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US lawmakers seek exemption for medical devices under China tariffs

by John R. Fischer, Senior Reporter | June 01, 2018
CT Medical Devices Molecular Imaging MRI PET SPECT Ultrasound X-Ray
U.S. Congress members Scott Peters (D-CA) and Erik Paulsen (R-MN) are calling on the U.S. Office of the United States Trade Representative to remove all Chinese-imported medical devices, including imaging equipment, from the list of imports subject to Section 301 tariffs.

With the support of 40 lawmakers, the two urged United States Trade Representative Robert Lightizer in a bipartisan letter to reconsider including almost $3 billion worth of medical equipment under the tax, out of fear that doing so could hurt U.S. manufacturers’ ability to compete globally, and would raise healthcare costs, thereby depriving patients access to lifesaving technologies.

“With its growing economy and middle class, rapidly aging population, and increased demand for medical technology, China will continue to be an attractive market for U.S. manufacturers,” the lawmakers said in the letter. “With that in mind, we are concerned that inclusion of medical devices on any final Section 301 tariff list could lead to retaliation that would jeopardize these opportunities.”
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Announced in March by President Donald J. Trump, the proposal aims to curb interest among American companies in transferring technology and intellectual property to domestic Chinese enterprises, issuing a 25 percent tariff on $50 billion worth of goods imported from China.

The USTR argues that such an action is valid under Section 301 of the Trade Act of 1974, which authorizes the president to take all appropriate measures, including retaliation, to remove any act, policy, or practice of a foreign government that violates an international trade agreement or is considered unjustified, unreasonable, or discriminatory, and that burdens or restricts U.S. commerce.

In the letter, lawmakers reference the U.S. medical technology industry as “an American success story” and “one of the few with a consistent trade surplus,” claiming that such achievements could be hindered by a possible retaliation by China to the tax.

The form of this response could include the East Asian country’s own tariffs on U.S. medical technology products or non-tariff barriers that could delay or prevent market access, hurting the ability of U.S. manufactures to compete globally.

They also point to the fact that imports for the $25 billion Chinese market are expected to grow. The implementation of the tariffs, they argue, ignores the nearly balanced trading relationship between the two regarding medical technology products, and could cause China to retaliate by placing its own tariffs on U.S. medical technology products or non-tariff barriers that could delay or prevent market access. Such actions could prevent them from competing on a global scale.

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