```

[Federal Register Volume 89, Number 241 (Monday, December 16, 2024)]
[Notices]
[Pages 101682-101684]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-29462]

=======================================================================
-----------------------------------------------------------------------

OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

Notice of Modification: China's Acts, Policies, and Practices 
Related to Technology Transfer, Intellectual Property, and Innovation

AGENCY: Office of the United States Trade Representative (USTR).

ACTION: Notice of modification of actions.

-----------------------------------------------------------------------

SUMMARY: In a notice published on September 18, 2024, the U.S. Trade 
Representative proposed additional modifications to the actions taken 
in the Section 301 investigation of China's acts, policies, and 
practices related to technology transfer, intellectual property, and 
innovation. Specifically, the U.S. Trade Representative proposed 
increasing Section 301 tariff rates on five subheadings of the 
Harmonized Tariff Schedule of the United States (HTSUS) covering 
certain tungsten products, wafers, and polysilicon. In a notice 
published on September 24, 2024, USTR announced the opening of an 
electronic portal for interested parties to submit comments on the 
proposed tariff increases. This notice announces the U.S. Trade 
Representative's determination to modify the actions being taken in 
this investigation by increasing tariff rates on the five subheadings.

DATES: January 1, 2025, at 12:01 a.m. EST: Tariff increases on the 
tariff subheadings set out in the Annex to this notice are applicable 
with respect to products that are entered for consumption, or withdrawn 
from warehouse for consumption, on or after January 1, 2025.

FOR FURTHER INFORMATION CONTACT: For general questions about this 
notice, contact Philip Butler and Megan Grimball, Chairs of the Section 
301 Committee at 202.395.5725. For specific questions on customs 
classification, contact [email protected].

SUPPLEMENTARY INFORMATION:

A. Background

    For background on the proceedings in this investigation, please see 
the prior notices including 82 FR 40213 (August 24, 2017), 83 FR 14906 
(April 6, 2018), 83 FR 28710 (June 20, 2018), and 83 FR 40823 (August 
16, 2018).
    On September 8, 2022, USTR announced that in accordance with 
Section 307(c)(3) of the Trade Act (19 U.S.C. 2417(c)(3)), the U.S. 
Trade Representative would conduct a review of the two actions taken, 
as modified, in this investigation. See 87 FR 55073. Based on 
information obtained during the review, USTR, in consultation with the 
Section 301 Committee, prepared a comprehensive report that included 
findings on the effectiveness of the actions taken in this 
investigation in achieving the objectives of the investigation, other 
actions that could be taken, and the effects of such actions on the 
United States economy, including consumers. The report, Four-Year 
Review of Actions Taken in the Section 301 Investigation: China's Acts, 
Policies, and Practices Related to Technology Transfer, Intellectual 
Property, and Innovation (Report), was published on May 14, 2024, and 
is available on the USTR website.
    On May 14, 2024, taking into consideration the U.S. Trade 
Representative's findings in the Report and recommendations, the 
President issued a Memorandum (President's Memorandum) that directed 
the U.S. Trade Representative to: ``maintain, as appropriate and 
consistent with this memorandum, the ad valorem rates of duty and lists 
of products subject to the [actions] taken under the Section 301 
investigation'' and ``[t]o further encourage China to eliminate the 
acts, policies, and practices at issue, and to counteract the burden or 
restriction of these acts, policies, and practices, the Trade 
Representative shall modify the [actions taken in the investigation] to 
increase Section 301 ad valorem rates of duty'' for certain specified 
products of China. See https://www.whitehouse.gov/briefing-room/presidential-actions/2024/05/14/memorandum-on-actions-by-the-united-states-related-to-the-statutory-4-year-review-of-the-section-301-investigation-of-chinas-acts-policies-and-practices-related-to-technology-transfer-intellectua/. In particular, the President's 
Memorandum specified 14 categories of products for proposed tariff 
increases, tariff rates for those products, and year for tariff 
increases.
    Consistent with the President's direction, USTR issued a Federal 
Register notice with proposed modifications, including proposed 
increases in Section 301 duties on 382 HTSUS subheadings and 5 
statistical reporting numbers of the HTSUS, with an approximate annual 
trade value of $18 billion (2023). See 89 FR 46252 (May 28, 2024) (May 
28 notice). In accordance with Section 307(a)(2) of the Trade Act (19 
U.S.C. 2417(a)(2)), USTR invited comments from interested persons and 
opened a 30-day docket on May 29, 2024 (USTR-2024-0007). See May 28 
notice.
    On September 18, 2024, the U.S. Trade Representative announced 
modifications to the actions, including certain adjustments to the 
modifications proposed in the May 28 notice. See 89 FR 76581 (September 
18, 2024) (September 18 notice). Additionally, and based on comments 
requesting that certain HTSUS subheadings be added to the 382 HTSUS 
subheadings proposed for tariff increases, the U.S. Trade 
Representative proposed increasing Section 301 duties on 5 additional 
HTSUS subheadings covering certain tungsten products, wafers, and 
polysilicon.
    In accordance with Section 307(a)(2) of the Trade Act, USTR invited 
comments from interested persons and opened a 30-day docket on 
September 24, 2024 (USTR-2024-0016). See 89 FR 77958 (September 24, 
2024) (September 24 notice).

B. Determination To Modify the Actions

    Pursuant to Sections 307(c) and 307(a)(1) of the Trade Act (19 
U.S.C. 2417(c), (a)(1)), the U.S. Trade Representative may modify or 
terminate any action, subject to the specific direction, if any, of the 
President with respect to such action, that is being taken under 
Section 301 if the burden or restriction on U.S. commerce of the acts, 
policies, and practices that are the subject of such action has 
increased or decreased, or such action is being taken under Section 
301(b) and no longer is appropriate.
    As previously discussed, modification of the actions is warranted 
under Section 307(a)(1)(B) and Section 307(a)(1)(C). See 89 FR 76581 
(September 18, 2024). The modifications to the actions are set out in 
the Annex to this notice. The U.S. Trade Representative's determination 
takes account of the public comments, the President's Memorandum and 
the policy rationale underlying the President's direction, as well as 
the advice of the interagency Section 301 committee and appropriate 
advisory committees.
    Any product listed in the Annex to this notice, which is subject to 
the additional duties imposed by this determination, and that is 
admitted into a U.S. foreign trade zone, except any product that is 
eligible for admission under ``domestic status'' as defined in 19 CFR 
146.43, only may be admitted as

[[Page 101683]]

``privileged foreign status,'' as defined in 19 CFR 146.41, effective 
as of the date that the additional duties are imposed. Products of 
China that are provided for in headings 9903.91.11 and listed in 
subdivision (j) of U.S. note 31 to subchapter III of chapter 99 of the 
HTSUS, which are admitted into a U.S. foreign trade zone on or after 
12:01 a.m. eastern daylight time on January 1, 2025, only may be 
admitted as ``privileged foreign status.'' All 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.

C. USTR's Responses to Significant Comments

    As discussed above, in light of comments requesting that certain 
HTSUS subheadings be added to the 382 HTSUS subheadings proposed for 
tariff increases, the U.S. Trade Representative proposed increasing 
Section 301 duties on 5 additional HTSUS subheadings falling under 2 of 
the 14 categories of products proposed for tariff increases. 
Specifically, the U.S. Trade Representative proposed increasing tariffs 
to 25 percent for 3 additional subheadings under ``other critical 
minerals'' covering certain tungsten products and proposed increasing 
tariffs to 50 percent for 2 additional subheadings under ``solar 
cells'' covering wafers and polysilicon. See 89 FR 76581.
    Tungsten Subheadings: Consistent with the President's Memorandum to 
increase tariffs on other critical minerals to 25 percent, the U.S. 
Trade Representative proposed increasing tariffs to 25 percent on 3 
additional subheadings covering certain tungsten products: 8101.94.00 
(Tungsten, unwrought (including bars and rods obtained simply by 
sintering)); 8101.99.10 (Tungsten bars and rods (o/than those obtained 
simply by sintering), profiles, plates, sheets, strip and foil); and 
8101.99.80 (Tungsten, articles nesoi).
    Comments supporting increases primarily assert that increasing 
tariffs on tungsten products is vital to the security and the 
resilience of domestic supply chains for critical U.S. industries, 
including aerospace, automotive, defense, medical, and the oil and gas 
industries. Some supporting comments recommend tariff rates as high as 
75 percent to address China's efforts to dominate and undercut domestic 
production.
    Comments opposing increases primarily assert limited availability 
of tungsten products outside of China, estimating that China accounts 
for approximately 80 percent of global tungsten reserves, and 
insufficient quantities available from third country sources. These 
comments express concerns that increased tariffs on tungsten will 
increase production costs, exacerbate inflation, harm U.S. 
competitiveness, and decrease U.S. market share. One comment encouraged 
USTR to take alternative actions to tariffs.
    Considering the comments and the advice of the Section 301 
Committee, and consistent with the President's direction to increase 
tariffs on other critical minerals to 25 percent, the U.S. Trade 
Representative has determined to increase tariffs on the 3 tungsten 
subheadings to 25 percent beginning in 2025. Continued reliance on 
China for tungsten products leaves U.S. supply chains vulnerable and 
puts U.S. national security at risk. Imports from China continue to 
undercut domestic production, and increasing tariffs will make domestic 
producers more competitive, which will increase leverage on China to 
eliminate its harmful acts, policies, and practices, and reduce 
vulnerability to those harmful acts, policies, and practices. 
Increasing duties on these products will support current investments, 
stimulate greater domestic production, and spur additional investments 
in domestic capacity.
    Polysilicon and Wafer Subheadings: Consistent with the President's 
Memorandum to increase tariffs on solar cells to 50 percent, the U.S. 
Trade Representative proposed increasing tariffs to 50 percent on 2 
subheadings covering polysilicon and wafers: 2804.61.00 (Silicon 
containing by weight not less than 99.99 percent of silicon); and 
3818.00.00 (Chemical elements doped for use in electronics, in the form 
of discs, wafers etc., chemical compounds doped for electronic use).
    Nearly all comments support increasing tariffs on polysilicon, 
noting the importance of the tariffs in helping to ensure the 
development and growth of the domestic industry producing polysilicon 
and downstream products and develop alternative supply chains outside 
of China. Specifically, the comments assert that the tariffs help to 
support recent investments by the domestic industry and increasing the 
tariffs to 50 percent will further support additional domestic 
production scheduled to come online in 2025. USTR received one comment 
opposing the tariff increase. The comment asserts that Section 301 
tariffs have not resulted in changing China's behavior and increasing 
the tariff will only increase prices for domestic companies.
    The majority of comments support increasing tariffs on wafers. The 
comments note that increasing tariffs will increase the effectiveness 
of the actions, provide additional support to the domestic industry, 
including recent investments, and help to strengthen alternative supply 
chains. Specifically, commenters note that higher tariffs will 
counteract China's unfair practices, which have allowed Chinese 
companies to dominate supply chains, and allow domestic producers to 
increase production, and continue to invest in additional capacity. To 
give domestic producers time to increase production, some of the 
comments supporting higher tariffs either suggest delaying the tariffs 
or allowing for certain exclusions. Other comments supporting higher 
tariffs suggest increasing tariffs immediately. Comments opposing the 
tariffs generally assert that the tariffs have not been effective and 
only negatively impacted the U.S. economy. One comment opposing the 
tariff increase suggests delaying the increase until domestic 
production has increased.
    Considering the comments and the advice of the Section 301 
Committee, and consistent with the President's direction to increase 
tariffs on solar cells to 50 percent, the U.S. Trade Representative has 
determined to increase tariffs on polysilicon and wafers to 50 percent 
in 2025. Increasing tariffs on polysilicon and wafers will complement 
recent investments, encourage diversification away from Chinese 
sources, provide additional leverage with China to eliminate the 
investigated acts, policies, and practices, and reduce vulnerability to 
those harmful acts, policies, and practices. While increasing tariffs 
may result in higher prices initially, the tariffs are necessary to 
allow domestic producers to compete against China's massive excess 
capacity, defend recent investments, and encourage more domestic 
manufacturing.
    The U.S. Trade Representative will continue to consider the actions 
taken in this investigation. In the event that further modifications 
are appropriate, the U.S. Trade Representative intends to take into 
account the extensive public comments provided in response to the May 
28 notice and the September 24 notice.

D. Technical Correction

    In the September 18 notice, USTR announced that it had determined 
to increase the rate of additional duties on medical gloves of 
vulcanized rubber,

[[Page 101684]]

other than hard rubber, to 50 percent in 2025 and to 100 percent in 
2026. The additional 100 percent duties that were to be effective on 
January 1, 2026, were provided for in HTSUS heading 9903.91.08. Due to 
a publishing error in the Federal Register notice, heading 9903.91.08 
did not contain the additional duties in the Rates of Duty 1--General 
column. To correct this error, USTR is making a technical correction to 
heading 9903.91.08 in Annex B(4) to insert the additional 100 percent 
duties that are to be effective on January 1, 2026.

Annex A--Tariff Increases

----------------------------------------------------------------------------------------------------------------
           HTSUS subheading                        Product description               Rate (%)         Timing
----------------------------------------------------------------------------------------------------------------
8101.94.00............................  Tungsten, unwrought (including bars and               25            2025
                                         rods obtained simply by sintering.
8101.99.10............................  Tungsten bars and rods (o/than those                  25            2025
                                         obtained simply by sintering),
                                         profiles, plates, sheets, strip and
                                         foil.
8101.99.80............................  Tungsten, articles nesoi................              25            2025
2804.61.00............................  Silicon containing by weight not less                 50            2025
                                         than 99.99 percent of silicon.
3818.00.00............................  Chemical elements doped for use in                    50            2025
                                         electronics, in the form of discs,
                                         wafers etc., chemical compounds doped
                                         for electronic use.
----------------------------------------------------------------------------------------------------------------

Annex B--Changes to Harmonized Tariff Schedule of the United States

    1. 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, 2025, subchapter III of chapter 99 
of the Harmonized Tariff Schedule of the United States (HTSUS) is 
modified:
    A. by inserting the following new heading 9903.91.11 in numerical 
sequence, with the material in the new heading inserted in the columns 
of the HTSUS labeled ``Heading/Subheading'', ``Article Description'', 
``Rates of Duty 1-General'', ``Rates of Duty 1-Special'' and ``Rates of 
Duty 2'', respectively:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                  Rates of Duty
                                                                                       -----------------------------------------------------------------
           Heading/ subheading                         Article description                                      1
                                                                                       --------------------------------------------------        2
                                                                                                     General                  Special
--------------------------------------------------------------------------------------------------------------------------------------------------------
``9903.91.11.............................  Effective with respect to entries on or      The duty provided in the          ..............  ..............
                                            after January 1, 2025, articles the          applicable subheading + 25%''.
                                            product of China, as provided for in
                                            subdivision (j) of U.S. note 31 to this
                                            subchapter.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    B. by inserting the following new subdivision (j) to note 31 to 
subchapter III of chapter 99 of the HTSUS:
    ``(j) Heading 9903.91.11 applies to products of China that are 
classified in the following 8-digit subheadings, 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, 
2025:

(1) 8101.94.00
(2) 8101.99.10
(3) 8101.99.80''.

    C. Subdivision (a) of note 31 to subchapter III of chapter 99 of 
the HTSUS is modified by deleting ``and 9903.91.08'' in six instances 
and inserting ``, 9903.91.08 and 9903.91.11'' in lieu thereof in those 
six instances.
    2. 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, 2025, subchapter III of chapter 99 
of the Harmonized Tariff Schedule of the United States (HTSUS) is 
modified:
    A. by deleting ``2804.61.00'' and ``3818.00.00'' from subdivision 
(f) of note 20 to subchapter III of chapter 99 of the HTSUS; and
    B. subdivision (f) of note 31 to subchapter III of chapter 99 of 
the HTSUS is modified by inserting ``(1) 2804.61.00'' and ``(2) 
3818.00.00'' in numerical order and by renumbering the remaining 
subheadings listed in subdivision (f) of note 31 in numerical order, 
beginning with ``(3) 4015.12.10''.
    3. Effective on January 1, 2026, subdivision (f) of note 31 to 
subchapter III of chapter 99 of the HTSUS is modified by deleting ``(3) 
4015.12.10''.
    4. The Rates of Duty 1-General column of heading 9903.91.08 is 
modified by inserting ``The duty provided in the applicable subheading 
+ 100%''.

Juan Millan,
Acting General Counsel, Office of the United States Trade 
Representative.
[FR Doc. 2024-29462 Filed 12-13-24; 8:45 am]
BILLING CODE 3390-F4-P
```