Logitech Urges Tariff Exemptions on Goods Produced at Foreign-Owned Entities in China
Logitech joins hundreds of others opposing a third tranche of Trade Act Section 301 tariffs on connected devices imported from China under the 8471.60.90 and 8517.62.00 subheadings because they will cause “disproportionate” harm to American consumers and the U.S. economy, commented the company in docket USTR-2018-0026. If the Trump administration doesn't see fit to spare those goods from tariffs, Logitech wants the Office of the U.S. Trade Representative to exempt tariffs on imported goods produced at “wholly foreign-owned enterprises” (WFOEs) in China, as Logitech's products are.
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The company imported more than $250 million worth of 8471.60.90 and 8517.62.00 goods from its WFOE in China last year, nearly all of them computer mice, wireless headsets, video conferencing systems and webcams, said the company. “As these products are entirely unrelated to the harm cited” in the USTR’s Section 301 investigative report, “we request that the tariff subheadings in which they are classified be excluded from List 3,” it said.
The comments were among the last trickling in as docket posts based on filings submitted to the regulations.gov portal at the Sept. 6 deadline. Attention now turns to how long the administration will take to publish its determination on which items on the proposed list will stay and which will go, when they will take effect and whether they'll be assessed at the rate of 10 percent or 25 percent.
Granting exemptions on products that WFOEs manufacture in China “may be effectively accomplished by refining the existing product exclusion request process to allow companies to certify under penalty of perjury” that the goods are produced at an entity with zero Chinese ownership, and therefore “not subject to foreign ownership restrictions” or “forced technology transfers,” said Logitech. The company “has made substantial investments in developing a manufacturing strategy in China that is insulated from the harmful acts, policies, and practices that were the subject of the Section 301 investigation,” it said.
Logitech invested in its China-based WFOE “several decades ago and, since that time, has embraced and re-embraced that facility as the best business practice to protect its intellectual property and proprietary product technology,” said the company. Logitech’s IP and proprietary technology “is better protected at its WFOE in China” than it would be if entrusted to “a third-party manufacturer in any other country,” said the company. “Indeed, Logitech’s intellectual property and proprietary technology actually would arguably be less protected if it were to source computer mice, video conference cams and webcams from unrelated third parties outside of China.”
The “exclusion process” that Logitech advocates “would be relatively easy to administer,” it said. USTR or Customs and Border Protection could “determine the documentation” necessary for certifying a legitimate WFOE and grant the exemptions on a “manufacturer-specific basis,” it said. “As the manufacturer of imported merchandise is already a required data element in the entry declaration filed with CBP, grants of exemption could be easily enforced at the border.”