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Section 201 Safeguard Petition Filed on Bicycles

Higher tariffs and other measures on imports of assembled bicycles valued under US$400 from all countries could result from a new global safeguard petition filed on 18 October. This petition covers (i) fully-assembled units comprised of all component parts and requiring no additional assembly, fabrication or finishing operations, and (ii) bicycles imported in any partially-assembled format with all necessary, dedicated components (with or without pedals) included upon importation; e.g., a knock-down kit. Subject bikes may be imported under HTSUS subheadings 8712.00.1510, 8712.00.1520, 8712.00.1550, 8712.00.2500, 8712.00.3500, 8712.00.4400 and 8712.00.4800. Mainland China is by far the largest U.S. supplier of subject bikes of all prices with a 65.8 percent of the import market or US$865.3 million in 2017, followed by Taiwan with a 29.0 percent share or US$381.1 million.

The petition was filed with the U.S. International Trade Commission under section 201 of the 1974 Trade Act, which requires the USITC to determine whether an article is being imported in such increased quantities as to be a substantial cause or threat of serious injury to a U.S. industry. Section 201 investigations do not require a finding of an unfair trade practice such as under the antidumping and countervailing duty laws.

The USITC now has 120 days to make a decision, 150 if the investigation is deemed extraordinarily complicated. If the USITC’s determination is affirmative it will recommend relief to the president within 180 days after the petition is filed. In this case the petitioner is not alleging the existence of critical circumstances or requesting provisional relief.

Section 201 remedies may include tariff increases, quotas, tariff-rate quotas, trade adjustment assistance or any combination thereof as well as any other action authorised under the law that is deemed likely to facilitate positive adjustment to import competition. In this case the petitioner is seeking the following.

  • a tariff-rate quota for at least four years that would impose an 11 percent tariff on the first 15 million units in the first year; this quota would decline by one million units per year
  • a 61 percent tariff on imports above the applicable annual quota
  • a reduction of the de minimis threshold for imported bikes from US$800 to US$50 for at least four years (the petition states that this measure “is necessary to prevent circumvention [of the safeguard], specifically in the form of direct-to-consumer sales of imports through online channels of distribution and small shipments direct to online retailer fulfillment centers”)
  • duty-free treatment for components parts imported by U.S. producers of mass-market bikes, upon certification that the components will be used in the production of such bikes, for at least four years

Any relief proposed by the USITC is merely advisory; it is up to the president to make the final decision on whether to provide relief as well as its form, amount and duration. Relief may initially be imposed for up to four years and extended to no more than eight.

Content provided by Picture: HKTDC Research
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