On December 14, 2020 the Bureau of Industry and Security (BIS) published an interim final rule (Interim Rule) making changes to the process for seeking exclusions from tariffs imposed on steel and aluminum imports under section 232 of the Trade Expansion Act of 1962 (section 232). The current rule is the fourth in a series of interim final rules that have, over the course of two years, periodically revised the section 232 exclusion process since it was first implemented in March 2018.
The Interim Rule makes three key changes to the exclusion process. First it adds a new category of “General Approved Exclusions” that identify categories of steel and aluminum products that are approved for import without payment of Section 232 duties. Importers will not be required to submit an exclusion request for these products. Second, it introduces a certification requirement for quantities that are requested to be excluded. Finally, it clarifies the timeline within which an objector is required to be able to provide the steel or aluminum article to the exclusion requester.
The Interim Rule is effective as of December 14, 2020.
General Approved Exclusions (GAEs)
The GAEs are categories of specific steel and aluminum products that were the subject of prior exclusion requests and for which no objections were received. Products meeting the descriptions of the GAEs are exempt from Section 232 duties without the need to apply for an exclusion request. Further, unlike a normal exclusion request, the GAEs do not impose any quantity limitations.
The GAEs are listed in new Supplements No. 2 and 3 to Part 705. There are 108 GAEs for steel products and 15 GAEs for aluminum products. In order to use a GAE, an importer must reference the GAE identifier in the customs entry submission corresponding to the steel or aluminum product being imported. The Interim Rule clarifies that GAEs are effective fifteen days after publication and relief is limited to articles imported after the effective date. BIS will not grant retroactive relief. Although the GAEs have no time limit, BIS may at any time remove, revise or add to an existing GAE. BIS expects the number of exclusion requests filed to be reduced by about 5,000 annually as a result of the GAE process.
Applicants for exclusions have been required to estimate the total quantity of the product that they need. Based on a concern that some applicants may have exaggerated their requirements, BIS has added a requirement that applicants attest that the quantities included in an exclusion request have a reasonable basis. Specifically, submitters are now required to attest that (i) the requester has a purchase order for the imported products or intends to further manufacture or transform them (ii) the total volume of excluded product will be used in the course of the organization’s business needs within the next calendar year (iii) the amount will not be used solely as a hedge against price (iv) the requested imported amount is in line with the organization’s current business outlook and (v) that the requester will provide documentation to justify its assertions if requested by the Department of Commerce (Commerce). An exclusion request submitted without the certification will be deemed incomplete and rejected.
Clarification of Available “Immediately”
Under the prior rules, a steel or aluminum product that could not be provided within eight weeks by an objecting domestic manufacturer was understood as not being “immediately” available, and this was one of the bases for approval of an exclusion request. The Interim Rule relaxes this requirement to state that an objector must be able to provide the steel or aluminum product “by a date earlier than the time required for the requester to obtain the entire quantity of the product from the requester’s foreign supplier,” rather than strictly limiting the objector to an eight-week deadline. It will then be incumbent upon the parties to provide supplemental evidence supporting their claimed delivery times, if requested.
In addition to implementing changes through the Interim Rule, Commerce is also seeking comments evaluating whether the changes will be effective in further improving the Section 232 exclusion process. Comments are due by February 12, 2021.