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Mid-February, 2019, China Update

The United States and China have been working feverishly to reach some agreement since the imposition of the 90-day extension granted by the Trump administration following meetings at the G-20 Summit at the end of November.

Most recently, a delegation of US officials including Treasury Secretary Mnuchin and USTR Lighthizer traveled again to Beijing last week to meet with their Chinese counterparts and Vice Premier Liu He with a focus on intellectual property rights protection.

Following the conclusion of those meetings, President Trump late on Friday said that he would be willing to extend the March 2nd deadline as the China delegation returns to the United States this week for further talks. The President had said that a meeting with Chinese President Xi was a contingent requirement to close the deal, but both sides are continuing to work towards the final agreement that the Presidents could meet to discuss and finalize in person.

Meanwhile, the budget deal agreed to and signed last week provides a vehicle for relief for importers of items on the third annex which imposed 10% additional duties on a host of more consumer products. While the first two lists had an exclusion process detailed where importers could request and obtain relief, the USTR had previously told members of Congress no exclusion process would be forthcoming until an agreement was finalized.

Fast forward to last week where the mini-Omnibus passed by Congress requested that no later than March 17th that USTR put in place an exclusion process for list 3 items. When the list is finalized, importers will also have the ability to go backwards and request refunds retroactively. Note that in this assessment, while the demand for an exclusion process was not included in the bill, the sense of the conferees makes it clear (and likely) one will be forthcoming.