NMPF, USDEC Want To End Section 301 Tariffs Assessed On Imports From China

The National Milk Producers Federation (NMPF) and US Dairy Export Council (USDEC) want the Office of the US Trade Representative (USTR) to end the Section 301 tariffs assessed on imports from China, while finding different avenues to address concerns regarding China’s trade policy actions.

The USTR is currently conducting a four-year review of actions taken in the Section 301 investigation of China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation.

In 2017, the USTR initiated an investigation into certain acts, policies, and practices of the Chinese government related to technology transfer, intellectual property, and innnovation under Section 301 of the Trade Act of 1974.

In a notice published on Apr. 6, 2018, the USTR determined that acts, policies and practices of the Chinese government related to technology transfer, intellectual property, and innovation are unreasonable or discriminatory, and burden or restrict US commerce, and are thus actionable under Section 301.

Following a notice and comment process, the USTR took two actions under Section 301: the July 6, 2018, action, covering an approximate annual trade value of $34 billion; and the Aug. 23, 2018 action, covering an approximate annual trade value of $16 billion. Those actions were subsequently modified by imposing additional duties on supplemental lists of products, as well as by the temporary removal of duties on certain products through product exclusions.

Last September, USTR announced that the July 6, 2018 action, as modified, and the Aug. 23, 2018, action, as modified, would remain in effect. The notice also announced that the USTR would conduct a review of those actions, and would publish a separate notice or separate notices describing the review process.

In the Federal Register of Oct. 17, 2022, the USTR announced that it would be opening a docket on Nov. 15, 2022, for interested persons to submit comments with respect to those 2018 actions. The deadline for submitting comments was Jan. 17, 2023.

In their comments, NMPF and USDEC said they “appreciate the challenge” facing US policymakers in their efforts to address longstanding issues in China that have negatively impacted many US companies, as well as the importance of holding US trading partners accountable to ensure that rules are properly enforced.

“However, the Section 301 duties that have been in place on Chinese imports have done little if anything to change the Chinese practices that are the focus of this investigation,” USDEC and NMPF noted. “Rather than facilitating solutions, the successive rounds of tariffs have raised costs on American businesses and consumers and have led to tit-for-tat Chinese tariffs that have harmed US exporters.”

Over the past decade, China has become a “critically important” market for US dairy products, NMPF and USDEC pointed out. Sales last year alone totaled over $705 million, ranking China the third largest export market for US dairy products (trailing only Mexico and Canada), despite the harmful impact of China’s retaliatory tariffs in response to the Section 301 duties.

Prior to the US-China tariff standoff, US dairy exports to China had been growing over the previous decade at 12 percent a year on a total volume basis and at 17 percent a year on a total value basis, the dairy organizations noted.

But US exports to China’s fast-growing dairy market fell in 2019 by more than 45 percent in volume and 25 percent in value when compared to 2018, according to USDEC and NMPF. The impact on US dairy farm revenues resulting from China’s retaliatory tariffs are estimated to be a loss of $2.6 billion from 2019 through 2021, compared with China export levels had the prior rate of growth not been interrupted.

“Our industry welcomed the conclusion of a US-China ‘Phase One’ economic and trade agreement in 2020 that resolved numerous regulatory impediments for US dairy exports to the Chinese market,”
NMPF and USDEC said. “However, despite accompanying tariff exemptions for select products (primarily provided for through an application-based process), Chinese retaliatory duties still place US exports at a disadvantage when compared to our major trade competitors.

“While there remains tremendous potential in this market as demand for dairy products continues to expand, China has not prioritized purchasing significantly larger shares of its dairy needs from the US to date,” USDEC and NMPF said
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