China 301 Duties

China 301 Duties

Any questions can be directed to Rick Van Arnam, The Vision Council's regulatory counsel, at rvanarnam@barnesrichardson.com.

Possible Extension of Exclusion for China 301 Duties on Spectacle Frames

(Updated June 30, 2020) On Friday, June 26, U.S. Trade Representative (USTR) Robert Lighthizer testified before Congress stating that if existing China 301 exclusions, including exclusions on plastic and metal spectacle frames, were extended the extensions would expire at the end of 2020. Following the testimony, the USTR's office issued a Federal Register notice announcing it is considering a possible extension for up to 12 months for certain product exclusions, including eyeglass frame exclusions. Public comments on this proposed action have been requested, with the comment period running from July 1-July 30, 2020.

Eyeglass frame companies should consider filing comments if they support the extension of the existing exclusions on plastic and non-plastic spectacle frames. The option to file comments will be available on July 1. To access the filing portal to make a comment, click here.

The Vision Council will submit comments in favor of the extensions, but it is extremely important for individual companies to file comments as well. Economic injury attributable to the China 301 duties is a key factor in favor of extending the exclusions and the USTR benefits from hearing how various individual companies were negatively impacted by the tariff on Chinese spectacle frames. If you file comments, you will need to provide data on your 2018 and 2019 purchases of Chinese-origin, third-country origin, and U.S. origin frames as well as your 2018 and 2019 gross revenue, all of which is treated confidentially. The process requires companies to provide information about steps they have taken to find non-Chinese sources and whether the resumption of the China 301 duties on spectacle frames will result in severe economic harm to their company.

 

The Vision Council Secures China 301 Exclusions for Spectacle Frames

(Updated June 10, 2020) The U.S. Trade Representative (USTR) published notice that it is granting exclusions from the China 301 duties for spectacle frames classifiable in subheadings 9003.11.0000 or 9003.19.0000 of the Harmonized Tariff Schedule of the United States. By excluding both subheadings from the China 301 duties, the USTR's decision covers spectacle frames of all materials including plastic and metal. An exclusion was also granted for safety spectacle frames of plastic that meet Occupational Safety and Health Administration (OSHA) standards and are classified in subheading 9003.11.0000.

The Vision Council and several members had requested the exclusions in January 2020. Any company importing spectacle frames that conform with The Food and Drug Administration (FDA) for eyewear or OSHA for safety eyewear standards, benefits from this exclusion and does not have to be one of the petitioning companies.

The exclusions will be applied retroactively to September 1, 2019, the date that spectacle frames were first assessed China 301 duties. The exclusions expire on September 1, 2020, at which time the China 301 duties will revert. If an opportunity to seek an extension of the exclusion is available at that time, The Vision Council will provide information in a future alert.

New China 301 Exclusion Denials

After providing relief to the spectacle frame industry, the U.S. Trade Representative (USTR) began denying exclusion requests filed by companies, including The Vision Council, for plano sunglasses, over-the-counter reading glasses, and prescription lenses. The USTR has not yet acted on all open applications for exclusions for these products. Therefore, the possibility still exists that one or more of these applications could be granted, in which case all products classified in the excluded tariff provision would benefit.

The Vision Council will continue to monitor this situation and notify members if any remaining applications are successful. In the meantime, sunglasses, readers, and lenses remain subject to the China 301 tariffs if the product originates in China.

Additional Information on China 301 Refund Process for Spectacle Frames

The Vision Council received various questions regarding the refund process for spectacle frames from China and has provided further information, below. At this time, The Vision Council advises all members to reach out to their Customs broker as soon as possible to coordinate refund efforts.

For those who also applied for an exclusion for spectacle frames but received a denial determination from the U.S. Trade Representative (USTR), do not be alarmed. The USTR grants exclusion requests on a product specific basis, therefore, you still benefit from a product exclusion granted for a similar product. Thus, USTR's decision to provide exclusions for spectacle frames of plastic under 9003.11.0000 HTS or spectacle frames of other materials under 9003.19.0000 HTS applies to all spectacle frames entered under those provisions.

Additionally, the exclusion ends on September 1, 2020. Chinese frames imported into the U.S. on or after that day will be subject to the additional China 301 duty. The Vision Council advises companies keep this in mind as they forecast future frame purchases. Notably, do not plan for the exclusion to be renewed beyond that date.

Before an importer can start benefitting from the granting of an exclusion on future shipments, U.S. Customs and Border Protection creates the functionality within its Automated Commercial Environment (ACE) system to process these new shipments without the additional China duties. Based on past knowledge, Customs takes around five business days to update its ACE system. Customs brokers are able to advise when entries of spectacle frames can be made without having to pay the China 301 duties.

On past shipments where China 301 duties were paid, a shipment's status as either a liquidated or unliquidated Customs entry will trigger the relevant refund process and timetable. Unliquidated entries can be refunded using the post summary correction method. If the entry has liquidated or is unliquidated but has fifteen or fewer days before liquidation will occur, then the importer of record will need to file an administrative protest within 180 days of the liquidation date. Contact your Customs broker to coordinate your refund efforts.

Furthermore, the China 301 exclusion on spectacle frames only covers the payment of the China 301 duties. Other relevant duties, taxes and fees that might have been assessed on your entry remain, including the 2.5 percent "ordinary" Customs duties on plastic spectacle frames.