Trade Office works through tariff exclusions as requests mount

Rejection rate on the 10,829 exclusion requests on first tranche of imports was 62 percent

The office of U.S. Trade Representative Robert Lighthizer has processed approximately 700 requests for exclusions on the first $34 billion tranche of imports. (Bill Clark/CQ Roll Call file photo)

The U.S. Trade Representative’s process for doling out exclusions to Section 301 tariffs on imports from China has slowed to a painful crawl.

Only approximately 700 requests for exclusions on the first $34 billion tranche of imports were decided over the past month, with half of those denied over concerns that product characteristics were not sufficiently narrow to prevent unrelated products from slipping through customs. The overall rejection rate on the 10,829 exclusion requests on the tranche increased to 62 percent.

And on the second tranche of $16 billion in imports, USTR in July up to the  19th had completed work on just 60 of the total 2,900 requests for tariff waivers on the tranche. The overall rejection rate stands at 45 percent, but there has been little movement on some 1,600 that already had received preliminary approval.

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Section 301 tariffs refer to the provision of a 1974 trade law that gives the president authority to levy them.

U.S. companies seeking an exclusion to ease the pain of the tariffs might want to bring a good book to the USTR waiting room. The agency estimated that it could get 60,000 requests for exclusion from a third, $200 billion tranche, for which the window opened June 30 and will close Sept 30. Apple Inc. filed 15 exclusion requests for the third tranche.

President Donald Trump drew attention to the $200 billion round Friday when he tweeted that “Apple will not be given Tariff waiver, or relief, for Mac Pro parts that are made in China. Make them in the USA, no Tariffs!”

Neither USTR nor Customs and Border Protection responded Friday to queries seeking details on the adjudication process. USTR’s guidelines permit companies to petition for exclusions based on “severe economic harm” or lack of availability of a product from non-China sources.

The requests that receive preliminary approval go through a so-called “administrability” review, with Customs and Border Protection making sure the product description is narrow enough to ensure that other, unrelated products can’t slip through.

One lawyer involved in the process on behalf of several clients said that USTR and Customs are ensuring that the product descriptions are quite narrow despite an earlier decision that exclusions would not be company specific but also would be available to similar products when approved.

That process takes time, the lawyer said, and it can lead to rejection when the company is not sufficiently responsive in providing a description that meets Customs’ needs.

The lawyer said that a more thorough review by USTR, which may be prompted by congressional interest, sometimes can make the difference in gaining approval of an exclusion request.

Congressional interest is not limited to individual requests. Sen. James Lankford, R-Oklahoma, said last month that he and others had been pushing USTR to open up the exclusion process on the $200 billion tranche.

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