How to Apply for Exclusion from Chinese Extra Tariff Lists?
Zhao | Jeffrey Shen | Ju Chen
Trade Compliance, Tariff Classification Service Center, Global Law Office
As of June 3,
2019, companies or trade associations in China for the first time have been
able to apply for exclusion from Chinese extra tariff lists some goods
originating from the United States (“US Goods”) and imported into China,
pursuant to the Announcement
No. 2  of the Tariff Commission of the State Council.
Tariff Commission imposes the extra tariffs on the imports according to their
8-digit tariff codes, which is also the subject matter of supervision by the
Chinese customs authorities. Importers in China, when applying for extra tariff
exclusion, must ensure the 8-digit tariff codes for the goods in question are
correct under Chinese Tariff Schedule. Otherwise, even if the application is
approved, the importer will find itself in violation of Chinese customs law if
using the wrong code to benefit from the exclusion, and the importer in China
will be exposed to investigation by the Anti-smuggling Bureau (ASB),
administrative or criminal.
1. What can a company benefit from such exclusion
exclusion application is approved, the tariff items covered by the application
will be excluded from the extra tariffs for one year, and the extra tariffs already
imposed may be refunded. However, import VAT is not refundable, and no refund
is available for the goods under a tariff code if the extra tariff has been
ceased or suspended before the exclusion application is approved.
2. What can be excluded from extra tariffs: a good of a
certain description or a tariff item?
A tariff item
means the goods covered by a given tariff code. The Ministry of Finance has
publicized a list of goods for exclusion application purposes, with a remark
that the descriptions of the goods under the same list are abbreviations for
reference only, and the company must refer to the corresponding commodities
under Chinese Tariff Schedule. This essentially means that the goods subject to
exclusion application are tariff items, rather than goods of a certain
description. If, however, the application is not to exclude all goods under a
given tariff item, the company must still include the tariff item in its
application, and make a distinctive description of the goods to enable Chinese
customs to distinguish the excluded goods from non-excluded ones under the same
3. What is the success ratio for such exclusion
(1) As it
seems that Sino-US trade conflict can probably not be resolved soon, we expect
that the Chinese government would be sympathetic about the “pains” afflicted by
companies in China and would alleviate the same through the channel of
exclusion applications, and there are some chances of success.
(2) The more
companies apply, the more likely that the Chinese government will feel the
painfulness of the industry relevant to a certain tariff item, and the success
ratio may thus increase.
4. What is the channel for the application?
is to be submitted on the website of the Tariff Policy Research Center of the
Ministry of Finance. The applying company can register, login and then fill out
the exclusion application online (https://gszx.mof.gov.cn)
5. What is the scope of the first round of exclusion
applications of the first round can be submitted sometime from June 3, 2019
till July 5, 2019.
(2) Application coverage
for the exclusion application have listed 734 tariff items (8-digit)
permissible for the first round applications. For details, please refer to
Annex 1 of Guides on Application for Excluding Extra Tariffs on Goods from the
United States, which can be found on the website: https://gszx.mof.gov.cn. The
extra tariff for these tariff items is 25%.
6. What is the scope of the second round of exclusion
applications of the second round can be submitted sometime from September 2,
2019 to October 18, 2019.
(2) Application coverage
round covers tariff items listed in Annex 1 through Annex 4 of the Tariff
Commission of the State Council Announcement No. 6  as follows:
(a) Annex 1,
25% as the extra tariff, 2943 tariff items.
(b) Annex 2,
20% as the extra tariff, 1078 tariff items.
(c) Annex 3,
10% as the extra tariff, 974 tariff items;
(d) Annex 4,
5% as the extra tariff, 662 tariff items, and among them 67 tariff items of
automobile and spare parts are not eligible for the application given
suspension of extra tariff has applied to these items.
7. To which governmental authority the online application
is to be submitted?
Commission of the State Council, whose office locates in the Ministry of
Finance of Chinese central government.
8. What are the basic data for such application?
company is to prepare the following data:
clearance declaration documents (for the period of 2017-2019) for the goods
covered by the application (in PDF, in the order of five import shipment
declaration documents with the highest import values only);
Explanation of market share and sales ranking of the covered goods in the
regional and/or country market;
information about the applying company: Unified Social Credit Code, Enterprise
Name, Enterprise Group Name, Industry Association Name, Main Business Scope,
National Economy Industry Classification, Enterprise Registration Type;
Information: Description, tariff code and usage;
data: Quantity and amount of imports of the covered goods from 2017 to 2019.
Separate data about imports from the States and imports from other five
countries (in the order of highest import quantity and value), separate data
for pre and post extra tariff imposition.
9. What does the applying company need to watch out in
preparing the exclusion application?
(1) Differentiation in goods
company intends to exclude some but not all goods under a given tariff item,
the company may use the ten-digit tariff code. If no such ten-digit tariff code
is available, the company must describe the goods to be excluded in detail. The
description must enable Chinese customs to identify your goods from others.
(2) Difficulty in substitution
must explain why the given imports of US Goods cannot be substituted by goods
of other origin. Substitution difficulty is the most important part of the
application. Without a convincing explanation on this point, the success ratio
for the application is slim. In explaining the substitution difficulty, the
following elements are probably relevant:
(a) The US
Goods embody high or new technology, which cannot be produced by other
performance, quality and technical indicators of US Goods are irreplaceable;
similar goods of other origin cannot reach the same degree in safety, stability
and environmental protection as that of US Goods;
capacity of other countries to produce the similar goods does not meet market
demand in the short term; and/or
comparison of US Goods to similar goods to show the irreplaceability of US
Goods, if possible.
the different situations of goods, the explanation of substitution difficulty
needs to be fully substantiated by reliable data.
(3) The economic damage on the part of the applicant
must be supported by the sharp comparison of the sales volume, profit margin
and so forth calculated for the phases before and after the tariff increase,
and thus to quantify and illustrate the economic damage afflicted on the part
of the applicant. Efforts must also be made to identify the specific business
characteristics and market position of the applicant, which may help to make
the damage description special and convincing to the authority.
(4) Damage or adverse social and industrial consequences
explanation must be well developed between the tariff increase and the
consequences as follows:
economic damage to the industry;
impact on the development of the industry, the negative effect on the upstream
and downstream industries, and the harm to the supply chain in related
(c) Damage to
continuity and sustainability of technological progress;
effect of production capability relocation on local economy, employment and
social stability if any;
(e) The effect
of failure to choose environmentally friendly goods on environmental protection
experience degradation caused by cost increase;
imports which affect the safety and health of end-users, and so forth.
10. What can external consultants help in the exclusion
consultants or lawyers can help the applicant to determine (a) whether the
import tariff code used is legitimate and accurate and (b) the contents of
application using their practical experience in management or supervision of
imported goods of different industries. The tariff classification experts of
Global Law Office are such experienced professionals with many years of customs
tariff classification and supervision as customs officers of the imported goods
of different industries. They also have many successful cases of tariff code or
item adjustment projects approved eventually by the Tariff Commission of the