The Tariff Commission of China’s State Council on 17 February 2020 issued guidance—Announcement 2—on the exclusion of goods under market-oriented procurement from additional tariff against the United States.
Announcement 2 provides guidance on applications of Chinese domestic enterprises to avoid imposing additional counter-tariffs against the U.S. tariff actions under the U.S. provision known as “Section 301” for a certain period of time on goods imported from the United States in line with the conditions and under the market-oriented and commercial principle.
Announcement 2 is the first time for the Tariff Commission of the State Council to issue an announcement on excluding U.S. products from additional tariffs since China and the United States announced the first phase of the December 2019 trade agreement that was officially signed on 16 January 2020.
The applicable scope for excludable products has been expanded based on the first two rounds of exclusion work, and the exclusion process has been further optimised. These developments have drawn the attention of import and export entities, particularly in light of the outbreak of the novel coronavirus epidemic.
Since China and the United States entered into the first phase of the economic and trade agreement, the issuance of Announcement 2 can be understood as part of China’s efforts to address the trade situation between the two countries. The implementation of Announcement 2 will reduce costs issues for enterprises and boost their development by minimising tax burdens in relation to products procured and imported from the United States. Announcement 2 is viewed as giving a boost to import and export entities, especially in light of the outbreak of the coronavirus epidemic. Import-related enterprises need to consider this opportunity and fully assess their exclusion requests, in particular by paying attention to the following issues:
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