By Dan Pickard and Jacob A. Garten, Buchanan Ingersoll & Rooney
In 2018, President Trump imposed Section 232 duties of 25% on steel and 10% on aluminum through a series of proclamations issued under the Trade Expansion Act of 1962. The Trade Expansion Act of 1962 authorizes the President to adjust import duties for goods that are imported in such quantities or under such circumstances as threaten to impair the national security of the United States.
The U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) recently published a proposed rule changing the exclusion request process for Section 232 duties on steel and aluminum products. The proposed rule affects both parties requesting an exclusion from the Section 232 duties and parties objecting to such an exclusion. The opportunity for the public to comment on the proposed rule ends October 12, 2023.
Key proposed revisions include:
- Modification of the criteria for General Approved Exclusions (“GAEs”)
- The creation of a General Denied Exclusions (“GDEs”) process
- The modification of certification language and the requirement for evidence of sourcing attempts for exclusion requests
- The introduction of new certification language on forms for objections to exclusions
GAEs were established in 2020 by means of a final interim rule issued by BIS. The purpose was to reduce the number of exclusion requests for steel and aluminum products not produced in the United States. BIS identified 123 GAEs that had received very few objections or none when submitted for exclusion requests. In 2021, BIS suspended 30 GAEs because BIS determined the products no longer fit the criteria for GAEs. BIS is proposing to change the criterion for GAEs from no objections to select HTSUS numbers (or subproducts) with very low rates of objections.
GDEs would also be established by the proposed rule. Similarly, GDEs would be implemented if there were very high rates of successful, substantiated objects for select HTSUS numbers (or subproducts). BIS noted that it has added various requirements over the years, such as certifications, to limit repeated exclusion requests that may overwhelm potential objectors’ ability to respond. New GDEs would be identified following an analysis of substantiated objections and exclusion requests that have been consistently denied.
BIS has also proposed modifications to the existing certification on the Exclusion Request Form. Those requesting an exclusion to the Section 232 tariffs would need to certify that they have first made reasonable efforts to source their product from the United States and, if that attempt was unsuccessful, that they have made reasonable efforts to source the product from a country with which the United States has arrived at an alternative means to address the threat to national security. Requests would now have to provide evidence to BIS of the certified sourcing attempts, which can be filed confidentially. BIS is requesting comments regarding what evidence should be considered and how it should be defined.
Similarly, BIS has proposed modifications to the certification language on the objection form. The language would further ensure objectors to the exclusion request can supply comparable quality and quantity steel or aluminum and can make it “immediately available” to requestors. BIS is seeking comments on whether this standard of “immediately available” is appropriate for the certification or if a different time period should be specified. BIS is also interested in how to address differences between different types of products.
Those objecting to the exclusion request would also have to submit evidence that they have commercially sold the same product within the last 12 months, or evidence that it has engaged in sales discussions with this requesting company or another company requesting the same product within the last 12 months. There are provisions for the filing of confidential information as well. BIS is seeking comments on the appropriate form and substance of such evidence.
This also continues to be a busy year for Section 232 duties on steel and aluminum on other fronts. In February, the Court of Appeals for the Federal Circuit upheld Section 232 duties on derivative steel products in PrimeSource Building Products, Inc. v. United States. Then in June, the same court in USP Holdings, Inc. v. United States upheld the imposition of Section 232 duties on steel products generally. In July, the U.S. Trade Representative Kathrine Tai stressed the importance of Mexico continuing to monitor its steel and aluminum exports to the United States in a meeting with the Mexican Secretary of Economy, in accordance with the 2019 agreement in which the United States dropped the Section 232 tariffs on Mexican steel and aluminum.
On August 15, 2023, Mexico imposed expanded tariffs on 483 products, including steel and aluminum, from between 5% and 25% until July 31, 2025, from countries such as China with which Mexico does not have a free trade agreement. Products from countries such as the United States and Europe with which Mexico has preferential trade agreements are not affected.
The U.S. Government Accountability Office (“GAO”) also issued a report in July on the steel and aluminum tariffs which emphasized that duties should be paid and questioned whether all Section 232 exclusion requests are needed. The report recommended that BIS should evaluate the results of the certification requirement to make sure that the exclusions are needed, and that Customs and Border Protection implement controls to prevent overclaiming of exclusions and to recover duties owed. Though not mentioned in the proposed rule, the GAO report does provide context to issues the new proposed rule is designed to address.
Companies and individuals impacted by the proposed rule should strongly consider commenting to BIS before the October 12, 2023 deadline. Contact Senior Director Energy Policy Maria Suarez-Simmons to be connected with the International Trade Policy Committee.
Energy Workforce Member Buchanan, Ingersoll & Rooney provides insights on international trade issues specific to energy services and technology companies. Daniel Pickard is Chair, International Trade & National Security Practice Group, and Jacob A. Garten is Section Specialist, International Trade & National Security Practice Group.
