February 5, 2023

Volume XIII, Number 36

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February 03, 2023

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February 02, 2023

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Exclusions 2.0. The USTR Announces a New Section 301 Exclusion Process for Chinese Products

Today, the United States Trade Representative issued a notice informing the importing community about a new Section 301 exclusion process and seeking comments from affected importers. The comment period begins on October 12, 2021, and ends on December 1, 2021.

As with past exclusion processes, the USTR proposal would permit importers to apply for relief from Section 301 duties on certain imports from China, which range from 7.5% to 25%. But importantly, the range of exclusions available under the new procedures is very limited, as outlined below.

Targeted Scope of the New Section 301 Exclusions

The new process is limited to only those imported products for which exclusions had been previously granted, and only those exclusions that were extended through the end of 2020 in a series of USTR extension notices (i.e., 549 exclusions in total). So, any exclusion that was not granted an extension in 2020 falls outside the scope of this new process. For ease of reference, an index of the 549 previously extended exclusions can be found here. The exclusions are a mix of product-specific exclusions (i.e., narrow exclusions requiring that a product meet a specific product description in order to avail itself to the exclusion) and HTS-wide exclusions (i.e., broad exclusions that apply to the entire 10-digit HTS code). Importers should carefully review the index and determine whether they have entries that could benefit from the new exclusion process.

Information to Submit to USTR

If importers identify entries subject to any of the 549 exclusions listed, they should consider filing a comment on extending those exclusions. The USTR’s decision whether to grant an exclusion will largely hinge on whether, despite the imposition of the Section 301 duties, the product remains available only from China. In addressing this factor, the USTR has requested that parties comment on the following:

  • Whether the particular product and/or a comparable product is available from sources in the United States and/or in third countries;

  • Any changes in the global supply chain since September 2018 with respect to the particular product or any other relevant industry developments;

  • The efforts, if any, the importers or U.S. purchasers have undertaken since September 2018 to source the product from the United States or third countries; and

  • Domestic capacity for producing the product in the United States.

In addition, the USTR will consider the economic effect of the requested extension to the commenter and to other U.S. interests, including the impact on U.S. small businesses, employment, manufacturing output, and critical supply chains in the United States, as well as the overall impact of the exclusions on the goal of obtaining the elimination of China’s acts, policies, and practices covered in the Section 301 investigation.

What’s Different About this New Process vs. Past Section 301 Exclusions?

Unlike previously-granted exclusions, the duty relief would not be retroactive. Rather, any duty relief would apply to any entry made after October 12, 2021. Additionally, on July 28, 2021, the Government Accountability Office (“GAO”) published a report finding that past exclusion processes lacked internal procedures to make decisions on exclusions and finding many inconsistencies (see the full report here). The USTR concurred with GAO’s recommendations to fully document internal procedures used in the Section 301 tariff exclusion process. We expect that the GAO’s report and USTR’s concurrence should increase transparency in this new exclusion process.

Current Duty Rate for Products Subject to Section 301 Duties

On December 31, 2020, exclusions that had been previously granted extensions expired (see our post here). As a result, Chinese-origin products were subject to the additional Section 301 duties, which range from 7.5% to 25%, as noted in the table below.

Section 301 List

Duty Rate

Import Volume

List 1


$34 billion

List 2


$16 billion

List 3


$200 billion

List 4A


$120 billion

List 4B


$180 billion

This new exclusion process provides an opportunity for importers to once again have some relief from these duties. The USTR has not provided a timeframe that the new exclusions would apply, but we would expect that it be applicable for one year. Whether the USTR, subject to the GAO report, will provide some process to request additional exclusions or exclusion extensions remains yet to be seen. We will keep you updated.

Copyright © 2023, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XI, Number 281

About this Author

Mario Andres Torrico Government Investigations Attorney Sheppard Mullin

Mario Torrico is an associate in the Government Contracts, Investigations, and International Trade Practice Group in the firm's Washington, D.C. office.

Mario focuses his practice on compliance counseling, investigations, and cross-border transactional work concerning international trade matters including customs, trade remedies, export controls, economic sanctions and embargoes, the Foreign Corrupt Practices Act (FCPA), and other areas of international trade law.

Prior to entering the private sector, he served as an...

J. Scott Maberry, Lawyer, Sheppard Mullin, International Trade, Trade Practice

Mr. Maberry is an International Trade partner in the Government Contracts, Investigations & International Trade Practice Group in the firm's Washington, D.C. office.

Areas of Practice

Mr. Maberry's expertise includes counseling and litigation in export controls, the Foreign Corrupt Practices Act (FCPA), anti-terrorism, economic sanctions, anti-boycott controls, and Customs.  He also represents clients in negotiations and dispute resolution under the World Trade Organization (WTO), North American Free Trade Agreement (NAFTA), and other multilateral and...

Lisa C. Mays, Sheppard Mullin, Government Investigations Attorney, International Trade Lawyer

Lisa Mays is an associate in the Government Contracts, Investigations & International Trade Practice Group in the firm's Washington D.C. office.

  • J.D., The George Washington University Law School, 2015

  • B.A., University of Southern California, 2010

Fatema Merchant, international, trade, Lawyer, Sheppard Mullin

Fatema Merchant is an associate in the Government Contracts, Investigations & International Trade Practice Group in the firm's Washington, D.C. office.

Fatema’s practice focuses on investigations and compliance counseling related to international trade laws.  She has extensive experience with U.S. Foreign Corrupt Practices Act and U.S.-Sanctioned Countries investigations, compliance, due diligence, and training.  Fatema also advises clients on compliance with International Traffic in Arms Regulations, Export Administration Regulations, Customs and Anti-Money Laundering...