What OFAC Defines as a “Sham Transaction” 

Sham transactions occur when blocked persons “give up their property on paper only,” while continuing to benefit from or control the asset. These arrangements often involve: 

• Proxies, straw owners, or front companies acting on behalf of sanctioned individuals. 
• Opaque legal structures, including multi‑layered LLCs, partnerships, or trusts. 
• Transfers to family members or close associates who may serve as facilitators. 
• Commercially unreasonable transfers, such as those lacking adequate consideration. 
• Continued use or control of the asset by the blocked person after the purported transfer. 

Pro Tip: Look beyond legal formalities and identify the economic realities of the transaction. 

Red Flags Identified by OFAC 

The advisory outlines several indicators that a transaction may be a sham designed to evade sanctions. These include: 

• Transfers with no legitimate business purpose or to individuals lacking relevant expertise. 
• Complex corporate structures in high‑risk jurisdictions. 
• Inconsistent or incomplete documentation surrounding the transfer. 
• Timing of the transfer, particularly if it occurs close to a sanctions designation. 
• Evasive or vague responses from intermediaries when questioned about ownership or control. 

Pro Tip: No single factor is determinative; look at the totality of the circumstances instead. 

If your organization needs assistance strengthening sanctions compliance, conducting due diligence, or reviewing internal controls, contact Diaz Trade Law today! 

Learn more: 

• Bloomberg Law: Submitting a Voluntary Self-Disclosure to OFAC 
• Bloomberg Law Feature: Voluntary Self-Disclosures: Recent Guidance From BIS, OFAC & DOJ 
• Office of Foreign Assets Control (OFAC) Sanctions Compliance 

The basis of the investigations is Section 232 of the Trade Expansion Act of 1962. Under Section 232, the president can restrict imports of products that are found to threaten to impair national security.

On April 16, BIS published two federal register notices (pharmaceuticals, semiconductors) seeking public comment. Comments are due May 7, 2025.

Pharmaceuticals and Pharmaceutical Ingredients

The scope of the pharmaceutical investigation covers pharmaceuticals and pharmaceutical ingredients, including:

• Finished drug products
• Medical countermeasures
• Critical inputs such as active pharmaceutical ingredients
• Key starting materials, and derivative products of those items

Among other information, BIS is particularly interested in comments that address:

• Demand for pharmaceuticals and pharmaceutical ingredients in the United States
• The extent to which domestic production of pharmaceuticals and pharmaceutical ingredients can meet domestic demand
• The role of foreign supply chains, particularly of major exporters, in meeting United States demand for pharmaceuticals and pharmaceutical ingredients
• The impact of foreign government subsidies and predatory trade practices on United States pharmaceuticals industry competitiveness
• Whether additional measures, including tariffs or quotas, are necessary to protect national security

Interested parties may submit a comment in this proceeding on or before May 7, 2025 at Regulations.gov using ID BIS-2025-0022.

Semiconductors and Semiconductor Manufacturing Equipment

The scope of the semiconductor investigation covers semiconductors, semiconductor manufacturing equipment, and their derivative products, including:

• Semiconductor substrates and bare wafers
• Legacy chips
• Leading-edge chips
• Microelectronics
• SME components

Among other information, BIS is particularly interested in comments that address:

• Demand for semiconductors in the United States
• The extent to which domestic production of semiconductors can or is expected to be able to meet domestic demand
• The impact of foreign government subsidies and predatory trade practices on United States semiconductor and SME industry competitiveness
• Whether additional measures, including tariffs or quotas, are necessary to protect national security

Interested parties may submit a comment in this proceeding on or before May 7, 2025 at Regulations.gov using ID BIS-2025-0021.

Make Your Voice Heard by Filing a Comment

These investigations may yield new tariffs on some or all of the products under consideration. If your business involves the importation of pharmaceutical or semiconductor products covered in this proceeding, consider filing a comment. Diaz Trade Law can help you draft and file a comment and/or help you understand how this rule may impact your business.

Read more:

• Presidential Powers and Tariffs: A Breakdown of Key Trade Laws
• Tariffs: Key Updates for Importers

2, 4-D is the active ingredient in many products used in the United States and throughout the world as an herbicide to kill weeds on land and in water.

Identified importers include:

• Helena Industries LLC (China)
• Nufarm Americas Inc. (China)
• PBI-Gordon Corporation (China)
• Gharda Chemicals (India)
• Atul USA, Inc. (India)

The full list of identified exporters and producers can be viewed here.

The alleged dumping margins are:

• China: 143.73%
• India: 62.66%

The proposed scope language includes the 2, 4-D component of any derivative products of 2, 4-D including amine salt and ester forms.

The Commerce Department will determine whether to initiate the investigations within 20 days. The United States International Trade Court (USITC) will reach a preliminary determination of material injury or threat of material injury within 45 days. Final determinations will likely occur late 2024.

As with any proceeding, participation is very important to protect your rights. We urge anyone that imports 2, 4-D to pay close attention to this case to ensure that all appropriate steps are taken to mitigate any damage.

Diaz Trade Law will continue to monitor this case and share updates. For more information or questions get in touch with us at 305-456-3830 or info@diaztradelaw.com.

Underpaying Through Duplicate Invoices

ADCO, a Dallas-based importer of industrial products, the company owner Raymond E. Davis, customs broker Calvin Chang, and Chinese companies Xiamen Atlantis MFC Co., Ltd. and Xiamen Taft Medical Co., Ltd conspired to underreport the value of goods they were importing.

The scheme involved falsifying invoices with low values for goods ADCO was importing from China. The company used a separate set of invoices that contained the correct value of goods to ensure that ADCO paid its suppliers the actual value of the goods.

In investigating the scheme, the U.S. Attorney’s Office and CBP’s Consumer Products and Mass Merchandising Center of Excellence and Expertise reviewed over 1,000 import entry lines.

Qui Tam Lawsuit

The settlement with the government resolved a “qui tam” lawsuit filed under the False Claims Act (FCA). A qui tam lawsuit is one that is brought by a private citizen or company against a defendant or defendants that owe money to the government.

When a qui tam lawsuit is successful, the party that initiated the case—called a “relator”—is entitled to a substantial monetary reward, ranging between 15% and 30% of the amount recovered for the government.  A qui tam lawsuit also engages the U.S. Department of Justice (“DOJ”) in the case, and typically results in the opening of an investigation by DOJ into the allegations made in the case.

In this case, the whistleblowers will receive $500,000 as part of the settlement.

A Customs Attorney Can Help Implement Compliant Valuation Practices

In this case, the parties involved were knowingly and willfully perpetrating a fraud to lower their duties liability. However, undervaluing (even if not knowing and willful) is still a serious violation of U.S. Customs laws.

All importers should have robust compliance measures in place to ensure they are valuing imports properly. The process should be periodically re-evaluated to ensure it is up to date with the latest CBP rulings and guidance.

A customs attorney can help you value specific goods, but also help you set up a system to ensure compliance going forward.

Diaz Trade Law has significant experience in a broad range of import compliance matters, including customs valuation. Contact us at info@diaztradelaw.com or call us at 305-456-3830.

Want to learn more? 

Relevant webinars:

• Basics on Tariff Classification
• Introduction to Importing
• Building and Maintaining an Effective Import Compliance Program

Relevant blog posts:

• Customs Undervaluation – It’s a Crime
• Customs Valuation 101

Full list of exporters here, full list of U.S. importers here.

The filing is in response to increasing volumes of allegedly unfairly priced imports of aluminum extrusions that have been growing since 2019, notwithstanding that Aluminum Extrusions made in the U.S. face significantly higher costs due to restrictions on the importation of primary aluminum.

The petitions aim to demonstrate that aluminum extrusion producers in these countries are selling extrusions in the U.S. at less than fair value and that such sales are harming the U.S. Aluminum Extrusion industry. The petitions note dumped rates up to 256%.

The petitions also claims that producers in China, Indonesia, Mexico, and Turkey unfairly benefit from countervailable subsidies, such as tax breaks and discounted land.

The President of the Aluminum Extruders Council, Jeff Henderson, stated:  “For years, American extruders and workers have lost huge amounts of sales to unfairly traded, dumped and subsidized imports of aluminum extrusions. It’s time to take a stand for American manufacturing and take on these illegally traded products.”

The Commerce Department will determine whether to initiate the investigations within 20 days. The USITC will reach a preliminary determination of material injury or threat of material injury within 45 days. The deposit of duties will likely be required by the late fall or early winter.  The process is expected to take approximately one year, with final determinations likely occurring in mid-2024.

As with any proceeding, participation is very important to protect your rights. In particular, this petition alleges a very broad scope and brings into the scope of the investigation numerous products that would not necessarily be considered to be “aluminum extrusions” in the marketplace.  The scope process, where parties can seek to clarify what is and is not covered, will take place early in the process.

More on scope of the investigation here.

We urge anyone that imports products containing Aluminum Extrusions to pay close attention to this case and to ensure that all appropriate steps are taken to mitigate any damage.

For more information or questions get in touch with us at 305-456-3830 or info@diaztradelaw.com.

In CSMS #46607637, CBP also provides guidance for importers, brokers, and other related parties:

• Per 85 FR 85831 Annex A, in addition to reporting the regular Chapters 84, 85, and 90 classifications of the HTS for the imported merchandise, importers shall report the HTS classification 9903.88.62 (Articles, the product of China related to Tranche 1 – $34B Action, as provided for in U.S. note 20(ooo) to this subchapter, each covered by an exclusion granted by the USTR for imported merchandise subject to the exclusion).
• Per 85 FR 85831 Annex B, in addition to reporting the regular Chapters 39, 84, and 90 classifications of the HTS for the imported merchandise, importers shall report the HTS classification 9903.88.63 (Articles, the product of China related to Tranche 2 – $16B Action, as provided for in U.S. note 20(ppp) to this subchapter, each covered by an exclusion granted by the USTR for imported merchandise subject to the exclusion).
• Per 85 FR 85831 Annex C, in addition to reporting the regular Chapters 28, 34, 38, 39, 40, 48, 56, 65, 84, 85, and 90 classifications of the HTS for the imported merchandise, importers shall report the HTS classification 9903.88.64 (Articles, the product of China related to Tranche 3 – $200B Action, as provided for in U.S. note 20(qqq) to this subchapter, each covered by an exclusion granted by the USTR for imported merchandise subject to the exclusion).
• Per 85 FR 85831 Annex D, in addition to reporting the regular Chapters 34, 39, 40, 48, 52, 55, 61, 62, 63, and 90 classifications of the HTS for the imported merchandise, importers shall report the HTS classification 9903.88.65 (Articles, the product of China related to Tranche 4A – $300B Action, as provided for in U.S. note 20(rrr) to this subchapter, each covered by an exclusion granted by the USTR for imported merchandise subject to the exclusion).
• Importers shall not submit the corresponding Chapter 99 HTS number for the Section 301 duties when HTS 9903.88.62, 9903.88.63, 9903.88.64, or 9903.88.65 are submitted.

Further, USTR may make additional modifications to remove Section 301 duties from other medical-care products to address COVID-19. CBP issued guidance on the 301 exclusion extensions and modifications on December 30, 2020, explaining its intentions to modify the 301 duties as appropriate.

Contact Us

For background information on Section 301 China tariffs and numerous ways to mitigate the effect of the China tariffs, check out our previous blogs. Diaz Trade Law has assisted clients in assessing their best options to prepare or mitigate the China tariffs and submitted comments and exclusion requests. If you need assistance understanding the USTR announcement or navigating China 301 tariffs, our Customs and International Law attorneys are available at 305-456-3830 or info@diaztradelaw.com.

***

Detailed Scope of Extension

Effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on April 1, 2021, and before 11:59 p.m. eastern daylight time on September 30, 2021, each of the article descriptions of headings 9903.88.62, 9903.88.63, 9903.88.64 and 9903.88.65 of the Harmonized Tariff Schedule of the United States are modified by deleting “March 31, 2021,” and by inserting “September 30, 2021,” in lieu thereof.

ANNEXES A—D:

1. by inserting the following new heading 9903.88.62, 9903.88.63, 9903.88.64, or 9903.88.65, respectively, in numerical sequence, with the new material in the new heading inserted in the columns of the HTSUS labeled “Heading/Subheading”, “Article Description”, and “Rates of Duty 1-General”, respectively:

ANNEX A – 9903.88.62: by inserting the following new U.S. note 20(ooo) to subchapter 99 in numerical sequence: “(ooo) The USTR determined to establish a process by which particular products classified in heading 9903.88.01 and provided for in U.S. notes 20(a) and 20(b) to this subchapter could be excluded from the additional duties imposed by heading 9903.88.01. See 83 FR 28710 (June 20, 2018) and 83 FR 32181 (July 11, 2018). Following its request for public comment in March, USTR determined that, as provided for in heading 9903.88.62, the additional duties provided for in heading 9903.88.01 shall not apply to the following particular products, which are provided for in the enumerated statistical reporting numbers:

The technical amendments to the exclusions to certain Notes to Subchapter III of Chapter 99 of the HTSUS can be found below:

Effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on January 1, 2021, the exclusion for certain inoculator sets of plastics that is provided for in heading 9903.88.06 and U.S. note 20(i)(32) to subchapter III of chapter 99 of the HTSUS is deleted.

ANNEX B – 9903.88.63: by inserting the following new U.S. note 20(ppp) to subchapter 99 in numerical sequence: “(ppp) The USTR determined to establish a process by which particular products classified in heading 9903.88.02 and provided for in U.S. notes 20(c) and 20(d) to this subchapter could be excluded from the additional duties imposed by heading 9903.88.02. See 83 FR 40823 (August 16, 2018) and 83 FR 47326 (September 18, 2018).  Following its request for public comment in March, USTR determined that, as provided for in heading 9903.88.63, the additional duties provided for in heading 9903.88.02 shall not apply to the following particular products, which are provided for in the enumerated statistical reporting numbers:

The technical amendments to the exclusions to certain Notes to Subchapter III of Chapter 99 of the HTSUS can be found below:

ANNEX C – 9903.88.64: by inserting the following new U.S. note 20(qqq) to subchapter 99 in numerical sequence: “(qqq) The USTR determined to establish a process by which particular products classified in heading 9903.88.03 and provided for in U.S. notes 20(e) and 20(f) to this subchapter could be excluded from the additional duties imposed by heading 9903.88.03, and by which particular products classified in heading 9903.88.04 and provided for in U.S. note 20(g) to this subchapter could be excluded from the additional duties imposed by heading 9903.88.04. See 83 FR 47974 (September 21, 2018) and 84 FR 29576 (June 24, 2019).  Following its request for public comment in March, USTR determined that, as provided for in heading 9903.88.64, the additional duties provided for in heading 9903.88.03 or in heading 9903.88.04 shall not apply to the following particular products, which are provided for in the enumerated statistical reporting numbers:

The technical amendments to the exclusions to certain Notes to Subchapter III of Chapter 99 of the HTSUS can be found below:

ANNEX D – 9903.88.65: by inserting the following new U.S. note 20(rrr) to subchapter 99 in numerical sequence: “(rrr) The USTR determined to establish a process by which particular products classified in heading 9903.88.15 and provided for in U.S. notes 20(r) and 20(s) to this subchapter could be excluded from the additional duties imposed by heading 9903.88.15. See 84 FR 43304 (August 20, 2019) and 84 FR 45821 (August 30, 2019); 84 FR 57144 (October 24, 2019) 85 FR 3741 (January 22, 2020). Following its request for public comment in March, USTR determined that, as provided for in heading 9903.88.65, the additional duties provided for in heading 9903.88.15 shall not apply to the following particular products, which are provided for in the enumerated statistical reporting numbers:

The technical amendments to the exclusions to certain Notes to Subchapter III of Chapter 99 of the HTSUS can be found below:

Table A contains a list of the original exclusions and corresponding Chapter 99 Heading and Note 20 Subdivision for the first extension and the current extension. Additionally, the table indicates which Annex to this notice the extension appears:

Contact Us

For background information on Section 301 China tariffs and numerous ways to mitigate the effect of the China tariffs, check out our previous blogs. Diaz Trade Law has assisted clients in assessing their best options to prepare or mitigate the China tariffs and submitted comments and exclusion requests. If you need assistance understanding the USTR announcement or navigating China 301 tariffs, our Customs and International Law attorneys are available at 305-456-3830 or info@diaztradelaw.com.

In 2020, the United States Trade Representative (“USTR”) initiated Section 301 investigations with respect to certain Digital Service Taxes (“DSTs”) being adopted or under consideration by a number of countries. DSTs are taxes on revenues that certain companies generate from providing certain digital services to users in those jurisdictions. According to USTR, available evidence suggests that DSTs are expected to target large, U.S.-based technology companies.

Section 301 of the U.S. Trade Act of 1974 authorizes the President to take all appropriate action including tariff-based and non-tariff-based retaliation to obtain the removal of any act, policy, or practice of a foreign government that violates an international trade agreement or is unjustified, unreasonable, or discriminatory, and that burdens or restricts U.S. commerce.

Accordingly, in early January 2021, USTR determined that certain countries’ DSTs were, in fact, unreasonable or discriminatory and burdened U.S. commerce. These countries included India, Italy, Turkey, Austria, Spain, and the United Kingdom. However, USTR has terminated DST investigations of Brazil, the Czech Republic, the European Union, and Indonesia after finding that these jurisdictions either have not adopted or not implemented a DST during the period of investigation. The reason for this termination is that USTR must make its determination within one year of initiation – or in this case June 2, 2021.  However, these countries have only proposed, and have not yet implemented a Digital Service Taxes. Accordingly, USTR has decided to terminate these investigations, and to continue to monitor the creation DST in these countries.

Proposed 25% Duties

In its March 31, 2021 notice, USTR announced that it is moving forward with its DST investigations for the following countries:

• Austria
• India
• Italy
• Spain
• Turkey
• United Kingdom

USTR is proposing to impose 25% duties on a range of products from each of these countries. The initial proposed list includes a broad range of products including certain clothing, footwear and the like from Italy and Spain, Shrimp from India and Spain, Glassware and ceramics from Austria, Spain, and the UK, welding machines from Austria, industrial robots from the UK and optical goods from Austria. This list is not comprehensive.

Retaliatory tariffs could total almost $1 billion annually. The cumulative annual value of the duties comes to $880 million, according to Bloomberg News calculations, which include the following annual value of duties by country:

• UK –  $325 million annually
• Italy –  $140 million annually
• Spain – $155 million annually
• Turkey – $160 million annually
• India – $55 million annually
• Austria – $45 million annually

Comment Opportunity

USTR is soliciting public comment on the above proposed actions. To be assured of consideration, written comments should be submitted to USTR by April 30, 2021. USTR requests comments with respect to any issue related to the action to be taken in these investigations. USTR specifically invites comments regarding:

• The level of the burden or restriction on U.S. commerce resulting from these countries’ DSTs, including the amount of DST payments owed by U.S. companies, the annual growth rate of such payments, and other effects, such as compliance costs.
• The appropriate aggregate level of trade to be covered by additional duties.
• The level of the increase, if any, in the rate of duty.
• The specific products to be subject to increased duties, including whether the tariff subheadings listed should be retained or removed,

Virtual Hearing

Additionally, USTR will hold a virtual hearing on these proposed actions on the following dates:

• May 3, 2021: Multi-jurisdictional virtual hearing on proposed actions
• May 4, 2021: Virtual hearing on the United Kingdom DST proposed action
• May 5, 2021: Virtual hearing on the Italy DST proposed action
• May 6, 2021: Virtual hearing on the Spain DST proposed action
• May 7, 2021: Virtual hearing on the Turkey DST proposed action

Although the proposed actions pertaining to India and Austria are covered by the multi-jurisdictional virtual hearing, there is no virtual hearing country-specific for proposed actions pertaining to either of those two countries. In order to directly participate in the virtual hearing a request to appear and a summary of testimony must be provided to USTR by April 21, 2021.

Additionally, USTR is soliciting hearing rebuttal comments. Rebuttal comments for the multi-jurisdictional hearing are due on May 10, 2021, and rebuttal comments for country-specific hearings are due in the days after.

It is important to note that these lists are broader than the lists of products against which retaliation will be taken. USTR will decide which products are subject to retaliation and which products are not subject to retaliation based in large part on the comments and testimony filed in this proceeding. If you are importing a product potentially subject to such duties, it is very important that you file comments explaining why your products should not be selected.

Contact Us

Diaz Trade Law has extensive expertise on Section 301 actions and in preparing and submitting comments for federal rulemaking. Please reach out to us if you would like to submit comments to USTR in order to inform the agency of how to proceed with the DST investigations. If you would like more information on this issue, including a full list of the products proposed  for each country, please contact us at your earliest convenience. Diaz Trade Law can be reached at info@diaztradelaw.com and 305-456-3830.

The revision, which added additional items to the list of European products subject to import duties, is the most recent increase of tension between the United States and the European Union (EU), in regards to their WTO dispute over Boeing and Airbus.

Background

The US and EU have been disputing the other illicitly subsidizes their airplane manufacturers since as early as 2006. In 2006, the US filed a case with the WTO that accused EU member states of providing Airbus with roughly $22 billion in illegal subsidies. Over the next 14 years, both members have brought various suits against the other via the WTO, in order to settle this international trade dispute.

Recent Timeline

Recent Developments

The decision to include additional products to the list of 301 tariffs is in direct response to the EU’s actions in November 2020. In November 2020, the EU imposed tariffs with an annual trade value of $4 billion against products from the U.S. Specifically, the EU levied additional import duties of 15 percent on large civil aircraft and of 25 percent on other U.S. goods. The action followed  a decision by the WTO arbitrator in the United States— Measure Affecting Trade in Large Civil Aircraft (DS353), and a corresponding WTO authorization to suspend WTO concessions to the U.S

According to USTR, while the EU claims its retaliatory action mirrors the action taken by the United States in this investigation: that is not accurate. USTR explains that the benchmark reference period used by the EU was impacted by the economic fallout from COVID-19, whereas the U.S. had used trade data from an unaffected period. The EU’s skewed methodology allowed it to cover a greater volume of imports in its action.  Further, ” up to and until the exit of the United Kingdom from EU customs territory is finalized, goods of the United States are subject to additional EU duties when entering the United Kingdom. However, the EU’s trade action valuation does not account for U.S. exports to the United Kingdom. Therefore, the value of U.S. exports subject to tariffs is greater than the trade value the EU ascribes to the various covered tariff lines.”

Despite the U.S. informing the EU of these claims and providing it with an opportunity to respond, the EU has declined to do so. Following the EU’s lack of response, USTR announced the January 6^th Revision of Action. In order to establish an equitable playing field, the U.S. has decided to mirror the EU approach to exercising its DSB authorization by adjusting the reference period for the action to be from August 2019 to July 2020, the same reference period used by the EU and stated:

In adopting this approach, the United States has made appropriate adjustments to ensure that the trade data from the revised reference period does not reflect reductions in trade resulting from the October 2019 trade action in the investigation. Using the estimated trade values from this reference period, the value of the U.S. trade action as last revised on August 12, 2020, is well below the $7.5 billion level authorized by the DSB. In order to exercise the DSB authorization to the United States, the U.S. Trade Representative has determined to add products to the list of products currently subject to additional duties, while otherwise maintaining the trade action as last revised on August 12, 2020.

Specifically, as detailed in the annexes of the Notice, the revision adds products of France and Germany to the list of EU products subject to additional duties. USTR reviewed the proposed lists in the April 12, 2019 notice (84 FR 15028) and chose products from France and Germany, “as these countries have provided the greatest level of WTO inconsistent large civil aircraft subsidies”.

Additionally, USTR explicitly states that it will continue to consider the action taken by the investigation. Effectively, if the dispute changes in nature, the scope of this action may either increase or decrease. Diaz Trade Law will continue to provide the public with updates to this matter if and when USTR announces its future actions.

**SECTION BELOW IS DIRECTLY FROM THE FEDERAL REGISTER NOTICE** 

Annex I to this notice identifies the products affected by the revised action, the rate of duty to be assessed, and the current or former EU member States affected. Annex II, section 1, contains the unofficial descriptive list of the revisions made by this Notice. Annex II, section 2, contains an unofficial, consolidated description of the action, reflecting the changes in Annex I.

In order to implement this determination, effective January 12, 2021, subchapter III of chapter 99 of the HTSUS is modified by Annex I to this notice. The additional duties provided for in the HTSUS subheadings established by annex I apply in addition to all other applicable duties, fees, exactions and charges.

Any product listed in annex I to this notice, except any product that is eligible for admission under ‘domestic status’ as defined in 19 CFR 146.43, which is subject to the additional duty imposed by this determination, and is admitted into a U.S. foreign trade zone on or after 12:01 a.m. eastern standard time on January 12, 2021, only may be admitted as ‘privileged foreign status’ as defined in 19 CFR 146.41. Such products will be subject upon entry for consumption to any ad valorem rates of duty or quantitative limitations related to the classification under the applicable HTSUS subheading.

ANNEX I

A. “Effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern standard time on January 12, 2021, U.S. note 21 to subchapter III of chapter 99 of the Harmonized Tariff Schedule of the United States is modified as provided herein:

1. U.S. note 21(a) to such subchapter is modified by deleting “9903.89.55” each place that it appears and inserting “9903.89.63” in lieu thereof.
2. U.S. note 21 to such subchapter is modified by inserting in alphabetical order: “(s) Subheading 9903.89.57 and superior text thereto shall apply to all of the following products of France and Germany:
   • Spirits obtained by distilling grape wine or grape marc (grape brandy), other than Pisco and Singani, in containers each holding not over 4 liters, valued over $38 per proof liter (provided for in subheading 2208.20.40); and
   • Products classified in the following 8-digit subheadings:

(t) For purposes of subheading 9903.89.61:

1. “Fuselages and fuselage sections” means: (a) the complete, tube-like structure comprising the central body portion of an airplane, including accommodations for crew, passengers, and/or cargo, whether or not containing systems, insulation, or other articles; and (b) sections of articles described in (a) that have exterior side surfaces attached to exterior top/crown and bottom/keel surfaces, whether or not designed to be pressurized, and whether or not there are additional articles attached. The term “fuselages and fuselage sections” shall not cover airplane parts, components, or subassemblies (e.g. aft pressure bulkheads, floor panels, seats) when imported unattached to the articles described in (a) and (b) of this subdivision.
2. “Wings and wing assemblies (other than wings having exterior surfaces of carbon composite material)” means: (a) left or right-handed outboard wing structures with fixed structures, whether or not also including moveable structures, having exterior surfaces of other than carbon composite material; (b) center wing boxes having exterior surfaces of other than carbon composite material; and (c) wing assemblies that combine an outboard wing structure with a fixed structure (whether or not having moveable structure) and a center wing boxes, having exterior surfaces of other than carbon composite material. The term “wings and wing assemblies (other than wings that have exterior surfaces of carbon composite material)” shall not cover airplane parts, components or subassemblies when imported unattached to the articles described in (a), (b), or (c) of this subdivision.
3. “Horizontal and vertical stabilizers” means a horizontal or vertical stabilizer, whether or not attached to elevators or fuselage/tail cone/empennages structures. The term “horizontal and vertical stabilizers” does not cover elevators or rudders when imported unattached to a fuselage, tail cone, or empennage structure.

Such subheading shall not cover other parts of airplanes or helicopter not covered by the definitions set forth in this subdivision.”.

B. Effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern standard time on January 12, 2021, the following new tariff provisions are inserted in numerical sequence in subchapter III of chapter 99, with the material in the following new tariff provisions inserted in the columns entitled “Heading/Subheading”, “Article Description”, and “rates of Duty 1- General”, respectively:

ANNEX II

Section 1 – Descriptive List of Changes from Annex II

Note: The product descriptions that are contained in this Annex are provided for informational purposes only, and are not intended to delimit in any way the scope of the action, except as specified below. In all cases, the formal language in Annex 1 governs the tariff treatment of products covered by the action. Section 1 of this Annex describes the changes to the action that were undertaken as a result of Annex 1, as reflected in the informal list presented in Section 2 of this Annex.

Any questions regarding the scope of particular HTS subheadings should be referred to U.S. Customs and Border Protection. In the product descriptions, the abbreviation “nesoi” means “not elsewhere specified or included”.

The following changes are made effective January 12, 2021.

a) The following products of France and Germany have been added to the action, and included in Part 18, which has been inserted in the descriptive list in Section

**Only a portion of HS8 digit is to be covered

b) The following Products of France and Germany have been added to the action, and included in Part 19, which has been inserted in the descriptive list in Section

**Only a portion of HS8 digit is to be covered

Section 2- Descriptive List of Action, reflecting changes as described in Annex 1

Note: The product descriptions that are contained in this Annex are provided for informational purposes only, and are not intended to delimit in any way the scope of the action, except as specified below. In all cases, the formal language in Annex 1 and the notices published at 84 FR 54245 (October 9, 2019), 84 FR 55998 (October 18, 2019), 85 FR 10204 (February 21, 2020), 85 FR 50866 (August 18, 2020), governs the tariff treatment of products covered by the action.

Any questions regarding the scope of particular HTS subheadings should be referred to U.S. Customs and Border Protection. In the product descriptions, the abbreviation “nesoi” means “not elsewhere specified or included”.

Part 1 – Products of France, Germany, Spain, or the United Kingdom described below are subject to additional import duties of 15 percent ad valorem.

Note: For purposes of the 8-digit subheading of HTS listed below, the product description defines and limits the scope of the proposed action.

**Only a portion of the HS8 digit is to be covered

Part 2- Products of Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, or the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Part 3 – Products of Germany, Spain, or the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Part 4 – Products of Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, or the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Part 5 – Products of Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, or the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Part 6 – Products of Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, or the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Part 7 – Products of Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, or the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Part 8 – Products of Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, or the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Part 9 – Products of Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, or the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Part 10 – Products of France, Germany, Spain, or the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Part 11 – Products of Germany described below are subject to additional import duties of 25 percent ad valorem:

Part 12 – Products of Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, or the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Part 13 – Products of Germany or the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Part 14 – Products of Germany, Ireland, Italy, Spain, or the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Part 15 – Products of the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Note: For purposes of 2208.30.30, the product description defines and limits the scope of the proposed action.

** Only a portion of HS8 digit is to be covered

Part 16 – Products of France or Germany described below are subject to additional import duties of 25 percent ad valorem:

Part 17 – Products of Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, or the United Kingdom described below are subject to additional import duties of 25 percent ad valorem:

Part 18 – Products of France or Germany described below are subject to additional import duties of 25 percent ad valorem:

Note: For purposes of 2208.20.40, the product description defines and limits the scope of the proposed action.

**Only a portion of HS8 digit is to be covered

 Part 19 – Products of France or Germany described below are subject to additional import duties of 15 percent ad valorem:

Note: For purposes of the 8-digit subheadings of HTS listed below, the product description defines and limits the scope of the proposed action.

**Only a portion of HS8 digit is to be covered

The USTR provided the following rationale for this limited extension:

In light of the rising spread and ongoing efforts to combat COVID–19, the U.S. Trade Representative has determined that maintaining or reimposing additional duties on certain products subject to the action no longer is appropriate and that the application of additional duties to these products could impact U.S. preparedness to address COVID–19. Pursuant to sections 301(b), 301(c), and 307(a) of the Trade Act of 1974, as amended, and in accordance with the advice of the interagency Section 301 Committee, the U.S. Trade Representative has determined to extend certain product exclusions on medical-care products and to remove the duties from additional medical-care products.

The items detailed in this notice have been granted extensions to their respective exclusions through March 31, 2021. Additionally, USTR has made further modifications to remove Section 301 duties from additional medical-care products to address COVID-19. USTR may consider further extensions and/or additional modifications as appropriate. U.S. Customs and Border Protection (“CBP”) issued guidance on the 301 exclusion extensions and modifications on December 30, 2020.

Contact Us

For background information on China Tariffs and numerous ways to mitigate the effect of the China tariffs, check out our previous blogs. Diaz Trade Law has assisted clients in assessing their best options to prepare or mitigate the China tariffs and submitted comments and exclusion requests. If you need assistance understanding the USTR announcement or navigating China 301 tariffs, our Customs and International Law attorneys are available at 305-456-3830 or info@diaztradelaw.com.

***

Detailed Scope of Extension

Effective with respect to goods entered for consumption or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on January 1, 2021, and before 11:59 pm on March 31, 2021, subchapter III of chapter 99 of the Harmonized Tariff Schedule of the United States (HTSUS) is modified:

ANNEXES A—D:

1. by inserting the following new heading 88.62, 9903.88.63, 9903.88.64, or 9903.88.65, respectively, in numerical sequence, with the new material in the new heading inserted in the columns of the HTSUS labeled “Heading/Subheading”, “Article Description”, and “Rates of Duty 1-General”, respectively:

ANNEX A – 9903.88.62: by inserting the following new U.S. note 20(ooo) to subchapter 99 in numerical sequence: “(ooo) The USTR determined to establish a process by which particular products classified in heading 9903.88.01 and provided for in U.S. notes 20(a) and 20(b) to this subchapter could be excluded from the additional duties imposed by heading 9903.88.01. See 83 FR 28710 (June 20, 2018) and 83 FR 32181 (July 11, 2018). Following its request for public comment in March, USTR determined that, as provided for in heading 9903.88.62, the additional duties provided for in heading 9903.88.01 shall not apply to the following particular products, which are provided for in the enumerated statistical reporting numbers:

The technical amendments to the exclusions to certain Notes to Subchapter III of Chapter 99 of the HTSUS can be found below:

Effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on January 1, 2021, the exclusion for certain inoculator sets of plastics that is provided for in heading 9903.88.06 and U.S. note 20(i)(32) to subchapter III of chapter 99 of the HTSUS is deleted.

ANNEX B – 9903.88.63: by inserting the following new U.S. note 20(ppp) to subchapter 99 in numerical sequence: “(ppp) The USTR determined to establish a process by which particular products classified in heading 9903.88.02 and provided for in U.S. notes 20(c) and 20(d) to this subchapter could be excluded from the additional duties imposed by heading 9903.88.02. See 83 FR 40823 (August 16, 2018) and 83 FR 47326 (September 18, 2018).  Following its request for public comment in March, USTR determined that, as provided for in heading 9903.88.63, the additional duties provided for in heading 9903.88.02 shall not apply to the following particular products, which are provided for in the enumerated statistical reporting numbers:

The technical amendments to the exclusions to certain Notes to Subchapter III of Chapter 99 of the HTSUS can be found below:

ANNEX C – 9903.88.64: by inserting the following new U.S. note 20(qqq) to subchapter 99 in numerical sequence: “(qqq) The USTR determined to establish a process by which particular products classified in heading 9903.88.03 and provided for in U.S. notes 20(e) and 20(f) to this subchapter could be excluded from the additional duties imposed by heading 9903.88.03, and by which particular products classified in heading 9903.88.04 and provided for in U.S. note 20(g) to this subchapter could be excluded from the additional duties imposed by heading 9903.88.04. See 83 FR 47974 (September 21, 2018) and 84 FR 29576 (June 24, 2019).  Following its request for public comment in March, USTR determined that, as provided for in heading 9903.88.64, the additional duties provided for in heading 9903.88.03 or in heading 9903.88.04 shall not apply to the following particular products, which are provided for in the enumerated statistical reporting numbers:

The technical amendments to the exclusions to certain Notes to Subchapter III of Chapter 99 of the HTSUS can be found below:

ANNEX D – 9903.88.65: by inserting the following new U.S. note 20(rrr) to subchapter 99 in numerical sequence: “(rrr) The USTR determined to establish a process by which particular products classified in heading 9903.88.15 and provided for in U.S. notes 20(r) and 20(s) to this subchapter could be excluded from the additional duties imposed by heading 9903.88.15. See 84 FR 43304 (August 20, 2019) and 84 FR 45821 (August 30, 2019); 84 FR 57144 (October 24, 2019) 85 FR 3741 (January 22, 2020). Following its request for public comment in March, USTR determined that, as provided for in heading 9903.88.65, the additional duties provided for in heading 9903.88.15 shall not apply to the following particular products, which are provided for in the enumerated statistical reporting numbers:

The technical amendments to the exclusions to certain Notes to Subchapter III of Chapter 99 of the HTSUS can be found below:

Table A contains a list of the original exclusions and corresponding Chapter 99 Heading and Note 20 Subdivision for the first extension and the current extension. Additionally, the table indicates which Annex to this notice the extension appears:

Included below is Table B, which contains a list of new products excluded from Section 301 duties:

Originally, List 3 imposed 10 percent ad valorem duties on 5,757 full and partial subheadings of the Harmonized Tariff Schedule of the United States (HTSUS) and had an annual trade value of $200 Billion. Months later, in May 2019, the 10 percent ad valorem duties were increased to 25 percent.

Following the announcement of the exclusion process in June 2019, on August 7, 2019, USTR began accepting exclusion requests that were set to expire on August 7, 2020. USTR proceeded to grant exclusion in September, October, November, and December 2019, and January, February, March, April, May, June, and August 2020. To date, USTR has granted 16 sets of exclusion for items subject to List 3.

The decision to grant exclusions were based on Requesters’ answers to questions addressing the following factors:

• Whether the particular product is available only from China and, specifically, whether the particular product and/or a comparable product is available from sources in the United States and/or third countries.
• Whether the imposition of additional duties on the particular product would cause severe economic harm to the requestor or other U.S. interests.
• Whether the particular product is strategically important or related to “Made in China 2025” or other Chinese industrial programs.

Technical Amendments

On October 7th, USTR published two (2) separate Federal Register Notices pertaining to List 3 exclusions, initially set to expire on August 7, 2020.

1. 85 FR 63329 Pages 63329-63330 (2 pages): The amendment announced is retroactive to the date the original exclusion was published and does not further extend the period for the original exclusion. Practically, this notice applies to items previously granted an exclusion that were set to expire on August 7, 2020:

Effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on September 24, 2018:

2. 85 FR 63332 Pg:63332-63333 (2 pages): Additionally, USTR announced that other List 3 exclusions were to be granted extensions through the end of the year. These amendments will apply to exclusion extensions previously announced on August 11, 2020. These exclusions were originally set to expire on August 7, 2020, but now expire on December 31, 2020:

Effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on August 7, 2020:

For background information on China Tariffs and numerous ways to mitigate the effect of the China tariffs, read our previous blogs. Diaz Trade Law has assisted clients in assessing their best options to prepare or mitigate the China tariffs and submitted comments and exclusion requests. Our Customs and International Law attorneys are available at 305-456-3830 or info@diaztradelaw.com.