American Trade & Manufacturing Blog

Imports of Unfairly Traded Indian Stainless Steel Flanges Plummet As A Result of Recent Trade Case

Posted in Antidumping, Dumping and Subsidies, Trade Remedies

Approximately a year ago, on August 16, 2017, a petition for antidumping (AD) and countervailing (CVD) duties on stainless steel flanges from China and India was filed by the Coalition of American Flange Producers (CAFP), an association of U.S. producers of stainless steel flanges. The case was brought in response to unfairly dumped and subsidized flanges being increasingly imported into the United States by Chinese and Indian producers. Last week, on August 13, 2018, the U.S. Department of Commerce (DOC) issued its final determinations in its AD and CVD investigations of Indian stainless steel imports, finding that Indian flanges are being dumped at rates of 19.16 to 145.25 percent and subsidized at rates of 4.92 to 256.16 percent.

While these margins are high and reflect the substantial degree to which Indian stainless steel flanges are unfairly traded in the United States, even before these determinations, this case has had a significant and positive effect on U.S. imports and the U.S. industry. That is, in the year prior to the filing of the petition, imports of stainless steel flanges from India surged dramatically, rising from approximately 400,000 to 1,000,000 kilograms per month. In the year since the filing of the petition, imports from India have decreased dramatically, falling to just 200,000 kilograms per month.

As shown in the chart above, examined at a more granular level, imports of Indian stainless steel flanges continued to decrease as the case progressed. While the petition was filed in August 2017, import levels actually fluctuated for the remainder of 2017, likely the result of Indian producers rushing flanges into the United States in advance of anticipated AD and CVD duties. However, once DOC issued its preliminary AD and CVD determinations, in which it forecasted high margins, imports plummeted. For instance, on January 23, 2018, DOC issued its CVD preliminary determination finding that Indian imports were being subsidized at rates of 5.00 to 239.61 percent. This caused a sharp decline in Indian imports. Similarly, on March 28, 2018, DOC issued its AD preliminary determination, finding that Indian imports were being dumping at rates of 18.10 to 145.25 percent. This caused an even steeper decline in Indian imports. The point being, as this case progresses, and the extent to which Indian stainless steel flanges are unfairly traded is made more clear, imports of those flanges have continued to plummet.

It should be stressed, however, that even the current duty deposit rates do not reflect the final duties that importers will owe on incoming shipments. Under the U.S. system, the duties paid at entry remain contingent, and changeable, until DOC concludes a post-investigation administrative review of those duties. With respect to stainless steel flanges from India and China, this means that final duty liability for imports subject to the preliminary duties will not be determined until mid-2019 at the earliest. Because of the lengthy contingent liability that AD and CVD duties represent, as well as the potential for final duties to be much higher than those paid at entry, importers may need to seek increased customs bonding to continue to import stainless steel flanges from India and China. Sureties may also require additional fees or security to underwrite bonds on such entries, given the increased uncertainty and risk involved.

Ultimately, Wiley Rein and the CAFP anticipate that DOC’s significant, final AD and CVD margins will cause Indian imports to continue to decrease, keeping them at stable and fair levels. This will allow U.S. stainless steel flange producers to compete on a level playing field, enabling them to produce more flanges and hire more workers here in the United States.

 

 

 

 

 

 

CFIUS Reform Legislation Signed into Law – Important Changes Become Effective Immediately

Posted in CFIUS

President Trump signed the Foreign Investment Risk Review Modernization Act (FIRRMA) into law today, August 13, 2018, as part of the National Defense Authorization Act for Fiscal Year 2019 (NDAA). FIRRMA significantly expands the jurisdiction of the Committee on Foreign Investment in the United States (CFIUS) to review transactions that were not previously subject to CFIUS scrutiny, including certain real estate transactions and non-controlling investments in critical technology companies, critical infrastructure companies, and companies that maintain or collect sensitive personal data of U.S. citizens. The new legislation also allows parties to covered transactions to file short-form “declarations” in lieu of a more detailed notice, requires mandatory filings for certain kinds of transactions, and reforms the CFIUS review process in several other important respects. Our summary of the law’s major provisions is available here.

Many provisions of FIRRMA become effective immediately. These include the extension of the initial review period from 30 days to 45 days, provisions relating to mitigation agreements, and the information sharing and funding aspects of the law. Other provisions (including those expanding the scope of what constitutes a “covered transaction” and provisions governing voluntary and mandatory declarations) will not go into effect until the earlier of 18 months after enactment or 30 days after publication in the Federal Register of a determination by CFIUS that the regulations, organizational structure, personnel, and other resources necessary to administer the law’s provisions are in place.

The focus now turns to the rulemaking process, where stakeholders will have an opportunity to submit comments and help shape the regulations that the U.S. Department of Treasury ultimately adopts to implement this sweeping new law. We also expect CFIUS to launch one or more pilot programs in the coming months to implement certain new authorities under FIRRMA. The scope and procedures for any pilot programs under FIRRMA will be published in the Federal Register in advance.

Wiley Rein has an unparalleled CFIUS and national security practice that draws on senior government-level experience with CFIUS member agencies and numerous representations of domestic and international companies in complex transactions involving nearly every industry sector subject to CFIUS review. Should you have any questions regarding the immediate impact of FIRRMA on inbound foreign investment, the upcoming notice and comment rulemaking process, or the new CFIUS pilot programs, please do not hesitate to contact one of the members of our CFIUS and national security practice listed on this alert.

BIS Announces Good News for India, Bad News for South Sudan on Export Controls Front

Posted in Export Controls

Does your company export products or technology to India or South Sudan? If so, last Friday, the Commerce Department’s Bureau of Industry and Security (BIS) made changes to the export controls on these countries that may impact your operations, particularly if your company exports “600 series” military commodities, software, or technology or satellite-related items.

First, recognizing India’s membership in three out of four multilateral export control regimes and its status as a Major Defense Partner of the United States, BIS added India to Country Group A:5 in the Export Administration Regulations (EAR)—the list of close U.S. allies granted favorable export status. A key benefit of being an A:5 country is that U.S. companies can now use License Exception STA to export “600 series” military items as well as satellite-related items to India without the need to apply for a specific license. BIS also formally recognized India’s membership in the Wassenaar Arrangement, added India to Country Group A:1, and removed license requirements for EAR items controlled for National Security Column 2 reasons.

On the flip side, BIS also updated the EAR to add South Sudan to Country Group D:5—the list of countries that are subject to arms embargoes. This change is designed to ensure that the EAR’s D:5 list mirrors the State Department’s list of Section 126.1 prohibited countries in the International Traffic in Arms Regulations, to which South Sudan was added earlier this year. Although the amendment is mostly a formality, as the D:5 list includes a note stating that State’s Section 126.1 prohibited countries list is controlling, BIS’s rule serves to put exporters on notice of South Sudan’s new status. One important impact of the arms embargo designation is that exports to South Sudan of satellite-related items and “600 series” military items are subject to a general policy of denial, except for certain types of transactions, such as exports in support of peacekeeping and humanitarian operations. The D:5 designation also limits the ability of foreign companies utilizing U.S. “600 series” (or satellite-related) parts or components from shipping their end products incorporating such parts or components to South Sudan.

 

BIS Adds 44 Chinese Entities and Institutions to its Entity List

Posted in Export Controls

Last week, the Department of Commerce’s Bureau of Industry and Security (BIS) added eight Chinese entities and 36 subordinate institutions to its Entity List, ratcheting up tensions with China and reflecting the administration’s crackdown on U.S. exports that officials believe are being used to strengthen the Chinese military.

Historically, companies often are added to BIS’s Entity List for engaging in activities related to proliferation of weapons of mass destruction. Here, some of the newly designated entities—including China Electronic Technology Group Corporation (CETC) 13 and some of its subordinate institutions—were added due to their alleged illicit procurement of U.S. commodities and technologies for unauthorized military end-uses in China. The remaining entities—including China Aerospace Science and Industry Corporation (CASIC) Second Academy and some of its subordinate institutions—were added to the Entity List based on a risk of diversion of items to military end-uses in China.

The new restrictions prohibit exports, reexports, and transfers (in-country) of any items subject to the U.S. Export Administration Regulations (EAR) to the newly-designated entities, along with any other transaction in which these entities act as a purchaser, intermediate consignee, ultimate consignee, or end-user of items subject to the EAR. In other words, even common, off-the-shelf EAR99 and mass market hardware, software, and technology cannot be provided to these 44 Chinese entities/institutions without U.S. government authorization. Further, export licenses are subject to a policy of denial, and no EAR license exceptions can be used for transactions with the designated entities.

This action is notable because it is part of much larger U.S.-China trade tensions. It also reveals the administration’s concerns regarding China’s use of commercial and dual-use U.S. items for military purposes, including not only proliferation of weapons of mass destruction but also conventional military applications. U.S. companies should brace for more restrictions on trade with China, as the President is expected to sign legislation this month that may be used to impose additional export controls on China/Chinese entities, including on the provision of “emerging and foundational technologies” as well as items for military end-users/end-uses.

USTR Announces List of $200 Billion Worth of Chinese Goods that May Be Subject to 10 Percent Tariffs

Posted in Customs Law, Trade Policy

On July 10, 2018, the United States Trade Representative (USTR) issued another list of Chinese products that may be subject to 10% duties stemming from the Section 301 investigation into China’s unfair practices related to technology transfer, intellectual property, and innovation. This list of products includes 6,031 tariff subheadings, covering a broad range of products, including agricultural goods, chemicals, building materials, and electronics, with an annual trade value of approximately $200 billion.

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Wiley Rein Wins AMM Award for Steel Excellence as ‘Best Legal Services Provider’ for Two Years Running

Posted in Announcements

Washington, DC—For the second consecutive year, Wiley Rein LLP has been named “Legal Services Provider of the Year” by American Metal Market (AMM) as part of the publication’s annual Awards for Steel Excellence. The award was presented yesterday evening to Alan H. Price, chair of the firm’s International Trade Practice, at a ceremony in New York City. The awards dinner honored winners in 15 categories selected from 53 finalists spanning the steel industry chain.

The awards program recognizes companies that have demonstrated best-in-class performance in their respective segments of the steel industry. The awards dinner was held in conjunction with Steel Survival Strategies XXXIII, North America’s largest steel conference, which is presented by AMM and World Steel Dynamics Inc.

Mr. Price also was a featured speaker at the conference, participating in yesterday’s panel discussion on “Steel Marketplace: Winning Strategies.”

Wiley Rein has one of the nation’s largest and most diverse international trade groups, advocating for U.S. steel companies that find their very existence threatened by foreign governments’ unfair trade practices. The firm’s International Trade Practice provides solutions for its clients through a blend of legal expertise, trade policy, thought leadership, and public relations capabilities. Wiley Rein is one of the leading firms in trade remedy proceedings representing U.S. producers, and is among a limited number of practices that regularly serve as principal counsel for major unfair trade investigations.

OFAC Revokes JCPOA-Related General Licenses and Issues Wind-Down Authorizations

Posted in Announcements

Following the President’s May 8, 2018 withdrawal from the Joint Comprehensive Plan of Action (JCPOA), today, the Office of Foreign Assets Control (OFAC) revoked General License H (GL H), which authorized U.S.-owned or -controlled foreign entities to engage in business with Iran, and General License I (GL I), which authorized U.S. persons to negotiate and enter into contingent contracts related to activities subject to OFAC’s (since revoked) favorable licensing policy for commercial passenger aircraft and related parts and services.

In conjunction with these changes, OFAC authorized the following wind-down activities:

  • All transactions and activities that are ordinarily incident and necessary to the wind-down of transactions relating to foreign entities owned or controlled by U.S. persons that were previously authorized under GL H, including transactions by U.S. parent companies and other U.S. persons related to necessary modifications of operating policies and procedures and continued use of automated and globally integrated business support systems to facilitate wind-down activities. Such wind-down transactions are authorized through November 4, 2018.
  • All transactions and activities ordinarily incident and necessary to the wind-down of transactions related to the negotiation of contingent contracts for the export/reexport to Iran of commercial passenger aircraft and related parts and services previously authorized under GL I. These wind-down transactions are authorized through August 6, 2018.
  • All transactions and activities ordinarily incident and necessary to the wind-down of transactions related to the importation into the United States of, and dealings in, certain Iranian-origin carpets and foodstuffs, such as pistachios and caviar. Such wind-down transactions are authorized through August 6, 2018.

Typically, wind-down activities do not cover “new” transactions. OFAC has stated that any activities involving Iran that continue after the wind-down periods conclude could be subject to enforcement actions, and that in evaluating potential enforcement or sanctions actions to take, OFAC will consider the efforts made to wind down activities prior to the conclusion of the applicable wind-down period. In other words, without explicitly stating as much, the U.S. government appears to be putting companies on notice that if they engage in new business with Iran during the wind-down periods, they do so at their own peril.

House Passes CFIUS Reform Bill

Posted in CFIUS

The U.S. House of Representatives yesterday passed by an overwhelming margin of 400-2 its version of the Foreign Investment Risk Review Modernization Act (FIRRMA). The landmark bipartisan legislation would significantly expand the jurisdiction and operational mandate of the Committee on Foreign Investment in the United States (CFIUS) and reform the CFIUS review process in a number of important respects. Our summary of the legislation as originally introduced is available here.

Notably, the current bills in both the House and the Senate omit the language in the original bill that would have authorized CFIUS to review certain outbound technology transfers (including of IP) through joint ventures and other similar arrangements. The current Senate draft, which differs from the House version in certain respects, has since been incorporated into the National Defense Authorization Act (NDAA) for Fiscal Year 2019, whereas the House version passed as a standalone bill. Conferees will be chosen in the coming weeks to reconcile the Senate and House versions. With the NDAA generally considered must-pass legislation, however, it appears highly likely that FIRRMA will soon become law in one form or another.

US Trading Partners Defy The Rules They Claim To Support

Posted in Trade Policy

On March 8, 2018, President Donald Trump imposed tariffs of 25 percent on steel imports[1] and 10 percent on aluminum imports[2] pursuant to Section 232 of the Trade Expansion Act of 1962, which authorizes him to adjust imports in the interests of national security.[3] Over the next two months, the president granted temporary exemptions to various trading partners, including the European Union, Canada and Mexico, as possible alternative forms of relief were negotiated.[4]

Even as these negotiations were in progress, the EU took a confrontational approach asserting that it could unilaterally declare Trump’s actions to be a safeguard, entitling them to immediate retaliation.[5] On May 31, 2018, the president signed two additional proclamations.[6] In both, he announced that the tariffs would apply to Canada, Mexico and the EU, and that Australia was exempt. With respect to steel, he announced that quotas would be provided to Argentina, Brazil and Korea. With respect to aluminum, he announced that the imports from Argentina would be subject to a quota.

Following the imposition of tariffs, the EU was quick to claim the U.S. measures were disguised “safeguards.”[7] Ultimately, the Chinese agreed, and were first to challenge the Section 232 relief on that basis.[8] The EU and others claimed that the U.S. action to impose Section 232 relief on aluminum and steel imports for national security reasons would undermine the rules-based global trading order. Given their own previous statements, however, it is clear that the EU’s and others’ unilateral acts of retaliation are outside the rules, and represent the true threats to the global trading order.

Only by unilaterally reinterpreting the U.S. government’s Section 232 investigation and the subsequent relief can the EU and others attempt to justify their retaliation under the existing World Trade Organization rules.[10] This rationale is unsupported by the facts, and anathema to the very WTO rules they claim to champion.

In fact, in its third-party submission in the Russia-Ukraine dispute regarding “Traffic in Transit (DS 512)” before the WTO, in response to Russia’s defense that the national security provision of Article XXI prevents any review by a dispute settlement panel, the EU states expressly that Article 23 of the Dispute Settlement Understanding, or DSU,

Prohibits Members from making a determination to the effect that a violation has occurred, except through recourse to the dispute settlement in accordance with the DSU. … In other words, a WTO Member, rather than the WTO dispute settlement bodies, would be deciding unilaterally the outcome of a dispute. This would run against the objectives of the DSU enshrined in Article 23 of the DSU.[11]

Notwithstanding the EU’s statement that WTO members do not have the authority to unilaterally determine whether a particular member’s measures are in violation of its WTO obligations, that is precisely what the EU, Canada and others have done in justifying their unilateral retaliation against the United States’ Section 232 aluminum and steel relief. Apparently, the rules-based trading system that the EU and others champion is only supposed to apply to other countries and not them.

The EU knows it is not supposed to unilaterally determine whether the U.S. 232 relief is a violation of its obligations without review by a dispute settlement panel, yet that is precisely what the EU and others have done by moving straight to the retaliation. By immediately retaliating, they offer the U.S. government very little incentive for cooperating in the proceedings or attempting to comply with a panel determination.

When the U.S. enforced its rights against the EU in the aircraft dispute, it did not unilaterally find the EU subsidies to be a violation, and move straight to the retaliation, before there was even a determination by a dispute settlement panel.[12] Yet the EU’s actions in this dispute suggest that that is precisely what the United States should have done to preserve its rights under the agreement rather than waiting for the dispute settlement process to take its course.

The Section 232 investigation was initiated by President Trump, the investigation was conducted, findings were made, relief recommendations were proposed and ultimately imports were adjusted under the statutory authority granted by the president to protect the national security of the United States. Article XXI of the General Agreement on Tariffs and Trade, or GATT, expressly allows members to suspend concessions for national security reasons.

The EU and others may not like the result, but there is a system in place — one they claim to champion — for them to challenge that result. Instead, the EU and others have chosen to move straight to retaliation without any findings by a dispute settlement body. This action undermines the continued existence of the dispute settlement system that the EU and others claim is “a central element in providing security and predictability to the multilateral trading system.”[13]

Only by unilaterally declaring Trump’s action to have been a safeguard in disguise can the EU even attempt to justify that it is entitled to compensation (i.e., retaliation) under the WTO Safeguards Agreement. The EU has claimed that it can use the Safeguards Agreement to “retaliate” within 90 days against the United States.[14] But the steel and aluminum tariffs are not safeguards.

The U.S. ambassador to the WTO, Dennis Shea, has rejected this assertion.[15] The United States has taken these measures pursuant to the national security provision under the Trade Expansion Act of 1962. This is a wholly separate statute from that setting out the safeguards procedure. And, as the EU itself admitted in the Russian-Ukraine dispute, only a WTO dispute settlement panel has the authority to determine whether the Section 232 relief is a safeguard in disguise.

Nothing in the WTO agreement permits the EU to take any such action without a dispute settlement panel finding. Indeed, Article 11(1)(c) of the Safeguards Agreement itself states that it does not apply to actions taken under any other provision of the suite of WTO agreements. There is an express national security exemption under the WTO agreement. Therefore, according to the plain text of the Safeguards Agreement, the EU cannot take action thereunder.

The Safeguard Agreement itself precludes the EU from undertaking this course of action. Article 11.1(c) specifically states that the Safeguard Agreement does not apply to measures sought, taken or maintained pursuant to other GATT or WTO provisions. As noted above, the United States has made it clear that this action is not being taken pursuant to the Safeguard Agreement. The action is being taken pursuant to national security, which is covered by GATT Article XXI.

Furthermore, the U.S. and others have taken the position that actions taken for national security reasons under Article XXI of the GATT are nonreviewable by the WTO. While the EU may disagree with this interpretation of Article XXI of the GATT, the EU recognizes that Article 23(2)(a) of the DSU prohibits members from unilaterally declaring that another member has breached its obligations. Only the WTO can do that, pursuant to dispute settlement procedures.

Nevertheless, even if the steel and aluminum 232 tariffs were considered “safeguards,” the EU’s assertion that it could retaliate within 90 days was wrong for two reasons. First, assuming the Safeguards Agreement can be invoked, Article 8. 3 of the agreement states that retaliation is available after three years when the increase in imports in question is absolute, rather than relative.

For both steel and aluminum, the United States experienced absolute increases in imports. In an apparent recognition of this requirement, the EU has separated its retaliation list into two groups of products: one group for which they claim there is no absolute increase (mostly steel products), and where retaliation is therefore permitted immediately, and another group for which retaliation must be delayed three years. For that second group of products, where the EU attempts to justify immediate retaliation, it can only do so by selectively interpreting the period examined and the group of imports it considers.

While the agreement does not define what period is to be used when considering the increase for retaliation purposes, it is reasonable to use the same period the administering authority uses. The U.S. normally uses a five-year period in its safeguards cases. For both steel and aluminum, in its 232 investigation, the U.S. Department of Commerce used the five-year period from 2013 to 2017. Over that period there is an absolute increase of steel and aluminum imports.

The only way the EU could justify retaliation was to cherry-pick the import data, relying only on imports from European countries using self-selected smaller periods. If the measure is a “safeguard” in disguise, as the EU claims, then the imports must be examined globally. A member does not get to selectively examine the relative import surge of only a few members when retaliating. The Section 232 relief is either a “safeguard” in disguise, or it is not.

Second, the EU has argued that it is not subject to the three-year waiting period because Article 8.3 only provides that grace period if the underlying safeguard measure is consistent with Safeguard Agreement rules.[16] Having declared that the U.S. action is not consistent with Safeguard Agreement rules, the EU thus considers itself entitled to proceed directly to retaliation. This of course assumes that the Section 232 relief is a safeguard, which it is not.

The EU’s reckless course of action is now leading multiple WTO members to follow suit and breach their obligations. Nothing confines the EU’s tactics to this one dispute. Nothing stops any other WTO member from declaring that another member’s policy is a safeguard and retaliating accordingly. The United States, for example, could consider the EU’s retaliation to be a safeguard and develop its own retaliation strategy, perhaps targeting sensitive EU products, such as those covered by geographical indications.

If the EU considers the United States to have breached its WTO obligations, the appropriate course of action is to challenge the action before the Dispute Settlement Body, not to violate the plain language of the Safeguard Agreement and the DSU. This ill-conceived approach is the real threat to the WTO. The EU holds no moral high ground in this dispute. Rather than upholding the rules-based system, the EU, by its actions, may ultimately undo the system.


[1] Proclamation 9705.

[2] Proclamation 9704.

[3] 19 U.S.C. 1862.

[4] https://www.whitehouse.gov/presidential-actions/presidential-proclamation-adjusting-imports-aluminum-united-states-3/https://www.whitehouse.gov/presidential-actions/presidential-proclamation-adjusting-imports-steel-united-states-3/.

[5] https://www.reuters.com/article/us-usa-trade-eu-explainer/europes-response-to-u-s-import-tariffs-idUSKCN1GS2CH.

[6] https://www.whitehouse.gov/presidential-actions/presidential-proclamation-adjusting-imports-steel-united-states-4/https://www.whitehouse.gov/presidential-actions/presidential-proclamation-adjusting-imports-aluminum-united-states-4/.

[7] https://www.platts.com/latest-news/metals/london/eu-requests-wto-consultations-with-us-over-section-26940993.

[8] https://insidetrade.com/trade/china-claims-us-232-tariffs-are-safeguards-requests-wto-consultations.

[9] “The Charlevoix G7 Summit Communique,” (June 9, 2018), https://www.reuters.com/article/us-g7-summit-communique-text/the-charlevoix-g7-summit-communique-idUSKCN1J5107.

[10] The following does not address whether the proposed retaliation is consistent under the NAFTA rules.

[11] European Union Third Party Written Submission, Russia — Measures Concerning Traffic in Transit (DS 512), at 5 (Nov. 8, 2017).

[12] European Union — Measures Affecting Trade in Large Civil Aircraft, DS 316 (May 28, 2018), Appellate Body Article 21.5 Report, https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds316_e.htm.

[13] European Union Third Party Written Submission, Russia — Measures Concerning Traffic in Transit (DS 512), at 5 (Nov. 8, 2017) (quoting Art. 3(2) of the DSU).

[14] https://www.reuters.com/article/us-usa-trade-eu-explainer/europes-response-to-u-s-import-tariffs-idUSKCN1GS2CH.

[15] “China files trade case at WTO over Trump’s steel and aluminum tariffs,” The Hill, by Vicki Needham (April 10, 2018) (quoting letter from Ambassador Shea: “These actions are not safeguard measures and, therefore, there is no basis to conduct consultations under the Agreement on Safeguards with respect to these measures”).

[16] https://www.reuters.com/article/usa-trade-eu/update-2-eu-to-respond-to-u-s-tariffs-within-90-days-if-not-exempt-idUSL5N1QR1OQ.

USTR Announces Chinese Goods Subject to 25 Percent Tariffs

Posted in Trade Remedies

U.S. Will Review Additional Goods, Chinese Investment Restrictions

Today, June 15, 2018, the Office of the United States Trade Representative (USTR) announced Chinese products that will and may be subject to special duties stemming from the Section 301 investigation into China’s IP practices. USTR has released two lists. List 1 covers 818 tariff lines that will be subjected to 25% duties starting on July 6, 2018. List 2 includes 284 tariff lines that will not yet be subject to the tariffs, but will undergo further review before a decision on duties is made.

USTR originally announced a proposed list of products to be subject to the 25% duties in April. See Wiley Rein Alert. That list included 1,333 tariff lines, covering products as diverse as retail-packaged medications and airplane seats. After receiving comments and holding a hearing, USTR issued List 1 today, which includes products from that original proposal.

USTR’s List 2 covers products that were not included in the original proposal. For example, List 2 covers certain lubricating oils, numerous plastics, and machinery for hi-tech manufacturing operations, including semiconductors and semiconductor manufacturing machinery.

Notably, multiple tariff lines covered by the original proposal have been removed completely. In particular, USTR appears to have dropped its original proposal to apply tariffs to a number of pharmaceutical and medical goods, as well as certain steel/aluminum goods.

In conjunction with the issuance of the new lists, U.S. Trade Representative Robert Lighthizer indicated that the Administration plans to announce new restrictions on Chinese investment in technology goods. Ambassador Lighthizer indicated that the restrictions will be announced within the next two weeks and will be focused on investment restrictions directed at Chinese industries involved in fields related to the Section 301 tariff lists, which are largely intellectual property-intensive. The restrictions will be based on national security considerations that extend beyond those assessed under reviews conducted by the Committee on Foreign Investment in the United States.

Wiley Rein is well placed to provide counsel and direction should your company choose to prepare comments for submission, as well as to engage the Administration and assist companies affected by the U.S. actions and any potential Chinese retaliation.

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