United States: USTR Announces and Immediately Suspends Tariffs in Section 301 Digital Services Tax Investigation

On June 2, 2021, Katherine Tai, United States Trade Representative (USTR) ad the conclusion of the one-year Section 301 Digital Services Tax (DST) investigations adopted by Austria, India, Italy, Spain, Turkey and the United Kingdom . The final decision in these investigations is to impose an additional 25% customs duty on certain goods (specified in Annex A of each notice) from these countries, while suspending customs duties for up to 180 days. in order to have additional time to complete the ongoing multilateral negotiations on international taxation at the OECD and in the G20 process. In each notice, Schedule A is in effect with respect to goods entered for consumption or removed from the warehouse for consumption on or after 12:01 a.m. Eastern Standard Time on November 29, 2021, which is 180 days. after the decision to take action. In the event that the USTR determines that the suspension of additional duties is expected to last for less than 180 days, the USTR will issue a subsequent notice modifying the effective date.

Advance copies of each of the Federal Register notices announcing and suspending trade actions in the six investigations can be found on the websites listed below:

In addition, each notice or appendix provides that:

Any product listed in Appendix A, with the exception of any product eligible for admission under “domestic status” as defined in 19 CFR 146.43, which is subject to the additional duty imposed by this determination, and is admitted to a United States Foreign Trade Zone on or after 12:01 am Eastern Standard Time on November 29, 2021, only may be admitted as “privileged alien status” as defined in 19 CFR 146.41. These products will be subject on entry for consumption to any ad valorem duty rate or quantitative limitations associated with classification in the applicable HTSUS subheading.

Additional duties imposed by the new headings [9902.90.02 through 9902.90.07] do not apply to products whose registration is regularly requested under a provision of Chapter 98 of the HTSUS, with the exception of products registered in subheadings 9802.00.40, 9802.00.50 and 9802.00.60 and to heading 9802.00.80. For subheadings 9802.00.40, 9802.00.50 and 9802.00.60, additional duties apply to the value of repairs, modifications or alterations carried out in the designated country and as described in the applicable subheading. For heading 9802.00.80, the additional duty applies to the value of the item less the cost or value of those United States products, as described in heading 9802.00.80.

The products of the designated country which are classified in the subheadings listed in Notes 23 (a) to 28 (a) and which may benefit from temporary exemptions or reductions of duties under Subchapter II of Chapter 99 are subject to the additional duties imposed by the measure, and such exemption or reduction of duties will apply only to the general permanent rate prescribed in the provisions of Chapters 1 to 97 of the Customs Tariff.

The additional duties imposed by the new headings do not apply to goods duly requested for registration under a provision of Chapter 98 of the HTSUS, with the exception of goods listed in subheadings 9802.00.40, 9802.00 .50 and 9802.00.60 and to heading 9802.00. 80. For subheadings 9802.00.40, 9802.00.50 and 9802.00.60, additional duties apply to the value of repairs, modifications or alterations carried out in the designated country and as described in the applicable subheading. For heading 9802.00.80, the additional duty applies to the value of the item less the cost or value of those United States products, as described in heading 9802.00.80

Products from the named countries that are provided for in the new sections [9903.90.02 through 9903.90.07] and classified in one of the subheadings listed in Notes 23 (b) to 28 (b) will continue to be subject to anti-dumping, countervailing or other duties (including duties imposed by other provisions of the subheading). chapter III of this chapter and the safeguard duties set out in the provisions of subchapter IV of this chapter), the duties, exactions and charges which apply to these products, as well as the additional duties which are imposed thereon.

Annex B contains product descriptions which are provided for informational purposes only and are not intended to delimit the scope of the action in any way.