysilicon. In a notice
published on September 24, 2024, USTR announced the opening of an
electronic portal for interested parties to submit comments on the
proposed tariff increases. This notice announces the U.S. Trade
Representative's determination to modify the actions being taken in
this investigation by increasing tariff rates on the five subheadings.
DATES: January 1, 2025, at 12:01 a.m. EST: Tariff increases on the
tariff subheadings set out in the Annex to this notice are applicable
with respect to products that are entered for consumption, or withdrawn
from warehouse for consumption, on or after January 1, 2025.
FOR FURTHER INFORMATION CONTACT: For general questions about this
notice, contact Philip Butler and Megan Grimball, Chairs of the Section
301 Committee at 202.395.5725. For specific questions on customs
classification, contact [email protected].
SUPPLEMENTARY INFORMATION:
A. Background
For background on the proceedings in this investigation, please see
the prior notices including 82 FR 40213 (August 24, 2017), 83 FR 14906
(April 6, 2018), 83 FR 28710 (June 20, 2018), and 83 FR 40823 (August
16, 2018).
On September 8, 2022, USTR announced that in accordance with
Section 307(c)(3) of the Trade Act (19 U.S.C. 2417(c)(3)), the U.S.
Trade Representative would conduct a review of the two actions taken,
as modified, in this investigation. See 87 FR 55073. Based on
information obtained during the review, USTR, in consultation with the
Section 301 Committee, prepared a comprehensive report that included
findings on the effectiveness of the actions taken in this
investigation in achieving the objectives of the investigation, other
actions that could be taken, and the effects of such actions on the
United States economy, including consumers. The report, Four-Year
Review of Actions Taken in the Section 301 Investigation: China's Acts,
Policies, and Practices Related to Technology Transfer, Intellectual
Property, and Innovation (Report), was published on May 14, 2024, and
is available on the USTR website.
On May 14, 2024, taking into consideration the U.S. Trade
Representative's findings in the Report and recommendations, the
President issued a Memorandum (President's Memorandum) that directed
the U.S. Trade Representative to: ``maintain, as appropriate and
consistent with this memorandum, the ad valorem rates of duty and lists
of products subject to the [actions] taken under the Section 301
investigation'' and ``[t]o further encourage China to eliminate the
acts, policies, and practices at issue, and to counteract the burden or
restriction of these acts, policies, and practices, the Trade
Representative shall modify the [actions taken in the investigation] to
increase Section 301 ad valorem rates of duty'' for certain specified
products of China. See https://www.whitehouse.gov/briefing-room/presidential-actions/2024/05/14/memorandum-on-actions-by-the-united-states-related-to-the-statutory-4-year-review-of-the-section-301-investigation-of-chinas-acts-policies-and-practices-related-to-technology-transfer-intellectua/. In particular, the President's
Memorandum specified 14 categories of products for proposed tariff
increases, tariff rates for those products, and year for tariff
increases.
Consistent with the President's direction, USTR issued a Federal
Register notice with proposed modifications, including proposed
increases in Section 301 duties on 382 HTSUS subheadings and 5
statistical reporting numbers of the HTSUS, with an approximate annual
trade value of $18 billion (2023). See 89 FR 46252 (May 28, 2024) (May
28 notice). In accordance with Section 307(a)(2) of the Trade Act (19
U.S.C. 2417(a)(2)), USTR invited comments from interested persons and
opened a 30-day docket on May 29, 2024 (USTR-2024-0007). See May 28
notice.
On September 18, 2024, the U.S. Trade Representative announced
modifications to the actions, including certain adjustments to the
modifications proposed in the May 28 notice. See 89 FR 76581 (September
18, 2024) (September 18 notice). Additionally, and based on comments
requesting that certain HTSUS subheadings be added to the 382 HTSUS
subheadings proposed for tariff increases, the U.S. Trade
Representative proposed increasing Section 301 duties on 5 additional
HTSUS subheadings covering certain tungsten products, wafers, and
polysilicon.
In accordance with Section 307(a)(2) of the Trade Act, USTR invited
comments from interested persons and opened a 30-day docket on
September 24, 2024 (USTR-2024-0016). See 89 FR 77958 (September 24,
2024) (September 24 notice).
B. Determination To Modify the Actions
Pursuant to Sections 307(c) and 307(a)(1) of the Trade Act (19
U.S.C. 2417(c), (a)(1)), the U.S. Trade Representative may modify or
terminate any action, subject to the specific direction, if any, of the
President with respect to such action, that is being taken under
Section 301 if the burden or restriction on U.S. commerce of the acts,
policies, and practices that are the subject of such action has
increased or decreased, or such action is being taken under Section
301(b) and no longer is appropriate.
As previously discussed, modification of the actions is warranted
under Section 307(a)(1)(B) and Section 307(a)(1)(C). See 89 FR 76581
(September 18, 2024). The modifications to the actions are set out in
the Annex to this notice. The U.S. Trade Representative's determination
takes account of the public comments, the President's Memorandum and
the policy rationale underlying the President's direction, as well as
the advice of the interagency Section 301 committee and appropriate
advisory committees.
Any product listed in the Annex to this notice, which is subject to
the additional duties imposed by this determination, and that is
admitted into a U.S. foreign trade zone, except any product that is
eligible for admission under ``domestic status'' as defined in 19 CFR
146.43, only may be admitted as
[[Page 101683]]
``privileged foreign status,'' as defined in 19 CFR 146.41, effective
as of the date that the additional duties are imposed. Products of
China that are provided for in headings 9903.91.11 and listed in
subdivision (j) of U.S. note 31 to subchapter III of chapter 99 of the
HTSUS, which are admitted into a U.S. foreign trade zone on or after
12:01 a.m. eastern daylight time on January 1, 2025, only may be
admitted as ``privileged foreign status.'' All 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.
C. USTR's Responses to Significant Comments
As discussed above, in light of comments requesting that certain
HTSUS subheadings be added to the 382 HTSUS subheadings proposed for
tariff increases, the U.S. Trade Representative proposed increasing
Section 301 duties on 5 additional HTSUS subheadings falling under 2 of
the 14 categories of products proposed for tariff increases.
Specifically, the U.S. Trade Representative proposed increasing tariffs
to 25 percent for 3 additional subheadings under ``other critical
minerals'' covering certain tungsten products and proposed increasing
tariffs to 50 percent for 2 additional subheadings under ``solar
cells'' covering wafers and polysilicon. See 89 FR 76581.
Tungsten Subheadings: Consistent with the President's Memorandum to
increase tariffs on other critical minerals to 25 percent, the U.S.
Trade Representative proposed increasing tariffs to 25 percent on 3
additional subheadings covering certain tungsten products: 8101.94.00
(Tungsten, unwrought (including bars and rods obtained simply by
sintering)); 8101.99.10 (Tungsten bars and rods (o/than those obtained
simply by sintering), profiles, plates, sheets, strip and foil); and
8101.99.80 (Tungsten, articles nesoi).
Comments supporting increases primarily assert that increasing
tariffs on tungsten products is vital to the security and the
resilience of domestic supply chains for critical U.S. industries,
including aerospace, automotive, defense, medical, and the oil and gas
industries. Some supporting comments recommend tariff rates as high as
75 percent to address China's efforts to dominate and undercut domestic
production.
Comments opposing increases primarily assert limited availability
of tungsten products outside of China, estimating that China accounts
for approximately 80 percent of global tungsten reserves, and
insufficient quantities available from third country sources. These
comments express concerns that increased tariffs on tungsten will
increase production costs, exacerbate inflation, harm U.S.
competitiveness, and decrease U.S. market share. One comment encouraged
USTR to take alternative actions to tariffs.
Considering the comments and the advice of the Section 301
Committee, and consistent with the President's direction to increase
tariffs on other critical minerals to 25 percent, the U.S. Trade
Representative has determined to increase tariffs on the 3 tungsten
subheadings to 25 percent beginning in 2025. Continued reliance on
China for tungsten products leaves U.S. supply chains vulnerable and
puts U.S. national security at risk. Imports from China continue to
undercut domestic production, and increasing tariffs will make domestic
producers more competitive, which will increase leverage on China to
eliminate its harmful acts, policies, and practices, and reduce
vulnerability to those harmful acts, policies, and practices.
Increasing duties on these products will support current investments,
stimulate greater domestic production, and spur additional investments
in domestic capacity.
Polysilicon and Wafer Subheadings: Consistent with the President's
Memorandum to increase tariffs on solar cells to 50 percent, the U.S.
Trade Representative proposed increasing tariffs to 50 percent on 2
subheadings covering polysilicon and wafers: 2804.61.00 (Silicon
containing by weight not less than 99.99 percent of silicon); and
3818.00.00 (Chemical elements doped for use in electronics, in the form
of discs, wafers etc., chemical compounds doped for electronic use).
Nearly all comments support increasing tariffs on polysilicon,
noting the importance of the tariffs in helping to ensure the
development and growth of the domestic industry producing polysilicon
and downstream products and develop alternative supply chains outside
of China. Specifically, the comments assert that the tariffs help to
support recent investments by the domestic industry and increasing the
tariffs to 50 percent will further support additional domestic
production scheduled to come online in 2025. USTR received one comment
opposing the tariff increase. The comment asserts that Section 301
tariffs have not resulted in changing China's behavior and increasing
the tariff will only increase prices for domestic companies.
The majority of comments support increasing tariffs on wafers. The
comments note that increasing tariffs will increase the effectiveness
of the actions, provide additional support to the domestic industry,
including recent investments, and help to strengthen alternative supply
chains. Specifically, commenters note that higher tariffs will
counteract China's unfair practices, which have allowed Chinese
companies to dominate supply chains, and allow domestic producers to
increase production, and continue to invest in additional capacity. To
give domestic producers time to increase production, some of the
comments supporting higher tariffs either suggest delaying the tariffs
or allowing for certain exclusions. Other comments supporting higher
tariffs suggest increasing tariffs immediately. Comments opposing the
tariffs generally assert that the tariffs have not been effective and
only negatively impacted the U.S. economy. One comment opposing the
tariff increase suggests delaying the increase until domestic
production has increased.
Considering the comments and the advice of the Section 301
Committee, and consistent with the President's direction to increase
tariffs on solar cells to 50 percent, the U.S. Trade Representative has
determined to increase tariffs on polysilicon and wafers to 50 percent
in 2025. Increasing tariffs on polysilicon and wafers will complement
recent investments, encourage diversification away from Chinese
sources, provide additional leverage with China to eliminate the
investigated acts, policies, and practices, and reduce vulnerability to
those harmful acts, policies, and practices. While increasing tariffs
may result in higher prices initially, the tariffs are necessary to
allow domestic producers to compete against China's massive excess
capacity, defend recent investments, and encourage more domestic
manufacturing.
The U.S. Trade Representative will continue to consider the actions
taken in this investigation. In the event that further modifications
are appropriate, the U.S. Trade Representative intends to take into
account the extensive public comments provided in response to the May
28 notice and the September 24 notice.
D. Technical Correction
In the September 18 notice, USTR announced that it had determined
to increase the rate of additional duties on medical gloves of
vulcanized rubber,
[[Page 101684]]
other than hard rubber, to 50 percent in 2025 and to 100 percent in
2026. The additional 100 percent duties that were to be effective on
January 1, 2026, were provided for in HTSUS heading 9903.91.08. Due to
a publishing error in the Federal Register notice, heading 9903.91.08
did not contain the additional duties in the Rates of Duty 1--General
column. To correct this error, USTR is making a technical correction to
heading 9903.91.08 in Annex B(4) to insert the additional 100 percent
duties that are to be effective on January 1, 2026.
Annex A--Tariff Increases
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HTSUS subheading Product description Rate (%) Timing
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8101.94.00............................ Tungsten, unwrought (including bars and 25 2025
rods obtained simply by sintering.
8101.99.10............................ Tungsten bars and rods (o/than those 25 2025
obtained simply by sintering),
profiles, plates, sheets, strip and
foil.
8101.99.80............................ Tungsten, articles nesoi................ 25 2025
2804.61.00............................ Silicon containing by weight not less 50 2025
than 99.99 percent of silicon.
3818.00.00............................ Chemical elements doped for use in 50 2025
electronics, in the form of discs,
wafers etc., chemical compounds doped
for electronic use.
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Annex B--Changes to Harmonized Tariff Schedule of the United States
1. Effective with respect to goods entered for consumption, or
withdrawn from warehouse for consumption, on or after 12:01 a.m.
eastern daylight time on January 1, 2025, subchapter III of chapter 99
of the Harmonized Tariff Schedule of the United States (HTSUS) is
modified:
A. by inserting the following new heading 9903.91.11 in numerical
sequence, with the material in the new heading inserted in the columns
of the HTSUS labeled ``Heading/Subheading'', ``Article Description'',
``Rates of Duty 1-General'', ``Rates of Duty 1-Special'' and ``Rates of
Duty 2'', respectively:
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Rates of Duty
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Heading/ subheading Article description 1
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General Special
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``9903.91.11............................. Effective with respect to entries on or The duty provided in the .............. ..............
after January 1, 2025, articles the applicable subheading + 25%''.
product of China, as provided for in
subdivision (j) of U.S. note 31 to this
subchapter.
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B. by inserting the following new subdivision (j) to note 31 to
subchapter III of chapter 99 of the HTSUS:
``(j) Heading 9903.91.11 applies to products of China that are
classified in the following 8-digit subheadings, effective with respect
to goods entered for consumption, or withdrawn from warehouse for
consumption, on or after 12:01 a.m. eastern daylight time on January 1,
2025:
(1) 8101.94.00
(2) 8101.99.10
(3) 8101.99.80''.
C. Subdivision (a) of note 31 to subchapter III of chapter 99 of
the HTSUS is modified by deleting ``and 9903.91.08'' in six instances
and inserting ``, 9903.91.08 and 9903.91.11'' in lieu thereof in those
six instances.
2. Effective with respect to goods entered for consumption, or
withdrawn from warehouse for consumption, on or after 12:01 a.m.
eastern daylight time on January 1, 2025, subchapter III of chapter 99
of the Harmonized Tariff Schedule of the United States (HTSUS) is
modified:
A. by deleting ``2804.61.00'' and ``3818.00.00'' from subdivision
(f) of note 20 to subchapter III of chapter 99 of the HTSUS; and
B. subdivision (f) of note 31 to subchapter III of chapter 99 of
the HTSUS is modified by inserting ``(1) 2804.61.00'' and ``(2)
3818.00.00'' in numerical order and by renumbering the remaining
subheadings listed in subdivision (f) of note 31 in numerical order,
beginning with ``(3) 4015.12.10''.
3. Effective on January 1, 2026, subdivision (f) of note 31 to
subchapter III of chapter 99 of the HTSUS is modified by deleting ``(3)
4015.12.10''.
4. The Rates of Duty 1-General column of heading 9903.91.08 is
modified by inserting ``The duty provided in the applicable subheading
+ 100%''.
Juan Millan,
Acting General Counsel, Office of the United States Trade
Representative.
[FR Doc. 2024-29462 Filed 12-13-24; 8:45 am]
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