Yesterday, notice was published in the Federal Register of the United States Trade Representative’s (USTR) decision to impose an additional twenty-five (25) percent tariff on imports from India valued at roughly $119 million, effective November 29, 2021 pursuant to its authority under Section 301 of the Trade Act of 1974. Certain shrimp products imported from India were included in the USTR’s announcement.
The additional duties are the result of the USTR’s investigation of the impact of the Government of India’s decision to impose a two (2) percent digital services tax on foreign companies operating in India. Following that investigation, the USTR issued a report explaining why India’s digital services tax was unreasonable and discriminatory and the manner in which the application of the tax on “non-resident” companies burdened and restricted U.S. commerce.
Based on that finding, at the end of March, the USTR announced potential measures that would impose additional tariffs on imports of goods from India grouped under forty (40) different eight (8)-digit codes in the Harmonized Tariff Schedule of the United States (HTSUS) and requested comments on its proposed action. In response, the Southern Shrimp Alliance and the American Shrimp Processors Association filed comments and participated in a public hearing to advocate for the imposition of a two (2) percent additional tariff on all imports of shrimp from India. Separately, Indian seafood exporters and U.S. seafood importers presented arguments to the USTR opposing additional tariffs on any shrimp imports.
In the action announced yesterday, the USTR decided to impose duties on a smaller group of imports than initially proposed, dropping from goods entered under forty (40) different HTSUS codes to twenty-six (26) HTSUS codes. While the USTR declined to act upon the requests of the Southern Shrimp Alliance and the American Shrimp Processors Association, it also rejected requests to remove shrimp from the Section 301 tariffs.
The USTR announced that the actual imposition of additional duties will be delayed until November 29, 2021 in order “to allow additional time for multilateral and bilateral discussions” that might resolve the issue. At the same time, the USTR also explained that the effective date of the additional duties could also be sped up at the agency’s discretion.
The shrimp products that may be subject to additional customs duties at the end of this year were valued at $6.3 million last year, comprising less than 0.3 percent of the total value of all Indian shrimp imports in 2020 ($2.4 billion). Nevertheless, shrimp imports under the three (3) covered HTSUS codes have increased massively over the last four years, quadrupling in value from 2017 to 2020. Import values under these HTSUS codes over the first quarter of 2021 ($2.0 million) were also higher than they were in the first quarter of 2020 ($1.8 million).
In comments to the USTR regarding the proposed trade action, the domestic shrimp industry expressed concerns regarding the possible evasion of any additional tariffs placed only on a limited subset of Indian shrimp imports because of the likelihood of mis-classification of such shrimp imports under HTSUS codes not covered by the additional tariffs. Accordingly, if and when additional tariffs are imposed, the Southern Shrimp Alliance intends to monitor trade patterns for significant changes. For the shrimp products subject to the additional twenty-five (25) percent tariffs, trade with the United States has been heavily concentrated. Since 2017, official government import data indicates that the overwhelming majority of this shrimp was imported into the United States through the port of Los Angeles, with that single port accounting for $14.8 million out of the $17.2 million worth of shrimp imports entered under the three relevant HTSUS codes over the last four years and three months.
Read yesterday’s Federal Register Notice regarding the USTR’s Notice of Action here: https://www.shrimpalliance.com/wp-content/uploads/2021/06/Final-Federal-Register-Notice.pdf
Review the Southern Shrimp Alliance’s comments to the USTR regarding the Proposed Notice of Action here: https://comments.ustr.gov/s/commentdetails?rid=BJ9GJCC76F
Review the American Shrimp Processors Association’s comments to the USTR regarding the Proposed Notice of Action here: https://comments.ustr.gov/s/commentdetails?rid=RHFB6VHXG2
Review the transcript of the Section 301 Committee’s May 10, 2021 public hearing regarding the USTR’s proposed action: https://ustr.gov/sites/default/files/enforcement/301Investigations/USTR_India_Hearing_Transcript.pdf