Section 201 Safeguards

International Trade Today is providing readers with some of the top stories for Oct. 22-26 in case they were missed.

Two U.S. manufacturers on Oct. 26 withdrew their request for Section 201 safeguard duties on bicycles, just one week after the petition was filed (see 1810230048). The document from Bicycle Corporation of America and Detroit Bikes notifying the International Trade Commission of the withdrawal provided no reason for the move, but Kelsey Rule, the attorney representing the companies, said it was “the result of a confidential settlement agreement between private parties.” The ITC had on the previous day sent a letter identifying deficiencies in the petition and requiring that they be corrected by Oct. 31 for the petition to receive consideration. Those omissions included concrete data on injury, including idling of production facilities, declining profitability or unemployment, as well as import data for the past five years. The petition had said import data on the bicycles included under the petition -- those valued under $400 -- was unreliable because many imports are entered under Section 321 and don’t show up in statistics. It also said the injury to U.S. industry had occurred in the mid-1990s when U.S. manufacturers were pushed out by low-priced imports.

PALM SPRINGS, Calif. -- Piecemeal bond increases to satisfy CBP insufficiency notices won’t be enough to dig importers out of the hole created by recently imposed sections 232 and 301 tariffs on aluminum and steel and products from China, respectively, said Dave Jordan of Roanoke Trade on Oct. 20. While CBP looks at duties paid over the past 12 months to set bond requirements, importers have likely seen their duty liability spike in the past few months since the tariffs were imposed, and will “probably end up with an insufficiency letter again in a few months” as more time passes with the tariffs in effect, he said, speaking at the Western Cargo Conference. Importers should do their own calculations, taking the month with the highest amount of duties paid, multiplying that by 12 months and setting a bond at 10 percent of that amount. For example, an importer that averaged $500,000 in duties paid over the last two months should extrapolate that to $6 million over the year and get a bond for $600,000. Some importers' products covered by multiple trade remedies could see bond requirements rise substantially, Jordan said. One of his clients, an importer of solar panels subject to Section 201 safeguards and Section 301 tariffs, started with an $800,000 bond that’s now up to $11 million, he said. CBP has urged importers to be “proactive” in setting their bond amounts (see 1808210029), given the recent spike in insufficiency notices (see 1807260011).

Two domestic bicycle manufacturers filed a petition Oct. 19 seeking new Section 201 safeguard duties on mass-market bicycles. Detroit Bikes and Bicycle Corporation of America say the dominance of imported mass-market bicycles makes it impossible for U.S. manufacturing to re-establish itself. The companies seek a tariff-rate quota over a period of four years, along with a decrease in the de minimis level for imported bikes and duty-free access for parts used in U.S. bicycle manufacturing operations. The duties would apply to bicycles from all countries, though the International Trade Commission can exempt free trade agreement partners.

The International Trade Commission issued Revision 12 to the Harmonized Tariff Schedule. The relatively comprehensive update implements as of Oct. 1 new provisions for wood products agreed to by the World Customs Organization, and adds new subheadings for pesticide-impregnated bed nets in Chapter 63. Other changes include new provisions for the third, $200 billion list of 10 percent Section 301 tariffs that took effect for goods from China beginning Sept. 24, as well as new exemptions for certain products from Section 201 safeguards on solar cells that took effect Sept. 19.

The World Trade Organization will establish panels on the legality of U.S. safeguard tariffs applied to both solar panels and residential washers, at the request of South Korea. The Dispute Resolution Body authorized the panels' formation on Sept. 26. China is also pressing a case on U.S. Section 201 tariffs (see 1805170058 and 1802070022).

The Office of the U.S. Trade Representative approved multiple categories of solar cells for exclusion from the Section 201 safeguards, it said in a notice. Seven new categories of solar cells with specific wattages, size and other characteristics will be excluded from the safeguard measures starting Sept. 19, it said. The agency received a total of 48 product exclusion requests, it said. The Section 201 tariffs were announced at the beginning of the year on solar cells and residential washing machines (see 1801230052). An exemption was "specifically written" for SunPower's "solar cells and modules based on copper-plated [interdigitated back contact (IBC)] technology," a Bank of America stock analyst said in a Sept. 18 research report. "The exemption is not applied retroactively, likely maintaining" about $68 million in "negative impact experienced in 2018 with tariffs already paid on imported modules."

National Association of Foreign-Trade Zones President Erik Autor is set to meet with officials at the Office of the U.S. Trade Representative in the coming weeks to discuss a quirk in foreign-trade zone filing requirements that’s resulting in the unfair application of Section 301 duties, he said in an Aug. 21 interview. Autor seeks to educate USTR on how tariffs apply to FTZ goods, in the hopes that the agency will amend Section 301 implementation language related to zones that CBP says leaves it with no choice but to sometimes collect the tariffs on inputs that sometimes aren’t even Chinese.

The International Trade Commission recently issued Revision 9 to the Harmonized Tariff Schedule. Changes from the previous version implement the increase in Section 232 tariffs on iron and steel products from Turkey up from 25 to 50 percent, effective Aug. 13. Among other things, new subheading 9903.80.02 is added specifically for Turkish iron and steel products, with iron and steel products from other countries subject to the original 25 percent tariff still classifiable in subheading 9903.80.01. U.S. Note 16 to Subchapter III of Chapter 99 is also modified to implement the increase. The updated tariff schedule also includes technical corrections to provisions in U.S. Note 18 to Subchapter III of Chapter 99 implementing Section 201 safeguard duties on solar cells. The corrections take effect beginning July 30.

The International Trade Commission posted Revision 6 to the 2018 Harmonized Tariff Schedule. The semiannual update to the HTS implements the third round of tariff cuts under the expanded World Trade Organization Information Technology Agreement, and adds new tariff numbers for a variety of products, including organic fruits and vegetables, lighted mirrors and molded or pressed paper plates. The ITC is also adding new tariff provisions that appear to cover products subject to antidumping and countervailing duty orders on solar cells and products from China and Taiwan, and reorganizing tariff classification provisions for archaeological and ethnographic objects. All changes take effect July 1, unless otherwise specified.