On December 21, 2018, the Office of the US Trade Representative (USTR) announced that a first wave of approximately 1,000 Section 301 product exclusion petitions submitted under List 1 have been approved. According to an advance copy of a notice that will be published in the Federal Register (copy available here), the approval covers products covered by (i) seven 10-digit tariff subheadings (which cover 918 product exclusion requests), and (ii) 24 specially-draft product descriptions (which cover 66 product exclusion requests).
The exemptions from the Section 301 duty are available to any product that meets the description of the tariff subheadings or the specially-drafted product descriptions identified in the notice. The exemptions relate back to the date the additional duty went into effect (i.e., July 6, 2018) and are good for one year from the date this notice is published in the Federal Register (which would normally be sometime this week, but for the government shutdown). US Customs and Border Protection (CBP) will issue instructions on entry guidance and implementation.
The USTR received more than 10,000 product exclusion petitions for List 1. Of those requests, approximately 1,250 have been denied, approximately 1,000 have been approved, and approximately 8,500 are in various stages of review. The notice indicates that this is the first round of approvals and that the USTR will publish further approvals periodically.
This is a positive development that shows that the standard for granting product exclusion petitions is not prohibitively high. Given the nature of the Section 301 dispute, it was not clear how high the USTR would hold the bar for approval (i.e., whether any exclusions would actually be approved). This action shows that approval is possible (for at least certain products), which is a positive development for all those companies who have pending petitions (whether for List 1 or List 2).
We hope that this is helpful. If you have any questions about the product exclusion process, or Section 301 mitigation strategies more generally, please let us know. Contact the author, Ted Murphy, or any member of the US Customs Practice with whom you normally work.
