Pursuant to President’s Trump’s March 8, 2018 proclamations issued under authority of Section 232 of the Trade Expansion Act of 1962, added customs tariffs on imports of a wide variety of steel and aluminum imports from all countries except Canada and Mexico will enter into effect on March 23. On March 16, 2018, the Department of Commerce’s (“DOC”) Bureau of Industry and Security (“BIS”) issued an interim rule that specifies the requirements and process for parties to submit product-exclusion requests from the Section 232 tariffs. Under the new rule, DOC is authorized to exclude from the tariffs aluminum and steel articles that are determined to lack sufficient U.S. production capacity of comparable products, or for which there are “specific national security-based considerations.”
BIS determined that it has good cause to waive the prior notice and opportunity for comment procedures due to impracticability and public interest considerations, and therefore the new rule is immediately effective, although subject to being amended. Comments on the interim rule are due by May 18. BIS specifically advised that commenters “may submit comments regarding how and whether or not the country of origin of a proposed product should be considered … as part of the process for reviewing product-based exclusion requests,” therefore implying that it is considering whether imports from certain countries will be given more favorable treatment than imports from others.
In short, the process provides for parties that use steel or aluminum in business activities in the United States to submit company-specific exclusion requests, and for domestic industry participants to object to such requests. Parties filing exclusion requests and objections must fill out the applicable forms provided on BIS’s website. The forms for steel are available here and forms for aluminum are available here. If an exclusion is granted, it will take effect five days after approval and will be valid for one year.
Below we outline the key aspects of the product-exclusion information collection procedure set forth in the interim rule.
Only individuals or organizations using steel (or aluminum) in business activities (e.g., construction, manufacturing, or supplying steel (or aluminum) product to users) in the United States may submit exclusion requests. An exclusion request must identify the relevant 10-digit Harmonized Tariff Schedule of the United States (HTSUS) classification number, and separate exclusion requests must be submitted for products falling in more than one 10-digit HTSUS classifications and for products covered by the same HTSUS reporting numbers.
An exclusion request should identify and explain the basis upon which exclusion is sought. These include that the article is not produced in the United States in a sufficient and reasonably available amount; the article is not produced in the United States in a satisfactory quantity; or specific national security-based considerations.
Exclusion requests will be approved on a product basis and approvals will be limited to the individual or organization that submitted the specific requests, unless BIS approves a broader application of the product-based exclusion request to apply to additional importers. Parties may submit exclusion requests for products that have already been the subject of an approved or denied exclusion request.
Objection Filings to Exclusion Requests
Within 30 days after an exclusion request is posted, any individual or organization in the United States may file objections to the request. These objections will be part of the file of the product-exclusion review. BIS has advised that an objection should identify and explain the basis for its opposition.
BIS will post responses at regulations.gov to each exclusion request submitted under docket number BIS-2018-0006. According to the notice, the review period will normally will not exceed 90 days, including adjudication of objections submitted. Parties whose exclusion requests are approved must report information concerning any applicable exclusion to Customs and Border Protection.
Given that the exclusion requests are not retroactive, companies will need to balance the urgency of exemptions against the importance of developing a thorough justification for an exclusion. For example, the form asks (among other questions) whether there are any U.S. companies that are capable of manufacturing the product and whether the applicant has attempted to qualify a U.S. source as a supplier during the past two years, as well as for background information on how the applicant has determined there is no U.S. source.
In addition, as reviewed in our blog post regarding the Section 232 tariffs on steel and aluminum, the Presidential Proclamations also provide for country exclusions. It has been reported that the Office of U.S. Trade Representative is expected to release guidance on the country-exemption process in the coming days.