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Trade and Industry Department The Government of the Hong Kong Special Administrative Region
Brand Hong Kong - Asia world city

Commercial Information Circulars

24-hour hotline : 23 922 922

e-mail address : enquiry@tid.gov.hk

Ref. : EIC 111/2/18
EIC 111/3
EIC 111/3/13
CR EIC 111/1/13/3

17 August 2018

Dear Sirs,

Commercial Information Circular No. 787/2018

US : Section 301 Tariffs on Certain Mainland Products Worth US$50 Billion - Clarification of Application under Chapter 98 of Harmonized Tariff Schedule of the United States

Further to Commercial Information Circular No. 759/2018 of 8 August 2018 regarding the additional tariffs of 25% on 279 tariff lines worth approximately US$16 billion of Mainland products which will take effect from 23 August 2018, the Office of the US Trade Representative (USTR) issued a Federal Register (FR) notice on 16 August 2018 to specify that additional tariff will take effect on or after 12:01 AM (US Eastern Standard Time) on 23 August 2018.

2.The notice also provides clarification on the application of the additional tariff currently under Chapter 98 of Harmonized Tariff Schedule of the United States (HTSUS). With the clarification, special tariff provisions for certain US goods returned to the US after assembly, repair, alterations and processing abroad, which are originally exempted from the additional 25% tariff, will become subject to the said tariffs. This affects both goods on the US' US$34 billion tariff list (which took effect on 6 July 2018) and US$16 billion tariff list (which will take effect on 23 August 2018).

DETAILS

3.The USTR's notice of 15 June 2018 released two sets of US tariff lines of Mainland products worth about US$50 billion for an additional 25% tariff under the Section 301 investigation. The first set, which took effect on 6 July 2018, contains 818 tariff lines worth approximately US$34 billion. The notice of 15 June 2018 originally specified that the additional 25% tariff does not apply to goods for which entry is properly claimed under a provision of Chapter 98 of the HTSUS (see also para. 5 below). Products in Chapter 98 include, among others, certain US goods returned to the US after assembly, repair, alterations and processing abroad. For example, subheading 9802.00.40 includes certain articles exported for repairs or alterations; heading 9802.00.80 covers certain articles assembled in whole or in part of fabricated components, the product of the US, which (a) were exported in condition ready for assembly without further fabrication, (b) have not lost their physical identity in such articles by change in form, shape or otherwise, and (c) have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process such as cleaning, lubricating and painting.

4.On 7 August 2018, the USTR released the finalized second set of tariff lines which contains 279 tariff lines worth approximately US$16 billion of Mainland goods to be subject to an additional duty of 25% with effect from 23 August 2018. The USTR further issued a FR notice on 16 August 2018 specifying that the above tariff will take effect from 12:01 AM (US Eastern Standard Time) on 23 August 2018.

5.USTR's notice of 16 August 2018 also provides clarification on the application of the additional tariff currently under Chapter 98 of HTSUS. Specifically, it clarifies that the additional 25% tariff on Mainland products worth about US$50 billion (i.e. both the US$34 and US$16 billion tariff lists) does not apply to goods for which entry is properly claimed under a provision of chapter 98 of the HTSUS, EXCEPT for goods entered under subheadings 9802.00.40, 9802.00.50, and 9802.00.60, and heading 9802.00.80. For subheadings 9802.00.40, 9802.00.50, and 9802.00.60, the additional duties apply to the value of repairs, alterations, or processing performed abroad, as described in the applicable subheading. For heading 9802.00.80, the additional duties apply to the value of the article less the cost or value of such products of the US, as described in heading 9802.00.80.

6.For further details of US' additional 25% tariff on Mainland products worth $50 billion and the clarification on application of the tariff under Chapter 98, please refer to the FR notice which is available at: ( https://www.gpo.gov/fdsys/pkg/FR-2018-08-16/pdf/2018-17709.pdf )

ENQUIRIES

7.For enquiries concerning the content of this circular, please contact the undersigned at 2398 5682.

Yours faithfully,

(Miss Ivy TAM)
for Director-General of Trade and Industry

Note: While every effort is made to ensure the accuracy of the above information, the Department cannot guarantee this to be so and will not be held liable for any reliance placed on the same.