[CTC] USTR opposes Senate-backed restart of Section 301 exclusion process

[Arthur Stamoulis]

The AFL-CIO letter on this is attached

USTR opposes Senate-backed restart of Section 301 exclusion process
April 29, 2022 at 7:17 PM
 
The Office of the U.S. Trade Representative this week told Democratic senators it opposes language in the Senate’s U.S. Innovation and Competition Act that would mandate restarting a robust Section 301 tariff-exclusion process, saying the provisions would undermine the administration’s efforts to address unfair Chinese trade practices. 
 
Section 73001 of the China-focused legislation sets out a “Process for exclusion of articles from duties under section 301 of the Trade Act of 1974,” as stated in the bill. It includes language that would amend the statute to establish an exclusion process for duties imposed on Chinese goods pursuant to the Section 301 investigation of China’s practices initiated in 2017, among other provisions. A House version of the legislation does not include language about an exclusion process – one of several major differences between the two bills that conferees from the two chambers must try to reconcile. 
 
USTR’s statement was sent to the Senate Democratic Caucus and labor leaders, according to a labor source who shared it with Inside U.S. Trade. It came after Sen. Pat Toomey (R-PA) on Thursday introduced a “motion to instruct” that would direct Senate conferees to include the provisions for restarting an exclusion process.  
 
MTIs, which are not binding, must be approved before conferees are appointed. 
 
The agency said it opposed Toomey’s MTI and the provisions, saying they would “undermine Section 301’s goal of addressing unfair foreign trade practices.”  
 
In particular, USTR wrote, “The provision addressed directly to the China 301 investigation on technology transfer would reduce the leverage needed to encourage China to change its practices involving the theft of U.S. technology, and would support China’s goal of obtaining a reduction in the tariffs.” 
 
USTR also took issue with a provision that would provide for retroactive reinstatement of prior exclusions, saying it “would undermine the Administration’s policy with respect to China and result in a major unfunded expenditure.”

The AFL-CIO also objected to Toomey’s motion, saying the Senate-backed provisions would benefit China.  
 
“These types of provisions are in direct contradiction with ongoing Administration and Congressional efforts to bolster supply chain resiliency and Buy American,” the union federation wrote in an April 28 letter to senators.
 
The labor organization urged lawmakers against “undoing progress” being made in reducing reduce reliance on China “by expanding tariff reductions for firms that have failed to adjust and diversify.” 
 
Americans for Tax Reform, a conservative advocacy group, hailed Toomey’s motion in a statement <https://www.atr.org/atr-supports-sen-toomeys-motion-instruct-competes-act-conferees-re-establish-section-301-tariff-exclusions-process/> on Thursday, describing the provisions as “a common sense measure that reduces the tax burden on American trade.” 
 
USTR last month concluded a review of previously granted product exclusions and announced it was reinstating more than 350 such exclusions through the end of this year. Later that month, when pressed by lawmakers on both sides of the aisle during a House Ways & Means Committee hearing, U.S. Trade Representative Katherine Tai did not indicate that USTR would be open to restarting a robust exclusion process.
 
USTR declined to comment on the communication to Senate Democrats. -- Margaret Spiegelman (mspiegelman at iwpnews.com <mailto:mspiegelman at iwpnews.com>)

Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826



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